1.

ADMIRALTY; JURISDICTION;
MARITIME CONTRACTS.
Admiralty has jurisdiction over all
maritime contracts, in whatever form,
wherever they were executed or are
to be performed, but not over nonmaritime contracts.
2.ID.; ID.; MARITIME
CONTRACTS DEPEND ON THE
SUBJECT MATTER THEREOF.
Whether or not a contract is
maritime depends not on the
place where the contract is made
and is to be executed, making the
locality the test, but on the subject
matter of the contract, making the
true criterion a maritime service or
a maritime transaction.
3. ID.; ID.; CONTRACT OF
AFFREIGHTMENT;
PROCEEDING "IN REM" OR "IN
PERSONAM." Admiralty has
jurisdiction of a proceeding in
rem or in personamfor the breach
of a contract of affreightment,
whether evidenced by a bill of
lading or a charter party. And
typical of a controversy over
contracts of affreightment is a suit
of one party against the other for
loss of or damage to the cargo.
4. PROHIBITION;
COURTS; JURISDICTION;
JUSTICE OF THE PEACE
COURTS HAVE NO
JURISDICTION IN ADMIRALTY
CASES. Cases in admiralty fall
within the original jurisdiction of

the Courts of First Instance to

which the jurisdiction of the justice
of the peace courts does not
extend and if the latter courts take
cognizance of such cases, they
may be restrained by the writ of
prohibition.
(Int'l. Harvester Co. of the Phil. v.
Aragon, G.R. No. L-2372, [August
26, 1949], 84 PHIL 363-367)
|||

[G.R. No. 29166. October 22, 1928.]

AUGUSTO
LOPEZ, plaintiffappellant, vs. JUAN
DURUELO, ET
AL., defendants. ALBI
NO JISON, appellee.
Angel S. Gamboa for
appellant.
Feria & La O for appellee.
SYLLABUS
1. SHIPPING; COLLISION;
PROTEST. The protest
required by article 835 of the
Code of Commerce in case of
collision between vessels is not
necessary to preserve the rights
of a person aboard a motor boat
engaged in conveying passengers

between ship and shore who is

injured in a collision between the
motor boat and the larger vessel.
2. ID.; ID.; ID.; CASE AT
BAR. A person desirous of
embarking on a ship which was
some distance away from the
shore in a Philippine port took
passage upon a small motor boat,
which was used in conveying
passengers and luggage to and
fro between the shore and the
shipside. Owing to the negligence
of thepatronor incompetence of
the person in charge so the
complaint averred the boat
approached too near to the stern
of the ship, with the result that the
propeller of the ship, which was
still turning, struck the motor boat
and sunk it, injuring the
plaintiff. Held: Upon demurrer,
that the failure of the complaint to
allege that the plaintiff had made
protest according to article 835 of
the Code of Commerce was no
impediment to the maintenance of
a civil action, under articles 1902
and 1903 of the Civil Code, to
recover damages for the tort.
3. ID.; ID.; ID.; MEANING
OF WORD VESSEL. The word
"vessel " (Spanish, "buque,"
"nave") used in the Third Section
of Title IV, Book Third, of the

Code of Commerce, dealing with

collisions, does not include all
ships, craft or floating structures
of any kind without limitation. The
provisions of said section do not
apply to minor craft engaged in
river and bay traffic.

[G.R. No. 31865. February 28, 1930.]

MARIANO
B. ARROYO,
Provincial Sheriff of
Iloilo, plaintiffappellee, vs. MARIA
CORAZON YU DE
SANE, JOSE M. PO
PAUCO, and PO SUY
LIONG,defendantsappellants. PHILIPPIN
E NATIONAL
BANK, defendantappellee.
SYLLABUS
1. SHIPPING;
REGISTRATION OF
VESSELS; CHATTEL
MORTGAGE LAW, WHETHER
NOW APPLICABLE TO
VESSELS; ADMINISTRATIVE
CODE, SECTION 1171,
CONSTRUED AND APPLIED.
Section 1171 of the Administrative

Code has modified the provisions

of the Chattel Mortgage Law, Act
No. 1508, particularly section 4
thereof. It is now not necessary
for a chattel mortgage of a vessel
to be noted in the registry of the
register of deeds. On the other
hand, it is essential that a record
of documents affecting the title of
a vessel be entered in the office
of the collector of customs at a
port of entry.
2. ID.; ID.; ID.; ID. The
law as now existing is designed to
protect persons who deal with a
vessel on the strength of the
record title.
3. ID.; ID.; ID.; ID.
Mortgages on vessels, although
not recorded, are good as
between the parties. But as
against creditors of the mortgagor,
an unrecorded mortgage is
invalid.
4. ID.; ID.; ID.; ID.;
FORECLOSURE OF
MORTGAGE. The procedure
provided by law for the
foreclosure of a mortgage must be
substantially carried out.

[G.R. No. 13695. October 18, 1921.]

STANDARD OIL
COMPANY OF NEW
YORK, plaintiffappellee, vs. MANUEL
LOPEZ
CASTELO, defendantappellant.
Gabriel La O for appellant.
Lawrence & Ross for
appellee.
SYLLABUS
1. GENERAL AVERAGE;
COASTWISE TRADE; JETTISON
OF DECK CARGO When, in
conformity with marine
regulations, cargo is carried on
the deck of a steamer engaged in
coastwise trade, the jettison of
such cargo upon occasion of peril
makes a case for general
average.
2. JETTISON;
LIQUIDATION OF GENERAL
AVERAGE; OMISSION OF
CAPTAIN TO DISTRIBUTE
LOSS. When jettison of cargo
occurs it is the duty of the captain
to effect the adjustment,
liquidation, and distribution of the
general average; and his
omission to take these steps

constitutes an actionable
dereliction of duty.

ENTRUSTED TO THEIR CARE.

3. ID.; ID.; ID.; LIABILITY

OF SHIPOWNERS. For this
omission not only is the captain
personally liable to the shipper of
the jettisoned goods, but the latter
may go at once upon the owner,
since the captain of the ship is the
representative of the owner, and
the latter is civilly liable for the
acts of the former.

delivered by Y to G and J, master

A certain sum of money was

and supercargo, respectively, of a
small craft engaged in the
coastwise trade in the waters of
the Philippine Islands, to be
carried together with various
merchandise from the port of
Cebu to the town of Catmon of
the Province of Cebu, upon
payment of a fixed sum. This

YU CON, plaintiff-

money disappeared from said

appellee, vs.

craft, and it was not proven nor

GLICERIO IPIL,

was there any indication that it

NARCISO LAURON,

was stolen by persons not

and JUSTO

belonging to the boat, nor that its

SOLAMO, defendants-

disappearance or loss was due to

appellants.

a fortuitous cause or to force

majeure. Held: That, as G and J,

Felix Sevilla y Macam for

the carriers of said sum received

from Y for its delivery to a shop in

appellants.
Juan Singson and Dionisio
Jakosalem for appellee.

the town of Catmon where it had

been consigned, were vested with
the character of depositories of
the same, and as they failed to

