Subject: Transportation

Professor: Atty. Ampil

By: Butch Ramiro

Note: This reviewer/case digest compilation has complete digests from Week 5 onwards. For
the first 4 weeks, however, only the doctrines are included. Good luck, enjoy, and memorize the
Beaufort Windscale in the finals for maximum awesomeness.
WEEK 1
Article 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734,
1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the
passengers is further set forth in articles 1755 and 1756.

Article 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.
Article contains the definition of a CC as per the law
Parties to a contract of transportation of goods
This article says that the standard of diligence of common carriers, whether it be for goods
or passengers, is extraordinary diligence.
It is the duty of the carrier ―to properly and carefully handle, carry, keep and care for the
goods carried‖ and ―to exercise due care to ascertain and consider the nature of the goods
offered for shipment and to use such methods for their care during the voyage as their
nature require‖

Shipper: The one sends goods for shipment, by packaging, labeling, and arranging for See cases below.
transit, or who coordinates the transport of goods
Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the
Carrier: The one who transports the goods goods, unless the same is due to any of the following causes only:

Consignee: The party to who the carrier is to deliver the things being transported. (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

What is a bill of lading? (2) Act of the public enemy in war, whether international or civil;

A bill of lading is a document the carrier delivers to the shipper, through which the former
admits the receipt of goods from the latter in order to transport them to a certain port.
The Bill of lading is usually issued on the goods loading or after loading them on board the
ship, as a proof of the loading act itself and as a confirmation of the transporter‘s receipt of
the goods.
Functions of a bill of lading
1) The Bill of lading is evidence that the carrier has received the goods.
2) The Bill of lading is a device that confirms the maritime transportation contract of
goods.
3) The Bill of lading is a title deed to the loaded goods.
(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.
Three causes of action against a common carrier in the carriage of goods
1) LOSS
2) DESTRUCTION
3) DETERIORATION
If any of the events occurs in Art 1734, will it exempt the CC from liability?

Distinguish a common carrier from a private carrier.
COMMON CARRIER
Holds himself out in common to all persons
who choose to employ him, as ready to
carry for hire
Bound to carry for all who offer such goods
as it is accustomed to carry and demand for
reasonable compensation for carrying them
Public service and subject to regulation
Standard of diligence: extraordinary
diligence
PRIVATE CARRIER
Agrees in some special case with some
private individual to carry for hire.
Not bound to carry for any reason unless it
enters into a special agreement in doing so
Not subject to regulation
Standard of diligence: Diligence agreed
upon, and in default, ordinary diligence.
Yes, it is a complete defense. There are different requisites for each event, as provided for
in the succeeding sections.
Article 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding
article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as required in article 1733.
If the goods are lost, destroyed or deteriorated and common carriers are PRESUMED to
have been at fault or to have acted negligently.
To rebut the presumption, the burden is on the common carrier to show that it exercised
extraordinary diligence.
1
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Does this mean that if the CC presents evidence to show extraordinary diligence, it
will already win?
No. According to the codal provision, a showing of extraordinary diligence will merely rebut
the presumption of negligence or fault on the part of the CC. Evidence still has to be
presented by both parties.
Article 1736. The extraordinary responsibility of the common carrier lasts from the time the
goods are unconditionally placed in the possession of, and received by the carrier for
transportation until the same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive them, without prejudice to the provisions
of article 1738.
Article 1737. The common carrier's duty to observe extraordinary diligence over the goods
remains in full force and effect even when they are temporarily unloaded or stored in transit,
unless the shipper or owner has made use of the right of stoppage in transitu.
Article 1738. The extraordinary liability of the common carrier continues to be operative even
during the time the goods are stored in a warehouse of the carrier at the place of destination,
until the consignee has been advised of the arrival of the goods and has had reasonable
opportunity thereafter to remove them or otherwise dispose of them
Is a contract of transportation a consensual contract?
Yes it is a consensual contract, perfected by the mere agreement of the parties. This article
talks about when the DUTY BEGINS and not when the CONTRACT IS PERFECTED.
GENERALLY, when does the duty of extraordinary diligence over the goods begin?
BEGINS AT: the time the goods are unconditionally placed in the possession of and
received by the carrier for transportation
ENDS: at the time the goods are delivered, actually or constructively, by the carrier
either to the 1) consignee, or to the 2) person who has a right to receive them.
Intervening Factors:
A) Art 1737:
The goods may be temporarily unloaded or stored in transit and the duty of ED still remains
in effect. However, the shipper/owner may exercise his right of stoppage in transit.
Stoppage in transitu: When the buyer of the goods is or becomes insolvent, the unpaid
seller who has parted possession with the goods has the right of stopping them in transitu.
In effect, the seller may resume possession of such goods.
Effect: the duty of ED ceases. The carrier only holds such goods in the capacity of a
warehouseman/bailee (―such care in regard to them as a reasonable careful owner of
similar goods would exercise‖)
B) Art 1738:
When the carrier‘s ship docks at its place of destination, it may store the goods it is
transporting in its warehouse. During this time, still has the duty to exercise ED over the
goods
Until when? Until the consignee has been 1) ADVISED of the arrival of the goods AND
has had 2) reasonable opportunity to REMOVE or OTHERWISE DISPOSTE of them.
Article 1739. In order that the common carrier may be exempted from responsibility, the natural
disaster must have been the proximate and only cause of the loss. However, the common carrier
must exercise due diligence to prevent or minimize loss before, during and after the occurrence
of flood, storm or other natural disaster in order that the common carrier may be exempted from
liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon
the common carrier in case of an act of the public enemy referred to in article 1734, No. 2.
What are the requisites to use the complete defense of NATURAL DISASTER and
ACT of the PUBLIC ENEMY in WAR? [in relation to 1734(1) and (2)]
1) There must indeed be a natural disaster or a war
2) The disaster/act of the enemy must be the PROXIMATE and ONLY cause of the loss
3) The CC must exercise DUE DILIGENCE BEFORE, DURING and AFTER the occurrence
Article 1740. If the common carrier negligently incurs in delay in transporting the goods, a
natural disaster shall not free such carrier from responsibility.
The general rule therefore is that if the carrier negligently occurs in delay in transporting the
goods, it cannot use the defense of a natural disaster when the goods are L/D/D.
HOWEVER mere delay to transport the goods or a refusal to transport them does not
necessarily render the CC liable in the event of the L/D/D of the goods. As the article says,
the CC must be guilty of a WILFUL and NEGLIGENT act, in incurring in delay.
Article 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration
of the goods, the proximate cause thereof being the negligence of the common carrier, the latter
shall be liable in damages, which however, shall be equitably reduced.
If the shipper or owner is guilty of contributory negligence but the CC is still the proximate
cause of the L/D/D, then the CC shall still be liable for damages, which shall be equitably
reduced [This is in relation to 1734 (3)]
THUS, for the CC to use the defense under Art 1734(3), it must show that the act or
omission of the shipper or owner was the proximate cause of the loss.
Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packing or of the containers, the common
carrier must exercise due diligence to forestall or lessen the loss.
For the CC to use the defense under Art 1734(4), it must show that it exercised DUE
DILIGENCE to lessen the loss.
2
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Article 1743. If through the order of public authority the goods are seized or destroyed, the
common carrier is not responsible, provided said public authority had power to issue the order
Article 1744. A stipulation between the common carrier and the shipper or owner limiting the
liability of the former for the loss, destruction, or deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service rendered by the common
carrier; and
(3) Reasonable, just and not contrary to public policy.
Note: A CC may be held to be liable for the L/D/D to the goods because of its breach of the
contract of carriage. However, although the CC is liable, it may still be upheld as regards its
stipulation limiting its liability.
Requisites of a stipulation limiting CC’s liability
1) In writing, signed by shipper or owner
2) Supported by valuable consideration other than service rendered by the CC
3) Reasonable, just and not contrary to public policy.
Article 1745. Any of the following or similar stipulations shall be considered unreasonable,
unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the
goods;
(3) That the common carrier need not observe any diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less than that of a good father
of a family, or of a man of ordinary prudence in the vigilance over the movables transported;
(5) That the common carrier shall not be responsible for the acts or omission of his or its
employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods
on account of the defective condition of the car, vehicle, ship, airplane or other equipment used
in the contract of carriage.
Article 1746. An agreement limiting the common carrier's liability may be annulled by the
shipper or owner if the common carrier refused to carry the goods unless the former agreed to
such stipulation.
Reason for annulling a stipulation limiting liability: CC refused to carry goods unless
the shipper/owner agreed to such stipulation
Article 1747. If the common carrier, without just cause, delays the transportation of the goods or
changes the stipulated or usual route, the contract limiting the common carrier's liability cannot
be availed of in case of the loss, destruction, or deterioration of the goods.
Article 1748. An agreement limiting the common carrier's liability for delay on account of strikes
or riots is valid.
Article 1749. A stipulation that the common carrier's liability is limited to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.
Article 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the
loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.
Article 1751. The fact that the common carrier has no competitor along the line or route, or a
part thereof, to which the contract refers shall be taken into consideration on the question of
whether or not a stipulation limiting the common carrier's liability is reasonable, just and in
consonance with public policy.
Article 1752. Even when there is an agreement limiting the liability of the common carrier in the
vigilance over the goods, the common carrier is disputably presumed to have been negligent in
case of their loss, destruction or deterioration.
Article 1753. The law of the country to which the goods are to be transported shall govern the
liability of the common carrier for their loss, destruction or deterioration.
Article 1754. The provisions of articles 1733 to 1753 shall apply to the passenger's baggage
which is not in his personal custody or in that of his employee. As to other baggage, the rules in
articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be
applicable.
Baggage of passengers in their personal custody or in the personal custody of the
passenger‘s employees shall be regarded as necessary deposits. Thus, CC shall be
responsible for such baggage as depositaries provided 1) it was given notice of the
baggage brought and that 2) the passengers take precautions which the CC advised
A CC is responsible for the loss/damage to the baggage in the personal custody of
passengers if such loss/damage is caused by the CC‘s servants or employees.
o E.G. conductor mishandles the bag of one bus-rider CC liable
A CC is NOT responsible for loss/damage to the baggage in the personal custody of its
passengers if such loss or damage is caused by force majeure
o E.G. lightning destroys the baggage
3
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

The act of a thief or robber counts as force majeure if it is done with use of arms or
irresistible force THEREFORE, if a heavily armed robber takes away the bag of a
passenger in a jeep, the CC is NOT liable.

A CC is NOT responsible IF the loss/damage is due to the acts of the passengers, his
family, servants, visitors or if loss arises from the character of the baggage.

A CC cannot free himself from liability by posting notices to the effect that he is not liable
for the baggage brought by the passengers. Such stipulation is void.

4
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 2:
1.MENDOZA V. PAL
Facts: Mendoza contracted PAL (carrier of passengers) to deliver a can of film just in time to
show it for a fiesta. However, PAL failed to deliver the film late and Mendoza failed to capitalize
on the fiesta. Mendoza sued PAL for lost profits.
Held: Common carriers are not obligated by law to carry and to deliver merchandise, and
persons are not vested with the right to prompt delivery unless such common carriers
previously assume the obligation. Said rights and obligations are created by a specific
contract entered into by the parties. Hence,
2. M ARITIME COMPANY V. CA
Facts: A ship carrying the goods a shipper collided with another ship, resulting to damage to the
goods. It was argued that it the Code of Commerce or Carriage of Goods by Sea Act should
apply because under these provisions, the CC would be relieved from liability.
Held: The New Civil Code was held to be applicable because the collision involved common
carriers. Therefore, collision will not relieve it of liability
3. MEDINA V. CRESENCIA
Facts: A jeep, owned by CRESENCIA being driven by driver AVORQUE smashed into a post
which resulted into death of one of the passengers. The heirs of the deceased passengers sued
CRESENCIA, the owner for damages. CRESENCIA argued that he was not liable because he
already sold the jeep.
Held: Since the sale of the jeep was without the approval of the PUBLIC SERVICE
COMMISSION, Cresencia, being the registered owner, continued to be liable to the public.
Basically, this case holds that if the transfer of a franchise is not approved, the transferor
continues to be the considered owner.
4. BENEDICTO V. IAC
Held: Registered owner is liable even if sold to another if registration is not transferred in the
transferee‘s name (same as Medina v. Cresencia)
5. FIRST M ALAYAN LEASING V. CA
Facts: VITUG‘s car was hit by an ISUZU TRUCK that was registered in the name of FIRST
MALAYAN LEASING, but at that time, was already sold to TRINIDAD. VITUG sued FIRST
MALAYAN.
Held:
1) First Malayan, as REGISTERED OWNER is still liable. ―Regardless of who the actual owner
of a motor vehicle might be, the registered owner is the operator of the same with respect to the
public and third persons, and as such, directly and primarily responsible for the consequences of
its operation‖
2) In this case, since the registered owner was held liable, can he ask for reimbursement from
the actual owner responsible?
YES. 2 remedies: a) 3rd party complaint if the actual owner is not yet impleaded or b) cross-claim
if the actual owner already impleaded
6. BA FINANCE V. CA
Facts: BA Finance was leasing a truck to ROCK COMPONENT. The truck was however, still
registered in its name. The driver of ROCK COMPONENT figured in an accident which caused
death and injuries.
Held: Since BA Finance was the registered owner, it can be held responsible. BA Finance may
ask for reimbursement from ROCK COMPONTENT.
7. DE GUZMAN V. CA
Facts: DE GUZMAN contracted with CENDENA for the hauling of Liberty filled milk from a
warehouse of GENERAL MILK in Makati to DE GUZMAN‘S establishment in Urdaneta. Some of
the milk did not reach the establishment because one of CENDENA‘S trucks was hi-jacked by
armed men. CENDENA denied that he was a common carrier because he only transported the
milk as an incident to his junk dealership and argued that the hi-jacking relieved him from any
liability
Held:
A) CENDENA is a common carrier.
Art 1732 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. (basically: the fact that a person has a limited clientele does not exclude it from the
definition of a common carrier.)
B) HOWEVER, CENDENA is not liable for the loss of the goods.
The limits of the duty of extraordinary diligence in the vigilance over the goods carried are
reached where the goods are lost as a result of a robbery which is attended by "grave or
irresistible threat, violence or force. In other words, the hi-jacking was a fortuitous event which
exempted Cendena from liability.
5
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
8. BASCOS V. CA
Facts: In this case, CIPRIANO agreed to transport the goods of JIBFAIR. CIPRIANO
subcontracted with BASCOS to deliver a part of the goods. However, BASCOS failed to deliver
the goods because the truck was hi-jacked. In turn, CIPRIANO had to pay JIBFAIR for the value
of the goods lost. CIPRIANO then sued BASCOS for reimbursement.
Held:
BASCOS argued that it was not a common carrier because it only offered its services to a select
group of people.
Test to determine w/n a person is a common carrier:
The test to determine a common carrier is whether the given undertaking is a part of the
business engaged in by the carrier which he has held out to the general public as his occupation
rather than the quantity or extent of the business transacted. In this case, Bascos made the
judicial admission that she was in the trucking business.
9. FIRST PHIL INDUSTRIAL CORP V. CA
Held: FPIC, as a grantee of a pipeline concession to contract, install and operate an oil pipeline,
is considered a COMMON CARRIER. Why?
It is engaged in the business of transporting or carrying goods, petroleum products,
for hire as a public employment.
It undertakes to carry for all persons indifferently, that is, to all persons who choose
to employ its services, and
It transports the goods by land and
It transports for compensation.
The definition of common carriers in the NCC makes no distinction as to the means
of transporting, as long as it is by land, water, or air. It does not provide that the
transportation of the passengers or goods should by motor vehicle
10. CALVO V. UCPB
Facts: Calvo is the owner of TCTSI, a sole proprietorship customs broker. It contracted with
SMC for the transfer of goods from the Port Area to SMC‘s warehouse. Pursuant to the contract,
Calvo withdrew the cargo from the arrastre operator and delivered it to SMC‘s warehouse.
However, the goods were found to be damaged. Calvo was sued.
Held:
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.
Moreover, As to Calvo‘s claims that the shipment was not yet under her custody when the same
were damaged, suffice it to say that when her employees withdrew the cargo from the arrastre
operator, they did so without exception or protest either with regard to the condition of container
vans or their contents.
11. Home Insurancce v. American Steamship
Held: As a private carrier, a stipulation exempting the owner from liability for the negligence of
its agents is not against public policy, and is deemed valid. Moreover, it is not bound to exercise
extraordinary diligence over the goods.
12. VALENZUELA HARDWOOD V. CA
Held: The stipulation making only the charterer liable in case of loss or damage to cargoes is
valid (meaning, the private carrier will not be liable) because it is freely entered into by private
individuals. Since private carriage does not involve the general public, the stringent provisions
governing common carriers do not apply.
Note: Contract of affreightment: private carrier // Bareboat Charter: common carrier
13. NATIONAL STEEL CORP V. CA
Facts: NSC (shipper/charterer) entered into a contract of affreightment with Vlasons Shipping, a
carrier. The goods were damaged during the voyage.
Held:
VSI was a private carrier considering that there was a special contract of charter party with a
charterer, a party other than the shipowner who obtains the use and service of all or some part
of a ship for a period of time or a voyage or voyages. Therefore, it does not have the duty to
exercise extraordinary diligence.
The provisions of the Code of Commerce govern, hence, as a general rule, merchandise shall
be transported at the risk and venture of the shipper who cannot proceed against the shipowner
arising from force majeure or the nature and inherent defect of the things.
14. FGU INSURANCE V. GP SARMIENTO
Facts: GP Sarmiento Trucking undertook to deliver 30 units of refrigerators from the plant site of
Concepcion Industries. However, the truck collided with another truck, resulting to damage to the
goods. GP Sarmiento argues that it was not a CC because it was the exclusive hauler of
Concepcion industries.
Held: While GPS is not a common carrier because it did not hold itself out to the public as such.
However, its negligence resulted to a breach of its contract of transportation. It is still liable as a
private carrier.
15. LOADSTAR SHIPPING V. CA
Facts: Loadstar transported certain goods through it ship, MV Cherokee. However, the vessel
sank. It was sued. It argues that it was not a COMMON CARRIER.
Held:
a) Loadstar is a CC
6
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

It is not necessary that a carrier be issued a certificate of public convenience, and this public That the rain water (not sea water) found its way into the ship is a clear indication that care and
character is not altered by the fact that the carriage of the goods in question was periodic, foresight did not attend the closing of the ship‘s hatches so that rain water would not find its way
occasional, episodic or unscheduled. The records do not diclose that MV Cherokee undertook into the cargo, Since Eastern has failed to establish any fortuitous event, the presumption of fault
to carry a special cargo or was chartered to a special person only. Therefore, it is a CC. or negligence applies.

b) Limited Liability not applicable if CC is negligent 18. DELSAN V. CA

The doctrine of limited liability does not apply where there was negligence on the part of the Held: A CC‘s vessel sank and caused loss of the goods allegedly due to strong winds. However,
vessel owner or agent. LOADSTAR was at fault or negligent in not maintaining a seaworthy CC is liable because PAGASA weather reports showed otherwise
vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In
any event, it did not sink because of any storm that may be deemed as force majeure, inasmuch
19. BANKERS AND M ANUFACTURERS ASSURANCE V. CA
as the wind condition in the area where it sank was determined to be moderate. Since it was
remiss in the performance of its duties, LOADSTAR cannot hide behind the ―limited liability‖
Held: If the shipment does not suffer loss or damage under the care or custody of the COMMON
doctrine to escape responsibility for the loss of the vessel and its cargo.
CARRIER, then there is no need to discuss its prima facie liability.
c) 3 kinds of stipulations in a bill of lading
20. SARKIES TOURS V. CA
Three kinds of stipulations have often been made in a bill of lading.
Facts: The CC (Sarkies Tours) lost the bags of its passengers
The first is one exempting the carrier from any and all liability for loss or damage
occasioned by its own negligence. Held: CC must also exercise vigilance over goods of its passengers from receipt until delivery.
The second is one providing for an unqualified limitation of such liability to an agreed
valuation.
The third is one limiting the liability of the carrier to an agreed valuation unless the
shipper declares a higher value and pays a higher rate of freight.

According to an almost uniform weight of authority, the first and second kinds of
stipulations are invalid as being contrary to public policy, but the third is valid and
enforceable

16. ARADA V. CA
Facts; The CC was initially denied clearance, but was allowed to sail the next day. When it did
sail, a typhoon developed and the ship ultimately sank.

Held: Even if typhoon caused the loss, the carrier was still remiss in its duty in exercising due
diligence in mitigating the loss before, during and after the occurrence of the typhoon. This is
because the shipmaster did not ascertain the direction of the typhoon and did not consistently
check for weather reports. Hence, the CC cannot use the complete defense of fortuitous event.

17. EASTERN SHIPPING V. CA

Facts: The lower hatch of the vessel was flooded with fresh water due to heavy rains. It caused
loss and damage to the cargo of the CC.

Held: The heavy seas and rains referred to in the master‘s report were not fortuitous events, but
normal occurrences that an ocean going vessel, particularly in the month of September which, in
our area, is a month of rains and heavy seas would encounter as a matter of routine. They are
not unforeseen nor unforeseeable. These are conditions that ocean-going vessels would
encounter and provide for, in the ordinary course of voyage.
7
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 3: unload the cargo and it also had the duty to ascertain the capability of the equipment it used.
Therefore, it is liable for the damage.
1. KEEP V. CHAN GIOCO
6. SOUTHERN LINES V. CA
Facts: CC was contracted to transport cavans of rice. The ship sank allegedly due to strong
winds so CC put up the defense of fortuitous event. Facts: Southern Lines, a CC, shipped sacks of rice owned by NARIC. Upon arrival, there was a
shortage. The CC argued that the packaging was defective and this was the cause of the
Held: There was no fortuitous event. The wind was not strong enough to sink a properly damage.
equipped boat managed by a capable crew. In effect, the court ruled that the blowing of strong
winds must be anticipated. Held: CC is still liable because it accepted the goods with the knowledge of its improper
packaging. Moreover, it was also negligent in not tying up the sacks properly.
2. PHILAMGEN V. MCG
7. GANZON V. CA
Facts: When the CC left the dock, the weather was still calm. However, a day after, it sank due
to strong winds and huge waves. Facts: Tumambing contracted Ganzon to haul scrap iron from Bataan to Manila. While the
loading was underway, he acting mayor arrived with police and seized the cargo. Some cargo
Held: There was a fortuitous event that suffices to relieve the CC from liability. Moreover, was dumped and the others were brought to a compound.
emergency measures were taken by the crew to save the vessel by bailing out the water.
Held: Ganzon as CC was still held to be liable for the following reasons:
Requisites of Fortuitous Event
a) The duty of extraordinary diligence already began as Ganzon was already placed in
a) Independent of the human will the possession of the iron
b) Impossible to foresee or if foreseeable, impossible to avoid b) The acting mayor had NO AUTHORITY to seize the goods
c) Event must render it impossible for the common carrier to fulfil his obligation c) There was also no FORTUITOUS EVENT as there was no force intimidation to render
d) CC must be free from any participation it impossible for Ganzon to carry out his obligation

3. PHIAMGEN V. CA 8. COMPANIA M ARITIMA V. INSURANCE COMPANY

Facts: There was a delay in unloading the cargo because of the town fiesta and the delay of
issuance of permits. Thus, there was no unloading done for 40 days. While the vessel was
waiting, a typhoon arrived and it caused the ship to sink. The villagers looted the goods that
washed up ashore.
Held: The SC held that the delay in unloading was due to a fortuitous event. Several factors
were a) the natural conditions of the port b) the customs of the place and the )typhoon
Moreover, the CC also exercised due diligence during and after the loss as the coastguard and
policemen were informed to avoid the looting. However, they still did not arrive. Therefore, the
CC is not liable.
4. MAERSK LINE V. CA
Facts: The CC used its barges to transfer the goods (hemp) of the shipper from the shipper‘s
warehouse to its own ship. En route to its ship, the barges sank and caused damage to the
goods.
Held: The CC is liable because when it loaded the goods into its barge, the duty to exercise ED
already commenced as it was already placed in unconditional possession of the goods.
9. SERVANDO V. PHIL. STEAMSHIP
Facts: Uy Bico and Servando loaded goods in the ship of Phil Steamship for transportation to
Manila. Upon arrival of the goods, they were stored in the customs warehouse. The consignees
were notified about the arrival of the shipment and demanded them to remove the same. The
warehouse burned resulting to the destruction of the goods.

Held: Even if persons are not vested with the right to prompt delivery unless stipulated, delivery
must still be within a reasonable time.
5. COMPANIA M ARITIMA V. CA
Facts: Conception contracted Compania Maritima to ship his construction equipment. While
unloading, the payloader fell and it was damaged. He sued CM.
Held: During unloading, the CC still had the duty to exercise extraordinary diligence in the care
of the goods transported. It could‘ve used equipment with better capabilities (A JUMBO) to
Held: The SC absolved the CC of liability because of the following:
a) The Bill of Lading (B/L) stipulation that states that ―goods are at the risk of the
owner unless the loss or destruction is due to the shipowner’s negligence‖ is
valid and not contrary to public policy.
b) There is nothing in the record to show that the CC,incurred in delay in the
performance of its obligation. The CC had not only notified consignees of the arrival
of their shipment, but had demanded that the same be withdrawn
c) The CC‘s or its employees CANNOT be charged with negligence. The storage of the
goods in the Customs warehouse pending withdrawal thereof by the consignees was
8
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
undoubtedly made with their knowledge and consent. Since the warehouse belonged
to and was maintained by the government, it would be unfair to impute negligence to
the CC, the latter having no control whatsoever over the same.
10. SAMAR MINING V. NORDEUTSCHER LLOYD
Facts: The goods sank during transhipment1. The owner of the goods sued the CC for the loss.
Held:
a) The B/L had a stipulation which stated that ―the CC is not liable if goods are damaged
or lost when not in its custody‖ Thus, the CC parted with the possession and control of
the goods when it received the goods for transhipment as at that point, it was merely
acting as the consignee’s agent.
11. LU DO V. BINAMIRA
Facts: The CC transported goods of Delta Photo. The CC hired Cebu Stevedoring to unload the
cargo. It was deposited in the customs warehouse. The cargo was pilfered when it was in the
possession of the customs warehouse.
Held:
b) The B/L stipulation that CC is not liable if goods not in its actual custody are
lost/damaged/destroyed is valid and not contrary to public policy
c) THEREFORE since the pilferage occurred while in the custody of customs, the CC is
not liable for such pilferage.
12. EASTERN SHIPPING V. CA
Facts: Nanyo Corporation shipped goods through Eastern Shipping, consigned to CMI. The B/L
was consigned to ―shipper‘s order with address arrival notice to CMI‖ Eastern Shipping released
the cargo to CMI even without the presentation of the Bill of Lading by CMI. HSBC then claimed
the goods because it had a lien over the same. HSBC then sued Eastern Shipping. It argues that
Eastern Shipping should have ascertained if CMI indeed had a right to the goods.
Held;
At the outset, the Bill of Lading which was issued by the carrier but contained articles furnished
by the Shipper, shows on its face that the Shipment is consigned "TO SHIPPER'S ORDER" with
"ADDRESS ARRIVAL NOTICE CMI‖
Nowhere did the Bill of Lading refer to respondent HSBC as the consignee or the one to be
notified.
1 The legal relationship between the consignee and the arrastre operator is akin to that
Transshipment or Transhipment is the shipment of goods or containers to an intermediate
destination, and then from there to yet another destination.
One possible reason is to change the means of transport during the journey (for example from
ship transport to road transport), known as transloading. Another reason is to combine small
shipments into a large shipment, dividing the large shipment at the other end. Transshipment
usually takes place in transport hubs.
The foregoing information, without more, in effect makes respondent CMI for all practical
intents and purposes the party named and ordered to receive the goods.
The carrier, not being privy to any transaction between HSBC and CMI, cannot be expected to
look beyond what is contained on the face of the bill of lading in question and guess which of the
many banks in Metro Manila or some other unrevealed corporation could possibly be the
consignee. To consider otherwise would not be sound business practice as petitioner would be
forced to wait for the real owner of the goods to show up, perhaps in vain.
Therefore, its duty to exercise extraordinary diligence already ceased when it delivered the
goods to the ―person with the right to receive them‖ as per Art 1736.
Note: It appears that both CMI and HSBC dealt with the CC in bad faith. The dispositive portion
held that the decision was w/o prejudice to any action HSBC may have against CMI.
13. MACAM V. CA
Facts: Macam shipped fruits through Wallem, consigned to Pakistan Bank with GPC as notify
party. However, CC delivered the goods directly to GPC and not to Pakistan Bank. Pakistan
Bank sued Wallem.
Held: Wallem is not liable because the export invoices indicated that the BUYER of the goods
was GPC. Thus, it was a party ―with a right to receive‖ the goods. Therefore, upon delivery by
Wallem to such party, its duty of extraordinary diligence ceased and it cannot be anymore held
liable.
14. METROPORT V. CA
Facts: Union Sales imported goods from Belgium, to be transported by Universal Shipping.
Goods arrived in Manila and turned over to the arrastre operator, Metroport. However, 1050
bags were received in bad order condition.
Held: Both the CC and the arrastre are proportionally liable. 619 bags were damaged in the
custody of the CC and 431 were damaged in the custody of the arrastre.
15. FIREMEN’S FUND V. METROPORT
ARRASTRE OPERATOR: Duty is to haul cargo either from the wharf or from the ship
of the CC to the CONSIGNEE. RESPONSIBILITY lasts until DELIVERY to the
consignee.
STEVEDORE: Duty is to handle the cargo in the holds of the vessel or between ship‘s
tackle and the holds of a vessel. RESPONSIBILITY lasts until LOADING/STOWING is
complete.
of a depositor and warehouseman.
The relationship between the consignee and the common carrier is similar to that of
the consignee and the arrastre operator.
9
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Since it is the duty of the ARRASTRE to take good care of the goods that are in its
custody and to deliver them in good condition to the consignee, such responsibility
also devolves upon the CARRIER.
o Both the ARRASTRE and the CARRIER are therefore charged with and
obligated to deliver the goods in good condition to the consignee.
The liability of the arrastre operator was reiterated in Eastern Shipping Lines, Inc. v.
Court of Appeals with the clarification that the arrastre operator and the carrier are not
always and necessarily solidarily liable as the facts of a case may vary the rule.
16. HE HEACOCK V. MACONDRAY
Facts: Heacock shipped clocks to Manila through Macondray. However, the clocks were not
delivered to the consignee. The issue was the validity of the B/L stipulation limiting liability.
Held: A clause in a bill of lading limiting the liability of the carrier to a certain amount unless the
shipper declares a higher value and pays a higher rate of freight, is valid and enforceable.
17. ST. PAUL FIRE V. MACONDRAY
Held:
The purpose of the bill of lading is to provide for the rights and liabilities of the parties
in reference to the contract to carry.
The stipulation in the bill of lading limiting the common carrier's liability to the
value of the goods appearing in the bill, unless the shipper or owner declares a
greater value, is valid and binding. This limitation of the carrier's liability is
sanctioned by the freedom of the contracting parties to establish such stipulations,
clauses, terms, or conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs and public policy.
A stipulation fixing or limiting the sum that may be recovered from the carrier
on the loss or deterioration of the goods is valid, provided it is
(a) reasonable and just under the circumstances, and
(b) has been fairly and freely agreed upon
18. SEA LAND SERVICE V. IAC (SAME DOCTRINE)
In this case, it was held that even if the consignee was not a signatory to the
contract of carriage between the shipper and the carrier, the consignee can still
be bound by the contract.
To begin with, there is no question of the right, in principle, of a consignee in a bill of
lading to recover from the carrier or shipper for loss of, or damage to goods being
transported under said bill, although that document may have been- as in practice it
oftentimes is-drawn up only by the consignor and the carrier without the intervention of
the consignee
The right of a party in the same situation as consignee here, to recover for loss of a
shipment consigned to him under a bill of lading drawn up only by and between the
shipper and the carrier, springs from either a relation of agency that may exist
between him and the shipper or consignor, or his status as stranger in whose favor
some stipulation is made in said contract, and who becomes a party thereto when he
demands fulfillment of that stipulation,
In this case the delivery of the goods or cargo shipped. In neither capacity can he
assert personally, in bar to any provision of the bill of lading, the alleged circumstance
that fair and free agreement to such provision was vitiated by its being in such fine
print as to be hardly readable. .
There can, therefore, be no doubt or equivocation about the validity and enforceability
of freely-agreed-upon stipulations in a contract of carriage or bill of lading limiting the
liability of the carrier to an agreed valuation unless the shipper declares a higher value
and inserts it into said contract or bill.
18. CITADEL V. CA
Facts: CC was found to be liable for the loss of the goods but its liability was deemed to be
lessened due to the stipulation in the B/L
Held:
The award of damages in the amount of P312,800.00 for the value of the goods lost,
based on the alleged market value thereof, is erroneous.
It is clearly and expressly provided under Clause 6 of the aforementioned bills
of lading issued by the CARRIER that its liability is limited to $2.00 per kilo.
Basic is the rule, long since enshrined as a statutory provision, that a
stipulation limiting the liability of the carrier to the value of the goods appearing
in the bill of lading, unless the shipper or owner declares a greater value, is
binding.
Further, a contract fixing the sum that may be recovered by the owner or shipper
for the loss, destruction or deterioration of the goods is valid, if it is reasonable
and just under the circumstances, and has been fairly and freely agreed upon.
The CONSIGNEE itself admits in its memorandum that the value of the goods shipped
does not appear in the bills of lading. Hence, the stipulation on the carrier's limited
liability applies. There is no question that the stipulation is just and reasonable under
the circumstances and have been fairly and freely agreed upon
19. EVERETT V. CA
Held: To defeat the carrier‘s limited liability, the aforecited Clause 18 of the bill of lading requires
that the shipper should have declared in writing a higher valuation of its goods before receipt
thereof by the carrier and insert the said declaration in the bill of lading, with the extra freight
paid. These requirements in the bill of lading were never complied with by the shipper, hence,
the liability of the carrier under the limited liability clause stands
10
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

20. REGIONAL CONTAINER V. NETHERLANDS INSURANCE

Held: If damage occurred during unloading, the CC is presumed to be liable for the loss.

21. MINDANAO TERMINAL V. PHOENIX ASSURANCE

Held: Stevedores, being mere labor providers, are not treated as CCs provided they remain
under the supervision of the CC and provided they do not possess any of the requirements of a
CC.

11
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 4:
Article 1755. A common carrier is bound to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with a due regard
for all the circumstances.
This provision deals with carriage of passengers, as opposed to carriers of goods. It follows
then that if passengers are involved, this subsection applies.
A high degree of care and extraordinary diligence is required of a carrier with respect to its
passengers. This is emphasized by the fact that it is charged to act with due regard to all
the circumstances.
This relation is contractual in nature as represented by the contract of carriage.
Article 1756. In case of death of or injuries to passengers, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755.
As in the case of carriage of goods, when passengers suffer injuries or die, the carrier will
be presumed to have acted negligently and consequently be held liable for damages.
o When will the presumption be overcome?
When CCs prove that they exercised extraordinary diligence It follows
therefore that the burden of proof is on the carrier to show that it exercised ED.
It also worth noting that as provided for by Art. 1733, the issue of whether or not the CC
exercised extraordinary diligence will be determined according to the circumstances of
each case.
Article 1757. The responsibility of a common carrier for the safety of passengers as required in
articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise.
In other words, this article provides that the responsibility of extraordinary diligence on the
part of the CC is not dispensed with or lessened by:
o Stipulation
o Posting of Notices
o Statement on tickets (or other means)
Whenever a passenger boards a ship/vehicle of a carrier, he is normally issued a ticket
which in turn, contains the terms and conditions. This ticket is a complete written contract
by the carrier and the passenger to wit:
o Consent: passenger boards and the carrier consent or accepts him for
transportation
o Object: transportation of the passenger from the place of departure to the place
of destination
o Cause: the fare paid by the passenger
As provided for in the article the CC and the passenger cannot enter into agreement
o 1) that absolutely exempts the carrier from liability from the passenger‘s
death/injuries
o 2) lessening the extraordinary diligence required by law
The rule is different when it comes to carriage of goods as Art 1744 provides that a
stipulation between the CC and the shipper/owner of the goods limiting liability for L/D/D of
goods to a degree less than extraordinary is valid provided it is 1) in writing 2) supported by
a valuable consideration other than service rendered by CC and 3) reasonable, just and not
contrary to public policy.
o When it comes to passengers, it is absolute; the responsibility of ED
cannot be lessened.
In contrast, private carriers are not governed by extraordinary diligence as its liability is
primarily governed by its contract with the passenger/s.
Article 1758. When a passenger is carried gratuitously, a stipulation limiting the common
carrier's liability for negligence is valid, but not for wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the common carrier's liability.
The rule in Art 1757, however, also comes with an exception, that is, when a passenger is
carried gratuitously (for free), the CC and passenger may validly agree on a stipulation
limiting the CC‘s liability for negligence.
Further, a reduction of fare will not limit the CC‘s liability.
Article 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or wilful acts of the former's employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the
diligence of a good father of a family in the selection and supervision of their employees.
CC‘s are liable for death/injuries to passengers caused by either the 1) negligence or 2)
wilful acts of its employees
o EVEN IF
Such employees acted beyond the scope of their authority
Or if they acted in violation of the orders of the common carriers
Example: Bus conductor of Philippine Rabbit picks a fight with a passenger and throws him
out of the bus, causing him injury. Philippine Rabbit, as employer, is civilly liable for the
injuries to the passenger even if the conductor violated the order of the CC (which is to take
care of the passengers etc)
Difference from CC when it comes employer’s liability: Moreover, the CC cannot
interpose the defense that it exercised ordinary diligence in the selection and supervision of
its employees.
o This is different from the general rule provided for in Art 2180 (vicarious liability)
which states that employers will not be liable for damages caused by their
employees once they prove that they exercised ordinary diligence in selection
and supervision.
12
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
o This is because the basis of carrier‘s liability is the contract of carriage (culpa
contractual). On the other hand, Art 2180 is applicable in cases of quasi-delict
(culpa aquiliana)
If plaintiff sues CC on the basis of tort or quasi delict, who would be the defendant?
The defendant would be the carrier. The basis is Art 2180 (vicarious liability for the
negligent of its employer) Available defense of CC: Ordinary diligence in selection and
supervision
If CC is sued under Art 2180, is there a presumption of negligence?
No.
If plaintiff sues the driver, what is his cause of action?
Art 2176, quasi-delict. There is also no presumption of negligence in this instance.
If plaintiff sues CC on the basis of the contract of carriage, what is his cause of
action?
The cause of action is the BREACH of the contract of carriage. In this case, the carrier
CANNOT raise the defense of diligence in selection and supervision of its employees. This
is because its liability as CC is direct and immediate.
If plaintiff sues under the contract of carriage, is there a presumption of fault or
negligence?
Yes. As per the codal provision.
Can the plaintiff sue the CC under Art 2180 and the driver under Art 2176 at the same
time?
Yes.
Can the plaintiff sue the CC under Art 2180 and alternatively, for a breach of the
contract of carriage?
Yes. Plaintiff may sue under alternative causes of action.
Can the victim also sue for a criminal action? What is the effect on the CC?
Yes, he can charge the driver. In this case, the employer will only be subsidiarily liable
under the RPC. However, the employer/CC cannot go to jail because subsidiary liability is
only civil
Is an administrative case also possible?
Yes. For the revocation of a certificate of public convenience.
X was a passenger of BUS A. BUS B hit BUS A which caused injuries to X. If X wants to
sue BUS A, what must his cause of action be?
IF HE WANTS TO SUE BUS A: Breach of contract of carriage.
IF HE WANTS TO SUE BUS B; Quasi delict (2176/2180) This is because he does not
have a contractual relationship with BUS B.
Article 1760. The common carrier's responsibility prescribed in the preceding article cannot be
eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or
otherwise.
The liability for the death or injuries caused by the CCs employees also cannot be limited
by stipulations, notices and statements on the tickets or otherwise.
This article further protects the passengers and enables them to recover notwithstanding
such stipulations.
Article 1761. The passenger must observe the diligence of a good father of a family to avoid
injury to himself.
This article shows that the law, in imposing extraordinary diligence on CC, is not one sided
as passengers are also required to exercise ordinary diligence to avoid injury to
himself when on board the vehicle.
o Failure to exercise such diligence will preclude recovery for injuries/death.
Example: X was on a bus and he persisted on sticking his head out of the window even if
there was a sign that warned them not to do so. X hit his head on a post. In this case, as
long as there was no negligence on the CC‘s part, then it is not liable.
Article 1762. The contributory negligence of the passenger does not bar recovery of damages
for his death or injuries, if the proximate cause thereof is the negligence of the common carrier,
but the amount of damages shall be equitably reduced.
This article qualifies Art 1761. When the PC of the death or injury is the CC, the
contributory negligence of the passenger will not bar recovery, albeit reduced.
Example: In the same example above, if the reason why X‘s head hit the post was
because the driver of the bus was speeding or was driving recklessly, then the PC of the
injury can be attributed to the driver and the contributory negligence of X will only mitigate,
but not bar, his recovery.
Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of
the wilful acts or negligence of other passengers or of strangers, if the common carrier's
employees through the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.
In this article, the CC is responsible for injuries suffered by a passenger due to negligence
or wilful acts of his co-passengers or a stranger if the injury could have been prevented by
the exercise of ordinary diligence.
13
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

However, if the injury to the passenger could not have been avoided by the exercise of
ordinary diligence, the CC is NOT LIABLE.
SUBSECTION 4. Common Provisions
Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with
Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a common carrier.
The new CC now contains provisions on common carriers. Consequently, there is now no
distinction between a transportation contract of a common carrier under the Civil Code and
a transportation contract under the Code of Commerce. However, the CC did not repeal the
provisions of the Code of Commerce on overland transportation. Instead, these code of
commerce provisions are suppletory to the provisions of the new civil code.
Order: 1) Civil Code 2) Code of Commerce 3) Special laws
Articles do not apply to private carrier. Governed by the contract of the parties (oblicon)

Damage, injury and damages:

o Injury is the illegal invasion of a legal right;
o Damage is the loss, hurt, or harm which results from the injury; and
o Damages are the recompense or compensation awarded for the damage
suffered.
Under Art 2197, damages may be: (available for culpa contractual and aquiliana)
o Actual or compensatory: an adequate compensation only for such pecuniary
loss suffered by him
o Moral: physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if
they are the proximate result of the defendant's wrongful act for omission
o Nominal : recognize technical violation of right
o Temperate: some pecuniary loss has been suffered but its amount cannot, from
the nature of the case, be provided with certainty
o Liquidated: agreed upon by the parties, to be paid in case of breach
o Exemplary : corrective damages, to serve as an example to others
Art 2206 provides for
o Minimum amount of damages to be paid in case of death of the passenger (now
PhP50,000 as per jurisprudence)
o Liability for loss of earning capacity, if applicable
o Liability to give support if deceased was obliged to give support to one who is not
an heir called to decedent‘s inheritance (testate/intestate)
o Liability for moral damages for mental anguish to be claimed by spouse,
legitimate and illegitimate ascendants and descendants.

Article 1765. The Public Service Commission may, on its own motion or on petition of any
interested party, after due hearing, cancel the certificate of public convenience granted to any
common carrier that repeatedly fails to comply with his or its duty to observe extraordinary
diligence as prescribed in this Section.

This article governs the cancellation of the certificate of public convenience to any common
carrier
The PSC may act on its own initiative or petition of any interested party.
After due hearing, the PSC may then cancel the certificate on the ground that the CC
repeatedly fails to comply with his or its duty to observe ED (e.g. multiple accidents)

