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IPIL (1916)

FACTS: Respondent, Yu Con (Yu Con), chartered the banca Maria owned by petitioner Narciso Lauron (Lauron) with Gilcerio Ipil (Ipil) as its
master and Juto Solamo (Solamo) as it supercargo to transport certain merchandise and money from the port of Cebu to Catmon. Yu Con loaded
the merchandise and delivered the money, placed in a trunk, to Ipil and Solamo. Allegedly because there was no more room for Yu Cons trunk, Ipil
and Solamo transferred the money to their own trunk in the stateroom. Before the ship could sail, the trunk and the money placed therein

ISSUES/HELD: Are the petitioners liable for the loss? YES.

RATIONALE: It is therefore beyond all doubt that the loss of the money occurred through the manifest fault and negligence of Ipil and Solamo. They
failed to take the necessary precautions in order that the stateroom containing the trunk in which they kept the money should be properly guarded
by members of the crew and they also did not expressly station some person inside the stateroom for the guarding and safe-keeping of the trunk.
Thus, it is only proper that the shipowner should be made liable.


FACTS: Petitioner loaded 1,000 sacks of copra on board a vessel owned by respondents, for shipment from Puerto Galera to Manila. Along its way,
the vessel capsized and sank. Petitioner filed an action for damages for breach of contract of carriage.

ISSUE: Whether respondents can avail of the limited liability

HELD: The shipowners or agents liability is merely co-extensive with his interests in the vessel such that the total loss thereof results in its
extinction. The total destruction of the vessel extinguishes maritime liens as there is no longer any res to which it can attach. The primary law is the
Civil Code and in default thereof, the Code of Commerce and other special laws are applied. Since the Civil Code contains no provisions regulating
liability of shipowners or agents in the event of total loss or destruction of the vessel, it is the provisions of the Code of Commerce that govern in
this case.


FACTS: On March 1, 1987, San Miguel Corporation insured several beer bottle cases with petitioner Philippine American General Insurance
Company. The cargo were loaded on board the M/V Peatheray Patrick-G to be transported from Mandaue City to Bislig, Surigao del Sur.
After having been cleared by the Coast Guard Station in Cebu the previous day, the vessel left the port of Mandaue City for Bislig, Surigao del Sur on
March 2, 1987. The weather was calm when the vessel started its voyage.

The following day, M/V Peatheray Patrick-G listed and subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a consequence thereof, the
cargo belonging to San Miguel Corporation was lost.

Petitioner paid San Miguel Corporation the full amount of the cargo pursuant to the terms of their insurance contract, and as subrogee filed with
the Regional Trial Court (RTC) of Makati City a case for collection against private respondents to recover the amount it paid.

Meanwhile, the Board of Marine Inquiry conducted its own investigation and found that the cause of the sinking of the vessel was the existence of
strong winds and enormous waves in Surigao del Sur, a fortuitous event that could not have been for seen at the time the M/V Peatheray Patrick-G
left the port of Mandaue City. It was further held by the Board that said fortuitous event was the proximate and only cause of the vessel's sinking.

ISSUE: Whether or not respondent MGG should be held liable.

HELD: No. [Common carriers, from the nature of their business and for reasons of public policy, are mandated to observe extraordinary diligence in
the vigilance over the goods and for the safety of the passengers transported by them. Owing to this high degree of diligence required of them,
common carriers, as a general rule, are presumed to have been at fault or negligent if the goods transported by them are lost, destroyed or if the
same deteriorated.

However, this presumption of fault or negligence does not arise in the cases enumerated under Article 1734 of the Civil Code:
Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;(2) Act of the public enemy in war, whether international or civil;(3) Act
or omission of the shipper or owner of the goods;(4) The character of the goods or defects in the packing or in the containers;(5) Order or act of
competent public authority.]

[In the case at bar, the issues may be narrowed down to whether the loss of the cargo was due to the occurrence of a natural disaster, and if so,
whether such natural disaster was the sole and proximate cause of the loss or whether private respondents were partly to blame for failing to
exercise due diligence to prevent the loss of the cargo.
The parties do not dispute that on the day the M/V Peatheray Patrick-G sunk, said vessel encountered strong winds and huge waves ranging from
six to ten feet in height. The vessel listed at the port side and eventually sunk at Cawit Point, Cortes, Surigao del Sur.

The Court of Appeals, citing the decision of the Board of Marine Inquiry in the administrative case against the vessel's crew (BMI--646-87), found
that the loss of the cargo was due solely to the existence of a fortuitous event, particularly the presence of strong winds and huge waves at Cortes,
Surigao del Sur on March 3, 1987.


On November 9, 2002, Macro-Lito Corporation, through M/V DIMI P vessel, 185 packages of electrolytic tin free steel, complete and in good
The goods are covered by a bill of lading, had a declared value of $169,850.35 and was insured with the Insurance Company of North America
(Petitioner) against all risk.
The carrying vessel arrived at the port of Manila on November 19, 2002, and when the shipment was discharged therefrom, it was noted that 7
of the packages were damaged and in bad condition.
On November 21, 2002, the shipment was then turned over to the custody of Asian Terminals. Inc. (Respondent) for storage and safekeeping
pending its withdrawal by the consignee.
On November 29, 2002, prior to the withdrawal of the shipment, a joint inspection of the said cargo was conducted. The examination report
showed that an additional 5 packages were found to be damaged and in bad order.
On January 6, 2003, the consignee, San Miguel Corporation filed separate claims against both the Petitioner and the Respondent for the damage
caused to the packages.
The Petitioner then paid San Miguel Corporation the amount of PhP 431,592.14 which is based on a report of its independent adjuster.The
Petitioner then formally demanded reparation against the Respondent for the amount it paid San Miguel Corporation.
For the failure of the Respondent to satisfy the demand of the Petitioner, the Petitioner filed for an action for damages with the RTC of Makati.


1.) Whether or not the trial court committed an error in dismissing the complaint of the petitioner based on the one-year prescriptive period for
filing a suit under the COGSA to an arrastre operator? YES.

2.) Whether or not the Petitioner is entitled to recover actual damages against the Respondent? YES, but only PhP164,428.76


The term carriage of goods covers the period from the time when the goods are loaded to the time when they are discharged from the ship.
Thus, it can be inferred that the period of time when the goods have been discharged from the ship and given to the custody of the arrastre
operator is not covered by the COGSA.

The Petitioner, who filed the present action for the 5 packages that were damaged while in the custody of the respondent was not forthright in
its claim, as it knew that the damages it sought, based on the report of its adjuster covered 9 packages. Based on the report, only four of the nine
packages were damaged in the custody of the Respondent. The Petitioner can be granted only the amount of damages that is due to it


G.R. No. 115497

September 16, 1996


The instant petition seeks the reversal and/or modification of the Resolution dated March 30, 1994 of public respondent National Labor Relations
Commission dismissing the appeals of petitioners and affirming the decision dated November 16, 1992 of Philippine Overseas Employment
Administration (POEA) Administrator Felicisimo C. Joson, This is a claim for death compensation benefits filed by Constancia Pineda as heir of her
deceased son, seaman Jeremias Pineda, against Interorient Maritime Enterprises, Inc. and its foreign principal, Fircroft Shipping Corporation and the
Times Surety and Insurance Co., Inc. The following facts were found by the POEA Administrator.

On September 28, 1989, he finished his contract and was discharged from the port of Dubai for repatriation to Manila; that his flight schedule from
Dubai to the Philippines necessitated a stopover at Bangkok, Thailand, and during said stopover he disembarked on his own free will and failed to
join the connecting flight to Hongkong with final destination to Manila; that on October 5, 1990, it received a fax transmission from the Department
of Foreign Affairs to the effect that Jeremias Pineda was shot by a Thai Officer on duty on October 2, 1989 at around 4:00 P.M.; that the police
report submitted to the Philippine Embassy in Bangkok confirmed that it was Pineda who "approached and tried to stab the police sergeant with a
knife and that therefore he was forced to pull out his gun and shot Pineda"

Petitioner contends that they are not liable to pay any death/burial benefits pursuant to the provisions of Par. 6, Section C. Part II, POEA Standard
Format of Employment which state(s) that "no compensation shall be payable in respect of any injury, (in)capacity, disability or death resulting from
a willful (sic) act on his own life by the seaman"; that the deceased seaman died due to his own willful (sic) act in attacking a policeman in Bangkok
who shot him in self-defense.

After the parties presented their respective evidence, the POEA Administrator rendered his decision holding petitioners liable for death
compensation benefits and burial expenses.

Petitioners appealed the POEA decision to the public respondent. In a Decision dated March 30, 1994, public respondent upheld the POEA.

Thus, this recourse to this Court by way of a special civil action for certiorari per Rule 65 of the Rules of Court.


Whether the petitioners can be held liable for the death of seaman Jeremias Pineda?


The petitioners contention that the assailed Resolution has no factual and legal bases is belied by the adoption with approval by the public
respondent of the findings of the POEA Administrator, which recites at length the reasons for holding that the deceased Pineda was mentally sick
prior to his death and concomitantly, was no longer in full control of his mental faculties.

In this instance, seaman Pineda, who was discharged in Dubai, a foreign land, could not reasonably be expected to immediately resort to and avail
of psychiatric examination, assuming that he was still capable of submitting himself to such examination at that time, not to mention the fact that
when he disembarked in Dubai, he was already discharged and without employment his contract having already run its full term and he had
already been put on a plane bound for the Philippines. Such mental disorder became evident when he failed to join his connecting flight to
Hongkong, having during said stopover wandered out of the Bangkok airport's immigration area on his own. This Court agrees with the POEA
Administrator that seaman Pineda was no longer acting sanely when he attacked the Thai policeman. The report of the Philippine Embassy in
Thailand dated October 9, 1990 depicting the deceased's strange behavior shortly before he was shot dead, after having wandered around Bangkok
for four days, clearly shows that the man was not in full control of his own self.

The POEA Administrator ruled, and this Court agrees, that since Pineda attacked the Thai policeman when he was no longer in complete control of
his mental faculties, the aforequoted provision of the Standard Format Contract of Employment exemption the employer from liability should not
apply in the instant case. Firstly, the fact that the deceased suffered from mental disorder at the time of his repatriation means that he must have
been deprived of the full use of his reason, and that thereby, his will must have been impaired, at the very least. Thus, his attack on the policeman
can in no wise be characterized as a deliberate, willful or voluntary act on his part. Secondly, and apart from that, we also agree that in light of the
deceased's mental condition, petitioners "should have observed some precautionary measures and should not have allowed said seaman to travel
home alone", and their failure to do so rendered them liable for the death of Pineda.

Petitioners further argue that the cause of Pineda's death "is not one of the occupational diseases listed by law", and that in the case of De Jesus vs.
Employee's Compensation Commission, this Court held that ". . . for the sickness and the resulting disability or death to be compensable, the
sickness must be the result of an occupational disease listed under Annex 'A' of the Rules (the Amended Rules on Employee's Compensation) with
the conditions set therein satisfied; otherwise, proof must be shown that the risk of contracting the disease is increased by the working

The foreign employer may not have been obligated by its contract to provide a companion for a returning employee, but it cannot deny that it was
expressly tasked by its agreement to assure the safe return of said worker. The uncaring attitude displayed by petitioners who, knowing fully well
that its employee had been suffering from some mental disorder, nevertheless still allowed him to travel home alone, is appalling to say the least.
Such attitude harks back to another time when the landed gentry practically owned the serfs, and disposed of them when the latter had grown old,
sick or otherwise lost their usefulness.

WHEREFORE, premises considered, the petition is hereby DISMISSED and the Decision assailed in this petition is AFFIRMED. Costs against


FACTS: Caltex chartered MT Vector-Tanker of Vector Shipping Corp to transport its fuel products from Limay, Bataan to Masbate. On Dec 2, 1987
while enroute the Tanker collided with MV Dona Paz of Sulpicio Lines Inc resulting to the sinking of the latter vessel and the death of about 4000
passengers with only 24 survivors.