SYLLABUS
1. SHIPPING; LIABILITY
OF MASTER AND
SUPERCARGO OF VESSEL
FOR LOSS OF MONEY

exercise, in its safe-keeping, the

diligence required by the nature of
the obligation assumed by them
and required by the
circumstances of the time and the
place, they are liable, pursuant to

the provisions of articles 1601 and

owner of a minor craft who has

1602, in relation to articles 1783,

equipped and victualed it for the

1784, and 1770 of the Civil Code,

purpose of using it in the

for its loss or misplacement, and

transportation of merchandise

are obliged to deliver it to Y, with

from one port to another of these

the corresponding interest

Islands is under the law a

thereon as an indemnity for the

shipowner, and the master of the

damage caused him through loss

craft is to be considered as its

of the same.

captain in the legal acceptation of

2. ID.; WHAT

this word, and the former must be

CONSTITUTES A VESSEL. A

held civilly liable for indemnities in

minor craft used for the

favor of third parties to which the

transportation of merchandise by

conduct of the latter of them may

sea and to make voyages from

give rise in the custody of the

one port to another of these

effects laden on the craft, and for

Islands, equipped and victualed

all losses which, through his fault

for this purpose by its owner, is a

or negligence, may occur to the

vessel, within the purview of the

merchandise or effects delivered

law and for the determination of

to him for that transportation as

the character and effect of the

well as for the damages suffered

relations created between the

by their transportation, as those

owners of the merchandise laden

who contracted with him, in

on it and its owner, according to

consequence of misdemeanors

the meaning and construction

and crimes committed by him or

given to the word vessel by the

by the members of the crew of the

Mercantile Code in treating of

craft.

maritime commerce under Title 1,

Book 3.
3. ID.; LIABILITY OF
SHIPOWNER FOR LOSSES
CAUSED BY CAPTAIN. The

[G.R. No. L-9534. September 29,

1956.]
MANILA STEAMSHIP
CO.,

INC., petitioner, vs.

INSA ABDULHAMAN
(MORO) and LIM
HONG
TO, respondents.
Pacifico de Ocampo for the
petitioner.
Felix F. Catis, Fernando P.
Blanco and Carlos Camins, Jr., for
respondents.
SYLLABUS
1. COMMON CARRIERS;
MARITIME TORTS; COLLISION
IMPUTABLE TO BOTH
VESSELS; LIABILITY OF
SHIPOWNERS, SOLIDARILY.
In case of collision between two
vessels imputable to both of them,
each vessel shall suffer her own
damage and both shall
be solidarily liable for the
damages occasioned to their
cargoes. (Article 827, Code of
Commerce.)
2. ID.; ID.; LIABILITY OF
SHIPOWNERS. The shipowner
is directly and primarily
responsible in tort resulting in a
collision at sea, and it may not
escape liability on the ground that
it exercised due diligence in the

selection and supervision of the

vessels's officer and crew.
3. ID.; ID.; LIABILITY OF
SHIPOWNER WHERE
OFFICERS OF THE SHIP ARE
UNLICENSED. The owner of a
vessel who had caused the same
to sail without licensed officers is
liable for the injuries caused by
the collission over and beyond the
value of his vessel; hence, he can
not escape liability because of the
sinking of the vessel.

[G.R. Nos. 47447-47449. October

29, 1941.]
TEODORO
R. YANGCO,
ETC., petitioner, vs.
MANUEL LASERNA,
ET AL., respondents.
Claro M. Recto, for
petitioner.
Powell & Vega, for
respondents.
SYLLABUS
1. SHIPS AND SHIPPING;
COLLISIONS OR SHIPWRECKS;

CIVIL LIABILITY OF
SHIPOWNER FOR INJURY TO
OR DEATH OF PASSENGERS
ARISING FROM NEGLIGENCE

DIONISIA ABUEG,
ET
AL., plaintiffs-appellees, vs.
BARTOLOME SAN DIEGO, d
efendant-appellant.

OF CAPTAIN. If the shipowner

or agent may in any way be held
civilly liable at all for injury to or
death of passengers arising from
the negligence of the captain in
cases of collisions or shipwrecks,
his liability is merely co-extensive
with his interest in the vessel such
that a total loss thereof results in
its extinction. In arriving at this
conclusion, the fact is not ignored
that the ill-fated S. S. Negros, as a
vessel engaged in interisland
trade, is a common carrier, and
that the relationship between the
petitioner and the passengers
who died in the mishap rests on a
contract of carriage. But assuming
that petitioner is liable for a
breach of contract of carriage, the
exclusively "real and hypothecary
nature" of maritime law operates
to limit such liability to the value of
the vessel, or to the insurance
thereon, if any. In the instant case
it does not appear that the vessel
was insured.

SYLLABUS
1. MARITIME
LAW;
SHIPOWNER
OR
AGENT,
ORIGIN
OF
REAL
AND
HYPOTHECARY NATURE OF
LIABILITY OF. The real and
hypothecary nature of the liability
of the shipowner or agent
embodied in provisions of the
Maritime Law, Book III, Code of
Commerce, had its origin in the
prevailing conditions of the
maritime trade and sea voyages
during
the
medieval
ages,
attended by innumerable hazards
and perils. To offset against these
adverse
conditions
and
to
encourage
shipbuilding
and
maritime commerce, it was
deemed necessary to confine the
liability of the owner or agent
arising from the operation of a
ship to the vessel, equipment, and
freight, or insurance, if any, so
that if the shipowner or agent
abandoned the ship, equipment,
and freight, his liability was
extinguished.

2. WORKMEN'S
COMPENSATION
ACT;
PROVISIONS OF CODE OF
COMMERCE
REGARDING
MARITIME
COMMERCE
WITHOUT
EFFECT
IN
APPLICATION OF. The
provisions of the Code of
Commerce regarding maritime
commerce have no room in the
application of the Workmen's
Compensation Act which seeks to
improve, and aims at the
amelioration of, the condition of
laborers and employees. Said Act
creates a liability to compensate
employees and laborers in cases
of injury received by or inflicted
upon them, while engaged in the
performance of their work or
employment, or the heirs and
dependents of such laborers and
employees in the event of death
caused by their employment.
3. ID.;
INDUSTRIAL
EMPLOYEES; OFFICERS OF
MOTOR SHIPS ENGAGED IN
FISHING EXCEPTIONS. The
officers of motor ships engaged in
fishing are industrial employees
within the purview of section 39,
paragraph (d), as amended, for
industrial employment "includes
all employment or work at a trade,
occupation
or
profession

exercised by an employer for the

purpose of gain." The only
exceptions recognized by the
Workmen's Compensation Act are
agriculture, charitable institutions
and domestic service. Even
employees engaged in agriculture
for the operation of mechanical
implements, are entitled to the
benefits
of
the
Workmen's
Compensation Act.
4. ID.; COASTWISE AND
INTERISLAND
TRADE,
MEANING OF; FISHING, WHEN
A TRADE . The term
"coastwise and interisland trade"
does not have such a narrow
meaning as to confine it to the
carriage for hire of passengers
and/or merchandise on vessels
between ports and places in the
Philippines because while fishing
is an industry, if the catch is
brought to a port for sale, it is at
the same time a trade.
HEIRS OF AMPARO
DE LOS SANTOS,
HEIRS OF ERNANIE
DELOS SANTOS,
HEIRS OF
AMABELLA DELOS
SANTOS, HEIRS OF
LENNY DELOS
SANTOS, HEIRS OF

