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Transportation Law Case Digests Eastern Shipping Lines vs.

IAC 150 scra 463 Facts: In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at Kobe, Japan for Manila:1.) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc.,2.) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.Both sets of goods were insured for their value with Development Insurance and Surety Corporation. In GR 71478, the same vessel took on board :3 . 1 2 8 c a r t o n s o f garment fabrics and accessories, in 2 containers, consigned to M a r i v e l e s Apparel Corporation4 . t w o c a s e s o f s u r v e y i n g instruments consigned to Aman Enterprises and G e n e r a l Merchandise.T h e 1 2 8 c a r t o n s w e r e i n s u r e d f o r t h e i r v a l u e b y N i s s h i n F i r e & M a r i n e I n s u r a n c e C o . , f o r US$46,583.00. The 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured. Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event; hence, it is not liable under the law. The Trial Court rendered judgment in favor of Development Insurance in the amounts of P256,039.00 and P92,361.75, respectively, with legal interest, plus P35,000.00 as attorneys fees and costs. Eastern Shipping took an appeal to the then Court of Appeals which, on 14 August 1984, affirmed the decision of the trial court. Eastern Shipping filed a petition for review on certiorari.N i s s h i n , a n d D o w a , a s s u b r o g e e s o f t h e i n s u r e d , f i l e d s u i t a g a i n s t E a s t e r n S h i p p i n g f o r t h e recovery of the insured value of the cargo lost imputing unseaworthiness of the ship and nonobservance of extraordinary diligence by Eastern Shipping. Eastern Shipping denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss of fire is established, the burden of proving negligence of the vessel is shifted to the cargo shipper. Trial Court rendered judgment in favor of Nisshin and Dowa. CA affirmed decision. Hence this petition on certiorari. Issue: Whether or not the carrier exercised extraordinary diligence. 29 Held: Eastern Shipping shall pay the Development Insurance the amount of P256,039 for the 28packages of calorized lance pipes, and P71,540 for the 7 cases of spare parts, with interest at the legal rate from the date of the filing of the Complaint on 13 June 1978, plus P5,000 as attorneys fees, and the costs. The Court, on the other hand, in GR 71478, affirmed the judgment. The evidence of the defendant did not show that extraordinary diligence was observed by the vessel to prevent the occurrence of fire at hatches nos. 2 and 3. Defendants evidence did not likewise show the

amount of diligence made by the crew, on orders, in the care of the cargoes. What appears is that after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage. The complete defense afforded by the COGSA when loss results from fire is unavailing to Eastern Shipping. The Carriage of Goods by Sea Act (COGSA), a special law, is merelysuppletory to the provisions of the Civil Code The fire may not be considered a natural disaster or calamity, as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier.

Everett Steamship Corporation v. Court of Appeals297 SCRA 496 Facts: Hernandez Trading Co., respondent herein, imported 3 crates of bus spare parts from its supplier,Maruman Trading Company, Ltd., a foreign corporation based in Japan. The crates were shipped from Japan to Manila on board "ADELFAEVERETTE," a vessel owned by the principal of the petitioner herein, Everett Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN. The vessel arrived in Manila and it was discovered that the one crate was missing. This was confirmed and admitted by petitioner in its letter of January 13, 1992 addressed to private respondent, which thereafter made a formal claim upon petitioner for the value of the lost cargo amounting to One Million Five Hundred Fifty-two Thousand Five Hundred (Y1,552,500.00) Yen, the amount shown in an Invoice No. MTM-941, dated November 14, 1991. However, petitioner offered to pay only One Hundred Thousand (Y100,000.00) Yen, the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner. Respondent rejected the offer and filed a case to collect payment for the loss against the petitioner. Issue: Whether or not the petitioner is liable for the actual value and not the maximum value recoverable under the bill of lading. Held: A stipulation in the bill of lading limiting the liability of the common carrier for the loss, damages of cargo to a certain sum, unless the shipper declares or a higher value is sanctioned by law, particularly Articles1749 and 1780 of the Civil Code. The stipulations in the bill of lading are reasonable and just. In the bill of lading, the carrier made it clear that its liability would only be up to Y100,000.00 (Yen). However, the shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was h i g h e r t h a n t h e l i m i t e d l i a b i l i t y o f t h e c a r r i e r . C o n s i d e r i n g t h a t t h e s h i p p e r d i d n o t d e c l a r e a h i g h e r valuation, it had itself to blame for not complying with the stipulations. The trial courts decision that private respondent could not have fairly agreed to the limited liability clause in the bill of lading because the said condition were printed in small letters does not make the bill of lading invalid.