HELD: The charterer Caltex under a contract of affreightment has no liability for damages under maritime laws. It is the shipowner Vector who
is liable as it is in possession, control and navigation of the tanker. As such Vector is a common carrier subject to the presumption of negligence
which it was found guilty by the Board of Maritime Inquiry in 1988. Thus Vector is liable to reimburse/indemnify Sulpicio Lines for whatever
damages, atty fees and cost the latter is adjudged to pay. (Note Sulpicio was also negligent with respects to its passengers overloading which
contrary to maritime rules and regulation- liable for breach of carriage).

[G.R. No. 150843. March 14, 2003]

In respondents return flight to Manila from Hongkong, they were deprived of their original seats in Business Class with their companions because
of overbooking. Since respondents were privileged members, their seats were upgraded to First Class. Respondents refused but eventually
persuaded to accept it. Upon return to Manila, they demanded that they be indemnified in the amount of P1million for the humiliation and
embarrassment caused by its employees. Petitioners Country Manager failed to respond. Respondents instituted action for damages. The RTC
ruled in favor of respondents. The Court of Appeals affirmed the RTC decision with modification in the award of damages.
Whether or not the petitioners (1) breached the contract of carriage, (2) acted with fraud and (3) were liable for damages.

(1) YES. Although respondents have the priority of upgrading their seats, such priority may be waived, as what respondents did. It should have not
been imposed on them over their vehement objection.

(2) NO. There was no evident bad faith or fraud in upgrade of seat neither on overbooking of flight as it is within 10% tolerance.

(3) YES. Nominal damages (Art. 2221, NCC) were awarded in the amount of P5,000.00. Moral damages (Art.2220, NCC) and attorneys fees were set
aside and deleted from the Court of Appeals ruling.

PHILIPPINE AIRLINES, INC., vs. VICENTE LOPEZ, JR. G.R. No. 156654 November 20, 2008

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

RULING: We had already specifically held that issues on the existence of negligence, fraud and bad faith are questions of fact. PAL is also guilty of
raising prohibited new matter and in changing its theory of defense since it is only in the present petition that it alleged the contributory negligence
of Lopez. PAL's procedural lapses notwithstanding, we had nevertheless carefully reviewed the records of this case and found no compelling reason
to depart from the uniform factual findings of the trial court and the Court of Appeals that: (1) it was the negligence of PAL which caused the
downgrading of the seat of Lopez; and (2) the aforesaid negligence of PAL amounted to fraud or bad faith, considering our ruling in Ortigas. We
cannot agree with PAL that the amount of moral damages awarded by the trial court, as affirmed by the Court of Appeals, was excessive. In Mercury
Drug Corporation v. Baking, we had stated that "there is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral
damages, since each case must be governed by its own peculiar facts. However, it must be commensurate to the loss or injury suffered.


FACTS: CANPOTEX SHIPPING SERVICES LIMITED INC., shipped on board the vessel M/V Trade carrier certain goods in favor of ATLAS FERTILIZER
CORPORATION. Subject shipments were insured with Provident Insurance Corp. against all risks. When the shipment arrived, consignee discovered
that the shipment sustained losses. Provident paid for said losses. Formal claims were then filed with Trade & Transport but MACONDRAY refused
and failed to settle the same. MACONDRAY denies liability over the losses, it, having no absolute relation with Trade & Transport, the alleged
operator of the vessel who transported the shipment; that accordingly, MACONDRAY is the local representative of the shipper; the charterer of M/V
Trade Carrier and not party to this case; that it has no control over the acts of the captain and crew of the carrier and cannot be held responsible for
any damage arising from the fault or negligence of said captain and crew; that upon arrival at the port, M/V Trade Carrier discharged the full
amount of shipment as shown by the draft survey.

ISSUE: Whether or not MACONDRAY & CO. INC., as an agent, is responsible for any loss sustained by any party from the vessel owned by Trade &

HELD: Although petitioner is not an agent of Trade & Transport, it can still be the ship agent of the vessel M/V Trade Carrier. A ship agent is the
person entrusted with provisioning or representing the vessel in the port in which it may be found. Hence, whether acting as agent of the owner of
the vessel or as agent of the charterer, petitioner will be considered as the ship agent and may be held liable as such, as long as the latter is the one
that provisions or represents the vessel.

The trial court found that petitioner was appointed as local agent of the vessel, which duty includes arrangement for the entrance and clearance of
the vessel. Further, the CA found that the evidence shows that petitioner represented the vessel. The latter prepared the Notice of Readiness, the
Statement of Facts, the Completion Notice, the Sailing Notice and Customs Clearance. Petitioners employees were present at the port of
destination one day before the arrival of the vessel, where they stayed until it departed. They were also present during the actual discharging of the
cargo. Moreover, Mr. de la Cruz, the representative of petitioner, also prepared for the needs of the vessel. These acts all point to the conclusion
that it was the entity that represented the vessel at the port of destination and was the ship agent within the meaning and context of Article 586 of
the Code of Commerce.


FACTS: The Kilusang Mayo Uno Labor Center (KMU) assails the constitutionality and validity of a memorandum which, among others, authorize
provincial bus and jeepney operators to increase or decrease the prescribed transportation fares without application therefore with the LTFRB, and
without hearing and approval thereof by said agency.

ISSUE: Whether or not the absence of notice and hearing and the delegation of authority in the increase or decrease of transportation fares to
provincial bus and jeepney operators is illegal?

HELD: Under Section 16 (c) of the Public Service Act, as amended, the legislature delegated to the defunct Public Service Commission the power of
fixing the rates of public services. LTFRB, the existing regulatory body today, is likewise vested with the same under Executive Order 202.

The authority given by the LTFRB to the bus operators to set fares over and above the authorized existing fare is illegal and invalid, as it is
tantamount to undue delegation of legislative authority. Under the maxim potestas delegate non delegari potest what has been delegated
cannot be delegated.

The policy allowing provincial bus operators to change and increase their fares would result not only to a chaotic situation but to an
anarchic state of affairs. This would leave the riding public at the mercy of transport operators who may increase fares, every hour, every day, every
month or every year, whenever it pleases them or whenever they deem it necessary to do so. Furthermore, under the Section 16 (a) of Public
Service Act, there must be proper notice and hearing in the fixing of rates, to arrive at a just and reasonable rate acceptable to both the public
utility and the public.

FACTS: Yau Yue Commercial Bank of Hongkong agreed to sell 140 packages of galvanized steel durzinc sheets to Herminio Teves for $32,458.26. Said
agreement was subject to the following terms: the purchase price should be covered by a bank draft which should be paid by Teves in exchange for
the delivery to him of the bill of lading to be deposited with Honkong and Shanghai Bank of Manila; that Teves would present said bill of lading to
carriers agent, American Steamship Agencies which would then issue the permit to deliver imported articles to be presented to the Bureau of
customs to obtain the release of the articles.
Yau Yue shipped the articles aboard S.S. Tensai Maru owned by Nissho Shipping Co., of which the American Shipping is the agent in the
When the Articles arrived in manila, Honkong Shanghais Bank notified Teves of the arrival of the goods and requested for the payment of
the demand draft. Teves, however, failed to pay the demand draft. So, the bank returned the bill of lading and the demand draft to Yau Yue which
endorsed the bill of lading to Domingo Ang.
Despite his non-payment, Teves was able to obtain a bank guarantee in favor of the American Steamship Agencies, the carriers agent.
Thus, Teves succeeded in securing a permit to deliver imported articles from the carriers agent, which he presented to the Bureau of Customs,
that released the said articles to him.
Subsequently, Domingo Ang claimed the articles from American Steamship, by presenting the indorsed bill of lading, but he was informed
that it had delivered the articles to Teves. Ang filed a complaint in the Court of First Instance of Manila against American shipping agencies, for
having wrongfully delivered the goods.

ISSUE: Whether or not the Carriage of Goods by Sea Act Section 3, Paragraph 4, applies to the case at bar?

HELD:The provision of the law speaks of loss or damage. But there was no damage caused to the goods which were delivered intact to Herminio
As defined by the Civil Code and as applied to section 3, paragraph 4, of the Carriage of Goods by sea Act, loss contemplates a situation
where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared that their
existence is unknown or they cannot be recovered. It does not include a situation where there was indeed delivery, but delivery to the wrong
The applicable rule on prescription is that found in the Civil Code, either: ten years for breach of contract or four years for quasi-delict. In
either case, the plaintiffs cause of action has not yet prescribed. Thus, the case is remanded to the court a quo for further proceedings.


FACTS:Plaintiff (herein private respondent Atty. Renato Arroyo) bought a ticket from herein petitioner for the voyage of M/V Asia Thailand Vessel to
Cagayan de Oro from Cebu City. Arroyo boarded the vessel in the evening of November 12, 1991 at around 5:30. At that instance, plaintiff noticed
that some repair works were being undertaken on the evening of the vessel. The vessel departed at around 11:00 in the evening with only one
engine running.

After an hour of slow voyage, vessel stopped near Kawit Island and dropped its anchor thereat. After an hour of stillness, some passenger
demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The
captain acceded to their request and thus the vessel headed back to Cebu City. At Cebu City, the plaintiff together with the other passengers who
requested to be brought back to Cebu City was allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Plaintiff, the next
day boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of the defendant.

On account of this failure of defendant to transport him to the place of destination on November 12, 1991, plaintiff filed before the trial
court a complaint for damages against the defendant.

ISSUE:Whether or not the failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage a breach of its

HELD: Undoubtedly, there was, between the petitioner and private respondent a contract of carriage. Under Article 1733 of the Civil Code, the
petitioner was bound to observed extraordinary diligence in ensuring the safety of the private respondent. That meant that the petitioner was
pursuant to the Article 1755 off the said Code, bound to carry the private respondent safely as far as human care and foresight could provide, using
the utmost diligence of very cautious persons, with due regard for all the circumstances. The Failure of the common carrier to maintain in
seaworthy condition its vessel involved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code


FACTS:On October 25, 2001, Halla Trading Co., a company based in Korea, shipped to Manila secondhand cars and other articles on board the vessel
Hanjin Busan 0238W. The bill of lading covering the shipment, i.e., Bill of Lading No. HJSCPUSI14168303, [2] which was prepared by the carrier
Hanjin Shipping Co., Ltd. (Hanjin), named respondent Shin Yang Brokerage Corp. (Shin Yang) as the consignee and indicated that payment was on a
Freight Collect basis, i.e., that the consignee/receiver of the goods would be the one to pay for the freight and other charges in the total amount of

The shipment arrived in Manila on October 29, 2001. Thereafter, petitioner MOF Company, Inc. (MOF), Hanjins exclusive general agent in the
Philippines, repeatedly demanded the payment of ocean freight, documentation fee and terminal handling charges from Shin Yang. The latter,
however, failed and refused to pay contending that it did not cause the importation of the goods, that it is only the Consolidator of the said
shipment, that the ultimate consignee did not endorse in its favor the original bill of lading and that the bill of lading was prepared without its

Thus, on March 19, 2003, MOF filed a case for sum of money before the Metropolitan Trial Court of Pasay City (MeTC Pasay). MOF alleged
that Shin Yang, a regular client, caused the importation and shipment of the goods and assured it that ocean freight and other charges would be
paid upon arrival of the goods in Manila. Yet, after Hanjin's compliance, Shin Yang unjustly breached its obligation to pay. MOF argued that Shin
Yang, as the named consignee in the bill of lading, entered itself as a party to the contract and bound itself to the Freight Collect arrangement. MOF
thus prayed for the payment of P57,646.00 representing ocean freight, documentation fee and terminal handling charges as well as damages and
attorneys fees.

