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1. Irreconcilable conflict between Clauses 1 Sometime on December 11, 1991, Nestor Angelia
and 9 with regard to the measure of Macondrays delivered to the Edgar Cokaliong Shipping Lines, Inc.
liability (now Cokaliong Shipping Lines), [petitioner] for
Whereas clause 1 contains only an implied undertaking to brevity, cargo consisting of one (1) carton of Christmas
settle in case of loss on the basis of not exceeding $500 per dcor and two (2) sacks of plastic toys, to be transported
freight ton, clause 9 contains an express undertaking to
on board the M/V Tandag on its Voyage No. T-189
scheduled to depart from Cebu City, on December 12, On July 14, 1992, [respondent], as subrogee of
1991, for Tandag, Surigao del Sur. [Petitioner] issued Bill Feliciana Legaspi, filed a complaint anchored on torts
of Lading No. 58, freight prepaid, covering the cargo. against [petitioner], with the Regional Trial Court of
Nestor Angelia was both the shipper and consignee of the Makati City, for the collection of the total principal
cargo valued, on the face thereof, in the amount of amount of P148,500.00, which it paid to Feliciana
P6,500.00. Zosimo Mercado likewise delivered cargo to Legaspi for the loss of the cargo, praying that judgment
[petitioner], consisting of two (2) cartons of plastic toys be rendered in its favor and against the [petitioner].
and Christmas decor, one (1) roll of floor mat and one (1)
bundle of various or assorted goods for transportation ISSUE: 1. W/N Edgar is liable
thereof from Cebu City to Tandag, Surigao del Sur, on 2. What is the basis of liability? Amount in the bill of
board the said vessel, and said voyage. [Petitioner] issued lading or actual amount?
Bill of Lading No. 59 covering the cargo which, on the face RULING:
thereof, was valued in the amount of P14,000.00. Under 1. Yes. The uncontroverted findings of the Philippine
the Bill of Lading, Zosimo Mercado was both the shipper Coast Guard show that the M/V Tandag sank due to a
and consignee of the cargo. fire, which resulted from a crack in the auxiliary engine
fuel oil service tank. Fuel spurted out of the crack and
On December 12, 1991, Feliciana Legaspi insured the dripped to the heating exhaust manifold, causing the
cargo, covered by Bill of Lading No. 59, with the UCPB ship to burst into flames. The crack was located on the
General Insurance Co., Inc., [respondent] for brevity, for side of the fuel oil tank, which had a mere two-inch gap
the amount of P100,000.00 against all risks under Open from the engine room walling, thus precluding
Policy No. 002/91/254 for which she was issued, by constant inspection and care by the crew.
[respondent], Marine Risk Note No. 18409 on said date.
Having originated from an unchecked crack in the fuel
She also insured the cargo covered by Bill of Lading No.
oil service tank, the fire could not have been caused by
58, with [respondent], for the amount of P50,000.00,
force majeure. May refer to Eastern Shipping Lines,
under Open Policy No. 002/91/254 on the basis of which
Inc. v. Intermediate Appellate Court.
[respondent] issued Marine Risk Note No. 18410 on said
date. A stipulation that limits liability is valid as long as it is
not against public policy.
When the vessel left port, it had thirty-four (34) Art. 1749. A stipulation that the common carriers
passengers and assorted cargo on board, including the liability is limited to the value of the goods appearing in
goods of Legaspi. After the vessel had passed by the the bill of lading, unless the shipper or owner declares
Mandaue-Mactan Bridge, fire ensued in the engine room, a greater value, is binding.
and, despite earnest efforts of the officers and crew of the Art. 1750. A contract fixing the sum that may be
vessel, the fire engulfed and destroyed the entire vessel recovered by the owner or shipper for the loss,
resulting in the loss of the vessel and the cargoes therein. destruction, or deterioration of the goods is valid, if it
The Captain filed the required Marine Protest. is reasonable and just under the circumstances, and
has been freely and fairly agreed upon.
Shortly thereafter, Feliciana Legaspi filed a claim, with
2. Bill of lading. The bill of lading subject of the present
[respondent], for the value of the cargo insured under
controversy specifically provides, among others:
Marine Risk Note No. 18409 and covered by Bill of Lading
No. 59. She submitted, in support of her claim, a Receipt, 18. All claims for which the carrier may be liable shall
dated December 11, 1991, purportedly signed by Zosimo be adjusted and settled on the basis of the shippers net
Mercado, and Order Slips purportedly signed by him for invoice cost plus freight and insurance premiums, if
the goods he received from Feliciana Legaspi valued in the paid, and in no event shall the carrier be liable for any
amount of P110,056.00. [Respondent] approved the claim loss of possible profits or any consequential loss.
of Feliciana Legaspi and drew and issued UCPB Check No. The carrier shall not be liable for any loss of or any
612939, dated March 9, 1992, in the net amount of damage to or in any connection with, goods in an
P99,000.00, in settlement of her claim after which she amount exceeding One Hundred Thousand Yen in
executed a Subrogation Receipt/Deed, for said amount, in Japanese Currency (100,000.00) or its equivalent in
favor of [respondent]. She also filed a claim for the value any other currency per package or customary freight
of the cargo covered by Bill of Lading No. 58. She unit (whichever is least) unless the value of the goods
submitted to [respondent] a Receipt, dated December 11, higher than this amount is declared in writing by the
1991 and Order Slips, purportedly signed by Nestor shipper before receipt of the goods by the carrier and
Angelia for the goods he received from Feliciana Legaspi inserted in the Bill of Lading and extra freight is paid
valued at P60,338.00. [Respondent] approved her claim as required.
and remitted to Feliciana Legaspi the net amount of In the present case, the stipulation limiting petitioners
P49,500.00, after which she signed a Subrogation liability is not contrary to public policy. In fact, its just
Receipt/Deed, dated March 9, 1992, in favor of and reasonable character is evident. The
[respondent]. shippers/consignees may recover the full value of the
goods by the simple expedient of declaring the true value unless the latter is at fault.
of the shipment in the Bill of Lading. Other than the 3. Both the TC and IAC found that there was
payment of a higher freight, there was nothing to stop ACTUAL FAULT of the carrier as shown by
them from placing the actual value of the goods therein. In LACK OF DILIGENCE based on the fact that
fact, they committed fraud against the common carrier by when the smoke was noticed, the fire was
deliberately undervaluing the goods in their Bill of Lading, already big and must have been existing for 24
thus depriving the carrier of its proper and just transport hrs and that the no regular inspection was
fare. made as to the condition of the cargoes.
It is well to point out that, for assuming a higher risk (the 4. Other matters:
alleged actual value of the goods) the insurance company a. Liability of carrier was decreased to the
was paid the correct higher premium by Feliciana Legaspi; set amount of COGSA to $500 per
while petitioner was paid a fee lower than what it was package
entitled to for transporting the goods that had been b. Attorneys fees were decreased from35k
deliberately undervalued by the shippers in the Bill of to 5k for Development Insurance
Lading. Between the two of them, the insurer should bear
the loss in excess of the value declared in the Bills of
Lading. FACTS:
Eastern Shipping Lines, Inc. v. The Nisshin Fire and (G.R. No. L-69044): a vessel operated by petitioner
Marine Insurance Co., et al., supra. Eastern Shipping Lines, Inc., loaded at Kobe, Japan
Facts: This is a consolidation of three cases concerning for transportation to Manila, 5000 pieces of calorized
the same instance filed by respondents Nisshin Fire and lance pipes in 28 packages consigned to Philippine
Marine Insurance, Dowa Fire and Marine Insurance and Blooming Mills Co., Inc., and 7 cases of spare parts
Development Insurance and Surety Corp. consigned to Central Textile Mills, Inc.; both sets of
M/S ASIATICA, operated by petitioner Eastern Shipping goods were insured with Development Insurance and
loaded several articles that were insured by private Surety Corp.
respondents. Enroute from Japan to Manila, the vessel (G.R. No. 71478): the same vessel took on board 128
caught fire and sank, resulting in the total loss of ship and cartons of garment fabrics and accessories, in 2
cargo. The respondent Insurers paid the corresponding containers, consigned to Mariveles Apparel
marine insurance values to the concerned consignees and Corporation, and two cases of surveying instruments
were thus subrogated unto the rights of the latter as the consigned to Aman Enterprises and General
insured. Merchandise
Eastern denied liability on the principal grounds that the the vessel caught fire and sank, resulting in the total
fire which caused the sinking of the ship is an exempting loss of ship and cargo
circumstance under COGSA.
