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I.

COMMON CARRIER under Civil Code Branch 267 of the Pasig RTC dismissed petitioners’ Complaint and respondent’s Counterclaim. The
appellate court denied petitioners’ appeal, holding, among other things, that the trial court correctly ruled
SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners, that respondent is a private carrier which is only required to observe ordinary diligence; that respondent in fact
vs.SUN HOLIDAYS, INC., Respondent. observed extraordinary diligence in transporting its guests on board M/B Coco Beach III; and that the proximate
G.R. No. 186312 June 29, 2010 THIRD DIVISION cause of the incident was a squall, a fortuitous event.
Ponente: CARPIO MORALES, J.:
ISSUES:
FACTS: Parents of the late Ruelito Cruz filed a complaint for damages against Sun Holidays Inc. araising
from death of their son Ruelito who perished with his wife who were on board the boat M/B Coco Beach 1. WON SUN HOLIDAYS IS A COMMON CARRIER AND GUILTY FOR NEGLIGENCE IN
III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the couple had stayed ALLOWING M/B COCO III SAIL NOTWITHSTANDING STORM WARNING BULLETINS
at Coco Beach Island Resort owned and operated by Sun Holidays Ins., ISSUED BY PAGASA.
2. WON SUCH CIRCUMSTANCES WILL FALL UNDER FORTUITOUS EVENT WHICH
The stay of the newly wed Ruelito and his wife at the Resort was by virtue of a tour package-contract with MAKE SUN HOLIDAYS NOT LIABE.
Sun Holidays that included transportation to and from the Resort and the point of departure in Batangas.
RULLINGS:
As it was still windy, Ruelito and his wife including other Resort guests trekked to the other side of the
Coco Beach mountain that was sheltered from the wind where they boarded M/B Coco Beach III, which 1. YES, The petition is impressed with merit.
was to ferry them to Batangas.
The Civil Code defines "common carriers" in the following terms:
Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into the
open seas, the rain and wind got stronger, causing the boat to tilt from side to side and the captain to step Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business
forward to the front, leaving the wheel to one of the crew members. of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering
their services to the public.
The waves got more unwieldy. After getting hit by two big waves which came one after the other, M/B
Coco Beach III capsized putting all passengers underwater. Eight passengers, including petitioners’ son The above article makes no distinction between one whose principal business activity is the carrying of
and his wife, died during the incident. 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
Sun Holidays denied any responsibility for the incident which it considered to be a fortuitous event. It offering transportation service on a regular or scheduled basis and one offering such service on
nevertheless offered, as an act of commiseration, the amount of ₱10,000 to petitioners upon their signing an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier
of a waiver. 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
Parents of Ruelito alleging that respondent, as a common carrier, was guilty of negligence in allowing 1733 deliberately refrained from making such distinctions.
M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by the Philippine
Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) as early as 5:00 a.m. So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with
of September 11, 2000.6 the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended)
which at least partially supplements the law on common carriers set forth in the Civil Code. Under Section
In its Answer,7 Sun Holidays denied being a common carrier, alleging that its boats are not available to 13, paragraph (b) of the Public Service Act, "public service" includes:
the general public as they only ferry Resort guests and crew members. Nonetheless, it claimed that it
exercised the utmost diligence in ensuring the safety of its passengers; contrary to petitioners’ allegation, Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to
there was no storm on September 11, 2000 as the Coast Guard in fact cleared the voyage; and M/B Coco be properly considered ancillary thereto. The constancy of respondent’s ferry services in its resort
Beach III was not filled to capacity and had sufficient life jackets for its passengers. By way of operations is underscored by its having its own Coco Beach boats. And the tour packages it offers, which
Counterclaim, respondent alleged that it is entitled to an award for attorney’s fees and litigation expenses include the ferry services, may be availed of by anyone who can afford to pay the same. These services are
amounting to not less than ₱300,000. thus available to the public.
The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical cyclone
warnings for shipping on September 10 and 11, 2000 advising of tropical depressions in Northern Luzon
which would also affect the province of Mindoro.22 By the testimony of Dr. Frisco Nilo, supervising
weather specialist of PAGASA, squalls are to be expected under such weather condition. 23

A very cautious person exercising the utmost diligence would thus not brave such stormy weather and
put other people’s lives at risk. The extraordinary diligence required of common carriers demands that they take
care of the goods or lives entrusted to their hands as if they were their own. This respondent failed to do.

2. Respondent’s insistence that the incident was caused by a fortuitous event does not impress
either.

The elements of a "fortuitous event" are: (a) the cause of the unforeseen and unexpected occurrence, or the
failure of the debtors to comply with their obligations, must have been independent of human will; (b) the
event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable, impossible
to avoid; (c) the occurrence must have been such as to render it impossible for the debtors to fulfill their
obligation in a normal manner; and (d) the obligor must have been free from any participation in the
aggravation of the resulting injury to the creditor.24

To fully free a common carrier from any liability, the fortuitous event must have been the proximate and
only cause of the loss. And it should have exercised due diligence to prevent or minimize the loss before,
during and after the occurrence of the fortuitous event.25

Respondent cites the squall that occurred during the voyage as the fortuitous event that overturned M/B
Coco Beach III. As reflected above, however, the occurrence of squalls was expected under the weather
condition of September 11, 2000. Moreover, evidence shows that M/B Coco Beach III suffered engine
trouble before it capsized and sank.26 The incident was, therefore, not completely free from human
intervention.

The Court need not belabor how respondent’s evidence likewise fails to demonstrate that it exercised due diligence to
prevent or minimize the loss before, during and after the occurrence of the squall.

Article 176427 vis-à-vis Article 220628 of the Civil Code holds the common carrier in breach of its contract
of carriage that results in the death of a passenger liable to pay the following: (1) indemnity for death, (2)
indemnity for loss of earning capacity and (3) moral damages.
II. CARRIER OF GOODS RULLING: NO "the fact that the shipment was not delivered to the consignee as stated in the Bill of Lading
or to a party designated or named by the consignee constitutes a misdelivery thereof". It is clear from the
BENITO MACAM vs. allegation in his complaint that it does not deal with misdelivery of the cargoes but of delivery to GPC
CA, CHINA OCEAN SHIPPING CO., and/or WALLEM PHILIPPINES SHIPPING, INC. without the required bills of lading and bank guarantee —
G.R. No. 125524 August 25, 1999 SECOND DIVISION
Ponente: BELLOSILLO, J.: At any rate, only the discussion on the imputed liability of respondents concerning the shipped goods.

FACTS: Benito Macam, shipped on board vessel through local agent Wallem the 3,500 boxes of Article 1736 of the Civil Code provides —
watermelons and 1,611 boxes of fresh mangoes which are covered by Bill of Lading and exported through
Letter of Credit issued by PAKISTAN BANK. The Bills of Lading contained the following pertinent Art. 1736. The extraordinary responsibility of the common carriers lasts from the time the goods are
provision: One of the Bills of Lading must be surrendered duly endorsed in exchange for the goods or unconditionally placed in the possession of, and received by the carrier for transportation until the same
delivery order. The shipment was bound for Hongkong with PAKISTAN BANK as consignee and Great are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right
Prospect Company of Kowloon, as notify party. to receive them, without prejudice to the provisions of article 1738.