Claiming that it is merely a consolidator/forwarder and that Bill of Lading No. HJSCPUSI14168303 was not endorsed to it by the ultimate
consignee, Shin Yang denied any involvement in shipping the goods or in promising to shoulder the freightage. It asserted that it never authorized
Halla Trading Co. to ship the articles or to have its name included in the bill of lading. Shin Yang also alleged that MOF failed to present supporting
documents to prove that it was Shin Yang that caused the importation or the one that assured payment of the shipping charges upon arrival of the
goods in Manila.

ISSUE:The issue for resolution is whether a consignee, who is not a signatory to the bill of lading, is bound by the stipulations thereof.

HELD:Corollarily, whether respondent who was not an agent of the shipper and who did not make any demand for the fulfilment of the stipulations
of the bill of lading drawn in its favor is liable to pay the corresponding freight and handling charges.

The bill of lading is oftentimes drawn up by the shipper/consignor and the carrier without the intervention of the consignee. However, the latter can
be bound by the stipulations of the bill of lading when a) there is a relation of agency between the shipper or consignor and the consignee or b)
when the consignee demands fulfilment of the stipulation of the bill of lading which was drawn up in its favor. [12]

In sum, a consignee, although not a signatory to the contract of carriage between the shipper and the carrier, becomes a party to the
contract by reason of either a) the relationship of agency between the consignee and the shipper/ consignor; b) the unequivocal acceptance of the
bill of lading delivered to the consignee, with full knowledge of its contents or c) availment of the stipulation pour autrui, i.e., when the consignee, a
third person, demands before the carrier the fulfilment of the stipulation made by the consignor/shipper in the consignees favor, specifically the
delivery of the goods/cargoes shipped. [16]

In the instant case, Shin Yang consistently denied in all of its pleadings that it authorized Halla Trading, Co. to ship the goods on its behalf; or that it
got hold of the bill of lading covering the shipment or that it demanded the release of the cargo. Basic is the rule in evidence that the burden of
proof lies upon him who asserts it, not upon him who denies, since, by the nature of things, he who denies a fact cannot produce any proof of it.
[17] Thus, MOF has the burden to controvert all these denials, it being insistent that Shin Yang asserted itself as the consignee and the one that
caused the shipment of the goods to the Philippines.


The liability of a common carrier for the loss of goods may, by stipulation in the bill of lading, be limited to the value declared by the shipper. On the
other hand, the liability of the insurer is determined by the actual value covered by the insurance policy and the insurance premiums paid therefor,
and not necessarily by the value declared in the bill of lading.

Sometime on December 11, 1991, Nestor Angelia delivered to the Edgar Cokaliong Shipping Lines, Inc. (now Cokaliong Shipping Lines), [petitioner]
for brevity, cargo consisting of one (1) carton of Christmas decor and two (2) sacks of plastic toys, to be transported on board the M/V Tandag on its
Voyage No. T-189 scheduled to depart from Cebu City, on December 12, 1991, for Tandag, Surigao del Sur. [Petitioner] issued Bill of Lading No. 58,
freight prepaid, covering the cargo. Nestor Angelia was both the shipper and consignee of the cargo valued, on the face thereof, in the amount of
P6,500.00. Zosimo Mercado likewise delivered cargo to [petitioner], consisting of two (2) cartons of plastic toys and Christmas decor, one (1) roll of
floor mat and one (1) bundle of various or assorted goods for transportation thereof from Cebu City to Tandag, Surigao del Sur, on board the said
vessel, and said voyage. [Petitioner] issued Bill of Lading No. 59 covering the cargo which, on the face thereof, was valued in the amount of
P14,000.00. Under the Bill of Lading, Zosimo Mercado was both the shipper and consignee of the cargo.

On December 12, 1991, Feliciana Legaspi insured the cargo, covered by Bill of Lading No. 59, with the UCPB General Insurance Co., Inc.,
[respondent] for brevity, for the amount of P100,000.00 against all risks under Open Policy No. 002/91/254 for which she was issued, by
[respondent], Marine Risk Note No. 18409 on said date. She also insured the cargo covered by Bill of Lading No. 58, with [respondent], for the
amount of P50,000.00, under Open Policy No. 002/91/254 on the basis of which [respondent] issued Marine Risk Note No. 18410 on said date.
When the vessel left port, it had thirty-four (34) passengers and assorted cargo on board, including the goods of Legaspi. After the vessel had
passed by the Mandaue-Mactan Bridge, fire ensued in the engine room, and, despite earnest efforts of the officers and crew of the vessel, the fire
engulfed and destroyed the entire vessel resulting in the loss of the vessel and the cargoes therein. The Captain filed the required Marine Protest.

Shortly thereafter, Feliciana Legaspi filed a claim, with [respondent], for the value of the cargo insured under Marine Risk Note No. 18409 and
covered by Bill of Lading No. 59. She submitted, in support of her claim, a Receipt, dated December 11, 1991, purportedly signed by Zosimo
Mercado, and Order Slips purportedly signed by him for the goods he received from Feliciana Legaspi valued in the amount of P110,056.00.
[Respondent] approved the claim of Feliciana Legaspi and drew and issued UCPB Check No. 612939, dated March 9, 1992, in the net amount of
P99,000.00, in settlement of her claim after which she executed a Subrogation Receipt/Deed, for said amount, in favor of [respondent]. She also
filed a claim for the value of the cargo covered by Bill of Lading No. 58. She submitted to [respondent] a Receipt, dated December 11, 1991 and
Order Slips, purportedly signed by Nestor Angelia for the goods he received from Feliciana Legaspi valued at P60,338.00. [Respondent] approved
her claim and remitted to Feliciana Legaspi the net amount of P49,500.00, after which she signed a Subrogation Receipt/Deed, dated March 9,
1992, in favor of [respondent].

On July 14, 1992, [respondent], as subrogee of Feliciana Legaspi, filed a complaint anchored on torts against [petitioner], with the Regional Trial
Court of Makati City, for the collection of the total principal amount of P148,500.00, which it paid to Feliciana Legaspi for the loss of the cargo,
praying that judgment be rendered in its favor and against the [petitioner]

Issues: (1) Is petitioner liable for the loss of the goods? (2) If it is liable, what is the extent of its liability?

HELD: The Petition is partly meritorious.

First Issue:Liability for Loss

Petitioner argues that the cause of the loss of the goods, subject of this case, was force majeure. It adds that its exercise of due diligence was
adequately proven by the findings of the Philippine Coast Guard.

We are not convinced. The uncontroverted findings of the Philippine Coast Guard show that the M/V Tandag sank due to a fire, which resulted from
a crack in the auxiliary engine fuel oil service tank. Fuel spurted out of the crack and dripped to the heating exhaust manifold, causing the ship to
burst into flames. The crack was located on the side of the fuel oil tank, which had a mere two-inch gap from the engine room walling, thus
precluding constant inspection and care by the crew.

Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused by force majeure. Broadly speaking,
force majeure generally applies to a natural accident, such as that caused by a lightning, an earthquake, a tempest or a public enemy.[14] Hence,
fire is not considered a natural disaster or calamity and the common carrier shall be presumed to have been at fault or to have acted negligently,
unless it proves that it has observed the extraordinary diligence required by law.

Where loss of cargo results from the failure of the officers of a vessel to inspect their ship frequently so as to discover the existence of cracked parts,
that loss cannot be attributed to force majeure, but to the negligence of those officials.[16]

Second Issue:Extent of Liability

The recordsshow that the Bills of Lading covering the lost goods contain the stipulation that in case of claim for loss or for damage to the shipped
merchandise or property, [t]he liability of the common carrier x x x shall not exceed the value of the goods as appearing in the bill of lading. The
attempt by respondent to make light of this stipulation is unconvincing. As it had the consignees copies of the Bills of Lading, it could have easily
produced those copies, instead of relying on mere allegations and suppositions. However, it presented mere photocopies thereof to disprove
petitioners evidence showing the existence of the above stipulation.


Proof of the delivery of goods in good order to a common carrier and of their arrival in bad order at their destination constitutes prima facie fault or
negligence on the part of the carrier. If no adequate explanation is given as to how the loss, the destruction or the deterioration of the goods
happened, the carrier shall be held liable therefor.

FACTS: On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at Hamburg, Germany 242coils of various Prime Cold Rolled
Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, M/V Anangel Sky arrived at the
port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad order. Finding the four (4) coils
in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss.
Petitioners refused to submit to the consignee's claim. Consequently, respondent paid the consignee and was subrogated to the latter's rights.
Subsequently, respondent instituted this complaint for recovery of the amount paid by them, to the consignee as insured. Petitioners imputed that
the damage and/or loss was due to pre-shipment damage. In addition thereto, they argued that their liability, if there be any, should not exceed the
limitations of liability provided for in the bill of lading and other pertinent laws.

1. Whether or not a notation in the bill of lading at the time of loading is sufficient to show pre-shipment damage and to exempt herein
defendants from liability.

NO. Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination
constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given as to how the deterioration,
the loss or the destruction of the goods happened, the transporter shall be held responsible. Petitioners failed to rebut the prima facie
presumption of negligence in the case at bar. True, the words "metal envelopes rust stained and slightly dented" were noted on the Bill of
Lading; however, there is no showing that petitioners exercised due diligence to forestall or lessen the loss. Having failed to discharge the
burden of proving that they have exercised the extraordinary diligencerequired by law, petitioners cannot escape liability for the damage
to the four coils.

2. Whether or not the consignee/plaintiff filed the required notice of loss within the time required by law.

YES. Pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act (COGSA), a failure to file anotice of claim within three dayswill
not bar recovery if it is nonetheless filed within one year. This one-year prescriptive period also applies to the shipper, the consignee, the
insurer of the goods or any legal holder of the bill of lading. In the present case, the cargo was discharged on July 31, 1990, while the
Complaint was filed by respondent on July 25, 1991, within the one-year prescriptive period.

3. Whether or not the "PACKAGE LIMITATION" of liability under Section 4 (5) of COGSA is applicable.

YES. In the case before us, there was no stipulation in the Bill of Lading limiting the carrier's liability. Neither did the shipper declare a higher
valuation of the goods to be shipped. This fact notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the basis for petitioners'
liability. A notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the shipper for the importation of steel
sheets did not effect a declaration of the value of the goods as required by the bill. In the light of the foregoing, petitioners' liability should be
computed based on US$500 per package and not on the per metric ton price declared in the Letter of Credit.

FABRE VS. CA (259 SCRA 426 G.R. NO. 111127, JULY 26, 1996)

FACTS: Petitioners Engracio Fabre, Jr. and his wife were owners of a Mazda minibus. They used the bus principally in connection with a bus service
for school children which they operated in Manila. It was driven by Porfirio Cabil.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with the petitioners for the transportation
of 33 members of its Young Adults Ministry from Manila to La Union and back in consideration of which private respondent paid petitioners the
amount of P3,000.00.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under repair, so that petitioner Cabil, who
was unfamiliar with the area (it being his first trip to La Union), was forced to take a detour through the town of Ba-ay in Lingayen, Pangasinan. At
11:30 that night, petitioner Cabil came upon a sharp curve on the highway. The road was slippery because it was raining, causing the bus, which was
running at the speed of 50 kilometers per hour, to skid to the left road shoulder. The bus hit the left traffic steel brace and sign along the road and
rammed the fence of one Jesus Escano, then turned over and landed on its left side, coming to a full stop only after a series of impacts. The bus
came to rest off the road. A coconut tree which it had hit fell on it and smashed its front portion. Because of the mishap, several passengers were
injured particularly Amyline Antonio.

Criminal complaint was filed against the driver and the spouses were also made jointly liable. Spouses Fabre on the other hand contended that they
are not liable since they are not a common carrier.

ISSUE: Whether the spouses Fabre are common carriers?

HELD:Petition was denied. Spouses Fabre are common carriers.

The Supreme Court held that this case actually involves a contract of carriage. Petitioners, the Fabres, did not have to be engaged in the
business of public transportation for the provisions of the Civil Code on common carriers to apply to them. As this Court has held: 10 Art. 1732,
Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both,
by land, water, or air for compensation, offering their services to the public.

