Transpo Digests 3

American Home Assurance vs CA 2
Philippine Home Assurance vs CA 4

Sulpicio Lines vs CA 6
Erlanger vs Swedish East 8
Belgian Overseas v Phil First 10
Sealand Services v IAC 13
Wallem Phils v S.R. Farms 15
Mitsui Lines v CA 17
ICTS v Prudential Guarantee 18
PECO v Manila Port 21
American Airlines v CA 25
PAL v Savillo 27
Northwest Airlines v CA 30
United Airlines v Uy 34
Lufthansa v CA 36
ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

BATCH 2017 1 OF 36 ATTY. VIVENCIO ABANO
AMERICAN HOME ASSURANCE VS CA
G.R. No. 94149, May 5, 1992
Digest Author: Anna Villanoza
*Issue on Averages was not tackled because the carrier didn’t attempt to prove that it was not negligent.
DOCTRINE
‣ Art. 848, Code of Commerce: Claims for average shall not be admitted if they do not exceed five percent of the
interest which the claimant may have in the vessels or cargo if it is gross average, and one percent of the goods
damaged if particular average, deducting in both cases the expenses of appraisal, unless there is an agreement to
the contrary.
‣ Particular Average - Particular average, is a loss happening to the ship, freight, or cargo which is not be shared by
contributing among all those interested, but must be borne by the owner of the subject to which it occurs.
‣ General Average - is a contribution by the several interests engaged in the maritime venture to make good the loss
of one of them for the voluntary sacrifice of a part of the ship or cargo to save the residue of the property and the
lives of those on board, or for extraordinary expenses necessarily incurred for the common benefit and safety of
all.
‣ Issue of negligence must first be addressed before the proper provisions of the Code of Commerce on the extent of
liability may be applied.
PARTIES
‣ American Home Assurance (insurer) - subrogated to the rights of Mayleen Paper
‣ National Marine Corp. - owns and operates the vessel
FACTS
‣ On June 19, 1988, Cheng Hwa Pul Corp. shipped 5,000 bales of bleached pulp from Taiwan on board “SS
Kaunlaran” which is owned by respondents, National Marine Corp (NMC).
‣ The shipment was consigned to Mayleen Paper, Inc. of Manila which insured it with petitioner American Home
Assurance.
‣ After 4 days, the shipment arrived in Manila, it was discharged to the custody of Marina Port Services. However,
upon delivery to Mayleen Paper, it was discovered that 122 bales were either damaged or lost. The loss was
calculated to be 4,360 kg with an estimated value of Php 61,263.41
‣ Mayleen Paper demanded indemnification from NMC for damages and losses but for no justifiable reason, the
demand was not heeded.
‣ Mayleen Paper then sought recovery from petitioner-insurer AHA, in the amount of $837,500.00 but was only
paid Php 31,506.75.
‣ As subrogree, AHA seeks to recover from NMC the amount it paid to Mayleen and it filed a complaint for recovery
of sum of money.
‣ NMC filed a motion to dismiss, stating that AHA had no cause of action based on Art. 848 of the Code of Commerce
which provides that:
‣ “claims for averages shall not be admitted if they do not exceed 5% of the interest which the claimant may have in
the vessel or in the cargo if it be gross average and 1% of the goods damaged if particular average, deducting in both
cases the expenses of appraisal, unless there is an agreement to the contrary.”
‣ AHA argued that Art. 848 of the Code of Commerce does not apply because it refers to averages, and that a
particular average presupposes that loss or damages is due to an inherent defect of the goods, an accident of the
sea, or a force majeure or the negligence of the crew of the carrier, while claims for damages due to the negligence
of the common carrier are governed by the Civil Code provisions on Common Carriers.
‣ The RTC ruled for NMC because the loss suffered by the shipment is only .18% or less than 1% of the interest of the
consignee. Since it is a particular average, the loss must be at least 1% to be able to sue for recovery.
‣ CA dismissed because the proper remedy should have been a certiorari with the SC.

ISSUE/HELD
‣ Should the application of the Law on Averages (Code of Commerce) apply in this case? (If it applies, then NMC
would win because the damage is less than 1%) — No, cannot apply.
RATIO
‣ The liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by said Code, the
rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws.
‣ The Court ruled that common carriers cannot limit their liability for injury or loss of goods where such injury or
loss was caused by its own negligence. Otherwise stated, the law on averages under the Code of Commerce cannot
be applied in determining liability where there is negligence.
‣ Under the foregoing principle and in line with the Civil Code's mandatory requirement of extraordinary diligence
on common carriers in the care of goods placed in their stead, it is but reasonable to conclude that the issue of
negligence must first be addressed before the proper provisions of the Code of Commerce on the extent of liability
may be applied.
‣ The records show that upon delivery of the shipment in question of Mayleen's warehouse in Manila, 122 bales
were found to be damaged/lost with straps cut or loose. Instead of presenting proof of the exercise of
extraordinary diligence as required by law, National Marine Corporation (NMC) filed its Motion to Dismiss
hypothetically admitting the truth of the facts alleged in the complaint to the effect that the loss or damage to the
122 bales was due to the negligence or fault of NMC. Filing of a motion to dismiss on the ground of lack of cause of
action carries with it the admission of the material facts pleaded in the complaint.
‣ AHA is entitled to reimbursement from NMC.

PHILIPPINE HOME ASSURANCE VS CA
G.R. No. 106999, June 20, 1996
Digest Author: Ellen Buenaventura
DOCTRINE
‣ The formalities prescribed in Article 813 and 814 of the Code of Commerce must be complied with to incur the
expenses and cause the damage corresponding to gross or general average.
PARTIES
‣ Petitioner is Phil Home Assurance Corp (PHAC)—insurer of the consigned goods
‣ Respondents are the CA and Eastern Shipping Lines (ESLI)—the carrier
FACTS
‣ ESLI loaded on board SS Eastern Explorer in Kobe, Japan the ff shipment for carriage to Manila and Cebu, freight
pre-paid and in good order and condition:
‣ 2 boxes internal combustion engine parts, consigned to William Lines
‣ 10 metric tons (334 bags) ammonium chloride, consigned to Orca’s company
‣ 200 bags Glue 300 consigned to Pan Oriental Match company
‣ Garments, consigned to Ding Velayo
‣ While the vessel was off Okinawa, Japan, a small flame was detected on the acetylene cylinder located in the
accommodation rea near the engine room on the main deck level. The crew tried to extinguish said fire, but the
cylinder suddenly exploded sending a flash of flame throughout the accommodation area, thus causing death and
severe injuries to the crew. The whole vessel caught fire. The master and crew were forced to abandon ship.
‣ SS Eastern Explorer was found to be a constructive total loss and its voyage declared abandoned
‣ A tugboat under Fukuda Salvage Co arrived and commenced to tow the vessel for the port of Naha. After the fire
was extinguished at the port, the cargoes salvaged were loaded to another vessel for delivery to their original ports
of destination.
‣ Note: The goods subject of the present controversy were neither lost nor damaged in transit by the fire and were all
delivered to consignees
‣ ELSI charged the consignees several amounts corresponding to additional freight and salvage charges. These were
paid by petitioner PHAC under protest for and in behalf of the consignees
‣ PHAC, as subrogee, filed the present complaint before the RTC against ELSI to recover the sum paid under protest
on the ground that the same were actually damages directly brought about by the fault, negligence, illegal act
and/or breach of contract of ELSI
‣ ELSI contended that it exercised the required diligence in the custody and carriage of the shipment, that the fire
was caused by an unforeseen event, and that the additional freight charges were due and demandable pursuant to
the Bill of Lading issued, and the salvage charges were collectible under the Salvage Law
‣ Trial court dismissed PHAC’s complaint and ruled in favor of ESLI. CA affirmed the judgment.
ISSUE/HELD
1. Was the fire a natural disaster? No. It was caused by respondent’s fault or negligence.
2. Do the expenses or averages incurred in saving the cargo constitute general average? No.
3. Was petitioner liable to respondent carrier for additional freight and salvage charges? No.
Basically, the RTC and the CA were wrong.
RATIO 1
‣ In jurisprudence, fire may not be considered a natural disaster since it almost always arises from some act of man
or by human means. It cannot be an act of God unless caused by lightning or a natural disaster or casualty not
attributable to human agency. In the case at bar, it is not disputed that a small flame was detected on the acetylene
cylinder and that by reason thereof, the same exploded despite efforts to extinguish the fire. Neither is there any
doubt that the acetylene cylinder, obviously fully loaded, was stored in the accommodation area near the engine
room and not in a storage area considerably far, and in a safe distance, from the engine room. Moreover, there was

no showing, and none was alleged by the parties, that the fire was caused by a natural disaster or calamity not
attributable to human agency.
‣ On the contrary, there is strong evidence indicating that the acetylene cylinder caught fire because of the fault
and negligence of respondent ESLI, its captain and its crew.
‣ The acetylene cylinder should not have been stored in the accommodation area near the engine room where
the heat generated there could cause the cylinder to explode from spontaneous combustion
‣ Storing said cylinder in the accommodation area reserved for passengers unnecessarily exposed its passengers
and crew to grave danger and injury
‣ The fact that the acetylene cylinder was checked, tested and examined and subsequently certified as having
complied with the safety measures and standards by qualified experts before it was loaded in the vessel only
shows to a great extent that negligence was present in the handling of the acetylene cylinder after it was
loaded and while it was on board the ship.
‣ Hence the fire was not a natural disaster but was caused by the fault or negligence of respondent.
RATIO 2
‣ As a rule, general or gross averages include all damages and expenses which are deliberately caused in order to
save the vessel, its cargo, or both at the same time, from a real and known risk. While the instant case may
technically fall within said provision, the formalities prescribed under Art 813 and 814 of the Code of
Commerce to incur the expenses and cause the damage corresponding to gross average were not complied
with.
‣ Art 813:
‣ In order to incur the expenses and cause the damages corresponding to gross average, there must be a resolution
of the captain, adopted after deliberation with the sailing mate and other officers of the vessel, and after
hearing the persons interested in the cargo who may be present.
‣ If the latter shall object, and the captain and officers or a majority of them, or the captain, if opposed to the
majority, should consider certain measures necessary, they may be executed under his responsibility, without
prejudice to the right of the shippers to proceed against the captain before the competent judge or court, if they
can prove that he acted with malice, lack of skill, or negligence. If the persons interested in the cargo, being on
board the vessel, have not been heard, they shall not contribute to the gross average, their share being
chargeable against the captain, unless the urgency of the case should be such that the time necessary for previous
deliberations was wanting.
‣ Art 814:
‣ The resolution adopted to cause the damages which constitute general average must necessarily be entered in the
log book, stating the motives and reasons for the dissent, should there be any, and the irresistible and urgent
causes which impelled the captain if he acted of his own accord.
‣ In the first case the minutes shall be signed by all the persons present who could do so before taking action, if
possible; and if not, at the first opportunity. In the second case, it shall be signed by the captain and by the
officers of the vessel. In the minutes, and after the resolution, shall be stated in detail all the goods jettisoned,
and mention shall be made of the injuries caused to those kept on board. The captain shall be obliged to deliver
one copy of these minutes to the maritime judicial authority of the first port he may make, within 24 hours after
his arrival, and to ratify it immediately under oath.
‣ Consequently, respondent ESLI’s claim for contribution from the consignees of the cargo at the time of the
occurrence of the average turns to naught.
RATIO 3
‣ Therefore, it indubitably follows that the cargo consignees cannot be made liable to respondent carrier for
additional freight and salvage charges. Consequently, respondent carrier must refund to herein petitioner the
amount it paid under protest for additional freight and salvage charges in behalf of the consignees.

