Delsan Transport Lines vs.

CA

Delsan Transport Lines, Inc. vs. Hon. Court of Appeals and American
Home Assurance Corporation
G.R. No. 127897, November 15, 2001

FACTS:
Caltex Philippines entered into a one-year contract of affreightment
with the petitioner, Delsan Transport Lines, Inc. to transport Caltex’s
industrial fuel oil from the Batangas-Bataan Refinery to different parts
of the country. Petitioner took on board its vessel, MT Maysun,
2,277.314 kiloliters of industrial fuel oil of Caltex to be delivered to the
Caltex Oil Terminal in Zamboanga City. The shipment was insured with
the private respondent, American Home Assurance Corporation.
Unfortunately, the vessel sank in the early morning of August 16, 1986
near Panay Gulf in the Visayas taking with it the entire cargo of fuel
oil. Petitioner attributes the sinking of MT Maysun to fortuitous event
or force majeure.

The insurance company paid Caltex the insured value of the lost cargo
and was subrogated of the rights of Caltex. However, despite repeated
demands, it failed to collect from petitioner carrier.

RTC’s decision: The vessel, MT Maysun, was seaworthy to undertake

the voyage as determined by the Philippine Coast Guard per Survey
Certificate Report No. M5-016-MH upon inspection during its annual
dry-docking and that the incident was caused by unexpected
inclement weather condition or force majeure, thus exempting the
common carrier (herein petitioner) from liability for the loss of its
cargo.

CA’s decision: Reversed RTC’s decision. PAGASA weather report

showed that the waves were not big. There was no explanation as to
what may have caused the sinking and found that the vessel was
improperly manned. Hence, common carrier is liable.

ISSUE:
Is petitioner exempt from liability due to fortuitous event?

RULING:
No. Petitioner is liable for the insured value of the lost cargo of
industrial fuel oil belonging to Caltex for its failure to rebut the
presumption of fault or negligence as common carrier occasioned by
the unexplained sinking of its vessel, MT Maysun, while in transit.
From the testimonies of Jaime Jarabe and Francisco Berina, captain
and chief mate, respectively of the ill-fated vessel, it appears that a
sudden and unexpected change of weather condition occurred in the
early morning of August 16, 1986; that at around 3:15 o’clock in the
morning a squall (“unos”) carrying strong winds with an approximate
velocity of 30 knots per hour and big waves averaging eighteen (18) to
twenty (20) feet high, repeatedly buffeted MT Maysun causing it to tilt,
take in water and eventually sink with its cargo. This tale of strong
winds and big waves by the said officers of the petitioner however,
was effectively rebutted and belied by the weather report from the
Philippine Atmospheric, Geophysical and Astronomical Services
Administration (PAGASA), the independent government agency
charged with monitoring weather and sea conditions, showing that
from 2:00 o’clock to 8:00 o’clock in the morning on August 16, 1986,
the wind speed remained at ten (10) to twenty (20) knots per hour
while the height of the waves ranged from .7 to two (2) meters in the
vicinity of Cuyo East Pass and Panay Gulf where the subject vessel
sank. Thus, petitioner’s vessel, MT Maysun, sank with its entire cargo
for the reason that it was not seaworthy. There was no squall or bad
weather or extremely poor sea condition in the vicinity when the said
vessel sank.

PHILIPPINE CHARTER INSURANCE CORPORATION vs. CHEMOIL LIGHTERAGE

CORPORATION (TRANSPORTATION LAW)

[G.R. No. 136888. June 29, 2005]

PHILIPPINE CHARTER INSURANCE CORPORATION, petitioner, vs. CHEMOIL
LIGHTERAGE CORPORATION, respondent.
CHICO-NAZARIO,

FACTS:
 Philippine Charter Insurance Corporation is a domestic corporation engaged in
the business of non-life insurance. Respondent Chemoil Lighterage Corporation is also
a domestic corporation engaged in the transport of goods. On 24 January 1991,
Samkyung Chemical Company, Ltd., based in South Korea, shipped 62.06 metric tons
of the liquid chemical DIOCTYL PHTHALATE (DOP) on board MT “TACHIBANA” which
was valued at US$90,201.57 and another 436.70 metric tons of DOP valued at
US$634,724.89 to the Philippines. The consignee was Plastic Group Phils., Inc. in
Manila. PGP insured the cargo with Philippine Charter Insurance Corporation against all
risks. The insurance was under Marine Policies No. MRN-30721[5] dated 06 February
1991. Marine Endorsement No. 2786[7] dated 11 May 1991 was attached and formed
part of MRN-30721, amending the latter’s insured value to P24,667,422.03, and
reduced the premium accordingly. The ocean tanker MT “TACHIBANA” unloaded the
cargo to the tanker barge, which shall transport the same to Del Pan Bridge in Pasig
River and haul it by land to PGP’s storage tanks in Calamba, Laguna. Upon inspection
by PGP, the samples taken from the shipment showed discoloration demonstrating that
it was damaged. PGP then sent a letter where it formally made an insurance claim for
the loss it sustained.
Petitioner requested the GIT Insurance Adjusters, Inc. (GIT), to conduct a
Quantity and Condition Survey of the shipment which issued a report stating that DOP
samples taken were discolored. Inspection of cargo tanks showed manhole covers of
ballast tanks’ ceilings loosely secured and that the rubber gaskets of the manhole
covers of the ballast tanks re-acted to the chemical causing shrinkage thus, loosening
the covers and cargo ingress. Petitioner paid PGP the full and final payment for the loss
and issued a Subrogation Receipt. Meanwhile, PGP paid the respondent the as full
payment for the latter’s services.
On 15 July 1991, an action for damages was instituted by the petitioner-insurer
against respondent-carrier before the RTC, Br.16, City of Manila. Respondent filed an
answer which admitted that it undertook to transport the shipment, but alleged that
before the DOP was loaded into its barge, the representative of PGP, Adjustment
Standard Corporation, inspected it and found the same clean, dry, and fit for loading,
thus accepted the cargo without any protest or notice. As carrier, no fault and
negligence can be attributed against respondent as it exercised extraordinary diligence
in handling the cargo. After due hearing, the trial court rendered a Decision in favor of
plaintiff. On appeal, the Court of Appeals promulgated its Decision reversing the trial
court. A petition for review on certiorari was filed by the petitioner with this Court.