The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction between
a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community
or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1732
deliberately refrained from making such distinctions.

G.R. No. 170633; October 17, 2007

Petitioner is engaged in the business of importing and wholesaling stainless steel products. One of its suppliers is the responded, an international
trading company with head office in Seoul, South Korea and regional headquarters in Makati City, Philippines. The two corporations conducted
business through telephone calls and facsimile or telecopy transmissions. Respondent would send the pro forma invoices containing the details of
the steel product order to petitioner; if the latter conforms thereto, its representative affixes his signature on the faxed copy and sends it back to
the respondent, again by fax.
Respondent filed a civil action for damages due to breach of contract against petitioner before the Regional Trial Court of Makati City. In its
complaint, respondent alleged that defendants breached their contract when they refused to open the letter of credit in the amount of
US$170,000.00 for the remaining 100MT of steel under Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2.
After respondent rested its case, petitioner filed a Demurrer to Evidence alleging that respondent failed to present the original copies of the pro
forma invoices on which the civil action was based. Petitioner contends that the photocopies of the pro forma invoices presented by respondent
Ssangyong to prove the perfection of their supposed contract of sale are inadmissible in evidence and do not fall within the ambit of R.A. No. 8792,
because the law merely admits as the best evidence the original fax transmittal. On the other hand, respondent posits that, from a reading of the
law and the Rules on Electronic Evidence, the original facsimile transmittal of the pro forma invoice is admissible in evidence since it is an electronic
document and, therefore, the best evidence under the law and the Rules. Respondent further claims that the photocopies of these
fax transmittals (specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are admissible under the Rules on Evidence because the respondent
sufficiently explained the non-production of the original fax transmittals.

Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence and admissible as such?

Electronic document shall be regarded as the equivalent of an original document under the Best Evidence Rule, as long as it is a printout or output
readable by sight or other means, showing to reflect the data accurately. Thus, to be admissible in evidence as an electronic data message or to be
considered as the functional equivalent of an original document under the Best Evidence Rule, the writing must foremost be an electronic data
message or an electronic document.
The Implementing Rules and Regulations (IRR) of R.A. No. 8792 defines the Electronic Data Message refers to information generated, sent,
received or stored by electronic, optical or similar means, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or
The phrase but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy in the IRRs definition of electronic
data message is copied from the Model Law on Electronic Commerce adopted by the United Nations Commission on International Trade Law
(UNCITRAL), from which majority of the provisions of R.A. No. 8792 were taken. While Congress deleted this phrase in the Electronic Commerce Act
of 2000, the drafters of the IRR reinstated it. The deletion by Congress of the said phrase is significant and pivotal.
Moreover, when Congress formulated the term electronic data message, it intended the same meaning as the term electronic record in the
Canada law. This construction of the term electronic data message, which excludes telexes or faxes, except computer-generated faxes, is in
harmony with the Electronic Commerce Laws focus on paperless communications and the functional equivalent approach that it espouses.
Facsimile transmissions are not, in this sense, paperless, but verily are paper-based.
[I]n an ordinary facsimile transmission, there exists an original paper-based information or data that is scanned, sent through a phone line, and re-
printed at the receiving end. [I]n a virtual or paperless environment, technically, there is no original copy to speak of, as all direct printouts of the
virtual reality are the same, in all respects, and are considered as originals. Ineluctably, the laws definition of electronic data message, which, as
aforesaid, is interchangeable with electronic document, could not have included facsimile transmissions, which have an original paper-based copy
as sent and a paper-based facsimile copy as received. These two copies are distinct from each other, and have different legal effects. While
Congress anticipated future developments in communications and computer technology when it drafted the law, it excluded the early forms of
technology, like telegraph, telex and telecopy (except computer-generated faxes, which is a newer development as compared to the ordinary fax
machine to fax machine transmission), when it defined the term electronic data message.
[T]he terms electronic data message and electronic document, as defined under the Electronic Commerce Act of 2000, do not include a
facsimile transmission. Accordingly, a facsimile transmission cannot be considered as electronic evidence. It is not the functional equivalent of an
original under the Best Evidence Rule and is not admissible as electronic evidence.

UCPB General Insurance Co., Inc. vs Aboitiz Shipping Corp.

On June 1991, 3 units of waste water treatment plant with accessories were purchased by San Miguel Corp from Super Max Engineering. The goods
came from Charleston, USA and arrived in port of Manila on board MV Scandutch Star. From Manila it was transported to Cebu on board of Aboitiz
Supercon II. In Cebu, with clearance from the Bureau of Customs, the goods were delivered and received by San Miguel at its plant site. It was then
discovered that the motor of the unit was damaged.

Pursuant to the insurance agreement, UCPB General Insurance paid San Miguel P1,703,381.40 representing the value of the damaged unit. In turn,
San Miguel executed a subrogation form in favor of UCPB. Then, UCPB filed a complaint on Kuly 1992 as subrogee of San Miguel seeking to recover
from Aboitiz. Aboitiz moved to admit East Asiatic Co. as general agent of DAMCO Intermodal System. RTC held Aboitiz, East Asiatic and DAMCO
solidarily liable.

CA reversed the decision of the RTC and ruled that UCPBs right of action did not accrue because UCPB failed to file a formal notice within 24 hours
from the damaged. In a memorandum, UCPB asserts that the claim requirement does not apply to cases concerning damages to the merchandise
had already been known to the carrier. UCPB revealed that the damage to the cargo was found upon discharge from the foreign carrier witnessed
by the carriers representative who signed the request for bad order survey and the turnover of bad order cargoes. This knowledge, UCPB argues,
dispenses with the need to give the carrier a formal notice of claim. Incidentally, the carriers representative mentioned by UCPB as present at the
time the merchandise was unloaded was in fact a representative of respondent Eagle Express Lines (Eagle Express). UCPB further claims that the
issue of the applicability of Art. 366 of the Code of Commerce was never raised before the trial court and should, therefore, not have been
considered by the CA.

Eagle Express, in its Memorandum dated February 7, 2007, asserts that it cannot be held liable for the damage to the merchandise as it acted
merely as a freight forwarders agent in the transaction. It allegedly facilitated the transhipment of the cargo from Manila to Cebu but represented
the interest of the cargo owner, and not the carriers.

Aboitiz, on the other hand, points out, in its Memorandum dated March 29, 2007, that it obviously cannot be held liable for the damage to the
cargo which, by UCPBs admission, was incurred not during transhipment to Cebu on board one of Aboitizs vessels, but was already existent at the
time of unloading in Manila. Aboitiz also argues that Art. 366 of the Code of Commerce is applicable and serves as a condition precedent to the
accrual of UCPBs cause of action against it.

Issue: Whether any of the remaining parties may still be held liable by UCPB.

UCPB obviously made a gross misrepresentation to the Court when it claimed that the issue regarding the applicability of the Code of Commerce,
particularly the 24-hour formal claim rule, was not raised as an issue before the trial court. The appellate court, therefore, correctly looked into the
validity of the arguments raised by Eagle Express, Aboitiz and Pimentel Customs on this point after the trial court had so ill-advisedly centered its
decision merely on the matter of extraordinary diligence.

Interestingly enough, UCPB itself has revealed that when the shipment was discharged and opened at the ICTSI in Manila in the presence of an
Eagle Express representative, the cargo had already been found damaged. In fact, a request for bad order survey was then made and a turnover
survey of bad order cargoes was issued, pursuant to the procedure in the discharge of bad order cargo. The shipment was then repacked and
transhipped from Manila to Cebu on board MV Aboitiz Supercon II. When the cargo was finally received by SMC at its Mandaue City warehouse, it
was found in bad order, thereby confirming the damage already uncovered in Manila.

We have construed the 24-hour claim requirement as a condition precedent to the accrual of a right of action against a carrier for loss of, or damage
to, the goods. The shipper or consignee must allege and prove the fulfilment of the condition. Otherwise, no right of action against the carrier can
accrue in favor of the former.

The shipment in this case was received by SMC on August 2, 1991. However, as found by the Court of Appeals, the claims were dated October 30,
1991, more than three (3) months from receipt of the shipment and, at that, even after the extent of the loss had already been determined by SMCs
surveyor. The claim was, therefore, clearly filed beyond the 24-hour time frame prescribed by Art. 366 of the Code of Commerce.

Petition was denied. CA's decision was affirmed.



Philippine Charter Insurance Corporation is a domestic corporation engaged in the business of non-life insurance. Respondent Chemoil Lighterage
Corporation is also a domestic corporation engaged in the transport of goods. On 24 January 1991, Samkyung Chemical Company, Ltd., based in
South Korea, shipped 62.06 metric tons of the liquid chemical DIOCTYL PHTHALATE (DOP) on board MT TACHIBANA which was valued at
US$90,201.57 and another 436.70 metric tons of DOP valued at US$634,724.89 to the Philippines. The consignee was Plastic Group Phils., Inc. in
Manila. PGP insured the cargo with Philippine Charter Insurance Corporation against all risks. The insurance was under Marine Policies No. MRN-
30721[5] dated 06 February 1991. Marine Endorsement No. 2786[7] dated 11 May 1991 was attached and formed part of MRN-30721, amending
the latters insured value to P24,667,422.03, and reduced the premium accordingly. The ocean tanker MT TACHIBANA unloaded the cargo to the
tanker barge, which shall transport the same to Del Pan Bridge in Pasig River and haul it by land to PGPs storage tanks in Calamba, Laguna. Upon
inspection by PGP, the samples taken from the shipment showed discoloration demonstrating that it was damaged. PGP then sent a letter where it
formally made an insurance claim for the loss it sustained.

Petitioner requested the GIT Insurance Adjusters, Inc. (GIT), to conduct a Quantity and Condition Survey of the shipment which issued a report
stating that DOP samples taken were discolored. Inspection of cargo tanks showed manhole covers of ballast tanks ceilings loosely secured and that
the rubber gaskets of the manhole covers of the ballast tanks re-acted to the chemical causing shrinkage thus, loosening the covers and cargo
ingress. Petitioner paid PGP the full and final payment for the loss and issued a Subrogation Receipt. Meanwhile, PGP paid the respondent the as
full payment for the latters services.

On 15 July 1991, an action for damages was instituted by the petitioner-insurer against respondent-carrier before the RTC, Br.16, City of Manila.
Respondent filed an answer which admitted that it undertook to transport the shipment, but alleged that before the DOP was loaded into its barge,
the representative of PGP, Adjustment Standard Corporation, inspected it and found the same clean, dry, and fit for loading, thus accepted the
cargo without any protest or notice. As carrier, no fault and negligence can be attributed against respondent as it exercised extraordinary diligence
in handling the cargo.


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

2. Whether or not the damage to the cargo was due to the fault or negligence of the respondent.


We have examined the evidence, and We are unable to find any proof of compliance with the required period, which is fatal to the accrual of the
right of action against the carrier.

Nothing in the trial courts decision stated that the notice of claim was relayed or filed with the respondent-carrier immediately or within a period
of twenty-four hours from the time the goods were received. The Court of Appeals made the same finding. Having examined the entire records of
the case, we cannot find a shred of evidence that will precisely and ultimately point to the conclusion that the notice of claim was timely relayed or

The requirement that a notice of claim should be filed within the period stated by Article 366 of the Code of Commerce is not an empty or
worthless proviso.

The object sought to be attained by the requirement of the submission of claims in pursuance of this article is to compel the consignee of goods
entrusted to a carrier to make prompt demand for settlement of alleged damages suffered by the goods while in transport, so that the carrier will
be enabled to verify all such claims at the time of delivery or within twenty-four hours thereafter, and if necessary fix responsibility and secure
evidence as to the nature and extent of the alleged damages to the goods while the matter is still fresh in the minds of the parties.

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

Considering that we have resolved the first issue in the negative, it is therefore unnecessary to make a resolution on the second issue.