SULPICIO LINES VS CA
305 SCRA 478, March 29, 1999
Digest Author: Coleen Bunao
DOCTRINE
‣ Whether or not the collision sued upon occurred in a crossing situation is immaterial. Rule 24-C, Regulations for
Preventing Collisions at the Sea, ruled that the duty to keep out of the way remained even if the overtaking vessel
cannot determine with certainty whether she is forward of or aft more than 2 points from the vessel.
PARTIES
‣ Aquarius Fishing Co — plaintiff vessel
‣ Agapito Gerbolinga — master of Aquarius Fishing Co.
‣ Sulpicio Lines — defendant vessel
FACTS
‣ A collision between one of Aquarius Fishing Co.’s fishing boats and M/V Don Sulpicio occurred.
‣ Admitted in Evidence:
‣ M/V Don Sulpicio has sighted 2 fishing boats, namely: F/B Aquarius ‘C’ and F/B Aquarius ‘G’ although it
(Sulpicio) maintained it was F/B Aquarius ‘B.’
‣ From the evidence it appears that the 2 fishing boats had a speed of about 7.5 to 8 knots per hour while M/V
Don Sulpicio was running about 15.5 knots per hour. (more than twice as fast as the speed of the two fishing
boats.)
‣ The weather at that time the accident happened was clear and visibility was good. In other words, from the
distance of about four miles at sea, the men of Don Sulpicio could clearly see the 2 fishing boats which were
ahead about 4 miles and likewise, the men of the 2 fishing boats could clearly see M/V Don Sulpicio following.
‣ Plaintiff Aquarius’s Claim: They continued on their speed in their course and while maintaining their speed they
were rammed by M/V Don Sulpicio.
‣ Defendant Sulpicio’s Claim: (simply because a vessel had no lookout and that the vessel was ahead, if it is rammed by
another vessel that is following, the fault would be on the vessel that is ahead because the vessel that is ahead should
always give way to the vessel that is following — the following vessel would NOT be at fault)
‣ Aquarius was negligent and that the collision was due to the negligence of the men manning F/B Aquarius ‘B’
and submit that considering that F/B Aquarius ‘B’ had no lookout and that the fishing boat was ahead, F/B
Aquarius ‘B’ should have given way to M/V Don Sulpicio who was following in order to avoid collision.
‣ Considering that F/B Aquarius ‘B’ was at fault, it should suffer its own damage.
‣ RTC Ruling: Aquarius Fishing Co.
‣ M/V Don Sulpicio is a passenger boat with a speed of about 15.5 knots an hour and being a passenger boat, it is
a bigger boat and a faster boat. It is incumbent upon its master to see to it that the direction to which they are
proceeding is clear.
‣ Having seen for the first time the 2 vessels, F/B Aquarius ‘C’ and F/B Aquarius ‘G’ about 4 miles ahead and that
they were almost parallel to each other or in the same line with each other, as M/V Don Sulpicio was following,
M/V Don Sulpicio should have used sufficient diligence to avoid collision.
‣ It appears from the evidence that during the incident, the weather was clear and visibility was very good. The M/
V Don Sulpicio had a clear opportunity to avoid collision, but it failed to do so. M/V Don Sulpicio believed, that
considering that it was a following vessel, it can just go thru and proceed irrespective of danger.
‣ The Court believes that the evidence is abundant to show negligence on the part of the master of the defendants
(Sulpicio) and as such, defendants should be held responsible for all the damages suffered by F/B Aquarius ‘G.’
‣ CA Ruling: Aquarius Fishing Co., MR of Sulpicio Lines denied.
‣ Sulpicio averred that the RTC made a mistake in disregarding the regulations for prevention of collision also
known as the Rules of the Road, in deciding who was negligent.
‣ According to Sulpicio, it complied with these regulations and Aquarius did not.

‣ Placing reliance on the Rules of the Road and Regulations on the Prevention of Collision: “All vessels irrespective of
size and make must keep a lookout. There is no exception to this rule,” Sulpicio maintains that the CA committed an
error.
‣ It was clearly established by the positive testimony of second mate, Aurelio Villacampa, Jr. on July 14, 1981 and the
sketch prepared by said witness (Exhibit 2) that the two vessels were in a crossing situation. The vessel M/V ‘Don
Sulpicio’ was approaching on the starboard or right side of the crossing vessel F/B ‘Aquarius B.’ The applicable rules
in such a crossing situation are Rules 19, 21, 22 and 23.
‣ Rules of the Road quoted in the decision: (The point of the rules is that the other vessel should keep out of the way
of the other vessel if they find themselves at a crossing. In this case, M/V Don Sulpicio was the privileged vessel
and the F/B ‘Aquarius B’ was the burdened vessel in the crossing situation.”)
‣ ‘Rule 19. When two power driven vessels are crossing, so as to involve risk of collision, the vessel which has the
other on her starboard side shall keep out of the way of the other.’
‣ ‘Rule 21. Where, by any of the Rules, one of two vessels is to keep out of the way, the other shall keep her course
and speed.’
‣ ‘Rule 22. Every vessel which is directed by these Rules to keep out of the way of another vessel shall, so far as
possible, take positive early action to comply with this obligation, and shall, if the circumstances of the case
admit, avoid crossing ahead of the other.’
‣ ‘Rule 23. Every power-driven vessel which is directed by these Rules to keep out of the way of another vessel
shall, on approaching her, if necessary, slacken her speed or stop or reverse.’
‣ Aquarius comments that the Coast Guard Judge Advocate is the proper authority and has the technical
competence to determine who is at fault in maritime cases has this to say on the no look out defense put up by the
Sulpicio:
‣ ‘It is clear that the M/V Don Sulpicio was the overtaking vessel and, under the Rules on the Road, was the
burdened vessel which had the duty to take all the necessary actions to keep clear of the overtaken vessel.
ISSUE/HELD
‣ W/N the CA committed reversible error when it maintained that Don Sulpicio Lines was negligent and was
therefore liable.- NO. Sulpicio Lines is liable and negligent. It is beyond cavil that M/V “Don Sulpicio” must assume
responsibility as it was in a better position to avoid the collision. It should have blown its horn or given signs to
warn the other vessel that it was to overtake it.
RATIO
‣ Whether or not the collision sued upon occurred in a crossing situation is immaterial as the Court of Appeals,
relying on Rule 24-C, Regulations for Preventing Collisions at the Sea, ruled that the duty to keep out of the way
remained even if the overtaking vessel cannot determine with certainty whether she is forward of or aft more
than 2 points from the vessel.
‣ Assuming argumenti ex gratia that F/B Aquarius “G” had no lookout during the collision, the omission does not
suffice to exculpate Sulpicio Lines from liability. M/V “Don Sulpicio” cannot claim that it was a privileged vessel
being in the portside which can maintain its course and speed during the collision. When it overtook F/B
Aquarius “G,” it was duty bound to slacken its speed and keep away from other vessels, which it failed to do.
The stance of petitioners that F/B Aquarius “G” is a burdened vessels which should have kept out of the way of M/V
“Don Sulpicio” is not supported by facts.

ERLANGER VS SWEDISH EAST
G.R. No. L-10051, March 9, 1916
Digest Author: Liane Candelario
DOCTRINE
‣ A derelict is defined as "A ship or her cargo which is abandoned and deserted at sea by those who were in charge of
it, without any hope of recovering it (sine spe recuperandi), or without any intention of returning to it (sine animo
revertendi).
PARTIES
‣ Erlanger & Galinger: the one who chartered Mindoro and took charge of salvaging Nippon and its cargo.
‣ The Swedish East Asiatic Co. and New Zealand Insurance Co: insurers and underwritters of Nippon and its cargo.
FACTS
‣ Steamship Nippon, loaded with copra and other general merchandise, sailed from Manila to Singapore. But while
en route, it got stranded on Scarborough Reef. Its Chief Officer, Weston, and nine members of the crew (note: not
the Captain and not all members of the crew) successfully left, reached Luzon, and requested assistance from the
Bureau of Navigation, Manila.
‣ Philippine Coast Guard cutter, Mindoro (another ship) was instructed to to go to the scene of the wreck of Nippon.
Meanwhile, another steamship, Manchuria traveling from Manila to Hong Kong passed by Scarborough reef and
rescued Captain Eggert and the remaining crew of Nippon. Mindoro offered the same assistance when they got to
the scene but Nippon’s Captain and Crew declined (so they ended up in Hong Kong).
‣ Apparently, it was Erlanger & Galinger who chartered Mindoro (the salvaging ship). Thus, they were in possession
of Nippon (the salvaged ship) until the last cargo was shipped back to Manila. Cargo of Nippon were brought to the
Manila Port while the actual Nippon ship was eventually floated and towed to Olongapo for repairs.
‣ Nippon cargo were valued at P156,231.73 while the ship was valued at P250,000. Erlanger & Galinger (the one
that chartered Mindoro) claimed P145,800 against the ship and this amount was settled.
‣ Now, Erlanger & Galinger brought a claim against the insurance company and underwriters of the cargo salvaged
from Nippon for the salvage costs of the said cargo. Those impleaded are:
‣ Oelwerke Teutonia corp claims the copra.
‣ New Zealand Insurance Company appeared as insurer and assignee of the owners of 33 crates of agar-agar
‣ The Tokio Marine Insurance Company appeared as the insurer and assignee of 1,000 cases of bean oil and two
cases of bamboo lacquer work; and
‣ The Thames and Mersey Marine Insurance Company appeared as a reinsurer to the extent of P6,500 on the cargo of
copra.
‣ Lower Court ruled in favor of Erlanger & Galinger, awarding one-half of the net proceeds of sales of Nippon’s cargo.
Oelwerke Teutonica, The New Zealand Insurance Company, and even Erlanger & Galinger appealed the decision.
ISSUES/HELD
4. Was the ship abandoned? YES. Evidence suggests that the ship was in peril and Captain and Crew left the ship
without intention/hope of returning to salvage the ship.
5. Was the salvage conducted with skill, diligence, and efficiency? YES. No proof to the contrary.
6. Was the award justified? NO. Award is not fixed at one-half of the proceeds. Must now be determined by the
particular facts and the degree of merit.
RATIO 1
‣ In general, salvage may be defined as a service which one person renders to the owner of a ship or goods, by his
own labor, preserving the goods or the ship which the owner or those entrusted with the care of them have either
abandoned in distress at sea, or are unable to protect and secure.
‣ Salvage is founded on the equity of remunerating private and individual services performed in saving, in whole or
in part, a ship or its cargo from impending peril, or recovering them after actual loss.

‣ In the US case of The Mayflower v. The Sabine, three (3) elements are necessary to a valid salvage claim: (1) A
marine peril. (2) Service voluntarily rendered when not required as an existing duty or from a special contract. (3)
Success, in whole or in part, or that the service rendered contributed to such success.
‣ The question whether or not a particular ship and her cargo is a fit object of salvage depends upon her condition at
the time the salvage services are performed. Here, Erlanger & Galinger claims that Nippon was a derelict or quasi-
derilict at the time of the salvage.
‣ A derelict is defined as "A ship or her cargo which is abandoned and deserted at sea by those who were in charge of
it, without any hope of recovering it (sine spe recuperandi), or without any intention of returning to it (sine animo
revertendi).
‣ Whether property is to be adjudged derelict is determimed by the intention and expectation of those in charge of
it when they quitted it. If those in charge left with the intention of returning, or of procuring assistance, the
property is not derelict, but if they quitted the property with the intention of finally leaving it, it is derelict, and a
change of their intention and an attempt to return will not change its nature.
‣ Here, evidence suggests that Captain and the crew and the crew left the ship sine animo revertendi (without any
hope of recovering it). This is supported by the letters sent by Captain of Nippon and by the Captain of Manchuria
which stated that there is very little hope of saving the ship. Even if they intend to return the ship to “save it,” this
was contradicted by the leisurely manner which Captain and the crew proceeded to Hong Kong
‣ As evidenced by his testimony, Capt. Eggert upon his arrival in Hong Kong had over two days in which to arrange
for salvage operations and he did nothing, while Erlanger and Galinger, who were strangers and had no interest,
sent out a salvage expedition in twenty-four hours after they discovered that the ship was wrecked.
‣ Captain Eggert’s testimony also mentioned that while he intends to return to save the ship,m he took all the crew
with him aboard Manchuria because he knew that the ship is in peril and any bad weather (typhoon., gale, etc) can
smash the ship.
‣ The evidence proves that the Nippon was in peril; that the captain left in order to protect his life and the lives of
the crew; that the animo revertendi (intention to return) was slight, hence the reason why he already took the
ship’s papers with him.
RATIO 2
‣ Erlanger & Galinger were diligent in commencing the work and were careful and efficient in its pursuit and
conclusion.
‣ Even if their business is not adapted to salvage proceedings, no proof was presented that their salvage operations
could have been conducted in a better manner and their lack of means was quickly remedied by the conduct of
their work. They were also right, as attested by an expert stevedore, in using Manila and not Hong Kong as the
base for the salvaged cargo since Manila is nearer to the scene of the wreck.
RATIO 3
‣ Expenses must be borne by Erlinger and Galinger. While the award should be liberal enough to cover the expenses
and give an extra amount as a reward for the services rendered, the expenses must not be used as a basis for the
final award. Simply put, salvage expenses are part of the risk that Erlinger and Galinger undertook.
‣ Erlinger and Galinger knew this risk and they should not have spent more money than their reasonable share of
the proceeds would amount to under any circumstances.
‣ While the lower court’s award of one-half is established in prior cases of derelicts, the Court ruled that the award
for derelicts is now determined by the particular facts and the degree of merit.
‣ Parties already settled the award for the salvage of the sip at P145,800. As for the cargo (the copra and the agar-
agar), the Court, in consideration of equity, awarded the following salvage amounts: (a) 40 per cent of the net value
of the wet copra salved; (b) 25 per cent of the net value of the dry copra salved; (c) 20 per cent of the net value of
the agar-agar salved.
‣ Thus: the net value of the wet copra salved amounted to P40,381.94; 40 per cent of that amount would be
P16,152.78. The net value of the dry copra salved amounted to P102,272.11; 25 per cent of that amount would be
P25,568.77.