MELANY DELOS
SANTOS, HEIRS OF
TERESA PAMATIAN,
HEIRS OF DIEGO
SALEM, AND RUBEN
REYES, petitioners, vs
. HONORABLE
COURT OF APPEALS
AND COMPANIA
MARITIMA, responden
ts.
Severino Z. Macavinta, Jr. for
petitioners.
Dinglasan Law Office for private
respondent.
SYLLABUS
1. COMMERCIAL LAW; MARITIME
COMMERCE; LIABILITY OF SHIP
AGENT; RULE AND EXCEPTION.
Under Art. 587 of the Code of
Commerce, a shipowner or agent
has the right of abandonment; and by
necessary implication, his liability is
confined to that which he is entitled
as of right to abandon "the vessel
with all her equipment's and the
freight it may have earned during the
voyage" (Yangco v. Laserna, et al.,
73 Phil. 330, 332). Notwithstanding
the passage of the New Civil Code,
Article 587 of the Code of Commerce

is still good law. The reason lies in

the peculiar nature of maritime law is
which is "exclusively real and
hypothecary that operates to limit
such liability to the value of the
vessel, or to the insurance thereon, if
any (Yangco v. Laserna, ibid). As
correctly stated by the appellate
court, "(t)his rule is found necessary
to offset against the innumerable
hazards and perils of a sea voyage
and to encourage shipbuilding and
marine commerce. (Decision, Rollo,
p. 29). Contrary to the petitioners'
supposition, the limited liability
doctrine applies not only to the goods
but also in all cases like death or
injury to passengers wherein the
shipowner or agent may properly be
held liable for the negligent or illicit
acts of the captain (Yangco v.
Laserna, ibid). It must be stressed at
this point that Article 587 speaks only
of situations where the fault or
negligence is committed solely by the
captain.
2. CIVIL LAW; COMMON CARRIER;
TASKED TO OBSERVE EXTRAORDINARY DILIGENCE IN THE
VIGILANCE OVER THE GOODS
AND SAFETY OF ITS
PASSENGERS. In cases where
the shipowner is likewise to be
blamed, Article 587 does not apply
(see Manila Steamship Co., Inc. v.

Abdulhanan, et al., 100 Phil. 32, 38).

Such a situation will be covered by
the provisions of the New Civil Code
on Common Carriers. Owing to the
nature of their business and for
reasons of public policy, common
carriers are tasked to observe
extraordinary diligence in the
vigilance over the goods and for the
safety of its passengers (Article
1733, New Civil Code). Further, they
are bound to carry the passengers
safely as far as human care and
foresight can provide, using the
utmost diligence of very cautious
persons, with a due regard for all the
circumstances (Article 1755, New
Civil Code). Whenever death or
injury to a passenger occurs,
common carriers are presumed to
have been at fault or to have acted
negligently unless they prove that
they observed extraordinary
diligence as prescribed by Articles
1733 and 1755 (Article 1756, New
Civil Code).
3. ID.; ID.; ID.; NOT OBSERVED IN
CASE AT BAR. Maritime presents
evidence of the seaworthy condition
of the ship prior to its departure to
prove that it exercised extraordinary
diligence in this case. M/V Mindoro
was dry-docked for about a month.
Necessary repairs were made on the
ship. Life saving equipment and

navigational instruments were

installed. While indeed it is true that
all these things were done on the
vessel, Maritima, however, could not
present evidence that it specifically
installed a radar which could have
allowed the vessel to navigate safely
for shelter during a storm.
Consequently, the vessel was left at
the mercy of 'Welming' in the open
sea because although it was already
in the vicinity of the Aklan river, it
was unable to enter the mouth of
Aklan River to get into New
Washington, Aklan due to darkness
and the Floripon Lighthouse at the
entrance of the Aklan River was not
functioning or could not be seen at all
(Exh. 3-H, Index of Exhibits, p. 192195; see also Exh. 2-A, ibid, p. 160).
Storms and typhoons are not strange
occurrences. In 1967 alone before
'Welming,' there were about 17
typhoons that hit the country (Exh. M,
Index of Exhibits, p. 115), the latest
of which was typhoon Uring which
occurred on October 20-25, which
cost so much damage to lives and
properties. With the impending threat
of 'Welming,' an important device
such as the radar could have
enabled the ship to pass through the
river and to safety. The foregoing
clearly demonstrates that Maritima's
lack of extraordinary diligence

coupled with the negligence of the

captain as found by the appellate
court were the proximate causes of
the sinking of M/V Mindoro. Hence,
Maritima is liable for the deaths and
injury of the victims.
4. ID.; MORAL DAMAGES;
RECOVERY THEREOF IN AN
ACTION BASED ON BREACH OF
CONTRACT OF
TRANSPORTATION; RULE AND
EXCEPTION; CASE AT BAR.
Reyes' claim for moral damages
cannot be granted inasmuch as the
same is not recoverable in damage
action based on the breach of
contract of transportation under
Articles 2219 and 2220 of the New
Civil Code except (1) where the
mishap resulted in the death of a
passenger and (2) where it is proved
that the carrier was guilty of fraud or
bad faith, even if death does not
result (Rex Taxicab Co., Inc. v.
Bautista, 109 Phil. 712). The
exceptions do not apply in this case
since Reyes survived the incident
and no evidence was presented to
show that Maritima was guilty of bad
faith. Mere carelessness of the
carrier does not per se constitute or
justify an inference of malice or bad
faith on its part (Rex Taxicab Co.,
Inc. v. Bautista, supra).

INTER-ORIENT
MARITIME
ENTERPRISES, INC.,
SEA HORSE SHIP
MANAGEMENT, INC.
and TRENDA WORLD
SHIPPING (MANILA),
INC., petitioners, vs.N
ATIONAL LABOR
RELATIONS
COMMISSION and
RIZALINO D.
TAYONG, respondents
.
SYLLABUS
3. COMMERCIAL LAW; CODE OF
COMMERCE; CAPTAIN'S
CONTROL OF VESSEL AND
REASONABLE DISCRETION AS TO
ITS NAVIGATION. A ship's
captain must be accorded a
reasonable measure of discretionary
authority to decide what the safety of
the ship and of its crew and cargo
specifically requires on a stipulated
ocean voyage. The captain is held
responsible, and properly so, for
such safety. He is right there on the
vessel, in command of its and (it
must be presumed) knowledgeable
as to the specific requirements of

seaworthiness and the particular

risks and perils of the voyage he is to
embark upon. The applicable
principle is that the captain has
control of all departments of service
in the vessel, and reasonable
discretion as to its navigation. It is
the right and duty of the captain, in
the exercise of sound discretion and
in good faith, to do all things with
respect to the vessel and its
equipment and conduct of the
voyage which are reasonably
necessary for the protection and
preservation of the interests under
his charge, whether those be of the
shipowner, charterers, cargo owners
or of underwriters. It is a basic
principle of admiralty law that in
navigating a merchantman, the
master must be left free to exercise
his own best judgment. The
requirements of safe navigation
compel us to reject any suggestion
that the judgment and discretion of
the captain of a vessel may be
confined within a straitjacket, even in
this age of electronic
communications. Indeed, if the ship
captain is convinced, as a
reasonably prudent and competent
mariner acting in good faith that the
shipowner's or ship agent's
instructions (insisted upon by radio or
telefax from their officers thousand of