MAYER STEEL PIPE CORPORATION case, [G.R. No. 124050. June 19, 1997]

Facts; Shipper, prior to shipping, insured the merchandise against all risks with South Sea Surety. During the voyage, the merchandise were
damaged. Insurer opposed claim on the ground, among others, that it was filed more than one (1) year from discovery of the damage to the
merchandise and therefore barred by the provisions of COGSA.
HELD: Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be discharged from all liability for loss or damage to
the goods if no suit is filed within one year after delivery of the goods or the date when they should have been delivered. Under this provision, only
the carriers liability is extinguished if no suit is brought within one year. But the liability of the insurer is not extinguished because the insurers
liability is based not on the contract of carriage but on the contract of insurance. A close reading of the law reveals that the Carriage of Goods by
Sea Act governs the relationship between the carrier on the one hand and the shipper, the consignee and/or the insurer on the other hand. It
defines the obligations of the carrier under the contract of carriage. It does not, however, affect the relationship between the shipper and the

FACTS:Spouses Ong sustained injuries when Inland Bus, which was owned by Inland Trailways under a Lease Agreement with Philtranco, slowed
down to avoid a cargo truck but was hit from behind by another bus, owned and operated by Philtranco. The court ruled, base on the police report,
that the proximate cause of the accident was the bumping of the bus from behind hence ruled against Philtranco and awarded damages.
However, this police report was contested as it was formally offered as evidence but merely as an annex to Inlands answer.

ISSUE: Whether damages were properly awarded.

HELD: The fundamental principle of the law on damages is that one injured by a breach of contract (in this case, the contract of transportation) or
by a wrongful or negligent act or omission shall have a fair and just compensation, commensurate with the loss sustained as a consequence of the
defendant's acts. Hence, actual pecuniary compensation is the general rule, except where the circumstances warrant the allowance of other kinds
of damages. Actual damages Actual damages are such compensation or damages for an injury that will put the injured party in the position in which
he had been before he was injured. They pertain to such injuries or losses that are actually sustained and susceptible of measurement. Except as
provided by law or by stipulation, a party is entitled to adequate compensation only for such pecuniary loss as he has duly proven. To be
recoverable, actual damages must be pleaded and proven in Court. No such proof was offered to the P10,000 claim of damages. At the most,
documentary evidence showed P3, 977 only as damages. Moral Damages and Diminution of use of arm A person is entitled to the physical integrity
of his or her body, and if that integrity is violated, damages are due and assessable. However, physical injury, like loss or diminution of use of an arm
or a limb, is not a pecuniary loss. Indeed, it is nor susceptible of exact monetary estimation. Thus, the usual practice is to award moral damages for
physical injuries sustained. In the case at bar, it was sufficiently shown during the trial that Francia's right arm could not function in a normal
manner and that, as a result, she suffered mental anguish and anxiety. Thus, an increase in the amount of moral damages awarded, from P30,000 to
P50,000, appears to be reasonable and justified. Renato also suffered mental anxiety and anguish from the accident. Thus, he should be separately
awarded P30,000 as moral damages. Unrealized Income Protesting the deletion of the award for Francia's unrealized income, petitioners contend
that Francia's injuries and her oral testimony adequately support their claim. The Court disagrees. Although actual damages include indemnification
for profits which the injured party failed to obtain (lucro cesante or lucrum cesans), the rule requires that said person produce the "best evidence of
which his case is susceptible. The petitioners failed to do so, as she could have returned to work despite the plaster in her arm. Attorney fees
Counsel's performance, however, does not justify the award of 25 percent attorney's fees. It is well-settled that such award is addressed to sound
judicial discretion and subject to judicial control. Only a 10% attorneys fee is awarded. Art. 2197.

AUGUSTO LOPEZ v. JUAN DURUELO, G.R. No. 29166. October 22, 1928.

Facts: On February 10, 1927, plaintiff Augusto Lopez was desirous of embarking upon the interisland steamer San Jacinto in order to go to Cebu, the
plaintiff embarked at the landing in the motorboat Jison which was engaged in conveying passengers and luggage back and forth from the landing
to the boats at anchor.

As the motorboat approached San Jacinto in a perfectly quiet sea, it came too near to the stern of the ship, and as the propeller of the ship had not
yet ceased to turn, the blades of the propeller strucked the motorboat and sank it at once. As it sank, the plaintiff was thrown into the water against
the propeller, and the revolving blades inflicted various injuries upon him. The plaintiff was hospitalized. He filed a complaint seeking to recover
damages from the defendant. The defendant however alleged that the complaint does not have a right of action, a demurrer was submitted
directed to the fact that the complaint does not allege that the protest had been presented by the plaintiff, within twenty-four hours after the
occurrence to the competent authority at the port where the accident occurred as provided for Article 835 of the Code of Commerce.

Issue: Whether the motorboat Jison is a vessel provided for by Article 835 of the Code of Commerce?

Held: The word vessel as used in the third section of tile IV, Book III of the Code of Commerce, dealing with collisions, does not include all ships,
craft or floating structures of any kind without limitation. The said section does not apply to minor craft engaged in a river and bay traffic.Therefore,
a passenger on boat like the Jison, is not required to make protest as a condition precedent to his right of action for the injury suffered by him in the
collision described in the complaint.Article 835 of the Code of Commerce does not apply.


Facts: A maritime collision occurred between the tanker CAVITE owned by LSCO and MV Fernando Escano (a passenger ship) owned by Escano, as a
result the passenger ship sunk. An action in admiralty was filed by Escano against Luzon. The trial court held that LSCO Cavite was solely to blame
for the collision and held that Luzons claim that its liability should be limited under Article 837 of the Code of Commerce has not been established.
The Court of Appeals affirmed the trial court. The SC also affirmed the CA. Upon two motions for reconsideration, the Supreme Court gave course to
the petition.

Issue: Whether or not in order to claim limited liability under Article 837 of the Code of Commerce, it is necessary that the owner abandon the

Held: Yes, abandonment is necessary to claim the limited liability wherein it shall be limited to the value of the vessel with all the appurtenances
and freightage earned in the voyage. However, if the injury was due to the ship owners fault, the ship owner may not avail of his right to avail of
limited liability by abandoning the vessel.

The real nature of the liability of the ship owner or agent is embodied in the Code of Commerce. Articles 587, 590 and 837 are intended to limit the
liability of the ship owner, provided that the owner or agent abandons the vessel. Although Article 837 does not specifically provide that in case of
collision there should be abandonment, to enjoy such limited liability, said article is a mere amplification of the provisions of Articles 587 and 590
which makes it a mere superfluity.

The exception to this rule in Article 837 is when the vessel is totally lost in which case there is no vessel to abandon, thus abandonment is not
required. Because of such loss, the liability of the owner or agent is extinguished. However, they are still personally liable for claims under the
Workmens Compensation Act and for repairs on the vessel prior to its loss.

In case of illegal or tortious acts of the captain, the liability of the owner and agent is subsidiary. In such cases, the owner or agent may avail of
Article 837 by abandoning the vessel. But if the injury is caused by the owners fault as where he engages the services of an inexperienced captain
or engineer, he cannot avail of the provisions of Article 837 by abandoning the vessel. He is personally liable for such damages.

In this case, the Court held that the petitioner is a t fault and since he did not abandon the vessel, he cannot invoke the benefit of Article 837 to
limit his liability to the value of the vessel, all appurtenances and freightage earned during the voyage.


Facts: On the afternoon of May 26, 1927, the steamer SS Negros left the port of Romblon on its return trip to Manila. Typhoon signal no. 2 was then
up and in fact, the passengers duly advised the captain before sailing. The boat was overloaded. After 2 hours of sailing, the boat encountered
strong winds and rough seas between the islands of Banton and Simara. While in the act of maneuvering, the vessel was caught sidewise by a big
wave which caused it to capsize and sink. Many of the passengers died on the mishap. Civil actions were instituted in the CFI of Capiz, the petitioner
sought to abandon the vessel to the plaintiffs in three cases.

Issue: Whether the shipowner or agent is liable for damages for the consequent death of its passengers notwithstanding the total loss of the

Held: The petitioner is absolved from all complaints.

Under Article 587 the ship agent shall also be civilly liable for indemnities in favor of third persons which arise from the conduct of the
captain in the vigilance over the goods which the vessels carried; BUT he may exempt himself therefrom by abandoning the vessel with all her
equipment and the freight he may have earned during the voyage.

Whether the abandonment of the vessel sought by the petitioner in the case was in accordance with the law or not, is immaterial. The
vessel having totally perished, any act of abandonment would be idle ceremony.

Barrios vs. Go Thong GR L-17192, 30 March 1963

Petitioner Honorio Barrios, captain and/or master of the MV Henry I, received or otherwise intercepted an S.O.S. distress signal by blinkers from the
MV Alfredo, owned and/or operated by respondent Carlos Go Thong & Company. Thereafter, he altered the course of said vessel, and steered and
headed towards the beckoning MV Don Alfredo, which Barrios found to be in trouble, due to engine failure and the loss of her propeller. Upon
getting close to the MV Don Alfreco, with the consent and knowledge of the captain and/or master of the MV Don Alfredo, Barrios caused the latter
vessel to be tied to, or well-secured and connected with tow lines from the MV Henry, and proceeded moving until such time that a sister ship of
MV Don Alfredo was sighted so that the tow lines were also released.

Brought to the CFI of Manila, the court therein dismissed the case; with cost against Barrios. Barrios interposed an appeal.

Whether under the facts of the case, the service rendered by plaintiff to defendant constituted "salvage" or "towage", and if so, whether plaintiff
may recover from defendant compensation for such service.
It is not a salvage service.

Salvage defined
Salvage has been defined as the compensation allowed to persons by whose assistance a ship or her cargo has been saved, in whole or in part,
from impending peril on the sea, or in recovering such property from actual loss, as in case of shipwreck, derelict, or recapture.

Elements for a valid salvage claim; Erlanger & Galinger case

In the Erlanger & Galinger case, it was held that three elements are necessary to a valid salvage claim, namely, (1) a marine peril, (2) service
voluntarily rendered when not required as an existing duty or from a special contract, and (3) success in whole or in part, or that the service
rendered contributed to such success.

No marine peril to justify valid salvage claim

There was no marine peril to justify a valid salvage claim by Barrios against Go Thong. It appears that although Go Thongs vessel in question was,
on the night of 1 May 1958, in a helpless condition due to engine failure, it did not drift too far from the place where it was. 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 its
foundering or being stranded, as it was far from any island or rocks. In case of danger of stranding, its anchor could be released, to prevent such
occurrence. There was no danger that Go Thongs vessel would sink in view of the smoothness of the sea and the fairness of the weather. That
there was absence of danger is shown by the fact that said vessel or its crew did not even find it necessary to lower its launch and two motor boats,
in order to evacuate its passengers aboard. Neither did they find occasion to jettison the vessels cargo as a safety measure. Neither the passengers
nor the cargo were in danger of perishing. All that the vessels crew members could not do was to move the vessel on its own power. That did not
make the vessel a quasi-derelict.

Contract of towage perfected even without written agreement

Herein, in consenting to Barrios offer to tow the vessel, Go Thong (through the captain of its vessel MV Don Alfredo) thereby impliedly entered into
a juridical relation of towage with the owner of the vessel MV Henry I, captained by Barrios, the William Lines.

Only owner entitled to remuneration in towage

If the contract thus created is one for towage, then only the owner of the towing vessel, to the exclusion of the crew of the said vessel, may be
entitled to remuneration. The courts have to draw a distinct line between salvage and towage; for the reason that a reward ought sometimes to be
given to the crew of the salvage vessel and to other participants in salvage services, and such reward should not be given if the services were held
to be merely towage. The master and members of the crew of a tug were not entitled to participate in payment by liberty ship for services rendered
by tug which were towage services and not salvage services. 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 salved vessel for its share.

