Bill of Lading Case Digests

SBU Transportation Law Case Doctrines|Mario Trinchera Jr.
|2018-2019|
Cases Doctrine
Bill of Lading
HE Heacock vs Macondray Issues: May a common carrier, by stipulations inserted in the bill of lading, limit its
liability for the loss of or damage to the cargo to an agreed valuation of the latter?
On June 1919, the plaintiff
delivered on board of Whether or not clause 1 or clause 9 of the bill should be adopted to determine defendant’s
steamship Bolton Castle in liability.
New York, four cases of
merchandise one of which Yes.
contained twelve (12) 8-day
Edmond clocks for Three kinds of stipulations have often been made in a bill of lading. The first is one
transportation to Manila, and exempting the carrier from any and all liability for loss or damage occasioned by its own
paid freight on said clocks negligence. The second is one providing for an unqualified limitation of such liability to
from New York to Manila in an agreed valuation. And the third is one limiting the liability of the carrier to an agreed
advance. The said valuation unless the shipper declares a higher value and pays a higher rate of freight.
steampship arrived in Manila According to an almost uniform weight of authority, the first and second kinds of
on September 1919, stipulations are invalid as being contrary to public policy, but the third is valid and
consigned to the defendant enforceable.
herein as agent and
representative of said vessel The authorities relied upon by the plaintiff-appellant support the proposition that the first
in said port. Neither the and second stipulations in a bill of lading are invalid.
master of said vessel nor the
defendant herein, as its A reading of clauses 1 and 9 of the bill of lading here in question, however, clearly shows
agent, delivered to the that the present case falls within the third stipulation, to wit: That a clause in a bill of
plaintiff the aforesaid twelve lading limiting the liability of the carrier to a certain amount unless the shipper declares a
8-day Edmond clocks, higher value and pays a higher rate of freight, is valid and enforceable. This proposition is
although demand was made supported by a uniform lien of decisions of the Supreme Court of the United States
upon them for their delivery. rendered both prior and subsequent to the passage of the Harter Act, from the case of Hart
vs. Pennsylvania.
The invoice value of the said
twelve 8-day Edmond clocks “Where a contract of carriage, signed by the shipper, agreeing on a valuation of the
in the city of New York was property carried, with the rate of freight based on the condition that the carrier assumes
P22 and the market value of liability only to the extent of the agreed valuation, even in case of loss or damage by the
the same in the City of negligence of the carrier, the contract will be upheld as proper and lawful mode of
Manila at the time when they securing a due proportion between the amount for which the carrier may be responsible
should have been delivered and the freight he receives, and protecting himself against extravagant and fanciful
to the plaintiff was P420. valuations." (Hart vs Pennyslavania)
The bill of lading issued “If a common carrier gives to a shipper the choice of two rates, the lower of the
contained, among others, the conditioned upon his agreeing to a stipulated valuation of his property in case of loss,
following clauses: even by the carrier's negligence, if the shipper makes such a choice, understandingly and
freely, and names his valuation, he cannot thereafter recover more than the value which
1. The value of the goods he thus places upon his property. As a matter of legal distinction, estoppel is made the
receipted does not exceed basis of this ruling, — that, having accepted the benefit of the lower rate, in common
$500 per freight ton, or, in honesty the shipper may not repudiate the conditions on which it was obtained, — but the
proportion for any part of a rule and the effect of it are clearly established." (Union Pacific Railways vs Burke)
ton, unless the value be
expressly stated herein and A limitation of liability based upon an agreed value to obtain a lower rate does not
ad valorem freight paid conflict with any sound principle of public policy; and it is not conformable to plain
thereon. principles of justice that a shipper may understate value in order to reduce the rate and
then recover a larger value in case of loss.
9. In the event of claims for
short delivery of, or damage It seems clear from the foregoing authorities that the clauses (1 and 9) of the bill of lading
to, cargo being made, the here in question are not contrary to public order. Article 1255 of the Civil Code provides
carrier shall not be liable for that "the contracting parties may establish any agreements, terms and conditions they may
more than the net invoice deem advisable, provided they are not contrary to law, morals or public order." Said
price plus freight and clauses of the bill of lading are, therefore, valid and binding upon the parties thereto.
insurance less all charges
saved, and any loss or No.
damage for which the carrier
may be liable shall be The defendant-appellant contends that these two clauses, if construed together, mean that
Caveat Lector: Read at your own risk. AGDV

SBU Transportation Law Case Doctrines|Mario Trinchera Jr. |2018-2019|
adjusted pro rata on the said the shipper and the carrier stipulate and agree that the value of the goods receipted for
basis. does not exceed $500 per freight ton, but should the invoice value of the goods be less
than $500 per freight ton, then the invoice value governs; that since in this case the
The case containing the invoice value is more than $500 per freight ton, the latter valuation should be adopted and
aforesaid twelve 8-day that according to that valuation, the proportionate value of the clocks in question is only
Edmond clocks measured 3 P76.36 which the defendant is ready and willing to pay to the plaintiff.
cubic feet, and the freight
ton value thereof was It will be noted, however, that whereas clause 1 contains only an implied undertaking to
$1,480, U. S. currency. settle in case of loss on the basis of not exceeding $500 per freight ton, clause 9 contains
an express undertaking to settle on the basis of the net invoice price plus freight and
No greater value than $500, insurance less all charges saved. "Any loss or damage for which the carrier may be liable
U. S. currency, per freight shall be adjusted pro rata on the said basis," clause 9 expressly provides. It seems to us
ton was declared by the that there is an irreconcilable conflict between the two clauses with regard to the measure
plaintiff on the aforesaid of defendant's liability. It is difficult to reconcile them without doing violence to the
clocks, and no ad valorem language used and reading exceptions and conditions into the undertaking contained in
freight was paid thereon. clause 9 that are not there.
On or about October 9, 1919, This being the case, the bill of lading in question should be interpreted against the
the defendant tendered to the defendant carrier, which drew said contract. "A written contract should, in case of doubt,
plaintiff P76.36, the be interpreted against the party who has drawn the contract."
proportionate freight ton
value of the aforesaid twelve It is a well-known principle of construction that ambiguity or uncertainty in an agreement
8-day Edmond clocks, in must be construed most strongly against the party causing it. These rules as applicable to
payment of plaintiff's claim, contracts contained in bills of lading. "In construing a bill of lading given by the carrier
which tender plaintiff for the safe transportation and delivery of goods shipped by a consignor, the contract will
rejected. be construed most strongly against the carrier, and favorably to the consignor, in case of
doubt in any matter of construction."
Macondray vs. Acting Issue: Whether or not the deficiency of the vessel’s manifest have been supplied by the
Commissioner of Customs bill of lading by indicating the whole shipment therein.
On November 2, 1962, the No.

vessel S/S TAI PING", of
which petitioner is the local The inclusion of the unmanifested cargoes in the Bill of Lading does not satisfy the
agent, arrived at the port of requirement of the aforequoted sections of the Tariff and Customs Code. It is to be noted
Manila from California that nowhere in the said section is the presentation of a Bill of Lading required, but only
conveying shipments among the presentation of a Manifest containing a true and accurate description of the cargoes.
which was a shipment of one This is for the simple reason that while a manifest is a declaration of the entire cargo, a
(1) coil carbon steel, one (1) bill of lading is but a declaration of a specific part of the cargo and is a matter of business
bundle carbon steel flat and convenience based exclusively on a contract.The object of a manifest is to furnish the
one (1) carton containing customs officers with a list to check against, to inform our revenue officers what goods
carbon tool holders carbide are being brought into the country, and to provide a safeguard against goods being
cutters, ground, all of which brought into this country on a vessel and then smuggled ashore.
appeared in the Bill of
Lading. The shipment, In short, while a bill of lading is ordinarily merely a convenient commercial instrument
except the one (1) coil designed to protect the importer or consignee, a manifest of the cargo is absolutely
carbon steel was not essential to the exportation or importation of property in all vessels, the evident intent and
reflected in the Inward object of which is to impose upon the owners and officers of such vessel an imperative
Cargo Manifest as obligation to submit lists of the entire loading of the ship in the prescribed form, to
required by the Tariff and facilitate the labors of the customs and immigration officers and to defeat any attempt to
Customs Code of the make use of such vessels to secure the unlawful entry of persons or things into the
Philippines. country.3 Since therefore, the purpose served by the manifest is far different from that of
the bill of lading, We cannot acceptor place an imprimatur on the contention of petitioner
The Collector of Customs that the entries in the bill of lading adequately supplied the deficiency of the manifest and
required petitioner to show cured it of its infirmity. The mandate of the law is clear and We cannot settle for less. The
cause why no administrative law imposes the absolute obligation, under penalty for failure, upon every vessel from a
fine should be imposed upon foreign port to have "on board complete written or typewritten manifests of all her cargo,
said vessel. Counsel for signed by the master". Where the law requires a manifest to be kept or delivered, it is not
petitioner wrote a letter to complied with unless the manifest is true and accurate.
the Collector of Customs