Issues: ISSUES: 1. which law should govern the Civil Code
3. Which law should govern the Civil Code provisions provisions on Common carriers or the Carriage of
on common carriers or COGSA? Goods by Sea Act?; 2. who has the burden of proof to
show negligence of the carrier? 3. what is the extent of
Held: the carriers liability?
1. Applicable law the law of the country to which HELD: 1. The law of the country to which the goods
the goods are to be transported governs the liability are to be transported governs the liability of the
of the common carriers in case of their loss, common carrier in case of their loss, destruction or
destruction or deterioration. Hence, the Civil Code deterioration. As the cargoes were transported from
of the Philippines must govern but in matters not Japan to the Philippines, the liability of Petitioner
regulated by the said Code, the Code of Commerce Carrier is governed primarily by the Civil Code.
and COGSA (being a special law) is suppletory to However, in all matters not regulated by said Code, the
the provisions of the Code. rights and obligations of common carrier shall be
2. The civil code only exculpates a carrier if the loss is governed by the Code of Commerce and by special
due to a fortuitous event. Fire may not be laws. Thus, the Carriage of Goods by Sea Act, a special
considered a natural disaster or calamity. It does law, is suppletory to the provisions of the Civil Code.
not fall within the category of an act of God unless 2. Article 1735 of the Civil Code provides that all cases
caused by lighting or by other natural disaster or than those mention in Article 1734, the common
calamity. As the peril is not comprehended within carrier shall be presumed to have been at fault or to
the exception, the common carrier shall be have acted negligently, unless it proves that it has
presumed to have been at fault, unless it has observed the extraordinary diligence required by law.
proved that extraordinary diligence has been The burden is upon Eastern Shipping Lines to prove
observed. On the other hand, COGSA considers that it has exercised the extraordinary diligence
that the carriers are not liable for loss due to fire
required by law. proven petitioners' claim that the loss or the deterioration
Note: fire not considered a natural disaster or calamity of the goods was due to pre-shipment damage.
within the contemplation of Art. 1734 for it arises almost
invariably from some act of man or by human means; it ISSUES: Whether petitioners have overcome the
does not fall within the category of an act of God unless presumption of negligence of a common carrier
caused by lightning or by other natural disaster or calamity RULING:
having failed to discharge the burden of proving that it had
No. A review of the records and more so by the evidence
exercised the extraordinary diligence required by law, shows
Eastern Shipping Lines cannot escape liability for the loss
of the cargo First, as stated in the Bill of Lading, petitioners received
As it was at fault, it cannot seek the protective mantle of the subject shipment in good order and condition in
Hamburg, Germany.
Sec. 4(2) of Carriage of Goods by Sea Act which provides:
Neither the carrier nor the ship shall be responsible for Second, prior to the unloading of the cargo, an
loss or damage arising or resulting from x x x (b) Fire, Inspection Report prepared and signed by
unless caused by the actual fault or privity of the carrier. representatives of both parties showed the steel bands
there was actual fault of the carrier shown by lack of broken, the metal envelopes rust-stained and heavily
diligence in that when the smoke was noticed, the fire was buckled, and the contents thereof exposed and rusty.
already big; that the fire must have started 24 hours before Third, Bad Order Tally Sheet No. 154979 issued by
the same was noticed; and that after the cargoes were Jardine Davies Transport Services, Inc., stated that
stored in the hatches, no regular inspection was made as to the four coils were in bad order and condition.
their condition during the voyage. Normally, a request for a bad order survey is made in
3. See Art. 1749. case there is an apparent or a presumed loss or
G.R. No. 69044: no stipulation in the Bills of Lading damage.
limiting the carriers liability for the loss or destruction of Fourth, the Certificate of Analysis stated that, based
the goods; no declaration of a higher value of the goods; on the sample submitted and tested, the steel sheets
Hence, Eastern Shipping Lines liability should not exceed found in bad order were wet with fresh water.
US $500 per package (as provided in 4(5) of the COGSA), Fifth, petitioners -- in a letter addressed to the
or its peso equivalent, at the time of payment of the value Philippine Steel Coating Corporation and dated
of the goods lost, but in no case more than the amount of October 12, 1990 -- admitted that they were aware of
damage actually sustained. the condition of the four coils found in bad order and
condition.
Belgian Overseas Chartering and Shipping, N.V. v. Phil
Further, petitioners failed to prove that they observed
First Insurance Co., supra.
the extraordinary diligence and precaution which the
DOCTRINE: Proof of the delivery of goods in good order to
law requires a common carrier to know and to follow
a common carrier and of their arrival in bad order at their
to avoid damage to or destruction of the goods
destination constitutes prima facie fault or negligence on the
entrusted to it for safe carriage and delivery.
part of the carrier. If no adequate explanation is given as to
how the loss, the destruction or the deterioration of the goods True, the words "metal envelopes rust stained and
happened, the carrier shall be held liable therefor. slightly dented" were noted on the Bill of Lading;
however, there is no showing that petitioners
FACTS: exercised due diligence to forestall or lessen the
Shipper: CMC Trading A.G. loss. The master of the vessel should have known at
Carrier: BELGIAN OVERSEAS CHARTERING AND the outset that metal envelopes in the said state would
SHIPPING N.V. eventually deteriorate when not properly stored while
Subject: coils of various Prime Cold Rolled Steel sheets in transit.The master of the vessel and his crew should
Consignee: Philippine Steel Trading Corporation have undertaken precautionary measures to avoid
Insurer: PHILIPPINE FIRST INSURANCE CO., INC. possible deterioration of the cargo. But none of these
measures was taken.
Goods found to be in bad order. Belgian refused to pay. Thus, In their attempt to escape liability, petitioners further
Phil First did. Impugning the propriety of the suit against contend that they are exempted from liability under
them, defendants-appellees imputed that the damage and/or Article 1734(4) of the Civil Code. They cite the
loss was due to pre-shipment damage, to the inherent nature, notation "metal envelopes rust stained and slightly
vice or defect of the goods, or to perils, danger and accidents dented" printed on the Bill of Lading as evidence that
of the sea, or to insufficiency of packing thereof, or to the act the character of the goods or defect in the packing or
or omission of the shipper of the goods or their the containers was the proximate cause of the damage
representatives. From the evidence on record, it cannot be reasonably
concluded that the damage to the four coils was due to
RTC dismissed. CA ruled that Belgian liable. Failed to the condition noted on the Bill of
overcome presumption of negligence. Belgian inadequately Lading.Theaforecitedexception refers to cases when
goods are lost or damaged while in transit as a result of alleged failure of PAL to observe extraordinary
the natural decay of perishable goods or the fermentation diligence in the vigilance and carriage of his luggage.
or evaporation of substances liable therefor, the After trial the municipal court of Zamboanga City
necessary and natural wear of goods in transport, defects rendered judgment ordering PAL to pay Shewaram
in packages in which they are shipped, or the natural P373.00 as actual damages, P100.00 as exemplary
propensities of animals. None of these is present in the damages, P150.00 as attorneys fees, and the costs of
instant case. the action. PAL appealed to the CFI of Zamboanga
Further, even if the fact of improper packing was known City. After hearing the CFI of Zamboanga City
to the carrier or its crew or was apparent upon ordinary modified the judgment of the inferior court by
observation, it is not relieved of liability for loss or injury ordering PAL to pay Shewaram only the sum of
resulting therefrom, once it accepts the goods P373.00 as actual damages, with legal interest from 6
notwithstanding such condition. May 1960, and the sum of P150.00 as attorneys fees,
eliminating the award of exemplary damages. From
May 2nd at 3rd issue pa pero di konasinama. Notice of loss.
the decision of the CFI of Zamboanga City, PAL
Dapat within 3 days dawsiyanagfile, 1 yr prescription if
appeals to the Supreme Court on a question of law.
there was an inspection. Limited liability. No stipulation
The Supreme Court affirmed the decision appealed
in the bill of lading, Letter of credit attached to the bill of
from, with costs against PAL.
lading does not count.