Article 1766. In all matters not regulated by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws.
14
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 5: COMMON CARRIERS; CARRIAGE OF PASSENGERS
1. CANGCO V. M ANILA RAILROAD (SACKS OF WATERMELON CASE, RIGHT ARM
AMPUTATION)
Doctrines:
The liability of masters and employers for the negligent acts or omissions of their servants
or agents, when such acts or omissions cause damages which amount to the breach of a
contact, is not based upon a mere presumption of the master's negligence in their selection
or control, and proof of exercise of the utmost diligence and care in this regard does not
relieve the master of his liability for the breach of his contract
A common carrier is directly liable under the contract of carriage when its passenger
suffers injury due to its negligence. The breach is a case of culpa contractual.
Facts:
Jose Cangco, a clerk of Manila Railroad was on his way home by train, using a pass
supplied by his company which allowed him to ride for free. As he was about to disembark
at San Mateo station, he jumped off the train when it had not yet slowed down to a
complete halt.
When he landed, he hit a sack of watermelons. He fell, rolled under the platform and got
dragged, resulting to injuries to his arm. Because of this, his arm had to be amputated.
In turn, he sued Manila Railroad due to the negligence of its employees in placing the
sacks in the platform. In its defense, Manila Railroad argues that Cangco was guilty of
contributory negligence.
Issue: Is Manila Railroad liable? Yes
The legal liability of Manila Railroad, a common carrier, is founded on the contract of
carriage. As a CC, it had the duty to safely carry its passengers and in turn, provide safe
means of entering and leaving its trains. Manila Railroad is therefore directly liable based
on a breach of contract and cannot use the defense that it exercised due diligence in the
selection and supervision of its employees. This is because such defense is only available
in actions under Art 2180 (vicarious liability)
Moreover, the proximate cause of the injury was the negligence of Manila Railroad‘s
employees.
o They should not have left the sack of watermelons on the platform when Cangco
had the right to assume that the platform was clear.
o The platform was dimly lit and poorly constructed
Cangco won.
RQ:
Was Cangco young or old? Young.
What was his job? Clerk
How many lights lit the platform? Not stated. Just said dimly lit.
Before he alighted, did he hold the railing with one arm? Left arm or right arm? Yes. Right.
How many times was he brought to the hospital? Twice.
2. ISAAC V. AL AMMEN TRANSPORTATION (SEVERED LEFT ARM CASE)
Doctrines:
If the passenger‘s negligence was the proximate cause of his injury, he is precluded from
recovering from the common carrier. However, in determining his negligence, the standard
is whether or not he exercised ordinary diligence.
Facts:
Isaac boarded one of AL Ammen‘s buses (ALAT) bound for Camarines Sur. During the
voyage, however, the bus collided with a pick-up truck. As a result, his left arm was
completely severed and the severed portion fell inside the bus.
Isaac then sued the bus company claiming that the driver was negligent. His basis was the
breach of contract of carriage. In its defense, the bus company argued that the accident
was due to a fortuitous event, hence it is not liable.
Issue: Is the bus company liable? NO
The bus is not liable. It was running at a moderate speed because it had just stopped at a
school zone. On the other hand, the pick-up truck was at full speed and was running
outside of its lane.
The bus driver did everything he could to avoid the pick-up truck by swerving to the very
extreme right of the road and even with that effort, it was still hit by the truck.
Moreover, Isaac is guilty of contributory negligence because he placed his left arm on the
window with a portion protruding outside. If he did not do that, then he would not have
suffered his severe injury. Because his negligence was the proximate cause of the injury,
he is precluded from recovery. CC wins.
RQ:
In the American case where the person threw his cigar outside the window of the train,
was the arm injured or only the hand? Only the hand (?)
3. NOCUM V. LAGUNA TAYABAS (FIRECRACKERS INSIDE THE BUS)
Doctrine:
A common carrier is required to exercise extraordinary diligence with a due regard for all
the circumstances. However, such extraordinary diligence should not extend as to
transgress constitutional rights to privacy.
Facts:
Nocum was a passenger in a Laguna Tayabas Bus #120. During the trip, he was injured as
a consequence of the explosion of firecrackers. The firecrackers were contained in a box
and the box was placed under a seat, with the owner declaring that it merely contained
clothes and miscellaneous items.
Nocum sued Laguna Tayabas based on a breach of the contract of carriage.
A witness, Severino Andaya, testified that the box was indeed placed under the seat and
the conductor, Sancho Mendoza, testified that there was no indication that the box
contained any explosives.
15
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
The trial court held Laguna Tayabas liable because 1) the defense of fortuitous event is
unavailing and 2) the employees of the company should have inspected the box.
Issue: is the bus company liable? NO
The conductor inquired as to the contents of the box. However, if the conductor insisted on
opening the box, company policy required him to call the police.
Moreover, it is to be presumed that a passenger will not take with him anything dangerous
to his life and his other co-passengers. He cannot be subjected to any unusual search if
his baggage, on its face, is not suspicious as to invite further inquiry. This is to
protect the Constitutional right of its passengers. Thus, the SC found that the CC was not
liable because its employees exercised extraordinary diligence in inquiring as to the
contents of the box.
However, the defense of fortuitous event was not ruled upon because the SC found that the
common carrier exercised ED for the safety of its passengers.
4. PHILIPPINE RABBIT V. IAC (DETACHED JEEP THEN HIT BY A BUS)
Doctrines:
Last clear chance is inapplicable in breaches of contract of carriage by CC.
Defense of fortuitous event is inapplicable if the injury/death was due to defects in the
vehicle.
Facts:
Catalina Pascua, along with others, boarded a jeep owned by spouses Mangune. The jeep
was driven by Manalo and was bound for Pangasinan. However, during the trip, the right
rear of the jeepney detached. This prompted the driver to put on the brakes which in turn
caused the jeep to land on the opposite side of the road.
The jeep blocked the southbound lane and was thereafter bumped at the rear by the bus of
Philippine Rabbit, driven by de los Reyes. 3 passengers (of the jeep) died and others were
injured.
As a result, Manalo was convicted of multiple homicide but de los Reyes was acquitted.
Thereafter, Mangunes, Manalo, Philippine Rabbit and de los Reyes were sued for
damages. The CA eventually found Philippine Rabbit and de los Reyes liable for damages.
The CA applied 1) doctrine of last clear chance and 2) presumption of fault on the one who
bumps the rear (―tailgate‖)
Issue: Who should be liable? Spouses Mangunes only. #1) last clear chance #2) presumption of
guilt in tailgater not applicable #3) collision unavoidable
First, the doctrine of last clear chance is inapplicable when the passenger sues under
breach of contract of carriage. It is only applicable in a suit between the owners and drivers
of vehicles. (it would have been applicable if the case was between the jeep suing the bus
under QD, or CC v. CC)
Second, the presumption of guilt on the rear vehicle is inapplicable because this only
applies when the rear vehicle is following the other vehicle. This is because it is the rear
vehicle is the one in control of the situation. In this case, the bus was not following the jeep
from the rear. It was on the other lane.
Third, Phil Rabbit could not have avoided the collision. Following the theory that the driver
was running at the speed of 80kph, its driver only had 2.025 seconds to react to the jeep.
Fourth, the defense of fortuitous event will not lie when it is caused by defects in the
automobile. (in this case, the rear end of the jeep)
However, only Mangunes (not the driver) should be held liable, since the contract of
carriage was between Mangunes and the complainants.
5. LASAM V. SMITH (FAULTY STEERING GEAR)
Doctrine:
For the defense of fortuitous event to prosper, there should be some extraordinary
circumstance independent of the will of the CC, or of his employees,
Facts:
Frank Smith was a common carrier. He undertook to convey Lasam and others from San
Fernando to Ilocos Norte in a Ford automobile. The driver, upon reaching San Juan,
allowed his assistant, Bueno, who had no driver‘s license, to drive the car.
Initially, the trip went smoothly until defects developed in the steering gear. This eventually
led to the car zigzagging then going off the road and down an embankment. Lasam and his
wife were injured. Thus, Lasam sued Smith for damages due to breach of the contract of
carriage.
Smith alleges that the injury was due to a fortuitous event.
Issue: Is Smith liable? YES
Smith breached the contract of carriage by failing to safely transport his passengers to their
destination.
As to the defense of fortuitous event, the element of an independent circumstance
independent of the will of the CC and his employee is absent. In this case, the accident was
caused either by #1) defects in the automobile or #2) through the driver‘s negligence.
Therefore, the Smith, as CC, is liable.
Note: this case shows that fortuitous event is a complete defense and does not merely
rebut the presumption
6. NECESITO V. PARAS (FRACTURE OF RIGHT STEERING KNUCKLE, CARRYING
VEGETABLES)
Doctrines:
American law: a passenger may recover damages from a carrier for an injury resulting from
a defect in an appliance bought from a manufacturer, whenever it appears that the defect
would have been discovered by the carrier if it had exercised extraordinary diligence. For
purposes of this doctrine, the manufacturer is considered as being in law the agent of the
carrier, as far as regards the work of constructing the appliance.
The rationale of the carrier‘s liability is the fact that the passenger has no control or choice
over the carrier in the selection and use of equipment used by the carrier. Having no
remedy against the manufacturer, the passenger may validly sue the carrier. The carrier in
turn, may sue the manufacturer.
16
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Facts
Severina Garces and her one year old son, Precillano Necesito, carrying vegetables,
boarded bus/truck #199 of the Philippine Rabbit Bus Lines at Pangasinan, bound for
Manila. On the way to Manila, however, the driver lost control and fell on its right side into a
creek.
As a result, Severina drowned and Precillano suffered a fracture. In turn, Precillano,
through his father, sued Phil Rabbit.
The TC ruled in favor of PRBL on the basis of fortuitous event. It found that the bus was
only proceeding slowly due to the bad road condition and that the accident was caused by
the fracture of the right steering knuckle which was defective. Its center was ―bubbled and
cellulous‖. This condition could not have been ascertained despite visual inspections every
30 days.
Issue: Is the CC liable? YES
The only test applied to the steering knuckle is a purely visual inspection every 30 days, to
see if any cracks developed. The carrier or the manufacturer did not test the knuckle and
see if its strength is up to standard. The carrier should have been aware of the importance
of the strength of the knuckle as its failure would result to a loss of balance.
Thus, the visual inspection did not measure up to the legal standard of utmost diligence of
very cautious persons. The failure of the knuckle cannot be considered a fortuitous event.
Random questions:
Were moral damages awarded? No. PRBL did not act in bad faith
Indemnity awarded: 5,000 for Precillano in form of actual damages and 15,000 consisting of
burial expenses, lost income for the death of Severina. Part of justification of this award is the
deprivation of her ―protection, guidance and company‖
Injury: left femur
7. NECESITO V. PARAS (MR)
Doctrine:
Under the NCC, in case of accident due to a carrier‘s negligence, the heirs of the deceased
passenger may recover moral damages even though a passenger who is injured, but
manages to survive, is not entitled to them (In other words, death indemnity may be
awarded to the heirs of the mother under Art 1764 and Art 2206)
MR:
EVIDENCE: This is the MR of PRBL. It seeks to introduce new evidence however, it was
denied because the proposed proof was available when the original trial was held. Hence,
such evidence is not newly discovered.
MECHANICAL DEFECTS: carrier is liable to its passengers for damages caused by
mechanical defects. In Son v. Cebu Autobus SC held that CC is liable in damages to a
passenger for injuries caused by an accident due to the breakage of a faulty drag-link
spring
DAMAGES: as to damages being too excessive, the court held that the injuries suffered by
Precillano are incapable of pecuniary estimation. However, as to moral damages, the court
held that under the NCC, in case of accident due to a carrier‘s negligence, the heirs of the
deceased passenger may recover moral damages even though a passenger who is injured,
but manages to survive, is not entitled to them.
8. LA M ALLORCA V. DE JESUS (LEFT FRONT TIRE BLOWOUT)
Doctrine:
In some cases, tire blow-outs may be considered fortuitous events if there is no finding of
any specific acts of negligence on the part of the defendant/common carrier.
However, if the cause of a tire blow-out is known and could have been prevented with the
exercise of extraordinary diligence, then such does not qualify as a fortuitous event.
Facts:
Lolita de Jesus, the 20 year old daughter of Valentin and the wife of Manolo, was riding in
La Mallorca‘s bus. The bus collided with a freight truck because the driver of the bus lost
control when its left front tire suddenly exploded.
As a result, La Mallorca was held liable for actual and moral damages. La Mallorca
appealed, arguing that the blow-out of the tire was due to a fortuitous event.
Issue: Is La Mallorca liable? Yes
The inner tube of the left front tire was pressed between the inner circle of the left
wheel and the rim which had slipped out of the wheel. This mechanical defect was
easily discoverable had the bus been subjected to a more thorough check-up before it took
the road.
Moreover, the bus was running quite fast before the accident occurred and the tire was not
new (described as ―not so very worn out‖)
Lastly, petitioner is also liable for moral damages because the death of a passenger is due
to a breach of the contract of carriage (Art 1764 in relation to 2206)
9. LANDINGIN V. PANGASINAN TRANSPORTATION (OPEN BUS IN EXCURSION,
DEFECTIVE CROSS JOINT)
Doctrine:
The mere fact that the bus was inspected only recently and found to be in order would not
exempt the carrier from liability unless it is shown that the particular circumstances under
which the bus would travel were also considered
An accident caused by defects in the automobile is not a fortuitous event.. The rationale of
the carrier's liability is the fact that "the passenger has neither the choice nor control over
the carrier in the selection and use of the equipment and appliances in use by the carrier."
Facts:
Leonila Landingin and Estrella Garcia were passengers in the bus driven by Oligan and
owned by Pantranco. They were on an excursion trip (from Dagupan to Baguio)
17
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
The bus was open on one side and closed on another. While on Kennon Road, the bus
suddenly swerved and the girls were then thrown out of the bus. This resulted to their
death.
In its defense, Pantranco alleges that the bus was driving at a slow speed (10kph) and that
after hearing a sound from the rear end of the bus, the girls jumped out even after the
warnings given to them.
The TC concluded that the accident was caused by a fortuitous event. However,
PANTRANCO was still ordered to pay 6,500 as an expression of goodwill.
Issue: Is the CC liable? YES
Pantranco was guilty of a breach of the contract of carriage by failing to exercise
extraordinary diligence. The cross-joint of the bus broke which resulted to the
malfunctioning of the motor. This in turn caused the passengers to panic.
Even if the bus was inspected before the day of the trip, the CC should have expected that
the mechanical parts of the bus would be taxed heavier than usual. In this respect, the CC
failed to give due regard for all circumstances in connection with the inspection. Therefore,
it is liable.
As regards the issue of a fortuitous event, the SC held that defects in the automobile do not
constitute a fortuitous event.
Random Questions:
What was the award? Ordered PANTRANCO to pay 6,500 and 3,500 respectively (initially
efforts to settle)
What was Leonila’s educational attainment? 3rd year commerce student at FEU
What was Estrella’s educational attainment? 4th year HS at dagupan Colleges
How many passengers were injured? 2
10. JUNTILLA V. FONTANAR (RIGHT REAR TIRE EXPLOSION, MISSING OMEGA
WATCH)
Doctrine:
Common carriers should teach their drivers not to overload their vehicles, not to exceed
safe and legal speed limits, and to know the correct measures to take when a tire blows up
thus insuring the safety of passengers at all times. Failure to do so would make them liable
for death/injuries.
The carrier, while not an insurer of the safety of his passengers, should nevertheless be
held to answer for the flaws of his equipment if such flaws were at all discoverable.
A common carrier may not be absolved from liability in case of fortuitous event alone. It
must also prove that it was not negligent in causing death or injury (free from human
participation)
Facts:
Juntilla was riding a jeep to Cebu. The jeep was driven by Camoro, under the franchise of
Fontanar and was owned by Banzon. During the course of the trip, the right rear tire
exploded and the vehicle turned turtle and jumped into a ditch.
Juntilla was thrown out of the jeep and momentarily lost consciousness. He suffered
injuries and he also lost his Omega wrist watch. As a result of his injury and his loss, he
sued for breach of contract against Fontanar, Banzon and Camoro. The three were held
liable. However, this was reversed on the ground that the bursting of the tire was a
fortuitous event.
Issue: Is the CC liable? YES, #1 high speed, #2 overloaded #3 too much air pressure
The jeep was #1) running at a very high speed before the accident. It would not have
jumped into a ditch even with a blown tire if it was running at a reasonable speed.
The jeep was also #2) overloaded. It had 14 passengers in the rear and 3 in the front.
Moreover, no evidence was presented to show that the accident was due to adverse road
conditions or that precautions were taken by the jeepney driver to compensate for any
conditions liable to cause accidents. The sudden blowing-up, therefore, could have
been caused by too much air pressure injected into the tire coupled by the fact that
the jeepney was overloaded and speeding at the time of the accident.
Common carriers should teach their drivers not to overload their vehicles, not to exceed
safe and legal speed limits, and to know the correct measures to take when a tire blows up
thus insuring the safety of passengers at all times. Thus, the CC is liable for its negligence.
RQ:
What was the plate # of the jeep? PUJ-71-7
What was the value of the Omega Wrist watch? PhP852.7
11. GATCHALIAN V. DELIM (SNAPPING SOUND WAS HEARD, FOREHEAD SCAR)
Doctrines:
To exempt a common carrier from liability for death or physical injuries to passengers upon
the ground of force majeure, the carrier must clearly show not only that the efficient cause
of the injury was entirely independent of the human will, but also that it was impossible to
avoid. Any participation by the common carrier in the occurrence of the injury will defeat the
defense of force majeure.
Facts:
Reynalda Gatchalian boarded Delim‘s ―Thames‖ mini-bus in La Union. While the bus was
running along the highway in Barrio Payocpoc, a ―snapping sound‖ was heard at one part
of the bus and shortly thereafter, the vehicle bumped a cement flower pot, went off the
road, turned turtle and fell into a ditch. As a result, Gatchalian and others were injured.
They were hospitalized. Delim‘s wife went to them, paid for their medical expenses and
made them sign quitclaims (Joint Affidavit). This notwithstanding, Gatchalian still filed a
complaint to recover damages.
Gatchalian alleges that due to the accident, she had a conspicuous white scar measuring 1
by 1/2 inches on the forehead, generating mental suffering and an inferiority complex on
her part; and that as a result, she had to retire in seclusion and stay away from her friends.
She also alleged that the scar diminished her facial beauty and deprived her of
opportunities for employment
In his defense, Delim alleges that the accident was due to a fortuitous event.
Issue: Is Delim, as CC, liable? YES
18
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
The Court held that to exempt a common carrier from liability for death or physical injuries
to passengers upon the ground of force majeure, the carrier must clearly show not only that
the efficient cause of the injury was entirely independent of the human will, but also that it
was impossible to avoid. Any participation by the common carrier in the occurrence of the
injury will defeat the defense of force majeure.
In this case, however, participation of the CC is present. When the snapping sound was
heard, the driver merely said that ―it was only normal‖ as it had been heard on previous
occasions. This means that the bus was not checked to determine what was causing the
sound. The driver didn‘t even stop to check the bus.
All these circumstances show that there was also negligence (and hence, participation) on
the part of the CC and therefore, it cannot avail of the defense of fortuitous event.
Gatchalian won.
RQ:
Plate number of the bus? Plate No. 52-222 PUJ Phil. 73
Were damages for plastic surgery for scar removal awarded? Yes. 15k
What was the job Gatchalian was supposed to interview for? Substitute teacher job.
Where did the accident occur? Barrio payocpoc Norte, Bauang
12. YOBIDO V. CA (FIVE-DAY OLD LEFT FRONT TIRE EXPLODED)
Doctrines:
Requisites of defense of FE
1. Cause must be independent of the human will
2. Cause was impossible to foresee and if it can be foreseen, must be impossible to
avoid
3. Cause must render it impossible for the debtor to fulfill his obligation in a normal
manner
4. Debtor must be free from any participation
A common carrier may not be absolved from liability in case of fortuitous event alone. It
must also prove that it was not negligent in causing death or injury (free from human
participation
Quantum of evidence required to rebut presumption of negligence in case of death or
injury: clear and convincing evidence.
It is not relevant w/n the manufacturer is reputable
Facts:
Tito and Leny Yumboy, and their children, at 3pm, boarded a Yobido Liner Bus bound for
Davao. During the voyage, the left front tire of the bus exploded. The bus fell into a ravine 3
feet from the road. Tito died and the other passengers were injured. Thus, Leny and her
children sued Alberta Yobido, the owner, and Crescencio Yobido, the driver.
o According to Leny‘s testimony, the bus was running fast even though the road
was not cemented and was wet due to rain.
Defendant, on the other hand, argues that the accident was due to a fortuitous event. It
argued that the bus was running at a speed of ―60 to 50‖ and that the left front tire
(Goodyear) was a brand new tire that was bought 5 days before the incident.
The TC dismissed the complaint and ruled that La Mallorca (where the carrier was held
liable) wasn‘t applicable because in this case, the cause of the explosion was not known.
Hence, the explosion was a fortuitous event completely independent of the will of the
carrier
Issue: Is the Carrier liable? Yes
The explosion of the tire cannot be considered a FE. This is because there were human
factors involved in the situation. The fact that the tire was new did not imply it was entirely
free from either #1) manufacturing defects or #2) improper mounting on the vehicle.
Moreover, a common carrier may not be absolved from liability in case of fortuitous event
alone. It must also prove that it was not negligent in causing death or injury (free from
human participation) In his case, the evidence shows that the bus was running too fast
notwithstanding the road conditions. In fact, the driver was even told to slow down but he
still didn‘t.
The CC failed to rebut the presumption of its negligence with clear and convincing evidence
of its exercise of extraordinary diligence. Therefore, it is liable for damages.
o Death indemnity under Art 1764 and Art 2206 in the amount of 50k is awarded
for the death of Tito. 20k in Exemplary damages also awarded because the
driver was driving recklessly.
RQ:
Road condition: winding road, not cemented and wet due to the rain
13. M. RUIZ HIGHWAY TRANSIT V. CA (REAR TIRE EXPLOSION RESULTING TO A
HOLE IN THE FLOOR)
Doctrine:
Defense of CC against liability: lack of contract of carriage
A CC will be held liable if it fails to provide a safe floor.
The carrier is liable for moral damages to the parents of a child who died while a passenger
in any of the carrier‘s vehicle
Facts:
Victoria, a 4 year old girl , was riding with her parents in a bus (#102) owned by M. Ruiz
Highway Transit. Martin Buena was driving. During the trip, a rear tire exploded, blasting a
hole in the very place where Victoria was standing (rear). As a result, the child fell through
the hole and died.
Thus, parents of Victoria sued the CC and the driver. However, the TC dismissed on the
ground of 1) fortuitous event and 2) a signed quitclaim by the spouses attesting to receipt of
PhP150.
The CA, on appeal, reversed. It awarded death indemnity, moral damages and attorneys
fees.
Issue: Is the CC liable? Yes #1) defective floor #2) overspeeding #3) tires not regularly checked
The child died because the floor of the bus gave way. This reinforces the presumption of
negligence on the part of the CC. No evidence of extraordinary diligence was shown to
rebut the presumption.
In fact, the bus was overspeeding, overcrowded and the tires were not regularly checked. A
combination of these instances was the reason of the explosion of the tire.
19
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Even if the tire explosion was fortuitous, the CC can still be held liable on account of its
defective floor.
Thus, the CC is liable. As for moral damages, the carrier is liable therefor to the parents of
a child who died while a passenger in any of the carrier‘s vehicle.
RQ:
Where did accident occur? Sta. Rosa
Destination of bus? Antipolo
14. ROQUE V. BUAN (PROTRUDING RIGHT ARM, DETACHED WINDOW GRILL)
Doctrine:
Negligence on the part of the CC is presumed if a passenger suffers injuries.
Unless it is proven that the CC, in violating the contract of carriage, acted fraudulently or in
bad faith, no moral damages can be awarded where the breach did not result to death, but
merely injuries.
Facts:
Antonio Roque rode a Philippine Rabbit Bus bound for Pampanga. This bus was driven by
Celestino Soliman. All along the way, the speed of the bus was 60km/h. It then started to
cross a bridge.
To avoid a truck coming from the opposite direction, the driver swerved the bus to the right,
which however, sideswiped the railing of the bridge. As a result, Roque injured his right arm
when the window grills got detached due to the impact.
o In its defense, the defendant CC alleges that #1) the bus was not running at a
high speed (10km/h) and #2) Roque was injured because he let his arm protrude
out of the window and that‘s why it was hit. When asked why, Roque answered
that he fell asleep.
Issue: Was CC liable? YES #1) unreasonable speed #2) cause of injury was the impact due to
the overspeeding
#1) The bus was running at an unreasonable speed when it crossed the bridge. If it was
true that the speed of the bus was only 10kms, then sideswiping the railing at such a low
speed would not result into substantial damage to the bus. However, the evidence shows
that the bus was severely damaged (iron grills were detached)
#2) Roque was not injured because he let his right arm protrude outside the grills. It was
the high speed of the bus that caused damage to the grills, and in turn, injured Roque. The
part of the bus where Roque was sitting was the part that directly hit the railing.
As can be seen, the CC did not exercise ED. Hence, it is liable. However, no moral
damages may be awarded.
RQ:
What is the name of the bridge? Sulipan Bridge in Apalit, Pampanga.
15. BATANGAS TRANSPORTATION V. CAGUIMBAL (BIÑAN BUS HIT BTCO BUS
WHICH WAS NOT PARKED PROPERLY)
Doctrine:
In an action based on a contract of carriage, the court does not have to make an express
finding of fault or negligence on the part of the carrier in order to hold it liable.
When a passenger dies or is injured while under the custody of the CC, it is incumbent
upon the carrier to prove that it exercised extraordinary diligence to overthrow the
presumption of negligence on its part.
Where a passenger of a CC is injured as a result of the negligence of another CC, the
former is still liable to the passenger if it created a hazardous situation for its passenger.
Facts:
Pedro Caguimbal was a paying passenger of a bus owned by Batangas Transportation
Company (BTCO)
When the BTCO bus was slowing down to a halt in order to drop off a passenger, a bus
owned by Biñan Transportation (Biñan), which was going really fast from the opposite
direction, tried to overtake the Calesa in front of it and in turn, hit the BTCO bus and the
calesa. Point of impact: left side of the BTCO bus, let front corner of its body. As a
result, Caguimbal died.
Thus, Caguimbal‘s heirs sued BTCO. BTCO in turn, filed a 3rd party complaint against
Biñan and its driver. Subsequently, Biñan and its driver were also impleaded by
Caguimbal‘s heirs.
The TC held that only Biñan was liable. However, CA reversed and held that BTCO was
solidarily liable with Biñan and its driver.
Issue: Is BTCO liable for damages? Yes. Improperly parked.
The SC found that BTCO was also liable because its driver, before dropping off its
passenger, did not completely drive the bus to the shoulder as part of it was still on the
road. He should have completely parked the bus on the shoulder. He should have seen the
calesa and must have known that the Biñan bus would try to overtake it.
It is true that the driver of the Biñan bus was also reckless in overtaking, but it was BTCO
which had the obligation to Caguimbal to exercise extraordinary diligence in transporting
him. This includes avoiding situations which are hazardous to the passengers.
It was BTCO‘s responsibility and not Biñan‘s. Therefore, it is solidarily liable with Biñan.
RQ:
Plate # of BTCO bus? TPU-507 driven by Tomas Perez
Plate # of Biñan bus? TPU-820 driven by Marciano Ilagan
Owner of Calesa? Benito Makahiya his horse died
16. BACARRO V. CASTAÑO (JEEP RACED WITH A TRUCK AND IT FELL INTO A DITCH)
Doctrine:
It cannot be contended by the CC that another vehicle was the proximate cause of the
accident as long as it can be shown that the CC failed to exercise extraordinary diligence in
20
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
transporting its passengers safely. Thus, once a passenger dies or is injured in the course
of travel, the carrier and the driver are presumed to be at fault.
Facts:
Gerundo Castaño boarded a jeep driven by Montefalcon that was bound for Misamis
Occidental. The jeep was filled to capacity, with 12 passengers in all.
While approaching the Sumasap bridge, there was a cargo truck coming from behind that
blew its horn for right of way. The jeep gave way but did not change speed (the jeep raced
with the truck for 20 meters) The truck sideswiped the jeep so the driver lost control and
the jeep fell into a ditch. As a result, Castaño‘s left leg got broken. He then sued
Montefalcon and the owner of the jeep.
In its defense, the jeep owner and driver allege that the truck was the one that was reckless
because it sideswiped the jeep while it was overtaking.
Issue: Is the CC (jeep) liable? YES
Montefalcon, the driver, did not slow down but instead continued to race with the truck for
20 meters. He even shouted at the driver of the truck. If the driver slowed down, there
would have been no contact.
Further, it is contended that the proximate cause of the accident was the negligence of the
truck driver. However, the fact is that there was a contract of carriage between the owner
and Castano which required ED on the owner‘s part.
Clearly, Montefalcon failed to exercise ED in transporting the passengers by racing with the
truck and not slowing down. CC liable. CC lost.
RQ:
Bridge? Sumasap Bridge
Truck details? Owned by Te Tiong Alias Chinggim, Driven by Nicostrato Digal.
Injury? Right leg shorter by 1.5 inches because of the accident
17. BRINAS V. PEOPLE (CONDUCTOR’S PREMATURE ANNOUNCEMENT OF STOP)
Doctrines:
It is criminal negligence on the conductor‘s part to announce the next stop when it is still a
full 3 minutes away.
There is no error in awarding civil damages (death indemnity) against the conductor in a
criminal case where a separate civil action is filed against the employer by the heir of the
deceased train passengers.
Facts:
Juanito Gesmundo bought a train ticket in Quezon for his 55 year old mother Martina Bool
and her 3 year old daughter Emelita. The train was bound for Barrio Lusacan. Upon
approaching Barrio Lagalag, the train slowed down and the conductor (Briñas) shouted
―Lusacan, Lusacan‖
Thereupon, Bool and Emelita got ready to alight from the train. When they were near the
door, the train suddenly picked up speed and they were not seen anymore. They fell from
the train and were run over by it.
The TC convicted Briñas for double homicide through reckless imprudence but acquitted
the engineman (Millan) and the assistant conductor (Buencamino) Briñas was ordered to
pay death indemnity to the heirs of the deceased.
o Note: during the pendency of the criminal case, a separate civil action was filed
by Gesmundo against Manila Railroad company
Issue:
1) Is criminally liable Briñas liable? YES
2) Was the judgment awarding indemnity errenous because a separate civil action was already
filed? NO
1) Criminal liability of Brinas
It was negligence on the part of the conductor to announce the next flag stop when the stop
was still a full three minutes ahead. In this case, Briñas‘ announcement was too early and
wrong. It was made while the train was still in Bario Lagalag.
It can be seen therefore that the proximate cause of the death of the victims was the
announcement. If it was not for the announcement, the victims would not have prepared to
alight near the exit and they would not have fallen when the train suddenly picked up
regular speed.
2) Difference of civil indemnity award in crim case v. separate civil action against employer
Briñas further argues that the TC had no more jurisdiction to award civil liability in its
conviction as a separate civil action had already been filed.
SC held that the source of the obligation in the civil case is contractual (breach of contract)
and not a crime. Furthermore, the action is against Manila Railroad, not Briñas. Culpa
contractual and culpa criminal are 2 distinct sources of obligation.
Thus the TC acted within its jurisdiction when despite the filing of the separate civil action
against manila railroad, it still awarded death indemnity in the judgment of conviction.
The indemnity for loss of earning capacity, moral damages, exemplary damages, atty‘s
fees and interests are recoverable separately from the death indemnity. The indemnity
arising from the fact of death due to a crime is fixed whereas the others are still subject to
the determination of the court based on the evidence presented.
Judgment: award of death indemnity increased to 12k each for Bool and Emelita.
Subsidiary imprisonment deleted.
RQ:
Whose head was crushed? The baby‘s
Was the grandmother‘s body found whole or severed? Severed
Was a ticket found at the place where the body was found? Yes. Pocket of grandmother
21
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
18. BATANGAS LAGUNA TAYABAS BUS CO. V. IAC (NEGLIGENT OVERTAKING OF
A FORD FIERA)
Doctrine:
In an action based on a contract of carriage, the court need not make an express finding of
fault or negligence on the part of the carrier to hold it liable to the passenger. This is
because the CC is presumed to be negligent for the death/injuries suffered by its
passengers.
Art 2176 is a viable remedy in going after the driver of the CC, if it can be shown that he
was negligent.
Facts:
Bus #1046 of Batangas Laguna Tayabas (BLTB) driven by Pon and Bus #404 of
Superlines driven by Dasco collided in Tayabas Quezon. This collision resulted to the death
of Rosales, Pamfilo, Neri and injuries to Rosales and Sales. They were all passengers of
the BLTB bus.
o The accident was due to the faulty overtake of the BLTB bus.
Thus, the heirs of the victims instituted separate cases against BLTB and Superlines (and
their drivers)
The defendants denied liability, interposed counterclaims and crossclaims against each
other. The TC exonerated Superlines and Dasco and attributed sole responsibility to BLTB.
CA affirmed.
BLTB appealed the decision, alleging that the IAC (CA) erred in adjudging that the actions
of the victims were based on culpa contractual (breach of contract) It contends that
Superlines should also be liable because the action that was filed was based on culpa
aquliana or tort and it was against all the defendants (Superlines included)
Issue: What was the basis of BLTB‘s liability? Contract of carriage.
BLTB and the driver‘s liability were based on both breach of contract and tort albeit
separately. The IAC found that BLTB‘s driver was negligent in #1) overtaking a Ford Fiera
as he was negotiating a bend and #2) despite the fact that there was a continuous yellow
line (no overtaking) BLTB‘s driver thus failed to act with the requisite diligence.
As to liability, IAC found that the driver is primarily liable under Art 2176 (tort) while the
liability of BLTB is also direct and is under its breach of the contract of carriage. Because
BLTB failed to rebut the presumption of negligence by a showing of extraordinary diligence,
it is liable.
19. CALALAS V. CA (EXTENSION SEAT, CONTRACT OF CARRIAGE V. TORT)
Doctrine:
In QD, the negligence of fault should be clearly established because it is the basis of the
action
o The principle of proximate cause is only applicable in tort cases and is not
available in breach of contract cases.
In breach of contract, the action can be prosecuted merely by proving the existence of the
contract and the fact that the CC (obligor) failed to transport his passenger safely to his
destination
Facts:
Eliza Sunga took a passenger jeepney owned and operated by Calalas. Sunga was given
an ‗exension seat‘, a wooden stool inside the jeep placed near its rear. This is because the
jeep was already filled to capacity with 24 passengers.
On the way to Poblacion Sibulan, the jeep stopped to let a passenger off. Sunga gave way
to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Verena and
owned by Salva, bumped the left rear portion of the jeepney. As a result, Sunga was
injured.
Thus, Sunga filed a complaint for damages against Calalas, based on a violation of the
contract of carriage. Calalas then filed a 3rd party complaint against Salva. The TC held
Salva liable. It took cognizance of a tort case filed by Calalas against Salva and Verena in
which Salva was held to be liable as the proximate cause of the accident
CA reversed on the ground that Sunga‘s cause of action was based on contract of carriage,
not quasi-delict. Calalas was held to be solely liable.
Issue: Is Calalas liable? Yes
1) Different Causes of Action
Sunga is not bound by the ruling in the tort case filed by calalas. The principle of res
judicata does not apply to Sunga. The issue in this case is w/n Calalas is liable under the
contrat of carriage. This is because QD and breach of contract rest on two different
foundations.
o Moreover, the finding that Salva‘s truck was the proximate cause is not
applicable in this case because the action is anchored on breach of contract.
2) Negligence of Calalas
In the case at bar, upon the happening of the accident, a presumption of negligence on the
part of Calalas arose, and it became the duty of Calalas to rebut that presumption.
Several factors show that Calalas did not exercise ED in transporting his passengers.
These are the following:
o #1) jeep was improperly parked as its rear was exposed from the shoulder
o #2) jeep took more passengers than allowed
o #3) taking of extension seat is not an implied assumption of risk
Hence, Calalas is liable.
3) Moral damages
22
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
CA erred in awarding moral damages. As a general rule, moral damages are not
recoverable in actions for damages based on breach of contract for it is not enumerated
under Art 2219. As an exception, moral damages are recoverable:
o #1) in cases in which the mishap results in the death of the passenger (Art
1763 Art 2206
o #2) in cases where CC is guilty of fraud or bad faith
In this case, there is no showing that there was bad faith. The fact that it was the driver of
the Isuzu truck who helped Sunga get to the hospital does not imply bad faith.
RQ:
education of Sunga? College freshman majoring in physical education in siliman
did she shift after the injury? Yes
injury? Fracture on the distal 3rd of the left tibia-fibula 3 months crutch
20. M ALLARI V. CA (OVERTAKE ACCIDENT: LEFT FRONT PORTION OF VAN HIT
LEFT REAR PORTION OF JEEP)
Doctrine:
A driver abandoning his proper lane for purposes of overtaking another vehicle has the duty
to see that the road is clear.
In an action based on a contract of carriage, the court need not make an express finding of
fault or negligence on the part of the carrier in order to hold it responsible to pay the
damages sought by the passenger. By contract of carriage, the carrier assumes the
express obligation to transport the passenger to his destination safely and observe
extraordinary diligence with a due regard for all the circumstances, and any injury that
might be suffered by the passenger is right away attributable to the fault or negligence of
the carrier. This is an exception to the general rule that negligence must be proved, and it is
therefore incumbent upon the carrier to prove that it has exercised extraordinary diligence
as prescribed in Articles 1733 and 1755 of the Civil Code
Facts:
At around 5am, a passenger jeep driven by Mallari Jr, owned by Mallari Sr., collided with
the delivery van of Bulletin Publishing along the national Highway in Bgy. San Pablo
Bataan.
Mallari Jr. testified that he overtook a Blue Fiera while negotiating a curve. This resulted in
the collision. The impact caused the jeepney to fall and this resulted to injuries to the
passengers. Israel Reyes, a passenger of the jeep, died due to the injuries
o Point of impact: left rear portion of jeep and left front side of van
Thus, his widow, Claudia, filed a complaint against the Mallaris, Bulletin, its driver (Angeles)
Claudia alleges that both drivers were negligent. TC found that the proximate cause was
Angeles considering the fact that the left front portion of the delivery truck hit the left rear
portion of the jeep.
CA reversed and held that Mallari, Jr. was responsible because of his faulty overtake.
Mallari Jr and Sr. solidarily held liable for loss of earning capacity, death indemnity and
atty‘s fees.
Issue: Who is liable? Mallari #1) illegal overtaking
Evidence shows that Mallari indeed tried to overtake while negotiating a curve. His
testimony shows that he saw the van coming right at him but he miscalculated the speed..
The act of overtaking was clearly against traffic rules and regulations.
The rule is settled that a driver abandoning his proper lane for purposes of overtaking
another vehicle has the duty to see that the road is clear. In this case, Mallari still overtook
despite the oncoming van. Clearly, his negligence was proximate cause of the accident.
It follows that Mallari Sr., as the owner, is liable for the breach of the contract of carriage. In
an action for breach of contract of carriage, the court does not have to make an express
finding of fault on the part of the carrier. CA decision affirmed.
RQ:
Specifics of the accident? point of collision left rear portion of the jeep and the left front side
of the delivery van. The 2 right wheels of the van were on the right shoulder. The jeepney fell on
its left side
21. ANURAN V. BUÑO (IMPROPERLY PARKED JEEP)
Doctrine:
The principle of last clear chance is inapplicable as it only applies in a suit between owners
and drivers of 2 colliding vehicles. It does not apply where a passenger demands
responsibility from the carrier to enforce its contractual obligation
Facts:
At noon of January 12, a passenger jeep was parked on the road to Taal, Batangas. It was
parked so that one of the passengers could alight. However, the jeep was parked in such a
way that ½ of its width was on the road and the other half on the shoulder.
5 minutes later, a speeding water truck, owned by Maligaya and Aro, bumped the jeep,
causing it to turn turtle into a ditch.
Thus, 3 passengers died and 2 suffered injuries. The driver and owners of both the jeep
and the truck were sued by the victims (Anuran etc). The TC, however, absolved the driver
(Buño) and owner of the jeep (Pedro Gahol and Luisa Alcantara)
Thus, the victims appealed, alleging that the owner/driver of the jeep should also be held
liable.
Issue: Should the owner and driver of the jeep be held liable? YES #1) improper parking #2)
overloaded
The obligation of the CC to transport its passengers safely requires utmost diligence. The
driver was at fault because he parked the jeep improperly. Therefore, because of the
driver‘s negligence, the CC is liable.
The principle of last clear chance is inapplicable as it only applies in a suit between owners
and drivers of 2 colliding vehicles. It does not apply where a passenger demands
responsibility from the carrier to enforce its contractual obligation.
RQ:
Plate of jeep? TPU-13548
Driver of jeep? Pepito Buño
23
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Plate of water truck? T-17526

# of passengers? 14 excluding the driver or 16 capacity: 11

24
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 6: COMMON CARRIERS; CARRIAGE OF PASSENGERS
1. DEL PRADO V. MRR (MAN TRIED TO BOARD THE TRAIN WHILE IT WAS MOVING;
AMPUTATED RIGHT FOOT)
Doctrine:
It is the carrier‘s duty not to do anything that would increase the peril of a passenger
attempting to board its vehicle.
Once a person places his left foot on the platform of a CC and even before he secures his
position, that person is already considered a passenger and the duty of ED of the CC
begins.
Facts:
In the morning of Nov 18, 1925, Florenciano, as motorman of Manila Electric Company
(MEC), was in charge of car #74 running from east to west on R. Hidalgo Street.
Del Prado, coming from the left, ran and jumped inside the train and signaled to the
motorman that he wanted to board. The motorman slowed down a little. When Del Prado
placed his left foot on the platform and before he secured his position, the motorman
suddenly sped up.
As a result, he fell to the ground then his right foot was crushed by the moving car. It had to
be amputated. Thus, he sued MEC for damages.
MEC argues that it used ordinary diligence in selection and supervision of its employees
and that del Prado was guilty of contributory negligence.
Issue: Is MEC liable? YES
Although the motorman of the car was not bound to stop to let del Prado on, it was his duty
to not do anything that would increase del Prado‘s peril as he was attempting to board the
car. He breached his duty when he suddenly sped up even if del Prado was not yet fully
secured. Thus, he is negligent.
#1) defense of selection and supervision: The SC further held that a contract of carriage
existed between del Prado and MEC and this was breached because of the motorman‘s
negligence. Once del Prado stepped on the train, the duty of MEC of ED began. Therefore,
the defense of diligence in selection and supervision cannot be used (because that defense
is available only under Art 2180)
#2) As to contributory negligence: the contributory negligence of del Prado was not the
proximate cause of the accident so it should only serve to mitigate MEC‘s liability (under Art
1762) as the PC of the injury was the premature speeding up of the motorman.
MEC liable, but award reduced due to contributory negligence.
Notes:
Was the foot replaced? Yes. Artificial
Other specifics? Del prado grasped the front handpost, which was to the left side of the
motorman. The motorman can‘t make the excuse that he didn‘t see del Prado
2. DANGWA TRANSPORTATION V. CA (M AN FELL FROM THE BUS WHILE HE WAS
CLOSING HIS UMBRELLA AND HE GOT RAN OVER)
Doctrine:
When the bus is not in motion there is no necessity for a person who wants to ride the
same to signal his intention to board. A public utility bus, once it stops, is in effect
making a continuous offer to bus riders. Hence, it becomes the duty of the driver and
the conductor, every time the bus stops, to not do anything that would increase the peril to
a passenger while he is attempting to board the bus
It is the duty of common carriers of passengers, including common carriers by railroad train,
streetcar, or motorbus, to stop their vehicles for a reasonable length of time in order to
afford passengers an opportunity to board and enter, and they are liable for injuries
suffered by boarding passengers resulting from the sudden starting up or jerking of their
conveyances while they are doing so.
It is not negligent per se to try to board a vehicle which is moving slowly. It is a matter of
common experience.
The victim, by stepping and standing on the platform of the bus, is already considered a
passenger and is entitled all the rights and protection pertaining to such a contractual
relation. Hence, it has been held that the duty which the carrier passengers owes to its
patrons extends to persons boarding cars as well as to those alighting therefrom
Facts:
The heirs of Cudiamat filed a complaint for damages against Dangwa allegedly due to its
negligence that then led to the death of Pedrito Cudiamat.
In the RTC, Cudiamat was found to be negligent in trying to board a moving bus owned by
Dangwa Transportation without even telling the driver/conductor that he wanted to board.
The CC was also found to be negligent for leaving the door open while it was moving
In the CA, however, it was found that that the bus was at full stop when Cudiamat tried to
board the bus. The accident occurred when Cudiamat was closing his umbrella on the
platform on the bus and the bus suddenly jerked because the driver accelerated the
bus even before Cudiamat was seated. Cudiamat fell and got ran over by the bus. He
eventually died.
The CA found that it was the driver‘s negligence that caused the accident because he did
not wait for Cudiamat to take a seat. Furthermore, the platform was slippery and wet at that
time.
Thus, Dangwa Transportation went to the SC assailing the CA findings alleging that #1)
the bus was at initially at full stop and Cudiamat tried to board while it was moving #2)
Cudiamat was guilty of contributory negligence #3) no contract of carriage
Issue: Is the CC liable? YES
#1) As to the bus being in full stop: Yes, the bus was really in full stop. When the bus is
not in motion there is no necessity for a person who wants to ride the same to signal his
intention to board. A public utility bus, once it stops, is in effect making a continuous
offer to bus riders. Hence, it becomes the duty of the driver and the conductor, every time
25
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
the bus stops, to not do anything that would increase the peril to a passenger while he is
attempting to board the bus. The premature acceleration of the bus in this case was a
breach of such duty.
#2) As to contributory negligence: Even assuming the bus was moving, Cudiamat‘s act
cannot be considered negligent. It is not negligent per se to try to board a vehicle which is
moving slowly. It is a matter of common experience. The driver should not have suddenly
jerked the bus.
#3) As to protection under contract of carriage: Cudiamat, by stepping on the platform
of the bus, is already considered a passenger and can claim for breach of the contract of
carriage. The duty to exercise ED already began.
CC lost. Liable under contract of carriage.
Notes
Other things that show negligence: When Cudiamat was ran over, the driver did not
immediately bring him to the hospital. It allowed a passenger to alight and even delivered a
refrigerator.
Where was the body found? At the rear of the bus.
Where did the incident happen? Between bunkhouse 53 and 54 at Marivic, Sapid, Mankayan,
Benguet
Name of driver? Theodore Lardizabal
3. LA M ALLORCA V. CA (LITTLE GIRL RAN OVER WHILE FATHER WAS GETTING A
BAG FROM THE BUS)
Doctrine:
The relation of carrier and passenger does not necessarily cease where the passenger,
after alighting from the car, aids the carrier's servant or employee in removing his baggage
from the car
The relation of carrier and passenger does not cease at the moment the passenger alights
from the carrier's vehicle at a place selected by the carrier at the point of destination, but
continues until the passenger has had a reasonable time or a reasonable opportunity to
leave the carrier's premises
Though, QD and breach of contract are incompatible, they can be alleged alternatively. The
defense of ordinary diligence in s&s is available if Art 2180 is used against carrier while
such defense is not available in breach of contract.
Facts:
Mariano Beltran boarded a Pambusco bus together with his wife and daughters at San
Fernando Pampanga. They were carrying four bags. The conductor of the bus issued 3
tickets covering the full fares of the family. No tickets were issued for minors Raquel and Fe
because of their height.
After an hour, the Beltran family got off. They went to the pedestrian lane. However,
Mariano forgot one of his bags so he went back. Raquel followed him. Beltran was standing
on the running board while waiting for his bag. The driver left the motor running.
Unfortunately, Raquel was found dead once Mariano got his bag and alighted from the bus.
Thus, Beltran sued La Mallorca
In its defense, La Mallorca claimed that there was no breach of contract because Raquel
was no longer a passenger when she was run over. However, it was still found to be liable
for quasi delict.
Issue: Is La Mallorca liable for the death of the child? YES
#1) As to existence of breach of contract: There was a breach of contract because the
relation of carrier and passenger lasts until the passenger has had a reasonable
opportunity to leave the carrier‘s premises. In the present case, the driver and conductor
did not exercise utmost diligence while Mario was getting his bag
o First, the engine was left running
o Second, bus driver ran the bus even if the unloading was not yet finished
The presence of Raquel near the bus was not unreasonable and
hence she is still considered a passenger of the carrier. Hence, La
Mallorca breached its contract of carriage when it failed to exercise
utmost diligence.
#2) As to liability or QD: even assuming there was no contract, La Mallorca also liable
under Art 2180 (vicarious liability for acts of its employees) because of the alternative
allegation of negligence by Beltran.
o Though, QD and breach of contract are incompatible, they can be alleged
alternatively. Under Art 2180, La Mallorca was entitled to a defense of ordinary
diligence and selection and supervision. However, it failed to show any evidence
of such.
CC lost. This is because the CC still had the duty to exercise ED with regard to passengers
who still have a justified reason to stay in its premises.
Notes:
conductor is half brother of Mariano
bag was left under one of the seats near the door
time of accident: around noontime
plate number of the bus TPU No. 757
Raquel was 4 ½ years old
4. ABOITIZ SHIPPING V. CA (VIANA WAS HIT BY A CRANE)
Doctrine:
The rule is that the relation of carrier and passenger continues until the passenger has
been landed at the port of destination and has left the vessel owner's dock or premises.
Once created, the relationship will not ordinarily terminate until the passenger has, after
reaching his destination, safely alighted from the carrier's conveyance or had a reasonable
opportunity to leave the carrier's premises.
All persons who remain on the premises a reasonable time after leaving the conveyance
are to be deemed passengers, and what is a reasonable time or a reasonable delay within
this rule is to be determined from all the circumstances, and includes a reasonable time to
see after his baggage and prepare for his departure.
o The carrier-passenger relationship is not terminated merely by the fact that the
person transported has been carried to his destination if, for example, such
person remains in the carrier's premises to claim his baggage.
The test to determine w/n a person is still a passenger of the CC: Was his presence in the
CC‘s premises still justified/reasonable? If yes, then he is still considered a passenger.
Facts:
26
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Viana boarded M/V Antonia owned by Aboitiz at the port in Occidental Mindoro. When it
arrived in manila, the passengers disembarked through a gangplank. Viana did not use the
gangplank and instead alighted from the third deck.
One hour after all the passengers disembarked, a crane operated by Pioneer Stevedoring
was used to unload the cargo from the vessel. At this point, Viana went back to the vessel
and while he was pointing to the crew of the crane where his cargo was, the crane hit him
and pinned him against the vessel. He died 3 days later. Thus, Viana‘s heirs sued Aboitiz.
In turn, Aboitiz sued Pioneer. Aboitiz was held to be liable and Pioneer was eventually held
to be free of any liability.
Issue: Is Aboitiz liable? YES, reasonable cause to justify Viana‘s presence. Hence duty of ED
remained on the part of the CC (Aboitiz)
#1) Was he still a passenger? In the case at bar, even though 1 hour had elapsed before
the accident, there existed a reasonable cause to justify Viana‘s presence on or near
Aboitiz‘s vessel. This is because by nature of Aboitiz as a shipper, the passengers are
given more time to disembark. A passenger usually needs an hour to disembark and claim
his baggage.
o Therefore, Viana was still considered a passenger when the accident occurred
as he was still claiming his baggage.
#2) Was Aboitiz negligent? The evidence did not show that there was a cordon of drums
around the perimeter of the crane. The presence of warning signs were also not proven.
Thus, Abotitiz was negligent in not sufficiently warning its passengers that it was dangerous
to enter the baggage unloading area. Hence, it breached its contract of carriage by failing
to exercise ED.
Aboitiz lost. It‘s solely liable.
Notes:
Pioneer was not held to be liable because it was able to show that it exercised sufficient
diligence. It is not bound to exercise ED like Aboitiz.
La Mallorca case was cited and it was applied in this case also. The test of reasonableness was
used.
Crane operator? Alejo Figueroa
5. PAL V. CA (FLIGHT GOT DIVERTED, PASSENGER GOT STUCK, HE WAS NOT
CARED FOR AND HIS BAGGAGE WAS LOST)
Doctrine:
In cases of diversion of flights, an air carrier would necessarily would still have to exercise
extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded
passengers until they have reached their final destination
Facts:
In 1976, Pedro Zapatos was a passenger of a PAL flight from Cebu to Ozamiz. The routing
was Cebu-Ozamiz-Cotabato. 15 minutes before landing, the pilot was told to proceed
directly to Cotabato instead due to heavy rains.
PAL informed the passengers that a flight would stop over to Cebu but there were only 6
seats available and the basis of the priority would be the check-in sequence. Zapatos,
despite asking for priority, was not given a seat because he was 9 th. Zapata still tried to
stop the departure of this flight as his personal belongings, including a camera that he was
supposed to deliver.
As a consolation, he was issued a free ticket to Iligan. Zapatos was not given
transportation, food or accommodation for his stay in Cotabato City. He never recovered
his belongings.
Zapatos then sued PAL for damages. PAL argues that it did not have any duty to take care
of Zapatos as he got stuck due to a fortuitous event.
Issue: Is PAL liable for damages? YES
#1) Negligence of PAL: PAL was negligent in caring for its stranded passenger. It was
shown by evidence that PAL indeed did not even offer transportation or accommodation to
Zapatos when he got stranded.
#2) As regards its duty to take care of its passengers: Even if the flight was diverted
due to a fortuitous event, this did not necessarily mean that PAL did not have the duty to
attend to Zapatos. This is because such fortuitous event did not terminate PAL’s
contract with Zapatos as his stay in the premises was still justified and reasonable.
He was still considered a passenger. Being in the business of air carriage, PAL is deemed
equipped to deal with situations as in this case.
o PAL necessarily would still have the duty to exercise extraordinary
diligence in safeguarding the comfort, convenience and safety of its
stranded passengers until they have reached their final destination.
On this score, PAL grossly failed considering the then ongoing battle
between government forces and Muslim rebels in Cotabato City
and the fact that the private respondent was a stranger to the place.
#3) However, as to the failure of Zapatos to be accommodated for the stop-over at Cebu,
PAL is not liable. This is because Zapatos‘ request to be given priority was unreasonable
given the circumstances. In fact, he had to stay longer at the Cotabato airport because he
kept on arguing with the PAL personnel
PAL won but damages awarded reduced.
Notes:
Zapatos‘ testimony that he had a scheduled business "transaction of shark liver oil supposedly
to have been consummated on August 3, 1975 in the morning" and that "since (private
respondent) was out for nearly two weeks I missed to buy about 10 barrels of shark liver
oil," are purely speculative.
Flight that got diverted? Flight 477
Flight that he wanted to get on? Flight 560, coming from Manila
27
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
6. JAPAN AIRLINES V. CA (STRANDED IN JAPAN BECAUSE OF MT. PINATUBO)
Doctrine:
If the fortuitous event (that prevented consummation of transportation contract) was
accompanied by neglect and malfeasance by the carrier's employees, an action for
damages against the carrier is permissible
Petitioner JAL reneged on its obligation to look after the comfort and convenience of its
passengers when it declassified private respondents from "transit passengers" to "new
passengers" as a result of which private respondents were obliged to make the necessary
arrangements themselves for the next flight to Manila
Adverse weather conditions or extreme climatic changes are some of the perils involved in
air travel, the consequences of which the passenger must assume or expect. After all,
common carriers are not the insurer of all risks.
Facts:
On June 1991, Miranda boarded JAL Flight JL 001 in San Francisco bound for Manila.
Likewise, on the same day, Agana and Francisco left LA for Manila via flight JL 061. As an
incentive, they were to make an overnight stopover at Narita Japan at the airlines‘ expense.
Upon arrival in Narita, the passengers were billeted at Hotel Nikko Narita for the night. They
were unable to go home to Manila because of the Mt. Pinatubo eruption. Because of this
NAIA had to be indefinitely closed.
To accommodate the passengers, JAL rebooked all the Manila-bound passengers to a
flight to Manila for June 16, 1991. Hotel expenses were also paid for. However, the flight
was still cancelled. JAL then informed the passengers that they would not pay for the hotels
anymore.
Thus, the passengers (respondents) had to pay for their expenses from their own money
from June 16-June 21. When they got home, the respondents sued JAL for damages,
asserting that JAL failed its duty to provide care and comfort for its stranded passengers by
refusing to pay for their expenses from June 16-June 21.
The CA held JAL liable for moral and exemplary damages and applied PAL v. CA.
Issue: Is JAL liable for damages? Yes. But JAL was not obliged to pay for their expenses until
June 21.
#1) Why PAL v. CA not applied: The SC held that reliance on the PAL case is misplaced.
This is because in the PAL case, although there was a fortuitous event that caused the
diversion, it was accompanied by neglect on the part of PAL‘s employees. In this case,
there was no neglect on the part of JAL as it paid for accommodations on the night of the
delayed flight.
#2) Liability of JAL: JAL however, is still liable because it had the duty to make necessary
arrangements to transport the stranded passengers on their first available flight to Manila.
JAL reneged its obligation to look after the comfort and convenience of the passengers
when it declassified them from ―transit passengers‖ to ―new passengers‖ as a result of
which, the respondents were placed on the waiting list and had to make arrangements for
their flight to Manila themselves.
Thus, nominal damages are awarded. Nominal damages are awarded for a technical
violation of a right, and not for the purpose of indemnity.
Technically, JAL won because moral and exemplary damages were deleted.
7. BACHELOR EXPRESS V. CA (SOLDIER WAS STABBED IN THE BUS, RESULTING
STAMPEDE KILLED 2 MEN)
Doctrine:
In order that a carrier may be relieved from liability in case of FE, it is not enough that the
accident was caused by such FE. The CC must still prove that it was not negligent in
causing the injuries resulting from such FE. In other words, it must be exclusively without
human intervention.
Requisites of defense of FE
1. Cause must be independent of the human will
2. Cause was impossible to foresee and if it can be foreseen, must be impossible to
avoid
3. Cause must render it impossible for the carrier to fulfill his obligation in a normal
manner
4. Carrier must be free from any participation
Article 1763. A common carrier is responsible for injuries suffered by a passenger on
account of the wilful acts or negligence of other passengers or of strangers, if the common
carrier's employees through the exercise of the diligence of a good father of a family could
have prevented or stopped the act or omission. In this case, this provision was not
applied because the act/omission could not have been stopped since it was a fortuitous
event.
Facts:
A bus owned by Bachelor Express (#800) was on its to way to Cagayan de Oro from
Davao. During the trip, a passenger at the rear portion ran amuck and stabbed a soldier
which caused panic. When the bus stopped, Beter was found dead and Rautraut died
shortly after. They allegedly died as a result of the stampede.
Thus, the heirs of Beter and Rautraut sued Bachelor Express, its owner Yasay and the
driver Rivera. Bachelor Express primarily argues that the #1) proximate cause of the deaths
was the act of the passenger in stabbing the soldier and #2) that it was a fortuitous event
Issue: Is Bachelor Express liable? YES
#1) What was the PC? The PC was the passenger who stabbed the soldier. This incident
led to the stampede.
#2) Fortuitous event: The sudden act of the passenger in stabbing the soldier comes
within the ambit of a fortuitous event. However, in order that a carrier may be relieved
from liability in case of FE, it is not enough that the accident was caused by such FE.
The CC must still prove that it was not negligent in causing the injuries resulting
from such FE. In other words, it must be exclusively without human intervention.
#3) Negligence of CC: SC held that these were the instances that showed negligence
o A) At the height of the commotion, however, the bus driver did not immediately
stop the bus. In fact, it was estimated to still be running at 30-40 miles/48-65km
at the time of the commotion. It is logical to assume that the victims then fell off
the bus when the door gave way due to the stampede.
o B) The bus was not properly equipped with doors in accordance with law
Therefore, the deaths of the two passengers were not exclusively due to a fortuitous event.
Bachelor express was negligent and thus, it breached its contract of carriage.
28
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
8. FORTUNE EXPRESS V. CA (M ARANAOS HI-JACKED AND BURNED THE BUS)
Doctrine:
A common carrier can be held liable for failing to prevent a hijacking by frisking passengers
and inspecting their baggages.
Article 1763. A common carrier is responsible for injuries suffered by a passenger on
account of the wilful acts or negligence of other passengers or of strangers, if the common
carrier's employees through the exercise of the diligence of a good father of a family could
have prevented or stopped the act or omission. In this case, employees could have
prevented the hi-jacking if it exercised ordinary diligence in inspecting the Maranaos’ bags
In Pilapil v. Court of Appeals, it was held that a common carrier is not liable for failing to
install window grills on its buses to protect the passengers from injuries caused by rocks
hurled at the bus by lawless element
In De Guzman v. Court of Appeals, it was ruled that a common carriers is not responsible
for goods lost as a result of a robbery which is attended by grave or irresistible threat,
violence, or force
o Cited cases not applicable for defense of FE to prosper because in this case the
hi-jacking was foreseeable
Facts;
A bus of Fortune Express figured in an accident with a jeepney, owned by a Maranao which
in turn caused the deaths of 2 other Maranaos. It was discovered by the PC thereafter that
certain Maranaos were planning to take revenge on Fortune Express by burning 5 of its
buses. This was made known to the operations manager of Fortune Express
4 days later, 3 armed Maranaos pretending to be passengers seized Fortune‘s bus and
shot the driver on the arm. The passengers were made to exit the bus and then the hi-
jackers started pouring gasoline in the bus.
However, Atty Caorong went back to the bus to retrieve something from the overhead rack.
Atty Caorong was shot and the bus was eventually burned. Atty. Caorong was pulled out of
the bus but he eventually died.
Thus, his heirs sued Fortune Express for breach of contract of carriage. The TC dismissed
the complaint. The CA eventually held Fortune Express liable for negligence because it
failed to take the proper precautions. Fortune argues #1) it was not negligent as it did not
have the duty to assign security guards and #2) the hi-jacking was a fortuitous event
Issue: Is Fortune Express liable? YES #1) negligent in failing to prevent #2) not a fortuitous
event #3) no contributory negligence
#1) Negligence
Despite warning by the PC that there was a plot against Fortune Express, it did not do
anything to protect the safety of its passengers. The employees of Fortune Express were
negligent as it let 3 passengers carry large amounts of gasoline in the bus. They should
have frisked the passengers and inspected their bags, preferably with non-intrusive
gadgets.
It follows then that the employees failed to prevent the hi-jacking because they did not
exercise the diligence of a good father of a family.
#2) Fortuitous event
The seizure of the bus is not a FE. This is because the PC informed the manager
beforehand of the threats to attack the bus. It should have taken special precautions to
prepare for such eventuality. Thus, the event can be properly characterized as foreseeable
and avoidable. Hence, it is not a fortuitous event.
#3) Contributory Negligence
Atty. Caorong was not guilty of contributory negligence. He was in fact allowed to retrieve
his bag because the beef of the Maranaos were with the bus company. He was only shot
because he pleaded for the driver‘s life. He was being a good Samaritan.
9. GILLACO V. MRR (GUARD OF RAILROAD COMPANY SHOT A PASSENGER)
Doctrine:
The only good reason for making the carrier responsible for the misconduct of the servant
perpetrated in his own interest, and not in that of his employer, or otherwise within the
scope of his employment, is that the servant is clothed with the delegated authority, and
charge with the duty by the carrier, to execute his undertaking with the passenger.
Article 1759. Common carriers are liable for the death of or injuries to passengers through
the negligence or wilful acts of the former's employees, although such employees may
have acted beyond the scope of their authority or in violation of the orders of the common
carriers. This liability of the common carriers does not cease upon proof that they exercised
all the diligence of a good father of a family in the selection and supervision of their
employees. article not applied because #1) this provision was not yet existent #2)
because of the unforeseeability of Devesa’s act
Facts:
At about 730am, Lt. Gillaco was a passenger in the train of Manila Railroad Company.
When the train reached the Paco railroad station, Devesa, a train guard of Manila Railroad,
happened to be waiting in the station because he was en route to Tutuban station, where
he was going to report for duty.
Devesa had a grudge against Gillaco, dating back to the Japanese occupation. Upon
seeing him, Devesa shot Gillaco with his carbine. Gillaco died as a result. Devesa was
convicted of homicide.
Thus, the wife of Gillaco sued Manila Railroad based on breach of contract. Manila
Railroad was held liable for breach of contract of transportation.
Issue: Is Manila Railroad liable? No. #1) unforeseeable #2) not in the line of duty (considered a
stranger) Manila railroad won.
#1) FE
The act of Devesa in shooting Gillaco because of a personal grudge was entirely
unforeseeable by the railroad company. It had no means to anticipate that the two would
meet. Thus it is a fortuitous event, which holds Manila Railroad free from liability.
#2) Devesa not performing his duty
At the time he shot Gillaco, Devesa was not yet on duty because he was to report for duty
in Tutuban. His tour of duty was to start at 9am, Thus, the killing was not done in the line of
duty. Gillaco is merely considered a stranger also awaiting transportation. There was no
breach of the contract of transportation.
29
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

10. M ARANAN V. PEREZ (CAB DRIVER SHOT PASSENGER) (3) as between the carrier and the passenger, the former must bear the risk of wrongful acts or
negligence of the carrier's employees against passengers, since it, and not the passengers, has
Doctrine: power to select and remove them.
Under Art 1759, it is enough that the assault happens within the course of the
employee's duty. It is no defense for the carrier that the act was done in excess of 11. M ANILA RAILROAD V. BALLESTEROS (AUDITOR TOOK THE WHEEL WHILE
authority or in disobedience of the carrier's orders. The carrier's liability here is absolute in DRIVER WAS CHANGING SPARKPLUG; ACCIDENT)
the sense that it practically secures the passengers from assaults committed by its own
employees.
Art 1759: CC‘s are liable for death/injuries to passengers caused by either the 1)
negligence or 2) wilful acts of its employees
Different proximate causes: #1) employee #2) passenger #3) stranger legal
consequences are different on each case

Facts:
Corachea was a passenger in a taxi owned by Perez. He was stabbed and killed by the
driver, Valenzuela. Corachea was convicted of homicide.
Thereafter, Corachea‘s mother (Maranan) filed a civil action against Perez and
Valenzuela.In his defense, Perez argues that Corachea was killed in self-defense as he
was the one who first attacked Valenzuela. The TC dismissed the claim as to Valenzuela
and ordered Perez to pay damages.
In his appeal, Perez relies mainly on Gillaco, arguing that the carrier not liable for assaults Doctrine:
of its employees upon the passengers.
Article 1763. A common carrier is responsible for injuries suffered by a passenger on
account of the wilful acts or negligence of other passengers or of strangers, if the common
Issue: Is Perez liable? YES #1) in the course of his duty #2) Art 1759 applicable
carrier's employees through the exercise of the diligence of a good father of a family could
have prevented or stopped the act or omission applicable because the driver could have
Gillaco is inapplicable in this case for two reasons:
prevented the accident had he taken control of the bus but he didn’t.
o FIRST: In Gillaco, the passenger was killed by the employee who was outside
Otherwise put, a CC is liable if its driver lets another person drive and that person causes
the scope of his duty and was not performing his duty. However, in this case, the
injuries to the passengers as long as it can be shown that the driver could have prevented
killing was done by the driver of the cab transporting the passenger .The driver
such situation had it exercised ordinary diligence. in this case, negligence was on the
was performing his duty by driving the cab. Notwithstanding that, the
part of the employee in that he failed to prevent the act or omission that led to the injury
unforeseeability of Devesa‘s act further exempted the railroad from liability.
o SECOND: Art 1759 was not yet enacted. In this case however, Art 1759 is now
Facts
applicable in the case at bar. This provision follows the second view that it is
enough that the assault happens within the course of the employee‘s duty. The respondents were passengers of Manila Railroad‘s bus. The driver, Anastacio stopped
the bus to replace a spark plug. While he was doing this, Abello, an auditor assigned to the
In the case at bar, it is clear that the driver attacked Corachea while he
was performing his duty. Under Art 1759 therefore, the carrier Perez is company by the Government, took the wheel and told the driver to sit somewhere else.
liable. Abello did not want to give the wheel back to Anastacio.
While negotiating a bend, a truck on the right side tried to avoid potholes so it swerved to
CC lost.
the middle of the road and in turn, smashed the left side of the bus. This resulted to injuries
to the passengers (respondents)
Notes: 3 reasons for Art 1759
Thus, the passengers sued Manila Railroad for the injuries.
As its defense, Manila Railroad argues that Abello was not its employee so it should not be
1) the special undertaking of the carrier requires that it furnish its passenger that full measure of
held responsible for his acts.
protection afforded by the exercise of the high degree of care prescribed by the law, inter
alia from violence and insults at the hands of strangers and other passengers, but above all,
Issue: Is the carrier liable? YES #1) Art 1763 #2) Abello had no professional license
from the acts of the carrier's own servants charged with the passenger's safety;

(2) said liability of the carrier for the servant's violation of duty to passengers, is the result of the
formers confiding in the servant's hands the performance of his contract to safely transport the
passenger, delegating therewith the duty of protecting the passenger with the utmost care
prescribed by law; and
Art 1763 is applicable in the case at bar. The CC is responsible for injuries suffered by a
passenger on account of the wilfull acts/negligence of other passengers or strangers, if the
common carrier‘s employees could have prevented the act or omission with ordinary
diligence.
Moreover, the motor vehicle law provides:
30
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Sec. 48(b). No professional chauffeur shall permit any unlicensed person to drive the motor
vehicle under his control, or permit a person, sitting beside him or in any other part of the car, to
interfere with him in the operation of the motor vehicle, by allowing said person to take hold of
the steering wheel, or in any other manner take part in the manipulation or control of the car
In this case, the driver had two chances to take over as Mr. Abello stopped for 2 times. The
fact that the driver failed to take back control constitute recklessness on his part.
12. VDA DE ABETO V. PAL (PLANE CRASH)
Doctrine:
When injuries/death are suffered by a CC‘s passengers, the CC is presumed to be at fault.
In an action based on a contract of carriage, the court need not make an express finding of
fault or negligence on the part of the carrier
Case involved an act of an employee in violating the CC‘s orders regarding the route.
Because of the violation of the order, the plane crash occurred. Therefore, the CC is liable.
Facts:
About 530pm, Judge Abeto (passenger #18) boarded the PAL plane bound for Manila from
Iloilo. The plane did not reach its destination and it was thereafter ascertained that the
plane crashed at Mt. Baco in Romblon. Judge Abeto‘s bag was recovered in the crash.
In response, Juddge Abeto‘s wife instituted an action to recover damages from PAL. PAL,
in its defense, tried to prove that the crash was beyond the pilot‘s control by showing that
there was only #1) navigational error, #2) that the plane was airworthy as it was thoroughly
inspected and #3) that the deviation from the route was due to bad weather.
Issue: Is PAL liable? YES Pilot did not follow the route orders
The prescribed route of the plane was Iloilo-Romblon-Manila, denominated as ―Amber I‖ It
was discovered however, the pilot did not take the route indicated/ordered to him. In fact,
the weather was clear. The pilot clearly violated air traffic rules. Moreover, if the pilot did not
deviate, the accident would not have happened.
In any case, when injuries/death are suffered by a CC‘s passengers, the CC is presumed to
be at fault. In an action based on a contract of carriage, the court need not make an
express finding of fault or negligence on the part of the carrier.
13. PAL V. NLRC (PILOT FORCED TWO FIRST OFFICERS TO DRINK)
Doctrine:
CC are liable for the willful acts of its employees if this results into injury or death to the
passengers
CC are presumed to be negligent when its passengers suffer injury or death
Facts:
Gempis, a pilot of PAL, was charged with serious misconduct for forcing first officers
Barcebal and Ranches to drink 3 bottles of beer each within 30 minutes. The two failed to
drink the beers on time so they were punched in the stomach. The incident occurred at
1030pm and Germpis knew that the two had duties at 7:00am and 12:00pm the next day.
Gempis was initially dismissed by PAL but on appeal, the NLRC held that the penalty
should be just 6 months demotion and ordered his reinstatement.
PAL argues that there shouldn‘t be reinstatement because pilots are required to follow the
manual in order to protect the interests of both the company and the public. It further
argues that Gempis is a risk and a liability and his reinstatement would necessarily
endanger the passengers.
Issue: Should Gempis be reinstated? NO
SC discussed the importance of having disciplined employees because once passengers
suffer injuries, CC are presumed to be negligent.
Extraordinary measures and diligence should be exercised by PAL for the safety of its
passengers and their belongings because it is a CC.
Thus, a pilot must be sober all the time for he may be called to fly a plane even before his
regular service hours. It would be unjust for an employer to be compelled to continue with
the employment of a person whose continuance in service is contrary to its interests.
PAL wins. Given clearance to terminate.
14. PILAPIL V. CA, ALATCO TRANSPORTATION (RANDOM MAN THREW A STONE
INSIDE THE BUS)
Doctrine:
In consideration of the right granted to it by the public to engage in the business of
transporting passengers and goods, a common carrier does not give its consent to become
an insurer of any and all risks to passengers and goods. It merely undertakes to perform
certain duties to the public as the law imposes, and holds itself liable for any breach
thereof.
The presumption of fault or negligence against the carrier is only a disputable presumption.
It gives in where contrary facts are established proving either that the carrier had exercised
#1) the degree of diligence required by law or #2) the injury suffered by the passenger was
due to a fortuitous event
as a general rule, common carriers are bound to exercise extraordinary diligence in the
safe transport of their passengers, it would seem that this is not the standard by which its
liability is to be determined when intervening acts of strangers is to be determined directly
cause the injury
A tort committed by a stranger which causes injury to a passenger does not accord the
latter a cause of action against the carrier. The negligence for which a common carrier is
held responsible is the negligent omission by the carrier's employees to prevent the tort
from being committed when the same could have been foreseen and prevented by them.
When the violation of the contract is due to the willful acts of strangers, as in the instant
case, the degree of care essential to be exercised by the common carrier for the protection
of its passenger is only that of a good father of a family.
Facts: (Stranger caused the injury)
Jose Pilapil, a paying passenger, boarded Alatco‘s bus (409) While the bus was near the
vicinity of the cemetery in Camarines Sur, an unidentified man hurled a stone at the left
side of the bus, which then hit Pilapil above his left eye.
Pilapil was taken to the hospital where he was treated for another week. He went to
another doctor but despite treatment, he partially lost vision in his left eye. Thus he sued
ALATCO.
Issue: Is Alatco liable? NO
31
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
In this case, the SC first discussed that the presumption of negligence on the part of the
carrier if its passengers are injured is merely a disputable presumption.
This presumption was disputed because in this case, the injury arose solely from the
causes created by the strangers over which the carrier had no control over.
Moreover, though as a general rule, CC are bound to exercise ED in the safe transport of
its passengers, this is not the standard by which its liability is to be determined when
intervening acts of strangers cause the injury. In this case, there was no way that the CC
could have foreseen or avoided the incident, even with the exercise of ordinary or
extraordinary diligence.
Although mesh-work grills could have prevented the injury, the CC is not charged with the
duty of providing or maintaining vehicles as to absolutely prevent any and all injures to
passengers.
CC wins.
15. GACAL V. PAL (MNLF HI-JACKED A PAL PLANE)
Doctrine:
Elements of FE
1. Cause must be independent of the human will
2. Cause was impossible to foresee and if it can be foreseen, must be impossible to avoid
3. Cause must render it impossible for the carrier to fulfill his obligation in a normal manner
4. Carrier must be free from any participation
Facts: (this happened during martial law)
City Fiscal Franklin Gacal and his wife, Anislag and his wife and the late Elma de Guzman
were passengers boarding PAL‘s flight bound to Manila. Heavily armed members of the
MNLF (total of 6 led by Commander Zapata) were also on board. They hi-jacked the plane
and told the pilot to fly to Libya.
When they were told that the plane did not have enough fuel for that flight, the pilot was just
told to land at Zamboanga. Once there, they demanded money and 6 armalites. The
military then attacked the plane resulting to the death of 10 passengers and 3 hi-jackers.
The petitioners were injured and thus, filed a complaint against PAL for damages. It was
dismissed because of force majeure. On their appeal, petitioners argue that the main cause
of the hi-jacking was the negligence of the PAL‘s employees to frisk the MNLF members
and discover their weapons.
Issue: IS PAL liable? NO. Fortuitous event.
It is true that CCs are presumed negligent if the passengers suffer injuries or die, however,
this presumption can be disputed by a showing that the cause of the injury/death was due
to a fortuitous event.
o #1) Independent of the will of PAL: failure of PAL to transport the passengers
safely was due to the hi-jacking of the MNLF members. Further, the rescue
attempt was purely a government operation.
o #2) Foreseeable/Avoidable In this case, the hi-jacking could‘ve been avoided
with more thorough inspection. However, airport security was being controlled by
the military as this incident occurred during martial law.
o #3) PAL could not perform its obligations in a normal manner: In the same
vein, the military take-over prevented PAL from performing its duty to inspect the
bags
o #4) Free from participation: clearly PAL did not in any way participate
In this case therefore, fortuitous event exempted PAL from any liability.
Note:
Passengers given ¼ of a sandwich and 1/10 cup of water
16. QUISUMBING V. CA (HOLD-UP OF A PLANE)
Doctrine:
A fortuitous event, such as hi-jacking, will exempt the CC from liability as long as all the
requisites are complied with.
A common carrier‘s failure to take certain steps that a passenger in hindsight believes
should have been taken is not the negligence or misconduct which mingles with force
majeure as an active and cooperative cause
Facts:
Norberto Quisimbing Sr and Gunther Leoffler were among the PAL‘s ―Fokker Friendship
plane which was bound for Manila. During the flight, NBI agent Villarin noticed ―Zaldy‖, who
was a suspect for killing a certain Judge Valdez. Zaldy was seated at the front seat near
the cockpit.
Villarin discovered that Zaldy used the alias ―Cardente‖ and that he had 3 companions.
Villarin then wrote a note to the captain and asked him to contact NBI agents in Manila to
meet him in the airport. He asked for about 6 agents.
After receiving then note, the captain told Villarin that he couldn‘t send the message
because it would be heard by all ground aircraft stations. Soon thereafter, a shootout
ensued between Villarin and Zaldy. Villarin and his companions then held up the
passengers, including Quisimbing and Gunther. Once the plane landed, they were able to
escape.
Thereafter, Quisimbing and Loefller sued PAL for damages.
Issue: Is PAL liable for damages? NO, for three reasons.
#1) The hi-jacking was a case of force majeure. It could not have been prevented by PAL
because it was not authorized to search its firearms and deadly weapons.
#2) There was irresistible force which prevented PAL from safely transporting its
passengers (the armed men)
#3) There was no lack of diligence on the part of PAL, as it complied with applicable
regulations and procedures to prevent hijacking.
Moreover, PAL's "failure to take certain steps that a passenger in hindsight believes should
have been taken is not the negligence or misconduct which mingles with force majeure as
an active and cooperative cause."
PAL wins.
32
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

17. BATACLAN V. MEDINA (BUS OVERTURNED, RESCUERS BROUGHT A TORCH, BUS 18. BALIWAG TRANSIT V. CA (SPEEDING DRIVER BUMPED A PARKED TRUCK)
BURNED DOWN, PROXIMATE CAUSE)

Doctrine:
That cause, which, in natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the result would not have
occurred

Facts:
Shortly after midnight, bus #30 of Medina Transportation, left the town of Cavite en route to
Pasay City. Among the passengers were Bataclan, Lara and Visaya.
At about 2am, one of the front tires burst and the vehicle began to zig-zag until it fell into a
ditch to the right side of the road and turned turtle. The three, however, could not get out of
the overturned bus. Gasoline leaked out of the bus.
After a while, ten men, one carrying a lit torch, approached the bus to help out but almost
immediately, a far broke out and burned everyone in the bus.
The heirs of the passengers sued the CC. The CC argued that the proximate cause of the
accident was the men carrying the torch.
Issue: Is the CC liable? Yes
The CC was negligent. Its driver was speeding at the time of the blow-out. When the tires
blew out, the driver had to step on the breaks but this in turn caused the bus to travel 150
more meters before it fell into the canal.
As to the proximate cause of Bataclan‘s death, the SC held that the proximate cause
was the overturning of the bus, which in turn set all the other events in motion. The
rescuers had to carry a torch with them because it was dark. They merely approached the
bus because they wanted to help.
o Moreover, the driver and conductor were just on the road walking back and forth.
They did not warn the rescuers that gas may have leaked from the bus.
Evidence also shows that the tires were old and that Medina had been asking the driver to
change the tires but the driver did not. The blow-out would not have occurred if the driver
changed the tires.
CC lost.
Note:
Bataclan seated to the right of the driver
Lara seated to the right bataclan
Visaya seated to the left of the driver.
Prosecution against the driver was initially dismissed but the SC ordered that it should be
pursued.
Doctrine:
In a contract of carriage, it is presumed that the common carrier was at fault or was
negligent when a passenger dies or is injured. Unless the presumption is rebutted, the
court need not even make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by evidence that the
carrier exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the
Civil Code.
Facts:
Bus driver Santiago of a Baliwag Bus failed to notice a truck owned by A&J parked at the
shoulder (tire change) even if there was a kerosene lamp at the end of the road to serve as
a warning device.
The driver was at driving at a very high speed and was even talking to some of his co-
employees. He failed to see the kerosene lamp and as a result, he failed to slow down on
time and hit the truck. Allan and Leticia Garcia were injured.
The parents of the Garcias sued Baliwag Transit, A&J Trading and Recontique (driver of
A&J) for damages.
Baliwag alleged that the accident was due to A&J‘s fault because the driver failed to place
an EWD. The CA eventually absolved A&J from liability
Issue: Should the CC be held liable for damages? YES
The presumption of negligence on the part of Baliwag was not overcome by evidence
showing extraordinary diligence. In fact, the evidence shows that the driver was negligent
as he was driving very fast despite the darkness and the drizzle. The driver also smelled of
liquor.
The kerosene lamp/torch placed at the edge of the road substantially complied with traffic
regulations as what is only required is an ―appropriate parking light or flares visible 100m
away‖ The EWD doesn‘t necessarily have to be the triangular reflector device.
CC Baliwag loses. But award of damages for hospitalization reduced.