informing that from our

client's records, the disputed
shipment was described in
the ship's manifest as "1 coil
carbon steel" only. However,
the bill of lading issued and
surrendered to our client,
duly endorsed by the
consignee, called for the
delivery of 1 coil carbon
steel, 1 bundle carbon steel
flat and 1 carbon containing
tool holders carbide cutters
ground. Upon investigation
by our client, it was verified
that the vessel actually
carried on board and
discharged at Manila as
called for in the bill of
lading.
The Collector of Customs

replied that petitioner is free
to file a protest but have to
pay fine first. Thus petitioner
paid the fine under protest.
Magellan vs CA Issue: Whether or not the bill of lading, which reflected the transhipment in violation of
the letter of credit was consented to by petitioner Magellan.
On May 1980, plaintiff
Magellan Manufacturers Yes.
(MMMC) entered into a
contract with Choju Co. of It is a long standing jurisprudential rule that a bill of lading operates both as a receipt and
Japan to export anahaw fans as a contract. It is a receipt for the goods shipped and a contract to transport and deliver
for and in consideration of the same as therein stipulated. As a contract, it names the parties, which includes the
$23,220.00. As payment consignee, fixes the route, destination, and freight rates or charges, and stipulates the
thereof, a letter of credit was rights and obligations assumed by the parties. Being a contract, it is the law between the
issued to plaintiff MMMC parties who are bound by its terms and conditions provided that these are not contrary to
by the buyer. Through its law, morals, good customs, public order and public policy.
president, James Cu,
MMMC then contracted F.E. A bill of lading usually becomes effective upon its delivery to and acceptance by the
Zuellig, a shipping agent, shipper. It is presumed that the stipulations of the bill were, in the absence of fraud,
through its solicitor, one Mr. concealment or improper conduct, known to the shipper, and he is generally bound by his
King, to ship the anahaw acceptance whether he reads the bill or not.
fans through the other
appellee, Orient Overseas The holding in most jurisdictions has been that a shipper who receives a bill of lading
Container Lines, Inc., without objection after an opportunity to inspect it, and permits the carrier to act on it by
(OOCL) specifying that he proceeding with the shipment is presumed to have accepted it as correctly stating the
needed an on-board bill of contract and to have assented to its terms. In other words, the acceptance of the bill
lading and that transhipment without dissent raises the presumption that all the terms therein were brought to the
is not allowed under the knowledge of the shipper and agreed to by him and, in the absence of fraud or mistake, he
letter of credit. On June 30, is estopped from thereafter denying that he assented to such terms. This rule applies with
1980, appellant MMMC paid particular force where a shipper accepts a bill of lading with full knowledge of its contents
F.E. Zuellig the freight and acceptance under such circumstances makes it a binding contract.
charges and secured a copy
of the bill of lading which In the light of the series of events that transpired in the case at bar, there can be no logical
was presented to Allied conclusion other than that the petitioner had full knowledge of, and actually consented to,
Bank. The bank then the terms and conditions of the bill of lading thereby making the same conclusive as to it,
credited the amount of and it cannot now be heard to deny having assented thereto. As borne out by the records,
US$23,220.00 covered by James Cu himself, in his capacity as president of MMMC, personally received and signed
the letter of credit to the bill of lading. On practical considerations, there is no better way to signify consent

appellant's account. than by voluntarry signing the document which embodies the agreement.
However, when appellant's
president James Cu, went Article 1371 of the Civil Code provides that "(i)n order to judge the intention of the
back to the bank later, he contracting parties, their contemporaneous and subsequent acts shall be principally
was informed that the considered."
payment was refused by the
buyer allegedly because The terms of the contract as embodied in the bill of lading are clear and thus obviates the
there was no on-board bill of need for any interpretation. The intention of the parties which is the carriage of the cargo
lading, and there was a under the terms specified thereunder and the wordings of the bill of lading do not
transhipment of goods. As a contradict each other.
result of the refusal of the
buyer to accept, upon Note:
appellant's request, the Transhipment: "the act of taking cargo out of one ship and loading it in another,"or "the
anahaw fans were shipped transfer of goods from the vessel stipulated in the contract of affreightment to another
back to Manila by appellees, vessel before the place of destination named in the contract has been reached,"or "the
for which the latter transfer for further transportation from one ship or conveyance to another."
demanded from appellant
payment of P246,043.43. The fact of transhipment is not dependent upon the ownership of the transporting ships or
conveyances or in the change of carriers, as the petitioner seems to suggest, but rather on
the fact of actual physical transfer of cargo from one vessel to another.
Saludo vs CA Issue: Whether or not respondent PAL should be liable for the switch of the bodies which
happened on October 27, 1976 since PAL issued its Air Waybill on October 26, and from
After the death of plaintiffs' that day, it is charged with exercising extraordinary diligence.
mother, Crispina Galdo
Saludo, in Chicago Illinois, No.
(on) October 23, 1976 (Exh.
A), Pomierski and Son A bill of lading is a written acknowledgment of the receipt of the goods and an agreement
Funeral Home of Chicago, to transport and deliver them at a specified place to a person named or on his order. Such
made the necessary instrument may be called a shipping receipt, forwarder's receipt and receipt for
arrangements for the transportation. The designation, however, is immaterial. It has been hold that freight
shipment, of the remains tickets for bus companies as well as receipts for cargo transported by all forms of
from Chicago to the transportation, whether by sea or land, fall within the definition. Under the Tariff and
Philippines. Pomierski Customs Code, a bill of lading includes airway bills of lading.
brought the remains to
C.M.A.S. (Continental The two-fold character of a bill of lading is all too familiar; it is a receipt as to the
Mortuary Air Services) at the quantity and description of the goods shipped and a contract to transport the goods
airport (Chicago) C.M.A.S. to the consignee or other person therein designated, on the terms specified in such
booked the shipment with instrument.
PAL with Pomierski F.H. as
the shipper and Mario Logically, since a bill of lading acknowledges receipt of goods to be transported, delivery
(Maria) Saludo as the of the goods to the carrier normally precedes the issuance of the bill; or, to some extent,
consignee. PAL Airway Bill delivery of the goods and issuance of the bill are regarded in commercial practice as
No. 079-01180454 Ordinary simultaneous acts. However, except as may be prohibited by law, there is nothing to
was issued. The routing was prevent an inverse order of events, that is, the execution of the bill of lading even
from Chicago to San prior to actual possession and control by the carrier of the cargo to be transported.
Francisco on October 27, There is no law which requires that the delivery of the goods for carriage and the issuance
1976 and from San Francisco of the covering bill of lading must coincide in point of time or, for that matter, that the
to Manila on board PAL former should precede the latter.
Flight No. 107 of the same
date, and from Manila to A bill of lading, when properly executed and delivered to a shipper, is evidence that the
Cebu on board PAL Flight carrier has received the goods described therein for shipment. Except as modified by
149 of October 29, 1976 statute, it is a general rule as to the parties to a contract of carriage of goods in connection
with which a bill of lading is issued reciting that goods have been received for
Upon arrival at San transportation, that the recital being in essence a receipt alone, is not conclusive, but may
Francisco by petitioner, she be explained, varied or contradicted by parol or other evidence.
went to the TWA counter
there to inquire about her While we agree with petitioners' statement that "an airway bill estops the carrier from
mother's remains. She was denying receipt of goods of the quantity and quality described in the bill," a further
told they did not know reading and a more faithful quotation of the authority cited would reveal that "(a) bill of
anything about it. lading may contain constituent elements of estoppel and thus become something more

than a contract between the shipper and the carrier. . . . (However), as between the
She then called Pomierski shipper and the carrier, when no goods have been delivered for shipment no recitals
that her mother's remains in the bill can estop the carrier from showing the true facts . . . Between the consignor
were not at the West Coast of goods and receiving carrier, recitals in a bill of lading as to the goods shipped raise
terminal, and Pomierski only a rebuttable presumption that such goods were delivered for shipment. As between
immediately called the consignor and a receiving carrier, the fact must outweigh the recital."
C.M.A.S., which informed
him that the remains were on Note:
a plane to Mexico City, that
there were two bodies at the To support their assertion, petitioners rely on the jurisprudential dictum, both under
terminal, and somehow they American and Philippine law, that "(t)he issuance of a bill of lading carries the
were switched. presumption that the goods were delivered to the carrier issuing the bill, for immediate
shipment, and it is nowhere questioned that a bill of lading is prima facie evidence of the
The following day October receipt of the goods by the carrier. . . . In the absence of convincing testimony
28, 1976, remains of establishing mistake, recitals in the bill of lading showing that the carrier received the
Crispina Saludo arrived (in) goods for shipment on a specified date control
San Francisco from Mexico
on board American Airlines.
This shipment was
transferred to or received by
PAL at 1945H or 7:45 p.m. It
arrived (in) Manila on
October 30, 1976, a day after
its expected arrival on
October 29, 1976.
Ysmael &Co. vs Issues: Whether or not the plaintiff filed the complaint out of time.
Limgengco Whether or not the limitation printed in the bill of lading is controlling.
Plaintiff, a domestic Yes.