Equity cannot be resorted if there is an express provision of law

Barrios cannot invoke equity in support of his claim for compensation against Go Thong. There being an express provision of law (Art. 2142, Civil
Code) applicable to the relationship created in the case, i.e. that of a quasi-contract of towage where the crew is not entitled to compensation
separate from that of the vessel, there is no occasion to resort to equitable considerations.


Facts: Petitioner is a corporation engaged in the business of maritime trade as a carrier. As such, it owned and operated the M/V P/ ABOITIZ, a
common carrier that sank on voyage from Hong Kong to Manila. Private respondent GAFLAC is a foreign insurance company pursuing its remedy as
a subrogee of several cargo consignees whose respective cargo sank with the said vessel and for which it has priory paid. The sinking of vessel gave
rise to filling of suit to recover the lost cargo either by shippers, their successors-in-interest, or the cargo insurers like GAFLAC as subrogees. The
sinking was initially investigated by the Board of Marine Inquiry, which found that such sinking was due to fortuitous event.
Issue: Whether or not the doctrine of limited liability is applicable to the case?


Rights of the parties to claim against an agent or owner of vessel may be compared to those of creditors against an insolvent corporation whose
assets are not enough to satisfy the totality of claims against it.
Creditors must limit their recovery to what is left in the name of the corporation
In the sinking of a vessel, the claimants of creditors are limited in their recovery to the remaining value of accessible assets. In the case of lost
vessel, these assets are the insurance proceeds and pending freightage for the particular voyage.


Facts: Petitioner Litonjua is the duly appointed local crewing Managing Office of the Fairwind Shipping Corporation ('Fairwind). The M/V Dufton Bay
is an ocean-going vessel of foreign registry owned by the R.D. Mullion Ship Broking Agency Ltd. ("Mullion"). On 11 September 1976, while the
Dufton Bay was in the port of Cebu and while under charter by Fairwind, the vessel's master contracted the services of, among others, private
respondent Gregorio Candongo to serve as Third Engineer for a period of twelve (12) months with a monthly wage of US$500.00. This agreement
was executed before the Cebu Area Manning Unit of the NSB. Thereafter, private respondent boarded the vessel. On 28 December 1976, before
expiration of his contract, private respondent was required to disembark at Port Kelang, Malaysia, and was returned to the Philippines on 5 January
1977. The cause of the discharge was described in his Seaman's Book as 'by owner's arrange".
Shortly after returning to the Philippines, private respondent filed a complaint before public respondent NSB, which complaint was docketed as
NSB-1331-77, for violation of contract, against Mullion as the shipping company and petitioner Litonjua as agent of the shipowner and of the
charterer of the vessel.

Issues: Whether or not the admiralty law as embodied in the Philippine Code of Commerce fastens liability for payment of the crew's wages upon
the ship owner, and not the charterer.

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


Facts: On January 16, 1984, plaintiff entered into an agreement with Seven Brothers Shipping corporation whereby the latter undertook to load on
board its vessel M/V Seven Ambassadors 940 Lauan round logs for shipment from Isabela to Manila. On January 20, plaintiff insured the cargo with
South Sea Surety and Insurance for two million pesos. However on January 25, 1984, the M/V Seven Ambassador sank, resulting in the loss of
petitioners logs. Pursuant to the loss, petitioner filed a claim with South Sea Surety and Insurance for the insured amount of the logs, but the latter
refused, denying liability under the policy. Petitioner likewise filed a formal claim against Seven Brothers Shipping Corporation for the value of the
lost logs, but the latter likewise denied their claim.

The trial court found for the plaintiff, holding South Sea and Seven Brothers liable for the loss. On appeal, the Court of Appeals affirmed in
part the decision of the trial court. The Court of Appeals affirmed the liability of South Sea Surety and Assurance but exonerated Seven Brothers,
stating that the latter is a private carrier therefore the provisions on common carriers is not applicable to their contract. Hence the present appeal.

Issue: Whether or not respondent Court of Appeals committed a reversible error in upholding the validity of the stipulation in the charter party
executed between petitioner and Seven Brothers exempting the latter from liability of loss arising from the negligence of its captain.

Held: The decision of the Court of appeals is correct. The contract between petitioner and Seven Brothers is one of Private Carriage hence the
provisions on common carriage do not apply. In a contract of private carriage parties are free to stipulate that the responsibility for the cargo rests
solely in the charterer, such stipulations are valid because they are freely entered into by the parties and the same is not contrary to law, morals,
good custom, public order or public policy.


Facts: Plaintiff Choa Tiek Seng filed a complaint against the petitioner before the then Court of First Instance of Manila for recovery of a sum of
money under the marine insurance policy on cargo. Mr. Choa alleged that the goods he insured with the petitioner sustained loss and damage in
the amount of P35, 987.26. The said goods were delivered to the arrastre operator E. Razon, Inc., on December 17, 1976 and on the same date
were received by the consignee-plaintiff.

Petitioner disclaims liability and imputes against plaintiff the commission of fraud. A similar complaint was filed by Joseph Benzon Chua
against the petitioner for recovery under the marine insurance policy for cargo alleging that the goods insured with the petitioner sustained loss
and damage in the sum of P55,996.49. The goods were delivered to the plaintiff-consignee on or about January 25-28, 1977.

Petitioner filed third-party complaints against private respondents for indemnity, subrogation, or reimbursement in the event that it is
held liable to the plaintiff.
The private respondents, carriers Frota Oceanica Brasiliera and Australia-West Pacific Line alleged in their separate answers that the
petitioner is already barred from filing a claim because under the Carriage of Goods by Sea Act, the suit against the carrier must be filed within one
year after delivery of the goods or the date when the goods should have been delivered

Petitioner contended that provision relied upon by the respondents applies only to the shipper and not to the insurer of the goods.

Respondent judge dismissed both third-party complaints.

Issue: Whether or not the one-year period within which to file a suit against the carrier and the ship, in case of damage or loss as provided for in the
Carriage of Goods by Sea Act applies to the insurer of the goods.

Held: The coverage of the Act includes the insurer of the goods. Otherwise, what the Act intends to prohibit after the lapse of the one-year
prescriptive period can be done indirectly by the shipper or owner of the goods by simply filing a claim against the insurer even after the lapse of
one year. This would be the result if we follow the petitioner's argument that the insurer can, at any time, proceed against the carrier and the ship
since it is not bound by the time-bar provision. In this situation, the one-year limitation will be practically useless. This could not have been the
intention of the law which has also for its purpose the protection of the carrier and the ship from fraudulent claims by having "matters affecting
transportation of goods by sea be decided in as short a time as possible" and by avoiding incidents which would "unnecessarily extend the period
and permit delays in the settlement of questions affecting the transportation."

In the case at bar, the petitioner's action has prescribed under the provisions of the Carriage of Goods by Sea Act. Hence, whether it files a
third-party complaint or chooses to maintain an independent action against herein respondents is of no moment.

The fact that the driver was able to use a bus with a faulty speedometer shows that the employer was remiss in the supervision of its employees
and in the proper care of its vehicles. Under Arts. 2180 and 2176 of Civil Code, owners and managers are responsible for damages caused by their


Facts: Direct appeals of both parties plaintiff, Francisco Ortigas, and defendant Luthansa German Airlines, from the decision of the Court of First
Instance of Manila Branch Y, condemning the defendant to pay plaintiff the amount of P100,000 as moral damages, P30,000 as exemplary or
corrective damages, with interest of both sums at the legal rate from the commencement of this suit until fully paid, P20,000 as attorneys fees and
the costs for the former failure to comply with its obligation to give first accommodation to (the latter) a (Filipino) passenger holding a first class
ticket, aggravated by the giving of the space instead to a Belgian and the improper conduct of its agents in dealing with him during the occasion of
such discriminatory violence of its contract of carriage.

Issue: Whether Lufthansa is liable for damages?

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


Facts: Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on March 30, 1958.

On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a "first class"
round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff traveled in "first class", but at Bangkok, the Manager of the
defendant airline forced plaintiff to vacate the "first class" seat that he was occupying because, in the words of the witness Ernesto G. Cuento, there
was a "white man", who, the Manager alleged, had a "better right" to the seat. When asked to vacate his "first class" seat, the plaintiff, as was to be
expected, refused, and told defendant's Manager that his seat would be taken over his dead body; a commotion ensued, and, according to said
Ernesto G. Cuento, "many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot
discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man" and
plaintiff reluctantly gave his "first class" seat in the plane after being threatened that he will be thrown out of the plane if he does not oblige. The
captain of the plane, when asked to intervene, refused to do so.

Issue: Whether or not there was bad faith on the part of Air France, petitioner, entitling Rafael Carrascoso, respondent for moral and exemplary
damages as against the petitioner?

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

The responsibility of an employer for the tortious act of its employees need not be essayed. It is well settled in law. For the willful
malevolent act of petitioner's manager, petitioner, his employer, must answer.

A contract to transport passengers is quite different in kind and degree from any other contractual relation. And this, because of the relation
which an air-carrier sustains with the public. Its business is mainly with the traveling public. It invites people to avail of the comforts and advantages
it offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees,
naturally, could give ground for an action for damages.

Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness, respect,
courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from
such employees. So it is that any rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages
against the carrier.

DR. HERMAN ARMOVIT VS CA, G.R. NO. 88561, APRIL 20, 1990

This is a case which involves a Filipino physician and his family residing in the United States who came home to the Philippines on a Christmas visit.
They were bumped off at the Manila International Airport on their return flight to the U.S. because of an erroneous entry in their plane tickets
relating to their time of departure.

In October 1981, the petitioners decided to spend their Christmas holidays with relatives and friends in the Philippines, so they purchased from
private respondent, (Northwest Airlines, Inc.) three (3) round trip airline tickets from the U.S. to Manila and back, plus three (3) tickets for the rest
of the children, though not involved in the suit. Each ticket of the petitioners which was in the handwriting of private respondent's tickets sales
agent contains the following entry on the Manila to Tokyo portion of the return flight:

from Manila to Tokyo, NW flight 002, date 17 January, time 10:30 A.M. Status, OK.

On their return trip from Manila to the U.S. scheduled on January 17, 1982, petitioner arrived at the check-in counter of private respondent at the
Manila International Airport at 9:15 in the morning, which is a good one (1) hour and fifteen (15) minutes ahead of the 10:30 A.M. scheduled flight
time recited in their tickets. Petitioners were rudely informed that they cannot be accommodated inasmuch as Flight 002 scheduled at 9:15 a.m.
was already taking off and the 10:30 A.M. flight time entered in their plane tickets was erroneous.

Previous to the said date of departure petitioners re-confirmed their reservations through their representative Ernesto Madriaga who personally
presented the three (3) tickets at the private respondent's Roxas Boulevard office. 2 The departure time in the three (3) tickets of petitioners was
not changed when re-confirmed. The names of petitioners appeared in the passenger manifest and confirmed as Passenger Nos. 306, 307, and 308,
Flight 002. 3

Herein petitioner Dr. Armovit protested in extreme agitation that because of the bump-off he will not be able to keep his appointments with his
patients in the U.S. Petitioners suffered anguish, wounded feelings, and serious anxiety day and night of January 17th until the morning of January
18th when they were finally informed that seats will be available for them on the flight that day.

Because of the refusal of the private respondent to heed the repeated demands of the petitioners for compensatory damages arising from the
aforesaid breach of their air-transport contracts, 4 petitioners were compelled to file an action for damages.

The appellate court observed that private respondent was guilty of gross negligence not only in the issuance of the tickets by the erroneous entry of
the date of departure and without changing or correcting the error when the said three (3) tickets were presented for re-confirmation. Nevertheless
it deleted the award of moral damages on the ground that petitioners did not take the witness stand to testify on "their social humiliation, wounded
feelings and anxiety, and that the breach of contract was not malicious or fraudulent." 8

We disagree.

The gross negligence committed by private respondent in the issuance of the tickets with entries as to the time of the flight, the failure to correct
such erroneous entries and the manner by which petitioners were rudely informed that they were bumped off are clear indicia of such malice and
bad faith and establish that private respondent committed a breach of contract which entitles petitioners to moral damages.

