Mayer Steel Pipe Corp. vs.

CA Case Digest

Facts: Hongkong Government Supplies Department henceforth, Hong Kong contracted petitioner Mayer Steel
Pipe Corp to manufacture and supply various steel pipes and fittings from August to October 1983, Mayer
shipped the said items to Hong Kong. Prior to shipment the items were insured against all risks with respondent
South Sea Surety and Insurance Co. and Charter Insurance Corp for $212,772.09 with South Sea and $149,470
with Charter.

Petitioner’s jointly appointed Industrial Inspection Inc as 3rd party inspector to examine the items to see if they
were in accordance with the contract. They certified it as such prior to shipment. However, when they reached
Hong Kong it was revealed that a substantial portion was damaged. Petitioner’s now claim for damages against
the respondents for indemnity under the insurance contract.

Respondents paid part of the petitioner’s demand but declined the rest claiming that the insurance surveyor’s
report allegedly showed that the damage was a factory defect and hence not covered by the insurance policies.
The lower court ruled in favor of the petitioner finding the damage not caused by manufacturing defects. It
also noted that the insurance contract insured against “all risks” or all causes of conceivable loss or damage
save those caused by fraud or intentional misconduct. At the court of appeals the CA found the “all risks”
provision covered the damage endured but set aside the decision because the complaint had been bared by
prescription. Sec 3(6) of the COGSA specifically bared it because it had been more than 1 year since the damage
had been done before the demand was made.

Held: The cause of action had not yet prescribed.

Ratio: Sec 3(6) of the COGSA covers only the liability of the carrier which is extinguished if no suit is brought
within a period of one year. However, the liability of the insurer is not extinguished because the COGSA governs
the relationship between carrier and shipper, and consignee and insurer. It defines a contract of carriage. The
relationship at bar is properly governed by the Insurance code. Thus the CA’s finding of prescription as per the
COGSA is overturned.

DOLE PHILIPPINES, INC. v MARITIME COMPANY OF THE PHILIPPINES

Facts:

The cargo subject of the instant case was discharged in Dadiangas unto the custody of the consignee,
Dole Philippines. The corresponding claim for the damages sustained by the cargo was filed by the
plaintiff with the defendant, Maritime Company on May 4, 1972.

On June 11, 1973 the plaintiff filed a complaint in the CFI Manila embodying 3 causes of action involving
3 separate and different shipments. The third cause of action therein involved the cargo now subject of
this present litigation.

On December 11, 1974, Judge Serafin Cuevas issued an Order dismissing the first two causes of action.
The third cause of action which covered the cargo subject of this case now was likewise dismissed but
without prejudice as it was not covered by the settlement. Because of the dismissal of the complaint
with respect to the third cause of action, DOLE instituted this present complaint on January 6, 1975

Maritime filed an answer pleading inter alia the affirmative defense of prescription under the provisions
of the Carriage of Goods by Sea Act. The Trial Court granted the motion, scheduling the preliminary
hearing on April 27, 1977. The record before the Court does not show whether or not that hearing was
held, but under date of May 6, 1977, Maritime filed a formal motion to dismiss invoking once more the
ground of prescription.

The Trial Court, after due consideration, resolved the matter in favor of Maritime and dismissed the
complaint.

Issue:

Whether or not Article 1155 of the Civil Code applies in lieu of the COGSA.

Held:

No. Article 1155 of the Civil Code provides that the prescription of actions is interrupted by the making
of an extrajudicial written demand by the creditor

Section 3, paragraph 6 of the COGSA provides that:

the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date when the goods should have been
delivered; Provided, That, if a notice of loss or damage, either apparent or conceded, is not given as
provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit
within one year after the delivery of the goods or the date when.the goods should have been delivered.

1. Dole argues that since the provisions of the Civil Code are, by express mandate of said Code,
suppletory of deficiencies in the Code of Commerce and special laws in matters governed by the latter
and there being a patent deficiency with respect to the tolling of the prescriptive period provided for in
the Carriage of Goods by Sea Act, prescription under said Act is subject to the provisions of Article 1155
of the Civil Code on tolling. Since Dole's claim for loss or damage was filed on May 4, 1972 amounted to
a written extrajudicial demand which would toll or interrupt prescription under Article 1155, it operated
to toll prescription also in actions under the Carriage of Goods by Sea Act.

These arguments might merit weightier consideration were it not for the fact that the question has
already received a definitive answer, adverse to the position taken by Dole, in The Yek Tong Lin Fire &
Marine Insurance Co., Ltd. vs. American President Lines, Inc.

2. Dole argues that it was error for the court not to have considered the action of plaintiff-appellant
suspended by the extrajudicial demand which took place, according to defendant's own motion to
dismiss on August 22, 1952.

Court noticed that while plaintiff avoids stating any date when the goods arrived in Manila, it relies upon
the allegation made in the motion to dismiss that a protest was filed on August 22, 1952 — which goes
to show that plaintiff-appellant's counsel has not been laying the facts squarely before the court for the
consideration of the merits of the case. We have already decided that in a case governed by the Carriage
of Goods by Sea Act, the general provisions of the Code of Civil Procedure on prescription should not be
made to apply. (Chua Kuy vs. Everett Steamship Corp., G.R. No. L-5554, May 27, 1953.) We hold that in
such a case the general provisions of the new Civil Code (Art. 1155) cannot be made to apply, as such
application would have the effect of extending the one-year period of prescription fixed in the law. It is
desirable that matters affecting transportation of goods by sea be decided in as short a time as possible;
the application of the provisions of Article 1155 of the new Civil Code would unnecessarily extend the
period and permit delays in the settlement of questions affecting transportation, contrary to the clear
intent and purpose of the law.

Under Dole's theory, when its claim was received by Maritime, the one-year prescriptive period was
interrupted and began to run anew from May 4, 1972, affording Dole another period of one year
counted from that date within which to institute action on its claim for damage. Unfortunately, Dole let
the new period lapse without filing action. It instituted Civil Case No. 91043 only on June 11, 1973, more
than one month after that period has expired and its right of action had prescribed.

Rizal Surety & Insurance vs. Macondray & Co, Inc (authorized agent of Barber Steamship Lines) G.R.
No. L-24064 February 29, 1968

Facts:

A company in Manila, Edwardson Manufacturing, was the consignee of some machinery parts shipped
on board a vessel owned by Macondray. However, such were not discharged in Manila. Because the
goods were insured by Rizal, they paid for their value. Rizal now seeks to recover from the common
carrier the maximum amount recoverable as based on the bill of lading. The defendants invoked
prescription based on the provisions of the Sea Act, that the action should have been filed within 1 yr
after the delivery of the goods or the date when the goods should have been delivered in order for the
carrier to be held liable in case of loss or damage. Rizal, however, contends that prescription does not
apply when the goods had not been discharged from the vessel, as in this case.