Note:
Leticia Garcia, one of the passengers, suffered a fracture in her pelvis and right leg. She was
taken to two hospitals.
Allan Garcia broke a leg.

33
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
19. LARA V. VALENCIA (M ALARIA MAN FELL FROM PICK UP TRUCK)
Doctrine:
that the owner or operator of an automobile owes the duty to an invited guest to exercise
reasonable care in its operation, and not unreasonably to expose him to danger and injury
by increasing the hazard of travel. This rule, as frequently stated by the courts, is that an
owner of an automobile owes a guest the duty to exercise ordinary or reasonable
care to avoid injuring him. On the other hand, the passenger is also tasked to exercise
ordinary diligence to avoid any injury to himself.
Facts:
Valencia was in the business of exporting logs while the deceased, Lara was an inspector
of the Bureau of Forestry. Lara went to Valencia‘s premises to classify his logs.. As a result
of his stay, he contracted malaria.
He then asked Valencia if he could be taken to a hospital in Davao. Valencia agreed. In the
pick-up truck, Valencia was driving and Lara was made to sit on a bag in the middle of the
back of the pick up truck. There were also other passengers with them. They were all not
charged a fee and were merely accommodated.
During the trip, Lara suddenly fell from the pick-up and he suffered injuries. He eventually
died.
Issue: #1) was Valencia a common carrier? NO #2) If not, did he exercise the requisite
diligence? YES
#1) Valencia was not a CC. Lara, along with the others, were merely accommodation
passengers who paid nothing for the service so they can be considered as invited guests.
Thus, the degree of diligence required from him is only ordinary diligence
#2) Valencia was not negligent. There is nothing to indicate such negligence. In fact,
Valencia was not even duty bound to take Lara and he only did so because he was sick.
Furthermore, Lara was invited to sit in front (beside the driver) but he refused to.
The accident can be attributed to the fact that Lara was asleep during the accident and
merely fell when the truck ran over some stones. Moreover, he is also negligent in avoiding
injury to himself as he was then in a crouching position.
Valencia wins.
20. FABRE V. CA (FIELD TRIP OF WWCF, QUASI DELICT)
Doctrine:
Due diligence in selection of employees is not satisfied by finding that the applicant
possessed a professional driver‘s license. The employer should also examine the applicant
for his qualifications, experience and record of service.
Due diligence in supervision, on the other hand, requires the formulation of rules and
regulations for the guidance of employees and the issuance of proper instructions as well
as actual implementation and monitoring of consistent compliance with the rules
[A] person who hires a public automobile and gives the driver directions as to the place to
which he wishes to be conveyed, but exercises no other control over the conduct of the
driver, is not responsible for acts of negligence of the latter or prevented from recovering for
injuries suffered from a collision between the automobile and a train, caused by the
negligence either of the locomotive engineer or the automobile driver
Facts:
Word for the World Christian Fellowship (WWCF) arranged with Fabre for the
transportation of its 33 members from Manila to La Union. The meeting was place Tropical
Hut.
Cabil took a route he was unfamiliar with as he was forced to make a detour. At 1130, he
came upon a sharp curve on the highway, running on a south to east direction (―siete‖) he
was running at 50km/h. Since the road was slippery, the bus skidded to the left road
shoulder, hit a brace, rammed a fence then turned over and landed on its left side. A
coconut tree also fell on its front portion.
Several passengers were injured. One of the passengers was Amyline, who got paralyzed
from the waist down. As a result, the passengers sued Fabre and the driver Cabil for
damages
Issue: Are Fabre and Cabil liable? YES
Fabre and Cabil were sued under the rules of QD. Fabre was sued under Art 2180
(vicarious liability) while Cabil was sued under Art 2176 (QD)
In this case, Cabil was negligent because was driving at 50km/h despite the darkness and
the road conditions. He should have driven at a slower speed.
In the case of Fabre, he is also liable as Cabil‘s negligence gave rise to the presumption
that Fabre, as employer, was also negligent in the selection and supervision of his
employees.
o Evidence shows that Cabil was only a school bus driver and he was only a 2
week apprentice.
Moreover, the SC held that Fabre was a CC so it was bound to exercise ED for the
transportation of its passengers. The same circumstances also justify finding Fabre guilty of
breach of contract of carriage.
CC loses. Solidarily liable with driver.
Note: (optional but very instructive)
As above stated, the decision of the Court of Appeals can be sustained either on the theory
of quasi delict or on that of breach of contract. The question is whether, as the two courts below
held, petitioners, who are the owners and driver of the bus, may be made to respond jointly and
severally liable.
We hold that they may be.
In Dangwa Trans. Co. Inc. v. Court of Appeals, on facts similar to those in this case, this Court
held the bus company and the driver jointly and severally liable for damages for injuries suffered
by a passenger.
Again, in Bachelor Express, Inc. v. Court of Appeals a driver found negligent in failing to stop the
bus in order to let off passengers when a fellow passenger ran amuck, as a result of which the
passengers jumped out of the speeding bus and suffered injuries, was held also jointly and
severally liable with the bus company to the injured passengers.
The same rule of liability was applied in situations where the negligence of the driver of the bus
on which plaintiff was riding concurred with the negligence of a third party who was the driver of
another vehicle, thus causing an accident. In Anuran v. Buño, Batangas Laguna Tayabas Bus
34
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Co. v. Intermediate Appellate Court, and Metro Manila Transit Corporation v. Court of Appeals,
the bus company, its driver, the operator of the other vehicle and the driver of the vehicle were
jointly and severally held liable to the injured passenger or the latter‘s heirs.
21. SULPICIO LINES V. CA (STEVEDORES DIED FROM GAS POISONING)
Doctrine:
CC are still liable to persons such as cargadors/stevedores who board its ship as long as it
is with its full consent and knowledge. This is notwithstanding the absence of a passenger-
carrier relationship between the two.
Facts:
ALC contracted Sulpico lines to transport its timber. Sulpico sent its tugboat MT Edmun and
its barge (Solid VI) to fetch the timber. ALC then hired several stevedores of CBL, which
then boarded Sulipico‘s barge (Solid VI) (to presumably load the timber)
The stevedores were warned not enter the storeroom because of the gas and heat
generated by the copra stored in the ship. However, three stevedores still went side. One of
them, Pamalaran, lost consciousness and eventually died.
Heirs of Pamalaran sued Sulpico, CBL and ALC. All were held solidarily liable to heirs of
Pamalaran by both TC and CA.
Issue: Is Sulpico liable? YES
Although Pamalaran was not Sulpico‘s passenger, it was still liable as common carrier for
his death. The stevedores were there to load the lumber of ALC and their presence was
consented to by Sulpico. It is of common knowledge that a shipper will also need to hire
stevedores to load its shipment in the boat of the carrier. Therefore, Sulpico is responsible
for their safety while on board the barge.
Moreover, it was not enough that the stevedores were warned after the hatch was open. It
was the responsibility of Sulpico‘s employee to ensure that no one could just easily enter
the hatch. Thus, Sulpico was liable for ―failing to exercise due diligence in the supervision
of its employees
Sulpico loses. CA affirmed.
22. HERMININO M ARIANO V. CALLEJAS
Doctrine:
To overcome the presumption of negligence, CCs have to show that they observed
extraordinary diligence in the discharge of their duty, or that the accident was caused by a
fortuitous event
Facts:
Dr. Mariano was a passenger of a Celyrosa Express bus, owned by Callejas, which was
bound for Tagaytay. At about 630pm, along Aguinaldo Highway, the bus collided with an
Isuzu trailer truck (plate # PJH 906 and TRH 531). The truck allegedly lost its brakes.
The trailer truck hit the bus on its left middle portion. Due to the impact, the bus fell on its
right side on the right shoulder and caused the death of Dr. Mariano.
Thus, her husband sued Celyrosa Express/Callejas for breach of contract of carriage. In its
defense, the CC argues that the PC of the accident was the recklessness of the driver of
the trailer truck. The CC filed a 3rd party complaint against the owner of the truck the TC
found Callejas, the bus driver and the truck owner solidarily liable for damages. The CA
however reversed thus Mariano appealed.
Issue: Is the CC liable? No
In the case at bar, petitioner cannot succeed in his contention that respondents failed to
overcome the presumption of negligence against them. The totality of evidence
shows that the death of petitioner’s spouse was caused by the reckless negligence
of the driver of the Isuzu trailer truck which lost its brakes and bumped the Celyrosa
Express bus, owned and operated by respondents. Evidence shows that the collision took
place because the truck had a faulty brake.
It was found that the Isuzu truck was 500 meters away from the point of impact due to the
brakes.
In fine, the evidence shows that before the collision, the passenger bus was cruising on its
rightful lane along the Aguinaldo Highway when the trailer truck coming from the opposite
direction, on full speed, suddenly swerved and encroached on its lane, and bumped the
passenger bus on its left middle portion.
Respondent driver De Borja had every right to expect that the trailer truck coming from the
opposite direction would stay on its proper lane. He was not expected to know that the
trailer truck had lost its brakes. The swerving of the trailer truck was abrupt and it was
running on a fast speed as it was found 500 meters away from the point of
collision. Secondly, any doubt as to the culpability of the driver of the trailer truck ought to
vanish when he pleaded guilty to the charge of reckless imprudence resulting to multiple
slight physical injuries and damage to property in Criminal Case No. 2223-92, involving the
same incident.
CC wins.
35
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 7 (COMMON CARRIERS, DAMAGES)
Art. 2197. Damages may be:
(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
Under Art 2197, damages may be: (available for culpa contractual and aquiliana)
o Actual or compensatory: an adequate compensation only for such pecuniary
loss suffered by him
o Moral: physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if
they are the proximate result of the defendant's wrongful act for omission
o Nominal : damages awarded to recognize a technical violation of right
o Temperate: some pecuniary loss has been suffered but its amount cannot, from
the nature of the case, be provided with certainty
o Liquidated: agreed upon by the parties, to be paid in case of breach of contract
o Exemplary : corrective damages, to serve as an example to the public
Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved. Such
compensation is referred to as actual or compensatory damages.
This article gives the definition of actual or compensatory damages.
To seek recovery of actual damages, it is necessary to prove with a preponderance of
evidence the actual amount of the loss suffered by the claiming party. Jurisprudence
has even held that courts must point out specific facts which show a basis for the amount
of actual damages to be awarded.
In general, to collect actual damages, one must
o 1) plead or allege the loss
o 2) pray for relief that the claim for loss be granted and
o 3) prove the loss
The issue of w/n a person is liable for damages is different from the issue of how much a
person is liable for damages
Art. 2200. Indemnification for damages shall comprehend not only the value of the loss suffered,
but also that of the profits which the obligee failed to obtain. (1106)
Art 2200 illustrates that there are two kinds of actual or compensatory damages to wit:
o One is for the loss of what a person already possesses
o Another is the failure to receive as a benefit that would have pertained to him
(also known as unrealized profits) lucrum cessans
Examples of both:
o First: If a person riding a cab suffers injury and has to pay medical expenses at
the hospital, then such expenses can be claimed as actual damages. Moreover,
in the case Alitalia Airways, it was held that: ―a passenger is entitled to be
reimbursed (actual damages) for the cost of the tickets he had to buy for a flight
to another airline if such passenger had to buy the ticket as a consequence of the
breach of contract of carriage‖
o Second: If the same person missed work that same day (and for other days to
come), then the lost wages can be claimed as unrealized profits
Can the amount of actual damages be limited by agreement or by contract? Yes.
Liquidated damages.
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good
faith is liable shall be those that are the natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have reasonably foreseen at the time
the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation. (1107a)
This article provides for two instances (note: negligence is not the same as bad faith =
NEGLIGENCE is not the same as RECKLESSNESS)
o IF debtor-obligor is in GOOD FAITH: then he will only be liable for the
damages that are the #1) natural and probable consequences of the breach and
are #2) foreseeable by the parties at the time the obligation was constituted
Example: If driver of the bus was merely negligent (jurisprudence has
held that ―mere carelessness of the carrier's driver does not per
se constitute of justify an inference of malice or bad faith on the part of
the carrier‖ ) which in turn caused injuries to a passenger , then the CC
may be held liable for the medical expenses that the passenger had to
shoulder because there was a breach of the contract of transportation
and such injuries are obviously consequences of such breach and
such was also foreseeable
o IF debtor-obligor is in BAD FAITH: then he will be responsible for all damages
which may be reasonably attributed to the non-performance of the obligation
Example: If the CC is shown to have been in bad faith, then the
standard for the damages to be awarded is lowered to all damages
that can be reasonably attributed. In the same example above, moral
and exemplary damages may be awarded.
Tan v. Northwest Airlines:: Where in breaching the contract of carriage the defendant airline
is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the
natural and probable consequences of the breach of obligation which the parties had
foreseen or could have reasonably foreseen. In that case, such liability does not include
moral and exemplary damages
Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a
family to minimize the damages resulting from the act or omission in question.
This provision simply means that the plaintiff (party who incurred loss or suffered injury)
also has the concurrent obligation to mitigate the damages resulting from the alleged act or
omission in question. this is considered to be contributory negligence
In connection with the law on transportation, the passenger who was injured should have
also exercised ordinary diligence after the accident caused by the CC. As an example, if a
person is injured from an accident and instead of going to the hospital to treat his injuries,
he instead goes on a drinking spree, then damages awarded may be reduced.
36
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
. This article provides for the instances when the court may mitigate (lessen) the damages to
Art. 2205. Damages may be recovered:
(1) For loss or impairment of earning capacity in cases of temporary or permanent personal
injury;
(2) For injury to the plaintiff's business standing or commercial credit.
This article provides that actual damages for loss of earning capacity and injury to plaintiff‘s
business standing/commercial may be awarded. This is of course provided that they are
duly proven.
LOSS/IMPAIRTMENT OF EARNING CAPACITY: Jurisprudence will show that victims of
accidents who had jobs at the time of the accident will may be awarded actual damages for
the loss of their earning capacity due to their injury. Oftentimes, these victims were unable
to work anymore because of the injuries.
INJURY TO BUSINESS STANDING/COMMERCIAL CREDIT: if a bank wrongfully
dishonors a check and as a result, the drawer‘s transaction was botched and his reputation
was besmirched, then damage can be awarded.
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract
complained of, the insurance company shall be subrogated to the rights of the insured against
the wrongdoer or the person who has violated the contract.
If the amount paid by the insurance company does not fully cover the injury or loss, the
aggrieved party shall be entitled to recover the deficiency from the person causing the loss or
injury.
This article provides for the right of subrogation of the insurer of a person‘s PROPERTY.
Applied in transportation, if P hired a common carrier to transport apples and P insured
such cargo with I, and such cargo was lost due to the carrier‘s negligence, then the insurer
may be subrogated to the rights of P after it pays the indemnity and go after the carrier.
However, if the amount paid to P does not fully cover the loss of the apples, then P can still
go after the common carrier to recover the deficiency.
In the cases, if the insurance company is already the plaintiff, it presumes therefore that the
insurance has already paid the proceeds to the plaintiff and therefore steps in the shoes of
the injured party.
Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may equitably mitigate the
damages under circumstances other than the case referred to in the preceding article, as in the
following instances:
(1) That the plaintiff himself has contravened the terms of the contract;
(2) That the plaintiff has derived some benefit as a result of the contract;
(3) In cases where exemplary damages are to be awarded, that the defendant acted upon the
advice of counsel;
(4) That the loss would have resulted in any event;
(5) That since the filing of the action, the defendant has done his best to lessen the plaintiff‘s
loss or injury.
be awarded to the plaintiff. This article contemplates the situation wherein damage was
indeed suffered but the damages awarded may be still be lessened.
This rests upon the sound discretion of the court
Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate,
liquidated or exemplary damages, may be adjudicated. The assessment of such damages,
except liquidated ones, is left to the discretion of the court, according to the circumstances of
each case.
When proof of pecuniary loss is not required:
o Moral damages
o Nominal damages
o Temperate damages
o Liquidated damages
o Exemplary damages
The amount to be awarded is left to the discretion of the court in accordance with the
circumstances.
Liquidated damages are synonymous with obligations with a penal clause. It saves the
court the trouble of determining itself how much to award in case of breach.
Can moral damages be awarded w/o actual damages? For example, in a case, no
evidence was adduced to prove actual damages, but entitlement to moral damages was
proven? Yes. Inability to award actual damages is not a bar to awarding moral damages.
(e.g. in oral defamation suits, moral damages may be awarded alone)
Can nominal damages be awarded alone? Yes
Can exemp be awarded alone? No.
Can atty‘s fees be awarded alone? No.
Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant's wrongful act for omission.
Moral damages are not punitive in nature but are designed to compensate the physical
suffering, mental anguish etc.
Villanueva v. Salvador: the conditions for awarding moral damages are:
o (a) there must be an injury, whether physical, mental, or psychological, clearly
substantiated by the claimant;
o (b) there must be a culpable act or omission factually established;
o (c) the wrongful act or omission of the defendant must be the proximate cause of
the injury sustained by the claimant; and
o (d) the award of damages is predicated on any of the cases stated in Article 2219
and 2220 of the Civil Code.
Corporations may only be awarded moral damages if it suffered besmirched reputation
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where the defendant acted fraudulently or in bad faith.
37
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Two other grounds for awarding moral damages (this is however qualified by the
requirement that the ―court should find that they are justly due‖)
o Willful injury to property
o Breaches of contract where defendant acted with fraud or bad faith
In the second instance, it can be seen that if a common carrier is proven to have acted in
bad faith in breaching the contract of transportation (e.g. failing to take the passenger
safely to his destination resulting to injury and the driver is reckless [not merely negligent]),
then moral damages may be awarded.
Miranda v. Fores, PRBL v. Esguerra: Moral damages are not recoverable in actions for
damages predicated on a breach of the contract of transportation, as in the instant case, in
view of the provisions of Articles 2219 and 2220 of the New Civil Code. The exceptions are
(1) where the mishap results in the death of a passenger, (the heirs may recover moral
damages for mental anguish) and (2) where it is proved that the carrier was guilty of fraud
or bad faith, even if death does not result
Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in
case of breach thereof.
The amount of liquidated damages agreed upon by the parties answers for the damages
suffered by the obligee. These damages take the nature of penalties. A penal clause is an
accessory undertaking to assume a greater liability in case of a breach.
In case liquidated damages have been agreed upon, no proof of loss is necessary in order
that such may be recovered. The stipulation is intended to avoid controversy on the amount
of the damages.
Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for
the public good, in addition to the moral, temperate, liquidated or compensatory damages.
Also known as punitive damages, exemplary damages are intended to serve as a deterrent
to serious wrongdoings. Its rationale is to provide an example for the public good.
Requisites of award of exemplary damages:
1. Imposed by way of example or correction only in addition to actual damages,
moral, temperate, and liquidated and cannot be recovered as a matter of right
(2233)
2. Claimant must establish his right to either moral, temperate, liquidated or
compensatory damages
3. The wrongful act must be accompanied by bad faith (wanton, fraudulent,
reckless, oppressive or malevolent) (2232)
Though exemplary damages may not be awarded as a matter of right, they need not be
proved.
In the cases below, exemplary damages are awarded to passengers of airlines who were
ill-treated by the latter in various ways (e.g. intentionally bumping off, discriminating, rude
treatment)
Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
This article plainly shows that in contracts of transportation, the court may be award
exemplary damages if the CC acted in bad faith. This is one of the elements of granting
exemplary damages.
For example, reckless driving on the part of the driver that leads to an accident and injuries
to passengers, will entitle such passengers to exemplary damages.
Fraudulent is deceit
Wanton connotes a disregard for the consequences of one‘s own actions
Reckless connotes an extreme lack of care of a person without thinking
Oppressive: abuse of authority
Malevolent: different from being oppressive, connotes cruelty and spitefulness
Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide
whether or not they should be adjudicated.
In a case, it was held that: [1) not a matter of right 2) amount need not proven but there must
still be basis (wanton, fraudulent, etc) 3) prayer for exemplary does not need to be
alleged/pleaded]
that exemplary damages may be imposed by way of example or correction only in addition,
among others, to compensatory damages, but they could not be recovered as a matter of
right, their determination depending upon the discretion of the court.
It further appears that the amount of exemplary damages need not be proven, because its
determination depends upon the amount of compensatory damages that may be awarded
to the claimant. If the amount of exemplary damages need not be proven, it need not also
be alleged, and the reason is obvious because it is merely incidental or dependent upon
what the court may award as compensatory damages.
Unless and until the above premises is determined and established, what may be claimed
as exemplary damages would amount to a mere surmise or speculation.
It follows as a necessary consequence that the amount of exemplary damages need
not be pleaded in the complaint because the same cannot be predetermined by the
court if in the cause of discretion the same is warranted by the evidence.
Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must
show that he is entitled to moral, temperate or compensatory damages before the court may
consider the question of whether or not exemplary damages should be awarded.
In case liquidated damages have been agreed upon, although no proof of loss is necessary in
order that such liquidated damages may be recovered, nevertheless, before the court may
consider the question of granting exemplary in addition to the liquidated damages, the plaintiff
must show that he would be entitled to moral, temperate or compensatory damages were it not
for the stipulation for liquidated damages.
Plaintiff must prove entitlement to either moral, temperate or compensatory damages
before the issue of exemplary damages may be taken.
This is also the case even if liquidated damages were agreed upon.
Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and
void.
Public policy demands that exemplary damages not be allowed to be renounced in
advance because it goes against the purpose of exemplary damages (courts should not be
hindered from making an example for the public good)
38
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

39
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 7 CASES
1. CARIAGA V. LTB (UST MED STUDENT ACCIDENT, ACTUAL DAMAGES AWARDED
BASED ON THE POSSIBILITY THAT HE ACTUALLY BECAME A DOCTOR)
Doctrine:
―Under Art 2201, the damages for which the obligor who acted in good faith is liable shall
be those that are the natural and probable consequences of the breach of the obligation,
and which the parties have foreseen or could have reasonably foreseen at the time the
obligation was constituted.‖ In this case, the possibility that Edgardo would not have been
able to finish his studies as a result of the accident is considered to have been foreseeable
at the time he boarded the bus. Therefore, the income which he could have earned as a
doctor may be awarded as actual damages.
Facts:
th
Edgardo Cariaga, a 4 year UST med student, rode a Laguna Tayabas Bus (LTB) to go to
Laguna. The bus however bumped a passing train as the highway crossed a railroad track.
As a result, Edgardo was severely injured. He had to be taken to two hospitals and
underwent two operations.
LTB paid for all hospital, medical and miscellaneous expenses and even paid for Edgardo‘s
stay in a private house. However, a suit was still filed against LTB and MRR (the train
company) to recover 312k as actual, moral and exemplary damages.
It is argued by LTB that MRR is liable because it failed to provide cross-tracks and that its
employees failed to sound the whistle on time. The TC found only LTB to be negligent and
awarded only 10,000 as actual damages and denied the prayer for moral damages
Issue: #1) Who is liable? #2) Was the award sufficient? #3) Should moral damages be
awarded?
As to negligence: LTB
o SC affirmed the finding that the whistle was sounded 4 times as the train was
300m from the crossing and that it was in fact the driver of the bus who was
negligent as another LTB bus heeded the whistle.
As to award of actual damages: increased
o The damages awarded were insufficient. As a result of Edgardo‘s injuries, all of
the right frontal lobe of his brain had to removed. As a result, he could no
longer finish his studies and even needs help just to walk. He approximately lost
50% of his intelligence.
o Therefore, the income which Edgardo could earn if he should finish his medical
course and pass the board examinations must be deemed to be in the ambit of
―damages that can be foreseen at the time the obligation was constituted‖
o The SC awarded damages based on PhP300 monthly income Edgardo could
have received. The damages awarded were increased to 25,000
As to award of moral damages: disallowed
o The award of moral damages cannot be allowed because:
#1) the situation is not under any of the instances provided under Art
2219 and
#2) there was no bad faith so there can be no recovery of moral
damages under Art 2210
Who won? TC affirmed in all respects except actual damages so LTB lost.
2. PANTRANCO V. LEGASPI (PRODUCTION OF LEDGERS SANCTIONED TO PROVE
FINANCIAL CAPACITY OF COMMON CARRIER IN ORDER TO AWARD HIGHER ACTUAL
DAMAGES)
Doctrine:
Under the law, independently of its financial capacity, the common carrier, if liable, must be
made to pay the minimum amount as provided for in Art 2206. But if its financial ability is
such that it can pay a greater amount of indemnity as demanded by the circumstances of
the case, then certainly it should be made to pay more than P3,000. Its financial standing in
such a case is material and therefore, it can be ordered to produce its ledgers under the
Rules of discovery.
Facts:
Pua Pian sued Pantranco for the death of his daughter and wife as a result of an accident
due to the alleged negligence of its driver in negotiating a blind curve. In his complaint, he
alleged that ―Pantranco is financially well-established, having enormous assets and huge
income‖
During the trial, Pua Pian asked the court to order Pantranco‘s office manager to produce
the company‘s general ledger for examination under the Rules of Discovery. Pantranco
opposed this motion on the ground that the general ledgers were immaterial to the issue of
negligence but its opposition was denied.
Issue: Should the production of the general ledger be allowed? YES
The applicable law in determining whether or not Pantranco‘s financial standing is Art 2206
of the CC which fixes the minimum indemnity (3k) for death caused by a crime or quasi-
delict. Such minimum indemnity may be increased by the courts according to the
circumstances and in such a situation, the courts may look into the financial capacity o the
common carrier to determine w/n it should award a greater amount.
It therefore follows that such financial standing is relevant to the issue.
Dissent:
― I must dissent in so far as the decision implies that inquiries into the resources of a defendant
would be permissible whenever damages, pecuniary or moral, are sought . We cannot lose sight
of the fact that the purpose of moral damages is essentially indemnity or reparation, not
punishment or correction. Moral damages are emphatically not intended to enrich a complainant
at the expense of a defendant; they are awarded only to enable the injured party to obtain
means, diversions or amusements that will serve to alleviate the moral suffering he has
undergone, by reason of the defendant's culpable action‖
“To recapitulate: compensatory and moral damages can only be awarded to indemnify
the victim or his relatives for the prejudice suffered, and the financial standing of the
person responsible is irrelevant to their evaluation. The omission in the Civil Code of any
reference to the defendant's pecuniary ability, as was heretofore done by Commonwealth Act
No. 284, confirms this thesis. The ruling in Alcantara vs. Surro, 93 Phil. 472, is predicated
precisely on that Commonwealth Act, and not on the Civil Code now in force, and is inapplicable.
In so far as the award exceeds indemnification, it trenches on the sphere of corrective damages
that are justified by other special circumstances set out by the Civil Code.‖
40
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
3. VILLA REY TRANSIT V. CA (COMPUTATION OF ACTUAL DAMAGES)
Doctrine:
The determination of such actual damages (resulting from death due to breach of contract
of carriage) depends, mainly upon two (2) factors, namely: (1) the number of years on the
basis of which the damages shall be computed and (2) the rate at which the losses
sustained should be fixed
Formula for life expectancy: (2/3 * [80 – age at time of death])
Although the formula of life expectancy is not the sole element of determining damages to
be awarded to the heirs of the deceased, it is still an important element.
LOST Earning capacity (to be awarded as actual damages) Net earning capacity = life
expectancy * (gross annual income – necessary expenses for decedent‘s own living)
o In addition to this, add to this the ―real‖ actual damages like medical expenses,
funeral expenses, etc.
Facts:
Quintos rode a bus owned by Villa Rey. During the trip, the bus hit the rear of a bullcart
filled with hay. As a result, the end of a bamboo pole placed on top of the hayload
penetrated the bus and landed on Quintos‘ face. He eventually died from the injuries.
Quintos‘ heirs sued Villa Rey to recover damages. The trial court awarded 63,750 in actual
damages for breach of the contract of carriage. This was affirmed by the CA
Issue: Was the award proper? Not entirely. Damagtes reduced.
The determination of such amount depends, mainly upon two (2) factors, namely: (1) the
number of years on the basis of which the damages shall be computed and (2) the rate at
which the losses sustained by said respondents should be fixed.
o As to first: LIFE EXPECTANCY: considered as 30 years old
Formula applied was (2/3 * [80-30]) = life expectancy (33 1/3)
o As to the second: RATE
The rate was properly fixed at 2,184.00 a year, the annual salary of
Quintos at the time of his death, working as a young training assistant
in a Cement company.
The court further explained the FULL formula for computing the award which is:
o Net earning capacity = [2/3 * (80 – age at death) * (gross annual income –
reasonable and necessary living expenses)
o ―it has been consistently held that earning capacity, as an element of damages to
one's estate for his death by wrongful act is necessarily his net earning capacity
or his capacity to acquire money, "less the necessary expense for his own living.
Ruling: Formula used, award reduced to 48k
4. DAVILA, TIRO V. PAL (PLANE CRASH)
Doctrine:
According to Article 2206, paragraph (1), of the Civil Code, "the defendant shall be liable for
the loss of the earning capacity of the deceased and indemnity shall be paid to the heirs of
the latter." This Article, while referring to "damages for death caused by crime or quasi-
delict," is expressly made applicable by Article 1764 "to the death of a passenger caused
by the breach of contract by a common carrier."
Facts:
Pedro Davila was a passenger in a PAL flight that crashed to the west of Mt. Baco,
Mindoro. His parents filed a suit against PAL and were awarded compensatory damages
for his death and for his lost earning capacity.
PAL appealed, arguing it was not negligent and that the award of damages was improper.
Issue: Was PAL negligent? Was the award proper?
As to negligence
o PAL was negligent as its pilot failed to follow the established flight plan along the
airway ―Amber I‖ The pilot wanted to fly a straight line to Manila and this deviation
was a violation of air traffic rules.
As to actual damages:
o Death indemnity: modified from 6k to 12k as per current jurisprudence
o Job:
Radio station manager: 8.4k a year
Lawyer in his father‘s law office: 3,600 a year
Farming: 3,000 a year
Gross earnings: 15k annually
o LE: (used Villa Rey formula to compute LE) 30 years old when he died so his LE
was 33 1/3. However, medical history shows he had back problems and chest
pains so his LE was reduced to 25.
o From LE, living expenses of 7,200 a year was deducted from gross income. So
the yearly income was reduced to 7.8k. 7.8k * 25 = 195k proper actual
damages for earning capacity to be awarded.
o Other actual damages: rolex watch, pistol, burial expenses, cemetery lot
As to moral damages: awarded due to anguish caused by the death
o Under Article 2206, in relation to Article 1764, of the Civil Code, the parents of
the deceased are entitled to moral damages for their mental anguish. The trial
court awarded P10,000.00 in this concept, and We find no justification to change
the award, considering the long period of uncertainty and suffering the plaintiffs
underwent from November 23, when the plane crash occurred, to December 19,
when they received a letter from the defendant's president confirming the death
of their son, and again to the following December 29, when his body was finally
recovered and taken back to them.
As to exemplary: no exemplary because there was no bad faith.
41
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
5. PAL V. CA, PADILLA
Facts:
Nicanor Padilla, a lawyer, died in a PAL flight (same flight as in Davila) when the plane he
was riding crashed in Minodoro. As a result of his death, his mother, Mrs. Padilla, filed a
complaint against PAL demanding payment of actual and ex damages + attorney‘s fees.
o Note: He was also president of padilla shipping (where he received 1.5k monthly)
and VP of allied overseas trading (where he also received salary), member of
jaycees
After four stipulations of facts, wherein Davila v. PAL was also cited, the TC proceeded with
trial and awarded Mrs Padilla 477k as award for expected income of Nicanor, moral
damages and attorneys fees. Affirmed by CA.
PAL appealed, arguing that the life expectancy should be computed on the basis of Mrs.
Padilla‘s life expectancy and not Nicanor‘s. It pointed to foreign jurisprudence which held
that the LE should be computed based on the decedent‘s LE or the recipient/beneficiary,
whichever is shorter
Issue: Was the award of damages proper? METHOD CORRECT, BUT AMOUNT IMPROPER
Following the procedure used by the Supreme Court in the case of Davila vs. PAL, 49
SCRA 497, the trial court determined the victims gross annual income to be P23,100 based
on his yearly salaries of P18,000 from the Padilla Shipping Company and P5,100 from the
Allied Overseas Trading Corporation.
Considering that he was single, the court deducted P9,200 as yearly living expenses,
resulting in a net income of P13,900 (not P15,900 as erroneously stated in the decision).
Since Nicanor Padilla was only 29 years old and in good health, the trial court
allowed him a life expectancy of 30 years. Multiplying his annual net income of P13,900
by his life expectancy of 30 years, the product is P417,000 (not P477,000) which is the
amount of death indemnity due his mother and only forced heir
DE CALISTON V. CA (PENSION AS LOST INCOME)
Doctrine:
A decedent‘s pension for 1 year may be awarded as actual damages
Facts:
While driving a bus, Dalmacio ran over Darrocha, a USVA pensioner. Darrocha died
instantly and was survived by her only child, Gloria.
Dalmacio was convicted for homicide through reckless imprudence and was ordered to pay
15k for death, 5k as moral, 5k for burial and 10k for loss of pension. This was, however,
revered.
Issue: Should the pension be awarded? YES.
The pension of the decedent being a sure income that was cut short by her death for which
Dalmacio was responsible, the surviving heir of the former is entitled to the award of P
10,000.00 which is just equivalent to the pension the decedent would have received for one
year if she did not die
On the other hand, the P5,000.00 paid to Gloria by the insurer of the passenger bus which
figured in the accident may be deemed to have come from the bus owner who procured the
insurance. Since the civil liability (ex-delicto) of the CC for the death caused by his driver is
subsidiary and, at bottom, arises from the same culpa, the insurance proceeds should be
credited in favor of the errant driver.
7 DE LIMA V. LAGUNA TAYABAS (INTEREST, DEATH INDEMNITY)
Doctrine:
As an exception to the general rule, the said heirs who did not appeal the judgment, should
be afforded equitable relief by the courts as it must be vigilant for their protection. The
claim for legal interest and increase in the indemnity should be entertained in spite of the
failure of the claimants to appeal the judgment
Facts:
A passenger bus of LTB and a truck of 7-up Bottling Co collided which resulted in the death
of Petra de la Cruz, and injures to de Lima and Flores, all passengers of LTB. 3
consolidated suits were filed against LTB.
The TC ruled against LTB and Claro Samonte ordering them to pay the following:
o To de Lima: loss of money, medical expenses, lost earnings, atty‘s fees
o To heirs of de la Cruz: death indemnity, funeral expense, lost money, funeral
expenses, loss of earning capacity
o To Flores: loss of earning capacity and atty‘s fees
But interest was not included in the judgment. Flores filed a motion to
include interest but it was not acted upon.
Only the defendants appealed to the CA because the victims already wanted to get the
money. The petitioners (victims) filed a motion in the CA, seeking for an immediate decision
of the appeal, with a prayer that legal interest be granted from the date of the TC decision
and for the increase of the death indemnity.
The CA however, held that interest was to be counted from the date of its decision until
actual payment because the defendants failed to appeal the TC decision. Hence, the
petitioners appealed.
Issue: Should interest be granted from the date of TC‘s decision or the CA‘s decision?
Legal interest of (6%) should be granted from the time of the TC‘s decision and not the
CA‘s decision.
Moreover, it is the general rule that a party who does not appeal from the decision may not
obtain any affirmative relief from the appellate court other than what he has obtained from
the lower court, if any, whose decision is brought up on appeal. However, in this case,
Flores was able to file a motion but it was not acted upon. The CA was correct in granting
interest.
Under the circumstances of this case, where the heirs of the victim in the traffic accident
chose not to appeal in the hope that the transportation company will pay the damages
awarded by the lower court but unfortunately said company still appealed to the Court of
Appeals, which step was obviously dilatory and oppressive of the rights of the said
claimants: that the case had been pending in court for about 30 years from the date of the
accident in 1958 so that as an exception to the general rule aforestated, the said heirs who
did not appeal the judgment, should be afforded equitable relief by the courts as it must be
vigilant for their protection. The claim for legal interest and increase in the indemnity
should be entertained in spite of the failure of the claimants to appeal the judgment.
Death indemnity awarded also increased to 30k pursuant to prevailing jurisprudence.
Petitioners de lima et al. win
42
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 8 (COMMON CARRIERS, DAMAGES)
1. Marchan v. Mendoza (Bus fell into a ditch, exemplary and actual damages0
Doctrine:
when plaintiffs prayed in their complaint for such other relief and remedies that may be
availed of under the premises, in effect, therefore, the court is called upon the exercise and
use its discretion whether the imposition of punitive or exemplary damages even though not
expressly prayed or pleaded in the plaintiffs' complaint
Characteristics of exemplary damages:
o They cannot be recovered as a matter of right and its determination is upon the
discretion of the court.
o The amount of exemplary damages need not be proved because they depend on
the actual damages awarded.
o If it doesn‘t have to be proven, then it doesn‘t have to be specifically alleged,
since it depends on the w/n actual damages should be awarded anyway.
If there is no death or no bad faith attending the breach of the contract of the carriage,
moral damages cannot be awarded.
Facts:
A passenger bus of Phil Rabbit (PRBL) being driven by Marchan fell into a ditch because
Marchan sped up recklessly and had to make a hard brake to avoid a parked truck.
Several passengers were injured. Aresenio Mendoza, his wife and child were also injured
as a result of being thrown out of the ground. Arsenio got paralyzed and it was opined that
he may never walk again.
As a result, Marchan was convicted for causing injuries due to reckless imprudence. The
Mendoza family sought to recover damages against Marchan and Buan, the owner of
PRBL. It was predicated on a breach of contract of carriage and on account of criminal
negligence of Marchan. TC found PRBL liable and held it to pay 40k in actual damages.
and 30k in exemplary damages. CA affirmed.
Issue: 1) is PRBL liable under the contract of carriage?? 2) Was award of damages proper?
As to liability: Yes. It was undisputed that Marchan was then at the steering wheel of the
bus and the riding public is not expected to inquire before they board the bus w/n the driver
is authorized. In fact, ―common carriers cannot escape liability "for the death of or injuries to
passengers through the negligence and willful acts of the former's employees, although
such employees may have acted beyond the scope of their authority or in violation of the
orders..."
As to the damages:
o ACTUAL: 40k was reasonable given that Arsenio, 26 at that time, was paralyzed
and also had a steady job as an assistant supervisor. (note: formula to compute
life expectancy was not used) The SC upheld the CA‘s discretion in affirming the
award of damages.
o EXEMPLARY:
PRBL, Marchan argued that exemplary damages shouldn‘t have been
awarded because it was not specifically prayed for. However, in the
complaint, the Mendoza family ―prayed for other relief that the court
may deem just and equitable‖ This prayer was held to be enough for
the court to exercise its discretion in awarding exemplary damages.
SC further explained exemplary damages. It held that exemplary
damages may be imposed by way of example or correction only in
addition (among others) to actual damages.
They cannot be recovered as a matter of right and its
determination is upon the discretion of the court.
The amount of exemplary damages need not be proved
because they depend on the actual damages awarded.
If it doesn‘t have to be proven, then it doesn‘t have to be
specifically alleged, since it depends on the w/n actual
damages should be awarded anyway.
Ruling: CA affirmed, Mendozas entitled to interest on actual damages from date of TC
decision and legal interest on exemplary damages from the date of the CA decision.
2. FORES V. MIRANDA (CC MUST BE IN BAD FAITH FOR IT TO BE LIABLE FOR MORAL
DAMAGES)
Doctrine:
To sue for moral damages under a breach of a contract of transportation,
o 1) it must be proven that the common carrier acted in bad faith (in relation to the
breach of the contract in other words, bad faith attended the accident and
o 2) if the passenger died moral damages to the ascendants and descendants
Facts:
Miranda was a passenger in a jeepney, owned by Fores and driven by Luga. The jeepney
got into an accident while descending the Sta. Mesa Bridge as a high speed and it then hit
the bridge wall. Miranda got injured and he got a fracture and was unable to use his right
arm
o Fores was a painter by profession and was a fine arts professor
Fores was criminally charged and was held to be guilty. TC awarded 10k in actual
damages. The CA, however, reduced the sum to 2k. It however, upheld the award of moral
damages to be paid to Miranda
Issue: Is Fores liable for moral damages? No.
The general rule is that under Art 1764 (in relation to 2206), the provision entitles the heirs
of the deceased passenger to ―demand moral damages by reason of the death of the
deceased‖
But the rule of Art 1764 holds that where the injured passenger does not die, moral
damages are only recoverable if it can be proven that the carrier is guilty of bad faith.
However, in this case, it was only shown the carrier was merely negligent and was not in
bad faith. To award moral damages for breach of contract, therefore, without proof of bad
faith or malice on the part of the defendant, as required by Art. 2220, would be to violate
the clear provisions of the law, and constitute unwarranted judicial legislation.
Actual damages, however, were still awarded.
43
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
3. PRBL, NICASIO DE LOS REYES V. ESGUERRA
Doctrine:
Moral damages are not recoverable in actions for damages predicated on a breach of the
contract of transportation, as in the instant case, in view of the provisions of Articles 2219
and 2220 of the New Civil Code. The exceptions are (1) where the mishap results in the
death of a passenger, and (2) where it is proved that the carrier was guilty of fraud or bad
faith, even if death does not result
Facts:
Esguerra was a passenger of PRBL. He sat at the left end of the 4 th row behind the driver
close to the window. During the trip, the bus sideswiped a freight truck owned by Transport
Contractors. As a result, Esguerra‘s left forearm was injured and it had to be amputated.
PRBL, Reyes and Transport Contractors were held liable for moral damages (5k) and
attorney‘s fees to Esguerra, due to an accident. Thus, PRBL and Reyes went to the SC to
assail the award of moral damages.
Issue: Should moral damages be awarded? No.
Moral damages are not recoverable in actions for damages predicated on a breach of the
contract of transportation, as in the instant case, in view of the provisions of Articles 2219
and 2220 of the New Civil Code. The exceptions are (1) where the mishap results in the
death of a passenger, and (2) where it is proved that the carrier was guilty of fraud or bad
faith, even if death does not result.
The Court of Appeals found that the two vehicles sideswiped each other at the middle of
the road. In other words. both vehicles were in their respective lanes and that they
did not invade the lane of the other. It cannot be said therefore that there was fraud
or bad faith on the part of the carrier's driver. This being the case, no moral damages
are recoverable.
However, with respect to attorney's fee of P2,000.00, the same need not be proved as
herein petitioners contended. The same is allowed in the discretion of the court after
considering several factors which are discernible from the facts brought out during the trial.
In this case, plaintiff was compelled to litigate and incur expenses in order to protect his
interest.
4. CHINA AIRLINES V. IAC
Doctrine:
(repeated doctrine as with PRBL)
To justify award of exemplary damages, the CC must be in bad faith in breaching the
contract of carriage.
Facts:
After a 4 day delay due an engine malfunction, Osorio and others boarded a China airlines
flight for Taipei. From there, they were supposed to go to LA, but because of the delay,
China Airlines instead paid for their accommodations and agreed to bring them to SAN
FRANCISCO instead, where they will be furnished an immediate flight to LA.
However, when they arrived in SF, they were not immediately issued tickets because the
instructions (via TELEX) from Manila did were not received on time. While stuck in SF, they
were not provided accommodations and food as transit passengers by Dennis Cheng, a
China Airlines employee based in SF. Due to this refusal, they all walked out without
leaving a contact address. Thus, when word from Manila came at 6:45 p.m. authorizing the
issuance of tickets for LA, they could not be found.
It was only on the following day, after spending a night at the YMCA, that they learned that
their tickets and luggage were ready for pick up. However, Osorio chose to go to LA with a
Western Airlines Ticket.
Osorio sued China Airlines and was only awarded the amounts she spent as an
involuntarily rerouted passenger in SF and the money she paid for her Western Air tickets.
CA, however reversed and ordered payment of actual, moral and exemplary damages.
Issue: 1) Was there a breach of contract of carriage? 2) Should moral damages be awarded?
As to breach:
o The records show that Osorio was assured of an immediate flight connection
from SF to LA. Due to the delay of the receipt of instruction however, the
promised immediate flight connection was not made. Indeed, there was a breach
of contract in failing to secure an immediate flight connection. CC‘s are duty
bound to carry passengers to their destination as far as human care and
foresight can provide.
As to moral damages:
o The breach however, was not attended by bad faith. The Manila office had no
other choice but to use TELEX because phone communication was not the
practice due to the time difference.
o Moreover, Dennis Cheng did not act in bad faith for his refusal to give
accommodations, food and issue the ticket was precisely because of the fact that
the instructions were not yet received.
The breach of contract under consideration having been incurred in good faith, petitioner
airlines is liable for damages which are the natural and probable consequences of said
breach and which the parties have foreseen at the time the obligation was constituted.
These damages consist of the actual damages awarded by the trial court.
Exemplary deleted because as it was not shown that China Airlines was in bad faith in
breaching the contract of carriage.
Judgment modified with respect to moral and exemplary.
44
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

5. PAL V. MIANO (LUGGAGE NOT IMMEDIATELY DELIVERED TO PASSENGER BUT

Issue: Is NW liable for moral and exemplary damages? No.
WAS TRACED AND FOUND, NO BAD FAITH, NO MORAL DAMAGES)

Doctrine: There was no bad faith on the part of NW because due to weight restrictions, the baggage
had to be transported on a different flight that was expected to arrive at the same time as
In breach of contract of carriage by air, moral damages are awarded only if the defendant
that of the Tans‘ plane.
acted fraudulently or in bad faith
It is admitted that respondent failed to deliver petitioner's luggages on time. However, there
was no showing of malice in such failure. By its concern for safety, respondent had to ship
Facts:
the baggages in another flight with the same date of arrival. Hence, there was no bad faith.
Miano took a PAL flight for Germany. He had an immediate connecting flight to Vienna. At
NAIA, he checked in out brought suitcase, allegedly containing money, a Nikkon Camera Where in breaching the contract of carriage the defendant airline is not shown to have
acted fraudulently or in bad faith, liability for damages is limited to the natural and probable
and clothes. However, upon arriving at Vienna, his luggage was missing.
consequences of the breach of obligation which the parties had foreseen or could have
o After 11 days, his suitcase was delivered to him in his hotel. He claimed he was
reasonably foreseen. In that case, such liability does not include moral and exemplary
forced to borrow money to buy some clothes, lost his camera and had to pay for
damages
the transportation of his luggage.
He wrote a demand letter but since it went unheeded, he sued PAL for damages before
How does a tracer telex work?
RTC Makati. RTC granted actual moral, exemplary and atty‘s fees.

Issue: Is the award of moral damages justified? No.
In breach of contract of carriage by air, moral damages are awarded only if the defendant
acted fraudulently or in bad faith. There was no bad faith on the part of PAL as it
immediately coordinated with its Central Baggage Services to trace the suitcase and
succeeded in finding it.
At the hearing, PAL‘s Manager for Administration of Airport Services Department Miguel
Ebio testified that their records disclosed that Manila, the originating station, did not receive
any tracertelex. A tracer telex, an airline lingo, is an action of any station that the airlines
operate from whom a passenger may complain or have not received his baggage upon his
arrival. It was reasonable to presume that the handling of the baggage was normal
and regular. Upon inquiry from their Frankfurt Station, it was however discovered
that the interline tag of private respondent's baggage was accidentally taken off.
We can neither sustain the award of exemplary damages. The prerequisite for the award of
exemplary damages in cases of contract or quasi-contract is that the defendant acted in
wanton, fraudulent, reckless, oppressive, or malevolent manner.
6. TAN V. NORTHWEST AIRLINES (LUGGAGE NOT DELIVERED ON TIME BECAUSE IT
HAD TO BE TRANSFERRED TO ANOTHER PLANE DUE TO WEIGHT RESTRICTIONS)
Doctrine:
Where in breaching the contract of carriage the defendant airline is not shown to have
acted fraudulently or in bad faith, liability for damages is limited to the natural and probable
consequences of the breach of obligation which the parties had foreseen or could have
reasonably foreseen. In that case, such liability does not include moral and exemplary
damages
8. LTB V. CORNISTA (RECKLESS DRIVING + FAILURE TO INSTALL SAFEGUARDS
FOR PASSENGERS = BAD FAITH = MORAL DAMAGES)
Facts:
Juliet Cornista sued LTB alleging that she sustained injuries due to the negligence of LTB‘s
driver. The driver was driving fast on a curve. Moreover, the right side of the bus was not
covered by any safeguard to prevent passengers from falling.
She was awarded moral damages in addition to actual damages. Thus, LTB sought a
review to set aside moral damages.
Issue: Should moral damages be granted? Yes
Regarding petitioner's contention that no award of moral damages should have been made
in favor of the injured passenger, it must be borne in mind that the court of origin not only
found petitioner's driver guilty of reckless driving, but also found petitioner itself guilty of
negligence because "the right side of said bus is not covered nor protected by any bar to
safeguard passengers sitting at the extreme ends of the seats on the right side from falling
therefrom."
Under the provisions of Art. 2220 of the New Civil Code, in cases of breach of contract
(including one of transportation or carriage), either fraud or bad faith, that is, wanton and
deliberately injurious conduct on the part of the carrier is necessary to justify an award of
moral damages. Petitioner's negligence consisting in its failure to cover the right side of the
bus in question with a bar or some other contrivance to safeguard or protect passengers
falls within this category of misconduct. Moral damages upheld.