Magellan Manufacturing Marketing vs. CA [GR 95529, 22 August 1991] Second Division, Regalado (J): 3 concur, 1 on leave Facts: On 20 May 1980, Magellan Manufacturers Marketing Corp. (MMMC) entered into a contract Co. of Yokohama, Japan to export 136,000 anahaw fans for and in consideration of $23,220.00. As payment thereof, a letter of credit was issued to MMMC by the buyer. Through its president, James Cu, MMMC then contracted F.E. Zuellig, a shipping agent, through its solicitor, one Mr. King, to ship the anahaw fans through Orient Overseas Container Lines, Inc., (OOCL) specifying that he needed an on-board bill of lading and that transshipment is not allowed under the letter of credit. On 30 June 1980, MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of lading which was presented to Allied Bank. The bank then credited the amount of US$23 ,220.00 covered by the letter of credit to appellants account. However, when MMMCs president James Cu, went back to the bank later, he was informed that the payment w a s r e f u s e d b y t h e b u y e r allegedly because there was no on-board bill of lading, and t h e r e w a s a trans shipment of goods. As a result of the refusal of the buyer to accept, upon MMMCs request, the anahaw fans were shipped back to Manila by OOCL and FE Zuellig, for which the latter demanded from MMMC payment of P246,043.43. MMMC abandoned the whole cargo and asked OOCL and FE Zuellig for damages. On 20 July 1981 MMMC filed the complaint in this case praying that OOCL and FE Zuellig be ordered to pay whatever MMMC was not able to earn from Choju Co., Ltd., amounting to P174,150.00 and other damages like attorneys fees since OOCL and FE Zuellig are to blame for the refusal of Choju Co., Ltd. To accept the Anahaw fans. In answer thereto the latter alleged that the bill of lading clearly shows that there will be a transshipment and that MMMC was well aware that MV (Pacific) Dispatcher was only up to Hongkong where the subject cargo will be transferred to another vessel for Japan. They this filed a counterclaim praying that MMMC be ordered to pay freight charges from Japan to Manila and the demurrages in Japan and Manila amounting to P298,150.93. The lower court decided the case in favor of OOCL and FE Zuellig.On appeal to the Court of Appeals, the finding of the lower court that MMMC agreed to a transshipment of the goods was affirmed but the finding that petitioner is liable for P298,150.93 was modified. It was reduced t o P 5 2 , 1 0 2 . 4 5 which represents the freight charges and demurrages incurred in J a p a n b u t n o t f o r t h e demurrages incurred in Manila. MMMC, dissatisfied with the decision moved for reconsideration. Denied, it filed a petition for review on certiorari. The Supreme Court affirmed the judgment of the Court of Appeals with the modification that MMMC is likewise absolved of any liability, thus setting aside the award of P52,102.45 with legal interest granted by the Appellate court on OOCL and FE Zuelligs counterclaim, said counterclaim being dismissed, without pronouncement as to costs. 1 . T r a n s s h i p m e n t d e f i n e d Transshipment, in maritime law, is defined as the act of taking cargo out of one ship and loading it in another, or the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel b e f o r e t h e p l a c e o f d e s t i n a t i o n named in the contract has been reached, or the transfer for f u r t h e r transportation from one ship or conveyance to another. Either in its ordinary or its strictly legal acceptation, there is transshipment whether or not the same person, firm or entity owns the vessels. In other words, the factor transshipment is not

dependent upon the ownership of the transporting ships or conveyances or in the change of camera, but rather on the fact of actual physical transfer of cargo from one vessel to another. 2 . Tra n s sh i pm e nt e xi s t s i n p rese n t ca s e There was transshipment, as there unmistakably appears on the face of the bill of lading the entry Hong Kong in the blank space labeled Transshipment, which can only mean that transshipment actually took place. This fact is further bolstered by the certification issued by F.E. Zuellig, Inc. dated 19 July 1980, although it carefully used the term transfer instead of transshipment. Nonetheless, no amount of semantic juggling can mask the fact that transshipment in truth occurred in this case. 3. A bill of lading operates both as a receipt and as a contract A bill of lading operates both as a receipt and as a contract. It is a receipt for the goods shipped and contract to transport and deliver the same as therein stipulated. As a contract, it names the parties, which includes the consignee, fixes the route, destination, and freight rates or charges, and stipulates the rights and obligations assumed by the parties. Being a contract, it is the law between the parties who are bound by its terms and conditions provided that these are not contrary to law, morals, good customs, public order and public policy. A bill of lading usually becomes effective upon its delivery to and acceptance by the shipper. It is presumed that the stipulations of the bill were, in the absence of fraud, concealment or improper conduct, known to the shipper, and he is generally bound by his acceptance whether he reads the bill or not. 4. Claims of mistake militates against nature of bill of lading The claim that there was a mistake in documentation on the part of OOCL and FE Zuellig militates against the conclusiveness of the bill of lading insofar as it reflects the terms of the contract between the parties, as an exception to the parol evidence rule, and would therefore permit it to explain or present evidence to vary or contradict the terms of the written agreement, that is, the bill of lading involved. 5. Receipt of bill lading without objection presumed to mean a c c e p t a n c e o f c o n t e n t s a s c o r r e c t a n d assent thereto A shipper who receives a bill of lading without objection after an opportuni ty to inspect it, and permits the carrier to act on it by proceeding with the shipment is presumed to have accepted it as correctly stating the contract and to have assented to its terms. The acceptance of the bill without dissent raises the presumption that all the terms therein were brought to the knowledge of the shipper and agreed to by him and, in the absence of fraud or mistake, he is estopped from thereafter denying that he assented to such terms. This rule applies with particular force where a shipper accepts a bill of lading with full knowledge of its contents and acceptance under such circumstances makes it a binding contract. 6. Parol evidence rule vis--vis contracts Under the parol evidence rule, the terms of a contract are rendered conclusive upon the parties, and evidence aliunde is not admissible to vary or contradict a complete and enforceable agreement embodied in document, subject to well defined exceptions which do not obtain in this case. The parol evidence rule is