ISSUE:
Whether or not the Notice of Claim was filed within the required period.
RULING:
Article 366 of the Code of Commerce has profound application in the case at bar,
which provides that; “Within twenty-four hours following the receipt of the merchandise a
claim may be made against the carrier on account of damage or average found upon
opening the packages, provided that the indications of the damage or average giving
rise to the claim cannot be ascertained from the exterior of said packages, in which
case said claim shall only be admitted at the time of the receipt of the packages.” After
the periods mentioned have elapsed, or after the transportation charges have been
paid, no claim whatsoever shall be admitted against the carrier with regard to the
condition in which the goods transported were delivered.
As to the issue, the petitioner contends that the notice of contamination was
given by PGP employee, to Ms. Abastillas, at the time of the delivery of the cargo, and
therefore, within the required period. The respondent, however, claims that the
supposed notice given by PGP over the telephone was denied by Ms. Abastillas. The
Court of Appeals declared: that a telephone call made to defendant-company could
constitute substantial compliance with the requirement of notice. However, it must be
pointed out that compliance with the period for filing notice is an essential part of the
requirement, i.e.. immediately if the damage is apparent, or otherwise within twenty-four
hours from receipt of the goods, the clear import being that prompt examination of the
goods must be made to ascertain damage if this is not immediately apparent. We have
examined the evidence, and We are unable to find any proof of compliance with the
required period, which is fatal to the accrual of the right of action against the carrier.
Nothing in the trial court’s decision stated that the notice of claim was relayed or
filed with the respondent-carrier immediately or within a period of twenty-four hours from
the time the goods were received. The Court of Appeals made the same finding. Having
examined the entire records of the case, we cannot find a shred of evidence that will
precisely and ultimately point to the conclusion that the notice of claim was timely
relayed or filed.
The requirement that a notice of claim should be filed within the period stated by
Article 366 of the Code of Commerce is not an empty or worthless proviso.
The object sought to be attained by the requirement of the submission of claims
in pursuance of this article is to compel the consignee of goods entrusted to a carrier to
make prompt demand for settlement of alleged damages suffered by the goods while in
transport, so that the carrier will be enabled to verify all such claims at the time of
delivery or within twenty-four hours thereafter, and if necessary fix responsibility and
secure evidence as to the nature and extent of the alleged damages to the goods while
the matter is still fresh in the minds of the parties.
 The filing of a claim with the carrier within the time limitation therefore actually
constitutes a condition precedent to the accrual of a right of action against a carrier for
loss of, or damage to, the goods. The shipper or consignee must allege and prove the
fulfillment of the condition. If it fails to do so, no right of action against the carrier can
accrue in favor of the former. The aforementioned requirement is a reasonable condition
precedent; it does not constitute a limitation of action.
We do not believe so. As discussed at length above, there is no evidence to
confirm that the notice of claim was filed within the period provided for under Article 366
of the Code of Commerce. Petitioner’s contention proceeds from a false presupposition
that the notice of claim was timely filed.

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Citation preview
Case No. 5 – Article 1169 LORENZO SHIPPING CORP., petitioner, vs. BJ MARTHEL
INTERNATIONAL, INC., respondent. G.R. No. 145483. November 19, 2004 CHICO-
NAZARIO, J.:

FACTS: Petitioner Lorenzo Shipping Corporation is a domestic corporation engaged in