1. Extraordinary diligence required of common
Shewaram v. PAL, 17 SCRA 606 (1966) carrier PAL is a common carrier. As such common
Facts: Philippine Airlines (PAL) is a common carrier carrier PAL, from the nature of its business and for
engaged in air line transportation in the Philippines, reasons of public policy, is bound to observe
offering its services to the public to carry and transport extraordinary diligence in the vigilance over the goods
passengers and cargoes from and to different points in and for the safety of the passengers transported by it
the Philippines. Parmanand Shewaram was, on 23 according to the circumstances of each case. Herein,
November 1959, a paying passenger with ticket 4-30976, The suitcase of Shewaram was tampered, and the
on PALs aircraft flight 976/910 from Zamboanga City transistor radio and the camera contained therein
bound for Manila. On said date, he checked in 3 pieces of were lost. As the loss of the transistor radio and the
baggages a suitcase and two 2 other pieces, The camera of Shewaram, costing P373.00 (The transistor
suitcase was mistagged by PALs personnel in Zamboanga radio costs P197.00 and the camera costs P176.00),
City, as I.G.N. (for Iligan) with claim check B-3883, was due to the negligence of the employees of PAL, it
instead of MNL (for Manila). When Shewaram arrived in is clear that PAL should be held liable for the payment
Manila on the same date, his suitcase did not arrive with of said loss.
his flight because it was sent to Iligan. He made a claim 2. Condition of carriage printed at the back of plane
with PALs personnel in Manila airport and another ticket stub The conditions of carriage printed at the
suitcase similar to his own which was the only baggage back of the plane ticket stub, which conditions are
left for that flight, the rest having been claimed and embodied in Domestic Tariff Regulations 2, which
released to the other passengers of said flight, was given was filed with the Civil Aeronautics Board. One of
to Shewaram for him to take delivery but he did not and those conditions, provides as follows: The liability, if
refused to take delivery of the same on the ground that it any, for loss or damage to checked baggage or for
was not his, alleging that all his clothes were white and delay in the delivery thereof is limited to its value and,
the National transistor 7 and a Rollflex camera were not unless the passenger declares in advance a higher
found inside the suitcase, and moreover, it contained a valuation and pay an additional charge therefor, the
pistol which he did not have nor placed inside his suitcase value shall be conclusively deemed not to exceed
(the suitcase belonged to a certain Del Rosario). After P100.00 for each ticket.
inquiries made by PALs personnel in Manila from 3. Article 1750 NCC Article 1750 of the New Civil Code
different airports where the suitcase in question must provides that A contract fixing the sum that may be
have been sent, it was found to have reached Iligan and recovered by the owner or shipper for the loss,
the station agent of the PAL in Iligan caused the same to destruction, or deterioration of the goods is valid, if it
be sent to Manila for delivery to Mr. Shewaram and is reasonable and just under the circumstances, and
which suitcase belonging to Shewaram arrived in Manila has been fairly and freely agreed upon. In accordance
airport on 24 November 1959. When Shewarams suitcase with Article 1750 of the New Civil Code, the pecuniary
arrived in Manila, he was informed by Mr. Tomas Blanco, liability of a common carrier may, by contract, be
Jr., the acting station agent of the Manila airport of the limited to a fixed amount. It is required, however, that
arrival of his suitcase but of course minus his Transistor the contract must be reasonable and just under the
Radio 7 and the Rollflex camera. Shewaram made circumstances and has been fairly and freely agreed
demand for these 2 items or for the value thereof but the upon.
same was not complied with by PAL. Before the 4. Requirements of Article 1750 must be complied
municipal court of Zamboanga City, Shewaram instituted with before common carrier may claim limitation of
an action to recover damages suffered by him due to the liability The requirements provided in Article 1750 of
the New Civil Code must be complied with before a the absence of statute, it is settled by the weight of
common carrier can claim a limitation of its pecuniary authority in the United States, that whatever
liability in case of loss, destruction or deterioration of the limitations against its common-law liability are
goods it has undertaken to transport. Herein, the permissible to a carrier, it cannot limit its liability for
requirements of said article have not been met. It can not injury to or loss of goods shipped, where such injury
be said that Shewaram had actually entered into a or loss is caused by its own negligence. This is the
contract with PAL, embodying the conditions as printed common law doctrine and it makes no difference that
at the back of the ticket stub that was issued by PAL to there is no statutory prohibition against contracts of
Shewaram. The fact that those conditions are printed at this character.
the back of the ticket stub in letters so small that they are 10. Corpus Juris, volume 10, p. 154; Paragraph 196.bb,
hard to read would not warrant the presumption that Considerations on which Rule Based Paragraph
Shewaram was aware of those conditions such that he 196.bb (Considerations on which Rule Based)
had fairly and freely agreed to those conditions. provides that The rule, it is said, rests on
Inasmuch as passengers do not sign the ticket, much less considerations of public policy. The undertaking is to
did Shewaram sign his ticket when he made the flight on carry the goods, and to relieve the shipper from all
23 November 1959, Shewaram is not, and can not be, liability for loss or damage arising from negligence in
bound by the conditions of carriage found at the back of performing its contract is to ignore the contract itself.
the ticket stub issued to him when he made the flight on The natural effect of a limitation of liability against
PALs plane. negligence is to induce want of care on the part of the
5. Article 1734 NCC Article 1734 of the Civil Code carrier in the performance of its duty. The shipper and
provides that Common carriers are responsible for the the common carrier are not on equal terms; the
loss, destruction, or deterioration of the goods, unless the shipper must send his freight by the common carrier,
same is due to any of the following causes only: (1) Flood, or not at all; he is therefore entirely at the mercy of
storm, earthquake, or other natural disaster or calamity; the carrier unless protected by the higher power of the
(2) Act of the public enemy in war, whether international law against being forced into contracts limiting the
or Civil; (3) Act or omission of the shipper or owner of the carriers liability. Such contracts are wanting in the
goods; (4) The character of the goods or defects in the element of voluntary assent.
packing or in the containers; and (5) Order or act of 11. Corpus Juris, volume 10, p. 154; Paragraph 197.cc,
competent public authority. Application and Extent of Rule, Negligence of servants
6. Article 1735 NCC Article 1735. of the Civil Code Paragraph 197.cc (Application and Extent of Rule)
provides that In all cases other than those mentioned in provides that (aa) Negligence of Servants. The rule
Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods prohibiting limitation of liability for negligence is
are lost, destroyed or deteriorated, common carriers are often stated as a prohibition of any contract relieving
presumed to have been at fault or to have acted the carrier from loss or damage caused by its own
negligently, unless they prove that they observed negligence or misfeasance, or that of its servants; and
extraordinary diligence as required in Article 1733. it has bean specifically decided in many cases that no
7. Carrier cannot limit liability for injury caused by its contract limitation will relieve the carrier from
own negligence In the case of Ysmael and Co. vs. responsibility for the negligence, unskillfulness, or
Barretto, 51 Phil. 90, the Court had laid down the rule carelessness of its employees.
that the carrier can not limit its liability for injury to or
loss of goods shipped where such injury or loss was Northwest Airlines, Inc. v. Cuenca, 14 SCRA 1063
caused by its own negligence. (1965)
8. Corpus Juris, volume 10, p. 154; Paragraph 194.6, FACTS
Reasonableness of Limitation Paragraph 194.6. Respondent Nicolas L. Cuenca (Cuenca) was the
(Reasonableness of Limitation) provides that The Commissioner of Public Highways; he was the
validity of stipulations limiting the carriers liability is to official delegate of the Philippines to a conference
be determined by their reasonableness and their in Tokyo and, thus, he purchased a first class ticket
conformity to the sound public policy, in accordance with from petitioner Northwest Airlines, Inc.
which the obligations of the carrier to the public are (Northwest).
settled. It cannot lawfully stipulate for exemption from o His ticket was marked W/L meaning he
liability, unless such exemption is just and reasonable, was waitlisted but his attention was never called
and unless the contract is freely and fairly made. No thereto and he wasnt advised what it meant.
contractual limitation is reasonable which is subversive of Cuenca was given first class accommodation
public policy. upon boarding the plane in Manila but, upon
9. Corpus Juris, volume 10, p. 154; Paragraph 195.7(a), arrival at Okinawa, he was transferred to the tourist
What Limitations of Liability Permissible, Negligence class.