corporation, seeks to recover
from the defendants It appears that the plaintiff made its claim of loss within seven days after receipt of
P9,940.95 the alleged value information that 160 cases only were delivered.
of four cases of merchandise
which it delivered to the In the case of Aguinaldo vs. Daza in which the printed conditions on the bill of lading
steamship Andres on were identical with those in the instant case, the action was not commenced for more than
October 25, 1922, at Manila year after the delivery of the goods by the plaintiff and the receipt of the bill of lading,
to be shipped to Surigao, but and it was there held that:
which were never delivered
to Salomon Sharuff, the We are of the opinion that, having regard to the situation involved in this shipment, and
consignee, or returned to the the slowness of communication between Manila and Catbalogan, the contractual
plaintiff. limitation stated in this bill of lading with respect to the time for presentation of the
written claim was insufficient.
The defendants alleged
among others: that under the We are clearly of the opinion that the action was brought with a "reasonable time" as
printed conditions appearing those words are specified and defined in the authorities cited. It is true that both the
on the back of the bill of plaintiff and the defendants are residents of the City of Manila, but it is also true that
lading, plaintiff's right of Surigao where the goods in question were to be delivered is one of the most distant places
action is barred for the from Manila in the Philippine Islands. In the very nature of things, plaintiff would not
reason that it was not want to commence its action until such time as it had made a full and careful investigation
brought within sixty days of all of the material facts and even the law of the case, so as to determine whether or not
from the time the cause of defendants were liable for its loss.
action accrued and that as
contained in the bill of No.
lading, the defendants are
not liable in excess of three The ship in question was a common carrier and, as such, must have been operated as a
hundred pesos (P300) for public utility. It is a matter of common knowledge that large quantities of silk are
any package of silk unless imported in the Philippine Islands. Clause 12 above quoted places a limit of P300 "for any
the value and contents of single package of silk." The evidence shows that 164 "cases" were shipped, and that the
such packages are correctly value of each case was very near P2,500. In this situation, the limit of defendants' liability
declared in the bill of lading for each case of silk "for loss or damage from any cause or for any reason" would put it in

at the time of shipment, etc. the power of the defendants to have taken the whole cargo of 164 cases of silk at a
valuation of P300 for each case, or less than one-eight of its actual value. If that rule of
law should be sustained, no silk would ever be shipped from one island to another in
the Philippines. Such a limitation of value is unconscionable and void as against
public policy.
Corpus Juris, volume 10, p. 154, says:
PAR. 194. 6. Reasonable of Limitation. — The validity of stipulations limiting the

carriers liability is to be determined by their reasonableness and their conformity to the
sound public policy, in accordance with which the obligations of the carrier to the public
are settled. It cannot lawfully stipulate for exemption from liability, unless such
exemption is just and reasonable, and unless the contract is freely and fairly made. No
contractual limitation is reasonable which is subversive of public policy.
Shewaram vs PAL Issue: Whether or not PAL’s liability should be limited to the printed conditons at the
back of the ticket.
Parmanand Shewaram, was
on November 23, 1959, a No.
paying passenger on
defendant's aircraft flight In accordance with the above-quoted provision of Article 1750 of the New Civil Code, the
from Zamboanga City bound pecuniary liability of a common carrier may, by contract, be limited to a fixed amount. It
for Manila; that on the is required, however, that the contract must be "reasonable and just under the
above-mentioned date of circumstances and has been fairly and freely agreed upon."
November 23, 1959, he
checked in three (3) pieces of The requirements provided in Article 1750 of the New Civil Code must be complied with
baggages — a suitcase and before a common carrier can claim a limitation of its pecuniary liability in case of loss,
two (2) other pieces; that the destruction or deterioration of the goods it has undertaken to transport. In the case before
suitcase was mistagged by us We believe that the requirements of said article have not been met. It can not be said
defendant's personnel in that the appellee had actually entered into a contract with the appellant, embodying the
Zamboanga City, as I.G.N. conditions as printed at the back of the ticket stub that was issued by the appellant to the
(for Iligan) with claim check appellee. The fact that those conditions are printed at the back of the ticket stub in letters
No. B-3883, instead of MNL so small that they are hard to read would not warrant the presumption that the appellee
(for Manila). was aware of those conditions such that he had "fairly and freely agreed" to those
conditions. The trial court has categorically stated in its decision that the "Defendant
When plaintiff Parmanand admits that passengers do not sign the ticket, much less did plaintiff herein sign his ticket
Shewaram arrived in Manila when he made the flight on November 23, 1959." We hold, therefore, that the appellee is
on the date of November 23, not, and can not be, bound by the conditions of carriage found at the back of the ticket
1959, his suitcase did not stub issued to him when he made the flight on appellant's plane on November 23, 1959.
arrive with his flight because
it was sent to Iligan. that It having been clearly found by the trial court that the transistor radio and the camera of
after inquiries made by the appellee were lost as a result of the negligence of the appellant as a common carrier,
defendant's personnel it was the liability of the appellant is clear — it must pay the appellee the value of those two
found to have reached Iligan articles.
and the station agent of the
PAL in Iligan caused the In the case of Ysmael and Co. vs. Barreto, 51 Phil. 90, cited by the trial court in support
same to be sent to Manila for of its decision, this Court had laid down the rule that the carrier can not limit its liability
delivery to Mr. Shewaram; for injury to or loss of goods shipped where such injury or loss was caused by its own
that when the plaintiff's negligence.
suitcase arrived in Manila his
Transistor Radio 7 and
Rollflex Camera were
missing, combined value of
which is at 373 pesos.

Ong Yiu vs CA Issue: Whether or not the lower court correctly limited the liability of PAL on account of
the contract printed at the back of the ticket.
On August 26, 1967,
petitioner was a passenger Yes.
of respondent PAL from
Mactan Cebu, bound for There is no dispute that petitioner did not declare any higher value for his luggage, much
Butuan City. He was less did he pay any additional transportation charge.
scheduled to attend the trial
of a case on August 28-31, But petitioner argues that there is nothing in the evidence to show that he had actually
1967. He checked in one entered into a contract with PAL limiting the latter's liability for loss or delay of the
piece of luggage, a blue baggage of its passengers, and that Article 1750* of the Civil Code has not been complied
"maleta". The plane left with.
Mactan Airport, Cebu, at
about 1:00 o'clock P.M., and While it may be true that petitioner had not signed the plane ticket. he is nevertheless
arrived at Bancasi airport, bound by the provisions thereof. "Such provisions have been held to be a part of the
Butuan City, at past 2:00 contract of carriage, and valid and binding upon the passenger regardless of the latter's
o'clock P.M., of the same lack of knowledge or assent to the regulation". It is what is known as a contract of
day. Upon arrival, petitioner "adhesion", in regards which it has been said that contracts of adhesion wherein one party
claimed his luggage but it imposes a ready made form of contract on the other, as the plane ticket in the case at bar,
could not be found. PAL are contracts not entirely prohibited. The one who adheres to the contract is in reality free
Manila wired PAL Cebu to reject it entirely; if he adheres, he gives his consent.
advising that the luggage had
been over carried to Manila And as held in Randolph v. American Airlines, "a contract limiting liability upon an
and that it would be agreed valuation does not offend against the policy of the law forbidding one from
forwarded to Cebu on the contracting against his own negligence.
same day. Instructions were
also given that the luggage Considering, therefore, that petitioner had failed to declare a higher value for his baggage,
be immediately forwarded to he cannot be permitted a recovery in excess of P100.00.Besides, passengers are advised
Butuan City on the first not to place valuable items inside their baggage but "to avail of our V-cargo service”. I t is
available flight. PAL Cebu likewise to be noted that there is nothing in the evidence to show the actual value of the
sent a message to PAL goods allegedly lost by petitioner.
Butuan that the luggage
would be forwarded on the
following day, August 27, Note:
196'
8. BAGGAGE LIABILITY ... The total liability of the Carrier for lost or damaged
Early in the morning of the baggage of the passenger is LIMITED TO P100.00 for each ticket unless a passenger
next day, August 27, 1967, declares a higher valuation in excess of P100.00, but not in excess, however, of a total
petitioner went to the valuation of P1,000.00 and additional charges are paid pursuant to Carrier's tariffs.
Bancasi Airport to inquire
about his luggage. He did
not wait, however, for the
morning flight which arrived
at 10:00 o'clock that
morning. Then Emilio
Dagorro then delivered the
"maleta" to petitioner, with
the information that the lock
was open. Upon inspection,
petitioner found that a folder
containing certain exhibits,
transcripts and private
documents on the civil case
were missing, aside from
two gift items for his
parents-in-law. Petitioner
refused to accept the
luggage.