coastwise shipping. It used to own the cargo vessel M/V Dadiangas Express. On the
other hand, respondent BJ Marthel International, Inc. is a business entity engaged in
trading, marketing, and selling of various industrial commodities. It is also an importer
and distributor of different brands of engines and spare parts. Sometime in 1989,
petitioner asked respondent for a quotation for various machine parts. Acceding to this
request, respondent furnished petitioner with a formal quotation, offering delivery within
2 months after receipt of firm order. Petitioner thereafter issued to respondent Purchase
Order No. 13839, dated 02 November 1989, for the procurement of one set of cylinder
liner, and Purchase Order No. 14011, dated 15 January 1990, for yet another unit of
cylinder liner. These purchase orders stated the term of payment to be “25% upon
delivery, balance payable in 5 bi-monthly equal installments.” These purchase orders
did not state the date of the cylinder liner’s delivery. Petitioner issued postdated
checked as payment. Respondent deposited petitioner’s check that was postdated 18
January 1990, however, the same was dishonored by the drawee bank due to
insufficiency of funds. The remaining nine postdated checks were eventually returned
by respondent to petitioner. Respondent thereafter placed the order for the two cylinder
liners with its principal in Japan, Daiei Sangyo Co. Ltd., by opening a letter of credit on
23 February 1990 under its own name with the First Interstate Bank of Tokyo. On 20
April 1990, Henry Pajarillo, repondent’s sales manager, delivered the two cylinder liners
at petitioner’s warehouse in North Harbor, Manila. Respondent thereafter demanded for
full payment the two cylinder liners by sending a Statement of Account and a demand
letter to petitioner. In reply, petitioner sent respondent a letter offering to pay only
P150,000 for the cylinder liners. In said letter, petitioner claimed that as the cylinder
liners were delivered late and due to the scrapping of the M/V Dadiangas Express, it
(petitioner) would have to sell the cylinder liners in Singapore and pay the balance from
the proceeds of said sale. Another demand letter furnished petitioner by respondent’s
counsel requiring the former to settle its obligation to respondent together with accrued
interest and attorney’s fees.

Due to the failure of the parties to settle the matter, respondent filed an action for sum
of money and damages before the Regional Trial Court (RTC) of Makati City. In its
complaint,[12] respondent (plaintiff below) alleged that despite its repeated oral and
written demands, petitioner obstinately refused to settle its obligations. Petitioner
afterwards filed its Answer alleging therein that time was of the essence in the delivery
of the cylinder liners and that the delivery on 20 April 1990 of said items was late as
respondent committed to deliver said items “within two (2) months after receipt of firm
order” from petitioner. Petitioner further prayed that it be allowed to sell the cylinder
liners at the best possible price and to place the proceeds of said sale in escrow. After
trial, the court a quo dismissed the action, with costs against the plaintiff, which is
ordered to pay P50,000.00 to the defendant as and by way of attorney’s fees. Aggrieved
by the findings of the trial court, respondent filed an appeal with the Court of Appeals
which reversed and set aside the Decision of the court a quo. Hence, this petition for
review.

ISSUE:

Whether or not the respondent, BJ Marthel International, Inc., incurred in delay in

performing its obligation under the contract of sale.

HELD: No. Respondent could not have incurred delay in the delivery of cylinder liners
as no demand, judicial or extrajudicial, was made by respondent upon petitioner in
contravention of the express provision of Article 1169 of the Civil Code which provides
that those obliged to deliver or to do something incur in delay from the time the obligee
judicially or extrajudicially demands from them the fulfillment of their obligation. There
was also no evidence of the alleged cancellation of orders by petitioner and that the
delivery of the cylinder liners on 20 April 1990 was reasonable under the circumstances.
In determining whether time is of the essence in a contract, the ultimate criterion is the
actual or apparent intention of the parties and before time may be so regarded by a
court, there must be a sufficient manifestation, either in the contract itself or the
surrounding circumstances of that intention. Petitioner insists that although its purchase
orders did not specify the dates when the cylinder liners were supposed to be delivered,
nevertheless, respondent should abide by the term of delivery appearing on the
quotation it submitted to petitioner. In the present case, the documents, by themselves,
embody the terms of the sale of the cylinder liners. While the quotation provided by
respondent evidently stated that the cylinder liners were supposed to be delivered within
two months from receipt of the firm order of petitioner and that the 25% down payment
was due upon the cylinder liners’ delivery, the purchase orders prepared by petitioner
clearly omitted these significant items. The petitioner’s Purchase Orders made no
mention at all of the due dates of delivery of the two cylinder liners A contract
undergoes three distinct stages – preparation or negotiation, its perfection, and finally,
its consummation. In the instant case, the formal quotation provided by respondent
represented the negotiation phase of the subject contract of sale between the parties.
As of that time, the parties had not yet reached an agreement as regards the terms and
conditions of the contract of sale of the cylinder liners. Notably, petitioner was the one
who caused the preparation of the said Purchase Orders yet it utterly failed to adduce
any justification as to why said documents contained terms which are at variance with
those stated in the quotation provided by respondent. The only plausible reason for
such failure on the part of petitioner is that the parties had, in fact, renegotiated the
proposed terms of the contract of sale. Relative to the above discussion, when the time
of delivery is not fixed or is stated in general and indefinite terms, time is not of the
essence of the contract. . . . In such cases, the delivery must be made within a
reasonable time. The law implies, however, that if no time is fixed, delivery shall be
made within a reasonable time, in the absence of anything to show that an immediate
delivery intended. . . . (Smith, Bell & Co., Ltd. v. Matti) The fact that while petitioner
alleges that the cylinder liners were to be used for dry dock repair and maintenance of
its M/V Dadiangas Express between the later part of December 1989 to early January
1990, the record is bereft of any indication that respondent was aware of such fact. The
failure of petitioner to notify respondent of said date is fatal to its claim that time was of
the essence in the subject contracts of sale. In fact, the petitioner should have cancelled
the first purchase order when the cylinder liner was not delivered on the date it now
says was necessary. Instead it issued another purchase order for the second set of
cylinder liner. This fact negates petitioner’s claim that time was indeed of the essence in
the consummation of the contract of sale between the parties. Finally, the ten postdated
checks issued in November 1989 by petitioner and received by the respondent as full
payment of the purchase price of the first cylinder liner supposed to be delivered on 02
January 1990 fail to impress. It is not an indication of failure to honor a commitment on
the part of the

respondent. Also, by accepting the cylinder liners when these were delivered to its
warehouse, petitioner indisputably waived the claimed delay in the delivery of said
items. We, therefore, hold that in the subject contracts, time was not of the essence.
The delivery of the cylinder liners on 20 April 1990 was made within a reasonable period
of time considering that respondent had to place the order for the cylinder liners with its
principal in Japan and that the latter was, at that time, beset by heavy volume of work.