As per letter of credit requirement, copies of the bills of lading and commercial invoices were submitted We emphasize that the extraordinary responsibility of the common carriers lasts until actual or constructive delivery
to petitioner's depository bank, SOLIDBANK, which paid Macam in advance the total value of the of the cargoes to the consignee or to the person who has a right to receive them.
shipment.
Respondents submitted in evidence a telex dated 5 April 1989 as basis for delivering the cargoes to GPC
Upon arrival in Hongkong, the shipment was delivered by WALLEM directly to GPC, not to PAKISTAN without the bills of lading and bank guarantee. The telex instructed delivery of various shipments to the
BANK, and without the required bill of lading having been surrendered. respective consignees without need of presenting the bill of lading and bank guarantee per the respective shipper's
request since "for prepaid shipt ofrt charges already fully paid."
GPC failed to pay PAKISTAN BANK that the latter, still in possession of the original bills of lading, refused
to pay petitioner through SOLIDBANK. Since SOLIDBANK already pre-paid petitioner the value of the Macam was named therein as shipper and GPC as consignee with respect to Bill of Ladings. Petitioner
shipment, it demanded payment from WALLEM through five (5) letters but was refused. disputes the existence of such instruction and claims that this evidence is self-serving.

Macam was thus allegedly constrained to return the amount involved to SOLIDBANK, then demanded The instruction in the telex of 5 April 1989 was "to deliver the shipment to respective consignees."
payment from respondent WALLEM in writing but to no avail.
We find the argument too simplistic. Respondent court analyzed the telex in its entirety and correctly
Macam sought collection of the value of the shipment of its equivalent. Wallem contended that the arrived at the conclusion that the consignee referred to was not PAKISTAN BANK but GPC —
shipment was delivered to GPC without presentation of the bills of lading and bank guarantee per request
of petitioner himself because the shipment consisted of perishable goods. The telex dated 5 April 1989
Apart from the foregoing obstacles to the success of petitioner's cause, petitioner failed to substantiate
conveying such request read —
his claim that he returned to SOLIDBANK the full amount of the value of the cargoes. It is not far-
fetched to entertain the notion, as did respondent court, that he merely accommodated SOLIDBANK in
AS PER SHPR'S REQUEST KINDLY ARRANGE DELIVERY OF A/M SHIPT TO RESPECTIVE CNEES order to recover the cost of the shipped cargoes from respondents.
WITHOUT PRESENTATION OF OB/L2 and bank guarantee since for prepaid shipt ofrt charges already
fully paid our end . . . .3
We note that it was SOLIDBANK which initially demanded payment from respondents through five (5)
letters. SOLIDBANK must have realized the absence of privity of contract between itself and
The trial court ruled for Macam. Court of Appeals appreciated the evidence in a different manner. Thus, respondents. That is why petitioner conveniently took the cudgels for the bank.
set aside the decision of the trial court and dismissed the complaint together with the counterclaims.
In view of petitioner's utter failure to establish the liability of respondents over the cargoes, no reversible
ISSUE: The real issue is whether respondents are liable to petitioner for releasing the goods to GPC error was committed by respondent court in ruling against him.
without the bills of lading or bank guarantee.
III. Breach of Contract of Carriage-vigilance over goods After hearing, the trial court dismissed the complaint for damages as well as the counterclaim filed by
therein defendant Sulpicio Lines, Inc. and the cross-claim filed by Delbros, Inc.
SULPICIO LINES, INC., petitioner,
vs.FIRST LEPANTO-TAISHO INSURANCE CORPORATION, respondent. Thus, respondent-insurer instituted an appeal with the Court of Appeals, which reversed the dismissal
G.R. No. 140349 June 29, 2005 SECOND DIVISION of the complaint by the lower court, the decretal portion of which reads:
Ponente: CHICO-NAZARIO, J.:
WHEREFORE, the appeal is granted. The decision appealed from is REVERSED. Defendants-appellees
FACTS: Taiyo Yuden Philippines, Inc. (owner of the goods) and Delbros, Inc. (shipper) entered into a Delbros and Sulpicio Lines are hereby ordered to pay, jointly and severally, plaintiff-appellant the sum of
contract, evidenced by Bill of Lading issued by the latter in favor of the owner of the goods, for Delbros, P194,220.31 representing actual damages, plus legal interest counted from the filing of the complaint until
Inc. to transport a shipment of goods consisting of three (3) wooden crates containing one hundred thirty- fully paid.5
six (136) cartons of inductors and LC compound on board the V Singapore V20 from Cebu City to
Singapore in favor of the consignee, Taiyo Yuden Singapore Pte, Ltd.
RULINGS of the CA:

For the carriage of said shipment from Cebu City to Manila, Delbros, Inc. engaged the services of the vessel
The appellate court disposed of the issues in the case in this wise:
M/V Philippine Princess, owned and operated by petitioner Sulpicio Lines, Inc. (carrier). The vessel arrived
at the North Harbor, Manila.
Furthermore, the evidence shows that one of the three crates fell during the unloading at the pier in
Manila. The wooden crate which fell was damaged such that this particular crate was not anymore sent
During the unloading of the shipment, one crate containing forty-two (42) cartons dropped from the cargo
to Singapore and was instead shipped back to Cebu from Manila. Upon examination, it was found that
hatch to the pier apron. The owner of the goods examined the dropped cargo, and upon an alleged finding
two (2) cartons of the forty-two (42) cartons contained in this crate were externally damaged. They were
that the contents of the crate were no longer usable for their intended purpose, they were rejected as a
torn at the sides and their top portions or flaps were open. These facts were admitted by all the parties.
total loss and returned to Cebu City.
Defendant-appellees, however, insist that it was only the external packaging that was damaged, and
that there was no actual damage to the goods such that would make them liable to the shipper. This
Taiyo filed a claim with herein Sulpicio-carrier for the recovery of the value of the rejected cargo which theory is erroneous. When the goods are placed at a common carrier’s possession for delivery to a specified
was refused by the Delbros. Thereafter, the Taiyo sought payment from respondent First Lepanto-Taisho consignee, they are in good order and condition and are supposed to be transported and delivered to
Insurance Corporation (insurer) under a marine insurance policy issued to the former. Respondent-insurer the consignee in the same state. In the case herein, the goods were received by defendant-appellee Delbros
paid the claim less thirty-five percent (35%) salvage value or P194, 220.31. in Cebu properly packed in cardboard cartons and then placed in wooden crates, for delivery to the
consignee in Singapore. However, before the shipment reached Singapore (while it was in Manila) one
The payment of the insurance claim of the owner of the goods by the respondent-insurer subrogated the crate and 2 cartons contained therein were not anymore in their original state. They were no longer fit
latter to whatever right or legal action the owner of the goods may have against Delbros, Inc. and to be sent to Singapore.
petitioner-carrier, Sulpicio Lines, Inc. Thus, respondent-insurer then filed claims for reimbursement from
Delbros, Inc. and petitioner-carrier Sulpicio Lines, Inc. which were subsequently denied. ….