Aboitiz vs CA Issue: Whether or not liability of the petitioner should be fixed at US$500.00 per
package/container, as stipulated in the bill of lading and not at the actual value of the
On October 28, 1980, the cargo.
vessel M/V "P. Aboitiz" took
on board in Hongkong for
shipment to Manila some No.
cargo consisting of one (1)
twenty (20)-footer container While it is true that in the bill of lading there is such stipulation that the liability of the
holding 271 rolls of goods carrier is US$500.00 per package/container/customary freight, there is an exception, that
for apparel covered by Bill is, when the nature and value of such goods have been declared by the shipper
of Lading No. 515-M and before shipment and inserted in the bill of lading. This is provided for in Section 4(5)
one (1) forty (40)-footer of the Carriage of Goods by Sea Act to wit —
container holding four
hundred forty- seven (447) (5) Neither the carrier nor the ship shall in any event be or become liable for any loss
rolls, ten (10) bulk and or damage to or in connection with the transportation of goods in an amount exceeding
ninety-five (95) cartons of $500 per package of lawful money of the United States, or in case of goods not shipped in
goods for apparel covered by packages, per customary freight unit, or the equivalent of that sum in other currency,
Bill of Lading No. 505-M. unless the nature and value of such goods have been inserted in the bill of lading. This
The total value, including declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not
invoice value, freightage, be conclusive on the carrier.
customs duties, taxes and
similar imports amounts to By agreement between the carrier, master or agent of the carrier, and the shipper another
US$39,885.85 for the first maximum amount than that mentioned in this paragraph may be fixed: Provided, that such
shipment while that of the maximum shall not be less than the figure above named. In no event shall the carrier be
second shipment amounts to liable for more than the amount of damage actually sustained.
US$94,190.55. Both
shipments were consigned to Neither the carrier nor the ship shall be responsible in any event for loss or damage to or
the Philippine Apparel, Inc. in connection with the transportation of the goods if the nature or value thereof has been
and insured with the General knowingly and fraudulently mis-stated by the shipper in the bill of lading. (Emphasis
Accident Fire and Life supplied.)
Assurance Corporation, Ltd.
(GAFLAC for short). The In this case the description of the nature and the value of the goods shipped are declared
vessel is owned and operated and reflected in the bills of lading. Thus, it is the basis of the liability of the carrier as the
by Aboitiz Shipping actual value of the loss.
Corporation (Aboitiz for
short). Moreover, it is absurd to interpret "container," as provided in the bill of lading to be
valued at US$500.00 each, to refer to the container which is the modern substitute for the
On October 31, 1980 on its hold of the vessel. 9 The package/container contemplated by the law to limit the liability
way to Manila the vessel of the carrier should be sensibly related to the unit in which the shipper packed the goods
sunk and it was declared lost and described them, not a large metal object, functionally a part of the ship, in which the
with all its cargoes. carrier used them to be contained. 10 Such "container" must be given the same meaning
GAFLAC paid the consignee and classification as a "package" and "customary freight unit."
the amounts US$39,885.85
or P319,086.80 and
US$94,190.55 or
P753,524.40 for the lost
cargo. As GAFLAC was
subrogated to all the rights,
interests and actions of the
consignee against Aboitiz, it
filed an action for damages
against Aboitiz in the
Regional Trial Court of
Manila alleging that the loss
was due to the fault and
negligence of Aboitiz and
the master and crew of its
vessel in that they did not
observe the extraordinary
diligence required by law as
regards common carriers.

Sea-Land vs IAC Issue: Whether or not the stipulation limiting the liability of petitioner is valid and should
thus be controlling.
On January 8, 1981, Sea-
Land Service, Inc., received Yes.
from Seaborne Trading
Company in California a It seems clear that even if said section 4(5) of the Carriage of Goods by Sea Act did not
shipment consigned to Sen exist, the validity and binding effect of the liability limitation clause in the bill of lading
Hiap Hing the business name here are nevertheless fully sustainable on the basis alone of the cited Civil Code
used by Paulino Cue in the provisions. That said stipulation is just and reasonable is arguable from the fact that it
wholesale and retail trade echoes Art. 1750 itself in providing a limit to liability only if a greater value is not
Cebu City. declared for the shipment in the bill of lading. To hold otherwise would amount to
questioning the justice and fairness of that law itself, and this the private respondent does
The shipper not having not pretend to do. But over and above that consideration, the lust and reasonable character
declared the value of the of such stipulation is implicit in it giving the shipper or owner the option of avoiding
shipment, no value was acrrual of liability limitation by the simple and surely far from onerous expedient of
indicated in the bill of declaring the nature and value of the shipment in the bill of lading. And since the shipper
lading. The bill described the here has not been heard to complaint of having been "rushed," imposed upon or deceived
shipment only as "8 CTNS in any significant way into agreeing to ship the cargo under a bill of lading carrying such
on 2 SKIDS-FILES. Based a stipulation — in fact, it does not appear that said party has been heard from at all insofar
on volume measurements as this dispute is concerned — there is simply no ground for assuming that its agreement
Sea-land charged the shipper thereto was not as the law would require, freely and fairly sought and given.
the total amount of
US$209.28 2 for freight age The private respondent had no direct part or intervention in the execution of the contract
and other charges. The of carriage between the shipper and the carrier as set forth in the bill of lading in question.
shipment was loaded on As pointed out in Mendoza vs. PAL, supra, the right of a party in the same situation as
board the MS Patriot, a respondent here, to recover for loss of a shipment consigned to him under a bill of lading
vessel owned and operated drawn up only by and between the shipper and the carrier, springs from either a relation
by Sea-Land, for discharge of agency that may exist between him and the shipper or consignor, or his status as a
at the Port Of Cebu. stranger in whose favor some stipulation is made in said contract, and who becomes a
party thereto when he demands fulfillment of that stipulation, in this case the delivery of
The shipment arrived in the goods or cargo shipped. In neither capacity can he assert personally, in bar to any
Manila on February 12, provision of the bill of lading, the alleged circumstance that fair and free agreement to
1981, and there discharged such provision was vitiated by its being in such fine print as to be hardly readable.
into the custody of the
arrastre contractor and the Parenthetically, it may be observed that in one comparatively recent case where this
customs and port authorities. Court found that a similar package limitation clause was "(printed in the smallest type on
Between February 13 and the back of the bill of lading, it nonetheless ruled that the consignee was bound thereby on
16, 1981, it was stolen by the strength of authority holding that such provisions on liability limitation are as much a
pilferers and has never been part of a bill of lading as though physically in it and as though placed therein by
recovered. agreement of the parties.
On March 10, 1981, Paulino There can, therefore, be no doubt or equivocation about the validity and enforceability of

Cue, the consignee, made freely-agreed-upon stipulations in a contract of carriage or bill of lading limiting the
formal claim upon Sea-Land liability of the carrier to an agreed valuation unless the shipper declares a higher value
for the value of the lost and inserts it into said contract or bill. This pro position, moreover, rests upon an almost
shipment allegedly uniform weight of authority.
amounting to P179,643.48.
Sea-Land offered to settle Note:
for US$4,000.00, or its then The liability of a common carrier for loss of or damage to goods transported by it under a
Philippine peso equivalent of contract of carriage is governed by the laws of the country of destination.
P30,600.00. asserting that
said amount represented its
maximum liability for the
loss of the shipment under
the package limitation clause
in the covering bill of lading.
Citadel vs CA
Issue: Whether the stipulation limiting the liability of the carrier contained in the bill of
Petitioner Citadel Lines, Inc. lading is binding on the consignee.
(CARRIER) is the general
agent of the vessel "Cardigan Yes.
Bay/Strait Enterprise," while
respondent Manila Wine We, however, find the award of damages in the amount of P312,800.00 for the value of
Merchants, Inc. (hereafter, the goods lost, based on the alleged market value thereof, to be erroneous. It is clearly and
the CONSIGNEE) is the expressly provided under Clause 6 of the aforementioned bills of lading issued by the
consignee. CARRIER that its liability is limited to $2.00 per kilo. Basic is the rule, long since
enshrined as a statutory provision, that a stipulation limiting the liability of the carrier to
On March 17, 1979, the the value of the goods appearing in the bill of lading, unless the shipper or owner declares
vessel "Cardigan Bay/Strait a greater value, is binding. 14 Further, a contract fixing the sum that may be recovered by
Enterprise" loaded on board the owner or shipper for the loss, destruction or deterioration of the goods is valid, if it is
at England, for carriage to reasonable and just under the circumstances, and has been fairly and freely agreed upon.
Manila, 180 Filbrite cartons
of mixed British The CONSIGNEE itself admits in its memorandum that the value of the goods shipped
manufactured cigarettes does not appear in the bills of lading. Hence, the stipulation on the carrier's limited
called "Dunhill International liability applies. There is no question that the stipulation is just and reasonable under the
Filter" and "Dunhill circumstances and have been fairly and freely agreed upon. In Sea-land Service, Inc. vs.
International Menthol," as Intermediate Appellate Court, et al. we there explained what is a just and reasonable, and
evidenced by Bill of Lading. a fair and free, stipulation, in this wise:
The shipment arrived on
Manila on April 18, 1979. It . . . That said stipulation is just and reasonable arguable from the fact that it echoes Art. 1750 itself in
was received by E. Razon, providing a limit to liability only if a greater value is not declared for the shipment in the bill of
Inc. (later known as Metro lading. To hold otherwise would amount to questioning the justice and fairness of that law itself, and
this the private respondent does not pretend to do. But over and above that consideration the just and
Port Service, Inc. and
reasonable character of such stipulation is implicit in it giving the shipper or owner the option of
referred to herein as the avoiding accrual of liability limitation by the simple and surely far from onerous expedient of
ARRASTRE). declaring the nature and value of the shipment in the bill of lading. And since the shipper here has
not been heard to complain of having been "rushed," imposed upon or deceived in any significant
On April 30, 1979, the way into agreeing to ship the cargo under a bill of lading carrying such a stipulation — in fact, it does
container van, which not appear, that said party has been heard from at all insofar as this dispute is concerned — there is
contained two shipments was simply no ground for assuming that its agreement thereto was not as the law would require, freely
stripped. One shipment was and fairly sought and well.
delivered and the other
shipment consisting of the The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per carton.
imported British Since 90 cartons were lost and the weight of said cartons is 2,233.80 kilos, at $2.00 per
manufactured cigarettes was kilo the CARRIER's liability amounts to only US$4,467.60.
palletized. Due to lack of
space at the Special Cargo
Coral, the aforesaid
cigarettes were placed in two