Issue: Whether prescription applies, thus the liability of the common carrier (or its agent) is
extinguished.

Held: Yes, prescription applies. Carrier’s liability is extinguished.

Whether or not the goods had been discharged is immaterial; the carrier would still be liable for non-
delivery of the goods, because such would be due to its own omission. And because the corresponding
bill of lading in this case stipulates that it is subject to the provisions of the Sea Act, particularly the
provision as to the prescription, such shall be deemed to be incorporated therein. In this case, before
the action was commenced, the period for filing the same had already expired.

Union Carbide Philippines, Inc. vs. Manila Railroad Co. (1977)

FACTS –

Dec 18 1961: the vessel Daishin Maru arrived in Manila with a cargo of synthetic resin which was later
sold to Union Carbide Philippines, Inc. - Dec 19 1961: that cargo was delivered to the Manila Port Service
in good order and condition except for 25 bags which were in bad order - 898 bags of resin out of the
1,000 bags were delivered by the customs broker to the consignee. 102 bags were missing. 25 bags were
damaged or pilfered while they were in the custody of the arrastre operator. - The consignee filed with
the Manila Port Service, as arrastre operator, and the American Steamship Agencies, Inc., as agent of the
carrier, a provisional claim advising them that the shipment in question was "shorthanded, short
delivered and/or landed in bad order" - Formal claims were then filed but as the claims were not paid,
Union Carbide Philippines, Inc. filed a complaint for the recovery of damages on Dec 21, 1962 - Union
Carbide's complaint was a joinder of 2 causes of action. One was an action in admiralty under the
Carriage of Goods by Sea Act against the carrier's agent for the value of 25 bags of resin which were
damaged before they were landed. The other was an action under the management contract between
the Bureau of Customs and the Manila Port Service, a subsidiary of the Manila Railroad Company, for
the recovery of the value of the undelivered 102 bags of resin and 25 bags, the contents of which were
damaged or pilfered while in the custody of the arrastre operator. - TC dismissed the case as to the
carrier's agent on the ground that the action had already prescribed because it was not "brought w/in 1
year after delivery of the goods", as contemplated in section 3(6) of the Carriage of Goods by Sea Act.
The 1-year period was counted from December 19, 1961 when the cargo was delivered to the arrastre
operator. The action was brought on December 21, 1962 or 2 days late, according to the TC's reckoning.
With respect to the consignee's claim against the arrastre operator, TC found that the provisional claim
was filed within the 15-day period fixed in the arrastre contract but the TC still dismissed the action
against the arrastre operator. - CA elevated the case to court - Union Carbide alleged that the TC erred
(1) in finding that its action was barred by the statute of limitations and (2) in not holding that the
carrier and the arrastre operator were liable for the value of the undelivered and damaged cargo.

ISSUE:

1. WoN the action was barred by the statute of limitations?

YES

2. WoN the carrier and the arrastre operator were liable for the value of the undelivered and
damaged cargo? YES RATIO

1. Under the Carriage of Goods by Sea Act, the 1-year period within which the consignee should sue
the carrier is computed from "the delivery of the goods or the date when the goods should have
been delivered". TC construed delivery as referring to the discharge or landing of the cargo. Union
Carbide contends that "delivery" does not mean the discharge of goods or the delivery to the
arrastre operator but the actual delivery of the goods to the consignee by the customs broker. The
carrier contends that delivery means discharge from the vessel into the custody of the customs
arrastre operator because under sections 1201 and 1206 of the Tariff and Customs Code
merchandise cannot be directly delivered by the carrier to the consignee but should first pass
through the customhouse at a port of entry for the collection of customs duties. What is the
meaning of "delivery" in section 3(6) of the Carriage of Goods by Sea Act? Tariff and Customs Code
allows the delivery of imported merchandise to the arrastre operator. Delivery within the meaning
of section 3(6) of the Carriage of Goods by Sea Law means delivery to the arrastre operator.

That delivery is evidenced by tally sheets which show whether the goods were landed in good order
or in bad order, a fact which the consignee or shipper can easily ascertain through the customs
broker. To use as basis for computing the one-year period the delivery to the consignee would be
unrealistic and might generate confusion between the loss or damage sustained by the goods while
in the carrier's custody and the loss or damage caused to the goods while in the arrastre operator's
possession. Section 3(6) adheres to the common-law rule that the duty imposed water carriers was
merely to transport from wharf to wharf and that the carrier was not bound to deliver the goods at
 the warehouse of the consignee. The common-law requirements as to the proper delivery of goods
by water carrier apply only when customs regulations at the port of destination do not otherwise
provide. The delivery must be in accordance with the usages of the port in order that such delivery
would discharge the carrier of responsibility. In this case, we held that the one-year period was
correctly reckoned by the trial court from December 19, 1961. Inasmuch as the action was filed on
December 21, 1962, it was barred by the statute of limitations. Defendant American Steamship
Agencies, Inc., as agent of the carrier, has no more liability to the consignee's assignee, Union
Carbide Philippines, Inc., in connection with the damaged twenty-five bags of resin.

2. The liability of the arrastre contractor has a factual and legal basis different from that of the carrier's.
The management contract between the Manila Port Service and the Bureau of Customs provides that
the action against the arrastre operator to enforce liability for loss of the cargo or damage thereto
should be filed within 1 year from the date of the discharge of the goods or from the date when the
claim for the value of such goods has been rejected or denied by the arrastre operator. But before the
action can be filed, a condition precedent should be complied with-- that a claim (provisional or final)
shall have been previously filed with the arrastre operator w/in 15-days from the date of the discharge
of the last package from the carrying vessel. In this case, the consignee's customs broker filed with the
Manila Port Service a provisional claim on January 3, 1962 or on the 15th day following December 19,
1961, the date of the discharge of the last package from the carrying vessel. That claim was never
formally rejected or denied by the Manila Port Service. Having complied with the condition precedent
for the filing of a claim within the 15-day period, Union Carbide could file the court action within 1 year,
either from December 19, 1961 or from December 19, 1962. This second date is regarded as the
expiration of the period within which the Manila Port Service should have acted on the claim. Thus, the
claimant or consignee has a 2-year prescriptive period, counted from the date of the discharge of the
goods, within which to file the action in the event that the arrastre contractor, as in this case, has not
rejected nor admitted liability. The arrastre operator is responsible for the value of 102 bags of resin
which were not delivered, and twenty-five bags, which were damaged, or a total of one hundred
twenty-seven bags valued at P6,185.22. Dispositive: TC's judgment is affirmed insofar as it dismissed
plaintiff-appellant's claim against defendant American Steamship Agencies, Inc. on the ground of
prescription BUT reversed insofar as it dismissed plaintiff's claim against the Manila Railroad Company,
as arrastre operator. –

H.E. Heacock Co. vs. Macondray

Three kinds of stipulations have often been made in a bill of lading. The first is one exempting the carrier
from any and all liability for loss or damage occasioned by its own negligence. The second is one
providing for an unqualified limitation of such liability to an agreed valuation. And the third is one
limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and
pays a higher rate of freight. According to an almost uniform weight of authority, the first and second
kinds of stipulations are invalid as being contrary to public policy, but the third is valid and enforceable.