Facts:
The Tans boarded NW bound for Philippines from Chicago with a stop-over at Detroit.
Upon arrival at PH, their baggage was missing and were informed that their baggage might
still be in another plane in Japan. The baggage, which was loaded in another NW plane,
was recovered but the contents were destroyed/soiled.
They sued NW for damages. NW argues that the baggage could not be carried on the
same flight because of ―weight restrictions‖ TC awarded actual, moral and exemplary.
45
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
9. DR. ARMOVIT V. CA, NORTHWEST (FAMILY BUMPED OFF THE PLANE BECAUSE
THE AIRLINE MADE THE MISTAKE IN CONFIRMING WHAT TIME THE FLIGHT WAS)
Doctrine:
Gross negligence may amount to bad faith and it will justify the award of moral damages in
cases of breach of contract of carriage
Nominal damages cannot co-exist with actual damages.
Facts:
The Armovit family decided to spend their xmas in Philippines so they bought 3 roundtrip
tickets from US to PH and back. On their ticket, there was a statement by the sales agent
that their flight from Manila to Tokyo was at 1030am. This was reconfirmed by the family
with the office.
They arrived at NAIA at 9:15am. However, they were rudely informed that they cannot
board because the flight time was actually at 915 and 1030 was wrong. Thus, they sued
NW and were awarded actual, moral, nominal and exemplary damages. The CA, however,
deleted the award for nominal moral damages and reduced the award for exemplary (500k-
100k) due to their failure to testify on their ―sleepless nights, etc‖
Issue: Should moral damages be awarded? Yes.
Court cited Air France wherein damages were awarded for the gross negligence of the
airline which amounted to bad faith. In this case, there was indeed bad faith as 1) the airline
did not correct the entries and 2) they were rudely informed that they were bumped off
They only 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 a 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.
However, Dr. Armovit‘s brother (Atty. Armovit) testimony sufficed as he was with them
when they checked in up to their departure.
Moral damages awarded but only 100k because NW accommodated them and boarded
them on the same day
Exemplary damages: 100k sufficient as example for public good.
Nominal damages: should be deleted because it cannot co-exist with actual damages.
10. TRANS WORLD AIRLINES V. CA (LAWYER DOWNGRADED TO ECONOMY,
TREATED RUDELY)
Facts:
Rogelio Vinluan (ACCRA partner) had to travel to Europe and US to attend to some
matters for clients. He bought first class tickets from Manila to Tokyo, Moscow, Paris,
Hamburg, Zurich, NY, LA and Hawaii and back to Manila.
While in Paris, he went to the office of Trans World (TWA) and secured a confirmed
reservation for 1st class from NY to SF. He then reconfirmed it. Upon checking in however,
he was informed that there was no first class seat available and the TWA employees gave
no reason.
o When he began to protest, one of the TWA employees, a certain Mr. Braam,
rudely threatened him with the words "Don't argue with me, I have a very bad
temper‖
o As a result, he had to take the economy seat and was given a refund application.
While waiting for departure however, Vinluan saw that Caucasians were given
priority in 1st class for no show passengers.
Thus, Vinluan sued TWA alleging breach and bad faith. He was awarded actual damages,
moral damages (500k), exemp (300k) and 100k (atty‘s fees) In its defense, LWA argues
that it had to use a smaller plane so 1st class accommodations were less.
Issue: Were the award of damages proper? Yes.
The tickets were reconfirmed twice. He was arrogantly threatened and the white people
were given priority. This attitude and discrimination shows bad faith so the award of moral
and exemplary were justified. Moreover, the plane switch showed that TWA was willing to
sacrifice its 1st class passengers‘ comforts.
However, the moral damages were reduced to 300k and exemp reduced to 200k
11. ALITALIA AIRWAYS V. CA
Spouses Julianos arrived at Rome in order to board an Alitalia Airways flight to Hong Kong.
However, the flight left without them. When he arrived, he returned to his employer Bristol-
Myers (where he was VP), the unused Rome-HK ticket. However, the cost of the Thai
Airways ticket that they had to buy in lieu of Alitalia was not refunded by the office.
The apparent cause why they were not able to board was because they were marked as no
shows. The spouses on the other hand allege they arrived on time but they had to take a
long line because there was no individual check in counters for Alitalia passengers. They
noticed that some passengers were entertained ahead of the line for them to check in but
they were not given the same assistance.
o They even found another Filipino who was similarly treated.
Thus, the spouses sued Alitalia Airways and it was held liable for actual damages, moral
damages (400k) and exemplary (50k) The CA lowered the awards and held that the
spouses were not entitled to a refund (for Alitalia tickets)
Issue: Should actual, moral and exemp damages be awarded?
When an airline issues a ticket to a passenger confirmed on a particular flight, on a certain
date, a contract of carriage arises, and the passenger has every right to expect that he
would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit
for breach of contract of carriage.
That Alitalia had no intention to accommodate all who had confirmed their flight
reservations could be seen in the absence of any measure to contact all possible
passengers for each flight who might be within the airport premises As a result, some
passengers would really be left behind in the long and disorderly queue at the check-in
counter.
As held in Trans World Airlines v. Court of Appeals, such inattention to and lack of care
[by the petitioner airline] for the interest of its passengers who are entitled to its
utmost consideration, particularly as to their convenience, amount to bad faith which
entitles the passenger to the award of moral damages. Ergo, we affirm the respondent
court's award of moral damages at P200.000.00. This award should be sufficient to
46
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
indemnify the Julianos for the delay, inconvenience, humiliation, and embarrassment they
suffered.
Likewise the award of exemplary damages is well-grounded. With dismay, we note, that the
imposition of substantial amounts of damages notwithstanding, international carriers have
not been dissuaded from repeating similar derogatory acts.
12. PAL V. CA (2 CONFIRMED PASSENGERS BUMPED OFF FOR THE COMPANIONS
OF 2 POLITICIANS)
Doctrine:
Intentionally bumping off 2 confirmed passengers for 2 politicians who were unconfirmed
passengers shows bad faith on the part of the CC.
The award of moral and exemplary damages in an aggregate amount may not be the usual
way of awarding said damages. However, there can be no question that the entitlement to
moral damages having been established, exemplary damages may be awarded; and
exemplary damages may be awarded even though not so expressly pleaded in the
complaint nor proved
The amount of exemplary damages need not be pleaded in the complaint because the
same cannot be predetermined. One can merely ask that it be determined by the court as
the evidence may warrant and be awarded at its discretion. This is exactly what private
respondents did.
Facts:
Bagadiong and Sto. Tomas bought 2 tickets from PAL in order to go to Manila from Naga.
Their flight was confirmed by PAL. In the airport, PAL‘s employees got their tickets
supposedly to issue them a boarding pass but before departure, their tickets were not given
back and they were not allowed to board. They were merely refunded their tickets. The
similar thing was done to Santos. In effect, the passengers were bumped off.
Thus, they sued PAL for damages and the TC found PAL guilty of breach of the contract of
carriage and awarded actual, moral and exemplary damages. PAL, in its defense, alleged
that the bumping off was due to a heavy booking of passengers due to the coming of the
Pope and because of the ―unlawful acts‖ of 2 companions of Gov. Alberto and Mayor
Antonio
Issue: Should moral damages be awarded? Yes.
It was discovered that PAL‘s employees knew there was a heavy booking and that it still
accommodated the 2 companions of Governor Alberto and Mayor Antonio, who were not
confirmed passengers, to the detriment of the respondent passengers.
The PAL employees knew that by not allowing petitioners to take the flight to Naga, they
were violating the contract of carriage the defendant had. Even granting all the mistakes
advanced by the defendant, still there would at least be negligence so gross and reckless
that it amounts to malice or bad faith in its breach of contract with the plaintiffs
The alleged fortuitous event, supposedly consisting of the unlawful acts of Governor
Alberto and Mayor Antonio, is not independent of the will of herein petitioner as the obligor
but was caused by the very act of its agents in allowing the governor and the mayor to
board Flight 296R in excess of the number of passengers allotted to them and with full
knowledge that the said flight for Manila was fully booked.
Grant of moral and exemplary damages upheld even if it was lumped together.
13. ZALAMEA V. CA (OVERBOOKING AMOUNTS TO BAD FAITH)
Doctrine:
When an airline issues a ticket to a passenger confirmed on a particular flight, on a
certain date, a contract of carriage arises, and the passenger has every right to
expect that he would fly on that flight and on that date. If he does not, then the carrier
opens itself to a suit for breach of contract of carriage. Where an airline had deliberately
overbooked, it took the risk of having to deprive some passengers of their seats in case all
of them would show up for the check in. For the indignity and inconvenience of being
refused a confirmed seat on the last minute, said passenger is entitled to an award
of moral damages.
Did the CC refund the original unused tickets bought from TWA? No. But the CC refunded
the American Airlines tickets.
Facts:
The Zalamea family bought 3 tickets from the Manila Agent of Transworld Airlines (TWA)
for a flight from NY-LA. They were all confirmed reservations. 2 tickets were bought at a
discount and one was bought for its full price.
Once in NY, they reconfirmed the flight. However, 1 hour before the departure, they were
placed on the wait-list because the plane was apparently full. Only the father was able to
board because he mistakenly presented his daughter‘s full fare ticket.
The wife and daughter were not accommodated in the next flight because it was apparently
full so they bought 2 tickets from American Airlines. TWA overbooked the flights and gave
priority to the ones who bought full-fare tickets.
Upon arrival, they sued PAL for breach of contract of carriage. They were awarded actual
and moral damages.
Issue: Was there bad faith on the part of PAL?
1) When an airline issues a ticket to a passenger confirmed on a particular flight, on
a certain date, a contract of carriage arises, and the passenger has every right to
expect that he would fly on that flight and on that date. If he does not, then the carrier
opens itself to a suit for breach of contract of carriage. Where an airline had deliberately
overbooked, it took the risk of having to deprive some passengers of their seats in case all
of them would show up for the check in. For the indignity and inconvenience of being
refused a confirmed seat on the last minute, said passenger is entitled to an award of moral
damages.
o (disregard for recitation, inserting because it was originally an assigned case)
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, where private
respondent was not allowed to board the plane because her seat had already
been given to another passenger even before the allowable period for
passengers to check in had lapsed despite the fact that she had a confirmed
ticket and she had arrived on time, this Court held that petitioner airline acted in
bad faith in violating private respondent's rights under their contract of carriage
and is therefore liable for the injuries she has sustained as a result.
2) Even on the assumption that overbooking is allowed, respondent TWA is still
guilty of bad faith in not informing its passengers beforehand that it could breach
the contract of carriage even if they have confirmed tickets if there was overbooking.
Respondent TWA should have incorporated stipulations on overbooking on the tickets
issued or to properly inform its passengers about these policies so that the latter would be
prepared for such eventuality or would have the choice to ride with another airline.
47
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
3) Moreover, respondent TWA was also guilty of not informing its passengers of its
alleged policy of giving less priority to discounted tickets. While the petitioners had
checked in at the same time, and held confirmed tickets, yet, only one of them was allowed
to board the plane ten minutes before departure time because the full-fare ticket he was
holding was given priority over discounted tickets. The other two petitioners were left
behind.
In the previously cited case of Alitalia Airways v. Court of Appeals, this Court explicitly held
that a passenger is entitled to be reimbursed for the cost of the tickets he had to buy for a
flight to another airline. Thus, instead of simply being refunded for the cost of the unused
TWA tickets, petitioners should be awarded the actual cost of their flight from New York to
Los Angeles.
Did the CC refund the original unused tickets bought from TWA? No. But the CC refunded
the American Airlines tickets.
14. SINGSON V. CA (FLIGHT COUPON LOST DUE TO NEGLIGENCE OF CATHAY’S
EMPLOYEES)
Doctrine:
―However, the P500,000.00 moral damages and P400,000.00 exemplary damages
awarded by the trial court have to be reduced. The well-entrenched principle is that the
grant of moral damages depends upon the discretion of the court based on the
circumstances of each case. This discretion is limited by the principle that the "amount
awarded should not be palpably and scandalously excessive" as to indicate that it was the
result of prejudice or corruption on the part of the trial court. 17 Damages are not intended
to enrich the complainant at the expense of the defendant. They are awarded only to
alleviate the moral suffering that the injured partly had undergone by reason of the
defendant's culpable action.
Example of acts which show bad faith attending the breach of the K of carriage.
Facts:
On 1988 Singson and his cousin Tiongson, bought a Cathay ticket for 2 open-dated,
identically routed, roundtrip plane tickets (from Manila to US)
o Each ticket consisted of six (6) flight coupons corresponding to this itinerary:
flight coupon no. 1 — Manila to Hongkong; flight coupon no. 2 — Hongkong to
San Francisco; flight coupon no. 3 — San Francisco to Los Angeles; flight
coupon no. 4 — Los Angeles back to San Francisco; flight coupon no. 5 — San
Francisco to Hongkong; and, finally, flight coupon no. 6 — Hongkong to Manila.
The procedure was that at the start of each leg of the trip a flight coupon
corresponding to the particular sector of the travel would be removed from the
ticket booklet so that at the end of the trip no more coupon would be left in the
ticket booklet. (MNL-HK-SF-LA-SF-HK-MNL)
After spending time in LA, they decided to go back home to MNL. In Cathay‘s LA office,
Singson could not get a flight back to MNL because the flight coupon corresponding to SF-
HK was not there. Instead, what was left was the SF-LA (an earlier flight he already took)
When he tried to talk to Cathay, Cathay just told him to go look for the missing coupon
himself.
Singson sued Cathay for damages, alleging it was in bad faith.
Issue: Was Cathay in bad faith? Yes.
The roundtrip ticket issued by Cathay to Singson was a perfected contract and was even
partially executed.
Moreover, it appears that Cathay was responsible for the loss of the important coupon. Two
things could‘ve happened. First, US Air (cathay‘s agent) mistakenly detached the wrong
coupon or the booking agent really did not include such coupon upon its issuance of the
ticket. Thus, in either case, Cathay was the proximate cause of the breach of the contract
of carriage.
As to moral damages, These are the reasons why the breach was attended with bad faith:
1) Cathay is liable because it was the cause of the loss/non-issuance of the coupon. 2)
Cathay‘s employees could‘ve easily ascertained Singon‘s reservations with its computer
but it did not do so. 3) Cathay even told Singson to look for the SF coupon and verify it
himself with Cathay‘s SF‘s office. Breach of contract attended with bad faith, but moral and
exemp damages reduced.
15. LTB V. DIASANTA (RECKLESS DRIVING = BAD FAITH)
Facts:
On 1958, Diasanta boarded an LTB bus bound for Manila. The driver, Betito, drove the bus
recklessly and as a result, the bus went off the asphalted part and on to the shoulder. The
bus jumped up and down so violently that Diasanta suffered a fractured vertebrate. She
was put in a cast for several months.
The TC awarded actual, moral and exemplary. CA, however, reduced the lumped award of
3k for moral and exemp to 1k.
Issue: Is LTB liable for the damages? Yes.
As regards the exemplary damages, Article 2232 of the Civil Code of the Philippines
provides that, in contracts and quasi-contracts the court may award exemplary damages if
the defendant acted in a "wanton, fraudulent,reckless, oppressive or malevolent manner."
In the case at bar, petitioner's driver and, hence, its agent, has been found guilty of
recklessness..
It may not be amiss to note, also, that courts have discretion to grant or not to grant
exemplary damages and that the circumstances obtaining in this case do not warrant
interference with the exercise of such discretion by the lower courts
16. MUNSAYAC V. DE LARA (CC NOT LIABLE FOR EXEMP IF IT DID NOT RATIFY
RECKLESS DRIVING THAT AMOUNTS TO BAD FAITH)
Doctrine:
Owners of CC‘s cannot be held liable for exemplary damages unless it is shown that it
authorized or ratified its driver‘s reckless driving which resulted to the breach of the contract
of carriage. SC held that it should be the driver that should be liable for such damages.
Facts:
Munsayac was a passenger on a jeep owned and operated by de Lara. Munsayac suffered
injuries because the driver drove at high speed even if the road was under repair and even
if the passengers asked him to slow down.
De Lara was sued and was ordered to pay actual and exemplary damages and atty‘s fees.
de Lara appealed. Exemplary damages were awarded because despite of Munsayac’s
extra-judicial demands for damages, de Lara still did not pay
48
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Issue: Is de lara liable for exemplary damages? No.
It is difficult to conceive how the defendant in a breach of contract case could be held to
have acted in a wanton, fraudulent, reckless, oppressive or violent manner within the
meaning of Article 2232 for something he did or did not do after the breach, which had no
causal connection therewith. The law does not contemplate a vicarious liability on his part:
the breach is his as party to the contract, and so if he is to be held liable at all for exemplary
damages by reason of the wrongful act of his agent, it must be shown that he had
previously authorized or knowingly ratified it thereafter, in effect making him a co-
participant.
From the decision under review, however, there is nothing to show previous authority or
subsequent ratification by de Lara insofar as the recklessness of the driver was concerned.
The mere statement that the defendant failed, even refused, to placate the suffering
of the plaintiff, necessitating the filing of the action, is too tenuous a basis to warrant
the conclusion that the defendant approved of the wrongful act of his servant with
full knowledge of the facts.
It is not enough to say that an example should be made, or corrective measures employed,
for the public good, especially in accident cases where public carriers are involved. For the
causative negligence in such cases is personal to the employees actually in charge
of the vehicles, and it is they who should be made to pay this kind of damages by
way of example or correction, unless by the demonstrated tolerance or approval of
the owners they themselves can be held at fault and their fault is of the character
described in Article 2232 of the Civil Code. Otherwise there would be practically no
difference between their liability for exemplary damages and their liability for compensatory
damages, which needs no proof of their negligence since the suit is predicated on breach
of contract and due diligence on their part does not constitute a defense.
17. SARKIES TOURS V. IAC (CORREGIDOR TRIP, CHILD DROWNED, EXEMPLARY
DAMAGES)
Facts:
Sarkies Tours advertised its tours to Corregidor on Independence day for PhP10 per
person including boat fare, shrine fee and tour. Thus, the spouses Dizon (Dizons) bought 6
tickets from Sarkies for them and their children. Two kinds of tickets were issued (one blue
ticket and one white ticket where the word ―EDISCO‖ was handwritten) so white: boat
and blue: bus
They were transported by the Sarkies bus to Pasig River where they boarded M/V Edisco,
which was owned by Mendoza, to go to Corregidor. The boat was an oversized banca not
licensed to ferry passengers or operate as a watercraft. It was also overloaded.
On the return trip, the boat capsized and as a result, they lost their belongings and one of
their children, Merceditas, died.
Thus, Dizons sued Sarkies and Mendoza in CFI. CFI exonerated Sarkies from liability
because it was merely a booking agent. The CA, however, held Sarkies and Mendoza both
liable and ordered them to pay among other things, exemplary damages. Sarkies appealed,
taking exception to the exemplary damages.
Issue: Is Sarkies liable together with Mendoza, the boat owner, for exemplary damages?
As to exemplary damages, SC cited Munsayac v. de Lara, which held the general rule that
the driver/employee of the CC should be directly liable for exemplary damages ―unless by
the demonstrative tolerance or approval of the owners they themselves can be held at fault
and their fault is of the character described in article 2232 of the Civil Code.‖
In this case, there is no showing that Sarkies acted in a wanton, reckless or malevolent
manner as a CC nor was there a showing that it ratified the acts of Mendoza.
Dispositve: exemplary damages deleted, moral damages reduced, Mendoza ordered to
reimburse Sarkies, Mendoza still liable.
18. R TRANSPORT V. PANTE (ACCIDENT, A/M/E DAMAGES)
Doctrine:
This case shows that moral damages may be awarded even if there was injury
Facts:
Pante rode an RL bus owned by Lamzon (RL Transport) in Cubao in order to go to Nueva
Ecija. While traveling along Bulacan, the bus hit a tree and a house due to the fast and
reckless driving of the driver, Johnny. As a result, Pante sustained injuries such as a
fracture on his right arm. He underwent two operations and afterwards, his employer
(Goldilocks) refused to accept him because of his disability.
He sued RL Transport and was awarded actual, moral, exemplary and atty‘s fees. CA
affirmed.
Issue: Is RL transport liable for damages?
Yes. In this case, the testimonial evidence of respondent showed that petitioner, through its
bus driver, failed to observe extraordinary diligence, and was, therefore, negligent in
transporting the passengers of the bus safely to Nueva Ecija since the bus bumped a tree
and a house, and caused physical injuries to respondent.
Actual: The award of actual damages based on a statement of account issued by the
hospital is justified. Jurisprudence has held that this is admissible evidence of hospital
expenses that were incurred.
Moral: The Court of Appeals correctly sustained the award of moral damages, citing
Spouses Ong v. Court of Appeals, which awarded moral damages to paying passengers,
who suffered physical injuries on board a bus that figured in an accident. Spouses Ong
held that a person is entitled to the integrity of his body and if that integrity is violated,
damages are due and assessable. Thus, the usual practice is to award moral damages for
physical injuries sustained.
Exemplary: The award is proper because it was shown that the driver was reckless in
driving at a high speed and this in turn caused the injury.
Petitioner lost.
49
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
19. SULPICIO V. CURSO (DIED IN FERRY ACCIDENT, COLLATERALS CANNOT ASK
FOR MORAL DAMAGES)
Doctrine:
If a person dies due to a breach of K of carriage, his brothers and sisters cannot claim for
moral damages. This is based on Art 2206. Moreover, the law provides that Article 2206
shall also apply to the death of a passenger caused by the breach of contract by a
common carrier.
o Article 2206. The amount of damages for death caused by a crime or quasi-delict
shall be at least three thousand pesos, even though there may have been
mitigating circumstances. In addition: ―(3) The spouse, legitimate and
illegitimate descendants and ascendants of the deceased may demand
moral damages for mental anguish by reason of the death of the deceased.‖
the conditions for awarding moral damages are: (a) there must be an injury, whether
physical, mental, or psychological, clearly substantiated by the claimant; (b) there must be
a culpable act or omission factually established; (c) the wrongful act or omission of the
defendant must be the proximate cause of the injury sustained by the claimant; and (d) the
award of damages is predicated on any of the cases stated in Article 2219 of the Civil
Code.
Facts:
Dr. Curso boarded MV Dona Marilyn owned by Sulpicio lines bound for Tacloban.
Unfortunately, in sank while at sea due to a typhoon (Unsang). Dr. Curso died.
His heirs, consisting of his siblings, sued Sulpicio to claim damages based on breach of
contract. Sulpicio denied liability on the ground of fortuitous event (typhoon) and averred
that the boat was seaworthy in all respects. RTC dismissed but CA reversed and granted
damages because it found Sulpicio to be negligent as its officers still chose to set sail
despite the oncoming typhoon. Death indemnity, loss of earning capacity and moral
damages were awarded.
Sulpicio appealed, arguing that it was not liable for moral damages.
Issue: Is Sulpicio lines liable for moral damages? No.
The omission from Article 2206 (3) of the brothers and sisters of the deceased passenger
reveals the legislative intent to exclude them from the recovery of moral damages for
mental anguish by reason of the death of the deceased.
the conditions for awarding moral damages are: (a) there must be an injury, whether
physical, mental, or psychological, clearly substantiated by the claimant; (b) there must be
a culpable act or omission factually established; (c) the wrongful act or omission of the
defendant must be the proximate cause of the injury sustained by the claimant; and (d) the
award of damages is predicated on any of the cases stated in Article 2219 of the Civil
Code.
It is true that they succeeded intestate to Dr. Curso as collaterals but Article 2219
circumscribes the instances in which moral damages may be awarded. The provision does
not include succession in the collateral line as a source of the right to recover moral
damage
In fine, moral damages may be recovered in an action upon breach of contract of carriage
only when: (a) where death of a passenger results, or (b) it is proved that the carrier was
guilty of fraud and bad faith, even if death does not result. Article 2206 of the Civil Code
entitles the descendants, ascendants, illegitimate children, and surviving spouse of the
deceased passenger to demand moral damages for mental anguish by reason of the death
of the deceased.
20. PHILIPPINE HAWK V. TAN LEE
Doctrine:
Whenever an employee’s negligence causes damage or injury to another, there
instantly arises a presumption that the employer failed to exercise the due diligence
of a good father of the family in the selection or supervision of its employees. The
defense under 2180 is that the CC exercised ordinary diligence in selection and supervision
of its employees.
As a rule, documentary evidence should be presented to substantiate the claim for
damages for loss of earning capacity.
o By way of exception, damages for loss of earning capacity may be awarded
despite the absence of documentary evidence when:
(1) the deceased is self-employed and earning less than the minimum
wage under current labor laws, in which case, judicial notice may be
taken of the fact that in the deceased's line of work no documentary
evidence is available; or
(2) the deceased is employed as a daily wage worker earning less than
the minimum wage under current labor laws
Facts:
Vivian and her husband Silvino was riding in their motorcycle. It was alleged by Vivian that
they when they were about to make a turn, they saw a bus, owned by Phil Hawk and driven
by Avila at high speed coming toward them. The bus hit a jeep and their motorcycle. This
resulted to her injuries and the death of her husband, Silvino.
As a result, Vivian Tan Lee filed a complaint against Philippine Hawk and Avila for
damages based on quasi-delict, It was alleged that Vivian was hospitalized at St. Lukes
and that her husband was operating a Caltex Gas station and it earned 1M a year in
revenue.
The bus driver testified that it was the motorcycle that cut the path of the bus which in turn
caused the collision. Phil Hawk testified that it exercised ordinary diligence in selection and
supervision.
The TC ordered Phil Hawk (under 2180) and Avila (2176) to solidarily pay Vivian 745k
actual damages and 50k as moral damages.
o The trial court found that before the collision, the motorcycle was on the left side
of the road, just as the passenger jeep was. Prior to the accident, the motorcycle
was in a running position moving toward the right side of the highway. The trial
court agreed with the bus driver that the motorcycle was moving ahead of the
bus from the left side of the road toward the right side of the road, but disagreed
that the motorcycle crossed the path of the bus while the bus was running on the
right side of the road.
Phil Hawk appealed but the CA affirmed and awarded (added) temperate damages and
death indemnity, and separate actual damages for funeral and medical expenses, and
separate awards for loss of earning capacity.
Issue: Is Phil Hawk liable? Yes. Was CA correct in awarding more damages? Yes.
petitioner‘s bus driver, Margarito Avila, was guilty of simple negligence as affirmed by the
appellate court. Foreseeability is the fundamental test of negligence. To be negligent, a
50
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

defendant must have acted or failed to act in such a way that an ordinary reasonable man
would have realized that certain interests of certain persons were unreasonably subjected
to a general but definite class of risks.
In this case, the bus driver, who was driving on the right side of the road, already saw the
motorcycle on the left side of the road before the collision. However, he did not take the
necessary precaution to slow down, but drove on and bumped the motorcycle, and also the
passenger jeep parked on the left side of the road, showing that the bus was negligent in
veering to the left lane, causing it to hit the motorcycle and the passenger jeep.
o Whenever an employee’s negligence causes damage or injury to another,
there instantly arises a presumption that the employer failed to exercise the
due diligence of a good father of the family in the selection or supervision
of its employees. To avoid liability for a quasi-delict committed by his employee,
an employer must overcome the presumption by presenting convincing proof that
he exercised the care and diligence of a good father of a family in the selection
and supervision of his employee.
The Court upholds the finding of the trial court and the Court of Appeals that Phil Hawk is
liable to Vivian, since it failed to exercise the diligence of a good father of the family in the
selection and supervision of its bus driver, Margarito Avila, for having failed to sufficiently
inculcate in him discipline and correct behavior on the road. Indeed, petitioner‘s tests were
concentrated on the ability to drive and physical fitness to do so. It also did not know that
Avila had been previously involved in sideswiping incidents.

As to damages awarded: As regards the issue on the damages awarded, petitioner

contends that it was the only one that appealed the decision of the trial court with respect to
the award of actual and moral damages; hence, the Court of Appeals erred in awarding
other kinds of damages in favor of Vivian. It is wrong. The CA review matters which TC
overlooked to arrive at a just decision.
o Loss of earning capacity: The indemnity for loss of earning capacity of the
deceased is provided for by Article 2206 of the Civil Code. Compensation of this
nature is awarded not for loss of earnings, but for loss of capacity to earn money.
Thus the award was justified as per the computation as Vivian was able to
present proof
o Death indemnity: As to the 50k death indemnity, it was also justified as being
sanctioned by jurisprudence.
o Temperate damages: The award of the temperate damages is also justified
because there was damage to the motorcycle, but it could not be proved with
certainty.
o Moral damages: also sanctioned because of the death of Vivian‘s husband
Therefore, the Court of Appeals correctly awarded civil indemnity for the death of
respondent’s husband, temperate damages, and moral damages for the physical
injuries sustained by respondent in addition to the damages granted by the trial
court to respondent. The trial court overlooked awarding the additional damages. The
appellate court is clothed with ample authority to review matters, even if they are not
assigned as errors in the appeal, if it finds that their consideration is necessary in arriving at
a just decision of the case.

51
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 9 (WARSAW CONVENTION)
1. KLM Royal Dutch Airlines v. CA (World Tour, Airline that issued tickets for ALL legs of a 3
leg trip, with 2 legs to be serviced by different airlines, is liable for the acts of the employees
of other airlines in breaching the contract of carriage)
Doctrine:
Article 36 of the WC does not apply if there is no accident or delay. In this case, the
manager of the airline breached the contract of carriage by preventing the passengers from
boarding the plane.
If the passage tickets of the spouses provide that the carriage to be performed by
successive carriers would be regarded as a single operation, then it simply means that
the passengers do not enter into individual contracts with each of the carriers that transport
them.
If the printed provisions at the back of the ticket are so small and hard to read, then it will
not bind the passenger.
Facts
Spouses Mendoza approached Tirso Reyes, a manager of the Philippine Travel Bureau (a
travel agency), for consultation about a world tour they intended to take with their daughter
and niece.
They were given a proposed itinerary, wherein they would fly on three different airlines for
three segments of the trip, the longest segment of which would be via KLM. Since they
wanted to visit Lourdes, France, they decided to take the Barcelona (Spain)-
Lourdes(France) route with knowledge that only one airline, Aer Lingus, serviced it.
The spouses approved the itinerary and asked Reyes to make the necessary reservations.
Reyes, in turn, went to KLM to arrange the flights. KLM thereafter, secured seat
reservations for the spouses and their two companions from the carriers which
would ferry them throughout their trip.
They were issued KLM tickets for the entire trip (ticket issuing agent) However, their
coupon for the Aer Lingus portion was marked ―RQ‖, which meant ―on request‖ After
sightseeing in U.S. and Europe, they went to Germany wherein they obtained a
confirmation from Aer Lingus of their seat reservation. When they got to Barcelona to board
the flight to Lourdes, the spouses were denied boarding while the daughter and the niece
were allowed. The Aer Lingus manager brushed them aside and shouted ―Conos!
Ignorantes Filipinos!‖
Thus, the spouses were forced to take the train to Lourdes and had to incur extra
expenses. Therefore, they sued KLM, as principal of Aer Lingus, for breach of
contract of carriage.
KLM argues that 1) according to Art. 36 of the WC, the passenger may only take action
against the carrier who performed the transportation during which the accident or the delay
occurred. 2) ticket provision was printed expressly limited KLM‘s liability for damages only
to occurrences in its own airline 3) that all it did was to request seat reservations from other
airlines and that the spouses entered into independent contracts with each of the carriers
that would fly them (Aer Lingus in particular)
Issue: Is KLM liable? YES
Art. 30 of the WC does not apply because there was no accident or delay. In this case, the
manager of Aer Lingus simply refused to transport the spouses to their contracted
destination.
The ticket provision also cannot be given any credence since the provision was so small
that one had to use a magnifying glass to read the words.
As the airline which issued those tickets with the knowledge that the spouses would be
flown on the various legs of their journey by different air carriers, KLM was chargeable
with the duty and responsibility of specifically informing the spouses of conditions
prescribed in their tickets or, in the very least, to ascertain that the spouses read
them before they accepted their passage tickets
Moreover, the passage tickets of the spouses provide that the carriage to be
performed by successive carriers would be regarded as a single operation.
Therefore, the spouses did not enter into individual contracts with each of the carriers that
ferried them.
Lastly, the spouses dealt exclusively with the KLM which issued the tickets for the entire
trip. These tickets guaranteed to them that they would surely have space in the Aer Lingus
flight. In the legal sense, the KLM had indorsed and in effect guaranteed the
performance of its principal engagement to carry out the spouses’ scheduled
itinerary previously and mutually agreed upon between the parties.
Damages awarded: actual, moral and attorney‘s fees
2. Pan American World Airways v. IAC (stipulation limiting liability, lost profits)
Doctrine:
Stipulations on the ticket that limit the carrier‘s liability for its negligence are VALID so long
as it is not so small as to require a magnifying class and that efforts were made by the CC
to ascertain w/n the passenger read the ticket.
While in San Francisco, Rene Pangan, president of Sotang Bastos and Archer Production,
entered into an agreement where Pangan agreed to supply Primo Quesada with 3 films
('Ang Mabait, Masungit at ang Pangit,' 'Big Happening with Chikiting and Iking,' and
'Kambal Dragon') for exhibition in the United States. Pangan also contracted with
Slutchnick for the exhibition of films in Guam.
It was agreed in both contracts that PANGAN would supply the promotional materials.
To return to Guam, Pangan bought an economy class ticket from PAN AM‘s OFFICE
through a travel agency
2 hours before departure time, PANGAN checked in 2 luggages which contained the
advertising and promotional materials. Subsequently, Pangan was informed that his name
was not in the manifest so he instead had to buy a first class ticket to be in Guam on time.
However, when PANGAN arrived in Guam, his two luggages did not arrive with his flight
and as a consequence, his agreements with QUESADA and SLUTCHNICK were
cancelled.
52
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Thus, PANGAN sued PAN-AM for damages due to breach of contract for the loss of his
luggage and his lost profits. PAN-AM principally argues that liable only for the amount
stipulated in the ticket ($600)
Issue: Does the printed stipulation limiting PAN-AM‘s liability apply? YES
In this case, PANGAN did not declare any higher value for his luggage and he did not pay a
higher rate of freight. Even if PANGAN did not sign the ticket, he is nevertheless bound by
its provisions. It is a contract of adhesion and these kinds of contracts are not entirely
prohibited, as the one who adheres to the contract is in reality free to reject it entirely.
The SC further held that Northwest v. Cuenca (next case) did not hold that the WC
provisions allowing stipulations limiting liability is contrary to public policy.
Lastly, PANGAN is not entitled to the lost profits due to the cancelled contract. This is
because PANGAN did not inform PAN-AM of the special circumstances of the luggage that
required its prompt delivery.
Carrier won: only liable for $600 (lost luggage)
3. Northwest Airlines v. Cuenca
Doctrine
Arts 17, 18 and 19 of the WC merely declare the carrier liable for damages in the
enumerated cases, if the conditions therein specified are present. Neither said provisions
nor others in the aforementioned Convention regulate or exclude liability for other breaches
of contract by the carrier
Facts
In this case, Cuenca sued Northwest Airlines for damages due to a breach of contract of
carriage. Cuenca, who was then Commissioner of Public Highways of the Philippines,
boarded Northwest‘s plane with a first class ticket to Tokyo. However, upon arrival in
Okinawa (stop-over), he was rudely asked to move to the tourist section under the threat of
being left in Okinawa. This is because of the marking on the ticket (―W/L‖) which meant
waitlisted.
Thus, Cuenca sued Northwest. The lower court ruled in Cuenca‘s favor, awarding him
actual and nominal damages.
In its appeal, Northwest argues that pursuant to Arts 17, 18, 19 of the WC, an air carrier is
liable only in the event of death/injury of a passenger, destruction or loss of his checked
baggage or any goods, or of delay in the transportation by air of passengers.
Issue: Is an air carrier liable only in cases specified in the WC? NO
The 3 articles merely declare the carrier liable for damages in the enumerated cases, if the
conditions therein specified are present. Neither said provisions nor others in the
aforementioned Convention regulate or exclude liability for other breaches of contract by
the carrier. Under NORTHWEST’s theory, an air carrier would be exempt from any
liability for damages in the event of its absolute refusal, in bad faith, to comply with a
contract of carriage, which is absurd.
It is true that said ticket was marked "W/L," but Cuenca‘s attention was not called thereto.
Much less was he advised that "W/L" meant "wait listed."
Liability for damages: moral and nominal (because of the rude treatment of employees
with knowledge that he was a public official, court also considered this as exemplary)
4. Alitalia v. IAC (UP professor to present in Italy but ALITALIA lost her bag, SC granted
nominal damages as a result of the lost bag, did not apply WC to limit damages awarded)
Doctrine:
The WC articles should be deemed a limit of liability only in those cases where the cause
of the death or injury to person, or destruction, loss or damage to property or delay in its
transport is NOT ATTRIBUTABLE to or attended by any wilful misconduct, bad faith,
recklessness, or otherwise improper conduct on the part of any official or employee for
which the carrier is responsible, and there is otherwise no special or extraordinary form of
resulting injury.
Facts
Dr. Felipa Pablo, a UP professor was invited to take part at a meeting in Italy due to her
specialized knowledge in ―foreign substances in food and agriculture environment‖
She accepted the invitation thus she was scheduled to read a paper as the SECOND
SPEAKER on the FIRST DAY of the CONFERENCE. The topic was ―The fate of
Radioactive Fusion Products Contaminating Vegetable Crops‖ Thus, she booked a flight
with ALITALIA. However, upon arrival in Italy, she was informed that her luggage was
delayed. Her 2 suitcases contained clothes and her presentation materials.
She tried to locate her suitcases but she could not find it so she simply returned to Manila
without attending the meeting. She subsequently found out that her suitcases were located
and delivered to Ispra, Italy, but only on the day after he scheduled appearance. The
suitcases were eventually returned to her.
ALITALIA argues that the WC should‘ve been applied to limit its liability.
Issue: Should the WC apply to limit ALITALIA‘s liability? NO
The Convention does not thus operate as an exclusive enumeration of the instances of an
airline's liability, or as an absolute limit of the extent of that liability.
In this case, there is no bad faith or improper conduct attributable to the employees of
ALITALIA. ALITALIA merely misplaced her baggage and failed to deliver it to her at the
time appointed with the result that she unable to read the paper and make her presentation.
The bag was even returned to her. NEVERTHELESS, ALITALIA breached its contract of
carriage with DR. PABLO. She underwent distress and anxiety and she was unable to
present and take part in the convention
o In this case therefore, the compensation for the injury suffered by Dr. Pablo
cannot under the circumstances be limited to that prescribed by the
Warsaw Convention for delay in the transport of her baggage. Ergo she
should be awarded nominal damages.
53
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
The WC articles should be deemed a limit of liability only in those cases where the cause
of the death or injury to person, or destruction, loss or damage to property or delay in its
transport is NOT ATTRIBUTABLE to or attended by any wilful misconduct, bad faith,
recklessness, or otherwise improper conduct on the part of any official or employee for
which the carrier is responsible, and there is otherwise no special or extraordinary form of
resulting injury.
o In this case, the employees of ALITALIA were not in bad faith. In fact, as
aforesaid, her luggage was returned to her, albeit tardily. Therefore, Dr. Pablo is
not entitled to be compensated for the loss or damage to her luggage. In effect,
the WC limiting liability of carriers was applied.
.
CA affirmed. ALITALIA loses.
5. PAL v. CA (lost bag, WC inapplicable if CC in bad faith)
Doctrine:
The liability of the common carrier for the loss, destruction or deterioration of goods
transported from a foreign country to the Philippines is governed primarily by the New
Civil Code. In all matters not regulated by said Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by Special Laws. Since
Philippines was the destination, then PH law should apply and it should be applied over the
Warsaw Convention.
This case is authority to the effect that if the CC was not in bad faith, then the WC limiting
liability can apply. If the CC is in bad faith, then PH law may apply and the limits of liability
under the WC cannot be used as a defense by the CC.
Facts:
At about 530am, Isidro Co accompanied by his wife and son, arrived at the airport on board
PAL‘s flight from San Francisco. He only found 8 out of his 9 checked in luggage. PAL‘s
employee was notified of the problem and filled up a form acknowledging the missing
luggage. In turn, Co surrendered all (including the one for his lost bag) of his claim checks
as per PAL procedure.
The luggage was a Samsonite suitcase measuring about 62 inches in length and was worth
around $200. It contained various items such as ―pasalubong‖ and personal effects. In spite
of repeated demands, PAL never recovered the luggage or paid its value. Thus, Co sued
PAL for damages.
PAL was held liable for actual and exemplary damages. TC found that it even fabricated a
―retrieval receipt‖. CA affirmed. It appealed arguing that the Warsaw Convention limits its
liability to checked in baggage to $20 based on weight
Issue: Should the Warsaw convention apply? No
The liability of the common carrier for the loss, destruction or deterioration of goods
transported from a foreign country to the Philippines is governed primarily by the New
Civil Code. In all matters not regulated by said Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by Special Laws.
Since the passenger's destination in this case was the Philippines, Philippine law governs
the liability of the carrier for the loss of the passenger's luggage. Thus, the articles on
presumption of negligence in case of loss applies.
In this case, PAL failed to overcome, not only the presumption, but more importantly,
Co’s evidence proving that the carrier's negligence was the proximate cause of the
loss of his baggage. Furthermore, PAL acted in bad faith in faking a retrieval receipt to
bail itself out of having to pay Co's claim. THEREFORE, the CA did not err in not applying
the WC.
6. Luna v. CA
Doctrine:
The application of the WC must not be construed to preclude the operation of the Civil
Code and other pertinent laws
Facts:
On 1989, petitioners Luna, Alonso and Rodriguez boarded a Northwest flight bound for
Seoul South Korea for a Rotary Convention. They checked in one bag each. However,
upon boarding, they were asked to disembark due to engine trouble and board a Korean
Airlines plane instead.
Upon arrival in Seoul, they discovered that their personal belongings were nowhere to be
found as their bags were allegedly flown to Seattle. It was only 4 days later that they were
able to retrieve their bags from Northwest. By then, the convention was already over.
Petitioners argue that they filed claims with Northwest before filing a complaint in
accordance with the Warsaw Convention. Nevertheless, their actions were dismissed
due to non-compliance with the requirement.
Moreover, petitioners argue that Art. 26 of the Warsaw Convention which prescribes the
reglementary period within which to file a claim cannot be invoked if damage is caused
by the carrier's willful misconduct, as provided by Art. 25 of the same Warsaw
Convention.
Issue: Is Northwest liable for damages? YES
The application of the Convention must not be construed to preclude the operation of the
Civil Code and other pertinent laws.
Hence, petitioners' alleged failure to file a claim with the common carrier as mandated by
the provisions of the Warsaw Convention should not be a ground for the summary
dismissal of their complaints since Northwest may still be held liable for breach of other
relevant laws which may provide a different period or procedure for filing a claim.
(e.g. CIVIL CODE provisions on negligence of CC)
As to argument on applicability of Art 25.
We are unable to agree however with petitioners that Art. 25 of the Convention operates to
exclude the other provisions of the Convention if damage is caused by the common
carrier's willful misconduct. This is because Art. 25 refers only to the monetary ceiling
on damages found in Art. 22 should damage be caused by the carrier's willful
54
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
misconduct. Hence, only the provisions of Art. 22 limiting the carrier's liability and
imposing a monetary ceiling in case of willful misconduct on its part that the carrier cannot
invoke.
In this case, the failure of Northwestto deliver their luggage at the designated time and
place amounted ipso facto to willful misconduct. For willful misconduct to exist, there must
be a showing that the acts complained of were impelled by an intention to violate the law,
or were in persistent disregard of one's rights. It must be evidenced by a flagrantly or
shamefully wrong or improper conduct.
7. Mapa v. CA
Petitioners Cornelio Mapa and Purita Mapa are both established and respectable members
of society., while their daughter Carmina was a student in Boston U. While in Bangkok, they
bought a ticket from Trans-World Airlines (TWA) to go from LA to Chicago (LA-NY-
BOSTON-ST.LOUIS-CHICAGO) Purita and her daughter went to LA from MANILA (but on
a PAL flight
o NOTE: TWA‘s domicile and principal place of business is at KANSAS,
MISSOURI (USA) The contracts (tickets) were perfected in BANGKOK. The
destination is CHICAGO
Upon arrival at the NY airport to go to Boston, Puritan and Carmina checked in SEVEN
bags. They were instructed to proceed to gate 35 for boarding. However, they were
informed that the flight was really boarding in gate 1. When they reached gate 1, they were
informed that the flight had just departed. They were told that they could use the same
boarding pass for another flight scheduled to leave in 30 minutes.
Upon arrival in BOSTON, they only found 3 out of the 7 bags they checked in. However,
TWA could NOT find their bags. They were asked to list down the items inside the bags to
help with the search. However, the bags still could not be found.
The Mapas wrote a demand letter so TWA offered transportation credit/cash settlement
and the Mapas accepted the travel credit. However, TWA disregarded this and unilaterally
declared the payment of $2.5k as full satisfaction of the claim.
THUS, the MAPAS sued TWA in the RTC for damages. TWA filed a motion to dismiss on
the following grounds:
o NO JURISDICTION: accdg to WC, can only file in KANSAS (domicile/principal
place), BANGKOK (perfection) or BOSTON (destination)
o LIMITED LIABILITY: liability limited to $20 per kilo
On the other hand, MAPAS insist that the WARSAW CONVENTION is not applicable to
their case because of the following:
o Contracts of carriage did not involve international transportation because their
itinerary was PURELY within the US.
o Annotation on the ticket ―INT‘L TKT‖ did not make the transportation contract
INTERNATIONAL
TC dismissed for lack of jurisdiction. Thus, Mapas appealed to the SC.
Issue: 1) Were the contracts entered into contracts of international transportation? NO 2) IF yes,
does the RTC have jurisdiction? Did not answer
There are then two categories of international transportation, viz., (1) that where the place
of departure and the place of destination are situated within the territories of two High
Contracting Parties regardless of whether or not there be a break in the transportation or a
transshipment; and (2) that where the place of departure and the place of destination are
within the territory of a single High Contracting Party if there is an agreed stopping place
within a territory subject to the sovereignty, mandate, or authority of another power, even
though the power is not a party to the Convention.
The contracts of transportation in this case are evidenced by the two TWA tickets, On the
basis alone of its provisions, it is obvious that the place of departure and the place of
destination are all in the territory of the United States, or of a single High Contracting
Party. The contracts, therefore, cannot come within the purview of the first category
of international transportation. Neither can it be under the second category since there
was NO agreed stopping place within a territory subject to the sovereignty, mandate,
or authority of another power.
The Manila-LA flight does not make the whole contract international because the basis of
the FIRST CATEGORY is based on ―the contract made by the parties‖ The Manila-LA flight
is INDEPENDENT of the TWA tickets issued in Bangkok. Moreover, the Manila-LA flight
and the LA-Boston flight were not regarded as an ―undivided carriage‖ or as a ‖single
operation‖
TC incorrect in dismissing. MAPAs win. Case remanded for trial.
8. PAL v CA, Chua Min (CC failed to present baggage check in evidence, therefore it
cannot use WC provisions limiting its liability to an amount per kg)
Facts
Chua Min boarded PAL‘s flight from HK to Manila and checked in 4 bags. Upon arrival,
Chua Min was unable to locate her two bags containing cinematographic films. In
response, Chua Min sued Pal for the loss of the baggage (20k value)
In its defense, PAL argues that its liability is limited as per the WC and that Chua Min does
not have personality to file the case because it was owned by the Hongkong firm of
"Loong Kee Pen Co., Film Exchange Dept‖
Issue: May PAL use the Warsaw Convention to limit its liability? NO
PAL failed to present the baggage check in evidence. Consequently, it cannot capitalize
on the limited liability clause under Article 22 (2) of the Warsaw Convention because of the
unequivocal condition set forth under the second sentence of Article 4, paragraph 4 that:
". . . if the carrier accepts baggage without a baggage check having been delivered, or if the
baggage check does not contain the particulars set out at (d), (f), and (h) above, the carrier
shall not be entitled to avail himself of those provisions of the Convention which exclude or
limit his liability."
55
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
9. Cathay Pacific v. CA (CC lost passenger‘s bag, he was treated rudely and was given $20 to
buy clothing for an executive conference)
Doctrine:
The WC must not be construed to preclude the operation of the Civil Code and other
pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages
for violating the rights of its passengers under the contract of carriage, especially if wilfull
misconduct on the part of the carrier's employees is found or established
Facts:
Tomas Altcantara was a 1st class passenger of Cathay from Manila-HK (flight cx-900) and
HK-Jakarta (CX-711) The purpose of the trip was to attend a conference with the Director
General of Trade of Indonesia. He checked in his luggage containing his clothes and
documents.
Upon arrival in Jakarta, he discovered his bag was missing. He was informed that his bag
was left behind in HK. He was offered $20 in convenience money so he can buy his clothes
while cathay was looking for the bag. When his bag arrived in HK, it was not immediately
delivered to his HOTEL. Cathay instead required that the bag be picked up by a member of
the Philippine embassy.
Alcantara sued CATHAY for damages due to the breach of contract. He was awarded by
the TC 20k moral, 5k, temperate, 10k exemplary. CA affirmed and increased. Thus, Cathay
appealed, arguing 1) that it was not liable for moral damages and that 2) WC convention
should apply
Issue: 1) Is CATHAY liable for the damages? YES 2) Should the WC operate to limit its liability?
NO
1) Moral Damages
CATHAY breached its contract of carriage with Alcantara when it failed to deliver his
luggage at the designated place and time, it being the obligation of a common carrier to
carry its passengers and their luggage safely to their destination, which includes the duty
not to delay their transportation, and the evidence shows that CATHAY acted fraudulently
or in bad faith.
CATHAY was grossly negligent when it failed to deliver the luggage on time. It was
unaware that Alcantara‘s bags were left behind. Moreover, the CATHAY representative
was indifferent, impatient, rude and insulting. He simply advised Alcantara to buy
anything he wanted. But even that was not sincere because the representative knew
that the passenger was limited only to $20.00 which, certainly, was not enough to
purchase comfortable clothings appropriate for an executive conference.
To compound matters, CATHAY refused to have the luggage of Alcantara delivered to him
at his hotel; instead, he was required to pick it up himself and an official of the Philippine
Embassy. THEREFORE, moral and exemplary damages are justified.
2) WC LIABILITY
The WC must not be construed to preclude the operation of the Civil Code and other
pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages
for violating the rights of its passengers under the contract of carriage, especially if wilfull
misconduct on the part of the carrier's employees is found or established, which is
especially the case at bar. In fact, the WC especially provides that:
Art 25(1) The carrier shall not be entitled to avail himself of the provisions of this convention
which exclude or limit his liability, if the damage is caused by his wilfull misconduct or by
such default on his part as, in accordance with the law of the court to which the case is
submitted, is considered to be equivalent to wilfull misconduct."
When CATHAY airline misplaced ALCANTARA‘s luggage and failed to deliver it to its
passenger at the appointed place and time, some special species of injury must have
been caused to him. For sure, the latter underwent profound distress and anxiety, and the
fear of losing the opportunity to fulfill the purpose of his trip. In fact, for want of appropriate
clothings for the occasion brought about by the delay of the arrival of his luggage, to his
embarrassment and consternation respondent Alcantara had to seek postponement of his
pre-arranged conference with the Director General of Trade of the host country.
Cathay loses.
10. Sabena Belgian World Airlines v. CA, Paula San Agustin (passenger‘s bag was lost
TWICE)
Doctrine:
Facts
San Agustin was a passenger of Sabena in a CASABLANCA – BRUSSELS, BELGIUM
flight. She was on her way to Manila. Upon arrival in BRUSSELS, she checked in her bags
containing valuables. Upon arrival in Manila, however, she found out that her bag was
missing.
Sabena informed San Agustin that her bag was found and the locks were broken for
identification. She was assured that her bag would be returned shortly. However, the bag
was lost for the SECOND TIME.
Thus, San Agustin sued Sabena and was awarded actual, moral, exemplary damages. In
its defense, Sabena argues that San Agustin was guilty of contributory negligence for
leaving her bag even if her flight was not yet confirmed and that WC provisions limiting its
liability to $20 per kilo unless a higher value is declared APPLIED.
Issue: Is Sabena liable for damages? Does the WC apply?
Sabena is liable for damages. It was the proximate cause of the loss which occurred while
the bags were in its custody. It is grossly negligent for losing the bag twice.
Since it was grossly negligent, it cannot seek refuge under the limitation on liability
provision under the WC. Under domestic law and jurisprudence (the Philippines being the
country of destination), the attendance of gross negligence (given the equivalent of fraud
or bad faith) holds the common carrier liable for all damages which can be reasonably
attributed, although unforeseen, to the non-performance of the obligation, including
moral and exemplary damages.
56
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
11. United Airlines v. Uy
Doctrine:
If the CC employs DELAYING TACTICS, the 2 year time bar under the WC to file a
complaint CANNOT be used by such CC.
CCs may be held liable for breaches of other provisions of the CC which provide for a
different reglementary period (tort: 4 years)
Facts
Uy was a revenue passenger in a United Airlines flight from San Francisco to Manila. In SF,
he checked in together with his luggage. However, 1 piece was found to be overweight.
United Airlines‘ employee rebuked him and told him he should‘ve known that the limit was
70kgs. He was told by the employee in a loud voice to transfer some of his items to his
other bags. However, the bags were still overweight.
He offered to pay overweight charges with an MCO (miscellaneous charge order/pre-paid
credit) but it was refused. Thus, he paid for the overweight charges. Upon his arrival in
Manila, he discovered that one of his bags had been slashed and its contents were stolen.
On OCT 16, 1989, He wrote United Airlines to complain about what happened and he was
merely sent a check. In response, he sent 2 more letters (1/4/90 and 10/28/91) demanding
an out of court settlement of 1M through his lawyer, Atty. Ramon Ampil.
On JUNE 1992, he sued United Airlines for damages due to 1) shabby treatment and 2)
slashing of his bags. United Airlines moved to dismiss the complaint on the ground that
Uy‘s cause of action has prescribed as per Art. 29 the WC (action must be brought within 2
years reckoned from the date of arrival at the destination)
o In response, Uy argues that par. 2 of Art 29 must be reconciled with par 1. Par. 2
states that the method of calculating the period of limitation must is to be
determined by the law of the court where the case is filed. In this particular case,
he alleges that the period was interrupted because of the 3 letters he sent.
However, TC still dismissed, on the ground of prescription.
Issue: Has Uy‘s cause of action prescribed? NO.
Within our jurisdiction we have held that the Warsaw Convention can be applied, or
ignored, depending on the peculiar facts presented by each case. Thus, we have ruled that
the Convention's provisions do not regulate or exclude liability for other breaches of
contract by the carrier or misconduct of its officers and employees, or for some particular or
exceptional type of damage.
Uy is suing on two (2) causes of action: (a) the shabby and humiliating treatment he
received from United‘s employees at the San Francisco Airport which caused him extreme
embarrassment and social humiliation; and, (b) the slashing of his luggage and the loss of
his personal effects.
While his second cause of action — an action for damages arising from theft or damage to
property or goods — is well within the bounds of the Warsaw Convention, his first cause
of action — an action for damages arising from the misconduct of the airline
employees and the violation of respondent's rights as passenger — clearly is not.
Consequently, insofar as the first cause of action is concerned, Uy‘s failure to file his
complaint within the two (2)-year limitation of the Warsaw Convention does not bar his
action since United may still be held liable for breach of other provisions of the Civil
Code which prescribe a different period or procedure for instituting the action,
specifically, Art. 1146 thereof which prescribes four (4) years for filing an action
based on torts.
As for UY‘s second cause of action, indeed the travaux preparatories of the Warsaw
Convention reveal that the delegates thereto intended the two (2)-year limitation
incorporated in Art. 29 as an absolute bar to suit and not to be made subject to the
various tolling provisions of the laws of the forum. This therefore forecloses the
application of PH rules on interruption of prescriptive periods.
Article 29, par. (2), was intended only to let local laws determine whether an action had
been commenced within the two (2)-year period, and within our jurisdiction an action shall
be deemed commenced upon the filing of a complaint. Since it is indisputable that
respondent filed the present action beyond the two (2)-year time frame his second cause of
action must be barred. Nonetheless, it cannot be doubted that respondent exerted
efforts to immediately convey his loss to petitioner, even employed the services of
two (2) lawyers to follow up his claims, and that the filing of the action itself was
delayed because of Cathay’s evasion.
Verily, respondent filed his complaint more than two (2) years later, beyond the period of
limitation prescribed by the Warsaw Convention for filing a claim for damages. However, it
is obvious that UY was forestalled from immediately filing an action because UNITED
gave him the runaround, answering his letters but not giving in to his demands.
o Hence, despite the express mandate of Art. 29 of the Warsaw Convention that an
action for damages should be filed within two (2) years from the arrival at the
place of destination, such rule shall not be applied in the instant case
because of the delaying tactics employed by petitioner airline itself. Thus,
private respondent's second cause of action cannot be considered as time-
barred under Art. 29 of the Warsaw Convention.
57
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
12. Lufthansa v. CA (intentional bumping off is not the ―delay‖ contemplated by the WC)
Doctrine:
The issuance of a confirmed Lufthansa ticket in favor of Antiporda covering his entire five-
leg trip abroad successive carriers serves as proof that Lufthansa, in effect guaranteed that
the successive carriers, such as Air Kenya would honor his ticket; assure him of a space
therein and transport him on a particular segment of his trip
Facts
Antiporda was a consultant of ADB. He was then contracted by SGV to be a financial
specialist for the Development Bank of Malawi in Africa. He was provided a round-trip
economy ticket from MANILA to BLANTYRE. On Sept 17, 1984, LUFTHANSA (airline)
issued a ticket for ANTIPORDA‘s flight to BLANTYRE, AFRICA. (Manila-SG-Bombay-
Nairobi-Lilongwe-BLANTYRE)
While waiting for his connecting flight from Bombay to Nairobi, he was told by MATIAS,
Lufthansa‘s officer, that his seat going to NAIROBI via AIR KENYA was given to a ―very
important person of BOMBAY who was attending a religious function in Nairobi‖ Thus, he
got stranded and was not able to arrive in NAIROBI as per his schedule.
Thus, ANTIPORDA sued Lufthansa for damages. Lufthansa argues the following 1) since
AIR KENYA was engaged to transport ANTIPORDA during that particular leg of the trip, it
was merely a ticket-issuing agent and 2) the WC provisions provide that the passenger can
only SUE the AIRLINE that was responsible for the DELAY (Air Kenya)
Issue: Was Lufthansa the proper party to sue? YES Is Lufthansa liable for damages? YES
Liability of Lufthansa
The SC rejected Lufthansa's theory that from the time another carrier was engaged to
transport Antiporda on another segment of his trip, it merely acted as a ticket-issuing agent
in behalf of said carrier. In the very nature of their contract,
Lufthansa is clearly the principal in the contract of carriage with Antiporda and
remains to be so, regardless of those instances when actual carriage was to be
performed by various carriers.
The issuance of a confirmed Lufthansa ticket in favor of Antiporda covering his entire five-
leg trip abroad successive carriers serves as proof that Lufthansa, in effect guaranteed that
the successive carriers, such as Air Kenya would honor his ticket; assure him of a space
therein and transport him on a particular segment of his trip.
Warsaw Convention
Section 2, Article 30 of the Warsaw Convention which provides the following:
Art. 30 (1). In the case of transportation to be performed by various successive carriers and
falling within the definition set out in the third paragraph of Article I, each carrier who
accepts passengers, baggage, or goods shall be subject to the rules set out in the
convention, and shall be deemed to be one of the contracting parties to the contract of
transportation insofar as the contract deals with that part of the transportation which is
performed under his supervision.
(2) In the case of transportation of this nature, the passenger or his representative
can take action only against the carrier who performed the transportation during
which the accident or the delay occurred, save in the case where, by express
agreement, the first carrier has assumed liability for the whole journey. (Emphasis supplied)
does not contemplate the instance of "bumping-off" but merely of simple delay. THUS it
cannot provide an excuse for Lufthansa as to exculpate it from any liability to Antiporda.
The payment of damages is, thus, deemed warranted by this Court.
Entitled to Moral and Exemplary
Bad faith attended the performance of the contract of carriage, for even while Antiporda
was in Bombay, representatives of Lufthansa already tried to evade liability
o first, by claiming that the contract of carriage between Lufthansa and Antiporda
ceased at Bombay airport, even if Antiporda was holding a Lufthansa ticket for
the entire five-leg trip;
o second, despite the manager‘s knowledge that Antiporda's seat was allowed to
be given to another passenger, he suppressed the information, presenting
altogether another reason why Antiporda was not listed in the manifest, i.e. that
Air Kenya Boeing 707 was overbooked, notwithstanding clear proof that
Lufthansa in Manila confirmed his reservation for said flight
.
As to exemplary damages, it is clear that Lufthansa, through its representatives in
Bombay, acted in a reckless and malevolent manner in dealing with Antiporda. MATIAS
maltreated ANTIPORDA by throwing his ticket on his lap and telling him to go to the
basement while carrying his 3 heavy bags.
13. British Airways v. CA
Doctrines
The rule that carriage by plane although performed by successive carriers is regarded as a
single operation and that the carrier issuing the passenger's ticket is considered the
principal party and the other carrier merely subcontractors or agent, is a settled issue.
An agent is also responsible for any negligence in the performance of its function and is
liable for damages which the principal may suffer by reason of its negligent act. Hence, the
Court of Appeals erred when it opined that BA, being the principal, had no cause of
action against PAL, its agent or sub-contractor
Facts:
On 1989, Mahtani decided to visit his relatives in BOMBAY, INDIA. His friend, Mr. GUMAR
prepared his travel plans and bought a ticket from BRITISH AIRWAYS (MNL-HK-BOMBAY)
o MNL-HK (through PAL) HK – BOM (through BA)
Mahtani checked in his 2 bags in the PAL counter. When he arrived in BOMBAY, he found
out that his luggage was missing and that upon inquiry from BA representatives, he was
told that the same might have been diverted to LONDON
58
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Back in the PH, Mahtani sued BA and Mr. GUMAR for damages. BA also filed a 3 rd party
complaint against PAL. PAL denies any liability. TC held BA liable for actual damages both
for the CONTENTS of the luggage and the value of the LUGGAGE itself.
o BA in its appeal, argues that the WC limiting its liability for lost luggage should be
applicable and that the 3rd party complaint should not be dismissed.
Issue: Should the liability be limited? Should the 3rd party complaint be dismissed?
Limited Liability Defense under WC subject to waiver
It is the position of BA that there should have been no separate award for the luggage and
the contents thereof since Mahtani failed to declare a separate higher valuation for the
luggage, and therefore, its liability is limited, at most, only to the amount stated in the ticket.
Though, admittedly, in a contract of air carriage a declaration by the passenger of a higher
value is needed to recover a greater amount. Article 22(1) of the Warsaw Convention
provides for this
o American jurisprudence provides that an air carrier is not liable for the loss of
baggage in an amount in excess of the limits specified in the tariff which was filed
with the proper authorities, such tariff being binding, on the passenger regardless
of the passenger's lack of knowledge thereof or assent thereto. This doctrine is
recognized in this jurisdiction.
Notwithstanding the foregoing, the SC has ruled against blind reliance on adhesion
contracts where the facts and circumstances justify that they should be disregarded.
Moreover, the defense of limited liability is subject to WAIVER.
o In this case, BA had waived the defense of limited liability when it allowed
Mahtani to testify as to the actual damages he incurred due to the misplacement
of his luggage, without any objection. Moreover, it even cross-examined
MAHTANI.
As to 3rd party complaint
3rd party complaint should NOT have been dismissed. Mahtani is entitled to damages from
BA, in view of their contract of carriage. Yet, BA and PAL are blaming each other as to who
is at fault so BA wants to sue PAL.
In resolving this issue, it is worth observing that the contract of air transportation was
exclusively between Mahtani and BA, the latter merely endorsing the Manila to Hongkong
leg of the former's journey to PAL, as its subcontractor or agent.
o Since the instant petition was based on breach of contract of carriage, Mahtani
can only sue BA alone, and not PAL, since the latter was not a party to the
contract. HOWEVER, this is not to say that PAL is relieved from any liability due
to any of its negligent acts. This is because PAL, as agent, may also be held
liable for its own negligence.
Accordingly, the court should have allowed the 3rd party complaint. It is but logical, fair and
equitable to allow BA to sue PAL for indemnification, if it is proven that the latter's
negligence was the proximate cause of Mahtani's unfortunate experience, instead of totally
absolving PAL from any liability.
14. American Airlines v. CA, Democrito Mendoza (AA exchanged the unused ticket with its own
ticket. Because of this, he became an agent of SGA)
Doctrine:
4 PLACES where ACTION FOR DAMAGES may be BROUGHT:
o 1) domicile of the carrier;
o 2) the carrier‘s principal place of business;
o 3) the place where the carrier has a place of business through which the contract
was made;
o 4) the place of destination
Facts:
Mendoza bought conjunction tickets from Singapore Airlines for Manila-SG-Athens-
Lamaca-Rome-Turin-Zurich-Geneva-Copenhagen-NY. AMERICAN AIRLINES was not a
participating airline any of the segments
Mendoza decided to forego his trip to Copenhagen and go straight to NY so he exchanged
the unused tickets for a one-way ticket from GENEVA-NY with AA. AA in turn, issued its
own ticket to Mendoza. It also submitted the unused portion to the IATA clearing house.
However, at the GENEVA airport, AA‘s security officers prevented him from boarding the
plane and was only allowed to enter after all the passengers already boarded the plane.
THUS, Mendoza sued AA for damages in RTC Cebu. In response, AA filed a motion to
dismiss, arguing that the PH courts did not have jurisdiction to entertain the claim. This is
because the ticket it issued to Mendoza in GENEVA was a separate and distinct contract of
carriage from that entered into by Mendoza and SG airlines in MANILA.
Issue: Can the contract of transportation between MENDOZA and AA be considered as a single
operation and part of the contract of transportation entered into by MENDOZA with SG AIR
(thereby granting PH courts jurisdiction)?
The contract of carriage between MENDOZA and Singapore Airlines although performed
by different carriers under a series of airline tickets, including that issued by AA, constitutes
a single operation.
Members of the IATA are under a general pool partnership agreement wherein they
act as agent of each other in the issuance of tickets to contracted passengers to
boost ticket sales worldwide and at the same time provide passengers easy access to
airlines which are otherwise inaccessible in some parts of the world
A member airline which enters into a contract of carriage consisting of a series of trips to be
performed by different carriers is authorized to receive the fare for the whole trip and
through the required process of interline settlement of accounts by way of the IATA clearing
house an airline is duly compensated for the segment of the trip serviced.
o Thus, when AA accpted the unused portion of the conjunction tickets, entered it
in the IATA clearing house and undertook to transport MENDOZA over the route
covered by the unused portion of the conjunction tickets, i.e., Geneva to New
59
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
York, AA tacitly recognized its commitment under the IATA pool
arrangement to act as agent of the principal contracting airline, Singapore
Airlines, as to the segment of the trip AA agreed to undertake.
o As such, AA thereby assumed the obligation to take the place of the carrier
originally designated in the original conjunction ticket. The new ticket was
simply a replacement for the unused portion of the conjunction ticket, both tickets
being for the same amount of US$ 2,760 and having the same points of
departure and destination. By constituting itself as an agent of the principal
carrier AA’s undertaking should be taken as part of a single operation
under the contract of carriage executed by the private respondent and
Singapore Airlines in Manila.
THUS, the third option of MENDOZA under Art 28 (1) of the Warsaw Convention e.g., to
sue in the place of business of the carrier wherein the contract was made, is therefore,
Manila, and Philippine courts are clothed with jurisdiction over this case.
o We note that while this case was filed in Cebu and not in Manila the issue of
venue is no longer an issue as AA is deemed to have waived it when it presented
evidence before the trial court.
15. China Airlines v. Daniel Chiok
Doctrine:
Ticket issuing carrier guarantees to the passenger that the endorsee carrier would honor
the ticket, assure him of space, and transport him,
Facts:
Chiok purchased from China Airlines (CAL) a ticket covering Manila-Taipei-HK-Manila. The
ticket was exclusively endoreseable to PAL. Chiok took his trip from Manila to Taipei using
the CAL ticket.
Upon arriving in Taipei, he went to the CAL office and confirmed his HK-Manila trip on
board a PAL flight. When he reached HK, he confirmed his flight back to Manila. However,
the flight got cancelled due to a typhoon.
PAL then announced that all the passengers on the cancelled flight were automatically
re-booked in the next flight scheduled to leave on the next day. Chiok informed PAL
that he needed to be in Manila on NOV 25, 1981 for a business meeting.
However, on the day of the rebooked flight, Chiok was not allowed to board by CARMEN,
PAL‘s terminal supervisor, as he did not appear in the list of passengers. To make matters
worse, one of Chiok‘s bags containing cosmetics worth $14k HKD was missing. When
Chiok went to PAL‘s HK office, he was told that his name was actually on the list.
Thus, Chiok had no choice but to buy another CAL ticket. It was again CARMEN who
attended him at the check-in counter (because the CAL ticket was booked on board a PAL
flight) At this time, Chiok already placed his clutch bag on top of the counter. Thereafter,
CARMEN directed PAL personnel to transfer counters and in the ensuing commotion,
Chiok lost his clutch bag containing money and jewelry (tie clip with a garnet birthstone)
Thus, CHIOK sued PAL and CAL for damages, alleging the failure of PAL to transport him
on the rebooked flight and for the actions of CARMEN in ridiculing and humiliating him.
Issue: IS CAL liable even if it is only a ticket issuing carrier? Is it liable for damages? YES to
both
First reason: Guarantee of ticket-issuing carrier
Yes. CAL is liable even if PAL was the one that would perform/had performed the contract
of carriage. The issuance of a confirmed CAL ticket in favor of CHIOK guaranteed that the
carrier (PAL) would honor his ticket, assure him of space and transport him.
Second reason: “single operation”, PAL as agent and CAL as principal
Moreover, it is significant to note that the contract of air transportation was between CAL
and CHIOK, with CAL endorsing to PAL the Hong Kong-to-Manila segment of the
journey. Such contract of carriage has always been treated in this jurisdiction as a single
operation.
o In this particular case the ticket-issuing airline is the PRINCIPAL (CAL) in a
contract of carriage, while the endorsee-airline is the AGENT (PAL). PAL
therefore acted as agent of CAL, and PAL‘s bad faith can also CAL liable even if
it was only a ticket-issuer for the HK-Manila trip.
Damages:
It is relevant to point out that the employees of PAL were utterly insensitive to his need to
be in Manila on November 25, 1981, and to the likelihood that his business affairs in the
city would be jeopardized because of a mistake on their part.
It was that mistake that had caused the omission of his name from the passenger list
despite his confirmed flight ticket. By merely looking at his ticket and validation sticker, it is
evident that the glitch was the airline‘s fault. However, no serious attempt was made by
PAL to secure the all-important transportation of respondent to Manila on the
following day. To make matters worse, PAL allowed a group of non-revenue passengers,
who had no confirmed tickets or reservations, to board the re-booked flight.
Since the status of CHIOK in the 1st flight was "OK," as a matter of right testified to by
PAL‘s witness, he should have been automatically transferred to and allowed to board
Flight 307 the following day. Clearly resulting from negligence on the part of PAL was its
claim that his name was not included in its list of passengers for the first flight and,
consequently, in the list of the replacement flight P. Since he had secured confirmation
of his flight -- not only once, but twice -- by personally going to the carrier’s offices
where he was consistently assured of a seat thereon -- PAL’s negligence was so
gross and reckless that it amounted to bad faith.
THUS moral and exemplary damages should be awarded (note: only CAL held liable, as
PAL was not impleaded)
60
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
16. Federal Express v. American Home (condition precedent not complied with)
Doctrine:
Notice in accordance with the W/C or in accordance with the stipulations on an AIRWAY
BILL.
Facts:
SMITHKLINE of Nebraska, USA, delivered to Burlington Air Express, an agent of Federal
Express (FEDEX) a shipment of 109 cartons of veterinary biologicals for delivery to
SMITHKLINE in Makati. The shipment was covered BURLINGON AIRWAYBILL (AWB)
with the words ―refrigerate when not in transit‖ and ―perishable
The next day, BURLINGTON transferred the cargo to FEDEX, which transported it to
Manila. The shipment was stored in a warehouse of CARGOHAUS. However, it was
discovered that they were stored only in a room with 2 air-conditioners running to cool the
lace. As a result, the biologicals (vaccines) deteriorated. As a consequence, SMITHKLINE
declared a total loss and claimed from the insurer.
The insurer, AMERICAN HOME, then sued FEDEX and CARGOHAUS for negligence. TC
found them solidarily liable
FEDEX maintains that 1) American Home does not have personality to sue and 2) the
claim has prescribed because the consignee (SMITHKLINE) never filed a written
claim/demand within the period prescribed by the warsaw convention and/or in the airway
bill.
Issue: Has the claim prescribed? Yes, because no notice was filed/given
The filing of a claim with the carrier within the time limitation therefor constitutes a condition
precedent to the accrual of a right of action against a carrier for loss of or damage to the
goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it
fails to do so, no right of action against the carrier can accrue in favor of the former.
The aforementioned requirement is a reasonable condition precedent; it does not
constitute a limitation of action
When an airway bill -- or any contract of carriage for that matter -- has a stipulation that
requires a notice of claim for loss of or damage to goods shipped and the stipulation is not
complied with, its enforcement can be prevented and the liability cannot be imposed
on the carrier. To stress, notice is a condition precedent, and the carrier is not liable
if notice is not given in accordance with the stipulation. Failure to comply with such a
stipulation bars recovery for the loss or damage suffered.
Being a condition precedent, the notice must precede a suit for enforcement.In the
present case, there is neither an allegation nor a showing of AMERICAN
HOME/SMITHKLINE‘s compliance with this requirement within the prescribed period. While
they may have had a cause of action then, they cannot now enforce it for their failure to
comply with the aforesaid condition precedent.
FEDEX freed from liability
17. PAL v. Savillo (late for golf tournament, emotional harm not covered by the WC)
Doctrine:
The emotional harm suffered by a passenger as an incident of a breach of a contract of
carriage should be distinguished from the actual damages which resulted from the same
incident.
Actual damages caused by the delay is covered by the W/C reglementary period for filing a
claim while the emotion harm suffered by the passenger as an incident of the delay (breach
of contract) is not covered by the W/C. It is governed by the prescriptive period on torts
Facts:
Grino was invited to participate in the 1993 ASEAN Seniors Golf tournament in Jakarta.
Thus, he purchased a MNL-SG-JAKARTA-SG-Manila. PAL would carry him from MNL-Sg
while Singapore Airlines would carry him from SG-Jakarta.
Upon arrival in SG, they proceeded to check-in for their flight to Jakarta. However, SG
Airlines rejected his ticket because it was not endorsed by PAL. He got stranded for a few
hours and was forced to buy tickets from GARUDA AIRLINES. He eventually arrived in
Jakarta but he got sick so he was unable to play in the tournament
When he got back, he sent a demand letter to PAL and to SGA. Both airlines denied liability
and blamed each other. He sued PAL and SGA but it filed a motion to dismiss on the
ground of PRESCRIPTION.
Issue: Has the claim prescribed? No.
In this case, GRINO‘s complaint alleged that both PAL and SGA were guilty of gross
negligence which resulted in his being subject to humiliation, embarrassment, mental
anguish, etc.
The emotional harm suffered by GRINO as a result of having been unreasonably and
unjustly prevented from boarding the plane should be distinguished from the actual
damages which resulted from the same incident. Under the Civil Code provisions on
tort, such emotional harm gives rise to compensation where gross negligence or malice is
proven. THEREFORE, the claim is not barred by the 2 year period under the WC because
it is covered by the rules on TORT
Had the present case merely consisted of claims incidental to the airlines' delay in
transporting their passengers, the private respondent's Complaint would have been time-
barred under Article 29 of the Warsaw Convention. However, the present case involves a
special species of injury resulting from the failure of PAL and/or Singapore Airlines
to transport private respondent from Singapore to Jakarta - the profound distress,
fear, anxiety and humiliation that private respondent experienced when, despite
PAL's earlier assurance that Singapore Airlines confirmed his passage, he was
prevented from boarding the plane and he faced the daunting possibility that he
would be stranded in Singapore Airport because the PAL office was already closed.
61
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