FALLO: WHEREFORE, premises considered, the instant Petition for Review on

Certiorari is DENIED. The Decision of the Court of Appeals, dated 28 April 2000, and its
Resolution, dated 06 October 2000, are hereby AFFIRMED. No costs. SO ORDERED.

Trans-Asia Shipping Lines vs. CA

(GR 118126, 4 March 1996)

FACTS:

Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein
petitioner for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from
Cebu City on November 12, 1991.

At around 5:30 in the evening of November 12, 1991, respondent boarded the M/V Asia
Thailand vessel during which he noticed that some repairs were being undertaken on
the engine of the vessel. The vessel departed at around 11:00 in the evening with only
one (1) engine running.

After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its
anchor thereat. After half an hour of stillness, some passengers demanded that they
should be allowed to return to Cebu City for they were no longer willing to continue their
voyage to Cagayan de Oro City. The captain acceded to their request and thus the
vessel headed back to Cebu City.

In Cebu City, plaintiff together with the other passengers who requested to be brought
back to Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to
Cagayan de Oro City. Petitioner, the next day, boarded the M/V Asia Japan for its
voyage to Cagayan de Oro City, likewise a vessel of defendant.

On account of this failure of defendant to transport him to the place of destination on

November 12, 1991, respondent Arroyo filed before the trial court “an action for damage
arising from bad faith, breach of contract and from tort,” against petitioner. The trial
court ruled only for breach of contract. The CA reversed and set aside said decision on
appeal.

ISSUE:

Whether or not the petitioner Trans-Asia was negligent?

HELD:

Yes.

Before commencing the contracted voyage, the petitioner undertook some repairs on
the cylinder head of one of the vessel’s engines. But even before it could finish these
repairs, it allowed the vessel to leave the port of origin on only one functioning engine,
instead of two. Moreover, even the lone functioning engine was not in perfect condition
as sometime after it had run its course, it conked out. This caused the vessel to stop
and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop
anchor. Plainly, the vessel was unseaworthy even before the voyage began. For a
vessel to be seaworthy, it must be adequately equipped for the voyage and manned
with a sufficient number of competent officers and crew.[21] The failure of a common
carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is
a clear breach of is duty prescribed in Article 1755 of the Civil Code.

G.R. No. 110398 November 7, 1997

NEGROS NAVIGATION CO., INC., petitioner,
 vs.
THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE
LA VICTORIA, respondents.
Facts:
Private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc.
four special cabin tickets. The tickets were for Voyage No. 457-A of the M/V Don Juan,
leaving Manila and going to Bacolod.

Subsequently, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T
Tacloban City, an oil tanker owned by the Philippine National Oil Company (PNOC) and
the PNOC Shipping and Transport Corporation (PNOC/STC). As a result, the M/V Don
Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some
of the victims were found and brought to shore, but the four members of private
respondents’ families were never found.

Private respondents filed a complaint against the Negros Navigation, the Philippine
National Oil Company (PNOC), and the PNOC Shipping and Transport Corporation
(PNOC/STC), seeking damages for the death. Petitioner, however, denied that the four
relatives of private respondents actually boarded the vessel as shown by the fact that
their bodies were never recovered. Petitioner further averred that the Don Juan was
seaworthy and manned by a full and competent crew, and that the collision was entirely
due to the fault of the crew of the M/T Tacloban City.

In finding petitioner guilty of negligence and in failing to exercise the extraordinary

diligence required of it in the carriage of passengers, both the trial court and the
appellate court relied on the findings of this Court in Mecenas v. Intermediate Appellate
Court, which case was brought for the death of other passengers. In Mecenas, SC
found petitioner guilty of negligence in (1) allowing or tolerating the ship captain and
crew members in playing mahjong during the voyage, (2) in failing to maintain the
vessel seaworthy and (3) in allowing the ship to carry more passengers than it was
allowed to carry. Petitioner is, therefore, clearly liable for damages to the full extent.

Petitioner criticizes the lower court’s reliance on the Mecenas case, arguing that,
although this case arose out of the same incident as that involved in Mecenas, the
parties are different and trial was conducted separately. Petitioner contends that the
decision in this case should be based on the allegations and defenses pleaded and
evidence adduced in it or, in short, on the record of this case.

Issues:
1. Whether the ruling in Mecenas v. Court of Appeals, finding the crew members of
petitioner to be grossly negligent in the performance of their duties, is binding in this
case;

2. Whether the award for damages in Mecenas v. Court of Appeals is applicable in this
case.

Held:
1. No. The contention is without merit.

Adherence to the Mecenas case is dictated by this Court’s policy of maintaining stability
in jurisprudence. Where, as in this case, the same questions relating to the same event
have been put forward by parties similarly situated as in a previous case litigated and
decided by a competent court, the rule of stare decisis is a bar to any attempt to
relitigate the same issue.