On 04 November 1992, respondent-insurer filed a suit for damages docketed as Civil Case No. 92-63337 As We have already found, there is damage suffered by the goods of the shipper. This consists in the
with the trial court against Delbros, Inc. and herein petitioner-carrier. On 05 February 1993, petitioner- destruction of one wooden crate and the tearing of two of the cardboard boxes therein rendering then unfit
carrier filed its Answer with Counterclaim. Delbros, Inc. filed on 15 April 1993 its Answer with to be sent to Singapore. Defendant-appellee Sulpicio Lines admits that this crate fell while it was being
Counterclaim and Cross-claim, alleging that assuming the contents of the crate in question were truly in unloaded at the Manila pier. Falling of the crate was negligence on the part of defendant-appellee
bad order, fault is with herein petitioner-carrier which was responsible for the unloading of the crates. Sulpicio Lines under the doctrine of res ipsa loquitur. Defendant-appellee Sulpicio Lines cannot
exculpate itself from liability because it failed to prove that it exercised due diligence in the selection and
Petitioner-carrier filed its Answer to Delbros, Inc.’s cross-claim asserting that it observed extraordinary supervision of its employees to prevent the damage.6
diligence in the handling, storage and general care of the shipment and that subsequent inspection of the
shipment by the Manila Adjusters and Surveyors Company showed that the contents of the third crate ISSUE: WHETHER OR NOT, BASED ON THE EVIDENCE PRESENTED DURING THE TRIAL, THE
that had fallen were found to be in apparent sound condition, except that "2 cello bags each of 50 pieces OWNER OF THE GOODS, RESPONDENT-INSURER’S PREDECESSOR-IN-INTEREST, DID INCUR
ferri inductors No. LC FL 112270K-60 (c) were unaccounted for and missing as per packaging list." DAMAGES, AND IF SO, WHETHER OR NOT PETITIONER-CARRIER IS LIABLE FOR THE SAME.
RULING OF THE SUPREME COURT: AFFIRMING THE DECISION OF CA

YES, It cannot be denied that the shipment sustained damage while in the custody of petitioner-carrier.
It is not disputed that one of the three (3) crates did fall from the cargo hatch to the pier apron while
petitioner-carrier was unloading the cargo from its vessel. Neither is it impugned that upon inspection,
it was found that two (2) cartons were torn on the side and the top flaps were open and that two (2) cello
bags, each of 50 pieces ferri inductors, were missing from the cargo.

Petitioner-carrier contends that its liability, if any, is only to the extent of the cargo damage or loss and
should not include the lack of fitness of the shipment for transport to Singapore due to the damaged
packing. This is erroneous. Petitioner-carrier seems to belabor under the misapprehension that a
distinction must be made between the cargo packaging and the contents of the cargo. According to it,
damage to the packaging is not tantamount to damage to the cargo. It must be stressed that in the case at
bar, the damage sustained by the packaging of the cargo while in petitioner-carrier’s custody resulted
in its unfitness to be transported to its consignee in Singapore. Such failure to ship the cargo to its final
destination because of the ruined packaging, indeed, resulted in damages on the part of the owner of the
goods.

The falling of the crate during the unloading is evidence of petitioner-carrier’s negligence in handling
the cargo. As a common carrier, it is expected to observe extraordinary diligence in the handling of goods
placed in its possession for transport.12 The standard of extraordinary diligence imposed upon common
carriers is considerably more demanding than the standard of ordinary diligence, i.e., the diligence of a
good paterfamilias established in respect of the ordinary relations between members of society.13 A
common carrier is bound to transport its cargo and its passengers safely "as far as human care and foresight
can provide, using the utmost diligence of a very cautious person, with due regard to all circumstances."14 The
extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier
to know and to follow the required precaution for avoiding the damage to, or destruction of, the goods
entrusted to it for safe carriage and delivery.15 It requires common carriers to render service with the
greatest skill and foresight and "to use all reasonable means to ascertain the nature and characteristic of
goods tendered for shipment, and to exercise due care in the handling and stowage, including such
methods as their nature requires."16

Thus, when the shipment suffered damages as it was being unloaded, petitioner-carrier is presumed to
have been negligent in the handling of the damaged cargo. Under Articles 173517 and 175218 of the Civil
Code, common carriers are presumed to have been at fault or to have acted negligently in case the goods
transported by them are lost, destroyed or had deteriorated. To overcome the presumption of liability for
loss, destruction or deterioration of goods under Article 1735, the common carrier must prove that they
observed extraordinary diligence as required in Article 173319 of the Civil Code.20

Petitioner-carrier miserably failed to adduce any shred of evidence of the required extraordinary diligence
to overcome the presumption that it was negligent in transporting the cargo.
IV. Exempting Circumstances The Court of Appeals,* finding that PAL was guilty only of simple negligence, reversed the judgment of
the trial Court granting petitioner moral and exemplary damages, but ordered PAL to pay plaintiff the
AGUSTINO B. ONG YIU, petitioner, sum of P100.00, the baggage liability assumed by it under the condition of carriage printed at the back
vs.HONORABLE COURT OF APPEALS and PHILIPPINE AIR LINES, INC., respondents. G.R. No. L- of the ticket.
40597 June 29, 1979 FIRST DIVISION
Ponente: MELENCIO-HERRERA, J.: ISSUE: WON PAL IS GUILTY ONLY OF SIMPLE NEGLIGENCE AND NOT BAD FAITH IN THE
BREACH OF ITS CONTRACT OF TRANSPORTATION WITH PETITIONER
FACTS: Ong Yiu was a fare paying passenger of (PAL), on board Flight from Mactan Cebu, bound for
Butuan City. He was scheduled to attend the trial of Civil Case in the Court of First Instance, Branch II RULLINGS: YES, There is no dispute that PAL incurred in delay in the delivery of petitioner's luggage.
which set for hearing. As a passenger, he checked in one piece of luggage, a blue "maleta" for which he The question is the correctness of respondent Court's conclusion that there was no gross negligence on
was issued Claim Check. Upon arrival, petitioner claimed his luggage but it could not be found. In the the part of PAL and that it had not acted fraudulently or in bad faith as to entitle petitioner to an award
meantime, petitioner was worried about the missing luggage because it contained vital documents needed of moral and exemplary damages.
for trial the next day. At 10:00 o'clock that evening, petitioner wired PAL Cebu demanding the delivery of
his baggage before noon the next day, otherwise, he would hold PAL liable for damages, and stating that From the facts of the case, we agree with respondent Court that PAL had not acted in bad faith. Bad faith
PAL's gross negligence had caused him undue inconvenience, worry, anxiety and extreme means a breach of a known duty through some motive of interest or ill will. 2 It was the duty of PAL to look for
embarrassment. petitioner's luggage which had been miscarried. PAL exerted due diligence in complying with such duty.