Paragraph 195. 7 (What Limitations of Liability o Although he revealed that he was traveling
Permissible) provides that a. Negligence (1) Rule in in his official capacity, an agent of Northwest
America (a) In Absence of Organic or Statutory rudely compelled him in the presence of other
Provisions Regulating Subject aa. Majority Rule. In
passengers to move, over his objection, to the Subsequently, on November 21, 1981, Chiok took his
tourist class, under threat of otherwise leaving him trip from Manila to Taipei using the CAL ticket. Before
in Japan. he left for said trip, the trips covered by the ticket were
Cuenca brought suit in the CFI in Manila which pre-scheduled and confirmed by the former. When he
held Northwest liable for damages; this was affirmed arrived in Taipei, he went to the CAL office and
by the CA. confirmed his Hongkong to Manila trip on board PAL
Flight No. PR 311. The CAL office attached a yellow
ISSUES/HELD sticker indicating that his flight status was OK.
Does Cuenca have a cause of action against When Chiok reached Hongkong, he went to the PAL
Northwest? YES. office and sought to reconfirm his flight back to
Is the award of nominal damages proper? YES. Manila. The PAL office also confirmed his return trip
on board Flight No. PR 311 and attached its own
RATIONALE sticker.
On November 24, 1981, Chiok proceeded to Hongkong
1ST ISSUE
International Airport for his return trip to
The instances specified in Arts. 17-19 of the
Manila. However, upon reaching the PAL counter,
Warsaw Convention merely declare the carrier liable
Chiok saw a poster stating that PAL Flight No. PR 311
for damages in the enumerated cases, if the conditions
was cancelled due to typhoon in Manila. He was then
therein specified are present.
informed that all the confirmed ticket holders of PAL
Neither said provisions nor others in the
Flight No. PR 311 were automatically booked for the
aforementioned Convention regulate or exclude next flight the following day.
liability for other breaches of contract by the carrier. On November 25, 1981, Chiok was not able to board the
Otherwise, an air carrier would be exempt from any plane because his name did not appear in PALs
liability for damages in the event of its absolute refusal, computer list of passengers. Chiok then sought to
in bad faith, to comply with a contract of carriage. recover his luggage but found only two and realized
Thus, Cuenca has a cause of action for breach of that his new Samsonite luggage was missing which
contract against Northwest. contained cosmetics worth HK$14,128.80
2ND ISSUE He then proceeded to PAL and confronted the
The award of nominal damages is proper reservation officer who previously confirmed his flight
considering that the CA has adjudicated no back to Manila. However, the reservation officer
compensatory, moral, and exemplary damages to showed him that his name was on the list.
Cuenca. Chiok then decided to use his CAL ticket and asked
Also, it is proper considering the following PALs reservation officer if he could use the ticket to
circumstances: book him for the said flight; The latter, once again,
o Cuenca was never advised that he was booked and confirmed the formers trip on a flight
merely waitlisted; scheduled to depart that evening
o After having been given first class Later, Chiok went to the PAL check-in counter and it
accommodation in Manila, Cuenca was entitled to was Carmen Chan, PALs terminal supervisor who
believe that his first class reservation was attended to him. As this juncture, Chiok had already
confirmed and would continue until his ultimate placed his travel documents, including his clutch bag,
destination, Tokyo; on top of the PAL check-in counter.Thereafter, Carmen
o Notwithstanding this, Northwest rudely directed PAL personnel to transfer counters. In the
breached the contract, even with full knowledge of ensuing commotion, Chiok lost his clutch bag
the fact that Cuenca was an official representative containing the following, to wit: (a) $2,000.00; (b)
of the Philippines; HK$2,000.00; (c) Taipei $8,000.00;
o Northwest never explained that the person (d) P2,000.00; (e) a three-piece set of gold (18 carats)
to whom Cuencas first class seat was given had a cross pens valued atP3,500; (f) a Cartier watch worth
better right thereto. about P7,500.00; (g) a tie clip with a garnet birthstone
At any rate, considering the Northwests agent had and diamond worth P1,800.00; and (h) a [pair of]
acted in a wanton, reckless, and oppressive manner, Christian Dior reading glasses. Subsequently, he was
said award may also be considered as one for placed on stand-by and at around 7:30 p.m., PAL
exemplary damages. personnel informed him that he could now check-in
Consequently, Chiok as plaintiff, filed a Complaint on
China Airlines v. Chiok, 407 SCRA 432 (2003) November 9, 1982 for damages, against PAL and CAL,
Facts: On September 18, 1981, Daniel Chiok purchased as defendants, docketed as Civil Case No. 82-13690,
from China Airlines, Ltd. (CAL for brevity) a passenger with Branch 31, Regional Trial Court, National Capital
ticket for air transportation covering Manila-Taipei- Judicial Region, Manila.
Hongkong-Manila. Said ticket was exclusively endorsable RTC: held CAL and PAL jointly and severally liable to
to Philippine Airlines, Ltd. (PAL for brevity) respondent but didnt rule on respective cross-claims
CA: affirmed RTCs decision and debunked petitioners
claim that it had merely acted as an issuing agent for the transportation was between petitioner and
ticket covering HK-Manila leg; Cited the decision in KLM respondent, with the former endorsing to PAL
Royal Dutch Airlines v CA: the Hong Kong-to-Manila segment of the
Article 30 of the Warsaw providing that in case of journey. Such contract of carriage has always
transportation to be performed by various successive been treated in this jurisdiction as a single
carriers, the passenger can take action only against the operation. This jurisprudential rule is
carrier who performed the transportation during which supported by the Warsaw Convention, to which
the accident or the delay occurred presupposes the the Philippines is a party, and by the existing
occurrence of either an accident or delay in the course of practices of the International Air Transport
the air trip, and does not apply if the damage is caused by Association (IATA).
the willful misconduct on the part of the carriers employee Article 1, Section 3 of the Warsaw Convention
or agent acting within the scope of his employment. states:
On PALs appeal, CA ruled that the airlines negligence was
Transportation to be performed by several successive
the proximate cause of the incident since in spite of the
air carriers shall be deemed, for the purposes of this
confirmations he had secured, his name didnt appear in
Convention, to be one undivided transportation, if it
the list of passengers
has been regarded by the parties as a single operation,
Issues:
whether it has been agreed upon under the form of a
5. W/N CA committed judicial misconduct in finding
single contract or of a series of contracts, and it shall
liability against CAL on the basis of misquotation
not lose its international character merely because one
from KLM Royal Dutch v CA and in magnifying its
contract or a series of contracts is to be performed
misconduct by denying CALs motion for
entirely within a territory subject to the sovereignty,
reconsideration on a mere syllabus, unofficial at
suzerainty, mandate, or authority of the same High
that;
Contracting Party.