If a common carrier gives to a shipper the choice of two rates and if the shipper makes such a choice,
understandingly and freely, and names his valuation, he cannot thereafter recover more than the value
which he thus places upon his property. A limitation of liability based upon an agreed value does not
conflict with any sound principle of public policy; and it is not conformable to plain principles of justice
that a shipper may understate value in order to reduce the rate and then recover a larger value in case
of loss.

KLM Royal Dutch Airlines vs CA Case Digest

Facts: Spouses Mendoza approached Mr. Reyes, the branch manager of Philippine Travel Bureau, for
consultation about a world tour which they were intending to make with their daughter and niece.
Three segments of the trip, the longest, was via KLM. Respondents decided that one of the routes they
will take was a Barcelona-Lourdes route with knowledge that only one airline, Aer Lingus, served it.
Reyes made the necessary reservations. To this, KLM secured seat reservations for the Mendoza’s and
their companions from the carriers which would ferry them throughout their trip, which the exception
of Aer Lingus. When the Mendoza’s left the Philippines, they were issued KLM tickets for the entire trip.
However, their coupon for Aer Lingus was marked “on request”.

When they were in Germany, they went to the KLM office and obtained a confirmation from Aer Lingus.
At the airport in Barcelona, the Mendozas and their companions checked in for their flight to Lourdes.
However, although their daughter and niece were allowed to take the flight, the spouses Mendozas
were off loaded on orders of the Aer Lingus manager, who brusquely shoved them aside and shouted at
them. So the spouses Mendozas took a train ride to Lourdes instead.

Thus, they filed a complaint for damages against KLM for breach of contract of carriage. The trial court
decided in favor of the Mendozas. On appeal, the CA affirmed the decision. Hence, KLM brings this
petition to the Supreme Court. KLM cites Art 30 of the Warsaw Convention, which states: the passenger
or his representatives can take action only against the carrier who performed the transportation during
which the accident or delay occurred. Also, KLM avers that the front cover of each ticket reads: that
liability of the carrier for damages shall be limited to occurrences on its own line.

Issue: Whether or not KLM is liable for breach of contract of carriage?

Held: The applicability of Art. 30 of the Warsaw Convention cannot be sustained. The article
presupposes the occurrence of delay or accident. What is manifest here is that the Aer Lingus refused to
transport the spouses Mendozas to their planned and contracted destination.

As the airline which issued the tickets, KLM was chargeable with the duty and responsibility of
specifically informing the spouses of the conditions prescribed in their tickets or to ascertain that the
spouses read them before they accepted their passage tickets.

The Supreme Court held that KLM cannot be merely assumed as a ticket-issuing agent for other airlines
and limit its liability to untoward occurrences on its own line.

The court found, that the passage tickets provide that the carriage to be performed therein by several
successive carriers is to be regarded as a “single operation”.

AMERICAN INSURANCE CO., INC. V MACONDRAY & CO., INC (1971)

Category: Transportation Laws

PARTIES:

Importer/Consignee- Atlas Consolidated Mining and Development Corporation

Shipper- Ansor Corp. of NY (S/S Toledo)

Insurer:
Apellee insurer: American Inusrance Co. Inc. - insured the cargoes against damages until the Port of
Cebu for P5, 700 in favor of consignee

Forwarding Agent of Ansor Corp: Macondray& Co., Inc-agent in the Philippines of the S/S "Toledo", a
common carrier in foreign trade between the United States and Philippine Ports;
Transshipment:
Port of NY > Manila (via S/S Toledo) > Cebu (via M/S Bohol)

FACTS:

1. On or about September 12, 1962, certain cargoes covered by the bill of lading were imported by
Atlas Consolidated Mining and Development Corporation and were loaded by the shipper, Ansor
Corporation of New York on board the S/S "Toledo" at the port of New York for delivery to Atlas at Cebu
City via Manila.
2. The freight up to Cebu City was paid in advance. The American Insurance Company insured the
cargoes against damage up to Cebu City for $5,700.00 in favor of the consignee.
3. The S/S "Toledo' discharged them at the port of Manila on October 17, 1962.
4. For their transshipment to Cebu City they were loaded on board the M/S "Bohol".
5. Upon the vessel's arrival in Cebu City on November 12, 1962, the cargoes were discharged and
delivered to the congsigneeminus one skid of truck parts which was not loaded on the M/S "Bohol". The
missing cargo was valued at $482.96 CIF Cebu, equivalent at that time to P1,889.58.
6. The consignee filed the corresponding claim with herein appellant (agent in the Philippines of the
S/S "Toledo", a common carrier in foreign trade between the United States and Philippine Ports) who
disclaimed liability therefor alleging that the cargoes had been discharged in full at the port of Manila.
7. A claim for the insured value of the cargo amounting to P2,087.20 plus the sum of P87.30 as
expenses of survey was filed with appellee under the covering insurance policy and the same was duly
paid, thereby acquiring by subrogation the rights of the consignee.
8. Thereafter the corresponding action was filed in the lower court to recover from appellant what
appellee had paid to the consignee.
9. Trial Court ordered Appellant Macondray to pay. Appellant appealed.

ISSUES AND RESOLUTIONS:

1. Whether the lower court had jurisdiction

YES.
True the case invoked only the sum of P1,889.58, but it is also true that appellee's action against
appellant is one involving admiralty jurisdiction, the exercise of which pertains originally and exclusively
to Courts of First Instance.
2. Whether American Insurance has cause of action against Macondray
YES
Appellant relies on the provisions of paragraph 22 of the bill of lading to the effort that the carrying
vessel, her owner and agent, are not liable for loss or damage occurring after the discharge of the goods.
Appellant's contention rests entirely upon the erroneous assumption that the carrying vessel had
discharged all the goods covered by the bill of lading in accordance with its obligation.
Under the Carriage Contract covering the cargoes in question, it was the duty of the carrying vessel to
discharge them at the port of Cebu City, via the port of Manila. It is clear therefore, that the discharge
effected at the latter port did not terminate the carrying vessel's responsibility which included the
transshipment of the cargoes from the port of Manila to the port of Cebu City. While it complied with
the obligation with respect to most of the cargoes covered, by the bill of lading, it failed to do so in
relation to the one skid of truck parts which, according to the stipulation of facts, was not loaded on
board the M/S "Bohol". In truth and in fact, the same has never been found.