containers duly padlocked

and sealed by the
representative of the
CARRIER.
In the morning of May 1,

1979, the CARRIER'S
headchecker discovered that
container van No. BENU
201009-9 had a different
padlock and the seal was
tampered with. It was found
that 90 cases of imported
British manufactured
cigarettes were missing.
Everett vs CA Issues: Whether or not the limited liability clause in the bill of lading is valid.
Whether or not consignee is bound by the stipulations in the bill of lading.
Private respondent imported
three crates of bus spare Yes.
parts marked as MARCO
C/No. 12, MARCO C/No. 13 ART. 1749, ART. 1750.
and MARCO C/No. 14, from
its supplier, Maruman Sea Land Service, Inc. vs Intermediate Appellate Court:
Trading Company, Ltd.
(Maruman Trading), a It seems clear that even if said section 4 (5) of the Carriage of Goods by Sea Act did not
foreign corporation based in exist, the validity and binding effect of the liability limitation clause in the bill of lading
Inazawa, Aichi, Japan. The here are nevertheless fully sustainable on the basis alone of the cited Civil Code
crates were shipped from Provisions. That said stipulation is just and reasonable is arguable from the fact that it
Nagoya, Japan to Manila on echoes Art. 1750 itself in providing a limit to liability only if a greater value is not
board declared for the shipment in the bill of lading. To hold otherwise would amount to
ADELFAEVERETTE, a questioning the justness and fairness of the law itself, and this the private respondent does
vessel owned by petitioners not pretend to do. But over and above that consideration, the just and reasonable character
principal, Everett Orient of such stipulation is implicit in it giving the shipper or owner the option of avoiding
Lines. The said crates were accrual of liability limitation by the simple and surely far from onerous expedient of
covered by Bill of Lading declaring the nature and value of the shipment in the bill of lading..
No. NGO53MN.
Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting
Upon arrival at the port of the common carriers liability for loss must be reasonable and just under the
Manila, it was discovered circumstances, and has been freely and fairly agreed upon.
that the crate marked
MARCO C/No. 14 was The stipulations are, to our mind, reasonable and just. In the bill of lading, the carrier
missing. This was confirmed made it clear that its liability would only be up to One Hundred Thousand (Y100,000.00)
and admitted by petitioner in Yen. However, the shipper, Maruman Trading, had the option to declare a higher
its letter of January 13, 1992 valuation if the value of its cargo was higher than the limited liability of the carrier.
addressed to private Considering that the shipper did not declare a higher valuation, it had itself to blame for
respondent, which thereafter not complying with the stipulations.
made a formal claim upon
petitioner for the value of the Yes.
lost cargo amounting to One
Million Five Hundred Fifty Sealand vs CA:
Two Thousand Five
Hundred (Y1,552,500.00) x x x the right of a party in the same situation as respondent here, to recover for loss of a
Yen, the amount shown in an shipment consigned to him under a bill of lading drawn up only by and between the
Invoice No. MTM-941, shipper and the carrier, springs from either a relation of agency that may exist between
dated November 14, 1991. him and the shipper or consignor, or his status as stranger in whose favor some stipulation
However, petitioner offered is made in said contract, and who becomes a party thereto when he demands fulfillment of
to pay only One Hundred that stipulation, in this case the delivery of the goods or cargo shipped. In neither capacity

Thousand (Y100,000.00) can he assert personally, in bar to any provision of the bill of lading, the alleged
Yen, the maximum amount circumstance that fair and free agreement to such provision was vitiated by its being in
stipulated under Clause 18 of such fine print as to be hardly readable. Parenthetically, it may be observed that in one
the covering bill of lading comparatively recent case (Phoenix Assurance Company vs. Macondray & Co., Inc., 64
which limits the liability of SCRA 15) where this Court found that a similar package limitation clause was printed in
petitioner. the smallest type on the back of the bill of lading, it nonetheless ruled that the consignee
was bound thereby on the strength of authority holding that such provisions on liability
limitation are as much a part of a bill of lading as though physically in it and as though
placed therein by agreement of the parties.
When private respondent formally claimed reimbursement for the missing goods from
petitioner and subsequently filed a case against the latter based on the very same bill of
lading, it (private respondent) accepted the provisions of the contract and thereby made
itself a party thereto, or at least has come to court to enforce it. Thus, private respondent
cannot now reject or disregard the carriers limited liability stipulation in the bill of lading.
In other words, private respondent is bound by the whole stipulations in the bill of lading
and must respect the same.
British Airways vs CA Issue: Whether or not petitioner’s liability to private respondent should be limited.
On April 16, 1989, Mahtani No. There was a waiver.

decided to visit his relatives
in Bombay, India. In In the instant case, it is apparent that the contract of carriage was between Mahtani and
anticipation of his visit, he BA. Moreover, it is indubitable that his luggage never arrived in Bombay on time.
obtained the services of a
certain Mr. Gumar to prepare In this regard, the trial court granted the following award as compensatory damages:
his travel plans. The latter, in
turn, purchased a ticket from Since plaintiff did not declare the value of the contents in his luggage and even failed to
BA. show receipts of the alleged gifts for the members of his family in Bombay, the most that
can be expected for compensation of his lost luggage (2 suit cases) is Twenty U.S. Dollars
Since BA had no direct ($20.00) per kilo, or a combined value of Four Hundred ($400.00) U.S. Dollars for
flights from Manila to Twenty kilos representing the contents plus Seven Thousand (P7,000.00) Pesos
Bombay, Mahtani had to representing the purchase price of the two (2) suit cases.
take a flight to Hongkong via
PAL, and upon arrival in However, as earlier stated, it is the position of BA that there should have been no separate
Hongkong he had to take a award for the luggage and the contents thereof since Mahtani failed to declare a separate
connecting flight to Bombay higher valuation for the luggage, and therefore, its liability is limited, at most, only to the
on board BA. amount stated in the ticket.
Prior to his departure, Considering the facts of the case, we cannot assent to such specious argument.
Mahtani checked in at the
PAL counter in Manila his Admittedly, in a contract of air carriage a declaration by the passenger of a higher value is
two pieces of luggage needed to recover a greater amount. Article 22(1) of the Warsaw Convention, provides as
containing his clothings and follows:
personal effects, confident
that upon reaching xxxxxxxxx
Hongkong, the same would
be transferred to the BA (2) In the transportation of checked baggage and goods, the liability of the carrier shall be limited to a
flight bound for Bombay. sum of 250 francs per kilogram, unless the consignor has made, at the time the package was handed
over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if
the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared
Unfortunately, when
sum, unless he proves that the sum is greater than the actual value to the consignor at delivery.
Mahtani arrived in Bombay
he discovered that his
American jurisprudence provides that an air carrier is not liable for the loss of baggage in
luggage was missing and
an amount in excess of the limits specified in the tariff which was filed with the proper
that upon inquiry from the
authorities, such tariff being binding on the passenger regardless of the passengers lack of
BA representatives, he was
knowledge thereof or assent thereto. This doctrine is recognized in this jurisdiction.
told that the same might
have been diverted to
Notwithstanding the foregoing, we have, nevertheless, ruled against blind reliance on
London. After patiently
adhesion contracts where the facts and circumstances justify that they should be
waiting for his luggage for
disregarded.

one week, BA finally

advised him to file a claim In addition, we have held that benefits of limited liability are subject to waiver such as
by accomplishing the when the air carrier failed to raise timely objections during the trial when questions and
Property Irregularity Report. answers regarding the actual claims and damages sustained by the passenger were asked.
Back in the Philippines, on Given the foregoing postulates, the inescapable conclusion is that BA had waived the
June 11, 1990, Mahtani filed defense of limited liability when it allowed Mahtani to testify as to the actual damages he
his complaint for damages incurred due to the misplacement of his luggage, without any objection.
and attorneys fees against
BA and Mr. Gumar before
the trial court.
Sweetline vs Teves Issue: Whether or not the conditions printed on the ticket is valid and binding.
Private respondents Atty. No.