Early in the morning of the next day, petitioner went to the Bancasi Airport to inquire about his luggage. In the absence of a wrongful act or omission or of fraud or bad faith, petitioner is not entitled to moral
He did not wait, however, someone sent it for him. Upon inspection, Ong Yiu found that a folder damages.
containing certain exhibits, transcripts and private documents in Civil Case and Sp. Procs were missing,
aside from two gift items for his parents-in-law. Petitioner refused to accept the luggage. Dagorro returned
Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
it to the porter clerk, Maximo Gomez, who sealed it and forwarded the same to PAL Cebu.
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though
incapable of pecuniary computation, moral damages may be recovered if they are the proximate result
In a letter addressed to PAL, Cebu, petitioner called attention to his telegram, demanded that his luggage of the defendant's wrongful act of omission.
be produced intact, and that he be compensated in the sum of P250,000,00 for actual and moral damages
within five days from receipt of the letter, otherwise, he would be left with no alternative but to file suit.
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are justly due. The same rule applies to
In the presence of Mr. Jose Yap and Atty. Manuel Maranga the contents were listed and receipted for by breaches of contract where the defendant acted fraudulently or in bad faith.
Ong Yiu.
Ong Yiu is neither entitled to exemplary damages. In contracts, as provided for in Article 2232 of the
Ong Yiu sent a tracer letter to PAL Cebu inquiring about the results of the investigation which Messrs. de Civil Code, exemplary damages can be granted if the defendant acted in a wanton, fraudulent, reckless,
Leon, Navarsi, and Agustin had promised to conduct to pinpoint responsibility for the unauthorized oppressive, or malevolent manner, which has not been proven in this case.
opening of the "maleta".
Petitioner further contends that respondent Court committed grave error when it limited PAL's carriage
PAL sent a apologizing letter to Ong yiu that they did not found his belongings. liability to the amount of P100.00 as stipulated at the back of the ticket. In this connection, respondent
Court opined:
Ong Yiu filed a Complaint against PAL for damages for breach of contract of transportation with the Court
of First Instance of Cebu, Branch V, which PAL traversed. After due trial, the lower Court found PAL to As a general proposition, the plaintiff's maleta having been pilfered while in the custody of the
have acted in bad faith and with malice and declared petitioner entitled to moral damages in the sum defendant, it is presumed that the defendant had been negligent. The liability, however, of PAL for
of P80,000.00, exemplary damages of P30,000.00, attorney's fees of P5,000.00, and costs. the loss, in accordance with the stipulation written on the back of the ticket, Exhibit 12, is limited
to P100.00 per baggage, plaintiff not having declared a greater value, and not having called the
Both parties appealed to the Court of Appeals — petitioner in so far as he was awarded only the sum of attention of the defendant on its true value and paid the tariff therefor. The validity of this stipulation
P80,000.00 as moral damages; and defendant because of the unfavorable judgment rendered against it. is not questioned by the plaintiff. They are printed in reasonably and fairly big letters, and are easily readable.
Moreover, plaintiff had been a frequent passenger of PAL from Cebu to Butuan City and back, and
he, being a lawyer and businessman, must be fully aware of these conditions. 4

We agree with the foregoing finding. The pertinent Condition of Carriage printed at the back of the plane
ticket reads:

8. BAGGAGE LIABILITY ... The total liability of the Carrier for lost or damaged baggage of the
passenger is LIMITED TO P100.00 for each ticket unless a passenger declares a higher valuation
in excess of P100.00, but not in excess, however, of a total valuation of P1,000.00 and additional
charges are paid pursuant to Carrier's tariffs.

There is no dispute that petitioner did not declare any higher value for his luggage, much less did he
pay any additional transportation charge.

But petitioner argues that there is nothing in the evidence to show that he had actually entered into a
contract with PAL limiting the latter's liability for loss or delay of the baggage of its passengers, and that
Article 1750* of the Civil Code has not been complied with.

While it may be true that petitioner had not signed the plane ticket (Exh. "12"), he is nevertheless bound
by the provisions thereof. "Such provisions have been held to be a part of the contract of carriage, and
valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the
regulation". 5 It is what is known as a contract of "adhesion", in regards which it has been said that
contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the
plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract
is in reality free to reject it entirely; if he adheres, he gives his consent. 6 And as held in Randolph v.
American Airlines, 103 Ohio App. 172, 144 N.E. 2d 878; Rosenchein vs. Trans World Airlines, Inc., 349 S.W.
2d 483, "a contract limiting liability upon an agreed valuation does not offend against the policy of the
law forbidding one from contracting against his own negligence.

Considering, therefore, that petitioner had failed to declare a higher value for his baggage, he cannot
be permitted a recovery in excess of P100.00.Besides, passengers are advised not to place valuable items
inside their baggage but "to avail of our V-cargo service " (Exh. "1"). I t is likewise to be noted that there
is nothing in the evidence to show the actual value of the goods allegedly lost by petitioner.

Ong yui was died, his widow represent him but the judgment was already final and executory.

Under the circumstances, considering the demise of petitioner himself, who acted as his own counsel, it is
best that technicality yields to the interests of substantial justice. Besides, in the 'last analysis, no serious
prejudice has been caused respondent PAL.

In fine, we hold that the conclusions drawn by respondent Court from the evidence on record are not
erroneous.
V. Carriage of Passenger VI. Liability of Registered Owners

Tamayo vs. Aquino et al & Rayos


Phil. Rabbit bus lines vs. IAC.
G.R. Nos. L-12634 and L-12720 May 29, 1959
G.R. Nos. L-66102-04 August 30, 1990.

FACTS. The passengers boarded the jeep owned by the Mangune Spouses and driven by Manalo to bring Facts: Epifania Gonzales (wife of Aquino) boarded a truck owned by Tamayo, holder of a certificate of
them to Carmen Rosales Pangasinan. Upon reaching barrio Sinayoan Tarlack,The right rear wheel of the public convenience to operate. Allegedly, while Epifania was making a trip aboard the truck, it bumped
truck was detouch so the driver steps on the brake as a result of which, the jeep against a culvert on the side of the road, causing her death. Aquino et al filed an action for damages
who is running unbalance made a uturn so that the front part face the south where it come from and its against Tamayo. Tamayo answered alleging that the truck is owned by Rayos, so he filed a 3rd party
rear face the north where it is going. The bus of the petitioner driven by Delos Reyes bump the jeep complaint against him (Rayos). The CFI ruled that Tamayo is the registered owner, under a public
resulting in the death of the three passengers of the jeepney and injuries to others. The two drivers was convenience certificate but such truck was sold to Rayos one month after the accident, but he (Tamayo)
charged of multiple homicide before the MTC of SanMiguel Tarlack. A probable cause was found with did not inform the Public Service Commission of the sale. CFI held Tamayo and Rayos jointly and
respect to the case of Manalo and the case of Delos Reyes was dismissed and Manalo was convicted By the severally liable to Aquino. CA affirmed, holding that, both the registered owner (Tamayo) and the actual
court of first instance of Pangasinan. Then the heirs of the deceased passengers filed a complaint for owner and operator (Rayos) should be considered as joint tortfeasors and should be made liable in
recovery of civil damages before the court of first instance impleading both the defendant accordance with Article 2194 of the Civil Code (solidary).
and the respondent. The CFI found Manalo guilty of negligence but this was reverse by the IAC.
Issue: WON Art 2194 (solidary liability) is applicable; and, if NOT, how should Tamayo (holder of the
cert. of public convenience) participate with Rayos (transferee/operator) in the damages recoverable.
ISSUE. Who is liable for the death and physical injuries suffered by the passengers of the jeepney?
Held: No, Art 2194 is not applicable.