The appellate court observed that the petitioners failed to take the witness stand and testify on the matter. It overlooked however, that the failure
of the petitioner to appear in court to testify was explained by them. The assassination of Senator Benigno Aquino, Jr. on August 21, 1983 following
the year they were bumped off caused turmoil in the country. This turmoil spilled over to the year 1984 when they were scheduled to testify.
However, the violent demonstrations in the country were sensationalized in the U.S. media so petitioners were advised to refrain from returning to
the Philippines at the time.
Nevertheless, Atty. Raymund Armovit, brother of petitioner Dr. Armovit, took the witness stand as he was with the petitioners from the time they
checked in up to the time of their ultimate departure. He was a witness when the check-in officer rudely informed the petitioners that their flight
had already taken off, while petitioner Dr. Armovit remonstrated that their tickets reflected their flight time to be 10:30 A.M.; that in anger and
frustration, Dr. Armovit told the said check-in-officer that he had to be accommodated that morning so that he could attend to all his appointments
in the U.S.; that petitioner Jacqueline Armovit also complained about not being able to report for work at the expiration of her leave of absence;
that while petitioner had to accept private respondent's offer for hotel accommodations at the Philippine Village Hotel so that they could follow up
and wait for their flight out of Manila the following day, petitioners did not use their meal coupons supplied because of the limitations thereon so
they had to spend for lunch, dinner, and breakfast in the sum of P1,300.00 while waiting to be flown out of Manila; that Dr. Armovit had to forego
the professional fees for the medical appointments he missed due to his inability to take the January 17 flight; that the petitioners were finally able
to fly out of Manila on January 18, 1982, but were assured of this flight only on the very morning of that day, so that they experienced anxiety until
they were assured seats for that flight.

No doubt Atty. Raymund Armovit's testimony adequately and sufficiently established the serious anxiety, wounded feelings and social humiliation
that petitioners suffered upon having been bumped off. However, considering the circumstances of this case whereby the private respondent
attended to the plight of the petitioners, taking care of their accommodations while waiting and boarding them in the flight back to the U.S. the
following day, the Court finds that the petitioners are entitled to moral damages in the amount of P100,000.00 each.

By the same token to provide an example for the public good, an award of exemplary damages is also proper. The award of the appellate court is
Nevertheless, the deletion of the nominal damages by the appellate court is well-taken since there is an award of actual damages. Nominal
damages cannot co-exist with actual or compensatory damages

In 1949, SS San Antonio, owned by AMInc, embarked on its voyage to Batanes via Aparri. It was carrying various cargoes, one of which was owned
by Agan. One fine weather day, it accidentally ran aground the mouth of the Cagayan River due to the sudden shifting of the sands below. SS San
Antonio then needed the services of Luzon Stevedoring Co. to tow the ship and make it afloat so that it can continue its journey. Later, AMInc
required the cargo owners to pay the expenses incurred in making the ship afloat (P841.40 each). The expenses, AMInc claims, fall under the
General Averages Rule under the Code of Commerce, which is to be shared by ship owner and cargo owners as well.
ISSUE: Whether or not general averages exist in the case at bar.
HELD: No. General averages contemplate that the stranding of the vessel is intentionally done in order to save the vessel itself from a certain and
imminent danger. Here, the stranding was accidental and it was made afloat for the purpose of saving the voyage and not the vessel. Note that this
happened on a fine weather day. Also, it cannot be said that the towing was made to save the cargos, for the cargos were not in danger imminent

CENTENNIAL TRANSMARINE, INC. vs. RUBEN G. DELA CRUZ, G.R. No. 180719, August 22, 2008

This petition for review on certiorari assails the August 31, 2007 Decision 1[1] of the Court of Appeals in CA-G.R. SP No. 91054 reversing the Decision
of the National Labor Relations Commission and finding that respondent Ruben G. Dela Cruz was illegally dismissed from service, as well as the
November 16, 2007 Resolution 2[2] denying the motion for reconsideration.

On May 15, 2000, respondent boarded MT Aquidneck and performed his functions as Chief Officer. However, on September 14, 2000,
respondent was relieved of his duties and repatriated to the Philippines. Failing to get a satisfactory explanation from petitioners for his relief,
respondent filed a complaint for illegal dismissal with prayer for payment of his salaries for the unexpired portion of contract, moral and exemplary
damages and attorneys fees on October 7, 2000.

Respondent alleged that while the vessel was docked in Lake Charles in the United States, another Chief Officer boarded the vessel. He
inquired from the master of the vessel, Captain Kowalewski, why he had a reliever, however the latter disclaimed any knowledge. At the same time,
he showed respondent an electronic mail (e-mail) from petitioner B+H Equimar Singapore, Pte. Ltd. stating that there was an incoming Chief Officer
who was to take over the operations upon boarding.

On April 23, 2001,3[6] Labor Arbiter Francisco A. Robles rendered a Decision dismissing respondents complaint. He found that respondent
was validly dismissed because he committed acts in violation of his duties as Chief Officer, amounting to breach of trust and confidence. He noted

that on September 6, 2000, Capt. Kowalewski wrote in the official log book of the vessel that respondent failed to follow entry procedures in loading
oil tanks while the vessel was navigating to Aruba; that the Safety Officer of the vessel also submitted a report on the violations committed by
respondent regarding safety rules on entry procedures; that respondent admitted his inadequacy or lack of knowledge in tanker operations; and
that respondent was properly apprised of his violations and was given ample opportunity to be heard.



The petition lacks merit.

Article 627 of the Code of Commerce defines the Chief Mate, also called Chief Officer or Sailing Mate, as the second chief of the vessel,
and unless the agent orders otherwise, shall take the place of the captain in cases of absence, sickness, or death, and shall then assume all his
powers, duties, and responsibilities. A Chief Officer, therefore, is second in command, next only to the captain of the vessel.

In the instant case, respondent has consistently assailed the genuineness of the purported entry and the authenticity of such copy. He
alleged that before his repatriation, there was no entry in the ships official logbook regarding any incident that might have caused his relief; 4[20]
that Captain Kowalewskis signature in such purported entry was forged. 5[21] In support of his allegations, respondent submitted three official
documents6[22] bearing the signature of Capt. Sczepan Kowalewski which is different from the one appearing in Annex E. Thus, it was incumbent
upon petitioners to prove the authenticity of Annex E, which they failed to do. Likewise, the purported report of Capt. Kowalewski dated September
1, 2000 (Annex D),7[23] and the statements of Safety Officer Khaldun Nacem Faridi and Chief Officer Josip Milin (Annexes G 8[24] and H9[25]) also
cannot be given weight for lack of authentication.

Although technical rules of evidence do not strictly apply to labor proceedings, however, in the instant case, authentication of the above-
mentioned documents is necessary because their genuineness is being assailed, and since petitioners offered no corroborating evidence. These
documents and their contents have to be duly identified and authenticated lest an injustice would result from a blind adoption of such contents. 10
[26] Thus, the unauthenticated documents relied upon by petitioners are mere self-serving statements of their own officers and were correctly
disregarded by the Court of Appeals.

Except for the self-serving allegation that respondent was required to explain why he should not be relieved for being incompetent,
petitioners offered no proof to show that they furnished respondent a written notice of the charges against him, or that there was a formal
investigation of the charges, or that respondent was furnished a written notice of the penalty imposed upon him. Respondent was verbally ordered
to disembark the vessel and was repatriated to the Philippines without being told of the reasons for his relief.


R Transport operates a bus line which transports passengers from Cubao, Quezon City to Gapan, Nueva Ecija.
27 January 1995: Pante rode a bus from Cubao (P48 fare). Along a highway in Bulacan, the bus hit a tree and a house due to the reckless
driving of Johnny Mediquia.
Pante sustained a laceration frontal area, with fracture of the right humerous 11.
o His operation, confinement, and medications caused him P30K. He became unemployed as Goldilocks refused to re-employ him
due to his condition.
o He had to undergo a second operation after four years. He spent another P15k.
o The only assistance petitioner gave was the amount of P7K to reimburse him for the stainless steel plate placed in his arm. Other
than that, petitioner refused to assist Pante.


14 March 1995: Pante sued for damages.
Petitioner in its answer denied fault claiming that it exercised the diligence of a good father of the family in the selection and supervision
of employees, and that the accident was force majeure.
The case went on for 7 years. The delays were due to the multiple postponements and unexplained absence of petitioners counsel. Its
rights to cross-examine and present evidence were eventually forfeited as a consequence.
RTC ruled in favour of Pante. CA affirmed RTCs decision.

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

HELD:YES. Petitioner is liable for damages.

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


Respondent John Anthony de Camilis filed a case for breach of contract of carriage, damages and attorney's fees against petitioner Air France
Philippines/KLM Air France (AF) in the Regional Trial Court (RTC) of Makati City, Branch 59.

Respondent alleged that he went on a pilgrimage with a group of Filipinos to selected countries in Europe. According to respondent: (1) AF's
agent in Paris failed to inform him of the need to secure a transit visa for Moscow, as a result of which he was denied entry to Moscow and was
subjected to humiliating interrogation by the police; (2) another AF agent (a certain Ms. Soeyesol) rudely denied his request to contact his
travel companions to inform them that he was being sent back to Paris from Moscow with a police escort; Ms. Soeyesol even reported him as a
security threat which resulted in his being subjected to further interrogation by the police in Paris and Rome, and worse, also lifted his flight
coupons for the rest of his trip; (3) AF agents in Rome refused to honor his confirmed flight to Paris; (4) upon reaching Paris for his connecting
flight to Manila, he found out that the AF agents did not check in his baggage and since he had to retrieve his bags at the baggage area, he
missed his connecting flight; (5) he had to shoulder his extended stay in Paris for AF's failure to make good its representation that he would be
given a complimentary motel pass and (6) he was given a computer print-out of his flight reservation for Manila but when he went to the
airport, he was told that the flight was overbooked. It was only when he made a scene that the AF agent boarded him on an AF flight to
Hongkong and placed him on a connecting Philippine Airlines flight to Manila.

The RTC found that AF breached its contract of carriage and that it was liable to pay P200,000 actual damages, P1 million moral damages, P1
million exemplary damages and P300,000 attorney's fees to respondent.

On appeal, the Court of Appeals (CA)affirmed the RTC decision with modifications. 1

The CA ruled that it was respondent (as passenger), and not AF, who was responsible for having the correct travel documents. However, the
appellate court stated that this fact did not absolve AF from liability for damages.

The CA agreed with the findings of fact of the RTC that AF's agents and representatives repeatedly subjected respondent to very poor service,
verbal abuse and abject lack of respect and consideration. As such, AF was guilty of bad faith for which respondent ought to be compensated.
The appellate court affirmed the award of P1 million moral damages and P300,000 attorney's fees. However, it reduced the actual damages to
US$906 (or its peso equivalent). According to the CA, this amount represented the expenses respondent incurred from the time he was unable
to join his group in Rome (due to the unfounded "communiqu" of Ms. Soeyesol that he was a security threat) up to the time his flight
reservation from Paris to Manila was dishonored for which he was forced to stay in Paris for two additional days. The appellate court pointed
out that, on the other hand, respondent's expenses for the Moscow leg of the trip must be borne by him as AF could not be faulted when he
was refused entry to Moscow for lack of a transit visa.

The CA also decreased the exemplary damages from P1 million to P300,000. The CA further imposed interest at the rate of 6% p.a. from the
date of extrajudicial demand2 until full satisfaction, but before judgment becomes final. From the date of finality of the judgment until the
obligation is totally paid, 12% interest p.a. shall be imposed.

Hence, this recourse.

Essentially, AF assails the CA's award of moral and exemplary damages and attorney's fees to respondent as the alleged injury sustained was
not clearly established. AF added that, even if respondent was entitled to the same, the amounts awarded were exorbitant. Lastly, it argued
that the interest rate should run not from the time of respondent's extrajudicial demand but from the time of judgment of the RTC.