miles away) will result, in the very

specific circumstances facing him, in
imposing unacceptable risks of loss
or serious danger to ship or crew, he
cannot casually seek absolution from
his responsibility, if a marine casualty
occurs, in such
instructions. Compagnie de
Commerce v. Hamburg is instructive
in this connection. There, this Court
recognized the discretionary
authority of the master of a vessel
and his right to exercise his best
judgment, with respect to navigating
the vessel he commands.
In Compagnie de Commerce, a
charger party was executed
between Compagnie de
Commerce and the owners of the
vesselSambia, under which the
former as charterer loaded on board
the Sambia, at the port of Saigon,
certain cargo destined for the Ports
of Dunkirk and Hamburg in Europe.
The Sambia flying the German flag,
could not, in the judgment of its
master, reach its ports of destination
because war (World War I) had been
declared between Germany and
France. The master of
the Sambia decided to deviate from
the stipulated voyage and sailed
instead for the Port of
Manila. Compagnie de
Commerce sued in the Philippines

for damages arising from breach of

the charter party and unauthorized
sale of the cargo. In affirming the
decision of the trial court dismissing
the complaint, our Supreme Court
held that the master of
the Sambia had reasonable grounds
to apprehend that the vessel was in
danger of seizure or capture by the
French authorities in Saigon was
justified by necessity to elect the
course which the took i.e., to flee
Saigon for the Port of Manila with
the result that the shipowner was
relieved from liability for the deviation
from the stipulated route and from
liability for damage to the cargo.
4. ID.; ID.; COMMERCIAL LAW;
CODE OF COMMERCE; CAPTAIN'S
CONTROL OF VESSEL AND
REASONABLE DISCRETION AS TO
ITS NAVIGATION. "The danger
from which the master of
the Sambia fled a real and not
merely an imaginary one as counsel
for shipper contends. Seizure at the
hands of an 'enemy of the King',
though not inevitable, was a possible
outcome of a failure to leave the port
of Saigon; and we cannot say that
under the conditions existing at the
time when the master elected to flee
from that port, there were no grounds
for a 'reasonable apprehension of
danger' from seizure by the French

authorities, and therefore no

necessity for flight. The word
'necessity' when applied to
mercantile affairs, where the
judgment must in the nature of things
be exercised, cannot, of course,
mean an irresistible compelling
power. what is meant by it in such
cases is the force of circumstances
which determine the course of a man
ought to take. Thus, where by the
force of circumstances, a man has
the duty cast upon him of taking
some action for another, and under
that obligation adopts a course
which, to the judgment of a wise and
prudent man, is apparently the best
for the interest of the persons for
whom he acts in a given emergency,
it may properly be said of the course
so taken that it was in a mercantile
sense necessary to take
it." Compagnie de
Commerce contended that the
shipowner should, at all events, be
held responsible for the deterioration
in the value of the cargo incident to
its long stay on board the vessel from
the date of its arrival in Manila until
the cargo was sold. The Supreme
Court, in rejecting this contention
also, declared that: "But it is clear
that the master could not be required
to act on the very day of his arrival;
or before he had a reasonable

opportunity to ascertain whether he

could hope to carry out his contract
and earn his freight; and that he
should not be held responsible for a
reasonable delay incident to an effort
to ascertain the wishes of the
freighter, and upon failure to secure
prompt advice, to decide for himself
as to the course which he should
adopt to secure the interests of the
absent owner of the property aboard
the vessel. The master is entitled to
delay for such a period as may be
reasonable under the circumstances,
before deciding on the course he will
adopt. he may claim a fair
opportunity of carrying out a contract,
and earning the freight, whether by
repairing or transshipping. should the
repair of the ship be undertaken, it
must be proceeded with diligently;
and if so done, the freighter will have
no ground of compliant, although the
consequent delay be a long one,
unless, indeed, the cargo is
perishable, and likely to be injured by
the delay. Where that is the case, it
ought to be forwarded, or sold, or
given up, as the case may be,
without waiting for repairs. A
shipowner or shipmaster (if
communication with the shipowner is
impossible), will be allowed a
reasonable time in which to decide
what course he will adopt in such

cases as those under discussion;

time must be allowed to him to
ascertain the facts, and to balance
the conflicting interests involved, of
shipowner, cargo owner, underwriter
on ship and freight. But once the time
has elapsed, he is bound to act
promptly according as he has elected
either to repair, or abandon the
voyage, or tranship. If he delays, and
owing to that delay a perishable
cargo suffers damage; he cannot
escape that obligation by pleading
the absence of definite instructions
from the owners of the cargo or their
underwriters, since he has control of
the cargo and is entitled to elect."
A. MAGSAYSAY,
INC., plaintiffappellee, vs.
ANASTACIO
AGAN, defendantappellant.
Custodio A. Villalva for
appellant.
Quijano, Alidio & Azores for
appellee.
SYLLABUS
1. ADMIRALTY LAW;
VESSELS; ACCIDENTAL

STRANDING; AVERAGES.
The law on averages is contained
in the Code of Commerce. Under
that law, averages are classified
into simple or particular and
general or gross. Generally
speaking, simple or particular
averages include all expenses
and damages caused to the
vessel or cargo which have not
inured to the common benefit (Art.
809) and are, therefore, to be
borne only by the owner of the
property which gave rise to the
same (Art. 810); while general or
gross averages include "all the
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" (Art. 811). Being for
the common benefit, gross
averages are to be borne by the
owners of the articles saved (Art.
812).
2. ID.; ID.; ID.;
CLASSIFICATION OF
AVERAGES. In classifying
averages into simple or particular
and general or gross and defining
each class, the Code (Arts. 809
and 811) at the same time
enumerates certain specific cases
as coming specially under one or
the other denomination. While the

expenses incurred in putting a

vessel afloat may well come
under number 2 of article 809
which refers to expenses suffered
by the vessel "by reason of an
accident of the sea or force
majeure" and should therefore
be classified as particular
average, the said expenses do
not fit into any of the specific
cases of general average
enumerated in article 811. No. 6
of this article does mention
"expenses caused in order to float
a vessel," but it specifically refers
to "a vessel intentionally stranded
for the purpose of saving it" and
would have no application where
the stranding was not intentional.
3. ID.; ID.; GENERAL
AVERAGE; ITS REQUISITES.
The following are the requisites
for general average: (1) there
must be a common danger; (2) for
the common safety part of the
vessel or of the cargo or both is
sacrificed deliberately; (3) from
the expenses or damages caused
follows the successful saving of
the vessel and cargo; and (4) the
expenses or damages should
have been incurred or inflicted
after taking proper legal steps and
authority.

4. ID.; ID.; ID.; ID. It is

the deliverance from an
immediate peril, by a common
sacrifice, that constitutes the
essence of general average
(Columbian Insurance Co. of
Alejandria vs. Ashby & Stribling,
13 Peters 331, 10 L. ed. 186).
Where there is no proof that the
stranded vessel had to be put
afloat to save it from an imminent
danger, and what does appear is
that the vessel had to be salvaged
in order to enable it "to proceed to
its port or destination," the
expenses incurred in floating the
vessel do not constitute general
average. It is the safety of the
property, and not of the voyage,
which constitutes the true
foundation of general average.
5. ID.; ID.; ID.; ID. Even
if the salvage operation was a
success, yet if the sacrifice was
for the benefit of the vessel - to
enable it to proceed to its
destination and not for the
purpose of saving the cargo, the
cargo owners are not in law
bound to contribute to the
expense.