RULINGS: According to the Supreme Court, The IAC erred in applying the doctrine of last clear chance The action instituted in this case is one for breach of contract, for failure of the defendant to carry safety
in this case because this doctrine applies only in a suit between the deceased for her destination. The liability for which he is made responsible, i.e., for the death of the
the owners and drivers of two colliding vehicles and not in a suit where passengers demand responsibility passenger, may not be considered as arising from a quasi-delict. As the registered owner Tamayo and his
from a carries to enforce its contractual obligation. transferee Rayos may not be held guilty of tort or a quasi-delict; their responsibility is NOT SOLIDARY.
So the decision of the IAC was set aside and the decision of the CFI was reinstated.
As Tamayo is the registered owner of the truck, his responsibility to the public or to any passenger
riding in the vehicle or truck must be direct. If the policy of the law is to be enforced and carried out,
the registered owner should not be allowed to prove that a third person or another has become the
owner, so that he may thereby be relieved of the responsibility to the injured. But as the transferee, who
operated the vehicle when the passenger died, is the one directly responsible for the accident and
death he should in turn be made responsible to the registered owner for what the latter may have been
adjudged to pay. In operating the truck without transfer thereof having been approved by the Public
Service Commission, the transferee acted merely as agent of the registered
VII. Overtaking-doctrine last Clear Chance negligence caused the loss, the one who has the last clear opportunity to avoid the loss but failed to do so
is chargeable with the loss. In this case, Deocampo had the last clear chance to avoid the collision. Since
LADECO vs. ANGALA
Deocampo was driving the rear vehicle, he had full control of the situation since he was in a position to
G.R. No. 153076 - June 21, 2007 observe the vehicle in front of him. Deocampo had the responsibility of avoiding bumping the vehicle in
front of him. A U-turn is done at a much slower speed to avoid skidding and overturning, compared to
FACTS: running straight ahead. Deocampo could have avoided the vehicle if he was not driving very fast while
following the pick-up. Deocampo was not only driving fast, he also admitted that he did not step on the
On May 4, 1993, at about 2:45 p.m., a Datsun crewcab with plate no. PEC-93 was driven by Apolonio
brakes even upon seeing the pick-up. He only stepped on the brakes after the collision.
Deocampo bumped into a 1958 Chevy pick-up with plate no. MAM-475 owned by Michael Raymond
Angala and driven by Bernulfo Borres. Lapanday Agricultural Development Corporation (LADECO)
owned the crewcab which was assigned to its manager Manuel Mendez. Deocampo was the driver and
bodyguard of Mendez. Both vehicles were running along Rafael Castillo St., Agdao, Davao City heading
north towards Lanang, Davao City. The left door, front left fender, and part of the front bumper of the
pick-up were damaged.

Respondent Angala filed an action for Quasi-Delict, Damages, and Attorney’s fees against LADECO, its
administrative officer Henry Berenguel and Deocampo. Respondent alleged that his pick-up was
slowing down to about five to ten kilometers per hour (kph) and was making a left turn preparatory to
turning south when it was bumped from behind by the crewcab which was running at around 60 to 70
kph. The crewcab stopped 21 meters from the point of impact. Respondent alleged that he heard a
screeching sound before the impact. Respondent was seated beside the driver and was looking at the
speedometer when the accident took place. Respondent testified that Borres made a signal because he
noticed a blinking light while looking at the speedometer.

Respondent sent a demand letter to LADEDO for the payment of the damages he incurred because of the
accident but he did not receive any reply. Thus, respondent filed the case against LADECO, Berenguel,
and Deocampo.

In its March 3, 1995 Decision, the Regional Trial Court of Davao City, Branch 15 ruled in favor of
defendant and ordered LADECO and Deocampo to solidarily pay the damages. The trial court found
that Berenguel was not liable because he was not the owner of the crewcab. LADECO and Deocampo
filed a motion for reconsideration but the same was denied on June 13, 1995.

Petitioner filed an appeal before the Court of Appeals. However, the appellate court affirmed in toto the
trial court’s decision. Petitioners filed a motion for reconsideration. In its March 11, 2002 Resolution, the
Court of Appeals denied the motion for lack of merit. Hence, the present petition was filed before the
Supreme Court.

ISSUE: Whether or not the doctrine of last clear chance applies in the case at bar.

RULING: Yes. Since both parties are at fault in this case, the doctrine of last clear chance applies

The doctrine of last clear chance states that where both parties are negligent but the negligent act of one
is appreciably later than that of the other, or where it is impossible to determine whose fault or
VIII. Duties of a Captain On the night, Mr. Clark received a call from Captain Tayong informing him that the vessel cannot sail
without the oxygen and acetylene for safety reasons due to the problems with the turbo charger and
INTER-ORIENT MARITIME ENTERPRISES, INC., SEA HORSE SHIP, INC. and TRENDA WORLD economizer. Mr. Clark responded that by shutting off the water to the turbo chargers and using the
SHIPPING (MANILA), INC., auxiliary boiler, there should be no further problems. According to Mr. Clark, Captain Tayong agreed with
vs.NATIONAL LABOR RELATIONS COMMISSION and RIZALINO D. TAYONG, him that the vessel could sail as scheduled on 0100 hours for South Africa.10
G.R. No. 115286 August 11, 1994 THIRD DIVISION
Ponente: FELICIANO, J.:
According to Captain Tayong, however, he communicated to Sea Horse his reservations regarding
proceeding to South Africa without the requested supplies,11 and was advised by Sea Horse to wait for the
supplies at 0800 hrs, which Sea Horse had arranged to be delivered on board the Oceanic Mindoro.12 At
FACTS: Captain Rizalino Tayong, a licensed Master Mariner with experience in commanding ocean-going 0800 hours, the requisitioned supplies were delivered and Captain Tayong immediately sailed for Richard
vessels, was employed by Trenda World Shipping (Manila), Inc. and Sea Horse Ship Management, Inc. Bay.
through Inter-Orient Maritime Enterprises, Inc. as Master of the vessel M/V Oceanic Mindoro, for a period
of one (1) year, as evidenced by an employment contract. Captain Tayong assumed command of
When the vessel arrived at the port of Richard Bay, South Africa on 16 August 1989, Captain Tayong was
petitioners' vessel at the port of Hongkong. His instructions were to replenish bunker and diesel fuel, to
instructed to turn-over his post to the new captain. He was thereafter repatriated to the Philippines, after
sail forthwith to Richard Bay, South Africa, and there to load 120,000 metric tons of coal.
serving petitioners for a little more than two weeks.13 He was not informed of the charges against him.14