2. No, it is not applicable.

Petitioner contends that, assuming that the Mecenas case applies, private respondents
should be allowed to claim only P43,857.14 each as moral damages because in the
Mecenascase, the amount of P307,500.00 was awarded to the seven children of the
Mecenas couple. Here is where the principle of stare decisis does not apply in view of
differences in the personal circumstances of the victims. For that matter, differentiation
would be justified even if private respondents had joined the private respondents in the
Mecenas case.

The doctrine of stare decisis works as a bar only against issues litigated in a previous
case. Where the issue involved was not raised nor presented to the court and not
passed upon by the court in the previous case, the decision in the previous case is not
stare decisis of the question presently presented.

The Mecenas case cannot be made the basis for determining the award for attorney’s
fees. The award would naturally vary or differ in each case.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and
petitioner is ORDERED to pay private respondents damages.
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G.R. No. 110398 November 7, 1997

NEGROS NAVIGATION CO., INC., petitioner,
vs.
THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE
LA VICTORIA, respondents.
Facts:
Private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc.
four special cabin tickets. The tickets were for Voyage No. 457-A of the M/V Don Juan,
leaving Manila and going to Bacolod.
Subsequently, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T
Tacloban City, an oil tanker owned by the Philippine National Oil Company (PNOC) and
the PNOC Shipping and Transport Corporation (PNOC/STC). As a result, the M/V Don
Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some
of the victims were found and brought to shore, but the four members of private
respondents’ families were never found.

Private respondents filed a complaint against the Negros Navigation, the Philippine
National Oil Company (PNOC), and the PNOC Shipping and Transport Corporation
(PNOC/STC), seeking damages for the death. Petitioner, however, denied that the four
relatives of private respondents actually boarded the vessel as shown by the fact that
their bodies were never recovered. Petitioner further averred that the Don Juan was
seaworthy and manned by a full and competent crew, and that the collision was entirely
due to the fault of the crew of the M/T Tacloban City.

In finding petitioner guilty of negligence and in failing to exercise the extraordinary

diligence required of it in the carriage of passengers, both the trial court and the
appellate court relied on the findings of this Court in Mecenas v. Intermediate Appellate
Court, which case was brought for the death of other passengers. In Mecenas, SC
found petitioner guilty of negligence in (1) allowing or tolerating the ship captain and
crew members in playing mahjong during the voyage, (2) in failing to maintain the
vessel seaworthy and (3) in allowing the ship to carry more passengers than it was
allowed to carry. Petitioner is, therefore, clearly liable for damages to the full extent.

Petitioner criticizes the lower court’s reliance on the Mecenas case, arguing that,
although this case arose out of the same incident as that involved in Mecenas, the
parties are different and trial was conducted separately. Petitioner contends that the
decision in this case should be based on the allegations and defenses pleaded and
evidence adduced in it or, in short, on the record of this case.

Issues:
1. Whether the ruling in Mecenas v. Court of Appeals, finding the crew members of
petitioner to be grossly negligent in the performance of their duties, is binding in this
case;

2. Whether the award for damages in Mecenas v. Court of Appeals is applicable in this
case.

Held:
1. No. The contention is without merit.

Adherence to the Mecenas case is dictated by this Court’s policy of maintaining stability
in jurisprudence. Where, as in this case, the same questions relating to the same event
have been put forward by parties similarly situated as in a previous case litigated and
decided by a competent court, the rule of stare decisis is a bar to any attempt to
relitigate the same issue.
2. No, it is not applicable.

Petitioner contends that, assuming that the Mecenas case applies, private respondents
should be allowed to claim only P43,857.14 each as moral damages because in the
Mecenascase, the amount of P307,500.00 was awarded to the seven children of the
Mecenas couple. Here is where the principle of stare decisis does not apply in view of
differences in the personal circumstances of the victims. For that matter, differentiation
would be justified even if private respondents had joined the private respondents in the
Mecenas case.

The doctrine of stare decisis works as a bar only against issues litigated in a previous
case. Where the issue involved was not raised nor presented to the court and not
passed upon by the court in the previous case, the decision in the previous case is not
stare decisis of the question presently presented.

The Mecenas case cannot be made the basis for determining the award for attorney’s
fees. The award would naturally vary or differ in each case.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and
petitioner is ORDERED to pay private respondents damages.
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Delsan Transport Lines vs. CA

Delsan Transport Lines, Inc. vs. Hon. Court of Appeals and American
Home Assurance Corporation
G.R. No. 127897, November 15, 2001

FACTS:
Caltex Philippines entered into a one-year contract of affreightment
with the petitioner, Delsan Transport Lines, Inc. to transport Caltex’s
industrial fuel oil from the Batangas-Bataan Refinery to different parts
of the country. Petitioner took on board its vessel, MT Maysun,
2,277.314 kiloliters of industrial fuel oil of Caltex to be delivered to the
Caltex Oil Terminal in Zamboanga City. The shipment was insured with
the private respondent, American Home Assurance Corporation.
Unfortunately, the vessel sank in the early morning of August 16, 1986
near Panay Gulf in the Visayas taking with it the entire cargo of fuel
oil. Petitioner attributes the sinking of MT Maysun to fortuitous event
or force majeure.
The insurance company paid Caltex the insured value of the lost cargo
and was subrogated of the rights of Caltex. However, despite repeated
demands, it failed to collect from petitioner carrier.