INTERNATIONAL
HARVESTER
COMPANY IN
RUSSIA, plaintiffappellee, vs.
HAMBURGAMERICAN
LINE, defendantappellant.
Crossfield & O'Brien for
appellant.
Lawrence & Ross for
appellee.
SYLLABUS
1. ADMIRALTY LAW;
GENERAL AVERAGE; NEUTRAL
CARGO ON INTERNED
VESSEL. Agricultural
machinery on board a merchant
vessel carrying the flag of a
belligerent nation, and belonging
to a subject of a neutral power, is
not subject to general average to
satisfy the costs and expenses
incident to the internment of the
ship in a neutral port. In such
case there is no common danger
to vessel and cargo, and hence
no case for general average.
2. CONTRACT; WAR AS
AFFECTING CONTRACT

BETWEEN SUBJECTS or
BELLIGERENT AND NEUTRAL
NATIONS.--The outbreak of war
between two powers does not
abrogate a contract between a
subject of one of the belligerents
and the subject of a neutral
power; and though the contract
may thus become impossible of
exact performance, it will still be
given effect if it can by any
reasonable construction be
treated as still capable of being
performed in substance.
3. ID.; CONTRACT OF
AFFREIGHTMENT; WAR AS
AFFECTING OBLIGATION OF
SHIP; LIABILITY FOR COST OF
FORWARDING CARGO. In the
spring of 1914 a German vessel
undertook to carry merchandise,
the property of an American
corporation, from Hamburg to
Vladivostock, reserving the right in
case of inability to effect
discharge at the port of
destination to forward the same at
its own expense by some other
means. When the voyage was
almost completed, war broke out
between Germany and Russia,
and the ship put in to the port of
Manila, where it was interned. The
captain did not elect to discharge
the cargo, and refused to

surrender it to the owner, who

recovered possession by means
of an action of replevin. Held:
That while the outbreak of war
absolved the ship from its
obligation to carry the cargo to the
Russian port, it was nevertheless
liable for the cost of forwarding
the cargo by another line, the full
freight having been received by
the ship at the commencement of
the voyage.
4. ID.; ILLEGALITY OF
CONTRACT; STIPULATION
LIMITING JURISDICTION OF
COURTS. A stipulation in a bill
of lading emitted in a foreign
country to the effect that all
disputes arising under the
contract shall be decided
exclusively in the courts of the
country wherein the contract is
made can not have the effect of
defeating the jurisdiction of the
courts of the Philippine Islands, in
and case involving the application
of such contract, and properly
coming before those courts.
6. CONFLICT OF LAW;
CONTRACT MADE IN FOREIGN
COUNTRY; PRESUMPTION AS
TO LAW OF PLACE OF
CONTRACT--When it is proposed
to invoke the laws of a foreign
country as supplying the proper

rules for the interpretation of a

contract, the law upon which
reliance is placed must be
pleaded and proved. Otherwise, it
will be presumed that the law
prevailing in the foreign country is
the same as that which prevails in
this jurisdiction.
COMPAGNIE DE
COMMERCE ET DE
NAVIGATION
D'EXTREME
ORIENT, plaintiffappellant, vs. THE
HAMBURG AMERIKA
PACKETFACHT
ACTIEN
GESELLSCHAFT, def
endant-appellant.
Gilbert, Cohn & Fisher for
plaintiff-appellant.
Crossfield & O'Brien for
defendant-appellant.
SYLLABUS
1. SHIPPING; ALIEN
ENEMY VESSELS; DAYS OF
GRACE AND SAFE CONDUCTS.
The Sixth Convention, adopted
at the Second Hague Peace
Conference (1907), recognized

the practice of granting "days of

grace' and "safe-conducts" to
enemy merchant vessels found in
the port of a belligerent at the
commencement of hostilities, not
as a right, but simply as a
privilege, a delai de faveur, which
may be accorded or refused at
the option of the belligerent.
2. ID.; ID.; ID. The fact
that there was so substantial a
divergence of views among the
conferees representing their
respective governments at the
Second Peace Conference, with
regard to the existence and
binding character of a duty in this
regard under accepted rules of
international law, as to make it
impossible for the conferees to
agree upon a convention setting
forth anything beyond "a pious
wish" in the premises, justifies the
conclusion that thereafter, at
least, adherence to the practice
by a belligerent could not be
demanded for adherence to the
practice inspired by his own
commercial and political interests,
outweighs any advantage he can
hope to gain by a refusal to
recognize the practice as binding
on him.
3. ID.; ID.; ID.; DEVIATION.
The master of a German

vessel, the Sambia which had just

completed loading a cargo of the
rice meal in the French port of
Saigon, at the outbreak of the
present war, for delivery in
Dunkirk or Hamburg, under a
contract of affreightment with a
French shipper, fled, with his
vessel and her cargo and took
refuge in Manila Bay, Held: That
under the circumstances
surrounding the flight of the
vessel, her master had no such
assurance, under any settled rule
of public international law, as to
the immunity of his vessel from
seizure by the French authorities
in Saigon as would justify holding
that it was his duty to remain in
that port, in the hope that he
would be allowed to sail for the
port of destination designated in
the charter partly with a laissezpasser or safe-conduct, which
would secure the safety of his
vessels and cargo en route.

of the Sambia had reasonable

grounds to apprehend danger of
seizure by the French authorities
in the event that the French
Government should decline to
conform to the practice; and the in
the absence of any assurance in
that regard upon which the master
could confidently rely, his duty to
his owner, and to his vessel's flag,
justified him in fleeing from danger
of seizure in the port of an enemy,
to the absolute security of a
neutral port.

4. ID.; ID.; ID.; ID.

Although the Republic of France
appears to have authorized and
directed the grant of "days of
grace" and "safe-conducts," soon
after the outbreak of the war, to
enemy merchant vessels in its
harbours; nevertheless, until such
action had been taken the master

6. ID.; VESSEL IN PORT

OF REFUGE; DISPOSITION OF
CARGO. Under ordinary
circumstances, it may fairly be
presumed in the absence of
instructions from a shipper whose
goods are found aboard a vessel
lying in a port of refuge, whose
master has been compelled to

5. I.D; ID.; ID.; ID. Under

the general provisions of maritime
law, and the express provisions of
the charter party which contained
a mutual exception with relation to
"The act of God, the King's
enemies, etc.," the shipowner was
relieved from liability for the
deviation of the Sambia from the
route prescribed in the charter
party, and the resultant damages
to the cargo.

abandon the attempt to transport

the cargo in his own vessel that
the shipper's interest will be
consulted by forwarding his
property to the port designated by
him in the contract of
affreightment; when practicable,
therefore, the master is bound to
act for the cargo owner in that
way; but when the condition of the
cargo is such as to render it
inadvisable to attempt to tranship,
or if there is ground to believe that
such will be the case before
suitable means of transhipment
can be secured, the duty clearly
rests upon the master to make
such other advantageous
disposition of the property of the
absent shipper as circumstances
will permit.
7. ID.; ID.; ID. Under all
the circumstances as set out in
the opinion in the case at
bar, Held: That the interests of the
absent shipper were consulted by
the sale rather than the tranship
perishable cargo aboard his
vessel.
8. ID.; ID.; ID. A
shipmaster must be allowed a
reasonable time in which to
decide what course he will adopt
as to the disposition of his cargo,
after entering a port of refuge; and

though he must act promptly

thereafter, when the cargo is a
perishable one, neither he nor the
shipowner is responsible for loss
or damage suffered by the cargo
as a result of its detention aboard
the vessel during such time as
may be reasonably necessary to
come to a decision in this regard.
9. ID.; ID.; ID.; FORCE
MAJEURE. Held: That under
all circumstance set out in the
opinion, the master of
the Sambia proceeded with all
reasonable dispatch, and did all
that could be required of prudent
man to protect the interests of the
owner of the cargo aboard his
vessel; so that any losses which
resulted from the detention of the
cargo aboard the Sambia must be
attributed to the act of the "Enemy
of the King," which compelled
the Sambia to flee to a port of
refuge, and made necessary the
retention of the cargo aboard the
vessel at anchor under a tropical
sun, and without proper
ventilation, until it could be
ascertained that the interests of
the absence owner would be
consulted by the sale of this
perishable cargo in the local
market.