based on the consideration that when the parties have reduced their agreement on a particular matter into writing, all their previous and contemporaneous agreements on the matter are merged therein. Accordingly, evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary, contradict or defeat the operation of a valid instrument. The mistake contemplated as an exception to the parol evidence rule is one which is a mistake of fact mutual to the parties. Furthermore, the rules on evidence, as amended, require that in order that parol evidence may be admitted, said mistake must be put in issue by the pleadings, such that if not raised inceptively in the complaint or in the answer, as the case may be, a party cannot later on be permitted to introduce parol evidence thereon. 7. Terms of contract in bill of lading clear and conclusive The terms of the contract as embodied in the bill of lading are clear and thus obviates the need for any interpretation. The intention of the parties which is the carriage of the cargo under the terms specified hereunder and the wordings of the bill of lading do not contradict each other. The terms of the contract being conclusive upon the parties and judging from the contemporaneous and subsequent actuations of petitioner, to wit, personally receiving and signing the bill of lading and paying the freight charges, there is no doubt that petitioner must necessarily be charged with full knowledge and unqualified acceptance of the terms of the bill of lading and that it intended to be bound thereby. 8. Transshipment of freight without legal excuse is a v i o l a t i o n o f c o n t r a c t ; N o c a u s e t o s u p p o s e shippers to be unaware of custom It is a well-known commercial usage that transshipment of freight without legal excuse, however c o m p e t e n t a n d s a f e t h e v e s s e l i n t o w h i c h t h e t r a n s f e r i s m a d e , i s a v i o l a t i o n o f t h e c o n t r a c t a n d a n infringement of the right of the shipper, and subjects the carrier to liability if the freight is lost even by a cause otherwise excepted. It is highly improbable to suppose that OOCL and FE Zuellig, having been engaged in the shipping business for so long, would be unaware of such a custom of the trade as to have undertaken such transshipment without petitioners consent and unnecessarily expose themselves to a possible liability. Verily, they could only have undertaken transshipment with the shippers permission, as evidenced by the signature of James Cu. 9. Knowledge of difference between bill of lading and on b o a r d b i l l o f l a d i n g e x p e c t e d f r o m t h o s e engaged in export industry for long periods The refusal of acceptance of the cargo of anahaw fans by Choju Co., Ltd. was also made on the ground that the bill of lading that was issued was not an on board bill of lading, in clear violation of the terms of the letter of credit issued in favor of MMMC. MMMC knew from the onset that its buyer, Choju Co., Ltd.,particularly required that there be an on board bill of lading, obviously due to the guaranty afforded by such a bill of lading over any other kind of bill of lading. The buyer could not have insisted on such a stipulation on apure whim or caprice, but rather because of its reliance on the safeguards to the cargo that having an on board bill of lading ensured. Herein petitioner cannot feign ignorance of the distinction between an or board and a received for shipment bill of lading. It is only to be expected that those long engaged in the export industry should be familiar with business usages and customs.