6. W/N CAL is liable for damages;
Ruling: Article 15 of IATA-Recommended Practice
Yes, CA committed a lapse when it relied merely on the similarly provides: Carriage to be performed by
several successive carriers under one ticket, or under a
unofficial syllabus of our ruling in KLM v. C.A Indeed,
ticket and any conjunction ticket issued therewith, is
lawyers and litigants are mandated to quote decisions
regarded as a single operation.
of this Court accurately. However, since this case is not
administrative in nature, we cannot rule on the CA In American Airlines v. Court of Appeals, we have
justices administrative liability, if any, for this noted that under a general pool partnership agreement,
lapse. In the case at bar, we can only determine the ticket-issuing airline is the principal in a contract of
whether the error in quotation would be sufficient to carriage, while the endorsee-airline is the agent.
reverse or modify the CA Decision. Likewise, as the principal in the contract of
carriage, the petitioner in British Airways v. Court of
In the instant case, the CA ruled that under the Appeals was held liable, even when the breach of
contract of transportation, petitioner -- as the contract had occurred, not on its own flight, but on that
ticket-issuing carrier (like KLM) -- was liable of another airline. The Decision followed our ruling
regardless of the fact that PAL was to perform or in Lufthansa German Airlines v. Court of Appeals, in
had performed the actual carriage. It elucidated on which we had held that the obligation of the ticket-
this point as follows: issuing airline remained and did not cease, regardless
By the very nature of their contract, defendant- of the fact that another airline had undertaken to carry
appellant CAL is clearly liable under the contract of the passengers to one of their destinations.
carriage with [respondent] and remains to be so, In the instant case, following the jurisprudence
regardless of those instances when actual carriage was to cited above, PAL acted as the carrying agent of CAL. In
be performed by another carrier. The issuance of a the same way that we ruled against British Airways and
confirmed CAL ticket in favor of [respondent] covering his Lufthansa in the aforementioned cases, we also rule
entire trip abroad concretely attests to this. This also that CAL cannot evade liability to respondent, even
serves as proof that defendant-appellant CAL, in effect though it may have been only a ticket issuer for the
guaranteed that the carrier, such as defendant-appellant Hong Kong-Manila sector.
PAL would honor his ticket, assure him of a space therein
and transport him on a particular segment of his trip. Santos, III v. CA, 210 SCRA 256 (1992)
Notwithstanding the errant quotation, we have INTERNATIONAL LAW: Warsaw Convention is
found after careful deliberation that the assailed constitutional, a treaty commitment voluntarily
Decision is supported in substance by KLM v. assumed by the Philippine government and, as such,
CA. The misquotation by the CA cannot serve as has the force and effect of law in this country.
basis for the reversal of its ruling.
INTERNATIONAL LAW: Warsaw Convention,
Yes, CAL is liable for damages;
when applicable: To all "international
It is significant to note that the contract of air
transportations of persons by aircraft for hire." Whether through its Resolution No. 19, on May 16, 1950. The
the transportation is "international" is determined by the Philippine instrument of accession was signed by
contract of the parties, which in the case of passengers is President Elpidio Quirino on October 13, 1950, and was
the ticket. When the contract of carriage provides for the deposited with the Polish government on November 9,
transportation of the passenger between certain 1950. The Convention became applicable to the
designated terminals "within the territories of two High Philippines on February 9, 1951. On September 23,
Contracting Parties," the provisions of the Convention 1955, President Ramon Magsaysay issued Proclamation
automatically apply and exclusively govern the rights and No. 201, declaring our formal adherence thereto. "to
liabilities of the airline and its passenger. the end that the same and every article and clause
INTERNATIONAL LAW: Warsaw Convention, thereof may be observed and fulfilled in good faith by
jurisdiction: Place of Destination vis-a-vis Agreed the Republic of the Philippines and the citizens
Stopping Place: The contract is a single undivided thereof."
operation, beginning with the place of departure and
ending with the ultimate destination. The use of the The Convention is thus a treaty commitment
singular in this expression indicates the understanding of voluntarily assumed by the Philippine government and,
the parties to the Convention that every contract of as such, has the force and effect of law in this country.
carriage has one place of departure and one place of
destination. An intermediate place where the carriage may Does the Warsaw Convention apply in this case?
be broken is not regarded as a "place of destination."
By its own terms, the Convention applies to all
international transportation of persons performed by
FACTS: aircraft for hire.
Petitioner is a minor and a resident of the Philippines. International transportation is defined in paragraph
Private respondent Nortwest Orient Airlines (NOA) is a (2) of Article 1 as follows:
foreign corporation with principal office in Minnesota,
U.S.A. and licensed to do business and maintain a branch (2) For the purposes of this convention, the expression
office in the Philippines. The petitioner purchased from "international transportation" shall mean any
NOA a round-trip ticket in San Francisco, U.S.A. In transportation in which, according to the contract
December 19, 1986, the petitioner checked in the at the made by the parties, the place of departure and the
NOA counter in the San Francisco airport for his departure place of destination, whether or not there be a break in
to Manila. Despite a previous confirmation and re- the transportation or a transshipment, are situated
confirmation, he was informed that he had no reservation [either] within the territories of two High Contracting
for his flight for Tokyo to Manila. He therefore had to be Parties . . .
wait-listed. On March 12, 1987, the petitioner sued NOA
for damages in RTC Makati. NOA moved to dismiss the Whether the transportation is "international" is
complaint on the ground of lack of jurisdiction. determined by the contract of the parties, which in the
case of passengers is the ticket. When the contract of
ISSUE: carriage provides for the transportation of the
Whether or not Article 28 (1) of the Warsaw passenger between certain designated terminals
Convention is in accordance with the constitution "within the territories of two High Contracting Parties,"
so as to deprive the Philippine Courts jurisdiction the provisions of the Convention automatically apply
over the case and exclusively govern the rights and liabilities of the
airline and its passenger.
HELD:
Since the flight involved in the case at bar is
Art. 28. (1) An action for damage must be brought at the international, the same being from the United States to
option of the plaintiff, in the territory of one of the High the Philippines and back to the United States, it is
Contracting Parties, either before the court of the domicile subject to the provisions of the Warsaw Convention,
of the carrier or of his principal place of business, or where including Article 28(1), which enumerates the four
he has a place of business through which the contract has places where an action for damages may be brought.
been made, or before the court at the place of destination.
Does Article 28(1) refer to Jurisdiction or Venue?
Constitutionality of the Warsaw Convention
...where the matter is governed by the Warsaw
The Republic of the Philippines is a party to the Convention, jurisdiction takes on a dual concept.
Convention for the Unification of Certain Rules Relating to Jurisdiction in the international sense must be
International Transportation by Air, otherwise known as established in accordance with Article 28(1) of the
the Warsaw Convention. It took effect on February 13, Warsaw Convention, following which the jurisdiction of
1933. The Convention was concurred in by the Senate, a particular court must be established pursuant to the
applicable domestic law. Only after the question of which of petitioner United Airlines, bound from San
court has jurisdiction is determined will the issue of venue Francisco to Manila. While in San Francisco, it was
be taken up. This second question shall be governed by the found that one piece of his luggage was over the
law of the court to which the case is submitted. maximum weight allowance of 70 kg. per bag. A
United Airlines employee rebuked him and in a loud
Was the case properly filed in the Philippines, since the voice, in front of the milling crowd, ordered him to
plaintiffs destination was Manila? repack his things accordingly. Wishing not to create a
scene, Willie did as asked. Unfortunately, his luggage
The place of destination, within the meaning of the was still overweight so the airline billed him
Warsaw Convention, is determined by the terms of the overweight charges. Willie offered to pay the charges
contract of carriage or, specifically in this case, the ticket with a Miscellaneous Charge Order (MCO) or an
between the passenger and the carrier. Examination of the airline pre-paid credit but the same employee, and an
petitioner's ticket shows that his ultimate destination is airline supervisor, refused to honor it, contending that
San Francisco. Although the date of the return flight was there were discrepancies in the figures. Thus, Willie
left open, the contract of carriage between the parties was forced to pay the charges with his American
indicates that NOA was bound to transport the petitioner Express credit card. Upon arrival in Manila, Willie
to San Francisco from Manila. Manila should therefore be discovered that one of his bags had been slashed and
considered merely an agreed stopping place and not the its contents, amounting to US$5,310.00, stolen.
destination.