RTC’s decision: The vessel, MT Maysun, was seaworthy to undertake

the voyage as determined by the Philippine Coast Guard per Survey
Certificate Report No. M5-016-MH upon inspection during its annual
dry-docking and that the incident was caused by unexpected
inclement weather condition or force majeure, thus exempting the
common carrier (herein petitioner) from liability for the loss of its
cargo.

CA’s decision: Reversed RTC’s decision. PAGASA weather report

showed that the waves were not big. There was no explanation as to
what may have caused the sinking and found that the vessel was
improperly manned. Hence, common carrier is liable.

ISSUE:
Is petitioner exempt from liability due to fortuitous event?

RULING:
No. Petitioner is liable for the insured value of the lost cargo of
industrial fuel oil belonging to Caltex for its failure to rebut the
presumption of fault or negligence as common carrier occasioned by
the unexplained sinking of its vessel, MT Maysun, while in transit.
From the testimonies of Jaime Jarabe and Francisco Berina, captain
and chief mate, respectively of the ill-fated vessel, it appears that a
sudden and unexpected change of weather condition occurred in the
early morning of August 16, 1986; that at around 3:15 o’clock in the
morning a squall (“unos”) carrying strong winds with an approximate
velocity of 30 knots per hour and big waves averaging eighteen (18) to
twenty (20) feet high, repeatedly buffeted MT Maysun causing it to tilt,
take in water and eventually sink with its cargo. This tale of strong
winds and big waves by the said officers of the petitioner however,
was effectively rebutted and belied by the weather report from the
Philippine Atmospheric, Geophysical and Astronomical Services
Administration (PAGASA), the independent government agency
charged with monitoring weather and sea conditions, showing that
from 2:00 o’clock to 8:00 o’clock in the morning on August 16, 1986,
the wind speed remained at ten (10) to twenty (20) knots per hour
while the height of the waves ranged from .7 to two (2) meters in the
vicinity of Cuyo East Pass and Panay Gulf where the subject vessel
sank. Thus, petitioner’s vessel, MT Maysun, sank with its entire cargo
for the reason that it was not seaworthy. There was no squall or bad
weather or extremely poor sea condition in the vicinity when the said
vessel sank.
NOTES:

 Seaworthiness relates to a vessel’s actual condition. Neither the

granting of classification or the issuance of certificates
establishes seaworthiness. Authorities are clear that diligence in
securing certificates of seaworthiness does not satisfy the
vessel owner’s obligation. Also securing the approval of the
shipper of the cargo, or his surveyor, of the condition of the
vessel or her stowage does not establish due diligence if the
vessel was in fact unseaworthy, for the cargo owner has no
obligation in relation to seaworthiness.
 The right of subrogation has its roots in equity. It is designed to
promote and to accomplish justice and is the mode which equity
adopts to compel the ultimate payment of a debt by one who in
justice and good conscience ought to pay. It is not dependent
upon, nor does it grow out of, any privity of contract or upon
written assignment of claim. It accrues simply upon payment by
the insurance company of the insurance claim. Consequently, the
payment made by the private respondent (insurer) to Caltex
(assured) operates as an equitable assignment to the former of
all the remedies which the latter may have against the petitioner.

Full text: Delsan Transport Lines vs CA G.R. No. 127897, November 15,
2001

Maerskline vs CA

Maersk Line vs. Court of Appeals and Efren V. Castillo, doing business
under the name and style of Ethegal Laboratories
 G.R. No. 94761, May 17, 1993
222 SCRA 108

FACTS:
Parties
Carrier – Maersk Line
Consignee – Efren Castillo, the proprietor of Ethegal Laboratories
Shipper – Eli Lilly. Inc.

Consignee imported from Eli Lilly. Inc. Puerto Rico 600,000 empty
gelatin capsules for the manufacture of his pharmaceutical products.
The capsules were placed in six (6) drums of 100,000 capsules each
valued at US $1,668.71. The capsules were shipped on board MV
Anders Maerskline for shipment to the Philippines via Oakland,
California. For unknown reasons, said cargo of capsules were
misshipped and diverted to Richmond, Virginia, USA and then
transported back Oakland, Califorinia. It finally arrived after two
months from the intended date of arrival. Consignee refused to receive
the goods due to its failure to arrive on time.

Consignee filed an action for rescission of contract with damages

against the carrier and the shipper due to gross negligence and undue
delay in the delivery of the goods.

Carrier’s allegation: The shipment was transported in accordance with

the provisions of the covering bill of lading and that its liability under
the law on transportation of good attaches only in case of loss,
destruction or deterioration of the goods as provided for in Article
1734 of Civil Code

Shipper’s allegation (Answer with compulsory and cross-claim): The

delay in the arrival of the subject merchandise was due solely to the
gross negligence of petitioner Maersk Line. The complaint against Eli
Lilly, Inc. was dismissed.

Trial court’s decision: Carrier liable.

CA’s decision: affirmed with modification the lower court’s decision.

ISSUE:
Whether or not the carrier is liable for the delay in the delivery of the
shipment.