3. Whether Appellant Macondray is the real party in interest

YES
Appellant Macondray contends that the action should’ve been bought against the shipper, Ansor Corp
Appellant is correct in saying that actions must be prosecuted not only in the name of the real party in
interest but also against the real party in interest. It is in error, however, in contending that it is not
liable for the loss of the skid of truck parts.
If the fact were that said cargo was loaded and thereafter lost on board the M/S "Bohol" or upon its
discharge at the port of Cebu City, We would agree that appellant is not liable. It was stipulated in this
case, however, that the said skid of truck parts was not loaded at all on board the M/S "Bohol." In
accepting the same on board the S/S "Toledo" at the port of New York for shipment to Cebu City, via the
port of Manila, it become precisely appellant's duty to see to it that it was loaded in Manila on board the
M/S "Bohol" or any other vessel, for the port of Cebu City. Not having complied with this duty, its
liability for the loss is unavoidable.

Ansor Corp. complied with its part of the transaction by delivering the lost cargo to the S/S "Toledo" at
the port of New York; thereafter paragraph 11 of the bill of lading operated to make appellant
Macondray, the shipper's forwarding agent whose duty precisely was to have the cargo, upon arrival at
the port of Manila, transshipped to the port of Cebu City.
As a general rule under the provisions of the Code of Commerce, the consignee of a cargo carried by a
vessel has a cause of action against the latter's agent for the undelivered cargo or any portion thereof.
This being the case, it is its duty to compensate appellee for the loss suffered.
Magellan Mfg. Marketing Corp. V. CA Supra (1991)

Lessons Applicable: Bill of Lading (Transportation)

Laws Applicable:

FACTS:

 Choju Co., Ltd purchased from Magellan Manufacturers Marketing Corp. (MMMC) 136,000
anahaw fans for $23,220

 MMMC contracted with F.E. Zuellig, a shipping agent of Orient Overseas Container Lines, Inc.,
(OOCL) specifying that he needed an on-board bill of lading and that transhipment is not
allowed under the letter of credit

 MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of lading which was
presented to Allied Bank. The bank then credited the amount of US$23,220 covered by the
letter of credit to MMMC

 When MMMC's President James Cu, went back to the bank later, he was informed that the
payment was refused by the buying for lack of bill of lading and there was a transhipment of
goods

 The anahaw fans were shipped back to Manila through OOCL who are demanding from
MMMC P246,043.43 (freight charges from Japan to Manila, demurrage incurred in Japan and
Manila from October 22, 1980 up to May 20, 1981 and charges for stripping the container van of
the Anahaw fans on May 20, 1981)

 MMMC abandoned the whole cargo and asked OOCL for damages

 OOCL: bill of lading clearly shows that there will be a transhipment and that petitioner
was well aware that MV (Pacific) Despatcher was only up to Hongkong where the
subject cargo will be transferred to another vessel for Japan

 RTC: favored OOCL:

 consented because the bill of lading where it is clearly indicated that there will be
transhipment

 MMMC was the one who ordered the reshipment of the cargo from Japan to Manila

 CA: Affirmed with modification of excluding demurrage in Manila

ISSUE: W/N the bill of lading which reflected the transhipment against the letter of credit is consented
by MMMC

HELD: YES. CA Affirmed with modification

 Transhipment

 act of taking cargo out of one ship and loading it in another

 the transfer of goods from the vessel stipulated in the contract of affreightment to
another vessel before the place of destination named in the contract has been reached

 transfer for further transportation from one ship or conveyance to another

 the fact of transhipment is not dependent upon the ownership of the transporting ships or
conveyances or in the change of carriers, as the petitioner seems to suggest, but rather on the
fact of actual physical transfer of cargo from one vessel to another

 appears on the face of the bill of lading the entry "Hong Kong" in the blank space labeled
"Transhipment," which can only mean that transhipment actually took place

 bill of lading

 operates both as a receipt and as a contract

  receipt for the goods shipped

 contract to transport and deliver the same as therein stipulated

 names the parties, which includes the consignee, fixes the route,
destination, and freight rates or charges, and stipulates the rights and
obligations assumed by the parties

 law between the parties who are bound by its terms and conditions
provided that these are not contrary to law, morals, good customs,
public order and public policy

 GR: acceptance of the bill without dissent raises the presumption that all the terms therein were
brought to the knowledge of the shipper and agreed to by him and, in the absence of fraud or
mistake, he is estopped from thereafter denying that he assented to such term

 There clearly appears on the face of the bill of lading under column "PORT OF TRANSHIPMENT"
an entry "HONGKONG'

 On board bill of lading vs. received for shipment bill of lading:

 on board bill of lading

 stated that the goods have been received on board the vessel which is to carry
the goods

 received for shipment bill of lading

 stated that the goods have been received for shipment with or without
specifying the vessel by which the goods are to be shipped

 issued whenever conditions are not normal and there is insufficiency of shipping
space

 certification of F.E. Zuellig, Inc. cannot qualify the bill of lading, as originally issued, into an on
board bill of lading as required by the terms of the letter of credit issued in favor of petitioner -
it is a received for shipment bill of lading

 issued only on July 19, 1980, way beyond the expiry date of June 30, 1980 specified in
the letter of credit for the presentation of an on board bill of lading

 Demurrage

 compensation provided for in the contract of affreightment for the detention of the
vessel beyond the time agreed on for loading and unloading

 claim for damages for failure to accept delivery

 before it could be charged for demurrage charges it should have been notified of the arrival of
the goods first

 Since abandon option was communicated, the same is binding upon the parties on legal and
equitable considerations of estoppel

Compania General de Tobacos de Filipinas vs. Manila

GR L-16619, 29 June 1963

En Banc, Dizon (J): 8 concur, 2 took no part

Facts: Compania General de Tabacos de Filipinas (Tabacalera) paid the City of Manila the fixed license
fees prescribed by Ordinance 3358 for the years 1954 to 1957. In 1954, City Ordinance 3634 and 3816
were passed; where the term “general merchandise” found therein included all articles in Sections 123
to 148 of the

Tax Code (thus, also liquor under Sedctions 133 to 135). The Tabacalera paid its wholesaler’s and
retailer’staxes. In 1954, the City Treasurer addressed a letter to an accounting firm, expressing the view
that liquor dealers paying the annual wholesale and retail fixed tax under Ordinance 3358 are not
subject to the wholesale aand retail deaklers’ taxes prescribed by City Ordinances 3634, 3301, and 3816.
The Tabacalera, upon learning of said stopped including quarterly sworn declaratons required by the
latter ordinances, and in 1957, demanded refunde of the alleged overpayment. The claim was
disallowed.

Issue: Whether there is a distinction between Ordinance 3358 and Ordinances 3634, 3301 and 3816, to

prevent refund to the company.