10. ID.; ID.; ID.;

ABANDONMENT OF CLAIM FOR
FREIGHT. Where a master
relinquishes the attempt either to
carry on the goods on his ship or
to send them to their destination
in another ship, he thereby wholly
abandons any claim for freight in
respect to them, unless it has
been made payable in advance,
or irrespective of delivery; where
freight is only payable on delivery,
no part is earned until it is
delivered.

seeking affirmative relief, in an

action for the breach of the
charter party instituted in the court
of the Philippine Islands; and
neither party to such an action will
be permitted to submit the issues
raised by the pleadings for
adjudication, without objection,
and then, when unsuccessful
assail the court's jurisdiction on
appeal, in reliance upon a
stipulation in the charter party
which he was at entire liberty to
waive if he so desired.

11. ID.; ID.; ID.; ID.

Carrying the cargo of
the Sambia from Saigon to Manila
was not even a partial
performance of the contract of
affreightment which provided for
its transportation from Saigon to
Europe; and even if it could be
treated as such, the shipowner
would have no claim for freight, in
the absence of any agreement,
express or implied, to make
payment for a partial performance
of the contract.

13. ID.; ID.; QUESTIONS

OF GENERAL AVERAGE.
Under the "York-Antwerp Rules"
of 1890, by reference to which it
was expressly stipulated in the
charter party of the Sambia all
questions of general average
should be settled, general
average is not allowed unless the
loss or damage sought to be
made good as general average
has been incurred for the
"common safety" of ship and
cargo.

12. ID.; CHARTER PARTY;

ACTION FOR BREACH. A
provision in a charter party for the
settlement of disputes by a
reference to arbitration in London
is waived by appearing and
answering without objection, and

14. ID.; ID.; ID. The

following general rule of maritime
law prescribing the conditions
under which a claim for general
average contribution on account
of ship's expenses, cited and
adhered to: "Expenses voluntarily

and successfully incurred or the

necessary consequences of
resolutions voluntarily and
successfully taken, by a person in
charge of a sea adventure, for the
safety of life, ship and cargo,
under the pressure of a danger or
total loss or destruction imminent
and common to them, give, the
ship being saved, a claim to
general average contribution."
15. ID.; FLIGHT OF
VESSEL NOT FOR THE
COMMON SAFETY. In fleeing
from the port of Saigon, and
taking refuge in Manila Bay the
master of the Sambiawas not
acting for the common safety of
the vessel and her cargo. The
French cargo was absolutely
secure from danger of seizure or
confiscation so long as it
remained in the port of Saigon,
and the flight of the vessel was a
measure of precaution adopted
solely and exclusively for the
preservation of the vessel from
the danger of seizure or capture.
16. ID.; MODIFICATION OF
JUDGMENT. So much of the
judgment as provides for the
delivery to the plaintiff of the net
proceeds of the sale of the cargo
(128,977.71) affirmed; but so
much thereof as allowed

damages for a breach of the

charter party (60,841.32)
reversed.
THE MANILA
RAILROAD
CO., plaintiffappellant, vs.
MACONDRAY &
CO., defendantappellant.
SYLLABUS
1. SALVAGE;
RESPECTIVE OBLIGATION OF
SHIP AND CARGO. Where a
ship and its cargo are saved
together, the salvage allowance
should be charged against the
ship and cargo in the proportion of
their respective values, the same
as in case of general average;
and neither is liable of the salvage
due from the other. Therefore,
where a personal action is
brought by the salvor against the
owner of the ship, the liability of
the latter is limited to such part of
the salvage compensation due for
the entire service as is
proportionate to the value of the
ship.
2. ID.; AMOUNT OF
AWARD. In determining the

amount of the award to be

allowed for salvage service the
aim should be to hold out to
seafaring men a fair inducement
to the performance of salvage
services without fixing a scale of
compensation so high as to cause
vessels in need of assistance to
hesitate because of the ruinous
cost. The salvor is entitled as of
bounty to something more than
mere remuneration for his work,
but he interests of commerce
would not be promoted by the
encouragement of exorbitant
charges.
3. ID.; TOWAGE SERVICE.
Towage is not considered in
itself a salvage service of high
order of merit; and when the risk
incident thereto is inconsiderable
and other conditions favorable the
compensation to be allowed
should be moderate in amount.
HONORIO M.
BARRIOS, plaintiffappellant, vs. CARLO
S A. GO THONG &
COMPANY, defendant
-appellee.
Laput & Jardiel for plaintiff-appellant.

Quisumbing & Quisumbing for

defendant-appellee.
SYLLABUS
1. ADMIRALTY; SALVAGE;
REQUISITES. Three elements are
necessary to a valid salvage claim,
namely, (1) a marine peril, (2) service
voluntarily rendered when not
required as an existing duty or from a
special contract, and (3) success in
whole or in part, or that the service
rendered contributed to such
success. (Erlanger & Galinger vs.
Swedish East Asiatic Co., Ltd.. 34
Phil. 178, citing the case of The
Mayflower vs. The Sabine, 101 U.S.
384.)
2. ID.; ID.; ID.; LACK OF MARINE
PERIL; CASE AT BAR. The
circumstances that although the
defendant's vessel was in a helpless
condition due to engine failure, it did
not drift too far from the place where
it was, that the weather was fair,
clear, and good, that there were only
ripples on the sea which was quite
smooth, that there was moonlight,
that although said vessel was drifting
towards the open sea, there was no
danger of its foundering or being
stranded as it was far from any island
or rocks, and its anchor could be
released to prevent such occurrence,

all show that there was no marine

peril, and the vessel was not a quasiderelict, as to warrant valid salvage
claim for the towing of the vessel.
3. ID.; TOWAGE; CONSENTING TO
OFFER TO TOW VESSEL.
Plaintiff's service to defendant can be
considered as a quasi-contract of
"towage" because in consenting to
plaintiff's offer to tow the vessel,
defendant thereby impliedly entered
into a Juridical relation of "towage"
with the owner of the towing vessel,
captained by plaintiff.
4. ID.; ID.; ONLY OWNER OF
TOWING VESSEL, NOT ITS CREW,
ENTITLED TO REMUNERATION.
Where the contract created is one for
towage, only the owner of the towing
vessel, to the exclusion of the crew
of the said vessel, may be entitled to
remuneration.
5. ID.; ID.; ID.; WAIVER BY OWNER.
As the vessel owner had
expressly waived its claim for
compensation for the towage service
rendered to defendant, it is clear that
plaintiff, whose right if at all depends
upon and not separate from the
interest of his employer, is not
entitled to payment for such towage
service.
6. ID.; ID.; ID.; EQUITY MAY NOT
BE INVOKED WHERE THERE IS