October 16, 1989 he sent his first letter of demand to
Article 1(2) also draws a distinction between a United Airlines. The airline did not refute Willies
"destination" and an "agreed stopping place." It is the allegations and mailed a check representing payment
"destination" and not an "agreed stopping place" that of his loss based on the maximum liability of US$9.70
controls for purposes of ascertaining jurisdiction under the per pound. Willie, thinking the amount to be grossly
Convention. inadequate to compensate him for his losses as well as
for the indignities he was subjected to, sent two more
The contract is a single undivided operation, beginning letters to petitioner airline, one dated January 4, 1990
with the place of departure and ending with the ultimate and the other dated October 28, 1991, demanding out-
destination. The use of the singular in this expression of-court settlement of P1,000,000.00.
indicates the understanding of the parties to the
Convention that every contract of carriage has one place of June 9, 1992 Willie filed a complaint for damages
departure and one place of destination. An intermediate before the Philippine courts. He had two causes of
place where the carriage may be broken is not regarded as action: (1) the shabby and humiliating treatment he
a "place of destination." received from petitioners employees at the San
Francisco Airport which caused him extreme
WHEREFORE, the petition is DENIED, with costs against embarrassment and social humiliation; and (2) the
the petitioner. It is so ordered. slashing of his luggage and the loss of personal effects
amounting to US$5,310.00.
United Airlines v. Uy, 318 SCRA 576 (1999)
For its part, United Airlines moved to dismiss the
INTERNATIONAL LAW: Applicability of the complaint on the ground that it was filed out of time.
Warsaw Convention: the Convention's provisions do Under Art. 29 of the Warsaw Convention, the right to
not regulate or exclude liability for other breaches of damages shall be extinguished if an action is not
contract by the carrier or misconduct of its officers and brought within 2 years. However, the second
employees, or for some particular or exceptional type of paragraph of the said provision stated that the method
damage. Neither may the Convention be invoked to of calculating the period of limitation shall be
justify the disregard of some extraordinary sort of determined by the law of the court to which the case is
damage resulting to a passenger and preclude recovery submitted. It is Willies position that our rules on
therefor beyond the limits set by said Convention. interruption of prescriptive period should apply.
Likewise, we have held that the Convention does not When he sent his letters of demand, the 2-year period
preclude the operation of the Civil Code and other was tolled, giving him ample time to file his
pertinent laws. It does not regulate, much less exempt, complaint.
the carrier from liability for damages for violating the
rights of its passengers under the contract of carriage, The trial court ordered the dismissal of the case,
especially if willful misconduct on the part of the carrier's holding that Art. 29(2) refers not to the local forums
employees is found or established rules in interrupting the prescriptive period but only
to the rules of determining the time in which the
FACTS: action was deemed commenced (meaning filed).
Willie filed his motion for reconsideration of the order
October 13, 1989 Respondent Willie Uy is a passenger of dismissal only on the 14th day. The trial court
denied his motion and 2 days later Willie filed his notice misconduct of the airline employees and the violation
of appeal. United Airlines this time contended that the of respondent's rights as passenger - clearly is not.
notice of appeal was filed beyond the 15-day reglementary
period and should therefore be dismissed. The CA, Action for damages arising from the misconduct of the
however, took cognizance of the case in the interest of airline employees and the violation of the
justice and ruled in favour of respondent. Hence, this respondents rights as passengers is covered under the
petition for certiorari. Civil Code
ISSUE: Whether or not the action for damages is barred Consequently, insofar as the first cause of action is
by the lapse of the 2-year prescriptive period under Art. concerned, respondent's failure to file his complaint
29 of the Warsaw Convention within the two (2)-year limitation of the Warsaw
Convention does not bar his action since petitioner
HELD: airline may still be held liable for breach of other
provisions of the Civil Code which prescribe a
Supreme Court held that although the 2-year prescriptive different period or procedure for instituting the
period under the Warsaw Convention has lapsed, it did action, specifically, Art. 1146 thereof which prescribes
not preclude the application of other pertinent provisions four (4) years for filing an action based on torts.
of the Civil Code. Thus, the action for damages could still
be filed based on tort which can be filed within 4 years Exception to the Application of the 2-year prescriptive
from the time cause of action accrued. As for the action period: When airline employed delaying tactics
pertaining to the loss of the contents of the luggage, while
it was well within the bounds of the Warsaw Convention, As for respondent's second cause of action, indeed the
the Supreme Court found that there was an exception to travaux preparatories of the Warsaw Convention
the applicability of the 2-year prescriptive period that is reveal that the delegates thereto intended the two (2)-
when the airline employed delaying tactics and gave the year limitation incorporated in Art. 29 as an absolute
passenger the run-around. bar to suit and not to be made subject to the various
tolling provisions of the laws of the forum. This
Applicability of the Warsaw Convention: Courts have therefore forecloses the application of our own rules
discretion whether to apply them or not on interruption of prescriptive periods. Article 29,
par. (2), was intended only to let local laws determine
Within our jurisdiction we have held that the Warsaw whether an action had been commenced within the
Convention can be applied, or ignored, depending on the two (2)-year period, and within our jurisdiction an
peculiar facts presented by each case. Thus, we have ruled action shall be deemed commenced upon the filing of
that the Convention's provisions do not regulate or a complaint. Since it is indisputable that respondent
exclude liability for other breaches of contract by the filed the present action beyond the two (2)-year time
carrier or misconduct of its officers and employees, or for frame his second cause of action must be barred.
some particular or exceptional type of damage. Neither Nonetheless, it cannot be doubted that respondent
may the Convention be invoked to justify the disregard of exerted efforts to immediately convey his loss to
some extraordinary sort of damage resulting to a petitioner, even employed the services of two (2)
passenger and preclude recovery therefor beyond the lawyers to follow up his claims, and that the filing of
limits set by said Convention. Likewise, we have held that the action itself was delayed because of petitioner's
the Convention does not preclude the operation of the evasion.
Civil Code and other pertinent laws. It does not regulate,
much less exempt, the carrier from liability for damages Verily, respondent filed his complaint more than two
for violating the rights of its passengers under the (2) years later, beyond the period of limitation
contract of carriage, especially if willful misconduct on prescribed by the Warsaw Convention for filing a
the part of the carrier's employees is found or established. claim for damages. However, it is obvious that
respondent was forestalled from immediately filing an
Respondent's complaint reveals that he is suing on two action because petitioner airline gave him the
(2) causes of action: (a) the shabby and humiliating runaround, answering his letters but not giving in to
treatment he received from petitioner's employees at the his demands. True, respondent should have already
San Francisco Airport which caused him extreme filed an action at the first instance when his claims
embarrassment and social humiliation; and, (b) the were denied by petitioner but the same could only be
slashing of his luggage and the loss of his personal effects due to his desire to make an out-of-court settlement
amounting to US $5,310.00. for which he cannot be faulted. Hence, despite the
express mandate of Art. 29 of the Warsaw Convention
While his second cause of action - an action for damages that an action for damages should be filed within two
arising from theft or damage to property or goods - is well (2) years from the arrival at the place of destination,
within the bounds of the Warsaw Convention, his first such rule shall not be applied in the instant case
cause of action -an action for damages arising from the because of the delaying tactics employed by petitioner
airline itself. Thus, private respondent's second cause of (3) After receiving the goods into his carrier, or the
action cannot be considered as time-barred under Art. 29 master or agent of the carrier, shall, on demand of the
of the Warsaw Convention. shipper, issue to the shipper a bill of lading showing
among other things chanrobles virtual law library
WHEREFORE, the assailed Decision of the Court of (a) The loading marks necessary for identification of
Appeals reversing and setting aside the appealed order of the goods as the same are furnished in writing by the
the trial court granting the motion to dismiss the shipper before the loading of such goods starts,
complaint, as well as its Resolution denying provided such marksare stamped or otherwise shown
reconsideration, is AFFIRMED. Let the records of the clearly upon the goods if uncovered,in such a manner
case be remanded to the court of origin for further as should ordinarily remain legible until the end of the
proceedings taking its bearings from this disquisition. voyage. chanrobles virtual law library
(b) Either the number of packages or pieces, or the
Evidence quantity or weight, as the casemay be, as furnished in
Code of Commerce writing by the shipper.