Held: Generally, the term “tax” applies to all kinds of exactions which become public funds.
Legally,however, a license fee is a legal concept quite distinct from tax: the former is imposed in the
exercise ofpolice power for purposes of regulation, while the latter is imposed under the taxing power
for the purpose of

raising revenues. Ordinance 3358 prescribes municipal license fees for the privilege to engage in the
businessof selling liquor or alcohol beverages; considering that the sale of intoxicating liquor is
(potentially) harmfulto public health and morals, and must be subject to supervision or regulation by the
State and by cities andmunicipalities authorized to act in the premises. On the other hand, Ordinances
3634 , 3301 and 3816imposed taxes on the sales of general merchandise, wholesale or retail, and are
revenue measures enacted bythe Municipal Board of Manila.Both a license fee and a tax may be
imposed on the same business or occupation, or for selling the samearticle, without it being in violation
of the rule against double taxation. The contrary view of the Treasurer inits letter is of no consequence
as the government is not bound by the errors or mistakes committed by itsofficers, specially on matters
of law.The company, thus, is not entitled to refund.

Eastern Shipping vs CA

FACTS

Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment as insured
with a marine policy. Upon arrival in Manila unto the custody of metro Port Service, which excepted to
one drum, said to be in bad order and which damage was unknown the Mercantile Insurance Company.
Allied Brokerage Corporation received the shipment from Metro, one drum opened and without seal.
Allied delivered the shipment to the consignee’s warehouse. The latter excepted to one drum which
contained spillages while the rest of the contents was adulterated/fake. As consequence of the loss, the
insurance company paid the consignee, so that it became subrogated to all the rights of action of
consignee against the defendants Eastern Shipping, Metro Port and Allied Brokerage. The insurance
company filed before the trial court. The trial court ruled in favor of plaintiff an ordered defendants to
pay the former with present legal interest of 12% per annum from the date of the filing of the
complaint. On appeal by defendants, the appellate court denied the same and affirmed in toto the
decision of the trial court.

ISSUE

(1) Whether the applicable rate of legal interest is 12% or 6%.

(2) Whether the payment of legal interest on the award for loss or damage is to be computed from the
time the complaint is filed from the date the decision appealed from is rendered.

HELD

(1) The Court held that the legal interest is 6% computed from the decision of the court a quo.
When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damaes awarded may be imposed at the discretion of the court at the rate of 6% per annum.
No interest shall be adjudged on unliquidated claims or damages except when or until the demand can
be established with reasonable certainty.

When the judgment of the court awarding a sum of money becomes final and executor, the rate of legal
interest shall be 12% per annum from such finality until satisfaction, this interim period being deemed to
be by then an equivalent to a forbearance of money.

The interest due shall be 12% PA to be computed fro default, J or EJD.

(2) From the date the judgment is made. Where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or EJ but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shll begin to
run only from the date of judgment of the court is made

(3) The Court held that it should be computed from the decision rendered by the court a quo.

British Airways vs. CA Case Digest

(285 SCRA 450)

Facts: On April 16, 1989, Mahtani is on his way to Bombay, India from Manila. His trip was Manila-Hong
Kong via PAL and then Hong Kong-India via British Airways. Prior to his departure, he checked in two
pieces of luggage containing his clothing and other personal effects, confident that the same would be
transferred to his BA flight.

Unfortunately, when he arrived in India, he discovered that his luggage was missing.

The RTC awarded Mahtani damages which was affirmed by CA.

Issue: Whether or not in a contract of air carriage a declaration by the passenger is needed to recover a
greater amount?

Held: American jurisprudence provides that an air carrier is not liable for the loss of baggage in an
amount in excess of the limits specified in the tariff which was filed with the proper authorities, such
tariff being binding on the passenger regardless of the passenger’s lack of knowledge thereof or assent
thereto. This doctrine is recognized in this jurisdiction.

The inescapable conclusion that BA had waived the defense of limited liability when it allowed Mahtani
to testify as to the actual damages he incurred due to misplacement of his luggage, without any
objection.

It is a well-settled doctrine that where the proponent offers evidence deemed by counsel of the adverse
party to be inadmissible for any reason, the latter has the right to object. However, such right is a mere
privilege which can be waived. Necessarily, the objection must be made at the earliest opportunity, in
case of silence when there is opportunity to speak may operate as a waiver of objections.

Japan Airlines vs Court of Appeals (G.R. No. 118664)

Facts: Private respondents boarded a JAL flight in San Francisco, California bound for Manila. It included
an overnight stopover at Narita, Japan at JAL’s expense. Due to the Mt. Pinatubo eruption, private
respondents’ trip to Manila was cancelled. JAL rebooked all the Manila-bound passengers and paid for
the hotel expenses of their unexpected overnight stay. The flight of private respondents was again
cancelled due to NAIA’s indefinite closure. JAL informed the respondents that it would no longer defray
their hotel and accommodation expense during their stay in Narita. The respondents were forced to pay
for their accommodations and meal expenses for 5 days.

Issues:

Whether or not JAL has the obligation to shoulder the hotel and meal expenses even if the delay was
caused by force majeure

Whether or not the award of damages was proper

Held:

When a party is unable to fulfill his obligation because of force majeure, the general rule is that he
cannot be held liable for damages for non-performance. When JAL was prevented from resuming its
flight to Manila due to the effects of the eruption, whatever losses or damages in the form of hotel and
meal expenses the stranded passengers incurred cannot be charged to JAL. The predicament of the
private respondents was not due to the fault or negligence of JAL. JAL had the duty to arrange the
respondents’ flight back to Manila. However, it failed to look after the comfort and convenience of its
passengers when it made the passengers arrange their flight back to Manila on their own and after
waiting in the airport for a whole day.

Yes, the award of nominal damages is proper. Nominal damages are adjudicated in order that a right of
a plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized and
not for the purpose of indemnifying any loss suffered by him

Tan v. Northwest Airlines

Facts:

On May 31, 1994, Priscilla Tan and Connie Tan boarded a Northwest Airlines plane in Chicago bound to
the Philippines with a stop-over at Detroit. Upon their arrival, they found out that their baggage was
missing. On June 3, they recovered the baggage and discovered that some were destroyed and soiled.
They filed an action for damages, claiming that they suffered mental anguish, sleepless nights and great
damage. Northwest offered to reimburse the cost of repairs of the bags or purchase price of new bags.
The trial court awarded actual, moral and exemplary damages, and also attorney’s fees. The Court of
Appeals partially affirmed the decision by deleting moral and exemplary damages. Hence, Tan filed this
instant petition.

Issue:

Whether respondent Airline is liable for moral and exemplary damages for willful misconduct and
breach of contract of carriage

Held:

We agree with the Court of Appeals that respondent was not guilty of willful misconduct. "For willful
misconduct to exist there must be a showing that the acts complained of were impelled by an intention
to violate the law, or were in persistent disregard of one's rights. It must be evidenced by a flagrantly or
shamefully wrong or improper conduct." Contrary to petitioner's contention, there was nothing in the
conduct of respondent which showed that they were motivated by malice or bad faith in loading her
baggages on another plane. Due to weight and balance restrictions, as a safety measure, respondent
airline had to transport the baggages on a different flight, but with the same expected date and time of
arrival in the Philippines. It is admitted that respondent failed to deliver petitioner's luggages on time.
However, there was no showing of malice in such failure. By its concern for safety, respondent had to
ship the baggages in another flight with the same date of arrival.