1 0 . On bo a rd b i ll o f la d in g de f i ne d An on board bill of lading is one in which it is stated that the goods have been received on board the vessel which is to carry the goods, whereas a received for shipment bill of lading is one in which it is stated that the goods have been received for shipment with or without specifying the vessel by which the goods are to be shipped. Received for shipment bills of lading are issued whenever conditions are not normal and there is insufficiency of shipping space. An on board bill of lading is issued when the goods have been actually placed aboard the ship with every reasonable expectation that the shipment is as good as on its way. It is, therefore, understandable that a party to a maritime contract would require an on board bill of lading because of its apparent guaranty of certainty of shipping as well as the seaworthiness of the vessel which is to carry the goods. 11. FE Zuelligs certification cannot qualify bill of lading into an ob board bill of lading The certification of F.E. Zuellig, Inc. cannot qualify the bill of lading, as originally issued, into an onboard bill of lading as required by the terms of the letter of credit issued in favor of MMMC. For one, the certification was issued only on 19 July 1980, way beyond the expiry date of 30 June 1980 specified in the letter of credit for the presentation of an on board bill of lading. Thus, even assuming that by a liberal treatment of the certification it could have the effect of converting the received for shipment bill of lading into an on board of bill of lading, such an effect may be achieved only as of the date of its issuance, that is, on 19July 1980 and onwards. The fact remains, though, that on the crucial date of 30 June 1980 no on board bill of lading was presented by petitioner in compliance with the terms of the letter of credit and this default consequently negates its entitlement to the proceeds thereof. Said certification, if allowed to operate retroactively, would render illusory the guaranty afforded by an on board bill of lading, that is, reasonable certainty of shipping the loaded cargo aboard the vessel specified, not to mention that it would indubitably be stretching the concept of substantial compliance too far. 12. Claim of contract of adhesion cannot be upheld as bill of lading is clear MMMC cannot escape liability by adverting to the bill of lading as a contract of adhesion, thus warranting a more liberal consideration in its favor to the extent of interpreting ambiguities against OOCLand FE Zuellig as allegedly being the parties who gave rise thereto. The bill of lading is clear on its face. There is no occasion to speak of ambiguities or obscurities whatsoever. All of its terms and conditions are plainly worded and commonly understood by those in the business. 13. Certain contracts of adhesion, such as bill of lading, not prohibited It is conceded that bills of lading constitute a class of contracts of adhesion. However, as ruled in the earlier case of Ong Yiu us. Court of Appeals, et al. and reiterated in Servando, et al. vs. Philippine Steam Navigation Co., plane tickets as well as bills of lading are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. 14. Violation of letter of credit would defeat right to collect proceeds thereof

Any violation of the terms and conditions of the letter of credit as would defeat its right to collect the proceeds thereof was, therefore, entirely of MMMCs making for which it must bear the consequences. Whether there was a violation of the terms and conditions of the letter of credit, or whether such violation was the cause or motive for the rejection by MMMCs Japanese buyer should not affect OOCL and FE Zuelligsince they were not privies to the terms and conditions of MMMCs letter of credit and cannot therefore be held liable for any violation thereof by any of the parties thereto. 1 5 . D e m u r r a g e d e f i n e d Demurrage, in its strict sense, is the compensation provided for in the contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading. Essentially, demurrage is the claim for damages for failure to accept delivery. In a broad sense, every improper detention of a vessel may be considered a demurrage. Liability for demurrage, using the word in its strictly technical sense, exists only when expressly stipulated in the contract. Using the term in its broader sense, damages in the nature of demurrage are recoverable for a breach of the implied obligation to load or unload the cargo with reasonable dispatch, but only by the party to whom the duty is owed and only against one who is a party to the shipping contract. Notice of arrival of vessels or conveyances, or of their placement for purposes of unloading is often a condition precedent to the right to collect demurrage charges. 16. Abandonment of goods releases MMMC from liability from demurrage charges Ordinarily, the shipper is liable for freightage due to the fact that the shipment was made for its benefit or under its direction and, correspondingly, the carrier is entitled to collect charges for its shipping services. By virtue of the exercise of its option to abandon the goods so as to allow OOCL and FE Zuellig to sell the same at a public auction and to apply the proceeds thereof as payment for the shipping and demurrage charges, MMMC was released from liability for the sum of P52,102.43 since such amount represents the Transportation Law, 2004 ( 295 )shipping and demurrage charges from which it is considered to have been released due to the abandonment of goods. 17.OOCL offered MMMC option, cannot renege of offer unilaterally OOCL and FE Zuellig unequivocally offered MMMC, on 20 March 1981, the option of paying the shipping and demurrage charges in order to take delivery of the goods or of abandoning the same so that the former could sell them at public auction and thereafter apply the proceeds in payment of the shipping and other charges. Responding thereto, in a letter dated 3 April 1981, MMMC seasonably communicated its decision to abandon to the goods in favor of the former with the specific instruction that any excess of the proceeds over the legal costs and charges be turned over to MMMC. Having given such option, especially since it was accepted by MMMC, OOCL and FE Zuellig are estopped from reneging thereon. To allow either of them to unilaterally back out on the offer and on the exercise of the option would be to countenance abuse of rights as an order of the day, doing violence to the long entrenched principle of mutuality of contracts. 18.Grounds for abandonment of goods In overland transportation, an unreasonable delay in the delivery of transported goods is sufficient ground for the abandonment of goods. By analogy, this can also apply to

maritime transportation. Further,MMMC can properly abandon the goods, not only because of the unreasonable delay in its delivery but because of the option which was categorically granted to and exercised by it as a means of settling its liability for the cost and expenses of reshipment. Said choice having been duly communicated, the same is binding upon the parties on legal and equitable considerations of estoppels.