BELGIAN OVERSEAS V PHIL FIRST
“Four Coils Damaged; Declared as Total loss; COGSA Notice of Loss Prescription Period; COGSA Limit of Liability Rule” G.R.
No. 143133. June 5, 2002
Digest Author: Ian Canoy
PARTIES
‣ Plaintiff: Philippine First Insurance (as subrogee of Philippine Steel Trading Corp.)
‣ Defendant: Belgian Overseas Chartering and Shipping & Jardine Davies Transport Services
DOCTRINE
‣ (Paraphrased) When the Bill of Lading doesn't state any declared value of the goods, the Limiting of Liability rule
under COGSA kicks in regardless of any declared value in a contract of sale, or letter of credit or whatnot. Must be
declared in the Bill of Lading because that's the contract of carriage between the parties.
‣ Under COGSA, Notice of Loss need not be given if the the state of the goods, at the time of their receipt, has been
the subject of a joint inspection or survey. (Paraphrased) In a situation like this, as long as the complaint for
recovery is filed within one year from delivery, you're good.
FACTS
‣ CMC Trading shipped 242 Coils of Prime Cold Rolled Steel Sheets on board the MN Anangel Sky in Hamburg,
Germany to be brought to Manila for the Consignee, Phil. Steel Trading Corp.
‣ When it arrived in Manila Port, 4 Coils were in Bad Order and damaged as evidenced by a Bad Order Tally Sheet.
‣ Because of this, Phil Steel Trading considered it unfit for its intended purpose and declared it a total loss.
‣ Despite receipt of formal demands, Defendants refused the consignee’s claim.
‣ Phil First Insurance paid the consignee around P500k for its claim and was subrogated in the rights of Phil Steel
Trading.
‣ Plaintiff Phil First Insurance then instituted an action for recovery of sum of money against Defendants
‣ Defendants arguments:
‣ Damage was caused by pre-shipment,
‣ inherent nature, vice or defect of the goods,
‣ or to perils, danger and accidents of the sea,
‣ or to insufficiency of packing thereof,
‣ or to the act or omission of the shipper of the goods or their representatives.
‣ their liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading
and other pertinent laws (COGSA).
‣ RTC dismissed the complaint.
‣ CA reversed saying Defendants were not able to overcome the presumption of negligence of a common carrier.
‣ As to the extent of liability, CA said COGSA doesn't apply because in the Letter of Credit, it indicated a higher
valuation of the cargo declared by the shipper.
ISSUES/HELD
1. W/N Defendants are negligent and liable for the damage. Yes, negligent and liable.
2. W/N the notice of loss was filed in time according to the COGSA. YES Filed on time. (Main)
3. W/N the package limitation of liability under the COGSA should apply. YES, limited to $500 per Packaging
($2000 in all) (MAIN)
RATIO 1
‣ Yes, Defendants didn't overcome the presumption of negligence. (Side issue)
‣ Common carriers are bound to observe extraordinary diligence. From this sprouts the presumption of negligence
in case of loss or damage in their custody.

‣ Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their
destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is
given as to how the deterioration, the loss or the destruction of the goods happened, the transporter shall be held
responsible.
‣ The defendants failed to rebut the prima facie presumption of negligence is revealed by the evidence:
1. First, Bill of Lading stated that defendants received the subject shipment in good order and condition in
Hamburg, Germany.
2. Second, prior to the unloading of the cargo, an Inspection Report prepared and signed by representatives of
both parties showed the steel bands broken, the metal envelopes rust-stained and heavily buckled, and the
contents thereof exposed and rusty.
3. Third, Bad Order Tally Sheet No. 154979 issued by Jardine Davies Transport Services, Inc., stated that the four
coils were in bad order and condition.
4. Fourth, the Certificate of Analysis stated that, based on the sample submitted and tested, the steel sheets
found in bad order were wet with fresh water.
5. Fifth, defendants -- in a letter addressed to the Philippine Steel Coating Corporation and dated October 12,
1990 -- admitted that they were aware of the condition of the four coils found in bad order and condition.
‣ These facts were confirmed by Ruperto Esmerio, Head Checker of BM Santos Checking Agency that was contracted
by Jardine Davies Transport.
‣ Defendants failed to prove that they observed the extraordinary diligence. there is no showing that petitioners
exercised due diligence to forestall or lessen the loss. Having been in the service for several years, the master of the
vessel should have known at the outset that metal envelopes in the said state would eventually deteriorate when
not properly stored while in transit.
‣ Also, they contend that they are exempt from liability under Art. 1734(4) of the civil code; that the character of
the goods or defects in the packing or container is the proximate cause of the damage. They cite the notation
“metal envelopes rust stained and slightly dented” printed on the Bill of Lading as evidence
‣ SC doesn't agree. The aforecited exception refers to cases when goods are lost or damaged while in transit as a
result of the natural decay of perishable goods or the fermentation or evaporation of substances liable therefor, the
necessary and natural wear of goods in transport, defects in packages in which they are shipped, or the natural
propensities of animals.None of these is present in the instant case.
‣ Even if the fact of improper packing was known to the carrier or its crew or was apparent upon ordinary
observation, it is not relieved of liability for loss or injury resulting therefrom, once it accepts the goods
notwithstanding such condition
RATIO 2
‣ Yes, filed on time as long as it was filed within one year from delivery. (Main-ish)
‣ Defendant claims that under COGSA sec. 3(6), the notice of loss should be filed three days from delivery. They
contend that it was delivered on July 31, 1990 and the claim was filed on September 18, 1990.
‣ Defendants are wrong.
‣ This COGSA provision provides that the notice of claim need not be given if the state of the goods, at the time
of their receipt, has been the subject of a joint inspection or survey. In this case, prior to unloading the cargo, an
Inspection Report as to the condition of the goods was prepared and signed by representatives of both parties.
‣ Second, as stated in the same provision, a failure to file a notice of claim within three days will not bar
recovery if it is nonetheless filed within one year. This one-year prescriptive period also applies to the shipper,
the consignee, the insurer of the goods or any legal holder of the bill of lading.
‣ (Civil code and code of commerce doesn't have any prescriptive period so COGSA suppletorily applies according to
the case)
‣ In the present case, the cargo was discharged on July 31, 1990, while the Complaint was filed by respondent on
July 25, 1991, within the one-year prescriptive period.
RATIO 3
‣ YES, limited to 500$ per package because there was no higher value declared in the Bill Of Lading. Letter of
Credit is immaterial here. (MAIN-er)

‣ Defendants contend that their liability should be limited to $500 per package damaged according to the COGSA,
Sec. 4(5).
‣ On the other hand, plaintiff argues that the COGSA is inapplicable because the value of the subject shipment was
declared by petitioners beforehand, as evidenced by the reference to and the insertion of the Letter of Credit in the
said Bill of Lading.
‣ Defendant is correct. The Bill of Lading serves as the contract and law between the parties.
‣ Stipulations that limit liability can be included in a Bill of Lading subject to the following circumstances:
1. the contract is reasonable and just under the circumstances, and
2. it has been fairly and freely agreed upon by the parties.
‣ the Civil Code does not limit the liability of the common carrier to a fixed amount per package.In all matters not
regulated by the Civil Code, Code of Commerce and special laws (in this case, COGSA) apply suppletorily.
‣ COGSA’s provisions on limited liability are as much a part of the bill of lading as though physically in it and as
though placed there by agreement of the parties.
‣ In this case, there was no stipulation in the Bill of Lading limiting the carriers liability. Neither did the shipper
declare a higher valuation of the goods to be shipped. This fact notwithstanding, the insertion of the words in the
Letter of Credit CANNOT be the basis for petitioners liability.
1. First, a notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the
shipper for the importation of steel sheets did not effect a declaration of the value of the goods as required
by the bill. That notation was made only for the convenience of the shipper and the bank processing the Letter
of Credit.
2. Second, in Keng Hua Paper Products v. Court of Appeals, we held that a bill of lading was separate from the
Other Letter of Credit arrangements:
‣ “The contract of carriage, as stipulated in the bill of lading… must be treated independently… from the
contract of issuance of a letter of credit… and the amount allowed in the letter of credit will not affect the
validity and enforceability of the contract of carriage as embodied in the bill of lading. As the bank
cannot be expected to look beyond the documents presented to it by the seller pursuant to the letter of
credit, neither can the carrier be expected to go beyond the representations of the shipper in the bill of
lading and to verify their accuracy vis--vis the commercial invoice and the letter of credit…”
‣ In the light of the foregoing, petitioners liability should be computed based on US$500 per package and NOT on
the per metric ton price declared in the Letter of Credit.
‣ (Definition of Package from Eastern Shipping: what would ordinarily be considered packages are shipped in a
container supplied by the carrier and the number of such units is disclosed in the shipping documents, each of
those units and not the container constitutes the package referred to in the liability limitation provision of
Carriage of Goods by Sea Act.)
‣ Considering, therefore, the ruling in Eastern Shipping Lines and the fact that the Bill of Lading clearly disclosed
the contents of the containers, the number of units, as well as the nature of the steel sheets, the four damaged coils
should be considered as the shipping unit subject to the US$500 limitation.
‣ Decision Modified. Liability of Defendants reduced to 2000$ plus legal interest.

SEALAND SERVICES V IAC
“Package Limitation Clause”; G.R. No. 75118; August 31, 1987
Digest Author: Amber Gagajena
DOCTRINE
‣ It seems clear that even if said section 4(5) of the Carriage of Goods by Sea Act did not exist, the validity and
binding effect of the liability limitation clause in the bill of lading here are nevertheless fully sustainable on the
basis alone of the cited Civil Code Provisions. That said stipulation (i.e., Package Limitation Clause) is just and
reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if a greater
value is not declared for the shipment in the bill of lading. To hold otherwise would amount to questioning the
justness and fairness of the law itself, and this the private respondent does not pretend to do.
PARTIES
‣ Carrier – Sea-Land Service, Inc. – A foreign shipping and forwarding company.
‣ Shipper – Seaborne Trading Company
‣ Consignee – Sen Hiap Hing – The business name used by Paulino Cue in the wholesale and retail trade.
FACTS
‣ On January 8, 1981, Sea-Land received from Seaborne Trading Company in Oakland, California a shipment
consigned to Sen Hiap Hing located on Plaridel Streets, Cebu City.
‣ Seaborne not having declared the value of the shipment, no value was indicated in the bill of lading. Also, the bill
of lading contains a Package Limitation Clause limiting carrier’s liability to $500 per package if no greater value is
declared.
‣ Based on volume measurements, Sea-land charged the shipper the total amount of $209 for freightage and other
charges.
‣ The shipment was loaded on board the MS Patriot, a vessel owned and operated by Sea-Land, for discharge at the
Port of Cebu.
‣ The shipment arrived in Manila on February 12, 1981, and there discharged into the custody of the arrastre
contractor and the customs and port authorities.
‣ Sometime between February 13 and 16, 1981, after the shipment had been transferred, along with other cargoes
near Warehouse 3 at Pier 3 in South Harbor, Manila, awaiting trans-shipment to Cebu, it was stolen by pilferers
and has never been recovered.
‣ Paulino Cue, the consignee, made formal claim upon Sea-Land for the value of the lost shipment allegedly
amounting to P179,643.
‣ Sea-Land offered to settle for $4,000.00 ($500 x 8 Packages), or its then Philippine peso equivalent of 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.
‣ Cue rejected the offer and thereafter brought suit for damages against Sea-Land in the CFI of Cebu.
‣ Said Court, after trial, rendered judgment in favor of Cue, sentencing Sea-Land to pay him P186,048 representing
the Philippine currency value of the lost cargo (at P8 to $1 exchange rate), P55,814 for unrealized profit with one
percent monthly interest from the filing of the complaint until fully paid, P25,000 for attorney's fees and P2,000
as litigation expenses.
‣ Upon appeal, IAC affirmed the decision.
ISSUE/HELD
‣ W/N the consignee is bound by stipulations in the covering bill of lading limiting to a fixed amount the liability
of the carrier for loss or damage to the cargo where its value is not declared in the bill— YES
RATIO
‣ There is no question of the right, in principle, of a consignee in a bill of lading to recover from the carrier or
shipper for loss of, or damage to, goods being transported under said bill, although that document may have been
drawn up only by the consignor and the carrier without the intervention of the consignee. Since the consignee
experiences benefits under the bill of lading, it is also bound by the provisions thereof.