Singson v. CA
Facts:

Carlos Singson and his cousin Crescentino Tiongson bought 2 identically routed, round-trip tickets from
Cathay Pacific. Each ticket consisted of 5 coupons, and the procedure is that one coupn will be detached
from the booklet at every start of the flight. The two left Manila on June 6, 1988. On July 1, 1988,
Singson’s coupon corresponding to the San Francisco-Hongkong trip was found to be missing. Instead,
what was there is the ticket for Los Angeles-San Francisco, which was supposed to be already detached.
It was only on July 6 that the airline company arranged for his flight back to Manila. Singson filed a
complaint for damages. The trial court ruled in his favor, but the decision was reversed by the Court of
Appeals.

Issues:

(1) Whether a breach of contract was committed by Cathay when it failed to confirm the booking of
petitioner for its July 1 flight

(2) Whether the carrier was liable not only for actual, but also for moral and exemplary damages

Held:

(1) CATHAY undoubtedly committed a breach of contract when it refused to confirm petitioner's flight
reservation back to the Philippines on account of his missing flight coupon. Its contention that there was
no contract of carriage that was breached because petitioner's ticket was open-dated is untenable. To
begin with, the round trip ticket issued by the carrier to the passenger was in itself a complete written
contract by and between the carrier and the passenger. It has all the elements of a complete written
contract, to wit: (a) the consent of the contracting parties manifested by the fact that the passenger
agreed to be transported by the carrier to and from Los Angeles via San Francisco and Hongkong back to
the Philippines, and the carrier's acceptance to bring him to his destination and then back home; (b)
cause or consideration, which was the fare paid by the passenger as stated in his ticket; and, (c) object,
which was the transportation of the passenger from the place of departure to the place of destination
and back, which are also stated in his ticket.

Interestingly, it appears that CATHAY was responsible for the loss of the ticket. One of two (2) things
may be surmised from the circumstances of this case: first, US Air (CATHAY's agent) had mistakenly
detached the San Francisco-Hongkong flight coupon thinking that it was the San Francisco-Los Angeles
portion; or, second, petitioner's booklet of tickets did not from issuance include a San Francisco-
Hongkong flight coupon. In either case, the loss of the coupon was attributed to the negligence of
CATHAY's agents and was the proximate cause of the non-confirmation of petitioner's return flight on 1
July 1988. It virtually prevented petitioner from demanding the fulfillment of the carrier's obligations
under the contract.

(2) Although the rule is that moral damages predicated upon a breach of contract of carriage may only
be recoverable in instances where the mishap results in the death of a passenger, or where the carrier is
guilty of fraud or bad faith, there are situations where the negligence of the carrier is so gross and
reckless as to virtually amount to bad faith, in which case, the passenger likewise becomes entitled to
recover moral damages. To be stranded for five (5) days in a foreign land because of an air carrier's
negligence is too exasperating an experience for a plane passenger. For sure, petitioner underwent
profound distress and anxiety, not to mention the worries brought by the thought that he did not have
enough money to sustain himself, and the embarrassment of having been forced to seek the generosity
of relatives and friends.

Private respondent's mistake in removing the wrong coupon was compounded by several other
independent acts of negligence above-enumerated. Taken together, they indubitably signify more than
ordinary inadvertence or inattention and thus constitute a radical departure from the extraordinary
standard of care required of common carriers. Put differently, these circumstances reflect the carrier's
utter lack of care and sensitivity to the needs of its passengers, clearly constitutive of gross negligence,
recklessness and wanton disregard of the rights of the latter, acts evidently indistinguishable or no
different from fraud, malice and bad faith. As the rule now stands, where in breaching the contract of
carriage the defendant airline is shown to have acted fraudulently, with malice or in bad faith, the award
of moral and exemplary damages, in addition to actual damages, is proper. In the instant case, the injury
suffered by petitioner is not so serious or extensive as to warrant an award amounting to P900,000.00.
The assessment of P200,000.00 as moral damages and P50,000.00 as exemplary damages in his favor is,
in our view, reasonable and realistic.
LUFTHANSA GERMAN AIRLINES v. CA, GR No. 83612, 1994-11-24

Facts:

Tirso V. Antiporda, Sr. was an associate director of the Central Bank of the Philippines and a registered
consultant of the Asian Development Bank, the World Bank and the UNDP.

contracted bySGV... to be the institutional financial... specialist for the agricultural credit institution
project of the Investment and Development Bank of Malawi in Africa.

he would render his services to the Malawi bank as an independent... contracto

For the engagement, Antiporda would be provided one round-trip economy ticket from Manila to
Blantyre and back

On September 17, 1984, Lufthansa, through SGV, issued ticket No. 3477712678 for Antiporda's
confirmed flights to Malawi, Africa.

Manila to Singapore

Singapore to Bombay

Bombay to Nairobi

Nairobi to Lilongwe

Lilongwe to Blantyre

Antiporda took the Lufthansa flight to Singapore from where he proceeded to Bombay on board the
same airline.

He arrived in Bombay as scheduled and waited at the transit area of the airport for his connecting flight
to Nairobi which was, per... schedule given him by Lufthansa, to leave Bombay in the morning of
September 26, 1984

Finding no representative of Lufthansa waiting for him at the gate, Antiporda asked the duty officer of
Air India how he could get in touch with Lufthansa. He was told to call up Lufthansa... which informed
him that somebody would attend to him shortly

Gerard Matias, Lufthansa's traffic officer, arrived, asked for Antiporda's ticket and told him to just sit
down and wait... informed Antiporda that seat in Air Kenya Flight 203 to Nairobi... had been given to a
very important person of Bombay who was attending a religious function in Nairobi.

Antiporda protested, stressing that he had an important professional engagement in Blantyre, Malawi in
the afternoon of September 26, 1984. He requested that the situation be... remedied but Air Kenya
Flight 203 left for Nairobi without him on board.

Strande Antiporda was booked for Nairobi via Addis Ababa only on September 27, 1984.arrived in
Blantyre at 9:00 o'clock in the evening of September 28, 1984, more than a couple of... days late for his
appointment with people from the institution he was to work with in Malawi.

Antiporda's counsel wrote the general manager of Lufthansa in Manila demanding P1,000,000 in
damages for the airline's "malicious, wanton, disregard of the contract of carriage."