RULING:
Yes. While it is true that common carriers are not obligated by law to
carry and to deliver merchandise, and persons are not vested with the
right to prompt delivery, unless such common carriers previously
assume the obligation to deliver at a given date or time, delivery of
shipment or cargo should at least be made within a reasonable time. A
delay in delivery of gelatin capsules for use in pharmaceutical
products for a period of two months and sevens days is considered
beyond the realm of reasonableness. Moreover, failure of the carrier to
explain cause of delay in the delivery of the shipment makes it liable
for breach of contract of carriage through gross negligence amounting
to bad faith, entitling consignee’s recovery of moral damages. The
unexplained misshipment of the goods by the common carrier
constitutes gross carelessness or negligence amounting to wanton
misconduct which justifies an award of exemplary damages to the
aggrieved party. Moreover, attorney’s fees are generally not
recoverable, but in this case since carrier acted with gross negligence
amounting to bad faith consignee is entitled to reasonable attorney’s
fees.

[CASE DIGEST] Mirasol v. Robert Dollar Company (G.R. No. L-29721)

March 27, 1929

FACTS:

Two cases of books were shipped in good order from New York to Manila onboard the
steamship President Garfield owned by The Robert Dollar Company. All freight
charges were paid.

When the goods arrived in Manila in 1927, they were in bad condition resulting in the
total loss of one case and partial loss of the other one. Mirasol, the owner and
consignee, claimed for damages from the owner of the steamship, Robert Dollar
Company.

Robert Dollar Company alleged that the damage was caused by sea water.

Mirasol filed for damages with legal interest from the filing of the complaint and
costs.
In its defense, Robert Dollar Company said that the words "perils of the sea" appearing
in the bill of lading apply to "all kinds of marine casualties, such as shipwreck,
foundering, stranding," and among other things, it is said: "Tempest, rocks, shoals,
icebergs and other obstacles are within the expression," and "where the peril is the
proximate cause of the loss, the shipowner is excused."

The lower court ruled in favor of Mirasol.

ISSUE:

Whether Robert Dollar Company can be held liable considering the limited liability
clause of the bill of lading. – YES.

HELD:

The Supreme Court held that Robert Dollar Company is liable because it failed to
prove its allegation that the loss was due to perils of the sea or force majeure, or that
it was not due to its negligence.

The defendant having admitted that the boxes were damaged while in transit and in
its possession, the burden of proof then shifted, and it devolved upon the defendant
to both allege and prove that the damage was caused by reason of some fact which
exempted it from liability.

Shippers who are forced to ship goods on an ocean liner or any other ship have some
legal rights, and when goods are delivered on board ship in good order and condition,
and the shipowner delivers them to the shipper in bad order and condition, it then
devolves upon the shipowner to both allege and prove that the goods were damaged
by the reason of some fact which legally exempts him from liability; otherwise, the
shipper would be left without any redress, no matter what may have caused the
damage.

Coastwise Lighterage Corp. vs. Court of Appeals and Philippine

General Insurance Company
G.R. No. 114167, July 12, 1995
245 SCRA 796
FACTS:
The consignee entered into a contract of affreightment which is to
transport molasses from the province of Negros to Manila with the
carrier using the latter’s barges. The barges were towed in tandem by
the tugboat MT Marica, also owned by the carrier. While approaching
the pier of destination, one of the barges, “Coastwise 9” was struck
and as a result, the molasses at the cargo tanks were contaminated
and rendered unfit for the use it was intended. The consignee rejected
the shipment of molasses as a total loss. The insurer paid the
consignee the amount representing the value of the damaged cargo of
molasses.

Parties:
Consignee – Pag-asa Sales, Inc.
Carrier – Coastwise Lighterage Corporation (Coastwise)
Insurer of the cargo – Philippine General Insurance Company (PhilGen)

ISSUES:
1. WON Coastwise Lighterage was transformed into a private carrier,
by virtue of the contract of affreightment which it entered into with the
consignee, Pag-asa Sales, Inc. What is the extent of its liability over
the lost, damaged and deteriorated cargo?
2. WON the insurer was subrogated into the rights of the consignee
against the carrier, upon payment by the insurer of the value of the
consignee’s goods lost while on board one of the carrier’s vessels.

RULING:
1. No. The contract of affreightment entered into between the
consignee and the carrier did not convert the latter into a private
carrier, but remained a common carrier and was still liable as such.
The consignee only leased three of petitioner’s vessels, in order to
carry cargo from one point to another, but the possession, command
and navigation of the vessels remained with petitioner carrier.
As a common carrier, the presumption of negligence attaches to it
when the goods it transports are lost, destroyed or deteriorated. This
presumption may be overcame only by proof of the exercise of
extraordinary diligence such as placing a person with navigational
skills. However, the carrier failed to overcome this presumption of
negligence as the patron did not possess the necessary license to
navigate.
2. Petitioner carrier was liable for breach of the contract of carriage it
entered into with the consignee. In accordance with Art. 2207,
payment by the insurer to the assured operated as an equitable
assignment to the former of all remedies which the latter may have
against the third party whose negligence or wrongful act caused the
loss. If the insured property is destroyed or damaged through the fault
or negligence of a party other than the assured, then the insurer, upon
payment to the assured will be subrogated to the rights of the assured
to recover from the wrongdoer to the extent that the insurer has been
obligated to pay.