‣ Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage
is governed by the laws of the country of destination and the goods in question were shipped from the United
States to the Philippines, the liability of petitioner Sea-Land to the respondent consignee is governed primarily by
the Civil Code, and as ordained by the said Code, suppletorily, in all matters not determined thereby, by the
Code of Commerce and special laws.
‣ One of these suppletory special laws is the Carriage of Goods by Sea Act, U.S. Public Act No. 521 which was made
applicable to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade by
Commonwealth Act No. 65. Sec. 4(5) of said Act in part reads:
‣ Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection
with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or
in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other
currency, unless the nature and value of such goods have been declared by the shipper before shipment and
inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but
shall not be conclusive on the carrier.
‣ Not only is there nothing in the Civil Code which absolutely prohibits agreements between shipper and carrier
limiting the latter's liability for loss of or damage to cargo shipped under contracts of carriage; it is also quite
clear that said Civil Code in fact has agreements of such character in contemplation in providing, in its Articles
1749 and 1750, that:
‣ ART. 1749 A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill
of lading, unless the shipper or owner declares a greater value, is binding.
‣ ART. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely
agreed upon.
‣ Nothing contained in section 4(5) of the Carriage of Goods by Sea Act already quoted is repugnant to or
inconsistent with any of the just-cited provisions of the Civil Code. Said section merely gives more flesh and
greater specificity to the rather general terms of Article 1749 (without doing any violence to the plain intent
thereof ) and of Article 1750, to give effect to just agreements limiting carriers' liability for loss or damage which
are freely and fairly entered into.
‣ It seems clear that even if said section 4(5) of the Carriage of Goods by Sea Act did not exist, the validity and
binding effect of the liability limitation clause in the bill of lading here are nevertheless fully sustainable on the
basis alone of the cited Civil Code Provisions. That said stipulation (i.e., Package Limitation Clause) is just and
reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if a greater
value is not declared for the shipment in the bill of lading. To hold otherwise would amount to questioning the
justness and fairness of the law itself, and this the private respondent does not pretend to do. But over and above
that consideration, the just and reasonable character of such stipulation is implicit in it giving the shipper or
owner the option of avoiding accrual of liability limitation by the simple and surely far from onerous expedient of
declaring the nature and value of the shipment in the bill of lading.
‣ There can, therefore, be no doubt or equivocation about the validity and enforceability of freely-agreed-upon
stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to an agreed valuation
unless the shipper declares a higher value and inserts it into said contract or bill. This pro position, moreover, rests
upon an almost uniform weight of authority.

WALLEM PHILS V S.R. FARMS
G.R. 161849, July 9, 2010
Digest Author: Alvin Garces
FACTS
‣ Contract of Carriage:
‣ The shipper: CONTINENTAL ENTERPRISES
‣ loaded in INDIA
‣ shipment of 1,100 metric tons of INDIAN SOYA BEAN MEAL
‣ for transport and delivery to MANILA
‣ with S.R. FARMS as consignee
‣ the vessel is owned by CONTI-FEED
‣ and WALLEM as its ship agent
‣ The cargo is part of a bulk order for delivery to several consignees including San Miguel and Vitarich
‣ APRIL 11, 1992 The vessel arrived at the port of Manila, shipment was discharged and transferred to the barges,
the offloading was handled by OCEAN TERMINAL SERVICES, INC. (OTSI), all throughout the period of unloading,
good weather prevailed. The unloading operation went on until APRIL 15, 1992 and delivered to S.R. FARMS
‣ At the instance of S.R. Farms, cargo check was made and using “draft survey method”, a shortage was noted at
80.467 metric tons
‣ Upon discovery, vessel chief officer was immediately notified
‣ MARCH 11, 1993 (within 1 yr from delivery) S.R. FARMS then filed a complaint for damages against CONTI-FEED
and others (but not WALLEM)
‣ JUNE 7, 1993 (after lapse of 1 yr from delivery) S.R. FARMS then filed an amended complaint impleading WALLEM
as agent of CONTI-FEED
‣ RTC dismissed the complaint
‣ CA reversed, ordered CONTI-FEED and WALLEM to pay
‣ WALLEM appealed to SC, arguing that:
‣ The claim was already time-barred when the case was filed against WALLEM after the lapse of the one-year
prescriptive period commenced on APRIL 15, 1992 when the subject shipment was delivered to private
respondent and lapsed on APRIL 15, 1993 as provided Carriage of Goods Sea Act (COGSA)
‣ S.R. FARMS waived its right of action when it did not give a written notice of loss to the petitioner within three
(3) days from discharge of the subject shipment as provided in COGSA.
ISSUE/HELD
‣ Whether the suit by S.R. FARMS against WALLEM was timely filed – No
RATIO
‣ According to Section 3(6) of COGSA: “Unless notice of loss or damage and the general nature of such loss or damage be
given in writing to the carrier or his agent at the port of discharge or at the time of the removal of the goods into the
custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie
evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not
apparent, the notice must be given within three days of delivery.
‣ Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking delivery
thereof.
‣ The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of
joint survey or inspection.
‣ In any event, the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit
is brought within one year after delivery of the goods or the date when the goods should have been delivered;

Provided, That, if a notice of loss or damage, either apparent or concealed, is not given as provided for in this
section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the
delivery of the goods or the date when the goods should have been delivered.
‣ In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable
facilities to each other for inspecting and tallying the goods.”
‣ Under this law, notice of loss or damages must be filed within three days of delivery. Admittedly, respondent did
not comply with this provision. However, failure to file a notice of claim within three days will not bar recovery if
a suit is nonetheless filed within one year from delivery of the goods or from the date when the goods should have
been delivered.
‣ However, in this case, S.R. FARMS was not able to file the suit within 1 year.
‣ There is no dispute that the vessel carrying the shipment arrived at the Port of Manila on April 11, 1992 and that
the cargo was completely discharged therefrom on April 15, 1992.
‣ However, S.R. FARMS erred in arguing that the complaint for damages, insofar as the WALLEM is concerned, was
filed on March 11, 1993 or within the prescriptive period.
‣ As the records would show, petitioner was not impleaded as a defendant in the original complaint filed on March
11, 1993. It was only on June 7, 1993 that the Amended Complaint, impleading petitioner as defendant, was filed.
‣ Respondent cannot argue that the filing of the Amended Complaint against petitioner should retroact to the date
of the filing of the original complaint.
‣ The settled rule is that the filing of an amended pleading does not retroact to the date of the filing of the original;
hence, the statute of limitation runs until the submission of the amendment.
‣ It is true that, as an exception, this Court has held that an amendment which merely supplements and amplifies
facts originally alleged in the complaint relates back to the date of the commencement of the action and is not
barred by the statute of limitations which expired after the service of the original complaint. The exception,
however, would not apply to the party impleaded for the first time in the amended complaint.
‣ In the instant case, WALLEM was only impleaded in the amended Complaint of June 7, 1993, or one (1) year, one
(1) month and twenty-three (23) days from April 15, 1992, the date when the subject cargo was fully unloaded
from the vessel. Hence, reckoned from April 15, 1992, the one-year prescriptive period had already lapsed.

MITSUI LINES V CA

ICTS V PRUDENTIAL GUARANTEE
G.R. No. 134514; December 8, 1999
Digest Author: Bel Gervasio
DOCTRINE
‣ In order to hold the arrastre operator liable for lost or damaged goods, the claimant should file with the operator a
claim for the value of said goods within 15 days from the date of discharge of the last package from the carrying
vessel. The filing of the claim for loss within the 15-day period is in the nature of a prescriptive period for bringing
an action and is a condition precedent to holding the arrastre operator liable. This requirement is a defense made
available to the arrastre operator, who may use or waive it as a matter of personal discretion.
FACTS
‣ Mother vessel Tao He loaded and received on board in San Francisco a shipment of 5 lots of canned foodstuff
complete and in good condition for transport to Manila in favor of consignee Duel Food Enterprises.
‣ Duel Food insured the shipment with Prudential Guarantee under a Marine Policy.
‣ Shipment arrived at the Port of Manila and discharged in favor of International Container Terminal Services, Inc.
(ICTSI) for safekeeping.
‣ A. D. Reyna Customs Brokerage withdrew the shipment and delivered the same to Duel Food. An inspection thereof
revealed that 161 cartons were missing valued at P85,984.40.
‣ Claim for indemnification of the loss having been denied by ICTSI and Reyna Customs Brokerage, Duel Food
sought payment from Prudential under the marine cargo policy. Duel received a compromised sum.
‣ As subrogee, Prudential instituted complaint against ICTSI and Reyna Customs Brokerage.
‣ ICTSI counters that:
‣ It observed extraordinary diligence over the subject shipment while under its custody;
‣ Loss is not attributable to its fault or its agent or employee;
‣ Consignee Duel failed to file a formal claim against it in accordance with PPA Administrative Order No. 10-81;
and
‣ Complaint states no cause of action.
‣ By way of crossclaim, it sought reimbursement from Reyna Customs Brokerage in the event it is adjudged to
pay the loss.
‣ RTC declared Reyna Customs Brokerage in default for failure to file answer within the reglementary period. Acting
on ICTSI’s motion, RTC allowed the former to present its evidence ex-parte against Reyna Customs Brokerage
relative to the cross claim.
‣ RTC rendered a decision dismissing complaint against Reyna Customs for lack of evidence.
‣ Subsequently, RTC rendered a Decision dismissing Prudential’s Complaint against ICTSI in this wise:
‣ Failure on the part of the consignee Duel to comply with the terms and conditions of the contract with
ICTSI, Prudential is not placed in a better position than the consignee Duel who cannot claim damages against
ICTSI. Hence, complaint DISMISSED.
‣ Reconsideration denied. CA reversed the RTC decision.
‣ CA found ICTSI negligent in its duty to exercise due diligence over the shipment. It concluded that the shortage
was due to pilferage of the shipment while the sea vans were stored at the container yard of ICTSI.
‣ CA also ruled that the filing of a claim depended on the issuance of a certificate of loss by ICTSI based on the
liability clause printed on the back of the arrastre and wharfage receipt. Since ICTSI did not issue such a certificate
despite being informed of the shortage, the 15-day period given to the consignee for filing a formal claim never
began. By subrogation, Prudential, as insurer of the consignee, was entitled to hold the ICTSI liable for the
shortage.
ISSUES/HELD
1. W/N ICTSI was negligent. –NO, not negligent.

2. W/N the Court of Appeals erred in allowing the Complaint despite the failure of consignee Duel to file a formal
claim within the period stated on the dorsal side of the arrastre and wharfage receipt, -YES, CA erred. The filing of
the claim for loss within the 15-day period is in the nature of a prescriptive period for bringing an action and is a
condition precedent to holding the arrastre operator liable.
RATIO 1
‣ The legal relationship between an arrastre operator and a consignee is akin to that between a warehouseman and a
depositor. As to both the nature of the functions and the place of their performance, an arrastre operators services
are clearly not maritime in character.
‣ In a claim for loss filed by a consignee, the burden of proof to show compliance with the obligation to deliver the
goods to the appropriate party devolves upon the arrastre operator. Since the safekeeping of the goods rests within
its knowledge, it must prove that the losses were not due to its negligence or that of its employees.
‣ To discharge this burden, ICTSI presented five Arrastre and Wharfage Bill/Receipts, which also doubled as
container yard gate passes, covering the whole shipment in question. A gate pass bore the signature of a
representative of the consignee, acknowledging receipt of the shipment in good order and condition. Thus, Court
sees no reason to dispute the finding of the trial court that the evidence adduced by the parties show that Duel
Food received the container vans in good condition.
‣ CA cites, as proof of ICTSI’s negligence, the Survey/Final Report of the independent adjuster. The adjuster insists
that the shipment was complete when the customs examiner opened the sea vans for tax evaluation. However, the
latter's report was not presented. Hence, there is no basis for comparing the cartons subjected to customs
examination and those which were delivered to the consignee.
‣ More important, the consigned goods were shipped under Shippers Load and Count. This means that the shipper
was solely responsible for the loading of the container, while the carrier was oblivious to the contents of the
shipment. Protection against pilferage of the shipment was the consignee’s lookout. The arrastre operator was, like
any ordinary depositary, duty-bound to take good care of the goods received from the vessel and to turn the same
over to the party entitled to their possession, subject to such qualifications as may have validly been imposed in the
contract between the parties. The arrastre operator was not required to verify the contents of the container received
and to compare them with those declared by the shipper because, as earlier stated, the cargo was at the shippers
load and count. The arrastre operator was expected to deliver to the consignee only the container received from
the carrier.
RATIO 2
‣ ICTSI contends that the appellate court misconstrued the liability clause printed on the dorsal side of the Arrastre
and Wharfage Bill/Receipt. It argues that the 15-day limitation for filing a claim against the arrastre operator
should run from the time of the delivery of the goods to the consignee, and that the latter’s failure to file a claim
within said period is sufficient ground to deny the claim.
‣ Court agrees with ICTSI. In order to hold the arrastre operator liable for lost or damaged goods, the claimant
should file with the operator a claim for the value of said goods within 15 days from the date of discharge of the
last package from the carrying vessel. The filing of the claim for loss within the 15-day period is in the nature of a
prescriptive period for bringing an action and is a condition precedent to holding the arrastre operator liable. This
requirement is a defense made available to the arrastre operator, who may use or waive it as a matter of personal
discretion.
‣ The said requirement is not an empty formality. It gives the arrastre contractor a reasonable opportunity to check
the validity of the claim, while the facts are still fresh in the minds of the persons who took part in the transaction,
and while the pertinent documents are still available. Such period is sufficient for the consignee to file a
provisional claim after the discharge of the goods from the vessel.
‣ While a literal reading of the liability clause makes the time limit run from the moment the shipment is
discharged from the carrying vessel, Court has chosen to interpret this condition liberally in an endeavor to
promote fairness, equity and justness. A long line of cases has held that the 15-day period for filing claims should
be counted from the date the consignee learns of the loss, damage or misdelivery of goods.
‣ In the case at bar, the consignee had all the time to make a formal claim from the day it discovered the shortage in
the shipment. By the time the claim for loss was filed on October 2, 1990, four months had already elapsed from
the date of delivery, June 4, 1990.
‣ Prudential did not explain the delay. It did not even allege or prove that the discovery of the shortage was made by
the consignee only 15-days before October 2, 1990. The latter had to wait for the independent adjusters survey
report dated September 7, 1990, before filing the claim with the former. By that time, however, it was clearly too
late, as the 15-day period had expired.