18. Lhuillier v. British Airways

Doctrine:

Facts:
Lhuillier was a passenger of BA in its flight from LONDON-ROME. Once on board, she
requested one of the flight attendants (HALLIDAY) to assist her in placing her hand-carried
luggage in the overhead bin. HALLIDAY refused and sarcastically remarked that ―If I were
to help all 300 passengers in this flight, I would have a broken back!‖

Moreover, once the plane was about to land, another attendant, KERRIGAN, singled her
out from among all the passengers in the business class section to lecture on plane safety,
making her look stupid.

Upon arrival in ROME, Lhuiller complaint to the ground manager but was told that the
attendants were ―only doing their job‖ THUS, LHUILLER filed a claim for damages (moral,
nominal and exemplary. BA filed a motion to dismiss on the ground of lack of jurisdiction
because only LONDON or ROME has jurisdiction. RTC granted the motion to dismiss.
Thus, Lhuiller appealed.

Issue: Does the court have jurisdiction? NO.

The Warsaw Convention applies because the air travel/where the alleged tortious conduct
occurred, was between the UK (London) and Italy, which are both signatories to the
Warsaw Convention.

In the case at bench, LHUILLER‘s place of departure was London, United Kingdom while
her place of destination was Rome, Italy. As such, the transport of the petitioner is deemed
to be an "international carriage" within the contemplation of the Warsaw Convention.

Since the warsaw convention applies, LHUILLER only had FOUR options (domicile of
carrier, principal business of carrier, branch of carrier where contract was made, court of
place of destination)

o ROME, ITALY: because the ticket was issued there and because that was the
destination.
o LONDON: BA‘s principal place of business and domcile of CC

HENCE, the complaint should be dismissed.

62
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 10 CODE OF COMMERCE [AGBAYANI BASED] Art. 350, in a nutshell enumerates the contents of a bill of lading. However, it has been held
that the form of a bill of lading is not material. As long as it contains an acknowledgement
TITLE VII – Commercial Contracts for Transportation Overland by the carrier of the receipt of goods for transportation, it is a bill of lading.

ARTICLE 349. A contract of transportation by land or water ways of any kind shall be
considered commercial:
1. When it has for its object merchandise or any article of commerce.
2. When, whatever its object may be, the carrier is a merchant or is habitually engaged in
transportation for the public.
Because of the passage of the civil code, there is now no distinction between a
transportation contract of a CC under the civil code and under the code of commerce.
However, the civil code did NOT repeal the code of commerce provisions on overland
transportation
Instead, the code of commerce provisions are SUPPLETORY to the new civil code.
As held in Mendoza v. PAL, a contract of transportation by air may also be regarded as
commercial. This was only not included in the code of commerce because at the time of its
promulgation, air transportation was not yet known.
ARTICLE 350. The shipper as well as the carrier of merchandise or goods may mutually
demand that a bill of lading be made, stating:
1. The name, surname and residence of the shipper.
2. The name, surname and residence of the carrier.
3. The name, surname and residence of the person to whom or to whose order the goods are
to be sent or whether they are to be delivered to the bearer of said bill.
4. The description of the goods, with a statement of their kind, of their weight, and of the
external marks or signs of the packages in which they are contained.
5. The cost of transportation.
6. The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery to the consignee shall be made.
9. The indemnity to be paid by the carrier in case of delay, if there should be any agreement
on this matter.
What is a bill of lading?
ARTICLE 351. In transportation made by railroads or other enterprises subject to regulation
rate and time schedules, it shall be sufficient for the bills of lading or the declaration of shipment
furnished by the shipper to refer, with respect to the cost, time and special conditions of the
carriage, to the schedules and regulations the application of which he requests; and if the
shipper does not determine the schedule, the carrier must apply the rate of those which appear
to be the lowest, with the conditions inherent thereto, always including a statement or reference
to in the bill of lading which he delivers to the shipper.
This article concerns the contents of a bill of lading. It provides that circumstances relative
to price, term, and conditions of carriage may be omitted and simple reference to be made
to the regulations under which the transportation is to be made.
However, it is provided her that if the shipper does not determine the schedule, the carrier
must apply the rate that appears to be the lowest.
ARTICLE 352. The bills of lading, or tickets in cases of transportation of passengers, may be
diverse, some for persons and others for baggage; but all of them shall bear the name of the
carrier, the date of shipment, the points of departure and arrival, the cost, and, with respect to
the baggage, the number and weight of the packages, with such other manifestations which may
be considered necessary for their easy identification.
This article provides that the bills of lading (for goods) and tickets (for passengers) may be
diverse.
Common requirement for bills of lading and tickets:
o It should bear the name of the carrier
o It should bear the date of shipment/transportation
o Date of shipment
o Points of departure and arrival
o The cost
o IF baggage the number and weight of the packages.

o It is a written acknowledgement of a receipt of goods

o It is an agreement to transport and to deliver the goods at a specified place to a
person named or on his order.
o Like warehouse receipts, it is a document of title, and if negotiable in form, they
can constitute a negotiable document of title (e.g. when it is stated that the goods
referred to therein will be delivered to the bearer, or to the order of any person
named in the document)

What are the functions of a bill of lading?

o It is a contract
o It is a receipt
o It is a symbol of the goods covered by it /represents the goods

63
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
ARTICLE 353. The legal evidence of the contract between the shipper and the carrier shall be
the bills of lading, by the contents of which the disputes which may arise regarding their
execution and performance shall be decided, no exceptions being admissible other than those of
falsity and material error in the drafting.
After the contract has been complied with, the bill of lading which the carrier has issued shall be
returned to him, and by virtue of the exchange of this title with the thing transported, the
respective obligations and actions shall be considered cancelled, unless in the same act the
claim which the parties may wish to reserve be reduced to writing, with the exception of that
provided for in Article 366.
In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by
the carrier, because of its loss or of any other cause, he must give the latter a receipt for the
goods delivered, this receipt producing the same effects as the return of the bill of lading.
Emphasize
The bill of lading is the legal evidence of the contract between the shipper and carrier. If
there is controversy regarding the execution or performance, no other evidence is
admissible.
EXCEPTION: 1) FALSITY and 2) MATERIAL ERROR in DRAFTING (in other words, in
these cases, other evidence may be introduced to explain/vary the terms of the bill of
lading)
The consignee must return the bill of lading when the goods consigned are delivered to
him. If the consignee cannot return the B/L, then he must issue a receipt. It has the same
effect as returning the B/L.
ARTICLE 354. In the absence of a bill of lading, disputes shall be determined by the legal
proofs which the parties may present in support of their respective claims, according to the
general provisions established in this Code for commercial contracts.
A contract of transportation is a consensual contract. Hence, even in the absence of a bill
of lading, it does not exclude the existence of the contract of transportation.
ARTICLE 355. The responsibility of the carrier shall commence from the moment he receives
the merchandise, personally or through a person charged for the purpose, at the place indicated
for receiving them.
Same principle as that of Art 1736. Basically, responsibility lasts until the goods are
delivered to the consignee personally or to a person authorized to receive such goods.
ARTICLE 356. Carriers may refuse packages which appear unfit for transportation; and if the
carriage is to be made by railway, and the shipment is insisted upon, the company shall
transport them, being exempt from all responsibility if its objections, is made to appear in the bill
of lading.
If the carriage is to be made by railway, and the shipper insists that his goods that appear
to be unfit for transportation be transported, then the CC is still obliged to transport them.
HOWEVER, the CC shall be exempt from any responsibility if its objections appear on the
bill of lading. (e.g. it objected to transport the goods because it appeared to be unfit for
transportation)
ARTICLE 357. If by reason of well-founded suspicion of falsity in the declaration as to the
contents of a package the carrier should decide to examine it, he shall proceed with his
investigation in the presence of witnesses, with the shipper or consignee in attendance.
If the shipper or consignee who has to be cited does not attend, the examination shall be made
before a notary, who shall prepare a memorandum of the result of the investigation, for such
purposes as may be proper.
If the declaration of the shipper should be true, the expense occasioned by the examination and
that of carefully repacking the packages shall be for the account of the carrier and in a contrary
case for the account of the shipper.
If it seems that the shipper lied about what he was going to ship, the carrier may examine
the package (open it)
However, examination must be made either in the presence of the shipper or consignee or
if both are not present, in the presence of a notary.
ARTICLE 358. If there is no period fixed for the delivery of the goods the carrier shall be bound
to forward them in the first shipment of the same or similar goods which he may make point
where he must deliver them; and should he not do so, the damages caused by the delay should
be for his account.
ARTICLE 359. If there is an agreement between the shipper and the carrier as to the road over
which the conveyance is to be made, the carrier may not change the route, unless it be by
reason of force majeure; and should he do so without this cause, he shall be liable for all the
losses which the goods he transports may suffer from any other cause, beside paying the sum
which may have been stipulated for such case.
When on account of said cause of force majeure, the carrier had to take another route which
produced an increase in transportation charges, he shall be reimbursed for such increase upon
formal proof thereof.
ARTICLE 360. The shipper, without changing the place where the delivery is to be made, may
change the consignment of the goods which he delivered to the carrier, provided that at the time
of ordering the change of consignee the bill of lading signed by the carrier, if one has been
issued, be returned to him, in exchange for another wherein the novation of the contract
appears.
The expenses which this change of consignment occasions shall be for the account of the
shipper.
The shipper may tell the carrier that the goods be delivered to someone else other than the
one named in the bill of lading. The carrier must sign this. However, the shipper must return
to the carrier the B/L and the carrier must make a new one.
64
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
ARTICLE 361. The merchandise shall be transported at the risk and venture of the shipper, if
the contrary has not been expressly stipulated.
As a consequence, all the losses and deteriorations which the goods may suffer during the
transportation by reason of fortuitous event, force majeure, or the inherent nature and defect of
the goods, shall be for the account and risk of the shipper.
Proof of these accidents is incumbent upon the carrier.
Is this article consistent with Art 1735?
Yes. When the codal says ―at the risk and venture of the shipper‖, it simply means that the
shipper will suffer for the loss/deterioration/destruction if the same was due to fortuitous
event, force majeure and inherent nature/defect of the goods.
The presumption of negligence in case of L/D/D on the part of the carrier/shipowner still
stands.
ARTICLE 362. Nevertheless, the carrier shall be liable for the losses and damages resulting
from the causes mentioned in the preceding article if it is proved, as against him, that they arose
through his negligence or by reason of his having failed to take the precautions which usage has
established among careful persons, unless the shipper has committed fraud in the bill of lading,
representing the goods to be of a kind or quality different from what they really were.
If, notwithstanding the precautions referred to in this article, the goods transported run the risk of
being lost, on account of their nature or by reason of unavoidable accident, there being no time
for their owners to dispose of them, the carrier may proceed to sell them, placing them for this
purpose at the disposal of the judicial authority or of the officials designated by special
provisions.
The carrier can still be held liable even if the loss was due to FE/inherent nature effect if it
is proven that it could have avoided the injury with the exercise of extraordinary diligence
(failure to take precautions)
2nd paragraph provides that the carrier may minimize injury by selling the goods transported
ARTICLE 363. Outside of the cases mentioned in the second paragraph of Article 361, the
carrier shall be obliged to deliver the goods shipped in the same condition in which, according to
the bill of lading, they were found at the time they were received, without any damage or
impairment, and failing to do so, to pay the value which those not delivered may have at the
point and at the time at which their delivery should have been made.
If those not delivered form part of the goods transported, the consignee may refuse to receive
the latter, when he proves that he cannot make use of them independently of the others.
2nd paragraph: it may happen that a part of a shipment may be delivered but a part may
have been destroyed during the voyage. In such a case, the consignee may refuse to
receive the shipment that made it if he cannot make use of it independently.
o Example: S contracted C to ship 10 different engine parts for the construction of
a car engine. Only 5 were delivered to the consignee. The consignee may refuse
to accept the whole shipment because he can‘t make use of the remaining 5
parts without the others.
ARTICLE 364. If the effect of the damage referred to in Article 361 is merely a diminution in
the value of the goods, the obligation of the carrier shall be reduced to the payment of the
amount which, in the judgment of experts, constitutes such difference in value.
ARTICLE 365. If, in consequence of the damage, the goods are rendered useless for sale and
consumption for the purposes for which they are properly destined, the consignee shall not be
bound to receive them, and he may have them in the hands of the carrier, demanding of the
latter their value at the current price on that day.
If among the damaged goods there should be some pieces in good condition and without any
defect, the foregoing provision shall be applicable with respect to those damaged and the
consignee shall receive those which are sound, this segregation to be made by distinct and
separate pieces and without dividing a single object, unless the consignee proves the
impossibility of conveniently making use of them in this form.
The same rule shall be applied to merchandise in bales or packages, separating those parcels
which appear sound.
1st par: If apples were supposed to be delivered to the consignee and during the voyage,
these apples were damaged, then the consignee may demand that the carrier pay their
value at the current price on the day of delivery. So if the apples were priced at PHP10 a
crate, and 10 crates were damaged, then the carrier must pay PHP100
2nd par: If some make it and some don‘t, then the consignee may choose to abandon the
damaged goods and accept the ones in good condition.
ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise, the claim
against the carrier for damage or average be found therein upon opening the packages, may be
made, provided that the indications of the damage or average which gives rise to the claim
cannot be ascertained from the outside part of such packages, in which case the claim shall be
admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been paid, no
claim shall be admitted against the carrier with regard to the condition in which the goods
transported were delivered.
Emphasize
This article speaks of conditions precedent for the consignee to sue the carrier (cause
of action)
If the damage is ascertainable only by opening the package, the claim against the carrier
must be made within 24 hours following the delivery of the merchandise
If the damage is ascertainable by just looking at the package, the claim for damages
must be made at the time of receipt.
65
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
ARTICLE 367. If doubts and disputes should arise between the consignee and the carrier with
respect to the condition of the goods transported at the time their delivery to the former is made,
the goods shall be examined by experts appointed by the parties, and, in case of disagreement,
by a third one appointed by the judicial authority, the results to be reduced to writing; and if the
interested parties should not agree with the expert opinion and they do not settle their
differences, the merchandise shall be deposited in a safe warehouse by order of the judicial
authority, and they shall exercise their rights in the manner that may be proper.
ARTICLE 368. The carrier must deliver to the consignee, without any delay or obstruction, the
goods which he may have received, by the mere fact of being named in the bill of lading to
receive them; and if he does not do so, he shall be liable for the damages which may be caused
thereby.
ARTICLE 369. If the consignee cannot be found at the residence indicated in the bill of lading,
or if he refuses to pay the transportation charges and expenses, or if he refuses to receive the
goods, the municipal judge, where there is none of the first instance, shall provide for their
deposit at the disposal of the shipper, this deposit producing all the effects of delivery without
prejudice to third parties with a better right.
ARTICLE 370. If a period has been fixed for the delivery of the goods, it must be made within
such time, and, for failure to do so, the carrier shall pay the indemnity stipulated in the bill of
lading, neither the shipper nor the consignee being entitled to anything else.
If no indemnity has been stipulated and the delay exceeds the time fixed in the bill of lading, the
carrier shall be liable for the damages which the delay may have caused.
ARTICLE 371. In case of delay through the fault of the carrier, referred to in the preceding
articles, the consignee may leave the goods transported in the hands of the former, advising him
thereof in writing before their arrival at the point of destination.
When this abandonment takes place, the carrier shall pay the full value of the goods as if they
had been lost or mislaid.
If the abandonment is not made, the indemnification for losses and damages by reason of the
delay cannot exceed the current price which the goods transported would have had on the day
and at the place in which they should have been delivered; this same rule is to be observed in all
other cases in which this indemnity may be due.
The consignee may abandon the goods transported in case of delay of delivery. However,
it must be made between the time the fault of the carrier produces a delay and the arrival of
the goods at the place of delivery. In case the consignee abandons, the carrier must pay
the full value of the goods.
ARTICLE 372. The value of the goods which the carrier must pay in cases if loss or
misplacement shall be determined in accordance with that declared in the bill of lading, the
shipper not being allowed to present proof that among the goods declared therein there were
articles of greater value and money.
Horses, vehicles, vessels, equipment and all other principal and accessory means of
transportation shall be especially bound in favor of the shipper, although with respect to railroads
said liability shall be subordinated to the provisions of the laws of concession with respect to the
property, and to what this Code established as to the manner and form of effecting seizures and
attachments against said companies.
ARTICLE 373. The carrier who makes the delivery of the merchandise to the consignee by
virtue of combined agreements or services with other carriers shall assume the obligations of
those who preceded him in the conveyance, reserving his right to proceed against the latter if he
was not the party directly responsible for the fault which gave rise to the claim of the shipper or
consignee.
The carrier who makes the delivery shall likewise acquire all the actions and rights of those who
preceded him in the conveyance.
The shipper and the consignee shall have an immediate right of action against the carrier who
executed the transportation contract, or against the other carriers who may have received the
goods transported without reservation.
However, the reservation made by the latter shall not relieve them from the responsibilities which
they may have incurred by their own acts.
The article refers to a case where several carriers successively transport the goods. If A
ships apples in CARRIER A (from Manila to Cebu) and CARRIER B will transport the
goods from Cebu to Davao, CARRIER B will assume responsibility to the shipper.
However, CARRIER B may go after CARRIER A if CARRIER A was the one actually at
fault. CARRIER B may also go after the shipper if the shipper was at fault.
ARTICLE 374. The consignees to whom the shipment was made may not defer the payment
of the expenses and transportation charges of the goods they receive after the lapse of twenty-
four hours following their delivery; and in case of delay in this payment, the carrier may demand
the judicial sale of the goods transported in an amount necessary to cover the cost of
transportation and the expenses incurred.
ARTICLE 375. The goods transported shall be especially bound to answer for the cost of
transportation and for the expenses and fees incurred for them during their conveyance and until
the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made, and once
prescribed, the carrier shall have no other action than that corresponding to him as an ordinary
creditor.
This article creates a lien in favor of the carrier over the goods transported. However, the 8
day period from delivery is now 30 days.
ARTICLE 376. The preference of the carrier to the payment of what is owed him for the
transportation and expenses of the goods delivered to the consignee shall not be cut off by the
bankruptcy of the latter, provided it is claimed within the eight days mentioned in the preceding
article.
ARTICLE 377. The carrier shall be liable for all the consequences which may arise from his
failure to comply with the formalities prescribed by the laws and regulations of the public
administration, during the whole course of the trip and upon arrival at the point of destination,
except when his failure arises from having been led into error by falsehood on the part of the
66
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
shipper in the declaration of the merchandise. If the carrier has acted by virtue of a formal order
of the shipper or consignee of the merchandise, both shall become responsible.
ARTICLE 378. Agents for transportation shall be obliged to keep a special registry, with the
formalities required by Article 36, in which all the goods the transportation of which is undertaken
shall be entered in consecutive order of number and dates, with a statement of the
circumstances required in Article 350 and others following for the respective bills of lading.
ARTICLE 379. The provisions contained in Articles 349 and following shall be understood as
equally applicable to those who, although they do not personally effect the transportation of the
merchandise, contract to do so through others, either as contractors for a particular and definite
operation, or as agents for transportations and conveyances.
In either case they shall be subrogated in the place of the carriers themselves, with respect to
the obligations and responsibility of the latter, as well as with regard to their rights.
(Articles 573-651)
ARTICLE 573. Merchant vessels constitute property which may be acquired and transferred by
any of the means recognized by law. The acquisition of a vessel must appear in a written
instrument, which shall not produce any effect with respect to third persons if not inscribed in the
registry of vessels.
The ownership of a vessel shall likewise be acquired by possession in good faith, continued for
three years, with a just title duly recorded. In the absence of any of these requisites, continuous
possession for ten years shall be necessary in order to acquire ownership.
A captain may not acquire by prescription the vessel of which he is in command.
rd
The acquisition of a vessel must be registered so that it may bind 3 parties.
When the code speak of vessels, they refer solely and exclusively to merchant ships.
These include vessels which are engaged in the transportation of passengers and goods
from one port to another.
o However, vessels such as river boats, and those carrying passengers from ship
to shore must be governed by the Civil Code. They are not vessels under the
Code of Commerce (see Lopez v. Duruelo and Yu Con v. Ipil below)
Vessels are considered personal property.
ARTICLE 586. The shipowner and the ship agent shall be civilly liable for the acts of the captain
and for the obligations contracted by the latter to repair, equip, and provision the vessel,
provided the creditor provides that the amount claimed was invested for the benefit of the same.
By ship agent is understood the person entrusted with provisioning or representing the vessel in
the port in which it may be found.
Who is the ship agent? It is the person undertaking the voyage. There can be one ship
owner and many ship agents. For example, a shipowner can be based in JAPAN. But he
can have ship agents in DIFFERENT COUNTRIES.
ARTICLE 587. The ship agent shall also be civilly liable for the indemnities in favor of third
persons which may arise from the conduct of the captain in the care of the goods which he
loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all
her equipments and the freight it may have earned during the voyage.
Art. 587 includes the SHIP OWNER.
SHIP OWNER and SHIP AGENT are liable for the following:
o For the acts of the captain
o For contracts entered into by captain for repair
o For damages in favor of 3rd persons which may arise from the conduct of the
captain in the care of the goods transported, as well as of the safety of
passengers
The liability of a ship agent/owner is limited to the value of the vessel or its insurance in
view of the real and hypothecary nature of maritime law. This is clear from the right of
the ship agent to abandon the vessel with all his equipment and the freightage
earned during the voyage. However, the limited liability under this article is NOT
applicable when NO abandonment is made.
The doctrine of limited liability applies in situations where the fault or negligence is
imputed to the captain. If it is alleged that the shipowner was at fault, then the doctrine of
limited liability is inapplicable.
EXCEPTIONS to LIMITED LIABILITY RULE (when it will not apply)
o Expenses for repairs of the vessel made PRIOR to the loss of the vessel
o Workmen‘s Compensation claims
o Where the vessel is insured
o Where the injury or death to a passenger is due either to the fault of the ship
owner, or to the concurring negligence of the ship owner and the captain
ARTICLE 588. Neither the shipowner nor the ship agent shall be liable for the obligations
contracted by the captain, if the latter exceeds the powers and privileges pertaining to him by
reason of his position or conferred upon him by the former.
Nevertheless, if the amounts claimed were invested for the benefit of the vessel, the
responsibility therefor shall devolve upon its owner or agent.
Shipowner/agent not liable for obligations contracted by the captain if he exceeds his
authority, unless the amounts claimed were invested for the benefit of the vessel.
However, this rule is inapplicable to carriage of passengers. Under Art 1759, the shipowner
is liable for the death/injuries to the passengers which are caused by the negligence or
wilful acts of his employees although such employees may have acted beyond the scope of
their authority/in violation of the orders of the ship owner.
67
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

ARTICLE 609. Captains, masters or patrons of vessels must be Filipinos, have legal capacity to
contract in accordance with this code, and prove the skill, capacity, and qualifications necessary
to command and direct the vessel, as established by marine or navigation laws, ordinances, or
regulations, and must not be disqualified according to the same for the discharge of the duties of
the position.
If the owner of a vessel desires to be the captain thereof, without having the legal qualifications
therefor, he shall limit himself to the financial administration of the vessel, and shall entrust the
navigation to a person possessing the qualifications required by said ordinances and
regulations.
3 functions of a captain:
o General agent of the shipowner
o Technical director of the vessels
o Represents the government of the country under whose flag he navigates
ARTICLE 618. The captain shall be civilly liable to the ship agent, and the latter to the third
persons who may have made contracts with the former;
1. For all the damages suffered by the vessel and its cargo by reason of want of skill or
negligence on his part. If a misdemeanor or crime has been committed, he shall be liable in
accordance with the Penal Code.
2. For all the thefts committed by the crew, reserving his right of action against the guilty parties.
3. For the losses, fines, and confiscations imposed an account of violation of customs, police,
health, and navigation laws and regulations.
4. For the losses and damages caused by mutinies on board the vessel or by reason of faults
committed by the crew in the service and defense of the same, if he does not prove that he
made timely use of all his authority to prevent or avoid them

Select Duties of captain (before, during and after arrival)
o To have a copy of the code of commerce on board
o To remain constantly on board the vessel with the crew while the cargo is being
taken on board
o To have three books: log book, accounting book and freight book
o To remain on board, in case the vessel is in danger, until all hope to save it is
lost.
o To be on deck on reaching land and to take command on entering and leaving
ports
ARTICLE 615. Without the consent of the agent, the captain cannot have himself substituted by
another person; and should he do so, besides being liable for all the acts of the substitute and
bound to the indemnities mentioned in the foregoing articles, the captain as well as the
substitute may be discharged by the ship agent.
5. For those caused by the misuse of the powers and the non-fulfillment of the obligations
pertaining to him in accordance with Articles 610 and 612.
6. For those arising by reason of his going out of his course or taking a course which he should
not have taken without sufficient cause, in the opinion of the officers of the vessel, at a meeting
with the shippers or supercargoes who may be on board.
No exceptions whatsoever shall exempt him from this obligation.
7. For those arising by reason of his voluntarily entering a port other than that of his destination,
outside of the cases or without the formalities referred to in Article 612.
8. For those arising by reason of non-observance of the provisions contained in the regulations
on situation of lights and maneuvers for the purpose of preventing collisions.

The ship agent must consent before the captain may be substituted. The ship agent is civilly liable to 3rd persons who may have made contracts with the captain
for the enumerated acts. However, the agent may go after the captain himself.
ARTICLE 617. The captain may not contract loans on respondentia secured by the cargo, and
should he do so, the contracts shall be void.

Neither may he borrow money on bottomry for his own transactions, except on the portion of the
vessel he owns, provided no money has been previously borrowed on the whole vessel, and
there does not exist any other kind of lien or obligation chargeable against the vessel. If he may
do so, he must state what interest he has in the vessel.

In case of violation of this article, the principal, interest and costs shall be for the personal
account of the captain, and the ship agent may furthermore discharge him.

68
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Art 624. A captain whose vessel has gone through a hurricane or who believes that the cargo
has suffered damages or averages, shall make a protest thereon before the competent authority
at the first port he touches, within 24 hours following his arrival and shall ratify it within the same
period when he arrives at his destination, immediately proceeding with the proof of the facts, and
he may not open the hatches until after this has been done.

The captain shall proceed in the same manner if the vessel having been wrecked, he is saved
alone or with part of his crew, in which case he shall appear before the nearest authority, and
make a sworn statement of facts.

The authority or the consul shall verify the said facts receiving sworn statements of the members
of the crew and passengers who may have been saved; and taking such other steps as may
assist in arriving at the facts he shall make a statement of the result of the proceedings in the log
book and in that of the sailing mate, and shall deliver to the captain the original record of the
proceedings, stamped and folioed, with a memorandum of the folios, which he must rubricate, in
order that it may be presented to the judge or court of the port of destination.

The statement of the captain shall be accepted if it is in accordance with those of the crew and
passengers; if they disagree, the latter shall be accepted, always saving proof of the contrary.

FORMALITIES if vessel goes through a hurricane/captain believes that the cargo suffered
damage: P-24-R-P
o Captain must make a PROTEST before the competent authority at the first port
he touches
o PROTEST must be made within 24 HOURS of arrival
o Captain must RATIFY the protest within the same period
o Captain must immediately proceed with the PROOF OF THE FACTS

69
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 12 (OVERLAND TRANSPORTATION; VESSELS; REAL AND HYPOTHECARY

NATURE OF M ARITIME LAW)
2. Abelardo Lim v. CA, Gonzales (Kabit System; Operator figured in an accident but he was
using the franchise of another, Operator allowed to sue)
1. Lita Enterprises v. IAC (Kabit System; No relief to both parties)
Doctrine
Doctrine:
When the operator in a kabit system gets into an accident and the one at fault is a 3rd party,
Parties to a kabit system cannot ask the court for relief in case of disputes regarding their
the operator has standing to sue the negligent party/party in fault.
contract because such contract is void.
Facts:
Facts:
In 1982, GONZALES bought an Isuzu passenger jeep from VALLARTA, who was then a
Spouses Ocampo bought in installment 5 Toyota Corona cars from Delta Motor Sales
holder of a public convenience for the operation of Spublic utility vehicles (PUVs) on the
Corporation to be used as taxicabs. Since they had no franchise to operate, they
MONUMENTO-BULACAN ROUTE.
contracted with LITA ENTERPRISES so that they can use its certificate of public
convenience. In the set-up, they would pay LITA rentals for the use of the certificate.
After buying the jeep, GONZALES continued to operate the route, but he did not register
the jeep in his name nor did he get a certificate of public convenience.
Pursuant to the agreement, the cabs were registered in LITA‘s name but were operated by
the spouses but maintained the trade name of LITA (ACME TAXI)
In 1990, the jeepney collided with a 10 wheeler truck owned by LIM. The driver took
responsibility, admitting the truck lost its brakes. LIM offered to repair the jeep and when
A year later, one of the cabs figured in an accident with a motorcycle driver who died. LITA
GONZALES refused, LIM offered to pay the assessed damage (20k, as estimated by a
was sued by the heirs of the victim. It was held liable for damages. Pursuant to the
mechanic). It was again refused. GONZALES wanted a brand new jeep.
judgment, 2 cars of the spouses ocampo were levied upon and sold.
GONZALES then sued LIM for damages. LIM argues that since the set up between
Thereafter, Ocampo decided to register the cabs in his name so he requested LITA to turn
GONZALES and VALLARTA was under a KABIT SYSTEM, VALLARTA remained as the
over the registration papers of the cabs to him but it refused. Hence, Ocampo sued LTIA for
owner of the jeep and therefore, he was the one who was the real party in interest, and
reconveyance. LITA was ordered to transfer the registration certificate to Ocampo.
NOT GONZALES.
Issue: Should the parties have been given relief by the court? NO. KABIT SYSTEM.
Issue: May Gonzales sue Lim, given that he did not register the jeep in his name nor did he
procure a franchise? YES
Unquestionably, the parties herein operated under an arrangement, commonly known as
the "kabit system", whereby a person who has been granted a certificate of
The kabit system is illegal. It allows holders of franchises to simply transfer their vehicles to
convenience allows another person who owns motors vehicles to operate under
one who has no property so that when the vehicle figures in an accident, the franchisee will
such franchise for a fee.
be able to escape liability.
Although not outrightly penalized as a criminal offense, the "kabit system" is recognized as o Thus, for the safety of passengers and the public who may have been wronged
being contrary to public policy and, therefore, void and inexistent under Article 1409 of the
and deceived through the baneful kabit system, the registered owner of the
Civil Code,
vehicle is not allowed to prove that another person has become the owner so that
he may be freed from liability.
It is a fundamental principle that the court will not aid either party to enforce an illegal
contract, but will leave them both where it finds them. THEREFORE it was incorrect for the o Therefore, the evil that the principle seeks to prevent is the DECEIT.
lower court to have given parties relief from their predicament.. Moreover, where the parties
are in pari delicto (both at fault), no affirmative relief of any kind will be given to one against
In this case, the evil that is sought to be prevented in enjoining the kabit system does not
the other
exist (for the following reasons)
Case dismissed. BOTH lost. o FIRST: Neither of the parties to the kabit system is being held liable. In fact, it is
one of the parties (GONZALES) who is trying to sue LIM.
o SECOND: The case was due to the negligence of another vehicle Thus it cannot
be said that private respondent Gonzales and the registered owner of the
jeepney were in estoppel for leading the public to believe that the jeepney
belonged to the registered owner.
70
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
o THIRD: the public was not inconvenienced by the illegal arrangement. In fact, is
GONZALES, one of the parties to the illegal arrangement, who was wronged
(damage due to negligence)
In light of the foregoing, it is evident that GONZALES has the right to proceed against LIM
for the damage caused on his passenger jeepney as well as on his business. (GONZALES
WON)
3. Tamayo v. Aquino (Registered owner may ask for reimbursement from the operator)
Doctrine
It is true that the registered owner of a vehicle is directly liable for injuries caused by such
vehicle even if he has already sold or transferred it. However, he may ask for
reimbursement from the transferee for whatever amount he was adjudged to pay.
Facts:
TAMAYO was a holder of a certificate of public convenience to operate 2 trucks. While
EPIFANIA was riding one of the trucks, it figured into an accident, resulting to EPIFANIA‘s
death. THUS, INOCENCIO AQUINO, the husband, sued TAMAYO for damages.
In his defense, TAMAYO alleged that he already sold the truck to RAYOS. TAMAYO then
filed a 3rd party complaint against RAYOS. TAMAYO and RAYOS were held solidarily
liable. TAMAYO appealed, alleging that he shouldn‘t be held liable because RAYOS was
the one who owned and operated the ill-fated truck.
CA affirmed, but held that TAMAYO and RAYOS were not solidarily liable as the action was
based on breach of contract of carriage, and not on quasi-delict.
Issue: Is TAMAYO, as the holder of the franchise, liable? YES If yes, can he hold RAYOS liable
also? YES.
The registered owner of a public service vehicle is responsible for damages that may be
caused to any of the passengers therein, even if the said vehicle had already been sold,
leased or transferred to another person who was, at the time of the accident, actually
operating the vehicle. THUS, Tamayo, as the registered owner, is directly liable.
HOWEVER, the transferee, RAYOS, is also liable to reimburse TAMAYO for what he will
be adjudged to pay. This is because, in operating the truck without transfer thereof having
been approved by the Public Service Commission, the transferee acted merely as agent of
the registered owner and should be responsible to him (the registered owner), for any
damages that he may cause the latter by his negligence
Tamayo wins.
4. Perez v. Gutierrez (TC erred in holding the operator liable instead of the registered owner)
Doctrine
Registered owner is directly liable.
Facts:
PEREZ, together with 9 other co-teachers, was a passenger of an AC (auto-calesa) Jeep
registered in the name of GUITERREZ. Due to the reckless driving of the driver, the jeep
figured in an accident that resulted to the injury of PEREZ. PEREZ thus sued GUITERREZ,
the registered owner.
GUITERREZ alleged that he should not be held liable because he already sold the jeep to
ALAJAR. He therefore filed a 3rd party complaint against ALAJAR. GUITERREZ further
alleged that under the deed of sale, ALAJAR assumed all responsibilities for the operation
of the vehicle.
The trial court held ALAJAR liable for actual damages to PEREZ and moral damages to
GUITERREZ. PEREZ appealed, arguing that it should be the registered owner who should
be held liable for damages resulting from a breach of contract.
Issue: Was the TC correct in directly holding ALAJAR liable? No, because it is the registered
owner who should be held directly liable.
To bind the public with the sale of the property covered by a franchise, the sale must be
first approved by the Public Service Commission. Without this approval, the transferor
continues to be the owner in the contemplation of the law.
it is quite clear therefore that the TC erred in holding ALAJAR, rather than GUTIERREZ, as
the one directly liable to PEREZ for the her injuries and the corresponding damages
incurred.
Moreover, that the court below inexplicably failed to hold the driver whom it found guilty of
reckless imprudence, jointly and solidarily liable with GUITERREZ to Fe Perez in
accordance with the provisions of article 2184 in relation to article 2180 of the new Civil
Code.
However, ALAJAR is liable to GUITERREZ for such amount that the latter may pay to
PEREZ
71
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
5. Juaniza v. Jose (―Live in‖ partner of registered owner mistakenly held liable with the latter)
Doctrine
Only the registered owner of a public service vehicle is responsible for damages that may
arise from consequences incident to its operation, or caused to any of the passengers
therein.
Facts:
EUGENIO JOSE was the registered owner and operator of a jeep involved in a collision
with a freight train of Phil National Railways (PNR) The injured passengers and the heirs of
the dead passengers sued JOSE.
o At that time of the accident, JOSE was legally married to RAMOS, but had been
cohabiting with ARROYO for 16 years
The TC held JOSE and ARROYO solidarily liable for damages. ARROYO questions her
liability because she was not the legal wife of JOSE.
Issue: Can ARROYO be held liable? NO.
Under the CIVIL CODE, the jeepney belongs to the conjugal partnership of JOSE and his
legal wife, RAMOS. There is therefore no basis for the liability of Arroyo for damages
arising from the death of, and physical injuries suffered by, the passengers of the jeepney
which figured in the collision.
Moreover, ARROYO, who is not the registered owner of the jeep, cannot be held liable for
damages caused by its operation. It is settled in jurisprudence that only the registered
owner of a public service vehicle is responsible for damages that may arise from
consequences incident to its operation, or maybe caused to any of the passengers therein.
6. MYC Agro-Industrial v. Vda de Caldo (Registered owner liable)
Doctrine:
Liability of registered owner upheld because though it leased the truck to another entity,
such entity was merely a dummy corporation.
Facts:
At about 430pm, a TOYOTA TRUCK owned by MYC AGRO and operated by AREVALO hit
the right center side of a jeep, owned by SILLA and operated by RODOLFO. As a
consequence, the jeep turned turtle and causing death and injuries to the 15 passengers (7
died, 8 injured)
o Moreover, upon impact, the jeep also hit and damages a cement fence, owned
by REYES.
REYES and the victims sued MYC-AGRO, AREVALO and KATIGBAK, the GM of MYC-
AGRO.
o In its answer, MYC AGRO admitted ownership but alleged that the truck involved
was leased to JAGUAR TRANSPORTATION. Therefore, MYC filed a 3rd party
complaint against JAGUAR.
o For its part, JAGUAR alleges that it secured 3rd party liability insurance from
FEDERAL INSURANCE. Therefore, it filed a 4th party complaint against
FEDERAL INSURANCE and its agent.
Issue: Who is liable? MYC AGRO
SC affirmed the TC finding that the lease contract was merely a simulated contract to
shift liability from MYC to JAGUAR. JAGUAR is considered as merely a dummy or conduit.
Moreover, MYC in reality, enjoyed all the rights of ownership over the trucks that were
ostensibly leased.
More importantly, jurisprudence holds that "[t]he registered owner/operator of a passenger
vehicle is jointly and severally hable with the driver for damages incurred by passengers or
third persons as a consequence of injuries (or death) sustained in the operation of said
vehicles. ... Regardless of who the actual owner of a vehicle is, the operator of record
continues to be the operator of the vehicles as regards the public and third persons, and as
such is directly and primarily responsible for the consequences incident to its operation, so
that, in contemplation of law, such owner/operator of record is the employer of the driver,
the actual operator and employer being considered merely as his agent."
THEREFORE, MYC is held liable (MYC lost)
7. Jereos v. CA, Pardorla
Doctrine
recovery by the registered owner or operator may be made in any form-either by a cross-
claim, third-party complaint, or an independent action
Facts:
PARDORLA is a holder of a franchise for an operation of a jeep line in Iloilo City. One of
the jeeps, however, was operated by JEREOS. This jeep hit JUDGE RODRIGUEZ and
his wife, causing the death of JUDGE RODRIGUEZ.
o Driver was convicted under the RPC for criminal negligence.
Thus, the heirs of RODRIGUEZ sued PARDORLA. In this defense, he argues that
JEREOS was the operator of the jeep when the accident happened. The TC exonerated
JEREOS from liability.
Issue: Is JEREOS, as operator, liable? YES.
In this case, the jeep was registered under the ―kabit system‖, wherein JEREOS will
operate the jeep under the franchise of PARDORLA. Evidence showed that JEREOS
engaged PARDORLA for the ―kabit‖ set-up because his jeep was previously involved in an
accident. He did it so that it would not be attached in case of any finding of the court of
liability.
It follows therefore that because JEREOS was the actual operator of the jeep, he can be
held liable to reimburse PARDORLA for any amount he is adjudged to pay to
RODRIGUEZ. JEREOS lost.
72
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
8. Yu Con v. Ipil
Doctrine
A small vessel used for the transportation of merchandise by sea and for the making of
voyages from one port to another, equipped and victualed for this purpose by its owner, is a
vessel, within the purview of the Code of Commerce, for the determination of the character
and effect of the relations created between the owners of the merchandise laden on it and
its owner.
It is well and good that the shipowner be not held criminally liable for such crimes or quasi
crimes; but the cannot be excused from liability for the damage and harm which, in
consequence of those acts, may be suffered by the third parties who contracted with the
captain, in his double capacity of agent and subordinate of the shipowner himself. In
maritime commerce, the shippers and passengers in making contracts with the captain do
so through the confidence they have in the shipowner who appointed him; they presume
that the owner made a most careful investigation before appointing him, and, above all,
they themselves are unable to make such an investigation, and even though they should do
so, they could not obtain complete security, inasmuch as the shipowner can, whenever he
sees fit, appoint another captain instead
Facts:
Yu Con, a merchant who sold cloth, contracted Ipil, Solamo and Lauron to transport
merchandise and money (P450) from the port of Cebu to the town of Catmon through Ipil‘s
craft (a banca named Maria)
o Shipmaster: Ipil, Supercargo: Solamo Boat owner: Lauron
However, before the ship set sail, the money could not be found. Thus, Yu Con sued Ipil,
Solamo and Lauron arguing that the disappearance was through their
negligence/abandonment. All 3 were held liable for negligence (Ipil and Solamo were
allegedly sleeping when the alleged theft occurs) thus they separately appealed.
o Lauron argues that under the Code of Commerce, he should not be held liable
because there is evidence to showing the possibility that one of the cabin boys
committed the theft. Instead, it should be the captain who should be held liable.
Issue: Are all 3 liable? Yes.
Ipil and Solamo, as master and supercargo respectively, are liable. They were entrusted
as depositaries of the lost money and it was through their negligence that it was lost.
Therefore, they should be liable
Thereafter, the SC, in determining the liability of LAURON (shipowner) and in
determining w/n there was a contract of carriage, first held that the banca (Maria) was a
vessel within the purview of the Code of Commerce.
o Blanco, the commentator on mercantile law, in referring to the grammatical
meaning of the word "ship" and "vessels," says, in his work aforecited, that these
terms designate every kind of craft, large or small, whether belonging to the
merchant marine or to the navy. It is also any ―floating apparatus used in the
service of an industry or in that of maritime commerce‖
Since IPIL was the master of the banca (vessel), he is considered the captain, as he was
person in charge. Moreover, in this case, since LAURON was the shipowner and since the
theft was not committed by a person not belonging to the craft, he should also be held
liable solidarily with IPIL and SOLAMO.
Quoting the SC:
The Code of Commerce in force omits the declaration of non-liability contained in the old
code, and clearly makes the shipowner liable civilly for the loss suffered by those who
contracted with the captain, in consequence of the misdemeanors and crimes committed by
the latter or by the members of the crew.
Check original on the circumstances of the theft. It will be asked as a follow up question.
Sailing Mate v. Second Mate
Primage v. Demurrage
Shipowner v. Ship Agent
What are lay days?
Allision
Inscrutable fault
9. Lopez v. Duruelo
Doctrine
Art 835 does not apply to small boats engaged in river and bay traffic. This articles apply to
merchant vessels
When the mercantile codes speak of vessels, they refer solely and exclusively to merchant
ships, as they do not include war ships furthermore, they almost always refer to craft which
are not accessory to another as is the case of launches, lifeboats, etc.
Moreover, the mercantile laws, in making use of the words ship, vessels, boat,
embarkation, etc., refer exclusively to those which are engaged in the transportation
of passengers and freight from one port to another or from one place to another; in a
word, they refer to merchant vessels and in no way can they or should they be
understood as referring to pleasure craft, yachts, pontoons, health service and
harbor police vessels, floating storehouses, warships or patrol vessels, coast guard
vessels, fishing vessels, towboats, and other craft destined to other uses.
Facts:
LOPEZ wanted to come aboard the inter-island steamer SAN JACINTO so he rode the
motor boat JISON (incidentally, owned by ALBINO JISON), which ferried passengers to
and from the boat (from land)
The engineer of the boat (a.k.a. driver) was JUAN DURUELO, a 16 year old novice without
experience in running motor boat, who was then in his 3rd day of apprenticeship. Moreover,
the boat was overloaded. As the JISON approached the SAN JACINTO, it came too near
so it was hit by the propeller. As a result, LOPEZ was thrown off and was injured by the
propeller.
73
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Thus, LOPEZ sued JISON and DURUELO‘s guardian. In response, the defendants sought
to dismiss the complaint as LOPEZ did not file a protest within 24 hourst in accordance with
Art. 835 of the Code of Commerce, therefore a condition precedent was not complied with.
Issue: Was protest necessary? No.
Art. 835 is found in the section dealing with collisions of sea-going vessels, and is not
applicable to small boats engaged in river and bay traffic. Moreover, this section was
intended to define the law relative to merchant vessels and marine shipping.
o To reiterate, the use of the word ―vessel‖ was not intended to include all ships,
craft, or floating structures of every kind without limitation and thus, the
provisions of the section where Art. 835 is found in should not be held to include
minor craft engaged only in river and bay traffic.
o THEREFORE, other vessels of a minor nature not engaged in maritime
commerce, such as river boats and those carrying passengers from ship to
shore, must be governed, as to their liability to passengers, by the provisions of
the Civil Code or other appropriate special provisions of law.
Thus, it follows that the complaint cannot be dismissed on the ground of the failure to
protest, as the code of commerce provisions are inapplicable
10. Standard Vacuum v. Luzon Stevedoring
Doctrine
Facts:
Standard Vacuum contracted Luzon Stevedoring to transport gasoline from Manila to Iloilo.
The gasoline was placed in Luzon Stevedoring‘s barge. Luzon‘s tugboat (SNAPPER)
picked up the barge and towed it. However, shortly afterwards, the engine of the tugboat
died due to a broken idler.
The tugboat got stuck and then the weather worsened. The tugboat sank and the barge
where the gasoline was loaded was damaged and as a consequence, much of the gasoline
already leaked out.
THUS, Standard Vacuum sued Luzon Stevedoring for breach of contract of carriage.
Issue: Is Luzon Stevedoring liable? Yes.
SC first determined the applicable law by stating the LUZON STEVEDORING is a public
utility. THEREFORE, it comes under the provisions of the Code of Commerce. The
applicable provision is Art. 361, which holds that the carrier is not liable if the loss was due
to fortuitous event.
SC found that the defense of fortuitous event will not lie primarily because of its
contributory negligence as shown by the following facts:
o It bought the tugboat and used it without submitting it to dry-dock overhaul and
inspection. It also did not have the necessary permits and equipment. (basically,
it was not seaworthy) THEREFORE, it was negligence on the part of LUZON
STEVEDORING to have used the tugboat in its operation without taking all the
precautions.
o While the breaking of the idler may be due to an accident, or to something
unexpected, the cause of the disaster which resulted in the loss of the gasoline
can only be attributed to the negligence or lack of precaution to avert it on the
part of LUZON STEVEDORING.
11. YU BIAO SONTUA & CO v. Ossorio (Explosion in motor boat, Ship agent/Owner held liable
for negligence of his employees)
Doctrine
The doctrines having reference to the relations between principal and agent cannot be
applied in the case of ship agents and ship owners
Facts:
On 1920, a fire broke out on board the motor boat Alfonso, which was loaded with a
considerable amount of gasoline. The fire spread to the steamer Y. Sontua, owned by YU
BIAO SONTUA & CO (Yu Biao) Thus, Yu Biao sued OSSORIO, the owner and ship agent
of Alfonso. OSSORIO denied any liability.
However, the TC found that OSSORIO‘s employees were liable in causing the explosion
that resulted in the fire. As a result, OSSORIO was also held liable.
Issue: Was there negligence? Is OSSORIO liable?
Issue of negligence:
Yes. The explosion was found to have been imputable to the negligence of the persons
having charge of the ship and under whose direction the loading of the gasoline was
performed.
Issue of w/n OSSORIO is liable for the acts of his agents/employees.
Yes. OSSORIO is liable. This is because the persons responsible for the fire were HIS
employees. ―Where the vessel is one of freight, a public concern or public utility, its owner
or agent is liable for tortious acts of his employees.
THEREFORE, OSSORIO, as ship owner/ship agent, is liable for the tortious acts of his
employees
o With regard to the allegation that the obligations enumerated in article 612 of our
Code of Commerce are inherent in the master such inherent duties do not
limit to the master the civil liability arising from their nonfulfillment, but
while the master is responsible to the ship agent, the ship agent, in turn, is
responsible to third persons, as is clearly provided in article 618 of said Code, in
which express mention is made, is subsections 5 and 7, of the duties
enumerated in the said article 612.
74
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
12. Rubiso v. Rivera (damages must have basis)
Facts:
RIVERA allegedly acquired the pilot boat VALENTINA on JAN 4, but he did not register
such purchase. Subsequently, however, RUBISO bought the pilot boat in a sale at public
auction on JAN 23 and he registered it. RIVERA sued for recovery of possession of the
boat but the trial court ruled in favor of RUBISO.
A writ of execution was issued, which allowed RUBISO to salvage the pilot boat, which at
the time was stranded in BATANGAS. However, when the ship was delivered to RUBISO, it
was in a damaged condition. THUS, RUBISO sued RIVERA for damages to the boat, which
was allegedly caused by the negligence of RIVERA and his employees
The TC dismissed the action for damages primarily because the boat was already
destroyed, so there was no basis for the damages.
Issue: Should damages be awarded? NO
Preliminarily, the court held that RUBISO had a better right because he was able to register
the sale.
Evidence shows that even before RUBISO bought the boat, it was already seriously
damaged due to a storm. Basically, by the time RUBISO bought the boat, it had no more
legal value. In fact, it was stranded for over 10 months before RUBISO was declared to be
the owner of the boat. THEREFORE, there is no sufficient proof to prove that RUBISO
indeed suffered any damage.
13. Luzon Stevedoring v. CA (Rule on Collision, applicability of Art 837)
Doctrine
The rule is that in case of collision there should be abandonment of the vessel by the
shipowner or agent in order to enjoy the limited liability provided for under said Article 837,
o The exception to this rule is when the vessel is totally lost in which case there is
no vessel to abandon so abandonment is not required. Because of such total
loss the liability of the shipowner or agent for damages is extinguished.
Nevertheless, the shipowner or agent is personally liable for claims under
the Workmen's Compensation Act and for repairs of the vessel before its
loss.
In case of illegal or tortious acts of the captain the liability of the shipowner and agent is
subsidiary. In such instance the shipowner or agent may avail of the provisions of Article
837 of the Code by abandoning the vessel.
However, if the injury or damage is caused by the shipowner's fault as where he engages
the services of an inexperienced and unlicensed captain or engineer, he cannot avail of the
provisions of Article 837 of the Code by abandoning the vessel. He is personally liable for
the damages arising thereby.
Facts:
On 1968, at past 6am, the tanker CAVITE owned by LUZON STEVEDORING and MV
―FERNANDO ESCANO‖, a passenger ship owned by ESCANO INC., collided. As a result,
the FERNANDO ESCANO sank. ESCANO sued LUZON STEVEDORING. In the course of
the trial, commissioners were appointed to determine the value of ―CAVITE‖ (180k)
TC ruled that ―CAVITE‖ was at fault, thus ordering payment to the insurance company (of
ESCANO INC) and ESCANO INC itself (68k)
o In its defense, LUZON argues that its liability is limited to the value of ―CAVITE‖
(its ship) and freight earned, in accordance with Art. 837 of the Code of
Commerce.
o ART. 837. The civil liability incurred by the shipowners in the cases prescribed in
this section, shall be understood as limited to the value of the vessel with all
her appurtenances and freight earned during the voyage
Issue: Should liability of LUZON be limited to the value of the CAVITE? No.
In case of collision of vessels, in order to avail of the benefits of Article 837 of the Code of
Commerce the shipowner or agent must abandon the vessel. In such case the civil
liability shall be limited to the value of the vessel with all the appurtenances and freight
earned during the voyage. However, where the injury or average is due to the ship-
owner's fault, the shipowner may not avail of his right to limited liability by
abandoning the vessel.
IN THIS CASE, there is no question that the action arose from a collision and the one at
fault is ―CAVITE‖. Undeniably LUZON has not abandoned the vessel. Hence LUZON
cannot invoke the benefit of the provisions of Article 837 of the Code of Commerce
to limit its liability to the value of the vessel, all the appurtenances and freightage
earned during the voyage
Note: (for annotation)
We reiterate what We said in previous decisions that the real and hypothecary nature of the
liability of the shipowner or agent is embodied in the provisions of the Maritime Law, Book III,
Code of Commerce. Articles 587, 590 and 837 of the same code are precisely intended to limit
the liability of the shipowner or agent to the value of the vessel, its appurtenances and freightage
earned in the voyage, provided that owner or agent abandons the vessel. Although it is not
specifically provided for in Article 837 of the same code that in case of collision there should be
such abandonment to enjoy such limited liability, said article on collision of vessels is a mere
amplification of the provisions of Articles 587 and 590 of same code where abandonment of the
vessel is a pre-condition. Even without said article, the parties may avail of the provisions of
Articles 587 and 590 of same code in case of collision. This is the reason why Article 837 of the
same code is considered a superfluity
75
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

14. Chua Yek Hong v. IAC, Guno and Olit [private respondents]
Notes:
Facts
The term "ship agent" as used in Art 587 is broad enough to include the ship owner.
Chua Yek Hong is a copra dealer. He contracted with GUNO and OLIT, the OWNERS of Pursuant to said provision, therefore, both the ship owner and ship agent are civilly and
MV LUZVIMINDA 1, a COMMON CARRIER, for the transport of 1,000 sacks of copra to directly liable for the indemnities in favor of third persons, which may arise from the conduct
Manila. However, the cargo did not reach Manila because it sank. of the captain in the care of goods transported, as well as for the safety of passengers.