While at the Port of Hongkong and in the process of unloading cargo, Captain Tayong received a weather
POEA placed considerable weight on petitioners' assertion that all the time lost as a result of the delay
report that a storm code-named "Gordon" would shortly hit Hongkong. Precautionary measures were
was caused by Captain Tayong and that his concern for the oxygen and acetylene was not legitimate as
taken to secure the safety of the vessel, as well as its crew, considering that the vessel's turbo-charger was
these supplies were not necessary or indispensable for running the vessel. The POEA believed that the
leaking and the vessel was fourteen (14) years old.
Captain had unreasonably refused to follow the instructions of petitioners and their representative, despite
petitioners' firm assurances that the vessel was seaworthy for the voyage to South Africa.
Captain Tayong followed-up the requisition by the former captain of the Oceanic Mindoro for supplies of
oxygen and acetylene, necessary for the welding-repair of the turbo-charger and the economizer.1 This
On appeal, the National Labor Relations Commission ("NLRC") reversed and set aside the decision of the
requisition had been made upon request of the Chief Engineer of the vessel and had been approved by the
POEA. The NLRC found that Captain Tayong had not been afforded an opportunity to be heard and
shipowner.2
that no substantial evidence was adduced to establish the basis for petitioners' loss of trust or
confidence in the Captain. The NLRC declared that he had only acted in accordance with his duties to maintain
The vessel sailed from Hong Kong for Singapore. In the Master's sailing message, Captain Tayong reported the seaworthiness of the vessel and to insure the safety of the ship and the crew. The NLRC directed petitioners to
a water leak from M.E. Turbo Charger No. 2 Exhaust gas casing. He was subsequently instructed to blank pay the Captain (a) his salary for the unexpired portion of the contract at US$1,900.00 a month, plus one
off the cooling water and maintain reduced RPM unless authorized by the owners. 3 while the vessel was en (1) month leave benefit; and (b) attorney's fees equivalent to ten percent (10%) of the total award due.
route to Singapore, Captain Tayong reported that the vessel had stopped in mid-ocean for six (6) hours and
forty-five (45) minutes due to a leaking economizer. He was instructed to shut down the economizer and
Petitioners, before this Court, claim that the NLRC had acted with grave abuse of discretion. Petitioners
use the auxiliary boiler instead.4 the vessel arrived at the port of Singapore.5 The Chief Engineer reminded
allege that they had adduced sufficient evidence to establish the basis for private respondent's discharge,
Captain Tayong that the oxygen and acetylene supplies had not been delivered.6 Captain Tayong inquired
contrary to the conclusion reached by the NLRC. Petitioners insist that Captain Tayong, who must
from the ship's agent in Singapore about the supplies. The ship agent stated that these could only be
protect the interest of petitioners, had caused them unnecessary damage, and that they, as owners of
delivered at 0800 hours as the stores had closed.7
the vessel, cannot be compelled to keep in their employ a captain of a vessel in whom they have lost
their trust and confidence.
Captain Tayong called the shipowner, Sea Horse Ship Management, Ltd., in London and informed them
that the departure of the vessel for South Africa may be affected because of the delay in the delivery of the
ISSUE: Whether or not Captain Tayong was validly dismissed
supplies.8
HELD: NO.The petition must fail.
Sea Horse advised Captain Tayong to contact its Technical Director, Mr. Clark, who was in Tokyo and
who could provide a solution for the supply of said oxygen and acetylene. 9
It is well settled in this jurisdiction that confidential and managerial employees cannot be arbitrarily
dismissed at any time, and without cause as reasonably established in an appropriate
investigation.15 Such employees, too, are entitled to security of tenure, fair standards of employment voyage. The captain is held responsible, and properly so, for such safety. He is right there on the vessel, in
and the protection of labor laws. command of it and (it must be presumed) knowledgeable as to the specific requirements of seaworthiness
and the particular risks and perils of the voyage he is to embark upon. The applicable principle is that
The captain of a vessel is a confidential and managerial employee within the meaning of the above the captain has control of all departments of service in the vessel, and reasonable discretion as to its
doctrine. A master or captain, for purposes of maritime commerce, is one who has command of a vessel. navigation.20 It is the right and duty of the captain, in the exercise of sound discretion and in good faith,
A captain commonly performs three (3) distinct roles: (1) he is a general agent of the shipowner; (2) he to do all things with respect to the vessel and its equipment and conduct of the voyage which are
is also commander and technical director of the vessel; and (3) he is a representative of the country reasonably necessary for the protection and preservation of the interests under his charge, whether those
under whose flag he navigates.16 Of these roles, by far the most important is the role performed by the be of the shipowners, charterers, cargo owners or of underwriters.21 It is a basic principle of admiralty law
captain as commander of the vessel; for such role (which, to our mind, is analogous to that of "Chief that in navigating a merchantman, the master must be left free to exercise his own best judgment. The
Executive Officer" [CEO] of a present-day corporate enterprise) has to do with the operation and requirements of safe navigation compel us to reject any suggestion that the judgment and discretion of the
preservation of the vessel during its voyage and the protection of the passengers (if any) and crew and captain of a vessel may be confined within a straitjacket, even in this age of electronic
cargo. In his role as general agent of the shipowner, the captain has authority to sign bills of lading, carry communications.22 Indeed, if the ship captain is convinced, as a reasonably prudent and competent
goods aboard and deal with the freight earned, agree upon rates and decide whether to take cargo. The mariner acting in good faith that the shipowner's or ship agent's instructions (insisted upon by radio or
ship captain, as agent of the shipowner, has legal authority to enter into contracts with respect to the vessel telefax from their offices thousands of miles away) will result, in the very specific circumstances facing
and the trading of the vessel, subject to applicable limitations established by statute, contract or him, in imposing unacceptable risks of loss or serious danger to ship or crew, he cannot casually seek
instructions and regulations of the shipowner.17 To the captain is committed the governance, care and absolution from his responsibility, if a marine casualty occurs, in such instructions. 23
management of the vessel.18 Clearly, the captain is vested with both management and fiduciary functions.

It is plain from the records of the present petition that Captain Tayong was denied any opportunity to
defend himself. Petitioners curtly dismissed him from his command and summarily ordered his
repatriation to the Philippines without informing him of the charge or charges levelled against him, and
much less giving him a chance to refute any such charge. In fact, it was only on 26 October 1989 that
Captain Tayong received a telegram dated 24 October 1989 from Inter-Orient requiring him to explain
why he delayed sailing to South Africa.

We also find that the principal contention of petitioners against the decision of the NLRC pertains to facts,
that is, whether or not there was actual and sufficient basis for the alleged loss of trust or confidence. We
have consistently held that a question of "fact" is, as a general rule, the concern solely of an
administrative body, so long as there is substantial evidence of record to sustain its action.

The record requires us to reject petitioners' claim that the NLRC's conclusions of fact were not supported
by substantial evidence. Petitioners rely on self-serving affidavits of their own officers and employees
predictably tending to support petitioners' allegation that Captain Tayong had performed acts inimical
to petitioners' interests for which, supposedly, he was discharged. The official report of Mr. Clark,
petitioners' representative, in fact supports the NLRC's conclusion that private respondent Captain did
not arbitrarily and maliciously delay the voyage to South Africa. There had been, Mr. Clark stated, a
disruption in the normal functioning of the vessel's turbo-charger19 and economizer and that had
prevented the full or regular operation of the vessel. Thus, Mr. Clark relayed to Captain Tayong
instructions to "maintain reduced RPM" during the voyage to South Africa, instead of waiting in Singapore
for the supplies that would permit shipboard repair of the malfunctioning machinery and equipment.

More importantly, a ship's captain must be accorded a reasonable measure of discretionary authority to
decide what the safety of the ship and of its crew and cargo specifically requires on a stipulated ocean
IX. Demmurage the Manila Electric Company called the attention of the coal company to the fact that company was
short nearly 20,000 tons in its contractual deliveries, and in view of this fact the coal company was
O'FARREL Y CIA., doing business under the name of MALAYSIAN NAVIGATION advised to consider the contract closed.
COMPANY, vs.THE MANILA ELECTRIC COMPANY,
G.R. No. L-31222 October 29, 1929 EN BANC
ISSUES: WON plaintiff raises the question of the responsibility of the defendant for the demurrage of
Ponente: STREET, J.:
the plaintiff's vessels at Hongay