AN EXPRESS PROVISION OF LAW

APPLICABLE. There being an
express provision of law (Art. 2142,
Civil Code) applicable to the
relationship created in this case, that
is, that of a quasi-contract of towage
where the crew is not entitled to
compensation separate from that of
the vessel, there is no occasion to
resort to equitable consideration.
SWEET
LINES,
INC., petitioner, vs. THE
HONORABLE COURT OF
APPEALS, MICAELA B.
QUINTOS,
FR.
JOSE
BACATAN,
S.J.,
MARCIANO CABRAS and
ANDREA
VELOSO, respondents.
Felixberto
Leonardo and Ramon
Tuangco for petitioner.
Expedito P. Bugarin for
respondents.
SYLLABUS
1. CIVIL
LAW;
COMMON
CARRIERS; FAILURE TO FULFILL
UNDERTAKING
AND/OR
INTERRUPTION
OF
TRIP;
LIABILITY
FOR
DAMAGES;

EXISTENCE
OF
FORTUITOUS
EVENT. A CRUCIAL FACTOR.
The crucial factor then is the
existence of a fortuitous event or
force majeure. Without it, the right to
damages and indemnity exists
against a captain who fails to fulfill
his undertaking or where the
interruption has been caused by the
captain exclusively. As found by both
Courts below, there was no fortuitous
event or force majeure which
prevented the vessel from fulfilling its
undertaking
of
taking
private
respondents to Catbalogan. In the
first place, mechanical defects in the
carrier are not considered a caso
fortuito that exempts the carrier from
responsibility
(Landingin
vs.
Pangasinan Transportation Co., 33
SCRA 284 [1970]). In the second
place, even granting arguendo that
the engine failure was a fortuitous
event, it accounted only for the delay
in departure. When the vessel finally
left the port of Cebu on July 10,
1972, there was no longer any force
mucure that justified by-passing a
port of call. The vessel was
completely repaired the following day
after it was towed back to Cebu. In
fact, after docking at Tacloban City, it
left the next day for Manila to
complete its voyage.

2. ID.; ID.; LIABILITY; MAY NOT BE

DIMINISHED OR CANCELLED BY
CONDITIONS PRINTED AT THE
BACK OF THE TICKET. In
defense, petitioner cannot rely on the
conditions in small hold print at the
back of the ticket. Even assuming
that those conditions are squarely
applicable to the case at bar,
petitioner did not comply with the
same. It did not cancel the ticket nor
did it refund the value of the tickets to
private respondents. Besides, it was
not the vessel's sailing schedule that
was involved. Private respondents'
complaint is directed not at the
delayed departure the next day but at
the by-passing of Catbalogan, their
destination. Had petitioner notified
them previously, and offered to bring
them to their destination at its
expense, or refunded the value of the
tickets purchased, perhaps, this
controversy would not have arisen.
Furthermore, the conditions relied
upon by petitioner cannot prevail
over Articles 614 and 698 of the
Code of Commerce heretofore
quoted.
3. ID.; ID.; CIVIL LIABILITY OF
OWNER AND SHIP AGENT. The
voyage
to
Catbalogan
was
"interrupted" by the captain upon
instruction of management. The
"interruption" was not due to

fortuitous event or force majeure nor

to disability of the vessel. Having
been caused by the captain upon
instruction of management, the
passengers' right to indemnity is
evident. The owner of a vessel and
the ship agent shall be civilly liable
for the acts of the captain.
4. ID.;
MORAL
DAMAGES;
RECOVERABLE IN THE CASE AT
BAR. Under Article 2220 of the
Civil Code, moral damages are justly
due in breaches of contract where
the defendant acted fraudulently or in
bad faith. Both the Trial Court and
the Appellate Court found that there
was bad faith on the part of
petitioner. That finding of bad faith is
binding on this Court, since it is not
the function of the Court to analyze
and review evidence on this point all
over again, aside from the fact that
the Court finds it faithful to the
meaning of bad faith enunciated
thus: "Bad faith means a breach of a
known duty through some motive or
interest or illwill. Self-enrichment or
fraternal interest, and not personal
illwill, may have been the motive, but
it is malice nevertheless." Under the
circumstances, however, the Court
finds the award of moral damages
excessive and accordingly reduce
them to P3,000.00, respectively, for
each of the private respondents.

5. ID.; ATTORNEY'S FEES; AWARD

HELD REASONABLE. The total
award of attorney's fees of P5,000.00
is in order considering that the case
has reached this Tribunal.
6. ID.; EXEMPLARY DAMAGES;
AWARD DISCRETIONARY UPON
THE COURT. Insofar as
exemplary damages are concerned,
although there was bad faith, the
Court is not inclined to grant them in
addition
to
moral
damages.
Exemplary damages cannot be
recovered as a matter of right; the
Court decides whether or not they
should be adjudicated. The objective
to meet its schedule might have been
called for, but petitioner should have
taken the necessary steps for the
protection of its passengers under its
contract of carriage.
7. ID.;
ACTUAL
OR
COMPENSATORY DAMAGES; NOT
MITIGATED
WHEN
HARM
OUTWEIGHS BENEFIT. Article
2215(2) of the Civil Code invoked by
petitioner is inapplicable herein. The
harm done to private respondents
outweighs any benefits they may
have derived from being transported
to Tacloban instead of being taken to
Catbalogan, their destination and the
vessel's first port of call, pursuant to
its normal schedule.

SYLLABUS
1. AIR CARRIERS; LIABILITY
UNDER THE WARSAW
CONVENTION OF 1929 AND FOR
OTHER BREACHES OF
CONTRACT. Articles 17, 18 and
19 of the Warsaw Convention of
1929 merely declare the airlines
liable for damage in the cases
enumerated therein, if the conditions
specified are present. Neither the
provisions of said articles nor others
regulate or exclude liability for other
breaches of contract by the air
carriers.
2. ID.; ID.; ID.; LIABILITY FOR
NOMINAL AND EXEMPLARY
DAMAGES; CASE AT BAR.
Respondent boarded petitioner's
plane in Manila with a first class
ticket to Tokyo. Upon arrival at
Okinawa, an agent of petitioner
rudely compelled him, in the
presence of other passengers, to
move to the tourist class.
Respondent protested, revealing that
he was traveling in his official

capacity as delegate of the Republic

of the Philippines to a conference in
Tokyo. In order to reach the
conference on time, respondent
obeyed. Held: Having been given
first class accommodation as he took
petitioner's plane in Manila,
respondent was entitled to believe
that this was a confirmation of his
first class reservation and that he
would keep the same until his
ultimate destination, Tokyo. Since
the offense had been committed with
full knowledge of the fact that
respondent was an official
representative of the Republic of the
Philippines, the sum of P20,000.00
awarded as damages may well be
considered as merely nominal. At
any rate, considering that petitioners
agent had acted in a wanton,
reckless and oppressive manner,
said award may, also, be considered
as one for exemplary damages.
(Northwest Airlines, Inc. v.
Cuenca, G.R. No. L-22425,
[August 31, 1965], 122 PHIL
403-407)
|||

A. The petitioner claims

that the lower court erred
in not ruling that Article
28(1) of the Warsaw

Convention violates the

constitutional guarantees
of due process and equal
protection.