Thus, CHUA sued the owners based on breach of contract of carriage. The owners argue
however that since their vessel was totally lost, their liability was already extinguished.
o TC awarded damages but CA reversed, ruling that the owners‘ liability, as ship
owners, for the loss of the cargo is merely co-extensive with their interest in the
vessel such that the total loss of such vessel results in its extinction. Therefore,
their liability is extinguished (basically, no ship, no liability)
o Basis:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third
persons which may arise from the conduct of the captain in the care of the goods
which he loaded on the vessel; but he may exempt himself therefrom by abandoning
the vessel with all the equipments and the freight it may have earned during the
voyage.
Issue: Are the owners still liable? NO.
To recite:
The SC applied the principle of limited liability of vessels. In accordance with this
principle, the ship owner/agent‘s liability is merely co-extensive with his interest in his
vessel such that a total loss thereof results in its extinction. Basically, the general rule is
that if the vessel is destroyed, the owners will not be held liable.
However, under the same Article (Art 587), this direct liability is moderated and limited by
the ship agent's or ship owner's right of abandonment of the vessel and earned freight. This
expresses the universal principle of limited liability under maritime law. The most
fundamental effect of abandonment is the cessation of the responsibility of the ship
agent/owner. In other words, the ship owner's or agent's liability is merely co-extensive with
his interest in the vessel such that a total loss thereof results in its extinction. "No vessel, no
liability" expresses in a nutshell the limited liability rule. The total destruction of the vessel
extinguishes maritime liens as there is no longer any res to which it can attach
EXCEPTIONS TO LIMITED LIABILITY RULE: The limited liability rule, however, is not
without exceptions, namely:
(1) where the injury or death to a passenger is due either to the fault of the ship owner, or
to the concurring negligence of the ship owner and the captain
(2) where the vessel is insured;
(3) in workmen's compensation claims
(4) expenses for repair of vessel prior to the loss
In this case, there is nothing in the records to show that the loss of the cargo was due to
the fault of the private respondent as shipowners, or to their concurrent negligence with the
captain of the vessel.

THEREFORE, it will have to be held that since the ship agent's or ship owner's liability is
merely co-extensive with his interest in the vessel such that a total loss thereof results in its
extinction and none of the exceptions to the rule on limited liability being present, the
liability of the owners for the loss of the cargo of copra must be deemed to have been
extinguished. There is no showing that the vessel was insured in this case.

In relation to the CIVIL CODE and COMMON CARRIERS, the SC explained that the
presumption of negligence in case of loss, destruction or deterioration still applies.
However, the liability is limited by Art 587. Since the Civil Code contains no provisions
regulating liability of ship owners or agents in the event of total loss or destruction of the
vessel, it is the provisions of the Code of Commerce, more particularly Article 587, that
govern in this case. [note: remember, the issue of w/n a CC is liable is different to the
extent of its liability, in this case there was NO finding of negligence on the part of the ship
owner OR its employees/agents]

HENCE, owners are not liable. CHUA loses.

76
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
15. Aboitiz Shipping v. General Accident Fire (Hypothecary nature)
Doctrine:
The real and hypothecary nature of maritime law simply means that the liability of the
carrier in connection with losses related to maritime contracts is confined to the vessel,
which is hypothecated for such obligations or which stands as the guaranty for their
settlement
Unseaworthiness may also pertain to the captain and its crew, and may operate to
exonerate the shipowner from liability
GR is that the limited liability rule will be applied if there is no showing of negligence on
the part of the shipowner.
Facts:
The vessel M/V P. Aboitiz, owned by ABOITIZ (a common carrier), shipped from HK to
Manila TWO shipments consisting of apparel totalling to about $140k. These were
consigned to PHIL. APPARENT INC and insured with GENERAL ACCIDENT FIRE AND
LIFE ASSURANCE [GAFLAC]
However, en route to Manila, the vessel sank and it was declared LOST with all its cargo.
The insured paid the consignee and then sued ABOITIZ for damages, alleging that the loss
was due to the negligence of Aboitiz, the master, and the crew of the vessel. The lower
courts found that the ship was not seaworthy.
o On the other hand, other cases have resulted in findings that the vessel was
SEAWORTHY and that the sinking was NOT due to force majeure
o This notwithstanding, GAFLAC filed a motion for execution of the judgment in its
favor. ABOITIZ opposes this on the ground that the limited liability rule should
govern to prevent the immediate impairment of the other claimants‘ share.
Issue: Should the limited liability rule apply? YES And consequently, should execution be
stayed? YES.
The limited liability rule applies because there was no negligence on the part of Aboitiz.
The court found that the finding of unseaworthiness by the lower court was NOT as to
the structural condition of the vessel, but to the condition that it was in at the time of
the sinking, which condition was due to the acts of the captain and the crew.
There being no negligence, then the limited liability rule can therefore apply. That being the
case, the rights of claimants to claim against an agent or owner of a vessel may be
compared to those of creditors against an insolvent corporation whose assets are
insufficient to satisfy all claims. While each creditor may prove their claim, it does not
automatically mean that they shall ALL be allowed to fully recover (basically, SC is saying
it‘s not first come first served)
In the instant case, there is, therefore, a need to collate all claims preparatory to their
satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its
pending freightage at the time of its loss. No claimant can be given precedence over the
others because it filed first.
why is the scheme of first come first served unfair?
serve justice, limited resources to satisfy all claims, so proportioning of the payments
should be done
o Thus, execution of judgment in earlier completed cases, even those already
final and executory, must be stayed pending completion of all cases
occasioned by the subject sinking. Then and only then can all such claims be
simultaneously settled, either completely or pro-rata should the insurance
proceeds and freightage be not enough to satisfy all claims
o However, in fairness to the claimants and as a matter of equity, the total
proceeds of the insurance and pending freightage should now be
deposited in trust.
16. Monarch Insurance v. CA
Doctrine
in cases involving the limited liability of shipowners, the initial burden of proof of negligence
or unseaworthiness rests on the claimants. However, once the vessel owner or any party
asserts the right to limit its liability, the burden of proof as to lack of privity or knowledge on
its part with respect to the matter of negligence or unseaworthiness is shifted to it.
Facts:
The ship M/V P. Aboitiz (the same ship as in the previous case) sank during its voyage
from HK to Manila. Seeking indemnification, insurers of the cargo sued Aboitiz. 2 of these
insurers are MONARCH and TABACLERA (petitioners in this case) All in all, there were
over 110 claimants against Aboitiz.
Aboitiz was held to be liable for damages in the cases filed by MONARCH and
TABACLERA. Consequently, they moved for the execution of the judgment and thus, writs
of execution were issued. However, ABOITIZ filed a motion to quash, alleging that since its
liability is limited to the value of the vessel, which was insufficient to satisfy the aggregate
claims of all 110 claimants, to indemnify MONARCH and TABACLERA ahead of the others
would be prejudicial to them. The writs were quashed.
Issue: is the limited liability rule applicable in favor of Aboitiz to stay the execution of judgments?
YES, but ABOITIZ still guilty of negligence.
FIRST OFF, in light of conflicting rulings of the Court as regards the negligence of Aboitiz,
the Court gave credence to the evidence showing the sinking of the ship was due to the
leakage of water inside the ship. THUS, Aboitiz was NEGLIGENT and it failed to show that
it exercised extraordinary diligence. It was NOT SEAWORTHY due to the NEGLIGENCE
of its OWNER, CAPTAIN and CREW. (this in effect reverses the view in the previous
case)
o HOWEVER, it cannot be said that the limited liability rule will not be applied. The
peculiar circumstances demand that there should be no strict adherence to
procedural rules if it will result to the frustration of the claims of the
shippers/insurers. THUS, the claimants will still be treated as creditors of an
insolvent corporation who does not have enough assets to satisfy all claims.
77
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro who won in this case?
17. Phil-Am general Insurance v. CA
Doctrine
The rule is to the effect that the right of abandonment of vessels, as a legal limitation of a
shipowner's liability, does not apply to cases where the injury or average was
occasioned by the shipowner's own fault.
Art. 587 speaks only of situations where the fault or negligence is committed solely by the
captain. Where the shipowner is likewise to be blamed, Art. 587 will not apply, and such
situation will be covered by the provisions of the Civil Code on common carrier.
Facts
Coca Cola loaded on board MV ASILDA (owned by FELMAN), 7500 cases of 1-liter coke
bottles to be transported to CEBU. The shipment was insured with PHILAMGEN. However,
45 minutes after leaving the port, the ship sank, and the entire cargo was lost.
PHILAMGEN paid the claim of Coca-cola and thereafter sued FELMAN, alleging that the
ship sank because of the vessel‘s unseaworthiness. In its defense, FELMAN invoked the
limited liability rule provided for in Art. 587 of the Code of Commerce and asserted that the
vessel was seaworthy.
Issue: Was the vessel unseaworthy? Is Art. 587 applicable?
As to unseaworthiness
The court found that as per the Adjusters, the proximate cause of the sinking of the ship
was its being top-heavy. The ship carried deck-cargo (placed 2,500 cases on its deck) and
it is settled that carrying deck-cargo raises the presumption of unseaworthiness unless it
can be shown that the deck cargo will not interfere with the proper management of the ship.
In this case, it was found that the ship was NOT designed to carry such deck-cargo.
Applicability of Art. 587
Art. 587 of the Code of Commerce is not applicable to the case at bar. Simply put, the ship
agent is liable for the negligent acts of the captain in the care of goods loaded on the
vessel. This liability however can be limited through abandonment of the vessel, its
equipment and freightage as provided in Art. 587. Nonetheless, there are exceptional
circumstances wherein the ship agent could still be held answerable despite the
abandonment, as where the loss or injury was due to the fault of the shipowner and
the captain.
The international rule is to the effect that the right of abandonment of vessels, as a legal
limitation of a shipowner's liability, does not apply to cases where the injury or average was
occasioned by the shipowner's own fault.
It must be stressed at this point that Art. 587 speaks only of situations where the fault or
negligence is committed solely by the captain. Where the shipowner is likewise to be
blamed, Art. 587 will not apply, and such situation will be covered by the provisions of the
Civil Code on common carrier.
It was already established at the outset that the sinking of "MV Asilda" was due to its
unseaworthiness even at the time of its departure from the port of Zamboanga. It was top-
heavy as an excessive amount of cargo was loaded on deck. Closer supervision on the
part of the shipowner could have prevented this fatal miscalculation. As such, FELMAN
was equally negligent. It cannot therefore escape liability through the expedient of
filing a notice of abandonment of the vessel by virtue of Art. 587 of the Code of
Commerce.
Under Art 1733 of the Civil Code, "(c)ommon carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by them, according to all
the circumstances of each case . . ." In the event of loss of goods, common carriers are
presumed to have acted negligently. FELMAN, the shipowner, was not able to rebut this
presumption. Hence, it is liable.
18. Negros Navigation v. CA
Doctrine
a shipowner may be held liable for injuries to passengers notwithstanding the exclusively
real and hypothecary nature of maritime law if fault can be attributed to the shipowner.
Facts:
In 1980, RAMON MIRANDA bought 4 special cabin tickets from Negros Navigation for his
family in order to attend a family reunion at Bacolod. They were on board the MV DON
JUAN. However, the ship collided with the M/T TACLOBAN CITY, an oil tanker owned by
PNOC. As a result, DON JUAN sank. All 4 members of his family died (he did not
accompany them)
As a result, RAMON MIRANDA sued NEGROS NAVIGATION and PNOC. In its defense,
NEGROS NAVIGATION alleged that the 4 members did not board the vessel as their
bodies were never recovered and that its crew was not negligent.
o Meanwhile, PNOC and NEGROS NAVIGATION entered into a compromise
agreement where NEGROS assumed liability for all claims arising out of the
collision.
Subsequently, TC found NEGROS liable for moral, actual and exemplary damages.
Issue: Is NEGROS NAVIGATION liable? YES.
As to w/n the deceased really were on board: Ramon Miranda testified that he
personally took his family and his niece to the vessel on the day of the voyage and stayed
with them on the ship until it was time for it to leave. There is no reason he should claim
members of his family to have perished in the accident just to maintain an action
As to negligence: Petitioner Negros Navigation is equally negligent with M/T Tacloban
City in tolerating the playing of mahjong by the ship captain and other crew members while
on board the ship and failing to keep the M/V Don Juan seaworthy so much so that the ship
sank within 10 to 15 minutes of its impact with the M/T Tacloban City. Moreover, the DON
JUAN was overloaded.
.
As to application of limited liability rule:
78
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
The rule is well-entrenched in our jurisprudence that a shipowner may be held liable for
injuries to passengers notwithstanding the exclusively real and hypothecary nature of
maritime law if fault can be attributed to the shipowner. As aforesaid, NEGROS
NAVIGATION was found to be negligent due to several circumstances.
Note: Before this case, SC promulgated Mecenas v. IAC, wherein NEGROS was found to
be liable for the same exact accident. SC anchored its findings of negligence on that
particular case.
19. Vasquez v. CA, Filipinas Pioneer Lines
Doctrine
the liability of a 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 a
shipowner or agent may be held liable for by reason of the death of its passengers
Findings of fact of BMI are not binding on the trial courts
Facts:
Vasquez, his wife, and nephew were on board MV PIONEER CEBU (owned by FILIPINAS)
On its way to CEBU, the ship encountered typhoon KLARING and struck a reef. It
subsequently sank. Vasquez and his family were not found. THUS, the heirs of Vasquez
sued FILIPINAS for the deaths of their relatives.
FILIPINAS, in its defense, argued that since the loss was due to force majeure, its liability
has been extinguished. Moreover, it brought up the defense under Art. 587.
o TC ruled in favor of the heirs, ruling that the loss was not due to a fortuitous
event since even before the vessel left on its voyage, the officer and crew
were already aware of the typhoon brewing in the general direction of their
destination. However, CA exonerated FILIPINAS from liability.
Issue: Is FILIPINAS liable? YES
Under the circumstances, while, indeed, the typhoon was an inevitable occurrence, yet,
having been kept posted on the course of the typhoon by weather bulletins at intervals of
six hours, the captain and crew were well aware of the risk they were taking. THUS, it can
be said that they failed to exercise the extraordinary diligence required from common
carriers
While the Board of Marine Inquiry, which investigated the disaster, exonerated the captain
from any negligence, it was because it had considered the question of negligence as "moot
and academic," the captain having "lived up to the true tradition of the profession." While
we are bound by the Board's factual findings, we disagree with its conclusion since it
obviously had not taken into account the legal responsibility of a common carrier towards
the safety of the passengers involved.
With respect to FILIPINAS‘ 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 a 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 a shipowner or agent may be held liable for by reason of the
death of its passengers.
Heirs of Vasquez wins.
20. Aboitiz Shipping v. New India Assurance
Doctrine
Facts:
Societe Francaise Des Colloides (French Company) loaded a cargo of textiles in M/V P.
Aboitiz (same ship as in the previous cases) The shipment was consigned to GENERAL
TEXTILE. However, the ship sank due to a typhoon which resulted to the loss of all its
cargo.
GENERAL TEXTILE lodged a claim with ABOITIZ for the value of the loss. However, since
it was denied, GENERAL TEXTILE claimed from NEW INDIA ASSURANCE, which was
subrogated to its rights. The insurance company then sued ABOITIZ. ABOITIZ alleged that
the ship was seaworthy, and that in accordance with the real and hypothecary nature of
maritime law, the sinking of the ship extinguished its liability.
o The TC ruled in favor of NEW INDIA, citing the CA decision in General Accident
and Life Assurance v. Aboitiz. Thus, Aboitiz was held to be liable for the total
value of the cargo.
o Aboitiz appealed, arguing that Monarch should apply and thus, the claim for
damages must only be against the insurance proceeds and limited to the
claimant‘s pro-rata share, in view of the doctrine of limited liability.
Issue: Is Monarch applicable in the present case? NO
In Monarch, it was held that the sinking of the vessel was not due to force majeure, but to
its unseaworthy condition. Aboitiz was found concurrently negligent with the captain and
crew. But the Court stressed that the ―peculiar‖ circumstances therein still made the
doctrine of limited liability applicable.
The ruling in Monarch may appear inconsistent with the exception of the limited liability
doctrine, as explicitly stated in the earlier part of the Monarch decision. An exception to the
limited liability doctrine is when the damage is due to the fault of the shipowner or to the
concurrent negligence of the shipowner and the captain. In which case, the shipowner shall
be liable to the full-extent of the damage. THUS, the SC sought to clarify such ruling to wit:
In the present case, ABOITIZ, in accordance with Art 1734 (CIVI LCODE PROVISIONS)
has the burden of showing that it exercised extraordinary diligence in the transport of the
goods it had on board in order to invoke the limited liability doctrine. Differently put, to limit
its liability to the amount of the insurance proceeds, ABOITIZ has the burden of proving that
the unseaworthiness of its vessel was not due to its fault or negligence. Considering the
evidence presented and the circumstances obtaining in this case, ABOITIZ failed to
discharge this burden.
It initially attributed the sinking to the typhoon and relied on the BMI findings that it was not
at fault. However, both the trial and the appellate courts, in this case, found that the sinking
79
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
was not due to the typhoon but to its unseaworthiness. Evidence on record showed that the
weather was moderate when the vessel sank. These factual findings of the Court of
Appeals, affirming those of the trial court are not to be disturbed on appeal, but must be
accorded great weight. These findings are conclusive not only on the parties but on this
Court as well.
Where the shipowner fails to overcome the presumption of negligence, the doctrine
of limited liability cannot be applied. (Aboitiz liable for actual value of the cargo)
21. Aboitiz Shipping v. CA
Doctrine
Facts:
The three petitions in this case stemmed from some of the several suits filed
against Aboitiz before different regional trial courts by shippers or insurers or the recovery
of the monetary value of the cargoes lost, or by the insurers for the reimbursement of
whatever they paid. The claims are based on the sinking of the M/V P. ABOITIZ.
Equitable, Malayan and Asia Traders are insurers who filed with the TCs the
aforementioned claims. They alleged that ABOITIZ was negligent. In its defense, ABOITIZ
argues that the loss was due to a fortuitous event, its ship was seaworthy, and the limited
liability rule should apply.
Issue: Should the limited liability rule apply? NO. Because ABOITIZ was NEGLIGENT.
RECIT VERSION
The Court UPHELD the ruling in NEW INDIA and held that as a general rule, a ship
owner‘s liability is merely co-extensive with his interest in the vessel, except where actual
fault is attributable to the shipowner.
o Thus, as an exception to the limited liability doctrine, a shipowner or
ship agent may be held liable for damages when the sinking of the vessel is
attributable to the actual fault or negligence of the shipowner or its failure
to ensure the seaworthiness of the vessel.
o The instant petitions cannot be spared from the application of the exception to
the doctrine of limited liability in view of the unanimous findings of the
courts below that both Aboitiz and the crew failed to ensure the
seaworthiness of the M/V P. Aboitiz.
Aboitiz‘s contention, that with the sinking of M/V P. Aboitiz, its liability to the cargo shippers
and shippers should be limited only to the insurance proceeds of the vessel absent any
finding of fault on the part of Aboitiz, is not supported by the record (because as aforesaid,
there was finding of fault). Thus, Aboitiz is not entitled to the limited liability rule and
is, therefore, liable for the value of the lost cargoes as so duly alleged and proven
during trial
LONG VERSION (very helpful in understanding what happened in case #15, 16, 17 and 20)
In this jurisdiction, the limited liability rule is embodied in Articles 587, 590 and 837 under
Book III of the Code of Commerce, thus:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third
persons which may arise from the conduct of the captain in the care of the goods which he
loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with
all her equipment and the freight it may have earned during the voyage.
Art. 590. The co-owners of the vessel shall be civilly liable in the proportion of their interests
in the common fund for the results of the acts of the captain referred to in Art. 587.
Each co-owner may exempt himself from this liability by the abandonment, before a notary,
of the part of the vessel belonging to him.
Art. 837. The civil liability incurred by shipowners in the case prescribed in this section,
shall be understood as limited to the value of the vessel with all its appurtenances and
freightage served during the voyage.
These articles precisely intend to limit the liability of the shipowner or agent to the value of
the vessel, its appurtenances and freightage earned in the voyage, provided that the owner
or agent abandons the vessel. When the vessel is totally lost in which case there is no
vessel to abandon, abandonment is not required. Because of such total loss the liability
of the shipowner or agent for damages is extinguished. However, despite the total loss
of the vessel, its insurance answers for the damages for which a shipowner or agent may
be held liable.
Nonetheless, there are exceptional circumstances wherein the ship agent could still be held
answerable despite the abandonment of the vessel, as where the loss or injury was due to
the fault of the shipowner and the captain. The international rule is to the effect that the
right of abandonment of vessels, as a legal limitation of a shipowner’s liability, does
not apply to cases where the injury or average was occasioned by
the shipowner’s own fault. Likewise, the shipowner may be held liable for injuries to
passengers notwithstanding the exclusively real and hypothecary nature of maritime law if
fault can be attributed to the shipowner.
Aboitiz‘s contention, that with the sinking of M/V P. Aboitiz, its liability to the cargo shippers
and shippers should be limited only to the insurance proceeds of the vessel absent any
finding of fault on the part of Aboitiz, is not supported by the record. Thus, Aboitiz is not
entitled to the limited liability rule and is, therefore, liable for the value of the lost
cargoes as so duly alleged and proven during trial
In Monarch Insurance, the Court deemed it fit to settle once and for all this factual issue by
declaring that the sinking of M/V P. Aboitiz was caused by the concurrence of
the unseaworthiness of the vessel and the negligence of both Aboitiz and the vessel‘s crew
and master and not because of force majeure. Notwithstanding this finding, the Court
did not reverse but reiterated instead the pronouncement in GAFLAC to the effect
that the claimants be treated as “creditors in an insolvent corporation whose assets
are not enough to satisfy the totality of claims against it. The Court explained that the
peculiar circumstances warranted that procedural rules of evidence be set aside to prevent
frustrating the just claims of shippers/insurers. Thus, the Court in Monarch Insurance
ordered Aboitiz to institute the necessary limitation and distribution action before
80
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

the proper RTC and to deposit with the said court the insurance proceeds of and the
freightage earned by the ill-fated ship.

However, subsequently, the Court rendered a decision in Aboitiz Shipping Corporation v.

New India Assurance Company, Ltd. (New India), reiterating the well-settled principle that
the exception to the limited liability doctrine applies when the damage is due to the fault of
the shipowner or to the concurrent negligence of the shipowner and the captain. Where
theshipowner fails to overcome the presumption of negligence, the doctrine of limited
liability cannot be applied. In New India, the Court clarified that the earlier
pronouncement in Monarch Insurance was not an abandonment of the doctrine of
limited liability and that the circumstances therein still made the doctrine applicable

o In New India, the Court declared that Aboitiz failed to discharge its burden of
showing that it exercised extraordinary diligence in the transport of the goods it
had on board in order to invoke the limited liability doctrine. Thus, the Court
rejected Aboitiz’s argument that the award of damages to respondent
therein should be limited to its pro rata share in the insurance proceeds
from the sinking of M/V P. Aboitiz.

As a general rule, a ship owner‘s liability is merely co-extensive with his interest in the
vessel, except where actual fault is attributable to the shipowner.

o Thus, as an exception to the limited liability doctrine, a shipowner or

ship agent may be held liable for damages when the sinking of the vessel is
attributable to the actual fault or negligence of the shipowner or its failure
to ensure the seaworthiness of the vessel.

o The instant petitions cannot be spared from the application of the exception to
the doctrine of limited liability in view of the unanimous findings of the
courts below that both Aboitiz and the crew failed to ensure the
seaworthiness of the M/V P. Aboitiz.

81
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 13 (persons in maritime law; maritime accidents)
1. Far Eastern Shipping v. CA
Doctrine:
A pilot, in maritime law, is a person duly qualified, and licensed, to conduct a vessel into or
out of ports, or in certain waters. In a broad sense, the term "pilot" includes both (1) those
whose duty it is to guide vessels into or out of ports, or in particular waters and (2) those
entrusted with the navigation of vessels on the high seas. However, the term "pilot" is more
generally understood as a person taken on board at a particular place for the purpose of
conducting a ship through a river, road or channel, or from a port
Under English and American authorities, generally speaking, the pilot supersedes the
master for the time being in the command and navigation of the ship, and his orders must
be obeyed in all matters connected with her navigation. He becomes the master pro hac
vice and should give all directions as to speed, course, stopping and reversing
anchoring, towing and the like. And when a licensed pilot is employed in a place where
pilotage is compulsory, it is his duty to insist on having effective control of the vessel,
or to decline to act as pilot. Under certain systems of foreign law, the pilot does not take
entire charge of the vessel, but is deemed merely the adviser of the master, who retains
command and control of the navigation even in localities where pilotage is compulsory
The master is not wholly absolved from his duties while a pilot is on board his vessel, and
may advise with or offer suggestions to him. He is still in command of the vessel, except so
far as her navigation is concerned, and must cause the ordinary work of the vessel to be
properly carried on and the usual precaution taken. He does not cede his authority when a
pilot is onboard pursuant to compulsory pilotage.
Even though the pilot is compulsory, if his negligence was not the sole cause of the injury,
but the negligence of the master or crew contributed thereto, the owners are liable. But the
liability of the ship in rem does not release the pilot from the consequences of his own
negligence. The rationale for this rule is that the master is not entirely absolved of
responsibility with respect to navigation when a compulsory pilot is in charge
Facts:
The MV PAVLODAR (from USSR), owned by Far Eastern Shipping (FESC) arrived at the
Port of Manila. Senen GAVINO was tasked by the Manila Pilot‘s Association to conduct
docking maneuvers for the safe berthing of the vessel (berthing = parking the boat in the
pier) KAVANKOV, the ship‘s master, was there to brief him and to relay his orders.
o Note: GAVINO piloted the boat pursuant to compulsory pilotage
When the boat was near the berthing station, GAVINO ordered the anchor to be dropped.
However, the anchor did not take hold as expected and the boat did not slow down. The
boat eventually hit the pier and damaged it.
The Manila Port Authority sued MPA, FESC and GAVINO for the damage to the pier. The
trial court held all the defendants solidarily liable for the damages. Thus, FESC appealed,
arguing that GAVINO, the pilot under compulsory pilotage, was the one at fault
Issue: Is GAVINO liable for his negligence? Is KAVANKOV liable for his negligence?
Gavino negligent
Pursuant to an ADMIN ORDER requiring compulsory pilotage, Capt. GAVINO was
assigned to pilot MV Pavlodar into the port. Upon assuming such office as compulsory pilot,
Capt. Gavino is held to the universally accepted high standards of care and diligence
required of a pilot, whereby he assumes to have skill and knowledge in respect to
navigation in the particular waters over which his license extends superior to and
more to be trusted than that of the master
In this case, the Court found that GAVINO was negligent because he was late in ordering
the dropping of the anchor. Moroever, when he realized that the anchor did not attach
properly, Gavino ordered merely "half-astern". It took Gavino another minute to order a
"full-astern". By then, it was too late. The vessel's momentum could no longer be slowed
and, barely a minute thereafter, the bow of the vessel hit the apron of the pier
Kavankov also negligent
The master is not wholly absolved from his duties while a pilot is on board his vessel, and
may advise with or offer suggestions to him. He is still in command of the vessel, except so
far as her navigation is concerned, and must cause the ordinary work of the vessel to be
properly carried on and the usual precaution taken.
In this case, while the pilot Gavino may indeed have been charged with the task of docking
the vessel in the berthing space the master of the vessel had the corresponding duty to
countermand any of the orders made by the pilot, and even maneuver the vessel
himself, in case of imminent danger to the vessel and the port. This, KAVANKOV
failed to do.
Liability of Shipowners
Even though the pilot is compulsory, if his negligence was not the sole cause of the injury,
but the negligence of the master or crew contributed thereto, the owners are liable. But the
liability of the ship in rem does not release the pilot from the consequences of his own
negligence. The rationale for this rule is that the master is not entirely absolved of
responsibility with respect to navigation when a compulsory pilot is in charge.
the captain as a generalist, is it proper to counter the pilot (a specialist)?
expanded jurisdiction of the SC is problematic
82
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
2. National Steel Corporation v. CA
Doctrine:
A stevedore company engaged in discharging cargo has the duty to load the cargo in a
prudent manner, and it is liable for injury to, or loss of, cargo caused by its negligence and
where the officers and members and crew of the vessel do nothing and have no
responsibility in the discharge of cargo by stevedores, the vessel is not liable for loss of,
or damage to, the cargo caused by the negligence of the stevedores
Facts:
Vlason‘s Shipping owns MV Vlasons I, a vessel which renders tramping service and as
such, does not transport for the general public. Its services are available only to specific
persons. It entered into a contract of affreightment/contract of voyage charter hire with
National Steel Corporation (NSC), wherein Vlasons was tasked to transport tin plates and
hot rolled sheets to Manila.
o The charter party provides that the shipowner shall not be responsible for
damage to the goods unless caused by the negligence of the master and crew.
Upon arrival in Manila, it was found that the cargo was wet and rusty. It was found that the
rusting was due to contact with SEA WATER sustained while on board the vessel. THUS,
NSC sued Vlasons for the damage to the cargo. Vlasons argue that the SEA WATER
seeped in because of rough seas, and not because of the negligence of its master and
crew, hence it should not be held liable.
The TC ruled that the damage was due to a fortuitous event, that the damage was due to
the inherent nature of the goods and that the stevedores were the ones liable for being
negligent. Thus, NSC appealed.
Issue: Were the officers/crew of VLASONS negligent? NO
Shipowners not liable
The court found that the ship used old tarpaulin to cover the hatches, but only in addition
to the new ones used primarily to make the hatches of the ship watertight. Due
diligence was exercised by the officers and the crew of the MV Vlasons I. It was
demonstrated by the fact that, despite encountering rough weather twice, the new tarpaulin
did not give way and the ship's hatches and cargo holds remained waterproof.
NSC failed to discharge its burden to show negligence on the part of the officers and the
crew of MV Vlasons I. On the contrary, the records reveal that it was the stevedores of
NSC who were negligent in unloading the cargo from the ship. The stevedores employed
only a tent-like material to cover the hatches when strong rains occasioned by a passing
typhoon disrupted the unloading of the cargo. This tent-like covering, however, was clearly
inadequate for keeping rain and seawater away from the hatches of the ship.
The fact that NSC actually accepted and proceeded to remove the cargo from the ship
during unfavorable weather will not make VSI liable for any damage caused thereby. In
passing, it may be noted that the NSC may seek indemnification, subject to the laws on
prescription, from the stevedoring company at fault in the discharge operations.
o A stevedore company engaged in discharging cargo has the duty to load the
cargo in a prudent manner, and it is liable for injury to, or loss of, cargo caused
by its negligence and where the officers and members and crew of the vessel do
nothing and have no responsibility in the discharge of cargo by stevedores the
vessel is not liable for loss of, or damage to, the cargo caused by the negligence
of the stevedores‖
Optional (demurrage)
The Court defined demurrage in its strict sense as the compensation provided for in the
contract of affreightment for the detention of the vessel beyond the laytime or that period of
time agreed on for loading and unloading of cargo. It is given to compensate the shipowner
for the nonuse of the vessel
Laytime runs according to the particular clause of the charter party. . . . If laytime is
expressed in "running days," this means days when the ship would be run continuously,
and holidays are not excepted. A qualification of "weather permitting" excepts only those
days when bad weather reasonably prevents the work contemplated.
In this case, the contract of voyage charter hire provided for a four-day laytime; it also
qualified laytime as WWDSHINC or weather working days Sundays and holidays included.
The running of laytime was thus made subject to the weather, and would cease to
run in the event unfavorable weather interfered with the unloading of cargo.
Consequently, NSC may not be held liable for demurrage as the four-day laytime allowed it
did not lapse, having been tolled by unfavorable weather condition
Vlasons won, NSC lost
Do Tin Plates Sweat? Yes, due to moisture outside the boat. However, in this case the
damage to the tinplates was occasioned not by airborne moisture but by contact with rain
and seawater.
3. Switzerland General Insurance v. Ramirez2
Doctrine:
The ship agent is solidarily liable with the shipowner for the damage caused to the goods
due to the negligence of the captain and crew.
Facts:
On 1974, 60k bags of urea nitrogen were shipped from Japan to Manila by CITADEL
LINES (local agent of OYAMA LINES). The goods were discharged by MABUHAY
BROKERAGE. However, when the consignee, BORDEN INTERNATIONAL, received the
goods, they were found to have been damaged (the bags were torn)
SWITZERLAND GEN INSURANCE (SGI) paid BORDEN the value of the goods and in turn
sued OYAMA, CITADEL and MABUHAY BROKERAGE.
2
Read the annotation by Domingo Lucenario. Will be asked in recitation.
83
IMPORTANT!!!
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
o CITADEL argued that it was not liable since it was merely an AGENT of
OYAMA and not a ship agent. OYAMA alleged that the claim could not be
entertained because it was already been declared insolvent by a court in Japan.
The TC found OYAMA to be liable, and exonerated CITADEL and MABUHAY
BROKERAGE. Hence, the insurer appealed.
Issue: Should CITADEL, the local agent, also be held liable? YES. It is a ship agent.
Considering the relationship of the parties, respondent Citadel Lines, Inc. cannot be
considered as a "mere agent" under the civil law on agency as distinguished from a ship
agent, within the context of the Code of Commerce.
o This is because in Yu Biao Sontua & Co. v. Ossorio, it was held that the
doctrines having reference to the relations between principal and agent
cannot be applied in the case of ship agents and ship owners.
In this case, CITADEL is clearly the ship agent of OYAMA. As provided in the law, a ship
agent is the person entrusted with the provisioning of a vessel or who represents her in the
port in which she happens to be. CITADEL took charge of the unloading of the goods and
issued cargo receipts in its own name. Therefore, it is clear that CITADEL is the ship
agent.
Being a ship agent, it is liable for the indemnities in favor of 3 rd persons which arise from
the conduct of the captain in the care of the goods (Art 587 and 618) It is therefore
solidarily liable with OYAMA for the value of the goods paid for by the insurer.
Moreover, the insolvency of Oyama Lines has no bearing on the case insofar as the liability
of Citadel is concerned. The law does does not make the liability of the ship agent
dependent upon the solvency or insolvency of the ship owner.
Note: As to the liability of charterer
In this case, the charterer represented itself on the face of the bill of lading as the carrier.
The vessel owner and the charterer did not stipulate in the Charter party on their separate
respective liabilities for the cargo. The loss/damage to the cargo was sustained while it was
still on board or under the custody of the vessel. As the charterer was itself the carrier, it
was made liable for the acts of the ship captain who was responsible for the cargo while
under the custody of the vessel.
As for the charterer's agent, the evidence showed that it represented the vessel when it
took charge of the unloading of the cargo and issued cargo receipts (or tally sheets) in its
own name. Claims against the vessel for the losses/damages sustained by that cargo were
also received and processed by it. As a result, the charterer's agent was also considered a
ship agent and so was held to be solidarily liable with its principal.
if the common carrier is liable, is it automatic that the ship agent is also
liable?
Vice versa?
Where does the command responsibility stop?
4. Sweet Lines v. CA, Bacatan, Quintos, Cabras, Veloso (private respondents)
Doctrine:
In this case, the voyage to Catbalogan was "interrupted" by the captain upon instruction of
management. The "interruption" was not due to fortuitous event or for majeure nor to
disability of the vessel. Having been caused by the captain upon instruction of
management, the passengers' right to indemnity from the ship owner. The owner of a
vessel and the ship agent shall be civilly liable for the acts of the captain.
Under Article 2220 of the Civil Code, moral damages are justly due in breaches of contract
where the defendant acted fraudulently or in bad faith. In this case there was bad faith as
the shipowner did not give notice to the respondents as to the change in schedule and in
fact bypassed them to comply with its schedule. However, no exemplary damages were not
awarded.
The owner of a vessel is liable in damages arising from the act of its captain in by-passing
a pre-scheduled port of call
Mechanical defects in a common carrier (e.g. boats, vehicles) are not considered fortuitous
events.
Facts:
The 4 private respondents in this case bought 4 first class tickets from SWEET LINES to go
to CATBALOGAN, SAMAR. The boat failed to leave on the stated time (12MN) and instead
left at 8AM due to engine trouble.
The boat did not dock at CATBALOGAN, the first port of call and instead proceeded to
TACLOBAN. The respondents had no choice but to disembark at TACLOBAN and they had
to board a ferryboat to CATBALOGAN. Hence, they sued SWEET LINES for damages.
Issue: Is Sweet Lines liable for damages? YES
Pertinent Provisions
ART. 614. A captain who, having agreed to make a voyage, fails to fulfill his undertaking, without
being prevented by fortuitous event or force majeure, shall indemnify all the losses which his
failure may cause, without prejudice to criminal penalties which may be proper.
ART. 698. In case of interruption of a voyage already begun, the passengers shall only be
obliged to pay the fare in proportion to the distance covered, without right to recover damages if
the interruption is due to fortuitous event or force majeure, but with a right to indemnity, if the
interruption should have been caused by the captain exclusively. If the interruption should be
caused by the disability of the vessel, and the passenger should agree to wait for her repairs, he
may not be required to pay any increased fare of passage, but his living expenses during the
delay shall be for his own account.
As found by both Courts below, there was no fortuitous event or force majeure which
prevented the vessel from fulfilling its undertaking of taking private respondents to
Catbalogan. In the first place, mechanical defects in the carrier are not considered
a caso fortuito that exempts the carrier from responsibility
In the second place, even granting arguendo that the engine failure was a fortuitous event,
it accounted only for the delay in departure. When the vessel finally left there was no longer
84
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
anyforce majeure that justified by-passing a port of call. The vessel was completely
repaired the following day.
The reason for by-passing the port of Catbalogan, as admitted by SWEET LINE‘s General
Manager, was to enable the vessel to catch up with its schedule for the next week. The
record also discloses that there were 50 passengers for Tacloban compared to 20
passengers for Catbalogan, so that the Catbalogan phase could be scrapped without
too much loss for the company.
In this case, the voyage to Catbalogan was "interrupted" by the captain upon instruction of
management. The "interruption" was not due to fortuitous event or for majeure nor to
disability of the vessel. Having been caused by the captain upon instruction of
management, the passengers' right to indemnity from the ship owner is evident. The
owner of a vessel and the ship agent shall be civilly liable for the acts of the captain.
5. Inter-orient v. NLRC
Doctrine:
Compagnie de Commerce vs. Hamburg is instructive and wherein the Court recognized the
discretionary authority of the master of a vessel and his right to exercise his best judgment,
with respect to navigating the vessel he commands
The captain has control of all departments of service in the vessel, and reasonable
discretion as to its navigation
A captain commonly performs three (3) distinct roles: (1) he is a general agent of the
shipowner; (2) he is also commander and technical director of the vessel; and (3) he is a
representative of the country under whose flag he navigates. The most important role has
to do with the operation and preservation of the vessel during its voyage.
Facts:
CAPTAIN TAYONG was employed by TRENDA WORLD SHIPPING through INTER-
ORIENT MARITIME ENTERPRISES for 1 year. On 1989, he assumed command of the
vessel of TRENDA with instructions to sail to SOUTH AFRICA to load 120k tons of coal.
TAYONG encountered problems during the voyage, such as the lack of oxygene and
acetylene. These were necessary for the welding repair of the turbo-charger and the
economizer. He was not immediately given these supplies and instead ordered to shut
down the economizer, and instead use the auxiliary boilers. TAYONG decided to not
immediately proceed to S.A. until the supplies were eventually delivered.
The supplies eventually arrived after 7 hours and the ship was able to proceed to S.A.
However, upon arrival, TAYONG was relieved of his position and thereafter repatriated for
not following orders. He then filed a complaint for illegal dismissal with the POEA. The
POEA granted his claim and awarded him his unpaid salary.
Issue: Was there sufficient basis to dismiss TAYONG? No.
The captain of a vessel is a confidential and managerial employee within the meaning of
the above doctrine. Hence, he cannot be dismissed without just cause.
Moreover, a master or captain, for purposes of maritime commerce, is one who has
command of a vessel. A captain commonly performs three (3) distinct roles: (1) he is a
general agent of the shipowner; (2) he is also commander and technical director of the
vessel; and (3) he is a representative of the country under whose flag he navigates. The
most important role has to do with the operation and preservation of the vessel during its
voyage.
In this case, the captain was dismissed without due process. More importantly, there is no
basis for terminating him. A captain must be accorded a reasonable measure of
discretionary authority to decide to promote the safety of the ship and its crew. In this case,
TAYONG was convinced that the ship should not sail unless the economizer and tubro-
charger were completely repaired. There being no basis to terminate him, it follows that he
was illegally dismissed3
6. Tabacalera Insurance v. North Front
Doctrine:
A charter party between a shipper and a carrier does not convert the carrier into a private
carrier.
Failure on the part of the consignee to start unloading operations upon notice constitutes
contributory negligence
Facts:
On August 1990, 20k sacks of corn grains were shipped on board NORTH FRONT 777, a
ship owned by NORTH FRONT SHIPPING. It was consigned to REPUBLIC FLOUR
MILLS, and insured with TABACALERA insurance.
When the cargo reached its destination, it was found that the merchandise was already
moldy and deteriorating. It was found that the goods were damaged due to contact with
SALT WATER. The insurers paid REPUBLIC FLOUR the value of the goods and thereafter
sued NORTH FRONT SHIPPING for damages.
o The TC dismissed the complaint on the ground that the contract entered into was
a charter-party agreement. As such, only ordinary diligence was required of
NORTH FRONT. The inspection of the barge by the shipper and the
representatives of the shipping company before actual loading, coupled with
3
IMPORTANT: A "turbo-charger" is a centrifugal blower driven by exhaust gas turbines and
used to supercharge an engine, or to supply a charge to the intake of an internal-combustion
engine at a pressure higher than that of the surrounding atmosphere (Webster's New World
Dictionary (1974), p. 1532.
An "economizer" is a device in which water is heated preliminary to entering the boiler proper.
The heat which was used in raising the temperature of the water contained in the boiler to boiling
point is utilized, instead of being wasted, for the purpose of raising the water in the economizer
to a high temperature before it enters the boiler. An increase in the feed water temperature will
raise boiler efficiency. (Ithaca Traction Corp. vs. Traveler's Indemnity Co., 177 N.Y.S. 753
[1919]).
85
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
the Permit to Sail issued by the Coast Guard, sufficed to meet the degree of
diligence required of the carrier.
o CA affirmed but found that NORTH FRONT was a common carrier and it
complied with its duty to exercise extraordinary diligence.
Issue: Was NORTH FRONT a COMMON CARRIER? Yes.
NORTH FRONT is a COMMON CARRIER
The charter-party agreement between North Front Shipping Services, Inc., and Republic
Flour Mills Corporation did not in any way convert the common carrier into a private carrier
North Front Shipping Services, Inc., is a corporation engaged in the business of
transporting cargo and offers its services indiscriminately to the public. It is without doubt a
common carrier. As such it is required to observe extraordinary diligence in its
vigilance over the goods it transports.
Extraordinary diligence was NOT exercised
North Front Shipping Services, Inc., proved that the vessel was inspected prior to actual
loading by representatives of the shipper and was found fit to take a load of corn grains..
However, having been in the service since 1968, the master of the vessel should have
known at the outset that corn grains that were farm wet and not properly dried would
eventually deteriorate when stored in sealed and hot compartments as in hatches of
a ship.
With this knowledge, the master of the vessel and his crew should have undertaken
precautionary measures to avoid or lessen the cargo's possible deterioration as they
were presumed knowledgeable about the nature of such cargo. But none of such
measures was taken.
However, the consignee REPUBLIC FLOUR is also guilty of contributory negligence.
It was seasonably notified of the arrival of the goods but it did not immediately start
unloading operations. This led to the further deterioration of the goods in question.
Insurers win.
7. A. Magsaysay v. Agan
Doctrine:
Requisites for gross/general averages:
(1) there must be a common danger.
(2), that for the common safety part of the vessel or of the cargo or both is sacrificed
deliberately.
(3), the ship and cargo are saved after the expenses and damage caused.
(4), that the expenses or damages should have been incurred or inflicted after taking
proper legal steps and authority
Facts:
SS Antonio was owned and operated by A. MAGSAYSAY It was bound for BATANES and
APARRI with general cargo belonging to different shippers (with AGAN among one of
them)
When the vessel reached APARRI, the ship ran aground at the mouth of the river due to
the shifting of sandbars. It had to be refloated by Luzon Stevedoring for an agreed amount.
The cargoes were eventually delivered to their owners, except for AGAN, who was the only
one who did not make a deposit to answer for its contribution to the average.
THUS, A. MAGSAYSAY sued AGAN for his contribution to the average. AGAN argued that
he should not be held liable as the stranding of the vessel was due to the negligence of the
ship‘s master.
Issue: Should a general average be allowed for floating a vessel that was accidentially
stranded? In other words, should AGAN contribute to the average?
The law on averages is contained in the Code of Commerce. Under that law, averages are
classified into simple or particular and general or gross.
Generally speaking, simple or particular averages include all expenses and damages
caused to the vessel or cargo which have not inured to the common benefit (Art. 809), and
are, therefore, to be borne only by the owner of the property gave rise to same (Art.
810); while general or gross averages include "all the damages and expenses which are
deliberately caused in order to save the vessel, its cargo, or both at the same time, from a
real and known risk" (Art. 811). Being for the common benefit, gross averages are to be
borne by the owners of the articles saved (Art. 812).
In this case, the The requisites for general and gross averages are as follows: :
First, there must be a common danger. This means, that both the ship and the cargo,
after has been loaded, are subject to the same danger, whether during the voyage, or in
the port of loading or unloading; that the danger arises from the accidents of the sea,
dispositions of the authority, or faults of men, provided that the circumstances producing
the peril should be ascertained and imminent or may rationally be said to be certain and
imminent. This last requirement exclude measures undertaken against a distant peril.
Second, that for the common safety part of the vessel or of the cargo or both is
sacrificed deliberately.
Third, that from the expenses or damages caused follows the successful saving of
the vessel and cargo.
Fourth, that the expenses or damages should have been incurred or inflicted after
taking proper legal steps and authority
In this case, the 1st requisite was not fulfilled as the evidence does not show that the
expenses sought to be recovered were incurred to save the ship. The vessel ran aground
in fine weather and merely at the mouth of the river, which was very shallow. It is the
86
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
deliverance from an immediate, impending peril, by a common sacrifice, that constitutes the
essence of general average. In the present case there is no proof that the vessel had
to be put afloat to save it from imminent danger. What does appear from the testimony
of plaintiff's manager is that the vessel had to be salvaged in order to enable it "to proceed
to its port of destination." But as was said in the case just cited it is the safety of the
property, and not of the voyage, which constitutes the true foundation of the general
average
The 2nd requisite was also not fulfilled as the cargo did not have to be sacrificed. It could‘ve
been unloaded by the owners if they were required to do so.
With respect to the third requisite, the salvage operation, was a success. But as the
sacrifice was for the benefit of the vessel — to enable it to proceed to destination —
and not for the purpose of saving the cargo, the cargo owners are not in law bound to
contribute to the expenses.
The 4th requisite has not been proved, for it does not appear that the expenses here in
question were incurred after following the procedure laid down in article 813 et seq.
In conclusion A. MAGSAYSAY has not made out a case for general average, with the
result that its claim for contribution against the defendant cannot be granted
IF you are a shipper, and your goods are jettisoned, why do you want a general
average loss? General average loss is a rule of equity. So that others (other shipper and
ship owner) will pay you for your loss
8. Standard Oil v. Castelo
Doctrine:
the captain is primarily the representative of the owner; and article 586 of the Code of
Commerce expressly declares that both the owner of the vessel and the charterer,
shall be civilly liable for the acts of the master and the owner of the vessel is civilly
liable for the acts of the captain; and he can only escape from this civil liability by
abandoning his property in the ship and any freight that he may have earned on the
voyage
In this case, Sir will ask again for the requisites of general average. What happens if there
is no general average loss? Then it will be a simple/particular average. It‘s a fancy way of
saying that the shipper will bear his own loss.
Facts:
CASTELO (owner) leased his interisland steamer Batangueno to CHUMBUQUE
(charterer) for use in the conveying of cargo within the PH. In this contract, it was stipulated
that the officers and crew of the Batangueño should be supplied by the owner, and that the
charterer should have no other control over the captain, pilot, and engineers than to
specify the voyages that they should make and to require the owner to discipline or
relieve them as soon as possible in case they should fail to perform the duties
respectively assigned to them.
The boat was hired by STANDARD OIL to deliver petroleum to Sorsogon. The petrol was
placed on the deck of the ship and not on the hold. During its voyage, the boat encountered
a storm. The captain was forced to jettison the petroleum. Thus, STANDARD OIL sued
CASTELO, the shipowner. CASTELO argues that the loss was a particular loss that should
be borne solely by STANDARD OIL.
Issue: Is the loss of the petrol a particular loss or a general average loss? General Average
Petrol is not allowed to be stored in the hold. Hence, it is legal to carry such product on the
ship‘s deck. Since it was legal to carry such petrol on the deck of the ship and the captain
had to jettison the goods to save the ship and the other goods loaded on board, it follows
that the loss of the petrol is a GENERAL AVERAGE.
HENCE, STANDARD OIL may recover from the OWNER of the ship (also against the
captain). This is because it is universally recognized that the captain is primarily the
representative of the owner; and article 586 of the Code of Commerce expressly
declares that both the owner of the vessel and the charterer, shall be civilly liable for
the acts of the master and the owner of the vessel is civilly liable for the acts of the
captain; and he can only escape from this civil liability by abandoning his property in
the ship and any freight that he may have earned on the voyage
Moreover, the captain is required to take the necessary steps to effect the adjustment,
liquidation, and distribution of the general average. In this case, the captain of the vessel
did not take those steps; consequently, the failure of the captain to take those steps gave
rise to the shipowner‘s liability.
Shipowner ordered to contribute. Shipowner loses.
9. Phil Home Assurance v. CA, Eastern Shipping
Doctrine:
Where the formalities prescribed under Articles 813 and 814 of the Code of Commerce in
order to incur the expenses and cause the damage corresponding to gross average were
not complied with, the carrier cannot claim for contribution from the consignees for
additional freight and salvage charges
Fire is generally not a fortuitous event
Facts:
While in KOBE, JAPAN, Eastern Shipping (ESLI) loaded to it ship engine parts to WILLIAM
LINES, ammonium chloride to ORCA‘s COMPANY, glue consigned to PAN ORIENTAL and
garments consigned to DING VELAYO.
While the vessel was off OKINAWA, JAPAN, the acetylene cylinder in the accommodation
area of the ship exploded and this explosion set fire to the whole ship. As a result, the
master and crew had to abandon the ship. The cargoes of the consignees were saved and
they were subsequently charged for additional freight and salvage costs. These charges
were all paid by PHAC, the insurer of all the consignees
PHAC in turn sued ESLI, alleging that the money it paid to the consignees were actually
damages caused by the fault and negligence of ESLI. ESLI argued that the fire was due to
a fortuitous event. The complaint was dismissed by the RTC on the ground of fortuitous
event. Further, it added that the expenses incurred in saving the cargo were considered
general average so the consignees must contribute. CA affirmed.
87
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Issue: Was the fire a fortuitous event? NO Was the loss a general average? NO
There is sufficient evidence to show that that the cylinder caught fire because of the
fault/negligence of ESLI, its master and its crew. The cylinder should not have been near
the engine room as the heat generated therefrom could cause an explosion. It follows
therefore that the loss was not caused by a fortuitous event.
As a rule, general or gross averages include all damages and expenses which are
deliberately caused in order to save the vessel, its cargo, or both at the same time,
from a real and known risk (Art. 811)
While the instant case may technically fall within the purview of Art 811, the formalities
prescribed under Articles 813 1and 814 of the Code of Commerce in order to incur
the expenses and cause the damage corresponding to gross average were not
complied with. Consequently, ESLI's claim for contribution from the consignees of
the cargo at the time of the occurrence of the average must be denied.
It follows therefore that the cargo consignees cannot be made liable to the carrier for
additional freight and salvage charges. Consequently, carrier must refund to the insurer the
amount it paid under protest for additional freight and salvage charges in behalf of the
consignees. Carrier loses.
10. Mecenas v. CA (mah-jong)
Doctrine:
A captain is grossly negligent if he is discovered to have been playing mah-jong at the time
of his ship‘s collision. It does not matter w/n he was off-duty at that time. This in turn entitles
the victims of the collision to ACTUAL, MORAL and EXEMPLARY damages.
Facts:
The M/T Tacloban City, a barge-type oil tanker owned by PNOC, headed towards Bataan.
During its voyage, it collided with M/V DON JUAN, owned by NEGROS NAVIGATION. The
DON JUAN rammed the TACLOBAN near the starboard bow. Due to the collision, the MV
DON JUAN sank and hundreds of its passengers died.
Two of the victims were the spouses MECENAS. Thus, their children sued NEGROS
NAVIGATION and the captain of DON JUAN.
NEGROS and CAPTAIN SANTISTEBAN were found to be liable for the deaths and the TC
awarded 400,000 for ―the death of their parents‖ This was affirmed by the CA but the CA
reduced the damages to 100k as ―actual damages‖ The Mecenas children appealed,
assailing the reduction of damages and praying for the award of exemplary damages.
Issue: Was NEGROS NAVIGATION and its captain grossly negligent? YES
The evidence shows that both M/T TACLOBAN and M/V DON JUAN were equally at fault
in the collision. M/ V Don Juan and Tacloban City became aware of each other's presence
in the area by visual contact at a distance of 6 miles from each other. They were fully aware
that if they continued on their course, they will meet head on. Don Juan - steered to the
right; Tacloban City continued its course to the left. There can be no excuse for them not
to realize that, with such maneuvers, they will collide. They executed inadequate
maneuvers and were too late in reacting to avoid collision.
o Moreover, it was found that the CAPTAIN was playing mah-jong up to the time of
the collision and that the DON JUAN was carrying more passengers than it was
allowed to carry (864, when the limit was 810)
Under these circumstances, a presumption of gross negligence on the part of the vessel
(her officers and crew) and of its ship-owner arises; this presumption was never rebutted by
NEGROS NAVIGATION. HENCE, NEGROS and its captain are grossly negligent and
should be held liable.
As to the issue of damages, RTC merely made the mistake of lumping all damages
together. They must be separated. SC granted actual, moral and exemplary and atty‘s fees.
NEGROS lost.
11. Smith Bell v. CA (look-out)
Doctrine:
Failure to provide a look-out constitutes negligence on the part of the shipowner.
The doctrine of last clear chance is inapplicable in maritime navigation
Facts:
In the early morning of MAY 1970, a collision took place between the MV DON CARLOS,
owned by GO THONG and MS YOTAI MARU, a Japanese merchant vessel. The collision
caused damage to the cargo of YOTAI MARU. The insurance companies paid the
consignees of the cargo in YOTAI MARU and in turn sued GO THONG (2 separate cases)4
o Starboard: right / Portside: left
Both judges found the crew of DON CARLOS to be negligent. GO THONG was held liable
for damages. THUS, GO THONG appealed to the SC5
Issue: Was MV DON CARLOS the proximate cause of the accident? YES. 1) faulty overtake 2)
no look-out
Evidence shows that YOTAI MARU‘s headlights indicated that both vessels were sailing on
exactly opposite paths. Despite this, the course of DON CARLOS was changed by 5
degrees to the left instead of to the right to overtake another vessel, the DON
FRANCISCO. THIS was the cause of the collision.
Moreover, another indicator of negligence was the fact that DON CARLOS failed to have a
proper look out as required by the Rules. The look-out‘s purpose is precisely that, to look
out for other vessels.
4
One case was filed by SMITH BELL and another and the other by SMITH BELL also, with
TOKYO MARINE in separate RTCs. The TOKYO Marine Case was handled by then Judge
Serafin Cuevas
5
It‘s a long and complicated case concerning res judicata. Check orig if you want.
88
 allision
inscrutable fault
time zones
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
A "proper look-out" is one who has been trained as such and who is given no other duty
save to act as a look-out and who is stationed where he can see and hear best and
maintain good communication with the officer in charge of the vessel, and who must, of
course, be vigilant
In the case at bar, the failure of the "Don Carlos" to recognize in a timely manner the risk of
collision with the "Yotai Maru" coming in from the opposite direction, was at least in part
due to the failure of the "Don Carlos" to maintain a proper look-out.
It follows therefore that DON CARLOS was the sole and proximate cause of the collision
and it should be held liable to the insurers.
12. Manila Steamship v. Abdulhaman
Doctrine:
In maritime torts, the shipowner‘s liability is direct. It cannot use the defense of ordinary
diligence in selection and supervision
The owner of a vessel who had caused the same to sail without licensed officers is liable
for the injuries caused by the collision over and beyond the value of his vessel; hence, he
cannot escape liability because of the sinking of the vessel. (Limitation of liability does not
apply)
Facts:
On the evening of MAY 1948, the ML CONSUELO V, owned by LIM TONG TO was
carrying ABDULHAMAN and his family.
During its voyage, the ML CONSUELO collided with M/S BOWLINE KNOT, owned by
MANILA STEAMSHIP. As a result, the boat capsized and the family of ABDULHAMAN
died.
Therefore, ABDULHAMAN sued LIM TONG TO for damages. The TC found both the ML
CONSUELO and ML BOWLINE KNOT were negligent and they were ordered to solidarily
pay ABDULHAMAN damages. However, LIM TONG TO was exempted from liability by
reason of the sinking and the total loss of the vessel.
MANILA STEAMSHIP appealed, arguing that that it exercised ordinary diligence in the
selection and supervision of its employees.
Issue: Is Manila Steamship liable? YES. Should LIM TONG TO be held liable also? YES.
Manila Steamship’s Liability for the MARITIME TORT is DIRECT, under the CODE OF
COMMERCE
MANILA STEAMSHIP‘s defense of diligence in selection and supervision is untenable.
While it is true that ABDULHAMAN’s action against MANILA STEAMSHIP is based on a
tort or quasi-delict, the tort in question is not a civil tort under the Civil Code but a
maritime tort resulting in a collision at sea, governed by Articles 826-939 of the Code
of Commerce.
Under Article 827 of the Code of Commerce, in case of collision between two vessels
imputable to both of them, each vessel shall suffer her own damage and both shall be
solidarily liable for the damages occasioned to their cargoes. This direct responsibility
is recognized in Article 618 of the Code of Commerce under which the captain shall be
civilly liable to the ship agent, and the latter is the one liable to third persons,
LIM TONG TO should not be exonerated because as shipowner, he was also
negligent. Limitation of liability is inapplicable.
In this case, both the master and the engineer of the motor launch ―Consuelo V‖ were not
duly licensed as such. The right of abandonment of vessels, as a legal limitation of a
shipowner‘s liability, does not apply to cases where the injury or the average is due to
shipowner‘s own fault. LIM TONG TO and MANILA STEAMSHIP solidarily liable.
13. Caltex v. Sulpicio
Doctrine:
A charter party is a contract by which an entire ship, or some principal part thereof, is let by
the owner to another person for a specified time or use; a contract of affreightment is one
by which the owner of a ship or other vessel lets the whole or part of her to a merchant or
other person for the conveyance of goods, on a particular voyage, in consideration of the
payment of freight.
A contract of affreightment may be either time charter, wherein the leased vessel is leased
to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a
single voyage. In both cases, the charter-party provides for the hire of the vessel only,
either for a determinate period of time or for a single or consecutive voyage, the ship owner
will supply the ship's store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship.
Under a demise or bareboat charter on the other hand, the charterer mans the vessel with
his own people and becomes, in effect, the owner for the voyage or service stipulated,
subject to liability for damages caused by negligence. It is only when the charter
includes both the vessel and its crew, as in a bareboat or demise that a common
carrier becomes private, at least insofar as the particular voyage covering the
charter-party is concerned
If the charter is a contract of affreightment, which leaves the general owner in possession
of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on
the owner. The charterer is free from liability to third persons in respect of the ship.
The charterer is not liable for damages to 3rd persons under a contract of
affreightment (voyage charter/time charter)
Facts:
ON DEC 1987, the MT VECTOR, owned by VECTOR SHIPPING left for MASBATE. It was
loaded w/ petrol products shipped by CALTEX by virtue of a charter party. During its
voyage, it collided with MV DONA PAZ, owned by SULPICIO. At the time of the collision,
the DONA PAZ was carrying 4,000 passengers. All the crew members MV DONA PAZ died
and only 24 passengers survived.
The heirs of the deceased sued SULPICIO, based on breach of contract of carriage.
SULPICIO in turn filed a third party complaint against VECTOR due to the finding of the
BMI that VECTOR was negligent and its negligence was the proximate cause of the
collision.
89
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
o SULPICIO also sued CALTEX under the 3rd party complaint, alleging that
Caltex chartered MT Vector with gross and evident bad faith knowing fully
well that MT Vector was improperly manned, ill-equipped, unseaworthy and a
hazard to safe navigation; as a result, it rammed against MV Doña Paz in the
open sea setting MT Vector's highly flammable cargo ablaze
o RTC dismissed the 3rd party complaint but CA modified, ordering VECTOR and
CALTEX to reimburse SULPICIO for whatever it may be ordered to pay to the
heirs of the victims. Hence, CALTEX appealed.
Issue: Should CALTEX, as charterer, also be held liable? NO. Does a charter party convert a
common carrier to a private carrier? No.
The charterer has no liability for damages under Philippine Maritime laws .
The respective rights and duties of a shipper and the carrier depends not on whether the
carrier is public or private, but on whether the contract of carriage is a bill of lading or
equivalent shipping documents on the one hand, or a charter party or similar contract on
the other.
CALTEX and Vector entered into a contract of affreightment, also known as a voyage
charter. If the charter is a contract of affreightment, which leaves the general owner in
possession of the ship as owner for the voyage, the rights and the responsibilities of
ownership rest on the owner. The charterer is free from liability to third persons in respect
of the ship. In this case, therefore, CALTEX should not be held liable to 3rd persons.
Moreover, the charterer of a vessel has no obligation before transporting its cargo to
ensure that the vessel it chartered complied with all legal requirements. The duty rests
upon the common carrier simply for being engaged in "public service." Only VECTOR
should be held liable.
The contract of affreightment did not turn VECTOR into a private carrier
A common carrier shall remain as such, notwithstanding the charter of the whole
portion of a vessel of one or more persons, provided the charter is limited to the ship
only, as in the case of a time-charter or the voyage charter.
It is only when the charter includes both the vessel and its crew, as in a bareboat or
demise that a common carrier becomes private, at least insofar as the particular
voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or
voyage charter retains possession and control of the ship, although her holds may, for the
moment, be the property of the charterer. In this case, since the contract was one of
affreightment, it follows that VECTOR remained to be a common carrier, and hence, it had
the duty to exercise extraordinary diligence.
As a common carrier, VECTOR is deemed to warrant impliedly the seaworthiness of the
ship. For a vessel to be seaworthy, it must be adequately equipped for the voyage and
manned with a sufficient number of competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a
clear breach of its duty prescribed in Article 1755 of the Civil Code Caltex won,
exonerated from liability, VECTOR did not appeal so its liability was affirmed.
14. NDC v. CA
Doctrine:
Under the provisions of the Code of Commerce, particularly Articles 826 to 839, the
shipowner or carrier, is not exempt from liability for damages arising from collision due to
the fault or negligence of the captain. Primary liability is imposed on the shipowner or
carrier in recognition of the universally accepted doctrine that the shipmaster or
captain is merely the representative of the owner who has the actual or constructive
control over the conduct of the voyage
Before the COGSA can be applied, Civil Code provisions should be applied first, then the
Code of Commerce. (CC CODE OF COMMERCE COGSA)
Facts:
NDC, as the mortgagee of DONA NATI, appointed Maritime Company of the PH (MCP) as
its agent to manage and operate the aforesaid vessel. Thus, on 1964, the E PHILIPP
Corporation loaded a total of 1200 bales of raw cotton in the DONA NATI. The shipment
was consigned to Manila Banking Corporation. Other cargoes were also loaded for
consignment to persons in the PH
En route to Manila from SAN FRANCISCO, the DONA NATI collided with YASUSHIMA
MARU, a japanese vessel. As a result, 550 bales of cotton were damaged and lost. The
other cargoes were also damaged. Consequently, the insurers paid the consignees. In turn,
they sued NDC and MCP for damages.
NDC and MCP were held solidarily liable for the damage as it found that the DONA NATI
was the one at fault. The RTC based its findings on the rules of collision under the CODE
OF COMMERCE. CA affirmed so both appealed to the SC. NDC argues that the COGSA
should apply and not the Civil Code or Code of Commerce.
o Under Section 4 (2) of said Act, the carrier is not responsible for the loss or
damage resulting from the "act, neglect or default of the master, mariner,
pilot or the servants of the carrier in the navigation or in the management
of the ship."
o Thus, NDC insists that based on the findings of the lower courts that both pilots
of the colliding vessels were at fault and negligent, NDC should be relieved of
liability under the Carriage of Goods by Sea Act.
Issue: Should the COGSA apply? No
The law of the country to which the goods are to be transported governs the liability of the
common carrier in case of their loss, destruction or deterioration" (Article 1753, Civil Code).
In this case, since the goods were intended to be transported to the Philippines, the
liability of the carrier is governed primarily by the Civil Code and in all matters not
regulated by said Code, the rights and obligations of common carrier shall be
governed by the Code of commerce (first) and (then) by special laws (Article 1766,
Civil Code).
90
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