FACTS: This action was by O'Farrel y Cia., for the purpose of recovering from the Manila Electric
The heart of the controversy is, we think, more properly found in the issue presented under the second
Company, upon three causes of action, alleged to be due to the plaintiff for breach of contract.. Upon
cause of action, which raises the question of the responsibility of the defendant for the demurrage of
hearing the case now under review by the trial court found that the action was not well founded and
the plaintiff's vessels at Hongay.
absolved the defendant by the complaint, with costs against plaintiff. From this judgement the plaintiff
appealed.
HELD: NO The point just determined is fatal also to the third cause of action, in which recovery is sought
for delay incurred by one ship which left without cargo.
O'Farrel y Cia. (Malaysian Navigation Company) was, during the period with which we are here
concerned, a shipping company engaged in operating freight vessels in oriental seas. In operation of
In connection with this matter it will be noted, upon careful inspection of the contract between the plaintiff
this plant; a new contract was entered into whereby the coal company agreed to sell and the defendant
and the defendant, that the stipulation for demurrage at the rate of P600 per day, or fraction thereof, is
agreed to buy, 75,000 tons of dust coal, with a margin of 10 percent more or less. In this contract it was
found in the paragraph of the contract which deals especially with the discharge of coal at Manila. There
agreed that delivery should be taken by the defendant in lots of about from 2,000 to 4,000 tons at regular
is no stipulation for demurrage incident to delay at Hongay; and, on the contrary, it is stipulated, in the
intervals, as could best be arranged to suit both purchasers and sellers, the purchasers agreeing to take not
third paragraph of the contract, that loading at Hongay should be "according to customary quick
less than about 6,000 tons per month and to send not more than one steamer to be loaded at the same time.
despatch subject to turn of mines." In appellant's brief emphasis has been placed upon the
It was also stipulated that the dust coal, the subject of the sale, should be loaded either in the stream or
words customary quick despatch and the other words subject to turn of mines have not been taken so
alongside the wharf or guay at Hongay, at the option of the coal company "with the quick despatch,
much into account.
vessels taking their turn in loading." As neither the coal company nor the Manila Electric Company was
engaged in operating seagoing vessels, it became necessary for the defendant to make arrangement
with some shipping company for the service necessary to transport the coal to Manila. The judgment appealed from, in our opinion, is without error, and the same will be affirmed, with costs
against that appellant. So ordered.
The practice followed by the parties in the performance of contract was that, upon the receipt of
information in Manila by the defendant company by the coal company, advising that a cargo of coal
was, or soon would be available in Hongay, the massage was turn over to O'Farrel y Cia., and the later
company made the arrangements for the sending of a boat to Hongay. But delay in the taking on of coal
occurred in Hongay, owing to the inability of the coal company to deliver the coal to the waiting boats.
The preponderance of the proof shows that this delay was due to the fact that the cranes of the coal
company at Hongay were defective and often out order. At any rate the result was that the plaintiff's
boats were frequently kept waiting in the port; and it in fact appears that altogether they were held there
idle one hundred twenty-three days, to say nothing at of the time occupied in the lading of the ships after
their turn had come for taking cargo. There can be no doubt, we think, that these delays were attributable
to the coal company.

It appears that, upon the visits that the plaintiff's ships made to Hongay, the coal necessary for the
operation of said ships was there taken on board with the assent of the coal company; and at the end the
plaintiff became indebted, to the coal company, on account of such advances of coal, As a result of the
inability of the plaintiff to liquidate this claim for coal advance to the plaintiff, the offices of the latter
became reluctant to send its vessels any longer to Hongay, for fear that the ships would be libeled for
the coal company's claim.
X. COGSA

INSURANCE COMPANY OF NORTH AMERICA,


vs.PHILIPPINE PORTS TERMINALS, INC.,
G.R. No. L-6420 July 18, 1955 EN BANC
Ponente: JUGO, J.:

FACTS: the Insurance Company of North America filed a complaint against the Philippine Ports
Terminals, Inc., alleging, among other things, that: the Philippine Ports Terminals, Inc., was the contractor
and operator of the arrastre service in the Port of Manila, and as such, was charged with the custody and
care of all cargoes discharged at the government piers at Manila with the duty to deliver same to their
respective owners upon presentation by the latter of release papers from the agents or owners of vessels
and the Bureau of Custom; that the plaintiff had been informed and therefore alleged that in the steamship
"PRESIDENT VAN BUREN" discharged into the custody of the Philippine Ports Terminals, Inc., one case
of machine knives consigned to the Central Saw Mill, but said merchandise was never delivered by the
defendant to said consignee; that the defendant admits the non-delivery of the said merchandise to the
consignee, Central Saw Mills, Inc., and offered to pay P500.00 for said merchandise instead of its value
P3,796.00 which offer was refused; that the plaintiff Insurance Company of North America was
subrogated to the rights of the Central Saw Mill, Inc., and that the defendant corporation refused to pay
said sum.

ISSUE: WON Philippine port terminal is not liable based on COGSA?

HELD: No, Philippine Port Terminal is liable, COGSA will not apply. The court ruled that;

It is evident, however, that the Philippine Ports Terminals, Inc., is not a carrier. Section 1 (a) and (d) of
"Carriage of Goods by Sea Act" defines the terms "carrier" and "ship" as follows:

The term "carrier" includes the owner or the charterer who enters into a contract of carriage
with a shipper.

The term "ship" means any vessel used for the carriage of goods by sea.

The defendant-appellee, Philippine Ports Terminals, Inc., is neither a charterer nor a ship. Consequently
the "Carriage of Goods by Sea Act" does not apply to it. However, the ordinary period of four years fixed
by the Code of Civil Procedure will apply. The action in this case has been brought within that time.

In view of the foregoing, the order of the lower court dismissing the complaint is hereby reversed and the
case is remanded to the court of origin for further proceedings, with costs against the appellee. It is so
ordered.
XI. Convention for the unification of certain Rules to Internal Carriage by air (WARSAW appointed - a breach of its contract of carriage. Certainly, the compensation for the injury suffered by Dr.
Convention) Pablo cannot under the circumstances be restricted to that prescribed by the Warsaw Convention for
delay in the transport of baggage.
Alitalia v. IAC

Facts: Dr. Felipa Pablo, an associate professor in the University of the Philippines and a research grantee
of the Philippine Atomic Energy Agency, was invited to take part at a meeting of the Department of
Research and Isotopes in Italy in view of her specialized knowledge in “foreign substances in food and
the agriculture environment”. She would be the second speaker on the first day of the meeting. Dr. Pablo
booked passage on petitioner Alitalia. She arrived in Milan on the day before the meeting, but was told
that her luggage was delayed and was in a succeeding flight from Rome to Milan. The luggage included
her materials for the presentation. The succeeding flights did not carry her luggage. Desperate, she went
to Rome to try to locate the luggage herself, but to no avail. She returned to Manila without attending the
meeting. She demanded reparation for the damages. She rejected Alitalia’s offer of free airline tickets and
commenced an action for damages. As it turned out, the luggage was actually forwarded to Ispra, but
only a day after the scheduled appearance. It was returned to her after 11 months. The trial court ruled in
favor of Dr. Pablo, and this was affirmed by the Court of Appeals.

Issues: Whether the Warsaw Convention should be applied to limit Alitalia’s liability

Held: Under the Warsaw Convention, an air carrier is made liable for damages for:

a. The death, wounding or other bodily injury of a passenger if the accident causing it took place on
board the aircraft or I the course of its operations of embarking or disembarking;

b. The destruction or loss of, or damage to, any registered luggage or goods, if the occurrence causing it
took place during the carriage by air; and

c. Delay in the transportation by air of passengers, luggage or goods.

The convention however denies to the carrier availment of the provisions which exclude or limit his
liability, if the damage is caused by his wilful misconduct, or by such default on his part as is considered
to be equivalent to wilful misconduct. The Convention does not thus operate as an exclusive
enumeration of the instances of an airline's liability, or as an absolute limit of the extent of that liability. It
should be deemed a limit of liability only in those cases where the cause of the death or injury to person,
or destruction, loss or damage to property or delay in its transport is not attributable to or attended by
any wilful misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official
or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form
of resulting injury.