Leovigildo Tandog and
Rogelio Tiro, a contractor by By the peculiar circumstances under which contracts of adhesion are entered into —
professions, bought tickets namely, that it is drafted only by one party, usually the corporation, and is sought to be
Nos. 0011736 and 011737 accepted or adhered to by the other party, in this instance the passengers, private
for Voyage 90 on December respondents, who cannot change the same and who are thus made to adhere thereto on the
31, 1971 at the branch office "take it or leave it" basis — certain guidelines in the determination of their validity and/or
of petitioner, a shipping enforceability have been formulated in order to that justice and fan play characterize the
company transporting inter- relationship of the contracting parties. Thus, this Court speaking through Justice J.B.L.
island passengers and Reyes held:
cargoes, at Cagayan de Oro
City. Respondents were to The courts cannot ignore that nowadays, monopolies, cartels and concentration of capital endowed
board petitioner's vessel, with overwhelm economic power, manage to impose upon parties d with them y prepared
M/S "Sweet Hope" bound for 'agreements' that the weaker party may not change one whit his participation in the 'agreement' being
reduced to the alternative 'to take it or leave it,' labelled since Raymond Saleilles 'contracts by
Tagbilaran City via the port
adherence' (contracts d' adhesion) in contrast to those entered into by parties bargaining on an equal
of Cebu. footing. Such contracts (of which policies of insurance and international bill of lading are prime
examples) obviously cap for greater strictness and vigilance on the part of the courts of justice with a
Upon learning that the vessel view to protecting the weaker party from abuses and imposition, and prevent their becoming traps for
was not proceeding to Bohol, the unwary.
since many passengers were
bound for Surigao, private
respondents per advice, went We find and hold that Condition No. 14 printed at the back of the passage tickets should
to the branch office for be held as void and unenforceable for the following reasons:
proper relocation to M/S
"Sweet Town". Because the 1. It is a matter of public knowledge, that there is a dearth of and acute shortage in
said vessel was already filled inter- island vessels plying between the country's several islands, and the facilities they
to capacity, they were forced offer leave much to be desired. Thus, even under ordinary circumstances, the piers are
to agree "to hide at the cargo congested with passengers and their cargo waiting to be transported. The conditions are
section to avoid inspection of even worse at peak and/or the rainy seasons, when Passengers literally scramble to
the officers of the Philippine whatever accommodations may be availed of, even through circuitous routes, and/or at
Coastguard." the risk of their safety — their immediate concern, for the moment, being to be able to
board vessels with the hope of reaching their destinations. The schedules are — as often
Private respondents alleged as not if not more so — delayed or altered.
that they were, during the
trip," "exposed to the Under these circumstances, it is hardly just and proper to expect the passengers to
scorching heat of the sun and examine their tickets received from crowded/congested counters, more often than not
the dust coming from the during rush hours, for conditions that may be printed much charge them with having
ship's cargo of corn grits," consented to the conditions, so printed, especially if there are a number of such conditions
and that the tickets they in fine print, as in this case.
bought at Cagayan de Oro

City for Tagbilaran were not 2. Condition No. 14 is subversive of public policy on transfers of venue of actions.
honored and they were For, although venue may be changed or transferred from one province to another by
constrained to pay for other agreement of the parties in writing t to Rule 4, Section 3, of the Rules of Court, such an
tickets. In view thereof, agreement will not be held valid where it practically negates the action of the claimants,
private respondents sued such as the private respondents herein.
petitioner for damages and
for breach of contract of The philosophy underlying the provisions on transfer of venue of actions is the
carriage in the alleged sum convenience of the plaintiffs as well as his witnesses and to promote the ends of justice.
of P10,000.00 before Considering the expense and trouble a passenger residing outside of Cebu City would
respondents Court of First incur to prosecute a claim in the City of Cebu, he would most probably decide not to file
Instance of Misamis the action at all. The condition will thus defeat, instead of enhance, the ends of justice.
Oriental. Upon the other hand, petitioner has branches or offices in the respective ports of call of its
vessels and can afford to litigate in any of these places.
Note:
Public policy is "that principle of the law which holds that no subject or citizen can
lawfully do that which has a tendency to be injurious to the public or against the public
good.
Alitalia vs IAC Issue: Whether or not the petitioner should be liable for damages, despite returning the
luggage to respondent.
Dr. Felipa Pablo, an
associate professor in the Yes.
University of the
Philippines, was invited to The Hague Protocol amended the Warsaw Convention by removing the provision that if
take part at a meeting of the the airline took all necessary steps to avoid the damage, it could exculpate itself
Department of Research and completely, and declaring the stated limits of liability not applicable "if it is proved that
Isotopes of the Joint FAO- the damage resulted from an act or omission of the carrier, its servants or agents, done
IAEA Division of Atomic with intent to cause damage or recklessly and with knowledge that damage would
Energy in Food and probably result." The same deletion was effected by the Montreal Agreement of 1966,
Agriculture of the United with the result that a passenger could recover unlimited damages upon proof of wilful
Nations in Ispra, Italy. She misconduct.
was invited in view of her
specialized knowledge in The Convention does not thus operate as an exclusive enumeration of the instances of an
"foreign substances in food airline's liability, or as an absolute limit of the extent of that liability. Such a proposition is
and the agriculture not borne out by the language of the Convention, as this Court has now, and at an earlier
environment." She accepted time, pointed out. Moreover, slight reflection readily leads to the conclusion that it
the invitation, and was then should be deemed a limit of liability only in those cases where the cause of the death or
scheduled by the organizers, injury to person, or destruction, loss or damage to property or delay in its transport is not
to read a paper on "The Fate attributable to or attended by any wilful misconduct, bad faith, recklessness, or otherwise
of Radioactive Fusion improper conduct on the part of any official or employee for which the carrier is
Products Contaminating responsible, and there is otherwise no special or extraordinary form of resulting injury.
Vegetable Crops." 3 The The Convention's provisions, in short, do not "regulate or exclude liability for other
program announced that she breaches of contract by the carrier" 26 or misconduct of its officers and employees, or for
would be the second speaker some particular or exceptional type of damage. Otherwise, "an air carrier would be
on the first day of the exempt from any liability for damages in the event of its absolute refusal, in bad faith, to
meeting. To fulfill this comply with a contract of carriage, which is absurd."
engagement, Dr. Pablo
booked passage on petitioner In Pan American World Airways, Inc. v. I.A.C., 28 for example, the Warsaw Convention
airline, ALITALIA. was applied as regards the limitation on the carrier's liability, there being a simple loss of
baggage without any otherwise improper conduct on the part of the officials or employees
She arrived in Milan on the of the airline or other special injury sustained by the passenger.
day before the meeting in
accordance with the itinerary In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the
and time table set for her by employees of petitioner airline; and Dr. Pablo's luggage was eventually returned to her,
ALITALIA. She was belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some
however told by the special species of injury was caused to Dr. Pablo because petitioner ALITALIA
ALITALIA personnel there misplaced her baggage and failed to deliver it to her at the time appointed — a breach of
at Milan that her luggage its contract of carriage, to be sure — with the result that she was unable to read the paper