ARTICLE 353. The legal evidence of the contract (c) The apparent order and conditions of the goods:
between the shipper and the carrier shall be the bills of Provided, that no carrier, master, or agent of the
lading, by the contents of which the disputes which may carrier, shall be bound to state or show in the bill of
arise regarding their execution and performance shall be lading any marks, number, quantity, or weight which
decided, no exceptions being admissible other than those he has reasonable ground for suspecting not accurately
of falsity and material error in the drafting. to represent the good actually received or which he has
After the contract has been complied with, the bill of had no reasonable means of checking. chanrobles
lading which the carrier has issued shall be returned to virtual law library
him, and by virtue of the exchange of this title with the (4) Such a bill of lading shall be prima facie evidence of
thing transported, the respective obligations and actions the receipt by the carrier of the goods as therein
shall be considered cancelled, unless in the same act the described in accordance with paragraphs (3) (a), (b),
claim which the parties may wish to reserve be reduced to and (c), of this section: (The rest of the provision is not
writing, with the exception of that provided for in Article applicable to the Philippines).
366. (5) The shipper shall be deemed to have guaranteed to
In case the consignee, upon receiving the goods, cannot the carrier the accuracy at the time of shipment of the
return the bill of lading subscribed by the carrier, because marks, number, quantity, and weight, as furnished by
of its loss or of any other cause, he must give the latter a him; and the shipper shall indemnify the carrier
receipt for the goods delivered, this receipt producing the against all loss, damages, and expenses arising or
same effects as the return of the bill of lading. resulting from inaccuracies in such particulars. The
ARTICLE 709. A bill of lading drawn up in accordance right of the carrier to such indemnity shall in no way
with the provisions of this title shall be proof as between limit his responsibility and liability under the contract
all those interested in the cargo and between the latter of carriage to any person other than the
and the insurers, proof to the contrary being reserved for shipper. chanrobles virtual law library
the latter. ARTICLE 710. If the bills of lading do not
(6) Unless notice or loss or damage and the general
agree, and no change or erasure can be observed in any of
nature of such loss or damage by given in writing to the
them, those possessed by the shipper or consignee signed
carrier or his agent at the port of discharge or at the
by the captain shall be proof against the captain or ship
time of the removal of the goods into the custody of the
agent in favor of the consignee or shipper; and those
person entitled to delivery thereof under the contract of
possessed by the captain or ship agent signed by the
carriage, such removal shall be prima facie evidence of
shipper shall be proof against the shipper or consignee in
the delivery by the carrier of the goods as described in
favor of the captain or ship agent.
the bill of lading. If the loss or damage is not apparent,
the notice must be given within three days of the
Carriage of Goods by Sea Act
delivery. chanrobles virtual law library
RESPONSIBILITIES AND LIABILITIES
Said notice of loss or damage may be endorsed upon
Sec. 3. (1) The carrier shall be bound before and at the the receipt for the goods given by the person taking
beginning of the voyage to exercise due diligence to delivery thereof.
The notice in writing need not be given if the state of
the goods has at the time of their receipt been the
(a) Make the ship seaworthy;
subject of joint survey or inspection.
(b) Properly man,equip, and supply the ship;
In any event the carrier and the ship shall be
(c) Make the holds, refrigerating and cooling chambers,
discharged from all liability in respect of loss or
and all other parts of the ship in which goods are carried,
damage unless suit is brought within one year after
fit and safe for their reception, carriage, and preservation.
delivery of the goods or the date when the goods should
(2) The carrier shall properly and carefully load, handle,
have been delivered: Provided, that, if a notice of loss
stow, carry, keep, care for,and discharge the goods carried.
or damage, either apparent or concealed, is not given as
provided for in this section, that fact shall not affect or which is not based on a written contract, the action is
prejudice the right of the shipper to bring suit within one already barred by the statute of limitations. Hence, the
year after the delivery of the goods or the date when the present appeal.
goods should have been delivered. It appears that the complaint was dismissed by the trail
In the case of any actual or apprehended loss or damage, court on the strength of a motion filed by defendant on
the carrier and the receiver shall give all reasonable the ground that the cause of action has already
facilities to each other for inspecting and tallying the prescribed. No evidence was presented by any party in
goods.chanrobles virtual law library support of or against the motion, the ruling of the court
(7) After the goods are loaded the bill of lading to be having been based merely on the factula allegations of
issued by the carrier, master, or agent of the carrier to the the complaint. The question that now arise is: Do the
shipper shall if the shipper so demands, be a "shipped" bill allegations of the complaint shows that the cause of
of lading: Provided, that if the shipper shall have action of plaintiffs is merely for recovery of damages, as
previously taken up any document of title to such goods, found by the trial court, or is one based on a written
he shall surrender the same as against the issue of the contract of carriage as claimed by appellants?
"shipped" bill of lading, but at the option of the carrier
such document of title may be noted at the port of We are inclined to uphold the contention of the
shipment by the carrier, master, or agent with the name or appellants for cursory reading of the complaint would
names of the ship or ships upon which the goods have show that their cause of action is predicated upon the
been shipped and the date or dates of shipment, and when failure of appellee to comply with its contract of
so noted the same shall for the purpose of this section be carrying the deceased from Malangas, Zamboanga to
deemed to constitute a "shipped" bill of lading. the City of Manila safely, in that the vessel on which he
(8) Any clause, covenant, or agreement in a contract of was riding belonging to defendant capsized because of
carriage relieving the carrier of the ship from liability for the reckless and imprudent manner it was managed
loss or damage to or in connection with the goods, arising and steered by its crew. It is true that the complaint
from negligence, fault, or failure in the duties and does not in so many words state that the transportation
obligations provide in this section or lessening such was undertaken by virtue of a written contract of
liability otherwise than as provided in this Act, shall be carriage, but this can be implied from the complaint
null and void and of no effect. A benefit of insurance in because It is a matter of common knowledge that
favor of the carrier, or similar clause, shall be deemed to whenever a passenger boards a ship for transportation
be a clause relieving the carrier from liability. from one place to another he is issued a ticket by the
shipper wherein the terms of the contract are specified.
De Guerrero, et al. v. Madrigal Shipping Co., Inc., 105 According to appellants, "This ticket is in itself a
Phil 485 (1959) complete written contract by and between the shipper
This is an action instituted before the court of First and the passenger. It has all the elements of a complete
Instance of Ilocos Norte to recover damages resulting contract, namely: (1) the consent of the contracting
from the death of Pacifico Acacio when the ship where parties manifested by the fact that the passenger board
the latter was riding as passenger capsized in San Jose, the ship and the shipper consents or accepts him in the
Antique. sip for transportation; (2) cause or consideration which
is the fare paid by the passenger as stated in the ticket;
On April 30, 1957, the wife and daughter of Pacifico and (3) object, which is the transportation of the
Acacio, plaintiffs herein, filed a complaint against passenger from the place of departure to the place of
defendant corporation alleging that on November 1, 1949 destination which are stated in the ticket."
Pacifico Acacio entered into a contract of carriage with
defendant whereby for certain consideration the latter Considering that the ticket is not now before us because
undertook to carry the former on it vessel "M.S. Regulus" the case has been decided merely on the motion to
from Malangas, Zamboanga, to the City of Manila; that dismiss, and this ticket is necessary to determine the
while the vessel was passing San Jose, Antique, its crew right of action of appellants, it would have been more
without taking the necessary precaution managed and proper had action on the motion been deferred until
steered the same in a reckless and imprudent manner after trial on the merits. This is authorized by the rule if
thereby causing the vessel to capsized and resulting to the the ground alleged in the motion does not appear to be
death of Pacifico Acacio. indubitable (Section 3, Rule 8 of the Rules of the
Court). We are therefore of the opinion that, in fairness
Defendant filed a motion to dismiss on the ground that to the appellants the trial court should not have
plaintiff's cause of action has already prescribed. It dismissed the case out right but should have deferred
contended that they should have filed the action within six action on the motion until after trial for the evidence to
years from the time of the alleged breach of contract, or on be presented may still show that the contract of the
November 1, 1955, or more than 7 years thereafter, the parties is really written and merely oral as intimated by
complaint was filed out of time. the court a quo.