Lufthansa general manager Hagen Keilich assured Antiporda that the matter would be investigated

Apparently getting no positive action from Lufthansa, on January 21, 1985, Antiporda filed with the
Regional Trial Court of Quezon City a complaint against Lufthansa... lower court... found... that Lufthansa
breached the contract to transport Antiporda from Manila to Blantyre on a trip of five legs. It said:...
defendant admits the issuance and validity of Ticket No. 3477712678 (Exh. B). However, it denies its
obligation to transport the plaintiff to his point of destination at Blantyre, Malawi, Africa. Defendant
claims that it was obligated to transport the plaintiff... only up to Bombay... case is one of a contract of
carriage.

From the ticket, therefore, it is indubitably clear that it was the duty and responsibility of the defendant
Lufthansa to transport the plaintiff from Manila to Blantyre, on a trip of five legs.
posture taken by the defendant that it was Air Kenya's, not Lufthansa's, liability to transport plaintiff
from Bombay to Malawi, is inacceptable... plaintiff dealt exclusively with the defendant Lufthansa which
issued to him the ticket for his entire trip and... which in effect guaranteed to the plaintiff that he would
have sure space in Air Kenya's flight to Nairobi. Plaintiff, under that assurance of the defendant,
naturally, had the right to expect that his ticket would be honored by Air Kenya, to which, in the legal
sense, Lufthansa... had endorsed and in effect guaranteed the performance of its principal engagement
to carry out plaintiff's scheduled itinerary previously and mutually agreed upon by the parties.

The contract of air transportation was exclusively between the plaintiff Antiporda and the defendant
Lufthansa, the latter merely endorsing its performance to Air Kenya, as its subcontractor or agent.

The fourth paragraph of the 'Conditions of Contracts' of the... ticket... issued by Lufth... hansa... shows
that the contract was one of continuous air transportation from Manila to Blantyre, Malawi.

'4. x x x carriage to be performed hereunder by several successive carriers is regarded as a single

operation.'

This condition embodied in the ticket issued to plaintiff is diametrically opposed to the defense theory
that Lufthansa's liability is only limited up to Bombay."... lower court held that Lufthansa cannot limit its
liability as a mere ticket issuing agent for other airlines and only to untoward occurrences on its own
line.

Lufthansa elevated the case to the Court of Appeals arguing that it cannot be held liable for the acts
committed by Air Kenya on the basis of the following... merely acted as a ticket-issuing agent in... under
sections (1) and (2) Article 30 of the Warsaw Convention, an airline carrier is liable only to untoward
occurences on its own line;

Court of Appeals... affirmed the decision of the trial court

Explained the Court of Appeals: although the contract of carriage was to be performed by several air
carriers, the same is to be treated as a single operation conducted by Lufthansa because Antiporda dealt
exclusively with it which issued him a Lufthansa ticket for the entire... trip. By issuing a confirmed ticket,
Lufthansa in effect guaranteed Antiporda a sure seat with Air Kenya. Private respondent Antiporda,
maintained the Court of Appeals, had the right to expect that his ticket would be honored by Air Kenya
which, in the legal sense, Lufthansa had... endorsed and, in effect, guaranteed the performance of its
principal engagement to carry out his five-leg trip.

According to the Court of Appeals, Antiporda's cause of action is not premised on the occurrence of an
accident or delay as contemplated under Section 2 of said Article but on Air Kenya's refusal to transport
him in order to accomodate another... ufthansa maintains that its liability to any passenger is limited to
occurrences in its own line, and, thus, in the case at bench, its liability to Antiporda is limited to the
extent that it had transported him from Manila to Singapore and from Singapore to Bombay; that...
therefrom, responsibility for the performance of the contract of carriage is assumed by the succeeding
carriers tasked to transport him for the remaining leg of his trip because at that stage, its contract of
carriage with Antiporda ceases, with Lufthansa acting, no longer as... the principal in the contract of
carriage, but merely as a ticket-issuing agent for the other carriers.

Issues:

whether or not petitioner Lufthansa German Airlines which issued a confirmed Lufthansa ticket to
private respondent Antiporda covering a five-leg trip aboard different airlines should... be held liable for
damages occasioned by the "bumping-off" of said private respondent Antiporda by Air Kenya, one of the
airlines contracted to carry him to a particular destination of the five-leg trip.

Ruling:

Antiporda was issued a confirmed Lufthansa ticket all throughout the five-leg trip. The fourth paragraph
of the "Conditions of Contract" stipulated in the... ticket indubitably showed that the contract of
carriage was considered as one of continuous air transportation from Manila to Blantyre, Malawi, thus:

"4. x x x carriage to be performed hereunder by several successive carriers is regarded as a single

operation."
In light of the stipulations expressly specified in the ticket defining the true nature of its contract of
carriage with Antiporda, Lufthansa cannot claim that its liability thereon ceased at Bombay Airport and
thence, shifted to the various carriers that assumed the actual... task of transporting said private
respondent.

Principles:

Lufthansa prays this court to take heed of jurisprudence in the United States where the term "delay"
was interpreted to include "bumping-off" or failure to carry a passenger with a confirmed reservation.
These decisions in the United States are not controlling in this... jurisdiction. We are not prepared,
absent reasons of compelling nature, to entertain an extended meaning of the term "delay," which in
KLM was given its ordinary signification. "Construction and interpretation come only after it has been
demonstrated that application is... impossible or inadequate without them. The ordinary language of a
statute must be given its ordinary meaning and limited to a reasonable interpretation."[13] In its
ordinary sense, "delay" means to prolong the time of or before; to... stop, detain or hinder for a time, or
cause someone or something to be behind in schedule or usual rate of movement in progress.[14]
"Bumping-off," which is the refusal to transport passengers with confirmed reservation to their...
planned and contracted destinations, totally forecloses said passengers' right to be transported,
whereas delay merely postpones for a time being the enforcement of such right.

Section 2, Article 30 of the Warsaw Convention which does not contemplate the instance of "bumping-
off" but merely of simple delay, cannot provide a handy excuse for Lufthansa as to exculpate it from any
liability to Antiporda.

HON. BERNARD L. SALAS and DEMOCRITO MENDOZA, respondents

Facts:

Private respondent purchased from Singapore Airlines in Manila conjunction tickets from Manila-
Singapore-Athens-Larnaca-Rome-Turin-Zurich-Geneva-Copenhagen-New York. In Geneva, he decided to
forego his trip to Copenhagen and go straight to New York. In the absence of a direct flight under his
conjunction tickets from Geneva to New York, he exchanged the unused portion of the conjunction
ticket for a one way ticket from Geneva to New York from American Airlines, which issued its own ticket
to respondent in Geneva and claimed the value of the unused portion of the conjunction ticket from the
International Air Transport Association (IATA) clearing house in Geneva. In September, 1989, respondent
filed an action for damages before the Regional Trial Court of Cebu for the alleged embarrassment and
mental anguish he suffered at the Geneva Airport when American Airline’s security officers prevented
him from boarding the plane.

Issue:

Whether or not the issuance of American Airlines of a new ticket in exchange of the conjunction ticket
the respondent purchased in Manila bar him from seeking recourse in Philippine courts.