o THEREFORE, the Carriage of Goods by Sea Act, a special law, is merely
suppletory to the provision of the Civil Code. It is immaterial that the collision
occurred in foreign waters.
It appears, however, that collision falls among matters not specifically regulated by
the Civil Code, so the CA did not err in its application to the case at bar of Articles 826 to
839 which deal exclusively with collision of vessels.
Thus, on 1985, the KRAMERS sued TRANS-ASIA for damages. TRANS-ASIA filed a
motion to dismiss on the ground of prescription.
it was argued that under Article 1146 of the Civil Code, the prescriptive period for instituting
a Complaint for damages arising from a quasi-delict like a maritime collision is four years.
He maintained that the petitioners should have filed their Complaint within four years from
the date when their cause of action accrued (1976, date of collision)

More specifically, Article 826 of the Code of Commerce provides that where collision is
imputable to the personnel of a vessel, the owner of the vessel at fault, shall indemnify the
losses and damages incurred after an expert appraisal. But more in point to the present
case is Article 827 of the same Code, which provides that if the collision is imputable to
both vessels, each one shall suffer its own damages and both shall be solidarily
responsible for the losses and damages suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to
839, the shipowner or carrier, is not exempt from liability for damages arising from collision
due to the fault or negligence of the captain. Primary liability is imposed on the
shipowner or carrier in recognition of the universally accepted doctrine that the
shipmaster or captain is merely the representative of the owner who has the actual
or constructive control over the conduct of the voyage
There is, therefore, no room for NDC's interpretation that the Code of Commerce
should apply only to domestic trade and not to foreign trade. Aside from the fact that
the Carriage of Goods by Sea Act (Com. Act No. 65) does not specifically provide for the
subject of collision, said Act in no uncertain terms, restricts its application "to all contracts
for the carriage of goods by sea to and from Philippine ports in foreign trade." Under
Section I thereof, it is explicitly provided that "nothing in this Act shall be construed as
repealing any existing provision of the Code of Commerce which is now in force, or as
limiting its application." By such incorporation, it is obvious that said law not only recognizes
the existence of the Code of Commerce, but more importantly does not repeal nor limit its
application. MDC loses, insurers win
Issue: What is the reckoning point for the prescriptive period for filing claims based on maritime
collisions?
Under Article 1146 of the Civil Code, an action based upon a quasi-delict must be instituted
within four (4) years. The prescriptive period begins from the day the quasi-delict is
committed.
The prescriptive period must be counted when the commission of an act or omission
violative of the right of the plaintiff, which is the time when the cause of action arises.
It is therefore clear that in this action for damages arising from the collision of two (2)
vessels the four (4) year prescriptive period must be counted from the day of the collision.
The aggrieved party need not wait for a determination by an administrative body like a
Board of Marine Inquiry, that the collision was caused by the fault or negligence of the other
party before he can file an action for damages. The ruling in Vasquez does not apply in this
case. Immediately after the collision the aggrieved party can seek relief from the courts by
alleging such negligence or fault of the owners, agents or personnel of the other vessel.
In this case, since the collision took place on 1976, and the complaint was only filed on
1985, the cause of action has prescribed. KRAMER lost.

15. Kramer v. CA

Doctrine:

in an action for damages arising from the collision of two (2) vessels, the four (4) year
prescriptive period must be counted from the day of the collision. The aggrieved party
need not wait for a determination by an administrative body like a Board of Marine Inquiry,
that the collision was caused by the fault or negligence of the other party before he can file
an action for damages.
4 kinds of maritime accidents: 1) general average 2) shipwreck (derelict) 3) collision 4)
arrival under stress (ship can still sail)

Facts:

ON 1976, the F/B MARJOLEA, owned by the KRAMERS, collided with MV ASIA
PHILIPPINES owned by TRANS-ASIA. As a result, the MARJOELA sank. On 1981 The
BMI found that the cause of the collision was the negligence of the employees of TRANS-
ASIA.

91
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 14 (MARITIME CONTRACTS)
1. Peralta de Guerrero v. Madrigal Shipping Co.
Doctrine:
The ticket issued to a passenger represents the contract of carriage between such
passenger and the carrier. (Note: Ticket is not necessary for perfection of contract of
carriage)
Facts:
PACIFICO ACACIO entered into a contract of carriage with MADRIGAL SHIPPING wherein
MADRIGAL obliged itself to carry ACACIO from Zamboanga to Manila. However, the ship
sank, causing ACACIO‘s death
Hence, his heirs (wife and daughter) sued MADRIGAL SHIPPING for damages due to the
alleged negligence of its captain and crew.
o In response, MADRIGAL filed a motion to dismiss, alleging that the cause of
action has prescribed because the case should‘ve been filed within 6 years from
the breach of contract. Since the complaint was filed more than 7 years from
ACACIO‘s death, the complaint was filed out of time.
o The trial court dismissed the complaint, as it treated the complaint as merely a
complaint for damages and not a complaint based on a written contract.
Issue: Is the complaint barred by prescriptive? No. Cause of action predicated on breach of
contract as embodied by the ticket.
The cause of action is based on a written contract. It is of common knowledge that
whenever a passenger boards a ship for transportation, he is issued a ticket by the shipper,
wherein the terms of the contract are specified. .
This ticket is in itself a complete written contract by and between the shipper and the
passenger. It has all the elements of a complete contract, namely: (1) the consent of the
contracting parties manifested by the fact that the passenger boards the ship and the
shipper consents or accepts him in the sip for transportation; (2) cause or consideration
which is the fare paid by the passenger as stated in the ticket; and (3) object, which is the
transportation of the passenger from the place of departure to the place of destination
which are stated in the ticket case should not have been dismissed. Carrier loses.
2. Planters v. CA (take note of this case for finals)
Doctrine:
Time-charter party does not transform the carrier into a private carrier.
Facts:
Planter‘s Products ordered urea (fertilizer) from MITSUBISHI in Japan. MITSUBISHI, in
behalf of PLANTERS, made arrangements to ship the urea in ―bulk‖ to the PH by entering
into a TIME-CHARTER party with KKKK (in Japan)
Upon arrival, PLANTERS unloaded the cargo onto its dump trucks within 11 days.
However, upon inspection, it was discovered that there was a shortage in the cargo and
some of the urea was also damaged and unfit for commerce.
PLANTERS sued SSI, the ship agent of KKKK for the value of the damaged and lost cargo
but the RTC dismissed, holding that KKKK was a private carrier, hence the duty of
extraordinary diligence did not apply.
Issue: Was KKKK a private carrier? No, it was a common carrier Time-charter party did not
make KKKK a common carrier. Was KKKK able to overcome the presumption of negligence?
YES
Charter parties are of two types:
(a) contract of affreightment which involves the use of shipping space on vessels leased by
the owner in part or as a whole, to carry goods for others; and,
(b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to
the charterer with a transfer to him of its entire command and possession and consequent
control over its navigation, including the master and the crew, who are his servants.
It is only when the charter includes both the vessel and its crew, as in a bareboat or
demise that a common carrier becomes private, at least insofar as the particular
voyage covering the charter-party is concerned. A shipowner in a time or voyage
charter retains possession and control of the ship, although her holds may, for the moment,
be the property of the charterer
In this case, what was entered into was a contract of affreightment. When PLANTERS
chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were
under the employ of the shipowner and therefore continued to be under its direct
supervision and control. Hence, the charter-party did not transform KKKK into a private
carrier.
However, KKKK was able to overcome to presumption of negligence. The probability of the
cargo being damaged or getting mixed or contaminated with foreign particles was made
greater by the fact that the fertilizer was transported in "bulk," thereby exposing it to the
inimical effects of the elements and the grimy condition of the various pieces of equipment
used in transporting and hauling it.
92
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
o The evidence of respondent carrier also showed that it was highly improbable for
sea water to seep into the vessel's holds during the voyage since the hull of the
vessel was in good condition and her hatches were tightly closed and firmly
sealed. THUS it is not liable for damages. Carrier wins.
3. Coastwise Lighterage v. CA
Doctrine:
Under the demise or bareboat charter of the vessel, the charterer will generally be regarded
as the owner for the voyage or service stipulated. The charterer mans the vessel with his
own people and becomes the owner pro hac vice, subject to liability to others for damages
caused by negligence.
To create a demise, the owner of a vessel must completely and exclusively
relinquish possession, command and navigation thereof to the charterer, anything
short of such a complete transfer is a contract of affreightment (time or voyage
charter party) or not a charter party at all. In this case, there was no demise, and only a
contract of affreightment. Hence, the carrier was not transformed into a private carrier.
Facts:
PAG-ASA SALES INC contracted COASTWISE (contract of affreightment) to transport
molasses from Negros to Manila, using the latter‘s (COASTWISE) barges. However, upon
reaching Manila Bay, one of the barges struck an unknown sunken object (later on
discovered to be a submerged vessel). As a result, the molasses were damaged.
The insurer, PHILGEN, paid for the damage and consequently, it sued PAG-ASA. PAG-
ASA argues that due to its ‗charter agreement‘ with PAG-ASA, it was transformed into a
private carrier, hence it is not bound to exercise extraordinary diligence.
Issue: Was COASTWISE turned into private carrier? No. It was a contract of affreightment.
A contract of affreightment is one in which the owner of the vessel leases part or all of its
space to haul goods for others. It is a contract for special service to be rendered by the
shipowner and under such contract the shipowner retains the possession, command
and navigation of the ship, The charterer or freighter merely has use of the space in the
vessel in return for his payment of the charter hire. (this case cites Puromines, case #6)
In this case, what was entered into was a contract of affreightment and not a demise. Pag-
asa Sales, Inc. only leased three vessels of COASTWISE, in order to carry cargo from one
point to another, but the possession, command and navigation of the vessels
remained with COASTWISE.
Since COASTWISE is a common carrier, it is presumed to be negligent if there is damage
to the goods that it is transporting. It was unable to overcome this presumption. Evidence
showed that carrier was negligent as it employed an unlicensed patron (much like a
captain). Carrier loses, liable for damages
4. Maritime Agencies and Services v. CA
Doctrine:
A charterer may be held liable to the consignee if under the charter party, it stipulates that it
is responsible for loading, stowage and unloading at the ports visited
3 significant reasons why it is important to know why a carrier is private or common
o Diligence required
o Presumption of negligence
o Stipulations limiting liability
Facts:
TRANSCONTINENTAL FERTILIZER COMPANY (TFM charterer) chartered a vessel
named HONGKONG ISLAND from HONGKONG ISLAND SHIPPING (HKIS carrier) for
the shipment of bagged urea (from USSR to the PH) The shipment was consigned to
ATLAS.
o TFM‘s agent is MARITIME AGENCIES while HKIS‘s agent is MACONDRAY
Upon arrival however, it was discovered that there was a shortage in the shipment. The
consignee was able to claim from its insurer, which in turn, sued HKIS, MARITIME and
MACONDRAY. However, only the charterer and its agent (TFM and MARITIME) were
found liable. Maritime argues that it should not be held liable, because it was merely the
charterer‘s agent.
Issue: May the charterer be held liable? Yes, by virtue of the stipulation in the charter.
A voyage charter is a contract for the hire of a vessel for one or a series of voyages
usually for the purpose of transporting goods for the charterer. The voyage charter is a
contract of affreightment.
o A voyage charter being a private carriage, the parties may freely contract
respecting liability for damage to the goods and other matters. The basic
principle is that "the responsibility for cargo loss falls on the one who
agreed to perform the duty involved" in accordance with the terms of most
voyage charters
o In this case, the charter party is a voyage charter where the charterer was
responsible for loading, stowage and discharging at the ports visited, while the
owner was responsible for the care of the cargo during the voyage. These
responsibilities are provided for under the charter. Therefore, the charterer
may be held liable.
As regards the shipowner, it may also be held liable. As the bags were in good order when
received in the vessel, the presumption is that they were damaged or lost during the
voyage as a result of their negligent improper stowage. For this the ship owner should be
held liable.
Dispositive Portion: Charterer‘s Agent (MARITIME) and shipowner and its agent both
held liable
93
charter party is just a lease of the ship or a space in a ship
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
5. Litonjua Shipping v. National Seamen’s Board
Doctrine:
in a demise or bare boat charter, the charterer is treated as owner pro hac vice of the
vessel. The charterer assumes 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 (for that particular voyage), and not the general
owner of the vessel, is held liable for the expenses of the voyage including the
wages of the seamen.
Facts:
LITONJUA is the local crewing officer of FAIRWIND. The M/V DUFTON BAY is a ship of
foreign registry owned by MULLION. Fairwind chartered the DUFTON BAY.
On 1976, while the ship, DUFTON BAY was in CEBU and while under the charter by
FAIRWIND, the vessel‘s master hired CANDONGCO to serve as 3rd engineer for 12
months. However, before the contract expired, CANDONGCO was terminated (reason:
―owner‘s arrange‖)
o THUS, he sued MULLION (ship owner) and LITONJUA (the agent of the
charterer, FAIRWIND) in the National Seamen Board (NSB) NSB held
LITONJUA, as PH agent of FAIRWIND, liable.
LITONJUA went to the SC, alleging that it was NOT the employer of CANDONGO. Instead,
the employer was MULLION, the shipowner.
Issue: May LITONJUA, as agent of the CHARTERER, be considered the employer of
CANDONGCO? YES.
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 assumes 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 (for that particular trip), and not the
general owner of the vessel, is held liable for the expenses of the voyage including
the wages of the seamen.
In this case, Litonjua did not place into the record of this case a copy of the charter party
covering the M/V Dufton Bay. As such, it was assumed by the SC that what was
entered into between the charterer and the ship owner was a bareboat charter. Since
LITONJUA was the agent of the charterer, it can be held liable for the contract of
employment entered into by the captain of the ship and CANDONGCO. LITONJUA lost
6. Puromines v. CA
Doctrine:
In cases of bareboat charter, the charterer is considered the shipowner pro hac vice (for
that voyage only), and will be liable as such to 3rd persons for damage to the cargo
Under the demise or bareboat charter of the vessel, the charterer will generally be
considered as owner for the voyage or service stipulated. The charterer mans the vessel
with his own people and becomes, in effect, the owner pro hac vice, subject to liability to
others for damages caused by negligence. To create a demise the owner of a vessel
must completely and exclusively relinquish possession, command and navigation
thereof to the charterer; anything short of such a complete transfer is a contract of
affreightment (time or voyage charter party) or not a charter party at all.
On the other hand, a contract of affreightment is one in which the owner of the vessel
leases part or all of its space to haul goods for others. It is a contract for a special
service to be rendered by the owner of the vessel and under such contract the
general owner retains the possession, command and navigation of the ship, the
charterer or freighter merely having use of the space in the vessel in return for his
payment of the charter hire. If the charter is a contract of affreightment, which leaves the
general owner in possession of the ship as owner for the voyage, the rights, responsibilities
of ownership rest on the owner and the charterer is usually free from liability to third
persons in respect of the ship
Facts:
Puromines entered into a contract with PHILLIP BROTHERS OCEANIC (PBO) for the sale
of UREA. PBO, in turn chartered M/V LILIANA DIMITROVA (shipowner and its PH
AGENT, MARITIME FACTORS, not impleaded in the SC petition) to transport the UREA
to the PH.
o In the sales contract, it was agreed upon that in case of any dispute for the loss
of the cargo, etc, the case will be referred to arbitration.
However, the UREA arrived in Manila in bad order and condition (caking, hardening,
wetting, melting), allegedly due to improper storage and ventilation. Thus, Puromines sued
MARITIME FACTORS and PBO (the charterer) for breach of contract of carriage. The TC
denied the motion to dismiss of PBO but the CA reversed, holding that it must respect the
arbitration clause.
Issue: Is the charterer liable assuming that its liability is based on the contract of carriage? It
depends on the kind of charter.
Responsibility to third persons for goods shipped on board a vessel follows the vessel's
possession and employment; and if possession is transferred to the charterer by virtue of a
demise, the charterer, and not the owner, is liable as carrier on the contract of
affreightment made by himself or by the master with third persons, and is
answerable for loss, damage or nondelivery of goods received for transportation.
o An owner who retains possession of the ship, though the hold is the property of
the charterer, remains liable as carrier and must answer for any breach of duty
as to the care, loading or unloading of the cargo.
94
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Assuming that in the present case, the charter party is a demise or bareboat charter, then
PBO is liable to Puromines, Inc., subject to the terms and conditions of the sales contract.
On the other hand, if the contract between PBO and the shipowner MV "Liliana Dimitrova"
was merely that of affreightment, then it cannot be held liable for the damages caused
by the breach of contract of carriage, the evidence of which is the bills of lading.
is necessary. In this particular case, the fact that RAFOLS violated the prohibition on
SUBLEASE did NOT grant OUANO a cause of action against MADE and SMCSI
The charter agreement was a bareboat charter. Hence, the owner did not have a lien over the
cargo.

In any case, whether the liability of PBO should be based on the sales contract or that of
the bill of lading, the parties are nevertheless obligated to respect the arbitration provisions
on the sales contract and/or the bill of lading. Since PUROMINES is a signatory and party
to the sales contract, it cannot escape from his obligation under the arbitration clause as
stated therein.
7. Julius Ouano v. CA
Doctrine:
In a demise charter, the maritime lien over the goods transported operates in favor of the
CHARTERER and not the SHIP OWNER.
Pursuant to the principle of relativity of contracts, the shipowner can only sue the charterer
even if the charterer violated the prohibition on sub-lease by sub-leasing the vessel to
another person
In a bareboat/demise charter, (the one in the case at bar), the owner of the ship transfers
possession and control to the charterer. The owner loses his lien for freight, and the lien
operates in favor of the CHARTERER, who substitutes the owner for that particular voyage.
o Therefore, where the charter constitutes a demise of the ship and the charterer is
the owner for the voyage, and that is the kind of charter party involved in the
instant case, the general owner has no lien on the cargo for the hire of the
vessel, in the absence of an express provision.
Moreover, even assuming that OUANO had a lien on the cargo for unpaid freight, it was
deemed waived when the goods were unconditionally released to the consignee at
the port of destination. A carrier has such a lien only while it retains possession of the
goods, so that delivery of the goods to the consignee or a third person terminates, or
constitutes a waiver of, the lien OWNER LOSES.

Facts: Optional: (another reason why the lien lapsed, assuming there was a lien)

OUANO is the registered owner and operator of MV DON JULIO OUANO. He leased the Furthermore, under Article 667 of the Code of Commerce, the period during which the lien shall
vessel to RAFOLS under a charter party. It was stipulated that the charterer was not subsist is twenty (20) days. During this period, the sale of the goods may be requested, even
allowed to sublease the vessel without the knowledge and consent of the owner. though there are other creditors and even if the shipper or consignee is insolvent.

RAFOLS, however, contracted with Market Developers INC (MADE) under an agreement
denominated as a ―fixture note‖ to transport cement from ILIGAN to GENSAN, with the
shipment consigned to SMCSI. OUANO‘s consent was not obtained. During the voyage to
GENSAN, Rafols had on board his sobre cargo (his employee)
Subsequently, OUANO asked MADE not to pay RAFOLS until RAFOLS has paid him the
first freight installment. However, MADE still paid RAFOLS. The cargo was eventually
delivered to SMSCI. There was no demand made by OUANO before the delivery.
o However, OUANO eventually sued MADE (shipper), SMCSI (consignee) and
RAFOLS (charterer) to pay for the freightage of the cement cargo. It was
eventually ruled that only RAFOLS, as charterer, was liable to OUANO, the
owner of the ship. THUS, Ouano appealed.
But, this right may not be made use of where the goods have been delivered and were
turned over to a third person without malice on the part of the third person and for a
valuable consideration.
In the present case, the cargo of cement was unloaded from the vessel and delivered to
the consignee on October 23, 1980, without any oral or written notice or demand having
been made on SMCSI for unpaid freight on the cargo. Consequently, after the lapse of thirty
(30) days from the date of delivery, the cargo of cement had been released from any maritime
lien for unpaid freight

Issue: Should MADE (shipper) and SMCSI (consignee) be made liable to OUANO for the
freightage of the cement cargo? NO (relativity of contracts) Did OUANO have a lien over the
goods transported? NO

Relativity of Contracts; Ouano’s cause of action was against RAFOLS only, the charterer and
the one he contracted with

The obligation of contracts is limited to the parties making them and, ordinarily, only those
who are parties to contracts are liable for their breach. Parties to a contract cannot thereby
impose any liability on one who, under its terms, is a stranger to the contract, and, in any
event, in order to bind a third person contractually, an expression of assent by such person
95
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
8. Loadstar v. Pioneer Asia Insurance
Doctrine:
Voyage-charter does not transform carrier into a private one
Facts:
LOADSTAR is the owner and operator of MV Weasel. It entered into a voyage charter with
NORTHERN MINDANAO TRANSPORT COMPANY (NMTC) for the carriage of cement
from ILIGAN to MANILA.
o The shipper was ILIGAN CEMENT and the consignee was MARKET
DEVELOPERS (MADE)
During the voyage, the master of the vessel ordered the vessel to be forced aground.
Consequently, the cement was destroyed due to exposure to seawater. The consignee
recovered from the insurance company. The insurance company sued LOADSTAR,
alleging that the ship was not seaworthy and that it was negligent in selection and
supervision of its employees.
o LOADSTAR argued that the voyage-charter converted it into a private carrier and
that the loss was caused by a fortuitous event
Issue: Did the voyage-charter convert LOADSTAR into a private carrier? NO Did a fortuitous
event cause the loss? NO
LOADSTAR remains a common carrier notwithstanding the existence of the charter
agreement with NMTC since the said charter is limited to the ship only and does not
involve both the vessel and its crew. As elucidated in Planters Products, its charter is
only a voyage-charter, not a bareboat charter.
Records show that in the evening of June 24, 1984, the sea and weather conditions in the
vicinity of Negros Occidental were calm. The records reveal that LOADSTAR took a
shortcut route, instead of the usual route, which exposed the voyage to unexpected
hazard. LOADSTAR has only itself to blame for its misjudgment. Carrier lost
9. Mindanao Bus v. Collector of Internal Revenue
Doctrine:
As long as a ticket contains a written acknowledgement by the carrier of the receipt of
goods and an agreement to transport the same to a specified person or to the order of a
specified person, it is a bill of lading.
Facts:
Mindanao Bus is a common carrier engaged in transporting passengers and freight by
means of buses. Sometime in 1953, its books were examined and it was discovered that
the freight tickets used by it do not contain the required documentary stamp tax (DST)
Thus, it was assessed to pay DST.
Mindanao Bus appealed, alleging that the freight tickets it issued are not bills of lading
subject to DST.
Issue: Are the freight tickets bills of lading subject to DST? YES
Bills of Lading, in modern jurisprudence, are not those issued by masters of vessels alone;
they now comprehend all forms of transportation, whether by sea or land, and includes the
receipts for cargo transported
As comprehending all methods of transportation, a bill of lading may be defined as a written
acknowledgment of the receipt of goods and an agreement to transport and to deliver them
at a specified place to a person named or on his order. Such instruments are sometimes
called 'shipping receipts,' 'forwarders' receipts,' and 'receipts for transportation."
The designation, however, is not material, and neither is the form of the instrument. If it
contains an acknowledgment by the carrier of the receipt of goods for
transportation, it is, in legal effect, a bill of lading. It follows therefore that the freight
tickets are also bills of lading that require payment of DST. Carrier lost
10. Macondray v. Commissioner of Customs (bill of lading v. cargo manifest)
Doctrine:
While a bill of lading is ordinarily merely a convenient commercial instrument designed to
protect the importer or consignee, a manifest (just a list of cargo) of the cargo is
essential to the exportation or importation of property in all vessels.
Facts:
MACONDRAY is the local agent of the vessel SS TAI PING. On NOV 2, 1962, the ship
arrived in Manila from San Francisco conveying various shipments of merchandise (mostly
carbon steel, 3 different items) The inward cargo manifest, however, did not reflect the
whole shipment as required by the customs code. It only stated “one coil carbon
steel” However, the bill of lading reflected the whole shipment.
The consignee asked MACONDRAY to correct the manifest so it can take delivery of the
shipment. Meanwhile, the Collector of Customs ordered MACONDRAY to pay an
administrative fine for failing to declare the cargo. In fact, the Collector commented that
MACONDRAY‘s vessels regularly fail to completely declare the cargo it carries.
MACONDRAY protested the fine on the ground that the bill of lading already reflected the
whole shipment so it should not be held liable for violation of the customs code.
Issue: Should MACONDRAY be held liable?
The inclusion of the undeclared cargoes in the Bill of Lading does not satisfy the
requirement of the TACC. Moreover, nowhere in the said section is the presentation of a
Bill of Lading required, but only the presentation of a Manifest containing a true and
accurate description of the cargoes. This is for the simple reason that while a manifest
is a declaration of the entire cargo, a bill of lading is but a declaration of a specific
part of the cargo and is a matter of business convenience based exclusively on a
contract.
While a bill of lading is ordinarily merely a convenient commercial instrument designed to
protect the importer or consignee, a manifest of the cargo is essential to the
exportation or importation of property in all vessels. This is because its evident intent
96
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
and object is to impose upon the owners and officers of such vessel an obligation to submit
lists of the entire loading of the ship in the prescribed form, to facilitate the labors of the
customs and immigration officers and to defeat any attempt to make use of such vessels to
secure the unlawful entry of persons or things into the country.
It follows therefore that MACONDRAY should still be held liable for the administrative fine
for failing to comply with the TACC carrier lost
11. Magellan Mfg. Marketing v. CA
Doctrine:
The acceptance of the bill without dissent raises the presumption that all the terms therein
were brought to the knowledge of the shipper and agreed to by him and, in the absence of
fraud or mistake, he is estopped from thereafter denying that he assented to such terms.
Demurrage, in its strict sense, is the compensation provided for in the contract of
affreightment for the detention of the vessel beyond the time agreed on for loading and
unloading. Essentially, demurrage is the claim for damages for failure to accept delivery. In
a broad sense, every improper detention of a vessel may be considered a demurrage.
There is no transshipment if the owner of both ships are one and the same
Facts:
Magellan Mfg. Marketing Corp (MMMC) entered into a contract with CHOJU of Japan
(buyer) to export 136k anahaw fans. MMMC was to be paid by CHOJU through a letter of
credit. MMMC then contracted ZUELLIG, a shipping agent, to ship the fans through Orient
Overseas Container Lines (OOCL)
o It was specified that there was a need for an on-board bill of lading6 and that
transshipment was not allowed under the letter of credit.
The bank did not pay MMMC because there was no on-board bill of lading and that there
was transshipment. Moreover, the buyer did not accept because of the violation of the
terms of the L/C. The goods were then returned to Manila and were thereafter abandoned
by MMMC.7. Thus, MMMC sued ZUELLIG and OOCL because the bill of lading issued by
the latter bore the notation "received for shipment" and contained an entry indicating
transhipment in Hongkong.8
6
An on board bill of lading is one in which it is stated that the goods have been received on
board the vessel which is to carry the goods, whereas a received for shipment bill of lading is
one in which it is stated that the goods have been received for shipment with or without
specifying the vessel by which the goods are to be shipped. Received for shipment bills of lading
are issued whenever conditions are not normal and there is insufficiency of shipping
space. 29 An on board bill of lading is issued when the goods have been actually placed aboard
the ship with every reasonable expectation that the shipment is as good as on its way. It is,
therefore, understandable that a party to a maritime contract would require an on board
bill of lading because of its apparent guaranty of certainty of shipping as well as the
seaworthiness of the vessel which is to carry the goods.
7
Name of the ship was MV PACIFIC DESPATCHER
8
MMMC in effect saying that it was OOCL‘s fault why the buyer did not accept because of the
violation of the terms of the L/C. He’s saying he did not agree to the transhipment as per the
B/L.
what are the 3 functions of a bill of lading? How is it a document of title?
what is demurrage?
However, MMMC lost the case and was even ordered to pay freightage and demurrage
for the trip back to manila. The RTC dismissed the complaint on the ground that MMMC
had given its consent to the contents of the bill of lading where it is clearly indicated that
there will be transhipment.
o Thus, MMMC went to the SC, alleging that there was NO TRANS-SHIPMENT:
considering that there was no actual transhipment of the Anahaw fans, then there
is no occasion under which MMMC can agree to the transhipment of the Anahaw
fans because there is nothing like that to agree to" and "(i)f there is no actual
transhipment but there appears to be a transhipment in the bill of lading,
then there can be no possible reason for it but a mistake on the part of the
OOCL and Zuellig
Issue: Was there transshipment? YES Should MMMC be allowed to explain the possibility that
the fact that transshipment appeared on the B/L was merely a mistake on the part of the carrier?
NO Is MMMC liable for demurrage? NO
There was transshipment
Transhipment, in maritime law, is defined as "the act of taking cargo out of one ship and
loading it in another. Clearly, there was transshipment in this case as there unmistakably
appears on the face of the bill of lading the entry "Hong Kong" in the blank space labeled
"Transhipment," which can only mean that transhipment actually took place.
Since MMMC, as shipper, received and accepted the B/L, it is bound by such B/L. It cannot
argue that it did not agree to the fact of transhipment
A bill of lading usually becomes effective upon its delivery to and acceptance by the
shipper. It is presumed that the stipulations of the bill were, in the absence of fraud,
concealment or improper conduct, known to the shipper, and he is generally bound
by his acceptance whether he reads the bill or not.
The acceptance of the bill without dissent raises the presumption that all the terms therein
were brought to the knowledge of the shipper and agreed to by him and, in the absence of
fraud or mistake, he is estopped from thereafter denying that he assented to such terms.
This rule applies with particular force where a shipper accepts a bill of lading with full
knowledge of its contents and acceptance under such circumstances makes it a binding
contract
In the light of the series of events that transpired in the case at bar, there can be no
logical conclusion other than that MMMC had full knowledge of, and actually
consented to, the terms and conditions of the bill of lading thereby making the same
conclusive as to it, and it cannot now be heard to deny having assented thereto
carrier lost
Demurrage
The carrier unequivocally offered MMMC the option of paying the shipping and demurrage
charges in order to take delivery of the goods or of abandoning the same so that the carrier
could sell them at public auction and thereafter apply the proceeds in payment of the
shipping and other charges. Moreover, the carrier belatedly informed MMMC of the arrival
97
 What is the diff bet bill of lading and a charter party?
Why is the bill of lading also serves as s document of title?
Subject: Transportation what is the diff bet a bill of lading and contract of carriage? Can the bill of lading
Professor: Atty. Ampil be the contract of carriage also? in case of conflict, which should be given
By: Butch Ramiro priority?
of the returned anahaw fans. HENCE, MMMC was well within its right to abandon the
goods and not pay demurrage.
12. Telengtan Brothers & Sons (Business name: LA SUERTE) v. CA
Doctrine:
A bill of lading operates both as a receipt and a contract. As a contract, it names the
contracting parties which include the consignee, fixes the route, destination, freight rate
or charges, and stipulates the right and obligations assumed by the parties
Facts:
On 1979, VAN REEKUM PAPER, contracted Kawasaki (K-LINE) for the shipment of board
liners from SAVANNAH to MANILA. The shipment was consigned to LA SUERTE CIGAR.
The contract of transportation was embodied in a bill of lading.
o The cargo was shipped to Tokyo then transhipped in two different vessels (10
vans in SS FAR EAST FRIENDSHIP, while 2 vans were in SS HANGANG
GLORY)
o The arrival of SS FAR EAST FRIENDSHIP was announced in Bulletin Today and
was made known to LA SUERTE. The second ship, HANGANG GLORY,
arrived 10 days later. However, customs refused to release the goods because
the manifest of FAR EAST FRIENDSHIP covered only 10 containers, while the
bill of lading covered 12 containers. This caused delay on the part of the
consignee to receive the cargo.
As a result of the delay, LA SUERTE was made liable to pay demurrage charges to secure
the release of the cargo.
o THUS, it filed a complaint for specific performance for the release of the
remaining 7 container vans and for the refund of demurrage charges. It alleges
that the B/L does not provide for the payment of demurrage.
Issue: Is the bill of lading indicating the payment of demurrage binding on LA SUERTE? YES
Whatever may be the merit of LA SUERTE‘s contention as to the meaning of the word
"demurrage" in the bill of lading, the fact is that another clause of the bill of lading, in
relation to Rule 21 of the Far East Conference Tariff No. 12, as quoted above, specifically
provides for the payment by the consignee of demurrage for the detention of
containers and other equipment after the so-called "free time."9
It must be remembered that a bill of lading is both a receipt and a contract. As a contract,
its terms and conditions are conclusive on the parties, including the consignee.
Therefore, LA SUERTE is liable to pay demurrage charges.
9
―Free time‖/Grace period under Far East Conference Tariff #12 to unload: 10 days
13. Keng Hua Paper Products v. CA, Sea Land Service, Inc.
Doctrine:
A bill of lading serves two functions. First, it is a receipt for the goods shipped. Second, it is
a contract by which three parties, namely, the shipper, the carrier, and the consignee
undertake specific responsibilities and assume stipulated obligations10
A bill of lading delivered and accepted constitutes the contract of carriage even though not
signed, because the acceptance of a paper containing the terms of a proposed contract
generally constitutes an acceptance of the contract and of all of its terms and conditions of
which the acceptor has actual or constructive notice
Facts:
SEA LAND SERVICE received at its HK terminal a container containing unsorted waste
paper for shipment to KENG HUA. The shipper was HO KEE. SEA LAND issued a bill of
lading. The shipment was eventually transported to MANILA.
KENG HUA was notified of the arrival of the shipment but it failed to discharge the
shipment from the container during the ―free time‖/grace period. The shipment remained in
the container for 481 days, thus, demurrage charges accrued.
KENG HUA refused to pay so SEA LAND sued for demurrage. KENG HUA argues that the
shipment was wrong as it contained more than what was agreed upon so it had the right to
refuse to discharge the shipment. SEA LAND won and was awarded demurrage.
Issue: IS KENG HUA, as consignee, liable for demurrage? YES
The bill of lading was a valid and perfected contract between the shipper (Ho Kee), the
consignee (Petitioner Keng Hua), and the carrier (Private Respondent Sea-Land). Section
17 of the bill of lading provided that the shipper and the consignee were liable for the
payment of demurrage charges for the failure to discharge the containerized
shipment beyond the grace period allowed by tariff rules
A bill of lading delivered and accepted constitutes the contract of carriage even though not
signed, because the acceptance of a paper containing the terms of a proposed contract
generally constitutes an acceptance of the contract and of all of its terms and conditions of
which the acceptor has actual or constructive notice.
In this case, the bill of lading was received by KENG HUA. It had the opportunity to
examine the document but it did not immediately object to it. It was only 6 months after
receipt that KENG HUA informed SEA LAND that it could not accept the shipment. It can
be inferred from the 6 month delay that KENG HUA accepted the terms of the bill of lading.
10
Compare to the 3 functions Sir gave us:
Functions of a bill of lading
1) The Bill of lading is evidence that the carrier has received the goods.
2) The Bill of lading is a device that confirms the maritime transportation contract of
goods.
3) The Bill of lading is a title deed to the loaded goods.
98
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
o THEREFORE, having accepted the terms of the bill of lading, it is clear that
KENG HUA is liable under the bill of lading for payment of demurrage
this is what happened—>there was a second contract overturning the first;
Optional as to interest on demurrage (which were reduced) not signed hence charter party na oral siya so pwede/valid still—> in such a
case then the BOL will be basis for det rights and oblig and nothing therein
was stated that demurrage meron
The case before us involves an obligation not arising from a loan or forbearance of money; thus, pursuant to
Article 2209 of the Civil Code, the applicable interest rate is six percent per annum. Since the bill of lading did
not specify the amount of demurrage, and the sum claimed by private respondent increased as the days went
by, the total amount demanded cannot be deemed to have been established with reasonable certainty until
the trial court rendered its judgment. Indeed, "(u)nliquidated damages or claims, it is said, are those which are
not or cannot be known until definitely ascertained, assessed and determined by the courts after presentation
of proof. " 32 Consequently, the legal interest rate is six percent, to be computed from September 28, 1990,
the date of the trial court's decision. And in accordance with Philippine National Bank 33 and Eastern
Shipping, 34the rate of twelve percent per annum shall be charged on the total then outstanding, from the time
the judgment becomes final and executory until its satisfaction
14. Market Developers v. IAC
Doctrine:
The charter party may be oral, in which case the terms thereof, not having been
reduced to writing, shall be those embodied in the bill of lading
Facts:
On 1978, MARKET DEVELOPERS (MADE) entered into a written barging contract
(contract of affreightment) with UY for the shipment of its cargo from ILIGAN to KALIBO. In
the original contract, MADE agreed to pay 5k per day of delay in the loading/unloading of
the goods in the barge.
Upon completion of the loading, the parties verbally agreed to divert the barge to CULASI,
ROXAS CITY with the cargo being consigned to MODERN HARDWARE. However, this
new agreement was not written. The shipment was eventually received by the consignee.
There was some dispute as to the time spent for unloading but 6 months later, UY sued
MADE for demurrage for an alleged delay of 8 days and 4/25 hours. The lower courts ruled
in favor of UY, holding that the written agreement was still controlling.
Issue: IS MADE liable for demurrage? NO.
The oral agreement superseded the original agreement. The terms of the oral agreement were
considered to be embodied in the bill of lading, which did not specify payment of demurrage.
The lower courts erred in holding that the original agreement was still in effect. What it
should have held instead was that the first written contract had been cancelled and
replaced by the second verbal contract because of the change in the destination of the
cargo.
While the code of commerce clearly shows that a contract of affreightment must be in
writing, Article 653 just as clearly provides that: ―If the cargo should be received without a
charter party having been signed, the contract shall be understood as executed in
accordance with what appears in the bill of lading, the sole evidence of title with regard to
the cargo for determining the rights and obligations of the ship agent, of the captain and of
the charterer‖
This provision means that the charter party may be oral, in which case the
terms thereof, not having been reduced to writing, shall be those embodied
in the bill of lading
Regarding the bill of lading, an examination thereof will reveal that there is no
condition or requirement therein for the payment of demurrage charges. Under the
afore-quoted Article 653 of the Code of Commerce, therefore, there was no reason to read
any stipulation for demurrage into the second contract.
Even assuming that the original agreement for demurrage had been carried over in the
second contract, there is no acceptable evidence of the delay allegedly incurred by MADE
in the unloading of its cargo in Roxas City.
Uy's testimony on this matter is self-serving, let alone the fact that he admittedly
was not present at the unloading. His corroboration is hearsay. This consisted
merely of Exhibits B and C, 15 the so-called statement of facts regarding the
unloading of the cargo from the barge, prepared by the barge patron, a certain
Ding Julian. This person was not presented at the trial to testify on his report and
could therefore not be subjected to cross examination carrier lost
15. Reyma Brokerage v. Phil. Home Assurance
Doctrine:
Where the carrier of the containerized cargo makes an explicit admission as to the
weight, measurement marks, numbers, quality contents, and value, etc, in the bill of
lading, such admission is deemed prima facie evidence of the receipt by the carrier
of the goods as therein described. Thus, the arrastre operator prima facie received
the quantity of the goods as stated in the B/L. Therefore, it if it cannot explain the
shortage, it will be liable for such.
Facts:
CRAIG MOSTYN & CO of Australia (CRAIG) shipped aboard MS MALMROS MONSOON
a shipment of hard frozen boneless beef to Manila. The shipment was consigned to RFM
CORP. Upon arrival, the ship discharged the shipment to the REYMA BROKERAGE, the
arrastre operator. The shipment was eventually delivered to RFM
However, upon inspection, it was discovered that there was shortage (what they received
was less than what was indicated in the bill of lading). Thus RFM claimed from it insurer,
PHIL HOME ASSURANCE, which in turn, sued REYMA BROKERAGE for the shortage.
Issue: Should REYMA BROKERAGE be held liable for the shortage? YES
In this particular case, the carrier signified in the bill of lading that such bill of lading was a
receipt of the number of packages as shown. Thus, the carrier admitted that the
shipments HAD the number of packages declared by the shipper (CRAIG) in the bill
of lading. The bill of lading also detailed the weight, marks, quantity of the shipment.
99
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

It follows therefore that the arrastre (REYMA) prima facie received the quantity of the meat
as reflected in the bill of lading (as admitted by the carrier), REYMA had the burden to
overthrow such presumption. Evidence shows that it failed to do so. HENCE, it is liable for
the shortage. REYMA lost.

16. Sweet Lines v. Hon. Teves, Tandog and Tiro is a contract of adhesion construed liberally against one party?
duties of the captain - from the code of commerce
Doctrine: line of command
A condition at the back of the ticket requiring passengers who intend to sue the carrier difference bet arrival under stress, shipwreck
based on the ticket to file at a specified venue is VOID for being against public policy. collisions, inscrutable fault
Facts: doc of last clear chance - not applicable in maritime collisions
pieces of paper either represent ownership or debt
Atty. TANDOG and TIRO (private respondents) bought tickets from SWEET LINES in order incorporeal - deed of assignment
to go to TAGBILARAN, BOHOL. Because the vessel they boarded was already filled to tangible - deed of sale
capacity, they were forced to hide at the cargo inspection to avoid Coastguard inspection

Thus, they sued SWEET LINES in MISAMIS ORIENTAL. They alleged that they were
exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn
grits," and that the tickets they bought for Tagbilaran were not honored and they were
constrained to pay for other tickets

o SWEET LINES filed a motion to dismiss on the ground of improper venue, as the
ticket (CONDITION 14, specifically) provided that actions concerning the ticket
were to be filed in CEBU. This was denied so SWEET LINES went the SC.

Issue: Is the condition at the back of the ticket regarding the venue of actions valid? NO.

There was indeed a contract of carriage as embodied in the tickets that were purchased. It
should be borne in mind, however, that CONDITION No 14 which is printed at the back of
the passage tickets, are commonly known as contracts of adhesion. Its validity will have to
be determined by the peculiar circumstances of each case.

Condition No. 14 printed at the back of the passage tickets should be held as void and
unenforceable for the following reasons:

o First, it is unfair to bind passengers to the terms of the conditions printed at the
back of the passage tickets, on which Condition No. 14 is printed in fine letters,
and

o Second, Condition No. 14 subverts the public policy on transfer of venue of

proceedings of this nature, since it will prejudice rights and interests of many
passengers in different parts of the country who, under Condition No. 14, will
have to file suits against petitioner only in the City of Cebu.

Considering the expense and trouble a passenger residing outside of

Cebu City would incur to prosecute a claim in the City of Cebu, he
would most probably decide not to file the action at all. The condition
will thus defeat, instead of enhance, the ends of justice.

100
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 15 (COGSA)
Be it enacted by the National Assembly of the Philippines:
Section 1. That the provisions of Public Act Numbered Five hundred and twenty-one of the
Seventy-fourth Congress of the United States, approved on April sixteenth, nineteen hundred
and thirty-six, be accepted, as it is hereby accepted to be made applicable to all contracts for
the carriage of goods by sea to and from Philippine ports in foreign trade: Provided, That
nothing in the Act shall be construed as repealing any existing provision of the Code of
Commerce which is now in force, or as limiting its application.
Section 2. This Act shall take effect upon its approval.
Approved: October 22,1936.
An Act Relating to the Carriage of Goods by Sea.
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled, That every bill of landing or similar document of title which is evidence of
a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade,
shall have effect subject to the provisions of the Act.
TITLE I
Section 1. When used in this Act —
(a) The term "carrier" includes the owner or the charterer who enters into a contract of
carriage with a shipper.
(b) The term "contract of carriage" applies only to contracts of carriage covered by a
bill of lading or any similar document of title, insofar as such document relates to the
carriage of goods by sea, including any bill of lading or any similar document as
aforesaid issued under or pursuant to a charter party from the moment at which such
bill of lading or similar document of title regulates the relations between a carrier and a
holder of the same.
(c) The term "goods" includes goods, wares, merchandise, and articles of every kind
whatsoever, except live animals and cargo which by the contract of carriage is stated
as being carried on deck and is so carried.
(d) The term "ship" means any vessel used for the carriage of goods by sea.
(e) The term "carriage of goods" covers the period from the time when the goods are
loaded on to the time when they are discharged from the ship.
Preliminaries
The COGSA applies to both foreign trade and domestic trade
The COGSA does not repeal any CODE OF COMMERCE provision.
If the both the civil code and the code of commerce do not provide for any pertinent point
in question, the COGSA applies. (COGSA applies suppletorily)
As per jurisprudence, it was held that the CIVIL CODE itself does not limit the liability of the
common carrier to a fixed amount per package. It merely allows the stipulation limiting
liability. Thus, the COGSA supplements the CIVIL CODE by establishing a statutory
provision limiting the carrier‘s liability (500USD per package, see below)
RISKS
Section 2. Subject to the provisions of section 6, under every contract of carriage of goods by
sea, the carrier in relation to the loading handling, stowage, carriage, custody, care, and
discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the
rights and immunities hereinafter set forth.
The section provides that the carrier is responsible for the loading, handling, stowage,
carriage and discharge of the goods.
RESPONSIBILITIES AND LIABILITIES
Section 3.
(1) The carrier shall be bound, before and at the beginning of the voyage, to exercise due
diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
(c) Make the holds, refrigerating and cooling chambers, and all other parts of the ship
in which goods are carried, fit and safe for their reception carriage and preservation.
(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and
discharge the goods carried.
(3) After receiving the goods into his charge the carrier, or the master or agent of the carrier,
shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things
—
(a) The leading marks necessary for identification of the goods as the same are
furnished in writing by the shipper before the loading of such goods starts, provided
such marks are stamped or otherwise shown clearly upon the goods if uncovered, or
on the cases or coverings in which such goods are contained, in such a manner as
should ordinarily remain legible until the end of the voyage.
(b) Either the number of packages or pieces, or the quantity or weight, as the case
may be, as furnished in writing by the shipper.
101
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

(c) The apparent order and condition of the goods: Provided, That no carrier,
master, or agent of the carrier, shall be bound to state or show in the bill of lading any
marks, number, quantity, or weight which he has reasonable ground for suspecting not
accurately to represent the goods actually received, or which he has had no
reasonable means of checking.
(4) Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as
therein described in accordance with paragraphs (3) (a), (b), and (c) of this section: Provided,
That nothing in this Act shall be construed as repealing or limiting the application of any part of
the Act, as amended, entitled "An Act relating to bills of lading in interstate and foreign
commerce," approved August 29, 1916 (U. S. C. title 49, secs. 81-124), commonly known as the
"Pomerene Bills of Lading Act."
(5) The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of
shipment of the marks, number, quantity, and weight, as furnished by him; and the shipper shall
indemnify the carrier against all loss damages, and expenses arising or resulting from
inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit
his responsibility and liability under the contract of carriage or to any person other than the
shipper.
(6) Unless notice of loss or damage and the general nature of such loss or damage be given in
writing to the carrier or his agent at the port of discharge before or at the time of the removal of
the goods into the custody of the person entitled to delivery thereof under the contract of
carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods
as described in the bill of lading. If the loss or damage is not apparent, the notice must be given
within three days of the delivery.
Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the
person taking delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt
been the subject of joint survey or inspection.
(8) Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship
from liability for loss or damage to or in connection with the goods, arising from negligence, fault,
or failure in the duties and obligations provided in this section, or lessening such liability
otherwise than as provided in this Act, shall be null and void and of no effect. A benefit of
insurance in favor of the carrier, or similar clause, shall be deemed to be a clause relieving the
carrier from liability.
Sec 3(6)
Of particular importance in this section is SEC 3(6), which provides for a prescriptive
period to file a claim against a CARRIER.
o In case of loss or damage, the plaintiff must file the case against the carrier
within 1 year
a) after delivery of the goods applies when there is delivery
b) the date when the goods should have been delivered applies
when the goods were NOT delivered at all
o Moreover, as long as it is claimed that the losses or damages suffered by the
shipper/consignee were due to the arrival of the goods in damaged condition, the
action is still basically one for damage to the goods.
HOWEVER cases of misdelivery or conversion are NOT covered.
Instead, what applies are the civil code rules (4 years: Quasi-delict, 10
years: contract)
o The first part of paragraph 6 provides that if the person entitled to the goods
takes delivery thereof, it shall be prima facie evidence of delivery.
o Generally, a notice of loss/damage must be given within 3 days after delivery.
However, even if it is not given, this does not bar recovery as long as a suit is
filed within 1 year.

In any event the carrier and the ship shall be discharged from all liability in respect of loss or
damage unless suit is brought within one year after delivery of the goods or the date when the
goods should have been delivered: Provided, That if a notice of loss or damage, either apparent
or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the
right of the shipper to bring suit within one year after the delivery of the goods or the date when
the goods should have been delivered
Section 3(8): Stipulations limiting liability for negligence/responsibilities provided for in COGSA
A carrier cannot limit its liability in a manner contrary to what is provided for in the COGSA.
Thus, for example, a carrier cannot base its defense on a stipulation wherein it will be
relieved of liability for damage to the cargo notwithstanding its fault or negligence,

In the case of any actual or apprehended loss or damage the carrier and the receiver shall give
all reasonable facilities to each other for inspecting and tallying the goods.

(7) After the goods are loaded the bill of lading to be issued by the carrier, master, or agent of
the carrier to the shipper shall, if the shipper so demands, be a "shipped" bill of lading Provided,
That if the shipper shall have previously taken up any document of title to such goods, he shall
surrender the same as against the issue of the "shipped" bill of lading, but at the option of the
carrier such document of title may be noted at the port of shipment by the carrier, master, or
agent with name or name the names of the ship or ships upon which the goods have been
shipped and the date or dates of shipment, and when so noted the same shall for the purpose of
this section be deemed to constitute a "shipped" bill of lading.

102
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
RIGHTS AND IMMUNITIES
Section 4.
(1) Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from
unseaworthiness unless caused by want of due diligence on the part of the carrier to make the
ship seaworthy, and to secure that the ship is properly manned, equipped, and supplied, and to
make to the holds, refrigerating and cool chambers, and all other parts of the ship in which
goods are carried fit and safe for their reception, carriage, and preservation in accordance with
the provisions of paragraph (1) of section 3.
Whenever loss or damage has resulted from unseaworthiness, the burden of proving the
exercise of due diligence shall be on the carrier or other persons claiming exemption under the
section.
(2) Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting
from —
(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in
the navigation or in the management of the ship;
(b) Fire, unless caused by the actual fault or privity of the carrier;
(c) Perils, dangers, and accidents of the sea or other navigable waters;
(d) Act of God;
(e) Act of war,
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or seizure under legal process;
(h) Quarantine restrictions;
(i) Act or omission of the shipper or owner of the goods, his agent or representative;
(j) Strikes or lockouts or stoppage or restraint of labor from whatever cause, whether
partial or general; Provided, That nothing herein contained shall be construed to
relieve a carrier from responsibility for the carrier's own acts;
(k) Riots and civil commotions
(l) Saving or attempting to save life or property at sea;
(m) Wastage in bulk or weight or any other loss or damage arising from inherent
defect, quality, or vice of the goods;
(n) Insufficiency of packing;
(o) Insufficiency of inadequacy of marks;
(p) Latent defects not discoverable by due diligence; and
(q) Any other cause arising without the actual fault and privity of the carrier and
without the fault or neglect of the agents or servants of the carrier, but the burden of
proof shall be on the person claiming the benefit of this exception to show that neither
the actual fault or privity of the carrier nor the fault or neglect of the agents or servants
of the carrier contributed to the loss or damage.
(3) The shipper shall not be responsible for loss or damage sustained by the carrier or the ship
arising from any cause without the act, fault, or neglect of the shipper, his agents, or servants.
(4) Any deviation in saving or attempting to save life or property at sea, or any reasonable
deviation shall not be deemed to be an infringement or breach of this Act or of the contract of
carriage, and the carrier shall not be liable for any loss or damage resulting therefrom:
Provided, however, That if the deviation is for the purpose of loading cargo or unloading cargo
or passengers it shall, prima facie, be regarded as unreasonable.
(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage
to or in connection with the transportation of goods in an amount exceeding $500 per package
lawful money of the United States, or in case of goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in other currency, unless the nature and value of such
goods have been declared by the shipper before shipment and inserted in the bill of lading. This
declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be
conclusive on the carrier.
By agreement between the carrier, master, or agent of the carrier, and the shipper another
maximum amount than that mentioned in this paragraph may be fixed: Provided, That such
maximum shall not be less than the figure above named. In no event shall the carrier be liable
for more than the amount of damage actually sustained.
Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in
connection with the transportation of the goods if the nature or value thereof has been knowingly
and fraudulently misstated by the shipper in the bill of lading.
(6) Goods of an inflammable, explosive, or dangerous nature to the shipment whereof the
carrier, master or agent of the carrier, has not consented with knowledge of their nature and
character, may at any time before discharge be landed at any place or destroyed or rendered
innocuous by the carrier without compensation, and the shipper of such goods shall be liable for
all damages and expenses directly or indirectly arising out of or resulting from such shipment. If
any such goods shipped with such knowledge and consent shall become a danger to the ship or
cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by
the carrier without liability on the part of the carrier except to general average, if any.
103
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
SURRENDER OF RIGHTS AND IMMUNITIES AND INCREASE OF RESPONSIBILITIES AND
LIABILITIES
Section 5. A carrier shall be at liberty to surrender in whole or in part all or any of his rights and
immunities or to increase any of his responsibilities and liabilities under this Act, provided such
surrender or increase shall be embodied in the bill of lading issued to the shipper.
The provisions of this Act shall not be applicable to charter parties; but if bills of lading are
issued in the case of a ship under charter party, they shall comply with the terms of this Act.
Nothing in this Act shall be held to prevent the insertion in a bill of lading of any lawful provision
regarding general average.
SPECIAL CONDITIONS
Section 6. Notwithstanding the provisions of the preceding sections, a carrier, master or agent
of the carrier, and a shipper shall, in regard to any particular goods be at liberty to enter into any
agreement in any terms as to the responsibility and liability of the carrier for such goods, and as
to the rights and immunities of the carrier in respect of such goods, or his obligation as to
seaworthiness (so far as the stipulation regarding seaworthiness is not contrary to public policy),
or the care or diligence of his servants or agents in regard to the loading, handling stowage,
carriage, custody, care, and discharge of the goods carried by sea: Provided, That in this case
no bill of lading has been or shall be issued and that the terms agreed shall be embodied in a
receipt which shall be a non-negotiable document and shall be marked as such.
Any agreement so entered into shall have full legal effect: Provided, That this section shall not
apply to ordinary commercial shipments made in the ordinary course of trade but only to other
shipments where the character or condition of the property to be carried or the circumstances,
terms, and conditions under which the carriage is to be performed are such as reasonably to
justify a special agreement.
Section 7. Nothing contained in this Act shall prevent a carrier or a shipper from entering into
any agreement, stipulation, condition, reservation, or exemption as to the responsibility and
liability of the carrier or the ship for the loss or damage to or in connection with the custody and
care and handling of goods prior to the loading on and subsequent to the discharge from the
ship on which the goods are carried by sea.
Section 8. The provisions of this Act shall not affect the rights and obligations of the carrier
under the provisions of the Shipping Act, 1916, or under the provisions of section 4281 to 4289,
inclusive, of the Revised Statutes of the United States, or of any amendments thereto; or under
the provisions of any other enactment for the time being in force relating to the limitation of the
liability of the owners of seagoing vessels.
TITLE II
Section 9. Nothing contained in this Act shall be construed as permitting a common carrier by
water to discriminate between competing shippers similarly place in time and circumstances,
either
(a) with respect to the right to demand and receive bills of lading subject to the provisions of this
Act; or
(b) when issuing such bills of lading, either in the surrender of any of the carrier's rights and
immunities or in the increase of any of the carrier's responsibilities and liabilities pursuant to
section 6, title I, of this Act or (c) in any other way prohibited by the Shipping Act, 1916, s
amended.
Section 10. Section 25 of the Interstate Commerce Act is hereby amended by adding the
following proviso at the end of paragraph 4 thereof: "Provided, however, That insofar as any bill
of lading authorized hereunder relates to the carriage of goods by sea, such bill of lading shall
be subject to the provisions of the Carriage of Goods by Sea Act."
Section 11. Where under the customs of any trade the weight of any bulk cargo inserted in the
bill of lading is a weight ascertained or accepted by a third party other than the carrier or the
shipper, and the fact that the weight is so ascertained or accepted is stated in the bill of lading,
then, notwithstanding any thing in this Act, the bill of lading shall not be deemed to be prima
facie evidence against the carrier of the receipt of goods of the weight so inserted in the bill of
lading, and the accuracy thereof at the time of shipment shall not be deemed to have been
guaranteed by the shipper.
Section 12. Nothing in this Act shall be construed as superseding any part of the Act entitled
"An act relating to navigation of vessels, bills of lading, and to certain obligations, duties, and
rights in connection with the carriage of property," approved February 13,1893, or of any other
law which would be applicable in the absence of this Act, insofar as they relate to the duties,
responsibilities, and liabilities of the ship or carrier prior to the time when the goods are loaded
on or after the time they are discharged from the ship.
Section 13. This Act shall apply to all contracts for carriage of goods by sea to or from ports of
the United States in foreign trade. As used in this Act the term "United States" includes its
districts, territories, and possessions: Provided, however, That the Philippine legislature may by
law exclude its application to transportation to or from ports of the Philippine Islands. The term
"foreign trade" means the transportation of goods between the ports of the United States and
ports of foreign countries. Nothing in this Act shall be held to apply to contracts for carriage of
goods by sea between any port of the United States or its possessions, and any other port of the
United States or its possession: Provided, however, That any bill of lading or similar document of
title which is evidence of a contract for the carriage of goods by sea between such ports,
containing an express statement that it shall be subject to the provisions of this Act, shall be
subjected hereto as fully as if subject hereto as fully as if subject hereto by the express
provisions of this Act: Provided, further, That every bill of lading or similar document of title which
is evidence of a contract for the carriage of goods by sea from ports of the United States, in
foreign trade, shall contain a statement that it shall have effect subject to the provisions of this
Act.
Section 14. Upon the certification of the Secretary of Commerce that the foreign commerce of
the United States in its competition with that of foreign nations is prejudiced the provisions, or
any of them, of Title I of this Act, or by the laws of any foreign country or countries relating to the
carriage of goods by sea, the President of the United States, may, from time to time, by
proclamation, suspend any or all provisions of Title I of this Act for such periods of time or
indefinitely as may be designated in the proclamation. The President may at any time rescind
such suspension of Title I hereof, and any provisions thereof which may have been suspended
shall thereby be reinstated and again apply to contracts thereafter made for the carriage of
goods by sea. Any proclamation of suspension or rescission of any such suspension shall take
effect on a date named therein, which date shall be not less than ten days from the issue of the
proclamation.
104
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Any contract for the carriage of goods by sea, subject to the provisions of this Act, effective
during any period when title I hereof, or any part thereof, is suspended, shall be subject to all
provisions of law now or hereafter applicable to that part of Title I which may have thus been
suspended.

Section 15. This Act shall take effect ninety days after the date of its approval; but nothing in
this Act shall apply during a period not to exceed one year following its approval to any contract
for the carriage of goods by sea, made before the date on which this Act is approved, nor to any
bill of lading or similar document of title issued, whether before or after such date of approval in
pursuance of any such contract as aforesaid.

Section 16. This Act may be cited as the "Carriage of Goods by Sea Act."

105
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
1. Eastern Shipping v. IAC (vessel caught fire and sank)
Doctrine:
COGSA applies suppletorily to the Civil Code provisions on common carriers
Fire is an exempting circumstance under COGSA. However, if fault is shown on the part of
the carrier, it will still be held liab.e
COGSA provisions on limited liability form part of the bill of lading.
Facts:
Sometime in 1977, the MS ASIATICA, owned by Eastern Shipping, loaded at KOBE,
JAPAN, for transportation to Manila, several cargoes11 consigned to different persons. En
route to Manila, the vessel caught fire and sank, resulting to the total loss of the cargo.
The insurers paid the consignees and in turn sued EASTERN SHIPPING . It was held
liable for the value of the goods. It then appealed and argued that the fire which caused
the sinking of the ship was an exempting circumstance under Section 4(2)(b) of COGSA
Issue: What law should apply? Is EASTERN SHIPPING exempt from liability under COGSA?
COGSA applicable in a suppletory manner
The law of the country to which the goods are to be transported governs the liability of the
common carrier in case of their loss, destruction or deterioration. As the cargoes in
question were transported from Japan to the Philippines, the liability of Petitioner Carrier is
governed primarily by the Civil Code. However, in all matters not regulated by said Code,
the rights and obligations of common carrier shall be governed by the Code of Commerce
and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is
suppletory to the provisions of the Civil Code
COGSA will not exempt Carrier from Liability because the fire was shown to have been caused
by the carrier
COGSA provides: Sec. 4(2). Neither the carrier nor the ship shall be responsible for loss or
damage arising or resulting from
xxxx
(b) Fire, unless caused by the actual fault or privity of the carrier.
In this case, there was a finding of actual fault on the part of the carrier as when the smoke
was noticed, the fire was already big; that the fire must have started twenty-four (24) hours
11
1. 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to
Philippine Blooming Mills Co., Inc., and 7 cases of spare parts valued at P92,361.75, consigned
to Central Textile Mills, Inc
2. 128 cartons of garment fabrics and accessories, in two (2) containers, consigned to Mariveles
Apparel Corporation, and two cases of surveying instruments consigned to Aman Enterprises
and General Merchandise
before the same was noticed; and that after the cargoes were stored in the hatches, no
regular inspection was made as to their condition during the voyage."
o The foregoing suffices to show that the circumstances under which the fire
originated and spread are such as to show that Petitioner Carrier or its
servants were negligent in connection therewith. Consequently, the complete
defense afforded by the COGSA when loss results from fire is unavailing
Carrier lost.
2. Aboitiz Shipping v. CA
Doctrine:
Under COGSA, if a higher value is declared by the shipper in the B/L, then the carrier is
bound to pay for the actual value of the goods lost, destroyed or damaged.
The package/container contemplated by the law to limit the liability of the carrier should be
sensibly related to the unit in which the shipper packed the goods and described
them, not a large metal object, functionally a part of the ship, in which the carrier used
them to be contained (in other words, the word container doesn’t mean the big rectangular
containers. It means the boxes inside those containers wherein the goods are contained)
Facts:
On OCT 1990, the vessel MV P. Aboitiz took on board in HK for shipment to Manila some
cargo consisting of one 20 foot container holding apparel and one forty foot container
holding other goods. The total value of the goods amount to 40k USD and 94k USD
respectively. Both were insured by the CONSIGNEES with GAFLAC.
On its way to Manila, the vessel sank and was declared lost. Thus, GAFLAC paid the
consignees the value of the goods. GAFLAC in turn sued ABOITIZ, alleging the loss was
due to negligence.
ABOITIZ was held to be liable for the value of the goods. One of the assigned errors of
ABOITIZ is the decision to hold it liable for the full value of the goods. It argues that the
liability should be fixed at 500 USD per container/package/customary freight, as per the bill
of lading.
Issue: Should liability be limited to 500 USD per container? No. Actual value declared in b/l
While it is true that the B/L has a stipulation limiting liability of the carrier, there is an
exception, that is, when the nature and the value of the goods have been declared by
shipper BEFORE shipment and INSERTED in the BILL OF LADING.12
12
COGSA Section 4(5)
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to
or in connection with the transportation of goods in an amount exceeding $500 per package of
lawful money of the United States, or in case of goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in other currency, unless the nature and value of
such goods have been inserted in the bill of lading. This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but shall not be conclusive on the carrier.
106
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
In this case the description of the nature and the value of the goods shipped were
declared and reflected in the bills of lading. Thus, it is the basis of the liability of the
carrier as the actual value of the loss.
Moreover, it is absurd to interpret "container," as provided in the bill of lading to be valued
at US$500.00 each, to refer to the container which is the modern substitute for the hold of
the vessel. The package/container contemplated by the law to limit the liability of the
carrier should be sensibly related to the unit in which the shipper packed the goods
and described them, not a large metal object, functionally a part of the ship, in which
the carrier used them to be contained. Such "container" must be given the same
meaning and classification as a "package" and "customary freight unit." Carrier lost
3. Eastern & Australian v. Great American
Doctrine:
The COGSA does not prevent the shipper and carrier from agreeing to a LESSER amount
as regards the value of the goods. The COGSA does not set the minimum as it only sets
the MAXIMUM amount recoverable by the shipper.
Facts:
On DEC 1971, SYDNEY shipped from Australia to MANILA, one case of impellers for
warman pump on board the SS CHITRAL, a vessel owned by EASTERN AND
AUSTRALIAN STEAMSHIP (carrier) The case was consigned to BENGUET
CONSOLIDATED.
On the same month, the ship arrived in MANILA but failed to discharge the shipment. The
insurer thus paid the consignee and in turn sued the carrier.
The carrier argues that its liability for the loss of the shipment is only limited to L100
Sterling or its peso equivalent of P1,544.40 as per stipulation in the Bill of Lading. On the
other hand, the insurer argues that the carrier‘s liability should be 500 USD, as per
COGSA.
Issue: What value is the carrier liable for? L100 Sterling.
There is no inconsistency between Section 4 (5) of the Carriage of Goods by Sea Act and
the Bill of Lading. The first part of the provision of Section 4 (5) of the Carriage of Goods by
Sea Act limits the MAXIMUM amount that can be recovered by the shipper. Said provision
DOES NOT prescribe the minimum and hence, it could be any amount which is below
$500.00.
The second paragraph of Section 4 (5) of the Carriage of Goods by Sea Act prescribing the
maximum amount (melee) shall not be less than $500.00 refers to a situation where
there is an agreement other than set forth in the Bill of Lading providing for a melee,
By agreement between the carrier, master or agent of the carrier, and the shipper another
maximum amount than that mentioned in this paragraph may be fixed: Provided, that such
maximum shall not be less than the figure above named. In no event shall the carrier be liable
for more than the amount of damage actually sustained.
higher than $500.00 per package. In the case at bar, it is apparent that there had been no
agreement between the parties, and hence, the bill of lading shall prevail.
4. Stevens & Co. v. Nordeutscher Lloyd
Doctrine:
The 1 year period under COGSA is interrupted by a judicial demand (filing of a case)
The 1 year period under the COGSA to sue the carrier is reckoned from the delivery of the
goods or the date when the goods should have been delivered
Facts:
On MARCH 1959, Stevens & Co shipped from HAMBURG to MANILA aboard MS
Schwabenstein (owned by Lloyd), 2,000 pieces of prismatical thermometers. On MAY 21,
1959, Lloyd notified Stevens of the arrival of the thermometers in Manila.
Upon examination however, it turned out that about 1,000 pieces were missing or
destroyed. Thus, on APRIL 27, 1960, it sued Lloyd for the value of the missing cargo in the
Municipal Trial Court. This was dismissed on the ground of lack of jurisdiction on JUNE 13,
1960
On JUNE 24, 1960, Stevens filed an appropriate suit in the CFI (RTC). LLOYD moved to
dismiss on the ground of prescription alleging that the action was filed out of time, it being
filed beyond 1 year after MAY 1959 (notification)13 It was granted.
Issue: has the cause of action prescribed? NO.
The first action was commenced by STEVENS in the MTC of Manila on April 27, 1960
(within 1 year) It was dismissed June 13, 1960, or over twenty (20) days after the expiration
of the period of one (1) year, beginning from May 21, 1959, within which plaintiff's action
could be brought pursuant to COGSA.
Under the law, the period within which could initiate the present case was renewed,
therefore, for another year, beginning from June 14, 1960. Therefore, the CFI case was
NOT filed out of time.
This is because according to the CIVIL CODE, the prescription of actions is interrupted
when they are filed before the court, when there is a written extrajudicial demand by the
creditors, and when there is any written acknowledged judgment of the debt by the debtor.
carrier lost.
13
Section 3 (6) COGSA: In any event the carrier and the ship shall be discharged from all
liability in respect of loss or damage unless suit is brought within one year after delivery of
the goods or the date when the goods should have been delivered: Provided, That if a
notice of loss or damage, either apparent or concealed, is not given as provided for in this
section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods should have been delivered
107
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
5. Dole v. Maritime Company
Doctrine:
A written extra-judicial demand DOES NOT toll the period of prescription (to sue the carrier)
under the COGSA
Facts:
Dole was the consignee of a shipment transported by MARITIME COMPANY (carrier) The
cargo was discharged to the carrier on DEC 18, 1971. (discharge)
ON MAY 4, 1972, DOLE filed a claim the carrier for the damages sustained by the cargo.
(extrajudicial demand/claim)
On JUNE 11, 1973, DOLE filed a complaint against MARITIME COMPANY for the
damage. In response, the carrier moved to dismiss on the ground of prescription. It was
granted.
Issue: Has DOLE‘s cause of action prescribed? Yes. The extrajudicial claim DID NOT toll the
prescriptive period
The SC ruled that a written extra-judicial demand does not toll the prescriptive period under
the COGSA. It cited a case (Chua Kuy v. Everett Steamship) that held that in a case
governed by COGSA, the rules of interruption under the Civil Code DO NOT APPLY.
Moreover, no different result would obtain even if the Court were to accept the proposition
that a written extrajudicial demand does toll prescription under the Carriage of Goods by
Sea Act. The demand in this instance would be the claim for damage-filed by Dole with
Maritime on May 4, 1972.
The effect of that demand would have been to renew the one- year prescriptive period from
the date of its making. Stated otherwise, under Dole's theory, when its claim was received
by Maritime, the one-year prescriptive period was interrupted — "tolled" would be the more
precise term — and began to run anew from May 4, 1972, affording Dole another period of
one (1) year counted from that date within which to institute action on its claim for damage.
Unfortunately, Dole let the new period lapse without filing action. It instituted only on
June 11, 1973, more than one month after that period has expired and its right of
action had prescribed..
6. American Insurance v. Compania Maritima
Doctrine:
The fact that transshipment was made does not remove a transaction from the ambit of the
COGSA
Facts:
On 1962, certain cargo consisting of tractor parts insured with AMERICAN INSURANCE
(insurer) was shipped from NY to the PH by MACONDRAY. The cargo was consigned to
ATLAS.
When the ship arrived in MANILA, MACONDRAYcontracted COMPANIA MARITIMA to
transship the cargo to CEBU, its agreed destination. When the consignee, ATLAS, took
delivery of the goods on SEPT 24, 1962, it discovered that there was a shortage.
The consignee was paid by AMERICAN INSURANCE and it in turn initially sued
MARITIME COMPANY on SEPT 24, 1963. However, on NOV 6, 1964, it moved to amend
to complaint to also implead MACONDRAY. This amended complaint was admitted on
NOV 14, 1964.
Macondray moved to dismiss the compliant on the ground of prescription. In response,
AMERICAN INSURANCE argues that the civil code should apply instead of COGSA (which
provides for a 1 year prescriptive period) because the cargo was ―transshipment cargo‖ and
that MACONDRAY was merely a forwarding agent.14
Issue: has the cause of action against MACONDRAY prescribed? Yes. Since COGSA applies,
the 1 year prescriptive period bars suit against MACONDRAY.
The action is based on the contract of carriage up to the final port of destination, which
was Cebu City, for which the corresponding freight had been prepaid.
The transshipment of the cargo from Manila to Cebu was not a separate transaction from
that originally entered into by Macondray. It was part of Macondray's obligation under
the contract of carriage and the fact that the transshipment was made via an inter-
island vessel did not operate to remove the transaction from the operation of the
Carriage of Goods by Sea Act. Macondray (carrier) won.
14
Argument as per the original: Plaintiff avers that the one year prescriptive period provided
for in the Carriage of Goods by Sea Act does not apply in this case, which should be governed
by the statute of limitations in the Civil Code. In support of this contention it is pointed out that
the cargo in question was transshipment cargo; that the discharge thereof in Manila terminated
the obligation of Macondray as carrier; and that its obligation to transship the cargo to Cebu was
merely that of a "forwarding agent" of the shipper.
108
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
7. Aetna Insurance v. Barber Steamship
Doctrine:
CLAIMS against the CARRIER under COGSA must be filed within 1 year from delivery.
Facts:
Manila Trading Supply was the consignee of a cargo of truck parts shipped by BARBER
STEAMSHIP, the carrier. When the goods arrived on FEB 25, 1964, it was discovered that
damage was caused to the cargo so the insurer paid the consignee.
The insurer in turn sued BARBER STEAMSHIP and Luzon Stevedoring on FEB 2, 1965.
On APRIL 7, 1965, an amended complaint was filed by the insurer, on the ground that it
should be BARBER FAR EAST LINE SERVICE that should have been impleaded. The
judge DISMISSED the complaint on the ground that the amended complaint was filed
beyond one year from the date of delivery (COGSA)
Issue: Has the action prescribed? YES, Barber Far East impleaded for first time.
The one-year statutory and contractual prescriptive period had already expired when the
insurance company filed on April 7, 1965 its action against Barber Line Far East Service.
The one year period commenced on February 25, 1964 when the damaged cargo was
delivered to the consignee.
It must be reiterated that the original complaint impleaded BARBER STEAMPSHIP. In this
case, BARBER FAR EAST was only impleaded for the first time. Since it was impleaded for
the first time BEYOND the 1 year period provided for in COGSA and the B/L, then it follows
that the action has prescribed. Insurer lost, Carrier won.
8. Universal Shipping v. IAC
Doctrine:
The parties may extend the 1 year period to file suit against the carrier under the COGSA
Facts:
SEVALCO, owned and operated by UNIVERSAL SHIPPING shipped from Netherlands
to Thailand 2 cargoes of State R Brand carton black. It was consigned to S LERSEN and
MUANG NGARM (one cargo per consignee) It was insured. When the ship arrived in
Bangkok, the cargo was delivered to MUANG NGARM but with shortages and nothing was
delivered to S LERSEN allegedly due to the fact that it dissolved due to contact with
seawater.
The insurer (who does not do business in the PH) paid the consignees and sued in Manila.
It impleaded UNIVERSAL SHIPPING and Carlos Go Thong, its Manila Agent. Both were
held solidarily liable. On appeal however, GO THONG was absolved from liability. Thus,
only UNIVERSAL SHIPPING was held to be liable. Among other things, UNIVERSAL
SHIPPING argues that the complaint has prescribed.
Issue: Has the complaint prescribed? No, extension agreed upon
The COGSA provision on prescription admits of an exception: if the parties agree to
suspend the 1 year period.
In this case, the exchange of correspondence between the parties shows that they mutually
agreed to extend the time to file the suit, even if it is beyond the 1 year period. When the
insurer filed the suit, it was still within the 1 year period. Carrier lost.
9. Union Carbide v. Manila Railroad
Delivery under COGSA means delivery to the arrastre operator, and not the consignee
Facts:
The vessel DAISHIN MARU arrived in Manila on DEC 18, 1961. The cargo of resin was
consigned to GENERAL BASE METALS and was later sold to UNION CARBIDE. The
cargo was delivered to the arrastre operator on DEC 19, 1961.
On JAN 20 and FEB 6&8, 1962, the resin was delivered by the customs broker to the
consignee, UNION CARBIDE. It was discovered that there was damage to the cargo.
o A formal claim was filed on JUNE 11, 1962. As the claims were not paid, UNION
CARBIDE sued MANILA PORT SERVICE (arrastre) under a management
contract and AMERICAN STEAMSHIP AGENCIES (agent of the carrier), under
the COGSA [joinder of cause of action] on DEC 21, 1962.
o The case was dismissed as to the carrier‘s agent on the ground of prescription.
The period was counted from delivery to the arrastre operator (DEC 19, 1962)
o Pertinent provision of law: Sec 3(6) COGSA: In any event the carrier and the ship
shall be discharged from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date when the goods
should have been delivered:
Issue: Should the period be reckoned from delivery to the arrastre operator? YES, for practical
reasons
The sensible and practical interpretation is that delivery within the meaning of section 3(6)
of COGSA means delivery to the arrastre operator. That delivery is evidenced by tally
sheets which show whether the goods were landed in good order or in bad order, a fact
which the consignee or shipper can easily ascertain through the customs broker.
To use as basis for computing the one-year period the delivery to the consignee would be
unrealistic and might generate confusion between the loss or damage sustained by
the goods while in the carrier's custody and the loss or damage caused to the goods
while in the arrastre operator's possession.
o In this case, the TC correctly reckoned the date on DEC 19. Therefore, the cause
of action against the CARRIER‘s AGENT has prescribed. Carrier won.
109
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

10. Ang v. American steamship
Doctrine:
If the carrier wrongfully delivers the goods to another person, the 1 year period to file suit
under COGSA does not apply. (Sec 3[6]) In this case, the provisions of the Civil Code apply
(quasi-delict: 4 years/written contract: 10 years)
Reason for 1 year period under COGSA: Said one-year period of limitation is designed to
meet the exigencies of maritime hazards. In a case where the goods shipped were neither
lost nor damaged in transit but were, on the contrary, delivered in port to someone who
claimed to be entitled thereto, the situation is different, and the special need for the short
period of limitation in cases of loss or damage caused by maritime perils does not obtain.
Facts:
Yau Yue (a bank) agreed to sell galvanized steel to TEVES. The agreement essentially
provided:
It follows that for suits predicated not upon loss or damage but on alleged misdelivery (or
conversion) of the goods, the applicable rule on prescription is that found in the Civil Code,
namely, either ten years for breach of a written contract or four years for quasi-delict.
(Arts. 1144[1], 1146, Civil Code) In either case, plaintiff's cause of action has not vet
prescribed, since his right of action would have accrued at the earliest on May 9, 1961
when the ship arrived in Manila and he filed suit on October 30, 1963. Carrier lost, action
has not yet prescribed.
11. Ang v. Compania Maritima
Doctrine:
Facts:
Domingo Ang (the same person from the previous case) was the assignee of a bill of lading
initially held by YAU YUE Bank. He sued this time, COMPANIA MARITIMA, MARITIME
COMPANY (MCP) and CL Diokno.

a) the purchase price should be covered by a bank draft for the corresponding amount ANG faults them as carriers (and representatives) for the misdelivery of the goods to
which should be paid by TEVES in exchange for the delivery to him of the corresponding TEVES. In response, the defendants moved to dismiss on the ground of prescription.
bill of lading to be deposited with a local bank, the Hongkong & Shanghai Bank of
Manila (HSBM) Issue: Has the action prescribed? No.

(b) upon arrival of the articles in Manila, TEVES would be notified and he would have to
pay the amount called for in the corresponding demand draft, after which the bill of lading
would be delivered to him; and
(c) TEVES would present said bill of lading to the carrier's agent, American Steamship
Agencies, Inc. which would then issue the corresponding permit so that the shipment will
be released
The shipment was transported from JAPAN to MANILA by NISSHO SHIPPING (Manila
Agent: American Steamship) with TEVES as the party to be notified.
In the American Steamship Agencies cases, it was held that the action of Ang is based
on misdelivery of the cargo which should be distinguished from loss thereof. The one-year
period provided for in section 3 (6) of the Carriage of Goods by Sea Act refers to loss of the
cargo. What is applicable is the four-year period of prescription for quasi-delicts prescribed
in article 1146 (2) of the Civil Code or ten years for violation of a written contract as
provided for in article 1144 (1) of the same Code.
As Ang filed the action less than three years from the date of the alleged misdelivery of the
cargo, it has not yet prescribed. Ang, as indorsee of the bill of lading, is a real party in
interest with a cause of action for damages. carrier lost.

Upon arrival on MAY 9, 1961, TEVES was notified of the shipment‘s arrival. However,
TEVES did not pay HSBM. TEVES was still able to get the shipment from AMERICAN
STEAMSHIP due to a bank guaranty. TEVES did NOT present the indorsed bill of lading.

Subsequently, DOMINGO ANG, an assignee of YAU YUE, claimed the shipment by

presenting the indorsed bill of lading. However, he was informed that the shipment was
already delivered to TEVES. THUS, on OCT 30 1963 ANG sued AMERICAN STEAMSHIP
for having wrongfully delivered the shipment. His action was dismissed due to prescription.

Issue: Has the action prescribed? No. There was no loss. Only misdelivery.

As defined in the Civil Code and as applied to Section 3 (6) of COGSA, "loss"
contemplates merely 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, or a misdelivery, as alleged
in the complaint in this case.
110
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
12. Mitsui v. CA
Doctrine:
Damages arising from late delivery are not within the ambit of the 1 year prescriptive period
under the COGSA.
Facts:
MITSUI OSK agreed to transport the goods of LAVINE LOUNGEWEAR from Manila to
France through MEISTER, a freight forwarder (MITSUI will transport from MANILA to
TAIWAN, while MEISTER will transport from TAIWAN to FRANCE) On JULY 24, 1991,
MITSUI loaded the container in its vessel for delivery. However, the shipment arrived late in
France on NOV 14, 1991.
Because of this15, LAVINE was not paid in full. Thus, LAVINE sued MEISTER,
MAGSAYSAY (as agent of MITSUI OSK) for the balance on APRIL 14, 1992. LAVINE
amended its complaint on MAY 20, 1993 to replace the agent with MITSUI.
MITSUI alleges prescription as a defense. He argues that the 1 year period applies. On the
other hand, it is argued by LAVINE that the ―late‖ delivery is not the ―loss/damage‖
contemplated by COGSA
Issue: Has the complaint prescribed? NO
The claim of LAVINE is not due to damage or loss to the goods. Its claim is based on the
carrier‘s POTENTIAL liability for the damages it has caused in the general sense (e.g. by
being late) HENCE, COGSA is not applicable. It is the CIVIL CODE which is applicable.
Therefore, the suit filed by LAVINE is NOT for "loss or damage" to goods contemplated in
§3(6), the question of prescription of action is governed not by the COGSA but by Art. 1144
of the Civil Code which provides for a prescriptive period of ten years. Carrier lost
15
The consignee allegedly paid only half the value of the said goods on the ground that they did
not arrive in France until the "off season" in that country.
13. Fil. Merchants v. Alejandro
Doctrine:
The 1 year period to file a complaint against the carrier applies to the INSURER also. The
3rd party complaint of the insurer cannot be said to have been filed on the date of the MAIN
ACTION of the consignee.
Facts:
CHOA TIEK SENG, as consignee filed a complaint against FIL MERCHANTS, the insurer
of the cargo, for the loss/damage that its shipment contained. In response, FIL
MERCHANTS filed a 3rd party complaint against respondents FROTA (carrier) and RAZON
(arrastre)
The respondents argue that the claim has prescribed since the 1 year period has elapsed.
The case was thereafter dismissed. FIL MERCHANTS argues that the 1 year period does
not apply to it as INSURER.
Issue: Does the 1 year period under COGSA apply to the INSURER? YES
Clearly, 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 FIL MERCHANT’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." carrier won, insurer lost.
111
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
14. Mayer Steel Pipe v. CA
Doctrine:
The basis of the insurer‘s liability is the insurance contract. Therefore, the 1 year period
under COGSA does not apply to suits against the INSURER.
Facts:
Hongkong Government (HONGKONG) contracted MAYER to manufacture steel pipes.
Prior to shipping, MAYER insured the pipes ―against all risks‖ with SOUTH SEA and
CHARTER. The pipes were inspected prior to shipping
When the goods reached HK, it was found that the pipes were allegedly damaged due to
factory defects. Thus, the insurer CHARTER paid HONGKONG. MAYER also claimed from
the insurer but the insurers denied the claim. Thus, MAYER sued the insurers.
The trial court ruled in favor of MAYER. It found that the damage to the goods is not due to
manufacturing defects. It also noted that the insurance contracts executed by petitioner
Mayer and private respondents are "all risks" policies which insure against all causes of
conceivable loss or damage. This ruling was reversed on the ground of prescription since
the action was filed 2 years AFTER the goods were unloaded in HK.
Issue: Has the action prescribed?
The Filipino Merchants case is different from the case at bar. In Filipino Merchants, it was
the insurer which filed a claim against the carrier for reimbursement of the amount it paid to
the shipper. In the case at bar, it was the shipper which filed a claim against the insurer.
The basis of the shipper's claim is the "all risks" insurance policies. (basically, this case is
SHIPPER v. INSURER)
Moreover, the ruling in Filipino Merchants should apply only to suits against the
carrier filed either by the shipper, the consignee or the insurer.
When the court said in Filipino Merchants that Section 3(6) of the Carriage of Goods by
Sea Act applies to the insurer, it meant that the insurer, like the shipper, may no longer file
a claim against the carrier beyond the one-year period provided in the law.
But it does not mean that the shipper may no longer file a claim against the insurer
because the basis of the insurer's liability is the insurance contract. An insurance
contract is a contract whereby one party, for a consideration known as the premium, agrees
to indemnify another for loss or damage which he may suffer from a specified peril. 11 An
"all risks" insurance policy covers all kinds of loss other than those due to willful and
fraudulent act of the insured. insurer lost.
15. Belgian Overseas v. Phil. First Insurance
Doctrine:
the notice of claim does not have to be given if the state of the goods, at the time of their
receipt by the consignee, has been the subject of a joint inspection PRIOR to unloading.
a failure to file a notice of claim within 3 days will not bar recovery if it is nonetheless filed
within 1 year. This 1 year period applies to the shipper, consignee, insurer of the goods or
any legal holder of the B/L.
the insertion of the words "L/C No. 90/02447 cannot be the basis for carrier‘s liability. This
is because the L/C transaction is separate from the BILL OF LADING.
On June 1990, CMC Trading shipped on board MV ANANGEL SKY ,owned by BELGIAN
OVERSEAS Cold Rolled Sheets for transportation to Manila. The shipment was consigned
to PHILIPPINE STEEL. Upon arrival, 4 coils were found to be in bad order.
The insurer paid PHIL STEEL and in turn sued the carrier.
o (1) In its defense, the carrier alleges that the damage was due to PRE-
SHIPMENT damage.
o (2) Moreover, the carrier claims that pursuant to Section 3(6)16 of COGSA, the
CONSIGNEE should have filed its Notice of Loss within three days from delivery.
o (3) Lastly, the carrier claims that its liability is limited
Issue: 1) Was the carrier negligent? 2) Should the notice of loss have been filed within 3 days
from delivery? 3) Should liability be limited?
16
"Unless notice of loss or damage and the general nature of such loss or damage be given in
writing to the carrier or his agent at the port of discharge or at the time of the removal of the
goods into the custody of the person entitled to delivery thereof under the contract of carriage,
such removal shall be prima facie evidence of the delivery by the carrier of the goods as
described in the bill of lading.
If the loss or damage is not apparent, the notice must be given within three days of
delivery.
"Said notice of loss or damage may be endorsed upon the receipt for the goods given by the
person taking delivery thereof.
"The notice in writing need not be given if the state of the goods has at the time of their receipt
been the subject of joint survey or inspection.
"In any event the carrier and the ship shall be discharged from all liability in respect of loss or
damage unless suit is brought within one year after delivery of the goods or the date when the
goods should have been delivered; Provided, That, if a notice of loss or damage, either apparent
or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the
right of the shipper to bring suit within one year after the delivery of the goods or the date when
the goods should have been delivered.
"In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give
all reasonable facilities to each other for inspecting and tallying the goods
112
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
Carrier was negligent
The presumption of negligence was not rebutted. Under the B/L, the goods were received
by the shipper in GOOD ORDER condition. Moreover, the goods were thoroughly
inspected before being unloaded from the ship upon arrival. True, the words "metal
envelopes rust stained and slightly dented" were noted on the Bill of Lading; however, there
is no showing that the carrier exercised due diligence to forestall or lessen the loss.
Notice of claim filed within 1 year.
FIRST, Section 3(6) of COGSA provides that the notice of claim does not have to be given
if the state of the goods, at the time of their receipt by the consignee, has been the subject
of a joint inspection PRIOR to unloading.
SECOND, a failure to file a notice of claim within 3 days will not bar recovery if a suit is filed
within 1 year. This 1 year period applies to the shipper, consignee, insurer of the goods or
any legal holder of the B/L.
However, liability is limited to 500USD per package as there was no declaration of a higher
value (only the L/C arrangement was expressed on the B/L)
In this 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.
o This is because first, 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. That
notation was made only for the convenience of the shipper and the bank
processing the Letter of Credit.
o Second, a B/L is separate and independent from the L/C transaction
o 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. Carrier lost (declared negligent) but won because its liability was
limited to $2,000
16. Philippines First Insurance v. Wallem
Doctrine:
Under the COGSA, the carrier is obliged to carefully unload/discharge the goods carried. If
damage is done to the cargo during unloading/discharge, then the carrier will be held liable
for such damage.
Facts:
LG Atkimson, the consignee, received a shipment of sodium sulfate transported by an
unknown carrier/charterer (and represented by WALLEM in the PH). Upon discharge, from
carrier it was discovered that 2k bags were in bad order. This was evidenced by the report
of the arrastre operator, ASIAN TERMINALS.
ASIA STAR FREIGHT delivered the goods to the consignee. The damage (spillage) to the
goods was confirmed by another inspection conducted by the consignee. Thus, LG
ATKIMSON claimed from the insurer (PHIL FIRST INSURANCE, petitioner herein). The
insurer in turn sued WALLEM and ASIAN TERMINALS.
Both were held solidarily liable for the damage.
Issue: Was the carrier negligent in discharging the goods? YES If yes, should it be solely liable?
YES
Section 2 of the COGSA provides that under every contract of carriage of goods by sea,
the carrier in relation to the loading, handling, stowage, carriage, custody, care, and
discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to
the rights and immunities set forth in the Act. Section 3 (2) thereof then states that among
the carriers‘ responsibilities are to properly and carefully load, handle, stow, carry,
keep, care for, and discharge the goods carried
Moreover, it is settled in maritime law jurisprudence that cargoes while being unloaded
generally remain under the custody of the carrier. In the instant case, the damage or losses
were incurred during the discharge of the shipment while under the supervision of the
carrier. Consequently, the carrier is liable for the damage or losses caused to the
shipment. Carrier lost, ARRASTRE free from liability
113
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
WEEK 16 (Salvage Law, PSA, Prior Operator Rule, CPC/CPCN)
1. Erlanger v. Swedish Asiatic
Doctrine:
Salvage may be defined as a service which one person renders to the owner of a ship or
goods, by his own labor, preserving the goods or the ship which the owner or those
entrusted with the care of them have either abandoned in distress at sea, or are unable to
protect and secure
Three elements are necessary to a valid salvage claim:
(1) A marine peril.
(2) Service voluntarily rendered when not required as an existing duty or from a special
contract.
(3) Success, in whole or in part, or that the service rendered contributed to such success.
A derelict is defined as "A ship or her cargo which is abandoned and deserted at sea by
those who were in charge of it, without any hope of recovering it (sine spe recuperandi),
or without any intention of returning to it (sine animo revertendi) A ship must be a
derelict (lost/abandoned at sea) before it can be salved.
Facts:
The steamship Nippon, which was carrying various cargo, was on its way to Singapore
when it went aground on Scarborough Reef. The captain and the crew left the ship and
went to the coast.
The Manchuria went by the reef and saved the captain and the crew. The Mindoro arrived
shortly after and removed the baggage of the officers/crew, which were on the deck of the
ship.
ERLANGER applied to charter a coast guard cutter for the purpose of proceeding to the
Nippon. The Mindoro was chartered to it. It then took possession of the NIPPON and
shipped the cargo to Manila for delivery to the consignees/sale.
Thereafter, ERLANGER sued the insurance companies of the cargo. It is suing for salvage,
to which it argues it is entitled to.
Issue: Is ERLANGER entitled to salvage? YES
There are 3 requisites before a valid claim for salvage can be made to wit: 1) marine peril
2) service voluntarily rendered when not required as an existing duty 3) success, in whole
or in part, or the service contributed to such success
In this case, the evidence proves that the Nippon was in peril; that the captain left in order
to protect his life and the lives of the crew; that the intent of returning was slight.
The argument of the insurers to the effect that the ship was in no danger is incorrect
because of the statement of the captain that she would sink with the first gale, coupled with
the fact that a typhoon was the cause of her stranding.
As to the amount of the award, ERLANGER contends that the expenses incurred by it
should be deducted from the entire amount of the salved property and the remainder be
divided as a reward for the services rendered.
o This contention has no basis in the law of salvage compensation.
o The expenses incurred by the salvor must be borne by them. It is true that the
award should be liberal enough to cover the expenses and give an extra amount
as a reward for the services rendered but the expenses are used in no other way
as a basis for the final award.
o A part of the risk that the salvor incurred was that the goods salved would not
pay them for the amount expended in salving them. They knew this risk and they
should not have spent more money than their reasonable share of the proceeds
would amount to under any circumstances.
2. Barrios v. Go Thong
Doctrine:
The distinction between salvage and towage is of importance to the crew of the salvaging
ship, for the following reasons: If the contract for towage is in fact towage, then the crew
does not have any interest or rights in the remuneration pursuant to the contract. But if the
owners of the respective vessels are of a salvage nature, the crew of the salvaging ship is
entitled to salvage, and can look to the salvaged vessel for its share [Salvage – crew can
collect, Towage – only shipowner can collect]
Facts:
Barrios was the captain of the MV Henry of William Lines. During the voyage, he
intercepted a distress signal from MV Don Alfredo (owned by GO THONG) The Don
Alfredo could not move due to engine failure and loss of its propeller.
To aid the ship, Barrios had the ship tied to his own ship. The MV Henry then towed the
Don Alfredo towards DUMAGUETE. Barrios made a claim for compensation for salvage.
Issue: Is Barrios entitled to salvage? If not, was he entitled to towage?
Barrios was not entitled to salvage. This is because there was no marine peril. Though
the ship was at a helpless condition due to engine failure, it did not drift too far from the
place where it was. Moreover, the weather was fair, clear, and good. The waves were
small and too slight, so much so, that there were only ripples on the sea, which was quite
smooth. During the towing of the vessel on the same night, there was moonlight. Although
said vessel was drifting towards the open sea, there was no danger of it floundering or
being stranded,
o Second, the ship was not a derelict/quasi-derelict. All that the vessel's crew
members could not do was to move the vessel on its own power. That did not
make the vessel a quasi-derelict, considering that even before Barrios extended
the help to the distressed ship, a sister vessel was known to be on its way to help
it
114
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
However, in this case, there was TOWAGE. A quasi-contract was created when the
shipowner of the DON ALFREDO consented to the towage of the ship by the ship manned
by Barrios. In the particular instance of towage however, only the shipowner can collect.
Barrios lost
3. Alhambra cigar v. La Granja
Doctrine:
A vessel although not abandoned may be subject of salvage if at the time the services were
rendered there was probable, threatening danger of the vessel or of the cargo to be
damaged.
Facts:
Alhambra Cigar and Cigarette Manufacturing loaded upon the barge Nieva 350 bales of
tobacco and 250,000 pieces of rattan.
While the barge was navigating along the Cagayan River, the owner of Nieva hired the
launch Triton, owned by La Granja Inc., to tow Nieva. Such action was prompted by fear of
an impending flood due to two typhoons that had just struck the vicinity.
Unfortunately, as the convoy approached the portion of the river known as Hurdle 10, the
rope that connected both vessels broke. This caused Nieva to be swept by the current into
the open sea where it eventually disappeared.
Alhambra (owner of the cargo) sued the owner of both vessels. While Nieva blamed the
disaster to La Granja, the latter denied responsibility for the damages saying that the same
has been caused by force majeure.
The trial court ruled against La Granja on the ground that the latter has been negligent
for attempting to tow an overloaded vessel, for not sending a bigger launch to rescue Nieva
and for using a defective cable in towing Nieva.
Issue: 1) what was the nature of the contract between Nieva and La Granja? Salvage 2) Is
anyone liable for the loss?
. be exposed, which it is the duty of the master of the tug to know and to guard against not
The contract between the two vessels was a salvage contract. A vessel although not
abandoned may be subject of salvage if at the time the services were rendered there was
probable, threatening danger of the vessel or of the cargo to be damaged.
In the case at bar, there is no question that at the time the contract was entered into there
was an imminent danger to Nieva and to its cargoes due to the impending flood.
The SC absolved both owners and attributed the loss to force majeure.
o First, the rope used to connect the vessels was actually only 2 years old and was
barely used at that. The reason why it snapped can be reasonably attributed to
the strong currents of the river.
o Second, Nieva was not overloaded as in fact it could still carry 4.6 more tons of
cargoes.
o Third, a bigger launch could not have been used to salvage Nieva because it was
at the time traversing shallow waters.
o Finally, the crew of both vessels were shown to have exercised due diligence. In
fact, the captain of Nieva stayed with it even when it drifted to the open sea in
an attempt to save the cargo, which left him drifting for three days and nights
without any food and water. Furthermore, the course taken by vessels was the
proper course in navigating the Cagayan River.
4. Limpangco & Sons v. Yangco Steamship
Doctrine:
The standard of care for a towage service is reasonable care with due regard for the
hazards and dangers that the tow may be exposed to.
Facts:
Limpango & Sons (PLAINTIFF) employed YANGCO (DEFENDANT) to tow from Guagua to
Manila 2 cascos loaded with sugar. The cascos were towed by defendant‘s 2 launches.
The cascos were temporarily left in the Malabon River because of the threatening weather
en route to Manila
When the weather was relatively safe, YANGCO tried to tow the cascos to Manila. The
crew members tried to launch off the mouth of Malabon River with bamboo poles (to
connect with one of the launches, Matulin). However, when they just passed the shallow
water, they were met with high seas and strong winds. The crew tried to call for help from
the launch but the launch was prevented from giving assistance due to the shallow water.
o Thus, the cascos washed up ashore and the cargo was lost. PLAINTIFF in turn,
sued YANGCO for the value of the lost cargo.
Issue: Is YANGCO liable? YES
A vessel which undertakes a towage service is liable for reasonable care of the tow, and
that reasonable care is measured by the dangers and hazards to which the tow is or may
only by giving proper instructions for the management of the tow, but by watching her when
in a dangerous locality, to see that his directions are obeyed.
The duty of the tug to a tow is a continuous one from the time service commences until it is
completed. Its responsibility includes not only the proper and safe navigation of the tug on
the journey, but to furnish safe, sound and reasonable appliances and instrumentalities for
the service to be performed, as well as the giving of proper instructions as to the
management of the tow;
While the captain of the Matulin would not have been responsible for an act of God by
which the cascos were lost, it was his duty to foresee what the weather was likely to
be, and to take such precautions as were necessary to protect his tow. It was not an
act of God by which the cascos were lost; it was the direct result of the failure of the captain
of the Matulin to meet the responsibilities which the occasion placed on him
115
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro
5. Martires Ereno v. PSC
Doctrine:
The "prior operator" and "protection of investment" rules cannot prevail over the
convenience of the public.
Facts:
PETITIONER company is a partnership between Martires and Ereno. It applied for a
certificate of public convenience to install and operate an ice plant in CASIGURAN,
SORSOGON as well as to serve neighboring municipalities such as Juban, Magallanes
and Irosin. This application was denied because Velasco & Co. was already serving the
locality.
Issue: Should a certificate of public convenience be granted? YES
The inhabitants of CASIGURAN, JUBAN, MAGALLANES AND IROSIN municipalities
procure their ice requirements from the Velasco Ice Plant in Sorsogon City or from the
Bulan Ice Plant in Bulan, through the Alatco or Ammen Transportation Company by
sending money and empty sacks, because VELASCO.
Casiguran is around 21 kilometers from Sorsogon and 45 kilometers from Bulan. Its
residents are engaged in fishing and they preserve their catch with ice. Therefore, public
necessity dictates that an ice plant also be established in CASIGURAN. Moreover, JUBAN,
MAGALLANES and IROSIN are nearer to CASIGURAN.
The "prior operator" and "protection of investment" rules cannot prevail over the
convenience of the public. At present, there is no ice plant in any of the municipalities of
Casiguran, Juban, Magallanes and Irosin, where a great demand for ice exists,
6. Epitacio San Pablo v. Pantranco
Doctrine:
While a ferry boat service has been considered as a continuation of the highway when
crossing rivers or even lakes, which are small body of waters - separating the land,
however, when as in this case the two terminals, Matnog and Allen are separated by an
open sea it cannot be considered as a continuation of the highway. Therefore to operate a
route on it, the carrier must obtain a separate CPC.
Facts:
The Pantranco South Express, Inc., hereinafter referred to as PANTRANCO is a domestic
corporation engaged in the land transportation business. It has CPC‘s to operate
passenger buses from Metro Manila to Bicol Region and Eastern Samar.
It then wrote to MARINA asking for authority to lease/buy a vessel ―BLACK DOUBLE‖ to be
used to ferry its buses through the San Bernardo Strait for the MATNOG-ALLEN ROUTE.
MARINA opined that there was already an inter-island shipping company operating their
desired route.
Nevertheless, PANTRANCO began operating the ferry. It believes that for the purpose of
continuing the highway, which is interrupted by a small body of water, the said proposed
ferry operation is merely a necessary and incidental service to its main service and
obligation of transporting its passengers.
Issue: Does PANTRANCO require a separate CPC? YES
Considering the distance between MATNOG and ALLEN (20km), the conveyance of
passengers, trucks and cargo from Matnog to Allen is certainly not a ferry boat service but
a coastwise or interisland shipping service.
Under no circumstance can the sea between Matnog and Allen be considered a
continuation of the highway. While a ferry boat service has been considered as a
continuation of the highway when crossing rivers or even lakes, which are small body of
waters - separating the land, however, when as in this case the two terminals, Matnog and
Allen are separated by an open sea it cannot be considered as a continuation of the
highway.
Respondent PANTRANCO should secure a separate CPC for the operation of an
interisland or coastwise shipping service in accordance with the provisions of law.
Its CPC as a bus transportation cannot be merely amended to include this water service
under the guise that it is a mere private ferry service
Thus the Court holds that the water transport service between Matnog and Allen is not a
ferry boat service but a coastwise or interisland shipping service. Before private respondent
may be issued a franchise or CPC for the operation of the said service as a common
carrier, it must comply with the usual requirements of filing an application, payment of the
fees, publication, adducing evidence at a hearing and affording the oppositors the
opportunity to be heard, among others, as provided by law PANTRANCO lost.
7. Sta. Clara Shipping v. San Pablo
Doctrine:
MARINA, has sound administrative discretion in applying its special knowledge, experience
and expertise to determine the technical and intricate factual matters relating to the
issuance/revocation of the CPC of Sta. Clara
Facts:
STA CLARA applied for a CPC to operate its ship on the MATNOG-ALLEN route. This was
initially granted by MARINA despite opposition for 5 other carriers. Upon petition in the CA
by SAN PABLO, one of the oppositors, the CPC was revoked
Meanwhile, RA 9295 was passed and it required existing operators to apply for NEW
CPCs. STA. CLARA applied for a CPC and obtained one. STA CLARA then filed an MR
with the CA (revocation) On the other hand, SAN PABLO moved for the revocation of the
NEW CPC. This was granted. Thus, STA CLARA went to the SC.
Issue: Should the NEW CPC be revoked also?
116
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

the passage of RA 9295 and the filing by Sta. Clara of an application for a new CPC under
the new law supervened and rendered the CA (revocation of old CPC issued by MARINA)
case MOOT. There was no more justiciable controversy for the CA to decide, no remedy to
grant or deny. The petition before the CA had become purely hypothetical, there being
nothing left to act upon

Besides, questions on the validity of the new CPC are cognizable by the MARINA
Administrator and, consonant with the doctrine of primary administrative jurisdiction, the CA
should have referred San Pablo to MARINA for the resolution of her challenge to the
validity of the new CPC of Sta. Clara. The CA ought to have given due deference to the
exercise by MARINA of its sound administrative discretion in applying its special
knowledge, experience and expertise to determine the technical and intricate factual
matters relating to the new CPC of Sta. Clara SC refused to delve into the merits.
Cancellation of the NEW CPC by Marina annulled.

117