The lower court sustained the motion holding that since
the nature of the action is one for recovery of damages
Wherefore, the order appealed is hereby set aside, and the ISSUES
case is remanded to the lower court for further (1) Was there a prescriptive period?
proceedings. No pronouncement as to costs. (2) If yes, was the prescriptive period valid and
legal?
(3) If it was valid and legal, did Philamgen act
Phil Am Gen Insurance Co., Inc. v. Sweet Lines, Inc. et
within the prescriptive period?
al., 212 SCRA 194 (1992)
FACTS
RULING
A total 7,000 bags of low density polyethylene (600 bags
(1) Yes. There was a prescriptive period. When the
of polyethylene 641 and 6,400 bags of polyethylene 647)
complaint was filed, prescription as an affirmative
were shipped from Baton Rouge, LA to Manila on board SS
defense was seasonably raised by Sweet Lines
Vishva Yash, a vessel belonging to the Shipping
in its answer. Though the bills of lading were not
Corporation of India (SCI). From Manila, the cargoes were
presented in evidence, the SC said that: As petitioners
shipped to Davao on board MV Sweet Love, a vessel owned
are suing upon SLI's contractual obligation under the
by Sweet Lines. The consignee was Far East Bank with
contract of carriage as contained in the bills of lading,
arrival notice to Tagum Plastics, Inc., Tagum, Davao City.
such bills of lading can be categorized as
The cargoes were insured by Far East Bank with the
actionable documents which under the Rules must
Philippine American General Insurance Co (Philamgen)
be properly pleaded either as causes of action or
and were covered by bills of lading which contained the
defenses, and the genuineness and due execution
following stipulation in paragraph 5:
of which are deemed admitted unless
specifically denied under oath by the adverse
Claims for shortage, damage, must be made
party. The rules on actionable documents cover and
at the time of delivery to consignee or
apply to both a cause of action or defense based on said
agent, if container shows exterior signs of
documents. In their answer, Sweet Lines included the
damage or shortage. Claims for non-
prescriptive period under paragraph 5 of the bills of
delivery, misdelivery, loss or damage
lading. Philamgen did not deny the existence of the bill
must be filed within 30 days from
of lading under oath. Instead, in its reply to the answer,
accrual. Suits arising from shortage,
Philamgen asserted that the bills of lading were
damage or loss, non-delivery or
contracts of adhesion and that such provisions were
misdelivery shall be instituted within
contrary to law and public policy and thus, Sweet
60 days from date of accrual of right
Lines cannot avail of such prescriptive period as a valid
of action. Failure to file claims or institute
defense. The SC said that Philamgens failure to deny
judicial proceedings as herein provided
under oath the existence of the bills of lading was
constitutes waiver of claim or right of
tantamount to an admission of its existence, together
action. In no case shall carrier be liable for
with paragraph 5 containing the prescriptive period.
any delay, non-delivery, misdelivery, loss of
Thus, the existence of the prescriptive period was duly
damage to cargo while cargo is not in actual
proved even if the bills of lading were not presented in
custody of carrier.
court.
On May 15, 1977, the shipment(s) were discharged from
(2) Yes. The prescriptive periods were valid and
the interisland carrier into the custody of the consignee. A
legal. Philamgen insists that the bills of lading
survey conducted on July 8, 1977 showed that of the
were contracts of adhesion and that the
shipment totalling 7,000 bags, originally contained in 175
prescriptive periods stated therein were void for
pallets, only a total of 5,820 bags were delivered to the
being contrary to law and public policy. The SC,
consignee in good order condition, leaving a balance of
citing Ong Yu vs CA, said that contracts of
1,080 bags. Some of the 1,080 bags were either MISSING
adhesion are not entirely prohibited. The one
OR DAMAGED beyond the point of being useful for the
who adheres to the contract is in reality free to
intended purpose.
reject it entirely; if he adheres he gives his
consent. Philamgen, thus, gave its consent to
FEBTC and Tagum Plastics sued the international carrier,
the contracts the bills of lading including
SCI, the inter-island carriers, Sweet Lines, the arrastre
consent to the prescriptive periods therein. The
company, Davao Arrastre and FE Zuellig (which I assume
SC also agreed with the CA that parties can
is the shipper). Before trial, a compromise agreement was
stipulate a shorter prescriptive period for the
entered into between the complainants and SCI and F.E.
filing of suits. The SC quoted the CA, It must
Zuellig, thus, only Sweet Lines and Davao Arrastre
be noted, at this juncture, that the aforestated
remained as defendants.
time limitation (paragraph 5) in the
The trial court ruled in favour of Philamgen and Tagum
presentation of claim for loss or damage, is but
Plastics. The CA reversed on the ground of prescription
a restatement of the rule prescribed
and denied the motion for reconsideration.
under Art. 366 of the Code of
Commerce... The SC said that, ... the
validity of a contractual limitation of time opportunity to examine the nature and extent of
for filing the suit itself against a carrier the injury. This protects the carrier by affording
shorter than the statutory period therefor it an opportunity to make an investigation of a
has generally been upheld as such claim while the matter is fresh and easily
stipulation merely affects the shipper's investigated so as to safeguard itself from false
remedy and does not affect the liability of and fraudulent claims.
the carrier. In the absence of any statutory
limitation and subject only to the (7) 2. Philamgen also asserted that since the
requirement on the reasonableness of the purpose of the notice of claim or loss was to
stipulated limitation period, the parties to a charge Sweet Lines with actual knowledge of
contract of carriage may fix by agreement a shorter the loss and damage involved, then the issuance
time for the bringing of suit on a claim for the loss of Sweet Lines of a Report on Losses and
of or damage to the shipment than that provided by Damage dated May 15, 1977, would obviate
the statute of limitations. Such limitation is not the need for or render superfluous the filing of a
contrary to public policy for it does not in any way claim within the stipulated period. The SC
defeat the complete vestiture of the right to said, The report on losses and damages is
recover, but merely requires the assertion of that not the claim referred to and required by
right by action at an earlier period than would be the bills of lading for it does not fix
necessary to defeat it through the operation of the responsibility for the loss or damage, but
ordinary statute of limitations. The SC also said merely states the condition of the goods
that, ..., the shortened period for filing suit is not shipped. The claim contemplated herein,
unreasonable and has in fact been generally in whatever form, must be something
recognized to be a valid business practice in the more than a notice that the goods have
shipping industry. This is in recognition of the been lost or damaged; it must contain a
inherent dangers of carriage by sea. claim for compensation or indicate an
(3) intent to claim. Furthermore, the report
(4) (3) No. Philamgen did not act within the bears an annotation at its lower part that says
prescriptive period. The shipment was discharged this Copy should be submitted together with
into the custody of the consignee on May 15, 1977, your claim invoice or receipt within 30 days
and it was from this date that petitioners' cause of from date of issue otherwise your claim will not
action accrued, with thirty (30) days therefrom be honored."
within which to file a claim with the carrier for any
loss or damage which may have been suffered by (8) 3. The claim against the carrier, Sweet Lines,
the cargo and thereby perfect their right of action. has prescribed but what about the claim against
Claim was filed only on April 28, 1978, way Davao Arrastre. The SC said that there was not
beyond the period provided in the bills of lading enough proof to pinpoint the party responsible
and violative of the contractual provision, the for the lost and damaged bags. (What I found
inevitable consequence of which is the loss surprising was that the SC also said, Unlike a
of petitioners' remedy or right to sue. The common carrier, an arrastre operator does not
SC said, Even the filing of the complaint on May labor under a presumption of negligence in case
12, 1978 is of no remedial or practical consequence, of loss, destruction or deterioration of goods
since the time limits for the filing thereof, whether discharged into its custody. In other words, to
viewed as a condition precedent or as a prescriptive hold an arrastre operator liable for loss of
period, would in this case be productive of the and/or damage to goods entrusted to it there
same result, that is, that petitioners had no right of must be preponderant evidence that it did not
action to begin with or, at any rate, their claim was exercise due diligence in the handling and care
time-barred. of the goods.