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 on
February 13, 1933. The Convention
was concurred in by the Senate,
through its Resolution No. 19, on
May 16, 1950. The Philippine
instrument of accession was signed
by President Elpidio Quirino on
October 13, 1950, and was
deposited with the Polish
government on November 9, 1950.
The Convention became applicable
to the Philippines on February 9,
1951. On September 23, 1955,
President Ramon Magsaysay
issued Proclamation No. 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."

ticket in Manila and a person who

purchases his ticket in San
Francisco. The classification of the
places in which actions for damages
may be brought is arbitrary and
irrational and thus violates the due
process and equal protection
clauses.
It is well-settled that courts will
assume jurisdiction over a
constitutional question only if it is
shown that the essential requisites of
a judicial inquiry into such a question
are first satisfied. Thus, there must
be an actual case or controversy
involving a conflict of legal rights
susceptible of judicial determination;
the constitutional question must have
been opportunely raised by the
proper party and the resolution of the
question is unavoidably necessary to
the decision of the case itself.
6

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 other's acts.

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.
The petitioner contends that Article
28(1) cannot be applied in the
present case because it is
unconstitutional. He argues that
there is no substantial distinction
between a person who purchases a

The treaty which is the subject matter

of this petition was a joint legislativeexecutive 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.
The petitioner's allegations are not
convincing enough to overcome this
presumption. Apparently, the
Convention considered the four

places designated in Article 28 the

most convenient forums for the
litigation of any claim that may arise
between the airline and its
passenger, as distinguished from all
other places. At any rate, we agree
with the respondent court that this
case can be decided on other
grounds without the necessity of
resolving the constitutional issue.
B. The petitioner claims
that the lower court erred
in not ruling that Art.
28(1) of the Warsaw
Convention is
inapplicable because of
a fundamental change in
the circumstances that
served as its basis.

The petitioner goes at great lengths

to show that the provisions in the
Convention were intended to protect
airline companies under "the
conditions prevailing then and which
have long ceased to exist." He
argues that in view of the significant
developments in the airline industry
through the years, the treaty has
become irrelevant. Hence, to the
extent that it has lost its basis for
approval, it has become
unconstitutional.
The petitioner is invoking the doctrine
of rebus sic stantibus. 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 would be
unreasonable." The key element of
this doctrine is the vital change in the
condition of the contracting parties
that they could not have foreseen at
the time the treaty was concluded.
7

(Santos III v. Northwest

Orient Airlines, G.R. No.
101538, [June 23, 1992])
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Certainly, the compensation for the

injury suffered by Dr. Pablo cannot
under
the
circumstances
be
restricted to that prescribed by the
Warsaw Convention for delay in the
transport of baggage.
She is not, of course, entitled to be
compensated for loss or damage to
her luggage. As already mentioned,
her baggage was ultimately delivered
to her in Manila, tardily but safely.
She is however entitled to nominal
damages which, as the law says,
is adjudicated in order that a right of
the plaintiff, which has been violated
or invaded by the defendant, may be
vindicated and recognized, and not
for the purpose of indemnifying the
plaintiff for any loss suffered and
this Court agrees that the respondent
Court of Appeals correctly set the
amount thereof at P40,000.00. As to
the purely technical argument that
the award to her of such nominal
damages is precluded by her

omission to include a specific claim

therefor in her complaint, it suffices
to draw attention to her general
prayer, following her plea for moral
and
exemplary
damages
and
attorney's fees, "for such other and
further just and equitable relief in the
premises," which certainly is broad
enough
to
comprehend
an
application as well for nominal
damages. Besides, petitioner should
have realized that the explicit
assertion, and proof, that Dr. Pablo's
right had been violated or invaded by
it absent any claim for actual or
compensatory damages, the prayer
thereof having been voluntarily
deleted by Dr. Pablo upon the return
to her of her baggage necessarily
raised the issue of nominal
damages.
cdrep

applicability of the Warsaw

convention the airline carrier's liability
for the lost baggage of private
respondent Pangan is limited to
$20.00 per kilo or $600.00, as
stipulated at the back of the ticket as
the latter did not declare a higher
value for his baggage and pay the
corresponding additional charges,
the case of Ong Yiu v. Court of
Appeals (G.R. No. L-40597, June 29,
1979, 91 SCRA 223) is squarely
applicable to the instant case.
2. REMEDIAL LAW; EVIDENCE;
CONCLUSION AND FINDINGS OF
THE TRIAL COURT AND THE
COURT OF APPEALS, REVERSED

(Alitalia
v.
Intermediate
Appellate Court, G.R. No.
71929, [December 4, 1990],
270 PHIL 108-119)
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AND SET ASIDE. The Court set

aside the decision of the trial court
and affirmed by the Court of Appeals,
awarding private respondent's
damages as for and for lost profits
when their contracts to show the
films in Guam and San Francisco,

SYLLABUS
1. WARSAW CONVENTION; CIVIL
LAW; ACTUAL DAMAGES;
LIABILITY OF AIRLINE CARRIER.
On the basis of the stipulations
printed at the back of the Airline
ticket, specifically referring to the

California were cancelled. Applying

the ruling in Mendoza v. Philippine
Airlines, Inc. (90 Phil. 836), petitioner
cannot be held liable for the
cancellation of respondents'
contracts in the absence of showing
that petitioner's attention was called
to the special circumstances

requiring prompt delivery of the

respondent's luggage on or before a
certain date.
(Pan
American
World
Airways, Inc. v. Intermediate
Appellate Court, G.R. No.
70462, [August 11, 1988], 247
PHIL 231-242)
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SYLLABUS
1. CIVIL LAW; DAMAGES; MORAL
AND EXEMPLARY DAMAGES;
BASIS FOR THE AWARD
THEREOF IN THE CASE AT BAR.
The discrimination is obvious and
the humiliation to which private
respondent was subjected is
undeniable. Consequently, the award
of moral and exemplary damages by
the respondent court is in order. At
the time of this unfortunate incident,
the private respondent was a
practicing lawyer, a senior partner of
a big law firm in Manila. He was a
director of several companies and
was active in civic and social
organizations in the Philippines.
Considering the circumstances of
this case and the social standing of
private respondent in the community,
he is entitled to the award of moral
and exemplary damages. However,
the moral damages should be
reduced to P300,000.00, and the

exemplary damages should be

reduced to P200,000.00. This award
should be reasonably sufficient to
indemnify private respondent for the
humiliation and embarrassment that
he suffered and to serve as an
example to discourage the repetition
of similar oppressive and
discriminatory acts.
2. ID.; ID.; MORAL DAMAGES;
PRESENCE OF BAD FAITH
JUSTIFIES AWARD THEREOF.
Petitioner sacrificed the comfort of its
first class passengers including
private respondent Vinluan for the
sake of economy. Such inattention
and lack of care for the interest of its
passengers who are entitled to its
utmost consideration, particularly as
to their convenience, amount to bad
faith which entitles the passenger to
the award of moral damages. More
so in this case where instead of
courteously informing private
respondent of his being downgraded
under the circumstances, he was
angrily rebuffed by an employee of
petitioner.
(Trans World Airlines v. Court
of Appeals, G.R. No. 78656,
[August 30, 1988])
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