Ruling:

The petitioner contends that under Article 28 of the Warsaw Convention, action for damages may only
be brought upon the following courst:

a.) Domicile of the carrier

b.) Carrier’s principal place of business

c.) Place where carrier has a place of business

d.) Place of destination

Since neither of these elements is present in the case, the petitioner contends that plaintiff cannot file
the case in the Philippines. He further posits that the second contract cannot be deemed as an extension
of the first as the petitioner airline is not a participating airline in any of the destinations under the first
contract.
 Respondent on the other hand contends that the second contract she entered into at Geneva is part and
parcel of the first contract, thus the third option under Article 28 of the Warsaw Convention would apply
to him. He further pointed out that petitioner cannot deny the contract of agency with Singapore
Airlines after it honored the conjunction tickets issued by the latter.

The court ruled that petitioner’s argument is void of merit with reference to Article 1(3) of the Warsaw
Convention. According to the said article, transportation to be performed by several carriers shall be
deemed as one and undivided. The number of tickets issued does not detract from the oneness of the
contract of carriage. Hence, the third option of the plaintiff under Article 28 of the Warsaw Convention
is clothed with jurisdiction.

SABENA BELGIAN WORLD AIRLINES V CA

26 FEB
G.R. No. 104685 | March 14, 1996 | J. VITUG

Doctrine:
– Art. 1733 of the [Civil] Code provides that from the very nature of their business and by reasons of public
policy, common carriers are bound to observe extraordinary diligence in the vigilance over the goods
transported by them.
– Art. 1735 establishes the presumption that if the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted negligently, unless they prove that they had
observed extraordinary diligence as required in Article 1733.
– The Warsaw Convention denies to the carrier availment ‘of the provisions which exclude or limit his
liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance
with the law of the court seized of the case, is considered to be equivalent to wilful misconduct,’ or ‘if the
damage is (similarly) caused x x x by any agent of the carrier acting within the scope of his employment.’

Facts:
1. Plaintiff Ma. Paula San Agustin, herein private respondent, was a passenger on board Flight SN 284 of
defendant airline originating from Casablanca to Brussels, Belgium on her way back to Manila. She checked in
her luggage which contained her valuables, namely: jewelries valued at $2,350.00; clothes $1,500.00;
shoes/bag $150; accessories $75; luggage itself $10.00; or a total of $4,265.00, for which she was issued Tag
No. 71423. She stayed overnight in Brussels and her luggage was left on board Flight SN 284.
2. She arrived at Manila International Airport and immediately submitted her Tag No. 71423 but her luggage
was missing. She was advised to accomplish and submit a property Irregularity Report which she submitted
and filed on the same day but when her luggage could not be found, she filed a formal complaint with
defendant’s Local Manager.
3. Subsequently, plaintiff was furnished copies of telexes of defendant’s Brussel’s Office that the latter found
her luggage and that they have broken the locks for identification. Plaintiff was assured by the defendant that
it has notified its Manila Office that the luggage will be shipped to Manila. But unfortunately plaintiff was
informed that the luggage was lost for the second time.
4. Plaintiff demanded from the defendant the money value of the luggage and its contents or its exchange
value, but defendant refused to settle the claim. Defendant asserts in its Answer and its evidence tend to
show that while it admits that the plaintiff was a passenger with a piece of checked in luggage, the loss of the
luggage was due to plaintiff’s sole if not contributory negligence.
5. Petitioner airline company, in contending that the alleged negligence of private respondent should be
considered the primary cause for the loss of her luggage, avers that, despite her awareness that the flight
ticket had been confirmed only for Casablanca and Brussels, and that her flight from Brussels to Manila had
yet to be confirmed, she did not retrieve the luggage upon arrival in Brussels. Petitioner insists that private
respondent, being a seasoned international traveler, must have likewise been familiar with the standard
provisions contained in her flight ticket that items of value are required to be hand-carried by the passenger
and that the liability of the airline or loss, delay or damage to baggage would be limited, in any event, to only
US$20.00 per kilo unless a higher value is declared in advance and corresponding additional charges are paid
thereon. At the Casablanca International Airport, private respondent, in checking in her luggage, evidently
did not declare its contents or value, pursuant to Section 5(c), Article IX, of the General Conditions of
Carriage, which states that: “Passengers shall not include in his checked baggage, and the carrier may refuse
to carry as checked baggage, fragile or perishable articles, money, jewelry, precious metals, negotiable
papers, securities or other valuables.”
6. The trial court rendered judgment ordering Sabena Belgian World Airlines to pay private respondent. Sabena
appealed but the CA affirmed in toto the trial court’s judgment, hence the present petition for review.
Issue:
W/N the airline is liable for the lost luggage

Held:
Yes. Fault or negligence consists in the omission of that diligence which is demanded by the nature of an
obligation and corresponds with the circumstances of the person, of the time, and of the place. When the
source of an obligation is derived from a contract, the mere breach or non-fulfillment of the prestation gives
rise to the presumption of fault on the part of the obligor. This rule is not different in the case of common
carriers in the carriage of goods which, indeed, are bound to observe not just the due diligence of a good
father of a family but that of “extraordinary” care in the vigilance over the goods.
The only exceptions to the foregoing extraordinary responsibility of the common carrier is when the loss,
destruction, or deterioration of the goods is due to any of the following causes:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority.’

Not one of the above excepted causes obtains in this case.

The airline cannot invoke the tort doctrine of proximate cause because the private respondent’s luggage was
lost while it was in the custody of petitioner. The “loss of said baggage not only once by twice,” said the
appellate court, “underscores the wanton negligence and lack of care” on the part of the carrier. The above
findings foreclose whatever rights petitioner might have had to the possible limitation of liabilities enjoyed by
international air carriers under the Warsaw Convention.

In Alitalia vs. Intermediate Appellate Court, the Court held that “the Warsaw Convention however denies to
the carrier availment ‘of the provisions which exclude or limit his liability, if the damage is caused by his wilful
misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is
considered to be equivalent to wilful misconduct,’ or ‘if the damage is (similarly) caused x x x by any agent of
the carrier acting within the scope of his employment.’
The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all
necessary steps to avoid the damage, it could exculpate itself completely, and declaring the stated limits of
liability not applicable ‘if it is proved that the damage resulted from an act or omission of the carrier, its
servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would
probably result.’ The same deletion was effected by the Montreal Agreement of 1966, with the result that a
passenger could recover unlimited damages upon proof of wilful misconduct.

The Convention does not thus operate as an exclusive enumeration of the instances of an airline’s liability, or
as an absolute limit of the extent of that liability. It should be deemed a limit of liability only in those cases
where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its
transport is not attributable to or attended by any wilful misconduct, bad faith, recklessness or otherwise
improper conduct on the part of any official or employee for which the carrier is responsible, and there is
otherwise no special or extraordinary form of resulting injury. Decision appealed from AFFIRMED.