‣ In any event, within 15 days from the time the loss was discovered, the consignee could have filed a provisional
claim, which would have constituted substantial compliance with the rule. Its failure to do so relieved the arrastre
operator of any liability for the nondelivery of the goods.
‣ The rationale behind the time limit is that, without it, a consignee could too easily concoct or fabricate claims and
deprive the arrastre operator of the best opportunity to probe immediately their veracity.
‣ Petition GRANTED.

PECO V MANILA PORT
42 SCRA 306 [1971]
Author: Angeline Ibuna
FACTS
‣ This is a joint-decision for 7 cases owing to the common issues therein raised.
‣ Manila Port Service (MPS) and/or Manila Railroad Company, arrastre operators in the Port of Manila are sued for
damages to and/or loss of goods consigned to the plaintiffs or their sibrogors or assignors.
‣ (you can skip cases if in a hurry)
‣ Case 1: PECO v MPS
‣ The Philippine Education Co., Inc. (PECO) was the consignee of 105 packages of books and magazines shipped
on board SS Susan Maersk, under Bill of Ladinf (BL) No. 147. Of the 104 packages discharged unto the custody
of MPS, only 97 were delivered to consignee – 30 of which weer in bad order condition. 13 of the 30 packages
were damaged on board the carrying vessel, whose representative paid the indemnity. 17 of th 30 was damages
while in the custody of MPS.
‣ On May 21, 1960, a provisional claim was filed 2 days after the discharge of the last package, followed by a
formal claim on Oct. 1960. In this case, as in the other 6 cases involved, the value of the goods was not stated in
the shipping manifest or in the BL and the arrastre charges were paid on the basis of weight or measurement,
not of said value.
‣ City Court of Manila awarded to PECO the sum of P528.41 (this is based on the CIF value of the packages short
delivered.
‣ Case 2: Malayan Insurance v. MPS
‣ Malayan Insurance (Malayan), as subrogee, filed in the CFI of Manila a complaint of 5 causes of action.
‣ For a sum of P2,287.69 paid by Malayan for 4 damages packages of auto parts consigned to Dupro, Inc. under
BL No. 306, covering 146 packages, shipped on board SS Pioneer Mart. The provisional claim was filed 8 days
after the last disharge.
‣ For a sum of P3,947.42 oaid by the plaintiff for 7 damaged packages of autor parts identically consigned, under
BL No. 299, covering 49 packages, shipped on board the same vessel. Th povisional claim was filed 7 days after
last discharge.
‣ For a sum of P2,363.28 paid by Malayan for 4 similarly damages packages, consigned to Dupro, Inc. under BL
no. 144 covering 57 packages shipped on board SS Pioneer Mill. The pvosisional claim was filed on day of the
last discharge.
‣ The fourth case was withdrawn.
‣ For a sum of P2,399.26 paid by Malayan for 4 damaged bundled of galvanized steel sheets consigned to Uy
Chaco & Son, Inc. under BL No. 2-A covering 38bundles of said goods, shipped on board SS Philippine President
Roxas. The provisional claim was filed 3 days after the last discharge, followed by a formal claim.
‣ The Trial Court sentenced MPS to pay, jointly and severally, to Malayan P10,997.65 representing the sum paid
by Malayan to the respective consignees.
‣ Case 3: Peco v. MPS
‣ This case involved 2 shipments of books and magazines on board SS Fernwave, consigned to PECO under BL no.
54 covering 139 packages of which only 118 packages – including 12 in bad order condition – were delivered to
PECO. Another under BL no. 55 covering 34 cartons, of which only 32 were delivered to the consignee. The
provisional claims were filed 2 days after last discharge.
‣ The city court rendered judgment in favor of PECO, sentencing MPS to pay the former the invoice value of the
missing merchandise, which the court helf to be P1,548.11.
‣ Case 4: Central Surety & Insurance, Inc. v. MPS
‣ This case refers to 1 damage package of miscallaneous electrical materials consigned to Q.K. Calderon
Construction Co., Inc. under BL No. 247, covering 10 packages, insured with Central Surety. The package was
shippe don board SS Pioneer Ming.

‣ The Provisional Claim was filed 5 days after the last discharge, followed by a formal claim for P2,015.44. The
complaint was filed with the CFI of Manla, sentencing MPS to pay Central Surety the sum of P1,011.10,
representing the invoice value of the damaged package.
‣ Case 5: St. Paul Fire & Marine Insurance v. MPS
‣ St. Paul Fire & Marine Insurance, as subrogee, filed an action to recover P6,133.73 for one damages drum of
castoria concetrate consigned to Winthrop Stearns, Inc. under BL No. 51, covering 3 drums of such product,
shipped on board SS Pioneer Moor and 4 damaged drums medical syrup considgned to the same corporation
under BL no. 67, covering 28 of said syrup, shipped on board SS Fernbank.
‣ The provisonal claim for the first shipment was filed 6 days after the last discharge while the claim for the
second was filed 3 days after last discharge. Formal claims were respectively filed thereafter.
‣ Case 6: Mobil Oil Philippines, Inc. v. MPS
‣ This case filed in the CFI of Manila setting up 7 causes of action.
‣ The first was for two (2) missing drums of petroleum additives consigned to Mobil Oil under a BL covering
fifteen (15) drums shipped on board the "SS Turandot." The provisional claim was filed 6 days after the last
discharge, followed by a formal claim for P999.04
‣ The second cause of action was dismissed. No appeal has been taken in connection therewith.
‣ The third was for a carton of Service Station Machinery parts, shipped on board the "SS Pioneer Minx," from
which it was discharged on September 14, 1962. Having subsequently been missing, the corresponding
provisional claim was filed 2 days after dicharge followed by a formal claim for P501.42.
‣ The fourth was for 4 missing bars of pig lead shipped on board the "SS Samos." The corresponding provisional
claim was filed on the same day of the last discharge of the shipment of 317 bars, was followed by a formal
claim, for P173.80, on January 4, 1963.
‣ The fifth was dismissed by the lower court, from the decision of which plaintiff did not appeal.
‣ The sixth was for 3 missing crates of air compressors, shipped on board the "SS Philippine President Quirino."
The corresponding provisional claim, filed 2 days after that of the last discharge, was followed by a formal
claim on January 26, 1963.
‣ The seventh was for two (2) missing packages of Lube oil and grease shipped on board the "SS Philippine Jose
Abad Santos." The goods having been discharged on December 2, 3 and 4, 1962, the provisional claim, filed on
December 3, 1962, was followed by a formal claim on March 6, 1963.
‣ The CFI sentenced the MPS to pay to the Mobil Oil the sums of P999.04, P501.42, P173.80, P3,257.12 and
P95.35 — representing the CFI value, the special import tax, the sales tax, the insurance premiums, the freight
and the compensating tax paid by the plaintiff under the first, the third, the fourth, the sixth and the seventh
causes of action.
‣ Case 7: Capital Insurance & Surety Co. v MPS
‣ This case involves the indemnity for five (5) missing cases of Carter carburetor repair kits consigned to the
Philippine Coconut Products Federation, Inc., under BL No. 22, and shipped on board the "SS FERNBANK." The
corresponding provisional claim was filed 14 days after the last discharge (July 27, 1959), followed by a formal
claim, for P2,085.98, on September 15, 1959. Capital Insurance and Surety Co. brought this action, as subrogee,
on September 2, 1961, in the Court of First Instance of Manila, which sentenced the MPS to, jointly and
severally, indemnify the Capital Insurance in the sum of P2,085.98 — the stipulated value of the missing
goods.
‣ These cases hinge on the proper interpretation of paragraph 15 of the management contract between the MPS
on the one hand, and the Government of the Philippines, thru the Bureau of Customs, on the other, which
paragraph binds Capital Insurance in view of the use made by them or their predecessors-in-interest of the
corresponding delivery receipts bearing, stamped thereon, as part thereof, the gist of the contents of said
paragraph, which reads as follows:
‣ ... and the CONTRACTOR shall be solely responsible as an independent contractor for, and promptly pay to the
steamship company, consignee, consignor, or other interested party or parties the invoice value of each package
but which in no case shall be more than five hundred pesos (P500.00) for each package unless the value is
otherwise specified or manifested, and the corresponding arrastre charges had been paid, including all damages
that may be suffered on account of loss, destruction, or damage of any merchandise while in the custody or under
the control of the CONTRACTOR upon any pier, wharf or other designated place under the supervision of the
BUREAU, ... in any event the CONTRACTOR shall be relieved and released of any and all responsibility or liability

for loss, damage, misdelivery and/or non-delivery of goods, unless suit in the court of proper jurisdiction is
brought within a period of one (1) year from the date of the discharge of the goods or from the date when the
claim for the value of such goods have been rejected or denied by the CONTRACTOR provided that such claim
shall have been filed with the CONTRACTOR within fifteen (15) days from the date of discharge of thelast
package from the carrying vessel
ISSUE/HELD
1. Whether the provisional claims — filed by the plaintiffs and/or their predecessors-in-interest, within fifteen (15)
days from the date of the discharge of the last package from the carrying vessel — sufficiently comply with the
requirement of said paragraph 15, considering that the value of the goods referred to in said claims was not set
forth therein and that the formal claims were filed beyond said period. - YES. As long as goods are described
sufficiently.
2. Whether the action was filed within the period of prescription set forth in said paragraph 15. – YES, Except case
7.
3. Whether the defendants may be held liable for the CIF value of the goods lots or damaged, even though the value
of each package exceeds P500.00 and has not been stated either in the bill of lading or in the manifest of the
carrying vessel, and the arrastre charges have been paid on the basis of weight or measurement of the goods, not
of the value thereof. – YES, but limited to P500.00
4. Whether attorney's fees are properly recoverable from the defendants in case 1, case 3 and case 4. – YES.
RATIO 1
‣ With respect to the first issue — raised in all of the present cases, except in case 5 and case 6, this Court has
repeatedly held that a provisional claim is sufficient "even if the value of the goods involved were not stated
therein, if it described the goods sufficiently to permit its identification by the operator and the determination by
the latter of the facts relevant thereto, such as the name of the carrying vessel, its date of arrival, the
corresponding bill of lading, ...."
‣ In the cases at bar, We find that the provisional claims involved therein contain the data aforementioned and that,
accordingly, they comply substantially with the requirement of the above-quoted paragraph 15 of the
management contract, as a condition precedent to the institution of court action.
RATIO 2
‣ As regards the second question — raised in Cases 3, 5, 6, and 7 - we note that: (case 7 lang barred by prescription.
The other 3 not barred cause MPS did not reject nor deny the claims)
a) The complaint in case 3 was filed on January 30, 1962, or over a year after the discharge of the last package
covered by Bill of Lading No. 54 (January 28, 1961). It appears, however, that defendants had neither rejected
nor denied plaintiff 's claim, in view of which the same should be deemed constructively denied or rejected only
upon the expiration of one year from the date of discharge of the last package, or on January 28, 1962. Since
plaintiff had up to January 28, 1963, to sue the defendants, the complaint against them was seasonably filed.
b) The complaint in case 5 was filed on December 19, 1961, or more than two (2) years from December 4 and 11,
1959, when the products covered by Bills of Lading Nos. 51 and 67 were last discharged. The claims of
plaintiff 's predecessors-in-interest having been neither denied nor rejected, their one-year period to sue the
defendants began to run from December 4 and 11, 1960, and expired on December 4 and 11, 1961, several days
before the filing of the complaint. This notwithstanding, defendants may not avail of the defense of
prescription, the same not having been specifically pleaded in their answer and, hence, deemed waived.
c) The complaint in case 6 was filed on April 4, 1964, or over a year after the dates of the last discharge of the
goods shipped on board: (1) "SS Turandot" (August 16, 1962); (2) "SS Pioneer Minx" (September 14, 1962,); (3) "SS
Samos" (September 17, 1962); (4) "SS Philippine President Quirino" (November 11, 1962); and (5) "SS Philippine
Jose Abad Santos" (December 4, 1962). Defendants having neither denied nor rejected plaintiff 's claims, the
latter's one-year period to sue the former began to run on August 16, September 14 and 17, November 11 and
December 4, 1963. In short, this action was commenced within said period.
d) In case 7 there was no express denial or rejection of the claim filed by the consignee, so that the aforementioned
period commenced to run upon the expiration of one (1) year from July 27, 1969, the date of discharge of the last
package involved in the case. Said period expired on July 27, 1961, or over a month before the filing of the
complaint on September 2, 1961. Plaintiff 's action is thus barred by prescription, the same having been
specifically pleaded in defendants' answer.
RATIO 3
‣ As to the extent of the arrastre operator's liability for goods damaged or lost in its possession, the above-quoted
paragraph 15 of the management contract provides that said liability shall be limited to "to invoice value of each