In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of
petitioner airline; and Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but
without appreciable damage. The fact is, nevertheless, that some species of injury was caused to Dr.
Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time
AMERICAN AIRLINES, petitioner, vs. COURT OF APPEALS,
HON. BERNARD L. SALAS and DEMOCRITO MENDOZA, respondents
G.R No. 116044-45. March 9, 2000

Facts:

Private respondent purchased from Singapore Airlines in Manila conjunction ticketsfrom 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 Airline’s security officers prevented
him from boarding the plane.

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

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

a.) Domicile of the carrier


b.) Carrier’s 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 petitioner’s argument is void of merit with reference to Article1(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.
XII. Public Service Act

G.R. No. L-68729 May 29, 1987


Radio Communications of the Philippines, Inc., petitioner
vs National Telecommunications Commission and Kayumanggi Radio Network
Ponente: Gutierrez, Jr.

Facts: Petitioner seeks the reversal of the decision of NTC which ordered Radio Comm to desist from
operating its radio telephone services in Catarman, Samar and Sorsogon. December 14, 1983 Kayumanggi
filed a complaint with NTC alleging that Radio Comm was operating in Catarman without certificate of
public convenience and necessity. Radio Comm counter-alleged that its telephone services in the areas are
covered by the legislative franchise recognized by NTC and its predecessor Public Service Commission.
After conducting hearing, NTC ordered Radio Comm to immediately cease from operating in thise areas.
Stating that EO 546 a certificate of public convenience and necessity is mandatory for the operation of
communication utilities and services including radio communications.Radio Comm then filed a motion
for reconsideration which was denied. Hence, the present petition.

Issue: Whether or not Radio Comm a grantee of legislative franchise to operate a radio company is required
to secure a certificate of public convenience and necessity before it can operate

Ruling: Petition has no merit.

PD No. 1 reorganizing the executive branch of the National Government, Public Service Commission was
abolished and its functions were transferred to 3 regulatory boards. The functions transferred were still
subject to limitations provided in the Public Service Law as amended.

The new provision states that the exemption enjoyed by radio companies no longer exists because of the
changes. And the argument of the petitioner that the franchise has been operating for a long time already
cannot be sustained.

In view of the foregoing, we find no reason to disturb the public respondent's findings of fact, and
conclusions of law insofar as the private respondent was authorized to operate in Catarman, Samar and
San Jose, Mindoro. As a rule, the Commission's findings of fact, if supported by substantial evidence, are
conclusive upon this Court. We may modify or ignore them only when it clearly appears that there is no
evidence to support reasonably such a conclusion. (Halili v. Daplas, 14 SCRA 14). The petitioner has not
shown why the private respondent should be denied the authority to operate its services in Samar and
Mindoro. It has not overcome the presumption that when the public respondent disturbed the petitioner's
monopoly in certain areas, it was doing so pursuant to public interest and the common good.
GAUDIOSO EREZO, ET AL., The principle upon which this doctrine is based is that in dealing with vehicles
vs.AGUEDO JEPTE, registered under the Public Service Law, the public has the right to assume or
G.R. No. L-9605 September 30, 1957 EN BANC presume that the registered owner is the actual owner thereof, for it would be
Ponente: LABRADOR, J.: difficult for the public to enforce the actions that they may have for injuries caused
to them by the vehicles being negligently operated if the public should be required
FACTS: JEPTE is the registered owner of a six by six truck while the same was being to prove who the actual owner is. How would the public or third persons know against
driven by Rodolfo Espino y Garcia, it collided with a taxicab at the intersection of San whom to enforce their rights in case of subsequent transfers of the vehicles? We do not
Andres and Dakota Streets, Manila. As the truck went off the street, it hit Ernesto Erezo imply by this doctrine, however, that the registered owner may not recover whatever
and another, and the former suffered injuries, as a result of which he died. The driver was amount he had paid by virtue of his liability to third persons from the person to whom he
prosecuted for homicide through reckless negligence in CFI of Manila. The accused had actually sold, assigned or conveyed the vehicle.
pleaded guilty and was sentenced to suffer imprisonment and to pay the heirs of Ernesto
Erezo the sum of P3,000. As the amount of the judgment could not be enforced against Under the same principle the registered owner of any vehicle, even if not used for a public
him, plaintiff brought this action against the registered owner of the truck, the defendant- service, should primarily be responsible to the public or to third persons for injuries
appellant. The circumstances material to the case are stated by the court in its decision. caused the latter while the vehicle is being driven on the highways or streets. The
members of the Court are in agreement that the JEPTE should be held liable to
The defendant does not deny at the time of the fatal accident the cargo truck plaintiff-appellee for the injuries occasioned to the latter because of the negligence
driven by Rodolfo Espino y Garcia was registered in his name. He, however, of the driver even if the defendant-appellant was no longer the owner of the vehicle
claims that the vehicle belonged to the Port Brokerage, of which he was the at the time of the damage because he had previously sold it to another. What is the
broker at the time of the accident. He explained, and his explanation was legal basis for his (defendant-appellant's) liability?.
corroborated by Policarpio Franco, the manager of the corporation, that the trucks
of the corporation were registered in his name as a convenient arrangement so as There is a presumption that the owner of the guilty vehicle is the defendant-
to enable the corporation to pay the registration fee with his backpay as a pre-war appellant as he is the registered owner in the Motor Vehicle Office. Should he not be
government employee. Franco, however, admitted that the arrangement was not allowed to prove the truth, that he had sold it to another and thus shift the responsibility
known to the Motor Vehicle Office. for the injury to the real and actual owner? The defendant holds the affirmative of this
proposition; the trial court held the negative.
The trial court held that as the defendant-appellant represented himself to be the owner of
the truck and the Motor Vehicle Office, relying on his representation, registered the The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that no vehicle
vehicles in his name, the Government and all persons affected by the representation had may be used or operated upon any public highway unless the same is properly
the right to rely on his declaration of ownership and registration. It, therefore, held that the registered. 1âw phïl.nêt

JEPTE is liable because he cannot be permitted to repudiate his own declaration


The above policy and application of the law may appear quite harsh and would seem to
ISSUE; WON JEPTE is liable at the time of the accident the relation of employer and conflict with truth and justice. We do not think it is so. A registered owner who has
employee between the driver and defendant-appellant was not established, it having already sold or transferred a vehicle has the recourse to a third-party complaint, in the
been proved at the trial that the owner of the truck was the Port Brokerage same action brought against him to recover for the damage or injury done, against the
vendee or transferee of the vehicle. The inconvenience of the suit is no justification for
HELD: YES, We find no merit or justice in the above contention. relieving him of liability; said inconvenience is the price he pays for failure to comply with
the registration that the law demands and requires.
In previous decisions, We already have held that the registered owner of a certificate
of public convenience is liable to the public for the injuries or damages suffered by In synthesis, we hold that the registered owner, the defendant-appellant herein, is
passengers or third persons caused by the operation of said vehicle, even though primarily responsible for the damage caused to the vehicle of the plaintiff-appellee,
the same had been transferred to a third person but he (defendant-appellant) has a right to be indemnified by the real or actual owner of
the amount that he may be required to pay as damage for the injury caused to the
plaintiff-appellant. 1âw phïl.nêt