NOTES:
The distinction between the two kinds of charter parties (i.e. bareboat
or demise and contract of affreightment) –
Under the demise or bareboat charter of the vessel, the charterer will
generally be regarded as the owner for the voyage or service
stipulated. The charterer mans the vessel with his own people and
becomes the owner pro hac vice, subject to liability to others for
damages caused by negligence. To create a demise, the owner of a
vessel must completely and exclusively relinquish possession,
command and navigation thereof to the charterer, anything short of
such a complete transfer is a contract of affreightment (time or
voyage charter party) or not a charter party at all.

On the other hand a contract of affreightment is one in which the

owner of the vessel leases part or all of its space to haul goods for
others. It is a contract for special service to be rendered by the owner
of the vessel and under such contract the general owner retains the
possession, command and navigation of the ship, the charterer or
freighter merely having use of the space in the vessel in return for his
payment of the charter hire. . . . . . . . . An owner who retains
possession of the ship though the hold is the property of the charterer,
remains liable as carrier and must answer for any breach of duty as to
the care, loading and unloading of the cargo. . . . – Puromines, Inc. vs.
Court of Appeals,

Coastwise Lighterage Corp. vs. Court of Appeals, et al. G.R. No.

114167, July 12, 1995
Everett Steamship Corporation vs. Court of Appeals

March 12, 2016

FACTS

Private respondent imported 3 crates of bus spare parts marked as MARCO C/No.
12,MARCO C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading
Company,Ltd. (Maruman Trading), a foreign corporation based in Inazawa, Aichi,
Japan. The crates were shipped from Nagoya, Japan to Manila on board
“ADELFAEVERETTE,” a vessel owned by petitioner’s principal, Everett Orient Lines.
Upon arrival at the port of Manila, it was discovered that the crate marked MARCO
C/No. 14 was missing. Privaterespondent claim upon petitioner for the value of the lost
cargo amounting to One Million Five Hundred Fifty Two Thousand Five Hundred (Y1,
552,500.00) Yen, theamount shown in an Invoice No. MTM-941, dated November 14,
1991. However,petitioner offered to pay only One Hundred Thousand (Y100,000.00)
Yen, the maximum amount stipulated under Clause 18 of the covering bill of lading
which limits the liability of petitioner. Private respondent rejected the offer and thereafter
instituted a suit for collection. The trial court rendered a decision in favour of the private
respondents and this was affirmed by the Court of Appeals. Thus, this instant petition.

ISSUE

Is private respondent, as consignee, who is not a signatory to the bill of lading bound by
the stipulations thereof?

HELD

Yes. The consignee who is not a signatory to the contract of carriage between the
shipper and the carrier, the consignee can still be bound by the contract.

The next issue to be resolved is whether or not private respondent, as consignee, who
is not a signatory to the bill of lading is bound by the stipulations thereof. Again, in Sea-
land Service, Inc. vs. Intermediate Appellate Court (Supra), we held that even in the
consignee between the shipper and the carrier, the consignee can still be bound by the
contract. Speaking through Mr. Chief Justice Narvasa, we ruled: “To begin with, there is
no question of the right, in the principle, of a consignee in a bill of lading to recover from
the carrier or shipper for loss of, or damage to goods being transported under the said
bill, although that document may have been-as in practice it oftentimes is-drawn up only
by the consignor and the carrier without the intervention of the consignee.
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 carrier’s limited liability stipulation in the bill of lading.
In other words, private respondents is bound by the whole stipulations in the bill of
lading and must respect the same.

Trans-Asia Shipping Lines vs. CA

(GR 118126, 4 March 1996)

FACTS:

Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein
petitioner for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from
Cebu City on November 12, 1991.

At around 5:30 in the evening of November 12, 1991, respondent boarded the M/V Asia
Thailand vessel during which he noticed that some repairs were being undertaken on
the engine of the vessel. The vessel departed at around 11:00 in the evening with only
one (1) engine running.

After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its
anchor thereat. After half an hour of stillness, some passengers demanded that they
should be allowed to return to Cebu City for they were no longer willing to continue their
voyage to Cagayan de Oro City. The captain acceded to their request and thus the
vessel headed back to Cebu City.

In Cebu City, plaintiff together with the other passengers who requested to be brought
back to Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to
Cagayan de Oro City. Petitioner, the next day, boarded the M/V Asia Japan for its
voyage to Cagayan de Oro City, likewise a vessel of defendant.

On account of this failure of defendant to transport him to the place of destination on

November 12, 1991, respondent Arroyo filed before the trial court “an action for damage
arising from bad faith, breach of contract and from tort,” against petitioner. The trial
court ruled only for breach of contract. The CA reversed and set aside said decision on
appeal.

ISSUE:

Whether or not the petitioner Trans-Asia was negligent?

HELD:

Yes.

Before commencing the contracted voyage, the petitioner undertook some repairs on
the cylinder head of one of the vessel’s engines. But even before it could finish these
repairs, it allowed the vessel to leave the port of origin on only one functioning engine,
instead of two. Moreover, even the lone functioning engine was not in perfect condition
as sometime after it had run its course, it conked out. This caused the vessel to stop
and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop
anchor. Plainly, the vessel was unseaworthy even before the voyage began. For a
vessel to be seaworthy, it must be adequately equipped for the voyage and manned
with a sufficient number of competent officers and crew.[21] The failure of a common
carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is
a clear breach of is duty prescribed in Article 1755 of the Civil Code.