package but which in no case shall be more than five hundred pesos (P500.00), for each package unless the
value is otherwise specified or manifested, and the corresponding arrastre charges had been paid, including
all damages that may be suffered on account of loss, destruction or damage of any merchandise while in the
custody or under the control of the contractor ...."
‣ In none of the cases under consideration have the arrastre charges been paid on the basis of the value of the
goods involved. Neither had such value been stated, either in the ship manifest or in the bill of lading.
Accordingly, the liability of the arrastre operator in these cases is limited to the invoice value of each package, plus
"all damages that may be suffered on account of loss, destruction or damage of any merchandise while in the
custody or under the control of the contractor" 4 — which liability may in no case exceed P500.00 for each
package.
‣ In the language of Phil. Education Co., Inc. v. Manila Port Service:... In a number of cases we have interpreted this
provision in the management contract as embracing not only the actual amount of costs, insurance and freight but even
marginal fees which had been paid in connection with the shipment. Freight and insurance shares were paid in addition
to costs of the shipment, and the shortages suffered by the shipment resulted in their loss. These are actual damages
suffered on account of the short-delivery, and, in accordance with par. 15 of the management contract, the arrastre
operator must answer for them.
‣ In other words, the defendants are liable for the CIF value of the goods in question and other legitimate
expenses incurred in connection therewith, all of which, however, shall not exceed P500.00 for each package.
RATIO 4 (NOT IMPORTANT)

‣ We have held in Phil. Education Co., Inc. v. Manila Port Service that "... (a) appellant (Manila Port Service) has been
systematically rejecting claims of the kind shown at bar, as attested by numerous decisions of this Court in this
and past years. Such conduct renders the award of attorneys' fees just and equitable and the objection (thereto)
must be rejected. (Civil Code, Art. 2208, No. 11)."
‣ Defendants have not advanced any reason, and We find none, to warrant departure from this view. On the
contrary, the appeals of similar nature that have kept on coming despite said view demand a more emphatic
reiteration thereof.

AMERICAN AIRLINES V CA
327 SCRA 482/ G.R. No. 116044-45. March 9, 2000
Digest Author: Lizzie Lecaroz
DOCTRINE
‣ The number of tickets issued does not detract from the oneness of the contract of carriage as long as the parties
regard the contract as a single operation. The evident purpose ofthis Article is to promote international air travel
by facilitating the procurement of a series of contracts for air transportation through a single principal and
obligating different airlines to be bound by one contract of transportation.
FACTS
‣ Private respondent Amadeo Seno purchased from Singapore Airlines in Manila conjunction tickets. (Manila -
Singapore - Athens - Larnaca - Rome - Turin - Zurich - Geneva - Copenhagen - New York.)
‣ The petitioner was not a participating airline in any of the segments in the itinerary under the said conjunction
tickets.
‣ In Geneva, the petitioner decided to forego his trip to Copenhagen and to go straight to New York. Because there
was no direct flight under his conjunction tickets from Geneva to New York, the private respondent exchanged the
unused portion of the conjunction ticket for a one-way ticket from Geneva to New York from the petitioner airline.
Petitioner issued its own ticket to the private respondent in Geneva and claimed the value of the unused portion of
the conjunction ticket from the IATA clearing house in Geneva.
‣ Private respondent filed an action for damages before the RTC of Cebu for the alleged embarassment and mental
anguish he suffered at the Geneva Airport when the petitioners security officers prevented him from boarding
the plane, detained him for about an hour and allowed him to board the plane only after all the other passengers
have boarded.
‣ The petitioner filed a motion to dismiss for lack of jurisdiction of Philippine courts to entertain the said
proceedings under Art. 28 (1) of the Warsaw Convention. The trial court denied the motion. Court of Appeals
which affirmed the ruling of the trial court.
‣ Art (28) (1) of the Warsaw Convention: An action for damages must be brought at the option of the plaintiff, in the
territory of one of the High Contracting Parties, either before the court of the domicile of the carrier or of his
principal place of business or where he has a place of business through which the contract has been made, or before
the court at the place of destination.
‣ Both the trial and that appellate courts held: The suit may be brought in the Philippines under the pool
partnership agreement among the IATA members, which include Singapore Airlines and American Airlines,
wherein the members act as agents of each other in the issuance of tickets to those who may need their services.
The contract of carriage perfected in Manila between the private respondent and Singapore Airlines binds the
petitioner as an agent of Singapore Airlines and considering that the petitioner has a place of business in Manila,
the third option of the plaintiff under the Warsaw Convention.
‣ PETITIONER: Under Art 28 (1) of the Warsaw Convention, an action for damages must be brought at the option of
the plaintiff either before the court of the 1) domicile of the carrier; 2) the carriers principal place of business; 3)
the place where the carrier has a place of business through which the contract was made; 4) the place of
destination.
‣ The petitioner asserts that the Philippines is neither the domicile nor the principal place of business of the
defendant airline; nor is it the place of destination.
‣ Petitioner contends that since the Philippines is not the place where the contract of carriage was made between
the parties herein, thus Philippine courts do not have jurisdiction over this action for damages.
‣ The issuance of petitioners own ticket in Geneva in exchange for the conjunction ticket issued by Singapore
Airlines for the final leg of the private respondents trip gave rise to a separate and distinct contract of carriage
from that entered into by the private respondent with Singapore Airlines in Manila.
‣ Petitioner lays stress on the fact that the plane ticket for a direct flight from Geneva to New York was purchased
by the private respondent from the petitioner by "exchange and cash" which signifies that the contract of
carriage with Singapore Airlines was terminated and a second contract was perfected.
‣ PRIVATE RESPONDENT: Controverts the applicability of the Warsaw Convention in this case. He posits that under
Article 17 of the Warsaw Convention, a carrier may be held liable for damages if the "accident" occurred on board

the airline or in the course of "embarking or disembarking" from the carrier and that under Article 25 (1) thereof
the provisions of the convention will not apply if the damage is caused by the "willful misconduct" of the carrier.
‣ He argues that his cause of action is based on the incident at the pre-departure area of the Geneva airport and
not during the process of embarking nor disembarking from the carrier and that security officers of the
petitioner airline acted in bad faith. Accordingly, this case is released from the terms of the Convention.
‣ Private respondent argues that assuming that the convention applies, his trip to nine cities in different
countries performed by different carriers under the conjunction tickets issued in Manila by Singapore Airlines
is regarded as a single transaction; as such the final leg of his trip from Geneva to New York with the petitioner
airline is part and parcel of the original contract of carriage perfected in Manila.
‣ Thus, the third option of the plaintiff under Art. 28 (1) e.g., where the carrier has a place of business through
which the contract of carriage was made, applies herein and the case was properly filed in the Philippines.
ISSUE/HELD
‣ Whether or not the Regional Trial Court of Cebu may take cognizance of the action for damages filed by the private
respondent against herein petitioner in view of Art 28 (1) of the Warsaw Convention. - YES
RATIO
‣ The Warsaw Convention to which the Republic of the Philippines is a party and which has the force and effect of
law in this country applies to all international transportation of persons, baggage or goods performed by an
aircraft gratuitously or for hire. As enumerated in the Preamble of the Convention, one of the objectives is "to
regulate in a uniform manner the conditions of international transportation by air.”
‣ The contract of carriage entered into by the private respondent with Singapore Airlines, and subsequently with
the petitioner, to transport him to nine cities in different countries with New York as the final destination is a
contract of international transportation and the provisions of the Convention automatically apply and exclusively
govern the rights and liabilities of the airline and its passengers.
‣ Art 1(3) of the Warsaw Convention states: "Transportation to be performed by several successive carriers shall be
deemed, for the purposes of this convention, to be one undivided transportation, if it has been regarded by the parties as
a single operation, whether it has been agreed upon under the form of a single contract or a series of contracts, and it
shall not lose its international character merely because one contract or series of contracts is to be performed entirely
within the territory subject of the sovereignty, suzerainty, mandate or authority of the same High contracting Party."
‣ This clearly states that a contract of air transportation is taken as a single operation whether it is founded
on a single contract or a series of contracts.
‣ The contract of carriage between the private respondent and Singapore Airlines although performed by different
carriers under a series of airline tickets, including that issued by petitioner, constitutes a single operation.
Members of the IATA are under a general pool partnership agreement wherein they act as agent of each other in
the issuance of tickets to contracted passengers to boost ticket sales worldwide and at the same time provide
passengers easy access to airlines which are otherwise inaccessible in some parts of the world.
‣ A member airline which enters into a contract of carriage consisting of a series of trips to be performed by
different carriers is authorized to receive the fare for the whole trip and through the required process of interline
settlement of accounts by way of the IATA clearing house an airline is duly compensated for the segment of the
trip serviced.
‣ Thus, when the petitioner accepted the unused portion of the conjunction tickets, entered it in the IATA clearing
house and undertook to transport the private respondent over the route covered by the unused portion of the
conjunction tickets, the petitioner tacitly recognized its commitment under the IATA pool arrangement to act as
agent of the principal contracting airline, Singapore Airlines, as to the segment of the trip the petitioner agreed to
undertake.
‣ The third option of the plaintiff under Art 28 (1) of the Warsaw Convention e.g., to sue in the place of business of
the carrier wherein the contract was made, is therefore, Manila, and Philippine courts are clothed with jurisdiction
over this case. We note that while this case was filed in Cebu and not in Manila the issue of venue is no longer an
issue as the petitioner is deemed to have waived it when it presented evidence before the trial court.

PAL V SAVILLO
G.R. No. 149547 July 4, 2008
Digest Author: Rose Anne Sy
DOCTRINE
‣ A claim covered by the Warsaw Convention can no longer be recovered under local law, if the statute of limitations
of 2 years has already lapsed. However, the Warsaw Convention does not "exclusively regulate" the relationship
between passenger and carrier on an international flight.
‣ If the purported negligence did not occur during the performance of the contract of carriage but, rather, days
before the scheduled flight, it is not among the acts covered by the Warsaw Convention. The action is covered by
the Civil Code on Prescription and cannot be dismissed based on the statute of limitations provided under Article
29 of the Warsaw Convention.
PARTIES
‣ Petitioner PAL is a corporation duly organized under Philippine law, engaged in the business of providing air
carriage for passengers, baggage and cargo.
‣ Public respondent Hon. Adriano Savillo is the judge of RTC Iloilo where Complaint was filed; Private respondent
Simplicio Griño is the plaintiff in the Complaint for Damages.
FACTS
‣ Take note of dates, issue is about Prescription.
‣ Simplicio Griño was invited to participate in the 1993 ASEAN Seniors Annual Golf Tournament held in Jakarta,
Indonesia.
‣ He and several companions decided to purchase their respective passenger tickets from PAL with the following
points of passage: MANILA-SINGAPORE-JAKARTA-SINGAPORE-MANILA. They were made to understand by PAL
that its plane would take them from Manila to Singapore, while Singapore Airlines would take them from
Singapore to Jakarta.
‣ They took the PAL flight to Singapore and arrived at about 6:00 pm. Upon their arrival, they proceeded to the
Singapore Airlines office to check-in for their flight to Jakarta scheduled at 8:00 pm the same evening.
‣ Singapore Airlines rejected their tickets because they were not endorsed by PAL. It was explained to them that if
Singapore Airlines honored the tickets without PAL’s endorsement, PAL would not pay Singapore Airlines for their
passage. Griño tried to contact PAL’s office at the airport, only to find out that it was closed.
‣ Stranded at the airport in Singapore and left with no recourse, Griño was in panic and at a loss where to go; and
was subjected to humiliation, embarrassment, mental anguish, serious anxiety, fear and distress.
‣ Eventually, they were forced to purchase tickets from Garuda Airlines and board its last flight bound for Jakarta.
When they arrived in Jakarta at about 12:00 midnight, the party who was supposed to fetch them from the airport
had already left and they had to arrange for their transportation to the hotel at a very late hour.
‣ Griño became ill and was unable to participate in the tournament.
‣ Upon his return to the Philippines, he sent a demand letter to PAL on 20 December 1993, received by PAL on 25
January 1994 and another letter to Singapore Airlines. However, both airlines disowned liability and blamed each
other.
‣ On 15 August 1997, Griño filed a Complaint for Damages before the RTC seeking compensation for moral
damages in the amount of P1,000,000.00 and attorney’s fees.
‣ PAL filed a Motion to Dismiss on the ground that the said complaint was barred on the ground of prescription.
‣ PAL argued that the Warsaw Convention (Article 29) governed this case as it provides that any claim for damages
in connection with the international transportation of persons is subject to the prescription period of two years.
‣ Since the Complaint was filed on 15 August 1997, more than three years after PAL received the demand letter
on 25 January 1994, it was already barred by prescription.
‣ RTC denied the MTD. It maintained that the provisions of the Civil Code and other pertinent laws of the
Philippines, not the Warsaw Convention, were applicable to the present case.
‣ CA likewise dismissed the Petition for Certiorari filed by PAL and affirmed the Order of the RTC.