was "delayed inasmuch as and make the scientific presentation (consisting of slides, autoradiograms or films, tables
the same . . . (was) in one of and tabulations) that she had painstakingly labored over, at the prestigious international
the succeeding flights from conference, to attend which she had traveled hundreds of miles, to her chagrin and
Rome to Milan." embarrassment and the disappointment and annoyance of the organizers. She felt, not
unreasonably, that the invitation for her to participate at the conference, extended by the
By then feeling desperate, Joint FAO/IAEA Division of Atomic Energy in Food and Agriculture of the United
she went to Rome to try to Nations, was a singular honor not only to herself, but to the University of the Philippines
locate her bags herself. and the country as well, an opportunity to make some sort of impression among her
There, she inquired about her colleagues in that field of scientific activity. The opportunity to claim this honor or
suitcases in the domestic and distinction was irretrievably lost to her because of Alitalia's breach of its contract.
international airports, and
filled out the forms Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and
prescribed by ALITALIA for anxiety, which gradually turned to panic and finally despair, from the time she learned
people in her predicament. that her suitcases were missing up to the time when, having gone to Rome, she finally
However, her baggage could realized that she would no longer be able to take part in the conference. As she herself put
not be found. Completely it, she "was really shocked and distraught and confused."
distraught and discouraged,
she returned to Manila Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the
without attending the circumstances be restricted to that prescribed by the Warsaw Convention for delay in the
meeting in Ispra, Italy. transport of baggage.
She is not, of course, entitled to be compensated for loss or damage to her luggage. As
already mentioned, her baggage was ultimately delivered to her in Manila, tardily but
safely. She is however entitled to nominal damages — which, as the law says, is
adjudicated in order that a right of the plaintiff, which has been violated or invaded by the
defendant, may be vindicated and recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered.
Pan American vs IAC Issue: Whether or not plaintiff’s liability for the lost baggage of private respondent
Pangan is limited to $600.00 ($20.00 x 30 kilos) as the latter did not declare a higher
By virtue of two agreements, value for his baggage and pay the corresponding additional charges.
one in Guam and the other in
California, plaintiff Rene Yes.
Pangan, on May 18, 1978,
obtained from defendant Pan
Am's Manila Office, an We find the ruling in Ong Yiu squarely applicable to the instant case:
economy class airplane
ticket with Manila to Guam While it may be true that petitioner had not signed the plane ticket (Exh. "12"), he is nevertheless
on May 27,1978, upon bound by the provisions thereof. "Such provisions have been held to be a part of the contract of
payment by said plaintiff of carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or
assent to the regulation." It is what is known as a contract of "adhesion," in regards which it has been
the regular fare.
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
On May 27, 1978, to the contract is in reality free to reject it entirely; if he adheres, he gives his consent, "a contract
defendant's ticket counter at limiting liability upon an agreed valuation does not offend against the policy of the law forbidding
the Manila International one from contracting against his own negligence."
Airport and presented his
ticket and checked in his two Considering, therefore, that petitioner had failed to declare a higher value for his baggage,
luggages. Subsequently, he cannot be permitted a recovery in excess of P100.00....
Pangan was informed that
his name was not in the On the other hand, the ruling in Shewaram v. Philippine Air Lines, Inc. [G.R. No. L-
manifest and so he could not 20099, July 2, 1966, 17 SCRA 606], where the Court held that the stipulation limiting the
take the in the economy carrier's liability to a specified amount was invalid, finds no application in the instant
class. Since there was no case, as the ruling in said case was premised on the finding that the conditions printed at
space in the economy class, the back of the ticket were so small and hard to read that they would not warrant the
so plaintiff Pangan took the presumption that the passenger was aware of the conditions and that he had freely and
first class fairly agreed thereto. In the instant case, similar facts that would make the case fall under
the exception have not been alleged, much less shown to exist.
When plaintiff Pangan
arrived in Guam on the date In view thereof petitioner's liability for the lost baggage is limited to $20.00 per kilo or
of May 27, 1978, his two $600.00, as stipulated at the back of the ticket.

luggages did not arrive with

his flight, as a consequence Note:
of which his agreements with Condition in the ticket:
Slutchnick and Quesada for
the exhibition of the films in Liability for loss, delay, or damage to baggage is limited as follows unless a higher value
Guam and in the United ideclared in advance and additional charges are paid: (1)for most international travel
States were cancelled. (including domestic portions of international journeys) to approximately $9.07 per pound
($20.00 per kilo) for checked baggage.
China Airlines vs Chiok Issue: Whether or not CA correctly ruled that petitioner is liable for damages.
On September 18, 1981, Yes.

Daniel Chiok purchased
from China Airlines, Ltd a CA based its decision on the case of KLM Royal Dutch vs CA:
ticket for air transportation
covering Manila-Taipei- “Moreover, as maintained by the respondents and the Court of Appeals, the passage tickets of the
Hongkong-Manila. Said respondents provide that the carriage to be performed thereunder by several successive carriers is to
ticket was exclusively be regarded as a single operation, which is diametrically incompatible with the theory of the KLM
that the respondents entered into a series of independent contracts with the carriers which took them
endorseable to PAL.
on the various segments of their trip. This position of KLM we reject. The respondents dealt
exclusively with the KLM which issued them tickets for their entire trip and which in effect
Subsequently, on November guaranteed to them that they would have sure space in Aer Lingus flight 861. The respondents, under
21, 1981, Chiok took his trip that assurance of the internationally prestigious KLM, naturally had the right to expect that their
from Manila to Taipei using tickets would be honored by Aer Lingus to which, in the legal sense, the KLM had indorsed and in
[the] CAL ticket. Before he effect guaranteed the performance of its principal engagement to carry out the respondents' scheduled
left for said trip, the trips itinerary previously and mutually agreed upon between the parties .”
covered by the ticket were
pre-scheduled and confirmed Under the contract of transportation, petitioner -- as the ticket-issuing carrier (like KLM) --
by the former. When he was liable regardless of the fact that PAL was to perform or had performed the actual
arrived in Taipei, he went to carriage. The CA elucidated on this point as follows:
the CAL office and
confirmed his Hongkong to By the very nature of their contract, defendant-appellant CAL is clearly liable under the
Manila trip on board PAL contract of carriage with [respondent] and remains to be so, regardless of those instances
Flight No. PR 311. The CAL when actual carriage was to be performed by another carrier. The issuance of a confirmed
office attached a yellow CAL ticket in favor of [respondent] covering his entire trip abroad concretely attests to
sticker appropriately this. This also serves as proof that defendant-appellant CAL, in effect guaranteed that the
indicating that his flight carrier, such as defendant-appellant PAL would honor his ticket, assure him of a space
status was OK. therein and transport him on a particular segment of his trip.
When Chiok reached

Hongkong, he went to the
PAL office and sought to
reconfirm his flight back to
Manila. The PAL office
confirmed his return trip on
board Flight No. PR 311 and
attached its own sticker. On
November 24, 1981, Chiok
proceeded to Hongkong
International Airport for his
return trip to Manila.
However, upon reaching the

PAL counter, Chiok saw a

poster stating that PAL
Flight No. PR 311 was
cancelled because of a
typhoon in Manila. He was
then informed that all the
confirmed ticket holders of
PAL Flight No. PR 311 were
automatically booked for its
next flight, which was to
leave the next day. Chiok
went to the airport the next
day. He was not allowed to
board however, because his
name was not on the list.
Santos vs Northwest Airlines Issues: Whether or not Warsaw Convention is unconstitutional.

Whether or not Warsaw Convention is merely a rule of venue or Jurisdiction.
The petitioner is a minor and Whether or not case was properly filed in Manila because it was the place of
a resident of the Philippines. destination.
Private respondent Whether or not the case was properly filed in the Philippines since defendant has
Northwest Orient Airlines his domicile in the Philippines.
(NOA) is a foreign
corporation with principal No.
office in Minnesota, U.S.A.
and licensed to do business On due process and equal protection.
and maintain a branch office
in the Philippines. It is well-settled that courts will assume jurisdiction over a constitutional question only if
it is shown that the essential requisites of a judicial inquiry into such a question are first
On October 21, 1986, the satisfied. Thus, there must be an actual case or controversy involving a conflict of legal
petitioner purchased from rights susceptible of judicial determination; the constitutional question must have been
NOA a round-trip ticket in opportunely raised by the proper party; and the resolution of the question is unavoidably
San Francisco. U.S.A., for necessary to the decision of the case itself.
his flight from San Francisco
to Manila via Tokyo and Courts generally avoid having to decide a constitutional question. This attitude is based
back. The scheduled on the doctrine of separation of powers, which enjoins upon the departments of the
departure date from Tokyo government a becoming respect for each other's acts.
was December 20, 1986. No
date was specified for his The treaty which is the subject matter of this petition was a joint legislative-executive act.
return to San Francisco. The presumption is that it was first carefully studied and determined to be constitutional
before it was adopted and given the force of law in this country.
On December 19, 1986, the
petitioner checked in at the The petitioner's allegations are not convincing enough to overcome this presumption.
NOA counter in the San
Francisco airport for his On ‘rebus sic stantibus’
scheduled departure to
Manila. Despite a previous According to Jessup"this doctrine constitutes an attempt to formulate a legal principle
confirmation and re- which would justify non-performance of a treaty obligation if the conditions with relation
confirmation, he was to which the parties contracted have changed so materially and so unexpectedly as to
informed that he had no create a situation in which the exaction of performance would be unreasonable."
reservation for his flight
from Tokyo to Manila. He The key element of this doctrine is the vital change in the condition of the contracting
therefore had to be wait- parties that they could not have foreseen at the time the treaty was concluded.
listed.
It is true that at the time the Warsaw Convention was drafted, the airline industry was still
On March 12, 1987, the in its infancy. However, that circumstance alone is not sufficient justification for the
petitioner sued NOA for rejection of the treaty at this time. The changes recited by the petitioner were,
damages in the Regional realistically, not entirely unforeseen although they were expected in a general sense only.