We deny the petition.

Preliminarily, on the issue pertaining to whether or not respondent was entitled to damages and attorney's fees, the same entails a resort to
the parties' respective evidence. Thus, AF is clearly asking us to consider a question of fact.

Time and again, we have held that the jurisdiction of this Court in a Petition for Review on Certiorari under Rule 45 is limited only to questions
of law,3 save for certain exceptions,4 none of which are present in this case.

Both the RTC and the CA have competently ruled on the issue of respondent's entitlement to damages and attorney's fees as they properly laid
down both the factual and legal bases for their respective decisions. We see no reason to disturb their findings.

The above liabilities of AF shall earn legal interest pursuant to the Court's ruling in Construction Development Corporation of the Philippines v.
Estrella,5 citing Eastern Shipping Lines, Inc. v. CA.6 rbl rl l lbrr

Pursuant to this ruling, the legal interest is 6% p.a. and it shall be reckoned from April 25, 2007 when the RTC rendered its judgment, not from
the time of respondent's extrajudicial demand. This must be so as it was at the time the RTC rendered its judgment that the quantification of
damages may be deemed to have been reasonably ascertained. Then, from the time this decision becomes final and executory, the interest
rate shall be 12% p.a. until full satisfaction.

WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals in CA-G.R. CV No. 90151 is AFFIRMED. Petitioner is ordered
to PAY legal interest of 6% p.a. from the date of promulgation of the decision dated April 25, 2007 of the Regional Trial Court, Branch 59,
Makati City and 12% p.a. from the time the decision of this Court attains finality, on all sums awarded until their full satisfaction.

Costs against petitioner.

EDNA DIAGO LHUILLIER, petitioner, vs. BRITISH AIRWAYS, respondent.

FACTS: On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint for damages against respondent British Airways before the Regional Trial
Court (RTC) of Makati City. The tortuous conduct by the flight attendants of said Airways, which prompted petitioner to file a case for damages,
allegedly transpired when petitioner boarded respondents flight 548 from London, United Kingdom to Rome, Italy. On May 30, 2005, respondent,
by way of special appearance through counsel, filed a Motion to Dismiss on grounds of lack of jurisdiction over the case and over the person of the
respondent. Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have jurisdiction over the complaint for damages
pursuant to the Warsaw Convention, Article 28(1) of which provides:

An action for damages must be brought at the option of the plaintiff, either before the court of domicile of the carrier or his principal place of
business, or where he has a place of business through which the contract has been made, or before the court of the place of destination.

ISSUE: Whether or not Philippines, a signatory to the Warsaw Convention, should adhere to the provision of the Warsaw Convention in the
determination of its jurisdiction with respect to a case for damages involving a tortuous conduct committed by an airline personnel while in an
international carrier against a Filipino citizen.

HELD: Yes. It is settled that the Warsaw Convention has the force and effect of law in this country.
In Santos III v. Northwest Orient Airlines, 210 SCRA 256 (1992), we held that: The Republic of the Philippines is a party to the Convention for the
Unification of Certain Rules Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on February
13, 1933. The Convention was concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of accession
was signed by President Elpidio Quirino on October 13, 1950, and was deposited with the Polish government on November 9, 1950. The Convention
became applicable to the Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201,
declaring our formal adherence thereto, to the end that the same and every article and clause thereof may be observed and fulfilled in good faith
by the Republic of the Philippines and the citizens thereof.

The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as such, has the force and effect of law in this



Private respondent purchased from Singapore Airlines in Manila conjunction tickets from Manila-Singapore-Athens-Larnaca-Rome-Turin-Zurich-
Geneva-Copenhagen-New York. In Geneva, he decided to forego his trip to Copenhagen and go straight to New York. In the absence of a direct flight
under his conjunction tickets from Geneva to New York, he exchanged the unused portion of the conjunction ticket for a one way ticket from
Geneva to New York from American Airlines, which issued its own ticket to respondent in Geneva and claimed the value of the unused portion of
the conjunction ticket from the International Air Transport Association (IATA) clearing house in Geneva. In September, 1989, respondent filed an
action for damages before the Regional Trial Court of Cebu for the alleged embarrassment and mental anguish he suffered at the Geneva Airport
when American Airlines security officers prevented him from boarding the plane.


Whether or not the issuance of American Airlines of a new ticket in exchange of the conjunction ticket the respondent purchased in Manila bar him
from seeking recourse in Philippine courts.


The petitioner contends that under Article 28 of the Warsaw Convention, action for damages may only be brought upon the following courst:

a.) Domicile of the carrier

b.) Carriers principal place of business
c.) Place where carrier has a place of business
d.) Place of destination

Since neither of these elements is present in the case, the petitioner contends that plaintiff cannot file the case in the Philippines. He further posits
that the second contract cannot be deemed as an extension of the first as the petitioner airline is not a participating airline in any of the
destinations under the first contract.

Respondent on the other hand contends that the second contract she entered into at Geneva is part and parcel of the first contract, thus the third
option under Article 28 of the Warsaw Convention would apply to him. He further pointed out that petitioner cannot deny the contract of agency
with Singapore Airlines after it honored the conjunction tickets issued by the latter.

The court ruled that petitioners argument is void of merit with reference to Article 1(3) of the Warsaw Convention. According to the said article,
transportation to be performed by several carriers shall be deemed as one and undivided. The number of tickets issued does not detract from the
oneness of the contract of carriage. Hence, the third option of the plaintiff under Article 28 of the Warsaw Convention is clothed with jurisdiction.


FACTS: The litigation involves a claim for damages for the loss at sea of petitioners respective children after the shipwreck of MV Pioneer Cebu due
to typhoon Klaring in May of 1966. When the inter-island vessel MV Pioneer Cebu left the Port of Manila in the early morning of May 15, 1966
bound for Cebu, it had on board the spouses Alfonso Vasquez and Filipinas Bagaipo and a four-year old boy, Mario Vasquez, among her passengers.
The MV Pioneer Cebu encountered typhoon Klaring and struck a reef on the southern part of Malapascua Island, located somewhere north of island
of Cebu and subsequently sunk. The aforementioned passengers were unheard from since then.
Due to the loss of their children, petitioners sued for damages before the Court Instance of Manila. Respondent defended on the plea of
force majeure, and extinction of its liability by the actual loss of the vessel. After proper proceedings, the trial court awarded damages. On appeal,
respondent Court reversed judgment and absolved private respondent from any liability. Hence, this Petition for Review on Certiorari.

Issue: Whether the shipowners liability is extinguished despite of the loss of the ship?

Held: With respect for the private respondents submission that the total loss of the vessel extinguished its liability pursuant to Article 587 of the
Code of Commerce as construed in Yangco vs. Laserna, 73 Phil. 330 (1941), suffice it to state that even in the cited case, it was held that the liability
of the shipowner is limited to the value of the vessel or to the insurance thereon, Despite the total loss of the vessel therefore, its insurance
answers for the damages that the shipowners agent may be held liable for by reason of the death of its passengers. Judgment of the CFI reinstated.


In April of 1980, private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc. four special cabin tickets for his wife, daughter,
son and niece who were going to Bacolod City to attend a family reunion. The tickets were for Voyage No. 457-A of the M/V Don Juan, leaving
Manila at 1:00 p.m. on April 22, 1980. The ship sailed from the port of Manila on schedule.
At about 10:30 in the evening of April 22, 1980, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban City, an oil tanker
owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and Transport Corporation (PNOC/STC). As a result, the M/V Don
Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some of the victims were found and brought to shore, but the four
members of private respondents families were never found.
Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court of Manila, Branch 34, against the Negros Navigation, the Philippine
National Oil Company (PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC), seeking damages for the death of Ardita de la
Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and Elfreda de la Victoria, 26. In its answer, petitioner admitted that private
respondents purchased ticket numbers 74411, 74412, 74413 and 74414; that the ticket numbers were listed in the passenger manifest; and that the
Don Juan left Pier 2, North Harbor, Manila on April 22, 1980 and sank that night after being rammed by the oil tanker M/T Tacloban City, and that, as
a result of the collision, some of the passengers of the M/V Don Juan died. Petitioner, however, denied that the four relatives of private respondents
actually boarded the vessel as shown by the fact that their bodies were never recovered. Petitioner further averred that the Don Juan was
seaworthy and manned by a full and competent crew, and that the collision was entirely due to the fault of the crew of the M/T Tacloban City.
On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. entered into a compromise agreement whereby petitioner assumed full
responsibility for the payment and satisfaction of all claims arising out of or in connection with the collision and releasing the PNOC and the
PNOC/STC from any liability to it. The agreement was subsequently held by the trial court to be binding upon petitioner, PNOC and PNOC/STC.
Private respondents did not join in the agreement.

1) Whether the members of private respondents families were actually passengers of the Don Juan;
2) Whether the ruling in Mecenas v. Court of Appeals, finding the crew members of petitioner to be grossly negligent in the performance of their
duties, is binding in this case;
3) Whether the total loss of the M/V Don Juan extinguished petitioners liability; and
4)Whether the damages awarded by the appellate court are excessive, unreasonable and unwarranted.

First. The trial court held that the fact that the victims were passengers of the M/V Don Juan was sufficiently proven by private respondent Ramon
Miranda, who testified that he purchased tickets numbered 74411, 74412, 74413, and 74414 at P131.30 each from the Makati office of petitioner
for Voyage No. 47-A of the M/V Don Juan, which was leaving Manila on April 22, 1980. This was corroborated by the passenger manifest (Exh. E) On
which the numbers of the tickets and the names of Ardita Miranda and her children and Elfreda de la Victoria appear.
Second. In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence required of it in the carriage of passengers,
both the trial court and the appellate court relied on the findings of this Court in Mecenas v. Intermediate Appellate Court, which case was brought
for the death of other passengers. In that case it was found that although the proximate cause of the mishap was the negligence of the crew of the
M/T Tacloban City, the crew of the Don Juan was equally negligent as it found that the latters master, Capt. Rogelio Santisteban, was playing
mahjong at the time of collision, and the officer on watch, Senior Third Mate Rogelio De Vera, admitted that he failed to call the attention of
Santisteban to the imminent danger facing them. This Court found that Capt. Santisteban and the crew of the M/V Don Juan failed to take steps to
prevent the collision or at least delay the sinking of the ship and supervise the abandoning of the ship.
Third. The next issue is whether petitioner is liable to pay damages notwithstanding the total loss of its ship. The issue is not one of first impression.
The rule is well-entrenched in our jurisprudence that a ship-owner may be held liable for injuries to passengers notwithstanding the exclusively real
and hypothetic nature of maritime law if fault can be attributed to the ship-owner.
Fourth. Petitioner contends that, assuming that the Mecenas case applies, private respondents should be allowed to claim only P43,857.14 each as
moral damages because in the Mecenas case, the amount of P307,500.00 was awarded to the seven children of the Mecenas couple. Under
petitioners formula, Ramon Miranda should receive P43, 857.14, while the De la Victoria spouses should receive P97, 714.28.


FACTS: Caltex chartered MT Vector-Tanker of Vector Shipping Corp to transport its fuel products from Limay, Bataan to Masbate. On Dec 2, 1987
while enroute the Tanker collided with MV Dona Paz of Sulpicio Lines Inc resulting to the sinking of the latter vessel and the death of about 4000
passengers with only 24 survivors.

HELD: The charterer Caltex under a contract of affreightment has no liability for damages under maritime laws. It is the shipowner Vector who
is liable as it is in possession, control and navigation of the tanker. As such Vector is a common carrier subject to the presumption of negligence
which it was found guilty by the Board of Maritime Inquiry in 1988. Thus Vector is liable to reimburse/indemnify Sulpicio Lines for whatever
damages, atty fees and cost the latter is adjudged to pay. (Note Sulpicio was also negligent with respects to its passengers overloading which
contrary to maritime rules and regulation- liable for breach of carriage).