ISSUE/HELD
‣ W/N the case is governed by the Warsaw Convention w/c provides for a 2 year prescriptive period and thus has
already prescribed - No. The Civil Code provisions on Torts apply, hence, the prescriptive period is 4 years.
RATIO
‣ In determining whether PAL’s Motion to Dismiss should have been granted by the trial court, it must be
ascertained if all the claims made by the private respondent in his Complaint are covered by the Warsaw
Convention, which effectively bars all claims made outside the two-year prescription period provided under
Article 29 thereof.
‣ If the Warsaw Convention covers all of the claims, then the Civil Case has already prescribed and should
therefore be dismissed. On the other hand, if some, if not all, of respondent’s claims are outside the coverage of
the Warsaw Convention, the RTC may still proceed to hear the case.
‣ The Warsaw Convention applies to "all international transportation of persons, baggage or goods performed
by any aircraft for hire."
‣ Its cardinal purpose is to provide uniformity of rules governing claims arising from international air travel;
thus, it precludes a passenger from maintaining an action for personal injury damages under local law when
his or her claim does not satisfy the conditions of liability under the Convention.
‣ Article 19 of the Warsaw Convention provides for liability on the part of a carrier for "damages occasioned by
delay in the transportation by air of passengers, baggage or goods."
‣ Article 24 excludes other remedies by further providing that "(1) in the cases covered by articles 18 and 19,
any action for damages, however founded, can only be brought subject to the conditions and limits set out in
this convention."
‣ Therefore, a claim covered by the Warsaw Convention can no longer be recovered under local law, if the
statute of limitations of two years has already lapsed.
‣ Nevertheless, jurisprudence in the Philippines and the United States also recognizes that the Warsaw Convention
does not "exclusively regulate" the relationship between passenger and carrier on an international flight. The
present case is substantially similar to cases in which the damages sought were considered to be outside the
coverage of the Warsaw Convention:
1. United Airlines v. Uy: There is a distinction between (1) damage to the passenger’s baggage and (2) humiliation
he suffered at the hands of the airline’s employees. The first cause of action was covered by the Warsaw
Convention which prescribes in two years, while the second was covered by the provisions of the Civil Code on
torts, which prescribes in four years.
2. Mahaney v. Air France (US Case): a passenger was denied access to an airline flight between New York and
Mexico, despite the fact that she held a confirmed reservation. The court ruled that if the plaintiff were to
claim damages based solely on the delay she experienced – for instance, the costs of renting a van, which she
had to arrange on her own as a consequence of the delay – the complaint would be barred by the two-year
statute of limitations. However, where the plaintiff alleged that the airlines subjected her to unjust
discrimination or undue or unreasonable preference or disadvantage, an act punishable under the United
States laws, then the plaintiff may claim purely nominal compensatory damages for humiliation and hurt
feelings, which are not provided for by the Warsaw Convention.
‣ In the Petition at bar, Griño’s Complaint alleged that both PAL and Singapore Airlines were guilty of gross
negligence, which resulted in his being subjected to "humiliation, embarrassment, mental anguish, serious
anxiety, fear and distress.” The emotional harm suffered by the private respondent as a result of having been
unreasonably and unjustly prevented from boarding the plane should be distinguished from the actual
damages which resulted from the same incident.
‣ Under the Civil Code provisions on tort, such emotional harm gives rise to compensation where gross negligence
or malice is proven. Hence, the applicable prescription period is that provided under Article 1146 of the Civil Code:
‣ Art. 1146. The following actions must be instituted within four years:
1. Upon an injury to the rights of the plaintiff;
2. Upon a quasi-delict.
‣ The instant case is comparable to the case of Lathigra v. British Airways. In Lathigra, it was held that the airlines’
negligent act of reconfirming the passenger’s reservation days before departure and failing to inform the latter
that the flight had already been discontinued is not among the acts covered by the Warsaw Convention, since the

alleged negligence did not occur during the performance of the contract of carriage but, rather, days before the
scheduled flight.
‣ In the case at hand, Singapore Airlines barred private respondent from boarding the Singapore Airlines flight
because PAL allegedly failed to endorse the tickets of private respondent and his companions, despite PAL’s
assurances to respondent that Singapore Airlines had already confirmed their passage.
‣ While this fact still needs to be heard and established by adequate proof before the RTC, an action based on these
allegations will not fall under the Warsaw Convention, since the purported negligence on the part of PAL did
not occur during the performance of the contract of carriage but days before the scheduled flight. Thus, the
present action cannot be dismissed based on the statute of limitations provided under Article 29 of the
Warsaw Convention.
‣ Had the present case merely consisted of claims incidental to the airlines’ delay in transporting their
passengers, the Complaint would have been time-barred under Article 29 of the Warsaw Convention. However,
the present case involves a special species of injury resulting from the failure of PAL and/or Singapore Airlines
to transport private respondent from Singapore to Jakarta – the profound distress, fear, anxiety and
humiliation that private respondent experienced when, despite PAL’s earlier assurance that Singapore Airlines
confirmed his passage, he was prevented from boarding the plane and he faced the daunting possibility that he
would be stranded in Singapore Airport because the PAL office was already closed.
‣ The Complaint was filed with the RTC on 15 August 1997, which was less than four years since PAL received
his extrajudicial demand on 25 January 1994. Thus, private respondent’s claims have not yet prescribed and
PAL’s Motion to Dismiss must be denied.

NORTHWEST AIRLINES V CA
G.R. No. 120334 January 20, 1998
Digest Author: Clarence Tiu
DOCTRINE
‣ The Warsaw Convention does not operate as an exclusive enumeration of the instances of an airline's liability, or as
an absolute limit of the extent of that liability. Such a proposition is not borne out by the language of the
Convention, as this Court has now, and at an earlier time, pointed out. Moreover, slight reflection readily leads to
the conclusion that it should be deemed a limit of liability only in those cases where the cause of the death or
injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or
attended by any willful misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any
official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of
resulting injury. The Convention's provisions, in short, do not "regulate or exclude liability for other breaches of
contract by the carrier" or misconduct of its officers and employees, or for some particular or exceptional type of
damage.
PARTIES
Plaintiff: Rolando Torres
Defendant: Northwest Airlines (NWA)
FACTS
‣ Plaintiff Torres, allegedly on a special mission to purchase firearms for the Philippine Senate, purchased a round
trip ticket from defendant Northwest Airlines (NWA) for his travel to Chicago and back to Manila. Via defendant's
flight, plaintiff left for United States.
‣ After purchasing firearms and on the way back to Manila, Torres checked-in and presented before NWA's
representative his two identical baggage, one of which contained firearms.
‣ NWA's representative required the baggage to be opened and the supporting evidence to be presented. Torres
showed them his authorization from the Philippine government and the purchase receipts. Torres thereafter
sealed the baggage and defendant's representative placed a red tag on the baggage with firearms with the marking
"CONTAINS FIREARMS”.
‣ Upon arrival in Manila, Torres was not able to claim one of his baggages. He was informed by NWA's representative
that his baggage containing firearms was recalled back to Chicago by defendant for US Customs verification. A
telex to this effect was shown to him .
‣ Later, after being advised of the arrival of his other baggage, Torres claimed and opened the baggage in the
presence of defendant's representative and found out that the firearms were missing. A Personal Property Missing
Damage Report was issued by NWA to Torres
‣ On account of continuous refusal of NWA to settle amicably, Torres then prayed before the trial court that
defendant be ordered to pay actual damages, moral damages, temperate damages, exemplary damages and
attorney's fees
‣ In its answer, NWA pleaded:
1. That it was the agents from the US Customs who ordered for the return of the weapons which plaintiff
checked-in;
2. That when opened in the presence of US Customs agents the box contained no firearms; and
3. That since the baggage which was returned back to Chicago did not contain any firearms, then the baggage
which plaintiff received upon arrival in Manila must have contained the firearms
‣ After Torres had presented its evidence, NWA filed a "Motion to Dismiss (By Way of Demurrer to the Evidence with
Motion for Summary Judgment)
‣ In said motion, defendant moved for the "dismissal of the complaint in so far as it prays for moral, exemplary
and temperate damages and attorney's fees" and further moved for "summary judgment to be rendered
awarding the plaintiff $640.00 as actual damages." (Motion to Dismiss By Way of Demurrer to Evidence with
Motion for Summary Judgment)
‣ NORTHWEST argued in its motion for summary judgment that the Warsaw Convention and the contract of
carriage limited its liability to US$640 and that the evidence presented by TORRES did not entitle him to
moral, exemplary, and temperate damages and attorney's fees

‣ Torres on the other hand, offered no objection to the submission of the case for decision but insisted that he is
entitled to damages as prayed for
‣ Instead of just ruling on NWA's Motion to Dismiss with Motion for Summary Judgment, which it considered
submitted for resolution, the trial court rendered a full-blown decision ordering NORTHWEST to pay TORRES the
following amounts:
1. The amount of $9,009.32, with legal interest thereon from the date of the filing of the complaint, in its peso
equivalent at the official rate of exchange at the time payment is made, representing the value of the goods
lost by the plaintiff;
2. The amount of P100,000.00 by way of attorney's fees;
3. The amount of P5,181.09 as filing fees paid by the plaintiff and the amount of P20,000.00 for expenses of
litigation, representing travel expenses and hotel accommodations of plaintiff 's counsels; and
4. The amount of P50,000.00 as moral damages.
‣ The award of US$9,009.32, representing the value of the lost firearms, was grounded on the trial court's
finding that "the act of [NORTHWEST's] personnel in Tokyo or Narita Airport in just guessing which baggage
contained the firearms was careless and imprudent, amounting to careless disregard for the safety of the
luggage of the passenger." According to the trial court, such act constituted willful misconduct which brought
the case beyond the application of Section 22(2) of the Warsaw Convention, thereby depriving NORTHWEST of
the limitation of the liability provided for in said section.
‣ The awards of attorney's fees and expenses of litigation were premised on NORTHWEST's having ignored the
demands of TORRES forcing the latter to litigate in order to assert his right. TORRES was also awarded moral
damages because of the "inconvenience, anxiety and worry" he suffered by reason of NORTHWEST's
unjustifiable refusal to settle his claim.
‣ Both TORRES and NORTHWEST appealed from the decision to the Court of Appeals
‣ TORRES assailed the failure of the trial court to award the actual, moral, and exemplary damages prayed for by
him.
‣ NORTHWEST, on the other hand, alleged that in prematurely resolving the case on the merits the court
prevented it from presenting evidence, thereby denying it due process; and that even assuming that the trial
court could resolve the entire case on the merits, it erred in awarding damages, attorney's fees, and expenses of
litigation
‣ RULING OF THE CA (Not important): CA affirmed the trial court's finding as to the right of TORRES to actual
damages but set aside the rest of the appealed decision. It then remanded the case to the court a quo for further
proceedings.
‣ The Court of Appeals sustained the trial court's judgment that TORRES was entitled to actual damages, since
NORTHWEST had, in effect, admitted the loss of the firearms when it insisted that its liability was limited to
$9.07 per pound or $20 per kilo. The appellate court then concluded that NORTHWEST's guessing of which
luggage contained the firearms amounted to willful misconduct under Section 25(1) of the Warsaw Convention
which entitled TORRES to claim actual damages in excess of the limitation provided for under Section 22(2) of
said Convention.
‣ Nevertheless, the Court of Appeals held that while the trial court properly ruled on the right of TORRES to
actual damages, it erred in determining by way of summary judgment the amount of damages; for under
Section 3 of Rule 34 of the Rules of Court, a summary judgment may be rendered upon proper motion except as
to the amount of damages.
‣ As to the trial court's act of disposing of the entire case by way of summary judgment, the Court of Appeals
noted that NORTHWEST categorically moved for summary judgment only on the issue of actual damages, but
not on the claims for moral damages and attorney's fees. NORTHWEST moved for the dismissal of the latter
claims by way of demurrer to evidence. That being so, the trial court could not, by way of summary judgment,
dispose of the case on its entirety. Section 2 of Rule 34 of the Rules of Court required that summary judgment
should be issued only after the motion therefor has been heard. Since there was no such motion as to the
claims for moral damages and attorney's fees, no summary judgment thereon could be made.
‣ Anent the demurrer to evidence, the Court of Appeals held that the trial court had to either grant or deny it. If
granted, no award therefor could have been validly made. If denied, then under Section 1 of Rule 35 of the
Rules of Court, NORTHWEST should have been allowed to present its evidence, as it was not deemed to have
waived that right.