Trial Court of Makati. In fact, the Convention itself, anticipating such developments, contains the following
significant provision:
Article 41. Any High Contracting Party shall be entitled not earlier than two years
after the coming into force of this convention to call for the assembling of a new
international conference in order to consider any improvements which may be made in
this convention. To this end, it will communicate with the Government of the French
Republic which will take the necessary measures to make preparations for such
conference.
But the more important consideration is that the treaty has not been rejected by the
Philippine government. The doctrine of rebus sic stantibus does not operate automatically
to render the treaty inoperative. There is a necessity for a formal act of rejection, usually
made by the head of State, with a statement of the reasons why compliance with the treaty
is no longer required.
Jurisdiction.
Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
authorities are sharply divided. While the petitioner cites several cases holding that
Article 28(1) refers to venue rather than jurisdiction, there are later cases cited by the
private respondent supporting the conclusion that the provision is jurisdictional.
Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by
consent or waiver upon d court which otherwise would have no jurisdiction over the
subject-matter of an action; but the venue of an action as fixed by statute may be changed
by the consent of the parties and an objection that the plaintiff brought his suit in the
wrong county may be waived by the failure of the defendant to make a timely objection.
In either case, the court may render a valid judgment. Rules as to jurisdiction can never be
left to the consent or agreement of the parties, whether or not a prohibition exists against
their alteration.
A number of reasons tends to support the characterization of Article 28(1) as a

jurisdiction and not a venue provision. First, the wording of Article 32, which indicates
the places where the action for damages "must" be brought, underscores the mandatory
nature of Article 28(1). Second, this characterization is consistent with one of the
objectives of the Convention, which is to "regulate in a uniform manner the conditions of
international transportation by air." Third, the Convention does not contain any provision
prescribing rules of jurisdiction other than Article 28(1), which means that the phrase
"rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the
last sentence of Article 32 specifically deals with the exclusive enumeration in Article
28(1) as "jurisdictions," which, as such, cannot be left to the will of the parties regardless
of the time when the damage occurred.
No.
The place of destination, within the meaning of the Warsaw Convention, is determined by
the terms of the contract of carriage or, specifically in this case, the ticket between the
passenger and the carrier. Examination of the petitioner's ticket shows that his ultimate
destination is San Francisco. Although the date of the return flight was left open, the
contract of carriage between the parties indicates that NOA was bound to transport the
petitioner to San Francisco from Manila. Manila should therefore be considered merely an
agreed stopping place and not the destination.
Article 1(2) also draws a distinction between a "destination" and an "agreed stopping
place." It is the "destination" and not an "agreed stopping place" that controls for purposes
of ascertaining jurisdiction under the Convention.
The contract is a single undivided operation, beginning with the place of departure and
ending with the ultimate destination. The use of the singular in this expression indicates
the understanding of the parties to the Convention that every contract of carriage has one
place of departure and one place of destination. An intermediate place where the carriage

may be broken is not regarded as a "place of destination."
No.
Notably, the domicile of the carrier is only one of the places where the complaint is
allowed to be filed under Article 28(1). By specifying the three other places, to wit, the
principal place of business of the carrier, its place of business where the contract was
made, and the place of destination, the article clearly meant that these three other places
were not comprehended in the term "domicile."
United Airlines vs Uy Issue: Whether respondent’s second cause of action is time-barred by the Warsaw
Convention.
On 13 October 1989
respondent Willie J. Uy, a No.
revenue passenger on United
Airlines Flight No. 819 for the Within our jurisdiction we have held that the Warsaw Convention can be applied, or
San Francisco - Manila route, ignored, depending on the peculiar facts presented by each case.
checked in together with his
luggage one piece of which was Respondent's complaint reveals that he is suing on two (2) causes of action: (a) the shabby
found to be overweight at the and humiliating treatment he received from petitioner's employees at the San Francisco
airline counter. To his utter Airport which caused him extreme embarrassment and social humiliation; and, (b) the
humiliation, an employee of slashing of his luggage and the loss of his personal effects amounting to US $5,310.00.
petitioner rebuked him saying
that he should have known the While his second cause of action - an action for damages arising from theft or damage to
maximum weight allowance to property or goods - is well within the bounds of the Warsaw Convention, his first cause of
be 70 kgs. per bag and that he action -an action for damages arising from the misconduct of the airline employees and
should have packed his things the violation of respondent's rights as passenger - clearly is not.
accordingly. Then, in a loud
voice in front of the milling Consequently, insofar as the first cause of action is concerned, respondent's failure to file
crowd, she told respondent to his complaint within the two (2)-year limitation of the Warsaw Convention does not bar
repack his things and transfer his action since petitioner airline may still be held liable for breach of other provisions of
some of them from the the Civil Code which prescribe a different period or procedure for instituting the action,
overweight luggage to the lighter specifically, Art. 1146 thereof which prescribes four (4) years for filing an action based
ones. Not wishing to create on torts.
further scene, respondent
acceded only to find his luggage As for respondent's second cause of action, indeed the travaux preparatories of the
still overweight. The airline then Warsaw Convention reveal that the delegates thereto intended the two (2)-year limitation
billed him overweight charges incorporated in Art. 29 as an absolute bar to suit and not to be made subject to the various
which he offered to pay with a tolling provisions of the laws of the forum.
miscellaneous charge order
(MCO) or an airline pre-paid Nonetheless, it cannot be doubted that respondent exerted efforts to immediately convey
credit. However, the airlines his loss to petitioner, even employed the services of two (2) lawyers to follow up his
employee, and later its airport claims, and that the filing of the action itself was delayed because of petitioner's evasion.
supervisor, adamantly refused to
honor the MCO pointing out that In this regard, Philippine Airlines, Inc. v. Court of Appeals is instructive. In this case of
there were conflicting figures PAL, private respondent filed an action for damages against petitioner airline for the
listed on it. Despite the breakage of the front glass of the microwave oven which she shipped under PAL Air
explanation from respondent that Waybill. Petitioner averred that, the action having been filed seven (7) months after her
the last figure written on the arrival at her port of destination, she failed to comply with par. 12, of the Air Waybill
MCO represented his balance, which expressly provided that the person entitled to delivery must make a complaint to
petitioners employees did not the carrier in writing in case of visible damage to the goods, immediately after discovery
accommodate him. Faced with of the damage and at the latest within 14 days from receipt of the goods.

the prospect of leaving without

his luggage, respondent paid the Despite non-compliance therewith the Court held that by private respondent's immediate
overweight charges with his submission of a formal claim to petitioner, which however was not immediately
American Express credit card. entertained as it was referred from one employee to another, she was deemed to have
substantially complied with the requirement. The Court noted that with private
Respondents troubles did not respondent's own zealous efforts in pursuing her claim it was clearly not her fault that the
end there. Upon arrival in letter of demand for damages could only be filed, after months of exasperating follow-up
Manila, he discovered that one of the claim, on 13 August 1990, and that if there was any failure at all to file the formal
of his bags had been slashed and claim within the prescriptive period contemplated in the Air Waybill, this was largely
its contents stolen. He because of the carrier's own doing, the consequences of which could not in all fairness be
particularized his losses to be attributed to private respondent.
around US $5,310.00.
In the same vein must we rule upon the circumstances brought before us. Verily,
respondent filed his complaint more than two (2) years later, beyond the period of
limitation prescribed by the Warsaw Convention for filing a claim for damages. However,
it is obvious that respondent was forestalled from immediately filing an action because
petitioner airline gave him the runaround, answering his letters but not giving in to his
demands. True, respondent should have already filed an action at the first instance when
his claims were denied by petitioner but the same could only be due to his desire to make
an out-of-court settlement for which he cannot be faulted. Hence, despite the express
mandate of Art. 29 of the Warsaw Convention that an action for damages should be filed
within two (2) years from the arrival at the place of destination, such rule shall not be
applied in the instant case because of the delaying tactics employed by petitioner airline
itself. Thus, private respondent's second cause of action cannot be considered as time-
barred under Art. 29 of the Warsaw Convention.

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SBU Transportation Law Case Doctrines|Mario Trinchera Jr.

Caveat Lector: Read at your own risk. AGDV

On November 2, 1962, the No.

Caveat Lector: Read at your own risk. AGDV

informing that from our

The Collector of Customs

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Plaintiff, a domestic Yes.

Caveat Lector: Read at your own risk. AGDV

Corpus Juris, volume 10, p. 154, says:

PAR. 194. 6. Reasonable of Limitation. — The validity of stipulations limiting the

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

containers duly padlocked

In the morning of May 1,

Caveat Lector: Read at your own risk. AGDV

On April 16, 1989, Mahtani No. There was a waiver.

Caveat Lector: Read at your own risk. AGDV

one week, BA finally

Private respondents Atty. No.

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

luggages did not arrive with

On September 18, 1981, Yes.

When Chiok reached

Caveat Lector: Read at your own risk. AGDV

PAL counter, Chiok saw a

Santos vs Northwest Airlines Issues: Whether or not Warsaw Convention is unconstitutional.

Caveat Lector: Read at your own risk. AGDV

A number of reasons tends to support the characterization of Article 28(1) as a

Caveat Lector: Read at your own risk. AGDV

may be broken is not regarded as a "place of destination."

Caveat Lector: Read at your own risk. AGDV

the prospect of leaving without

Caveat Lector: Read at your own risk. AGDV

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