Santos vs. Northwest Orient Airlines (GR 101538, 23 June 1992) En Banc, Cruz (J): 13 concur Facts: Augusto Benedicto Santos III is a minor and a resident of the Philippines. Northwest Orient Airlines(NOA) is a foreign corporation with principal office in Minnesota, U.S.A., and licensed to do business and maintain a branch office in the Philippines. On 21 October 1986, Santos purchased from NOA a round-trip t i c k e t i n S a n F r a n c i s c o , U.S.A., for his flight from San Francisco to Manila via Tokyo and b a c k . T h e scheduled departure date from Tokyo was 20 December 1986. No date was specified for his return to San Francisco. On 19 December 1986, Santos checked in at the NOA counter in the San Francisco airport for his scheduled departure to Manila. Despite a previous confirmation and re-confirmation, he was informed that he had no reservation for his flight from Tokyo to Manila. He therefore had to be wait-listed. On 12 March 1987, Santos, represented by his father and legal guardian Augusto Benedicto Santos, sued NOA for damages in the RTC Makati. On 13 April 1987, NOA moved to dismiss the complaint on the ground of lack of jurisdiction. On 1 February 1988, the lower court granted the motion and dismissed the case. Santos appealed to the Court of Appeals, which affirmed the decision of the lower court. On 26 June 1991,Santos filed a motion for reconsideration, but the same was denied. Santos then came to the Supreme Court. The Supreme Court denied the petition, with costs against Santos. 1 . Art i cl e 28 (1 ) o f t h e W arsa w Co n ve n t i on Article 28(1) of the Warsaw Convention, reads an action for damage 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. 2.W arsaw Convention has force and effect in the Philippines; History of adoption The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on13 February 1933. The Convention was concurred in by the Senate, through its Resolution 19, on 16 May1950. The Philippine instrument of accession was signed by President Elpidio Quirino on 13 October 1950,and was deposited with the Polish government on 9 November 1950. The Convention became applicable to t h e P h i l i p p i n e s o n 9 February 1951. On 23 September 1955, President Ramon M a g s a y s a y i s s u e d Proclamation 201, declaring our formal adherence thereto, to the end that the same and every article and clause thereof may be observed and fulfilled in good faith by the Republic of the Philippines and the citizens thereof. The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as such, has the force and effect of law in this country. 3.Requisites of a judicial inquiry over a constitutional question Courts will assume jurisdiction over a constitutional question only if it is shown that the essential requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be an actual case or controversy involving a conflict of legal rights susceptible of judicial determination; the constitutional q u e s t i o n m u s t

have been opportunely raised by the proper party and the r e s o l u t i o n o f t h e q u e s t i o n i s unavoidably necessary to the decision of the case itself. 4.Judicial desistance to decide constitutional question; Separation of powers Courts generally avoid having to decide constitutional question. This attitude is based on the doctrine of separation of powers, which enjoins upon the departments of the government a becoming respect for each Transportation Law, 2004 ( 526 ) others acts. Therefore, where the case can be decided on other grounds, there will be no necessity of resolving the constitutional issue. 5.Presumption that a joint legislative -executive act is carefully studied The treaty which is the subject matter of this petition was a joint legislative executive act. The presumption is that it was first carefully studied and determined to be constitutional before it was adopted and given the force of law in this country. 6 . D o c t r i n e o f r e b u s s i c s t a n t i b u s According to Jessup, this doctrine constitutes an attempt to formulate a legal principle which would justify non-performance of a treaty obligation if the conditions with relation to which the parties contracted have changed so materially and so unexpectedly as to create a situation in which the exaction of performance w o u l d b e u n r e a s o n a b l e . The key element of this doctrine is the vital change in the condition o f t h e contracting parties that they could not have foreseen at the time the treaty was concluded. 7.Intent of the Warsaw drafters; Day v. Trans World Airlines, Inc. As observed in Day vs. Trans World Airlines, the W arsaw drafters wished to create a system of liability rules that would cover all the hazards of air travel. The Warsaw delegates knew that, in the years to come, civil aviation would change in ways that they could not foresee. They wished to design a system of airlaw that would be both durable and flexible enough to keep pace with these changes. The ever-changing needs of the system of civil aviation can be served within the framework they created. 8.Circumstance that airline industry is in infancy when Convention w a s d r a f t e r d o e s n o t w a r r a n t rejection of treaty Although, it is true that at the time the Warsaw Convention was drafted, the airline industry was stillin its infancy; that circumstance alone is not sufficient justification for the rejection of the treaty at this time. Changes were, realistically, not entirely unforeseen although they were expected in a general sense only. 9.Article 41 of the Warsaw Convention; Anticipation of developments Article 41 of the Convention provides that any High Contracting Party shall be entitled not earlier than two years after the coming into force of this convention to call for the assembling of a new international conference in order to consider any improvements which may be made in this convention. To this end, it will communicate with the Government of the French Republic which will take the necessary measures to make preparations for such conference.

10.Rejection of treaty necessitates formal act of rejection The treaty has not been rejected by the Philippine government. The doctrine of rebus sic stantibusdoes not operate automatically to render the treaty inoperative. There is a necessity for a formal act of rejection, usually made by the head of State, with a statement of the reasons why compliance with the treaty is no longer required. 11.Article 39 of the W arsaw Convention; Manner in which the treaty is to be denounced The treaty may be denounced even without an expressed j u s t i f i c a t i o n f o r t h i s a c t i o n . S u c h denunciation is authorized under its Article 39, viz: (1) Any one of the High Contracting Parties may denounce this convention by a notification addressed to the Government of the Republic of Poland, which shall at once inform the Government of each of the High Contracting Parties. (2) Denunciation shall take effect six months after the notification of denunciation, and shall operate only as regards the party which shall have proceeded to denunciation. 12.Rejection of a treaty not a function of the Court; Scope of powers of the Judiciary Rejection of the treaty, whether on the ground of rebus sic stantibus or pursuant to Article 39, is not a function of the courts but of the other branches of government. This is a political act. The conclusion and renunciation of treaties is the prerogative of the political departments and may not be usurped by the judiciary. The courts are concerned only with the interpretation and application of laws and treaties in force and not with their wisdom or efficacy. 13.Constitutional guaranty of access to courts refer only to courts w i t h a p p r o p r i a t e j u r i s d i c t i o n ; Doctrine of incorporation The constitutional guaranty of access to courts refers only to courts with appropriate jurisdiction as defined by law. It does not mean that a person can go to any court for redress of his grievances regardless of the nature or value of his claim. If the petitioner is barred from filing his complaint before our courts, it is because they are not vested with the appropriate jurisdiction under the Warsaw Convention, which is part of the law of our land. 14.International transportation defined; Article 1 (2) International transportation is defined in paragraph (2) of Article 1, which provides For the purposes of this convention, the expression international transportation shall mean any transportation in which, according to the contract made by the parties, the place of departure and the place of destination, whether or not there be a break in the transportation or a transshipment, are situated [either] within the territories of two High Contracting Parties. 15.Nature of transportation determined by contract of parties, i.e. ticket Whether the transportation is international is determined by the contract of the parties, which in the case of passengers is the ticket. When the contract of carriage provides for the transportation of the passenger between certain designated terminals within the territories of two High Contracting Parties, the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of the airline and its

passenger. Herein, since the flight involved is international, the same being from the United States to the Philippines and back to the United States, it is subject to the provisions of the Warsaw Convention, including Article 28(1), which enumerates the four places where an action for damages may be brought. 16.Distinction between venue and jurisdiction Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent or waiver upon a court which otherwise would have no jurisdiction over the subject-matter of an action; but the venue of an action as fixed by statute may be changed by the consent of the parties and an objection that the plaintiff brought his suit in the wrong county may be waived by the failure of the defendant to make a timely objection. In either case, the court may render a valid judgment. Rules as to jurisdiction can never be left to the consent or agreement of the parties, whether or not a prohibition exists against their alteration. 17.Article 18 (1) is a jurisdiction and not a venue provision A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not avenue provision. First, the wording of Article 32, which indicates the places where the action for damage must be brought, underscores the mandatory nature of Article 28(1). Second, this characterization inconsistent with one of the objectives of the Con vention, which is to regulate in a uniform manner the conditions of international transportation by air. Third, the Convention does not contain any provision prescribing rules of jurisdiction other than Article 28(1), which means that the phrase rules as to jurisdiction used in Article 32 must refer only to Article 28(1). In fact, the last sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as jurisdictions, which, as such, cannot be left to the will of the parties regardless of the time when the damage occurred. 18.Jurisdiction takes dual concept when matter is governed by the W arsaw Convention . Where the matter is governed by the W arsaw Convention, jurisdiction takes on a dual concept. Jurisdiction in the international sense must be established in accordance with Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular court must be established pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is determined will the issue of venue be taken up. This second question shall be governed by the law of the court to which the case is submitted. 19.Article 32 of the Warsaw Convention Article 32 provides that any clause contained in the contract and all special agreements entered into before the damage occurred by which the parties purport to infringe the rules laid down by this convention, whether by deciding the law to be applied, or by altering the rules as to jurisdiction, shall be null and void. Nevertheless for the transportation of goods, arbitration clauses shall be allowed, subject to this convention, if the arbitration is to take place within one of the jurisdictions referred to in the first paragraph of Article 28. 20.Motion to dismiss on the ground of lack of jurisdiction did n o t a f f e c t i m p r o p e r v e n u e a s a ground to dismiss Examination of Article 28(1) in relation to Article 32 does not support the conclusion that in moving to dismiss on the ground of lack of jurisdiction, Northwest has waived improper venue as a ground to dismiss. Herein, Santos claim that NOA waived venue

as a ground of its motion to dismiss is not correct. True it is that NOA averred in its MOTION TO DISMISS that the ground thereof is the Court has no subject matter jurisdiction to entertain the Complaint which SANTOS considers as equivalent to lack of jurisdiction over the subject matter . . . However, the gist of NOAs argument in its motion is that the Philippines is not the proper place where SANTOS could file the action meaning that the venue of the action is improperly laid. Even assuming then that the specified ground of the motion is erroneous, the fact is the proper ground of the motion improper venue has been discussed therein. 21.W aiver not taken lightly; Doubt resolve to non -waiver Waiver cannot be lightly inferred. In case of doubt, it must be resolved in favor of nonwaiver if there are special circumstances justifying this conclusion. As observed in Javier vs. Intermediate Court of Appeals, Legally, of course, the lack of proper venue was deemed waived by the petitioners when they failed to invoke it in their original motion to dismiss. Even so, the motivation of the private respondent should have been taken into account by both the trial judge and the respondent court in arriving at their decisions. 22.Aanestad vs. Air Canada; Place of Destination construed The only conclusion that can be reached in Aanestad vs. Air Canada is that the place of destination as used in the Warsaw Convention is considered by both the Canadian C.T.C. and the United States C.A.B. to describe at least two places of destination, viz., the place of destin ation of a particular flight either an outward destination from the point of origin or from the outward point of destination to any place in Canada. Therein, the place of destination under Article 28 and Article 1 of the W arsaw Convention of the flight on which Mrs. Silverberg was killed, was Los Angeles according to the ticket, which was the contract between the parties and the suit is properly filed in this Court which has jurisdiction. 23.Butz vs. British Airways; Place of Destination in a trip c o n s i s t i n g o f s e v e r a l p a r t s i s u l t i m a t e destination In Butz v. British Airways, the United States District Court (Eastern District of Pennsylvania) said that although the authorities which addressed this precise issue are not extensive, both the cases and the commentators are almost unanimous in concluding that the place of destination referred to in the Warsaw Convention in a trip consisting of several parts is the ultimate d e s t i n a t i o n t h a t i s a c c o r d e d t r e a t y jurisdiction. 24.Place of destination determined by the contract of carriage The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of the contract of carriage or, specifically, the ticket between the passenger and the carrier. Whether the return portion of the ticket is characterized as an option or a contract, the carrier was legally bound to transport the passenger back to the place of origin within the prescribed time and the passenger for her part agreed to pay the fare and, in fact, did pay the fare. Thus there was mutuality of obligation and a binding contract of carriage. The fact that the passenger could forego her rights under the contract does not make it any less a binding contract. Certainly, if the parties did not contemplate the return le g of the journey, the passenger would not have paid for it and the carrier would not have issued a round trip ticket. Herein, examination of Santos ticket shows that his ultimate destination is San Francisco. Although the date of the return flight was left open, the contract of carriage

between the parties indicates that NOA was bound to transport Santos to San Francisco from Manila. Manila should therefore be considered merely an agreed stopping place and not the destination. 25.Butz and Aanestadd case not controlling; Courts discretion On the claim that the Butz case could not have overruled the Aanestad case because these decisions are from different jurisdictions; it is neither here nor there. In fact, neither of these cases is controlling on this Court. If the Butz case was preferred, it is because the Court, in exercising uts own freedom of choice, decided that it represents the better, and correct, interpretation of Article 28(1). 26.Article 1 (2); Distinction between destination and agreed stopping place Article 1(2) also draws a distinction between a destination and an agreed stopping place. It is the destination and not an agreed stopping place that controls for purposes of ascertaining jurisdiction under the Convention. The contract is a single undivided operation, beginning with the place of departure and ending with the ultimate destination. The use of the singular in this expression indicates the understanding of the parties to the Convention that every contract of carriage has one place of departure and one place of d e s t i n a t i o n . A n i n t e r m e d i a t e place where the carriage may be broken is not regarded he a place o f destination. 27.Domicile of a corporation; Compagnie Nationale Air France vs. Giliberto The domicile of a corporation is customarily regarded as the place where it is incorporated, and the courts have given the meaning to the term as it is used in article 28(1) of the Convention. Moreover, the structure of article 28(1), viewed as a whole, is also incompatible with the cl aim that the domicile of a corporation includes any country where the airline carries on its business on a regular and substantial basis.The article, in stating that places of business are among the bases of the jurisdiction, sets out two places where an action for damages may be brought: the country where the carriers principal place of business is located, and the country in which it has a place of business through which the particular contract in question was made, that is, where the ticket was bought. 28.French law not intended to govern the meaning of Warsaw terms It cannot be said that Internal French law is to be applied in the choice of law sense, to determine the meaning and scope of the Conventions terms. Of course, French legal usage must be considered in arriving at an accurate English translation of the French. But when an accurate English translation is made and agreed upon the inquiry not meaning does not then revert to a quest for a past or present French law to be applied for revelation of the proper scope of the terms. It does not follow from the fact that the treaty is written in French that in interpreting it, the parties forever chained to French law, either as it existed when the treaty was written or in its present state of development. There is no suggestion in the treaty that French law was intended to govern the meaning of Warsaws terms, nor any indication has been found to this effect in its legislative history or from the study of its application and interpretation by other courts. Indeed, analysis of the cases indicates that the courts, in interpreting and applying the Warsaw Convention, have not

considered themselves bound to apply French law simply because the Convention is written in French. 29.Where action may be brought; Article 28 (1) The domicile of the carrier is only one of the places where the complaint is allowed to be filed under Article 28(1). By specifying the three other places, to wit, the principal place of business of the carrier, its place of business where the contract was made, and the place of destination, the article clearly meant that these three other places were not comprehended in the term domicile. 30.Reason for the phrase however founded; Husserl vs. Swiss Air Transport Company The reason for the use of the phrase however founded, is two -fold: to accommodate all of the multifarious bases on which a claim might be founded in different countries, whether under code law or common law, whether under contract or tort, etc.; and to include all bases on which a claim seeking relief for an injury might be founded in any one country. In other words, any relief available is subject to the conditions and limitations established by the Warsaw System, regardless of the particular cause of action which forms the basis on which a plaintiff could seek relief. 31.Article 25 (1) of the Warsaw Convention Article 25 (1) provides that the carrier shall not be entitled to avail himself of the provisions of this Convention which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance which the law of the court to which the case is submitted, is considered to be equivalent to willful misconduct. 31.Allegation of willful miscon duct resulting in a tort is insufficient t o e x c l u d e t h e c a s e f r o m t h e comprehension of the Warsaw Convention; Articles 22 and 25 (1) in relation to Article 28 (1). The allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the comprehension of the Warsaw Convention. It is understood under Article 25 (1) that the court called upon to determine the applicability of the limitation provision must first be vested with the appropriate jurisdiction. Article 28(1) is the provision in the Convention which defines that jurisdiction. Article 22 merely fixes the monetary ceiling for the liability of the carrier in cases covered by the Convention. If the carrier is indeed guilty of willful misconduct, it can avail itself of the limitations set forth in said article. But this can be done only if the action has first been commenced properly under the rules on jurisdiction set forth in Article 28 (1). 32.Article 24 NCC; Jurisdiction precedes application Article 24 of the Civil Code states that In all contractual property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant f or his protection. Application of the article is m i s p l a c e d , a s t h e p r o v i s i o n a s s u m e s t h a t t h e c o u r t i s v e s t e d w i t h j u r i s d i c t i o n t o r u l e i n f a v o r o f t h e disadvantaged minor. 33.Concerns in various countries in similar cases resulted in a d o p t i o n o f a n a m e n d m e n t t o A r t i c l e 28 (1) through the Guatemala Protocol

A number of countries have signified their concern over the problem of citizens being denied access to their own courts because of the restrictive provision of Article 28(1) of the Warsaw Convention. Among these is the United States, which has proposed an amendment that would enable the passenger to sue in his own domicile if the carrier does business in that jurisdiction. The reason for this proposal is explained thus In the event a US citizen temporarily residing abroad purchases a Rome to New York to Rome ticket on a foreign air carrier which is generally subject to the jurisdiction of the US, Article 28 would prevent that person from suing the carrier in the US in a Warsaw Case even though such a suit could be brought in the absence of the Convention. 34.Guatemala Protocol amending the W arsaw Convention i n e f f e c t i v e a s i t h a s n o t b e e n r a t i f i e d b y required minimum number of contracting parties The proposal was incorporated in the Guatemala Protocol amending the Warsaw Convention, which was adopted at Guatemala City on 8 March 1971. But it is still ineffective because it has not yet been ratified by the required minimum number of contracting parties. Herein, pending such ratification, Santos will still h a v e t o f i l e his complaint only in any of the four places designated by Article 2 8 ( 1 ) o f t h e W a r s a w Convention. The proposed amendment bolsters the ruling of the Court that a citizen does not necessarily have the right to sue in his own courts simply because the airline has a place of business in his country. 35.Mere fact of litigation in American court does not necessarily mean he will litigate in vai n While the Court can only sympathize with the petitioner, who must prosecute his claims in the United States rather than in his own country at less inconvenience, it may not be amiss to observe at this point that the mere fact that he will have to litigate in the American courts does not necessarily mean he will litigate in vain. The judicial system of that country is known for its sense of fairness and, generally, its strict adherence to the rule of law