‣ The Court of Appeals then held that since the demurrer was impliedly denied by the trial court, NORTHWEST
should have been allowed to present its evidence in accordance with the above rule.
‣ NORTHWEST contests the right of TORRES to actual damages on the following grounds:
1. The loss of firearms was disputed;
2. The finding of willful misconduct was arbitrary; and
3. TORRES failed to produce a United States license for the shipment of the firearms; hence, the importation was
illegal and no damages could arise therefrom.
‣ TORRES, on the other hand, claims that the Court of Appeals erred:
1. In setting aside the appealed decision of the court a quo as to the awards of damages, attorney's fees, and cost
of suit
2. In remanding the case to the court a quo for further proceedings; and
3. In failing to award other damages for breach of contract and willful misconduct committed by Northwest for
mishandling the cargo.
ISSUE/HELD
1. W/N the motion for summary judgment was proper- NO
2. W/N NWA’s liability for actual damages may not be limited to that prescribed in Section 22(2) of the Warsaw
Convention.- NO
RATIO 1
‣ As to the motion for summary judgment, both the trial court and the Court of Appeals were in error.
‣ Summary judgments were formerly governed by Rule 34 of the Rules of Court. The rule is now Rule 35 of the 1987
Rules of Civil Procedure with the amendments allowing the parties to submit not only affidavits but also
depositions or admissions in support of their respective contentions.
‣ Motions for summary judgment may be filed by the claimant or by the defending party. Sections 1, 2, and 3 of the
old Rule 34, the governing law in this case
‣ NORTHWEST, the defending party, moved for summary judgment on the claim for actual damages after TORRES
had presented his evidence in chief. This was allowed by Section 2 where the motion may be filed "at any time," as
distinguished from section 1 where the claimant, like TORRES, may file the motion at any time after the answer is
filed.
‣ Summary judgment is allowed if, except as to the amount of damages, there is no genuine issue as to any material
fact and the moving party is entitled to a judgment as a matter of law.
‣ In this case, NORTHWEST denied in its Answer the material allegations in the complaint and asserted, in fact, that
it was not liable for actual damages because the box containing the alleged lost firearms was the one received by
TORRES when he arrived in Manila. It likewise contended that, even granting that the firearms were lost, its
liability was limited by the Warsaw Convention and the contract of transportation to $9.07 per pound, or a total of
$640 as the box weighed 70 pounds. It also denied having acted fraudulently or in bad faith
‣ In thus submitting for summary judgment the matter of its liability only to the maximum allowed in Section
22(2) of the Warsaw Convention, NORTHWEST was deemed to have hypothetically admitted arguendo that the
firearms were lost. It did not waive the presentation of evidence that it was not in fact liable for the alleged
loss of firearms. And even if it was not liable beyond the maximum provided in said Section 22(2).
‣ Notably, TORRES prayed for actual damages in the amounts of (1) $9,009.32 representing the value of the lost
firearms; and (2) P39,065 representing the cost of his place tickets.
‣ Concretely the, there remained a genuine issue on the fact and amount of actual damages. The motion for
summary judgment was not therefore in order. NORTHWEST must have resorted to it, in like manner as it did
in filing the demurrer, to delay the progress of the trial of the case. Verily, it was grave abuse of discretion on the
part of the trial court to grant such motion and award TORRES actual damages commensurate to the value of the
firearms and based on his evidence alone.

RATIO 2
‣ We, however, agree with both the trial court and the Court of Appeals that NORTHWEST's liability for actual
damages may not be limited to that prescribed in Section 22(2) of the Warsaw Convention.
‣ In Alitalia v. Intermediate Appellate Court, The Warsaw Convention does not operate as an exclusive enumeration of
the instances of an airline's liability, or as an absolute limit of the extent of that liability. Such a proposition is not
borne out by the language of the Convention, as this Court has now, and at an earlier time, pointed out. Moreover, slight
reflection readily leads to the conclusion that it should be deemed a limit of liability only in those cases where the cause
of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to
or attended by any willful misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official
or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting
injury. The Convention's provisions, in short, do not "regulate or exclude liability for other breaches of contract by the
carrier" or misconduct of its officers and employees, or for some particular or exceptional type of damage.

UNITED AIRLINES V UY
G.R. No. 127768. November 19, 1999
Digest Author: Helen Toledo
FACTS
‣ 13 October 1989: Willie Uy, a passenger of United Airlines for the San Francisco – Manila route checked in with his
luggage and found out that one piece of which was over the maximum weight allowance of 70 kg. per bag. A
United Airlines employee rebuked him and in a loud voice, in front of the milling crowd, ordered him to repack his
things accordingly. Not wishing to create further scene, Uy acceded only to find his luggage still overweight. The
airline then billed him overweight charges which he offered to pay with a Miscellaneous Charge Order (MCO) or an
airline pre-paid credit but the employee, and later an airport supervisor, refused to honor it, pointing out that
there were conflicting figures listed on it. Thus he was forced to pay the charges with his American Express credit
card. Upon arrival in Manila, he discovered that one of his bags had been slashed and its contents, amounting to
US$5,310.00, stolen.
‣ 16 October 1989: Uy sent the airline a letter notifying it of his loss and requested reimbursement thereof.
Petitioner did not refute any of his allegations and mailed a check representing the payment of his loss based on
the maximum liability of US $9.70 per pound. Uy, thinking the amount to be grossly inadequate to compensate
him for his losses, as well as for the indignities he was subjected to, sent two (2) more letters to petitioner, one
dated 4 January 1990 and another dated 28 October 1991 demanding an out-of-court settlement of
P1,000,000.00. Petitioner did not accede to his demands.
‣ 9 June 1992: Uy filed a complaint for damages against United Airlines alleging that he was a person of good
station, sitting in the board of directors of several top 500 corporations and holding senior executive positions for
such similar firms; that petitioner accorded him ill and shabby treatment to his extreme embarrassment and
humiliation; and, as such he should be paid moral damages, exemplary damages, plus attorney's fees. He also
requested reimbursement for the damage to his luggage and its stolen contents.
‣ United Airlines moved to dismiss the complaint on the ground that it was filed out of time, contending that under
Art. 29 of the Warsaw Convention, the right to damages shall be extinguished if an action is not brought within 2
years from the date of arrival at the destination. However, based on the 2nd paragraph of said provision which
states that the method of calculating the period of limitation shall be determined by the law of the court to which
the case is submitted, Uy posits that our rules on interruption of prescriptive period should apply. Thus when he
sent his letters of demand, the 2-year period was tolled.
‣ 2 August 1992: The trial court dismissed the case holding that Art. 29(2) does not refer to the forum’s rules in
interrupting the prescriptive period but only to the rules of determining the time in which the action was deemed
commenced (meaning “filed”). Hence, it concluded that Art. 29 excludes the application of our interruption rules.
This was reversed by the CA, hence this petition.
ISSUE/HELD
‣ W/N the claim for damages has already prescribed – NO, for the claim based on torts.
RATIO
‣ The Warsaw Convention does not regulate or exclude liability for other breaches of contract by the carrier or
misconduct of its officers and employees, or for some particular or exceptional type of damage. It does not
preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the
carrier from liability for damages for violating the rights of its passengers under the contract of carriage,
especially if willful misconduct on the part of the carrier's employees is found or established.
‣ Respondent's complaint reveals that he is suing on two (2) causes of action:
1. The shabby and humiliating treatment he received from petitioner's employees at the San Francisco Airport
which caused him extreme embarrassment and social humiliation; and,
2. The slashing of his luggage and the loss of his personal effects amounting to US $5,310.00.
‣ While his second cause of action - an action for damages arising from theft or damage to property or goods - is
well within the bounds of the Warsaw Convention, his first cause of action - an action for damages arising
from the misconduct of the airline employees and the violation of respondent's rights as passenger - clearly is
not.
‣ Consequently for his first cause of action, his failure to file his complaint within the two (2)-year limitation of the
Warsaw Convention does not bar his action since petitioner may still be held liable for breach of other provisions

of the Civil Code which prescribe a different period or procedure for instituting the action, specifically, Art. 1146
thereof which prescribes four (4) years for filing an action based on torts.
‣ As for the second, the two (2)-year limitation incorporated in Art. 29 was indeed intended as an absolute bar to
suit and not to be made subject to the various tolling provisions of the laws of the forum. This therefore forecloses
the application of our own rules on interruption of prescriptive periods. Article 29 (2) was intended only to let
local laws determine whether an action had been commenced within the two (2)-year period, and within our
jurisdiction an action shall be deemed commenced upon the filing of a complaint.
‣ Respondent filed the present action beyond the two (2)-year time frame hence his second cause of action must be
barred. However respondent exerted efforts to immediately convey his loss to petitioner, even employed the
services of two (2) lawyers to follow up his claims, and that the filing of the action itself was delayed because of
petitioner's evasion. It is obvious that he was forestalled from immediately filing an action because petitioner gave
him the runaround, answering his letters but not giving in to his demands. True that he should have already filed
an action at the first instance when his claims were denied but it could only be due to his desire to make an out-of-
court settlement. Hence, the rule shall not be applied in the instant case because of the delaying tactics employed
by petitioner airline itself. Thus, his second cause of action cannot be considered as time-barred under Art. 29 of
the Warsaw Convention.
‣ Case remanded to the trial court for further proceedings.

LUFTHANSA V CA


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American Home Assurance vs CA 2

Philippine Home Assurance vs CA 4

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

Digest Author: Anna Villanoza

‣ National Marine Corp. - owns and operates the vessel

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

‣ AHA is entitled to reimbursement from NMC.

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

Digest Author: Ellen Buenaventura

‣ Respondents are the CA and Eastern Shipping Lines (ESLI)—the carrier

‣ 2 boxes internal combustion engine parts, consigned to William Lines

‣ 10 metric tons (334 bags) ammonium chloride, consigned to Orca’s company

‣ 200 bags Glue 300 consigned to Pan Oriental Match company

‣ Garments, consigned to Ding Velayo

Basically, the RTC and the CA were wrong.

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

Digest Author: Coleen Bunao

‣ Agapito Gerbolinga — master of Aquarius Fishing Co.

‣ Sulpicio Lines — defendant vessel

‣ RTC Ruling: Aquarius Fishing Co.

‣ CA Ruling: Aquarius Fishing Co., MR of Sulpicio Lines denied.

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

Digest Author: Liane Candelario

‣ Oelwerke Teutonia corp claims the copra.

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

Digest Author: Ian Canoy

‣ Despite receipt of formal demands, Defendants refused the consignee’s claim.

‣ Damage was caused by pre-shipment,

‣ inherent nature, vice or defect of the goods,

‣ or to perils, danger and accidents of the sea,

‣ or to insufficiency of packing thereof,

‣ or to the act or omission of the shipper of the goods or their representatives.

‣ RTC dismissed the complaint.

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

‣ Defendants are wrong.

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

1. the contract is reasonable and just under the circumstances, and

2. it has been fairly and freely agreed upon by the parties.

‣ Decision Modified. Liability of Defendants reduced to 2000$ plus legal interest.

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

Digest Author: Amber Gagajena

‣ Shipper – Seaborne Trading Company

‣ Upon appeal, IAC affirmed the decision.

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

Digest Author: Alvin Garces

‣ The shipper: CONTINENTAL ENTERPRISES

‣ shipment of 1,100 metric tons of INDIAN SOYA BEAN MEAL

‣ for transport and delivery to MANILA

‣ with S.R. FARMS as consignee

‣ the vessel is owned by CONTI-FEED

‣ and WALLEM as its ship agent

‣ Upon discovery, vessel chief officer was immediately notified

‣ RTC dismissed the complaint

‣ CA reversed, ordered CONTI-FEED and WALLEM to pay

‣ WALLEM appealed to SC, arguing that:

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

ATENEO LAW 3B LAW ON TRANSPORTATION DIGESTS

Digest Author: Bel Gervasio

‣ ICTSI counters that: