15. MONICO PUENTEBELLA, ET AL. vs. NEGROS COAL CO., LTD.

, ET AL
Facts:
These are appeals involved two actions for recovery of damages for the sum of P50,000 and
P40,000, respectively.
It is alleged that the plaintiffs, having bound themselves to plant sugar cane which the defendants, in
turn, promised to mill in a sugar central which they were to erect, complied with their contract, but
the latter did not erect the central in due time, this delay causing the former to lose all of the said
crop. It is further prayed that the contracts executed for that purpose be cancelled.
It is alleged in the answer of the defendants that the Negros Coal Co., Ltd., was dissolved by an
order of the Court of First Instance of Iloilo, but that its rights, actions and obligations were placed in
charge of the commercial firm of Hijos de I. de la Rama & Co., of which the defendant Esteban de la
Rama is the manager; that due to force majeure, fortuitous events, and other circumstances
independent of the will of the defendants, they were unable to complete the construction of the sugar
central within due time and that the plaintiffs, after the construction of the central, refused to mill their
cane and did nothing to lessen their losses.
Moreover, in the first case it is alleged as a special defense, that it having been agreed in the
contract upon which the plaintiffs base their action, that before commencing any litigation they would
submit their differences to arbitrators, the plaintiffs have done nothing to comply with this stipulation.
Indeed, paragraph 17 of the contract says:
"That they shall submit each and every one of the differences that may arise between the
party of the first part and the party of the second part to the decision of arbitrators, two of
whom shall be selected by the party of the first part and two by the party of the second part,
who, in case of a disagreement, shall select a fifth arbitrator, and they shall respect and
abide by the decision of said arbitrators or any three of them, as the case may be."
As may be seen, this clause states absolutely, and not as a mere condition precedent to
judicial action, that all differences between the contracting parties shall be submitted to arbitrators,
who decision the parties shall respect and abide by, and the clause is, therefore, void...
The contract was executed in Iloilo by Esteban de la Rama, in his capacity as President of the
Negros Coal Co., Ltd., on the one hand, and by Juliana Puentebella, Pedro Ferrer and Francisco
Ferrer on the other, which contract contains, among other things, a stipulation that the party of the
first part shall erect a sugar central in the sitio denominated Labilabi, Escalante, Occidental Negros,
with a railway across the land of the party of the second part for the transportation of sugar cane to
the central, the said party of the second part binding itself to mill the sugar cane in said central,
receiving 45 per cent of the total amount of the sugar manufactured; and the party of the second part
grants an easement of way on their land to the party of the first part and, at its option, 'to mill or not
to mill' its cane in the said sugar central.
Mrs. Juliana Puentebella, in company with her son Francisco Ferrer, also made a trip to Iloilo for a
conference with Esteban de la Rama and to advise him that their cane, as well as the cane of her
sons Pedro and Francisco was ripe and some of it over-ripe, and asked permission to mill it in the
San Carlos sugar Central, Occidental Negros, in view of the fact that neither the sugar central of the
Negros Coal Co., Ltd., nor the railway had been constructed, but Mr. De la Rama laid down certain

conditions which the petitioner considered burdensome; so nothing was done about milling the cane
in the San Carlos Central. As a result, the cane belonging to the Puentebellas and the Ferrers was
left in the fields without being milled, and with the exception of a small quantity belonging to the
Puentebellas which they had sent to the San Carlos Central for milling was drying out and
deteriorating and became a complete loss.
Esteban de la Rama alleged that the delay in the construction of the central was due to force
majeure, fortuitous events and other circumstances independent of the will of the defendants.
The plaintiffs allege, furthermore, that on account of not having harvested their crops, they could not
prepare their fields for the cultivation of the ratoon crop for the next agricultural year, an having lost
the crop for that year, they pray for damages for such loss.

Issue: WON the court committed an error in not dismissing the complaint of Messrs. Ferrer, the
plaintiffs not having complied with the condition precedent to submit their difference to arbitrators
before filing their complaint.
Held:
The contention is without merit. The arbitration clause in paragraph 17 of the Ferrer contract, Exhibit
A, expressly provides that the parties shall "abide by the decision of said arbitrators or any three of
them, as he case may be." The clause does not merely to the courts; it provides for
a final determination of legal rights by arbitration. In other words, an attempt was make to take the
disputes between the parties out of the jurisdiction of the courts. An agreement to that effect is
contrary to public policy and is not binding upon the parties.

Note: yung may *** yung important part

14. PHILIPPINE AIRLINES, INC. vs. COURT OF APPEALS and GILDA C. MEJIA
***This is definitely not a case of first impression. The incident which eventuated in the present
controversy is a drama of common contentious occurrence between passengers and carriers
whenever loss is sustained by the former. Withal, the exposition of the factual ambience and the
legal precepts in this adjudication may hopefully channel the assertiveness of passengers
and the intransigence of carriers into the realization that at times a bad extrajudicial
compromise could be better than a good judicial victory.
Facts:
Plaintiff Gilda C. Mejia shipped thru defendant, Philippine Airlines, one (1) unit microwave oven, with
a gross weight of 33 kilograms from San Francisco, U.S.A. to Manila, Philippines. Upon arrival,
however, of said article in Manila, Philippines, plaintiff discovered that its front glass door was broken
and the damage rendered it unserviceable. Demands both oral and written were made by plaintiff
against the defendant for the reimbursement of the value of the damaged microwave oven, and
transportation charges paid by plaintiff to defendant company. But these demands fell on deaf ears.
Plaintiff Gilda C. Mejia filed the instant action for damages against defendant in the lower court.

In its answer, defendant Airlines alleged inter alia, by way of special and affirmative defenses, that
the court has no jurisdiction over the case; that plaintiff has no valid cause of action against
defendant since it acted only in good faith and in compliance with the requirements of the law,
regulations, conventions and contractual commitments; and that defendant had always exercised the
required diligence in the selection, hiring and supervision of its employees.
The trial court rule in favor of the private respondent.
It was transpired in the court a quo that the plaintiff suffered sleepless nights when defendant
refused to pay her (for) the broken oven and claims P10,000.00 moral damages, P20,000.00
exemplary damages, P10,000.00 attorney's fees plus P300.00 per court appearance and
P15,000.00 monthly loss of income in her business as the plaintiff is engaged in (the) catering and
restaurant business. Hence, the necessity of the oven. On the other hand, defendant Philippine
Airlines thru its employees Rodolfo Pandes and Vicente Villaruz posited that plaintiff's claim was not
investigated until after the filing of the formal claim. Also plaintiff's claim was filed out of time under
paragraph 12, a (1) of the Air Waybill which provides: "(a) the person entitled to delivery must make
a complaint to the carrier in writing in case: (1) of visible damage to the goods, immediately after
discovery of the damage and at the latest within 14 days from the receipt of the goods.
Respondent Court of Appeals similarly ruled in favor of private respondent by affirming in full the trial
court's judgment, with costs against petitioner.
WON the trial court erred in:
I.
II.
III.

ruling in favor of the private in respondent on the ground that since the air waybill is a contract
of adhesion, its provisions should be strictly construed against herein petitioner;
finding that herein petitioner's liability is not limited by the provisions of the air waybill; and
in awarding to private respondent of moral and exemplary damages, attorney's fees and
litigation expenses.

Held:
I.

The trial court relied on the ruling in the case of Fieldmen's Insurance Co., Inc. vs. Vda. De
Songco, et al. in finding that the provisions of the air waybill should be strictly construed against
petitioner. It ruled that under our jurisprudence, the Air Waybill is a contract of adhesion
considering that all the provisions thereof are prepared and drafted only by the carrier The
only participation left of the other party is to affix his signature thereto. In the earlier case of
Angeles v. Calasanz, the Supreme Court ruled that "the terms of a contract [of adhesion]
must be interpreted against the party who drafted the same." The court found nothing
objectionable about the lower court's reliance upon the Fieldmen's Insurance case, the
principles wherein squarely apply to the present petition.

II. Petitioner insists that both respondent court and the trial court erred in finding that petitioner's
liability, if any, is not limited by the provisions of the air waybill, for, as evidence of the contract of
carriage between petitioner and private respondent, it substantially states that the shipper certifies to
the correctness of the entries contained therein and accepts that the carrier's liability is limited to US
$20 per kilogram of goods lost, damaged or destroyed unless a value is declared and a
supplementary charge paid. In refutation, private respondent explains that the reason for the
absence of a declaration of a higher value was precisely because petitioner's personnel in San
Francisco, U.S.A. advised her not to declare the value of her cargo, which testimony has not at all
been rebutted by petitioner. This being so, petitioner is estopped from faulting private respondent for
her failure to declare the value of the microwave oven.

It cannot be denied that the attention of PAL through its personnel in San Francisco was sufficiently
called to the fact that private respondent's cargo was highly susceptible to breakage as would
necessitate the declaration of its actual value. Petitioner had all the opportunity to check the
condition and manner of packing prior to acceptance for shipment, as well as during the preparation
of the air waybill by PAL's Acceptance Personnel based on information supplied by the shipper, and to
reject the cargo if the contents or the packing did not meet the company's required specifications.
Certainly, PAL could not have been otherwise prevailed upon to merely accept the cargo.
There is no absolute obligation on the part of a carrier to accept a cargo. Where a common carrier
accepts a cargo for shipment for valuable consideration, it takes the risk of delivering it in good
condition as when it was loaded. And if the fact of improper packing is known to the carrier or its
personnel, or apparent upon observation but it accepts the goods notwithstanding such condition, it
is not relieved of liability for loss or injury resulting therefrom.
II.

Petitioner ascribes ultimate error in the award of moral and exemplary damages and
attorney's fees in favor of private respondent in that other than the statement of the trial court
that petitioner acted in bad faith in denying private respondent's claim, which was affirmed by
the Court of Appeals, there is no evidence on record that the same is true. Petitioner insists
that its failure to deliver the oven in the condition in which it was shipped could hardly be
considered as amounting to bad faith.

Private respondent counters that petitioner's failure to deliver the microwave oven in the condition in
which it was received can be described as gross negligence amounting to bad faith, on the further
consideration that it failed to prove that it exercised the extraordinary diligence required by law, and
that no explanation whatsoever was given as to why the front glass of the oven was broken.
Respondent appellate court was in full agreement with the trial court's finding of bad faith on the part
of petitioner as a basis for the award of the aforestated damages, declaring that aside from the fact
that defendant-appellant acted in bad faith in breaching the contract and in denying plaintiff's valid
claim for damages, plaintiff-appellee underwent profound distress, sleepless nights, and anxiety
upon knowledge of her damaged microwave oven in possession of defendant-appellant, entitling her
to the award of moral and exemplary damages and certainly plaintiff-appellant's unjust refusal to
comply with her valid demand for payment, thereby also entitling her to reasonable attorney's fees.
***paki-emphasize* On this note, the case at bar goes into the annals of our jurisprudence after six
years and recedes into the memories of our legal experience as just another inexplicable
inevitability. We will never know exactly how many man-hours went into the preparation, litigation
and adjudication of this simple dispute over an oven, which the parties will no doubt insist they
contested as a matter of principle. One thing, however, is certain. As long as the first letter in
"principle" is somehow outplaced by the peso sign, the courts will always have to resolve similar
controversies although mutual goodwill could have dispensed with judicial recourse.

13. G.R. No. R-190-P September 15, 1987

HON. JAMES B. PAJARES vs. DEPUTY SHERIFF ELIZER ALIPANTE
Facts:

Elizer Alipante, Deputy Sheriff of Camarines Sur, was charged with dishonesty, dereliction of duty
and conduct prejudicial to the best interest of the service under a sworn complaint filed by Judge
James Pajares, RTC Branch 19, Naga City. The case was referred for investigation, report and
recommendation to the Executive Judge of the Regional Trial Court at Naga City. Hearings were
held on the matter before Acting Executive Judge Juan Llaguno, at which respondent was
represented by counsel.
On the basis of the evidence adduced before him, the Investigating Judge opined that the guilt of the
respondent for neglect of duty and inefficiency and incompetence in the performance of official
duties, had been sufficiently established. According to him, the evidence proved that respondent as
deputy sheriff undertook to enforce a writ of preliminary attachment issued in a civil case of the Court
of First Instance entitled "Freshie Sta. Rosa-Yador v. Dario M. Javier, et al.," that pursuant to the writ
he levied on several items of personalty in the possession of two of the defendants; that he
deposited the articles in a private warehouse owned by Samson Cagonia, at Naga City; that
somehow, and without respondent's knowledge, the plaintiff were thereafter able to withdraw the
property from the warehouse, and respondent sheriff has since been unable to locate and retrieve
the same; and that respondent failed to file a return on the writ of preliminary attachment, bestirring
himself to do so only when required to do so under threat of disciplinary action by the complaint
Judge. The Investigating Judge also rejected respondent's proferred excuse of pressure of work for
his failure to file his report on his implementation of the writ of attachment, as well as his claim that
his inability to retain official custody of the attached property was rendered inconsequential by the
fact that an amicable settlement had been subsequently reached by the parties concerned and the
plaintiffs had credited the defendants with the value of the property levied on.
The Investigating Judge however declared the other charges against respondent as not having been
adequately substantiated by the evidence submitted.
Issue: WON the respondent is guilty of gross negligence
Held: The find no cogent reason after reviewing the record to disturb His Honor's findings. The court
agree that the respondent is guilty of gross negligence and conduct seriously prejudicial to the best
interest of the service. The evidence shows respondent to have been completely unmindful of his
duties, so indifferent to his responsibilities as to be scornful of them, and utterly uncaring of the rights
of the parties. He has by his conduct shown himself to be unfit for public service, specially that
connected with the administration of justice, which demands the highest sense of dedication
and zeal in the protection and conservation of the rights and interests of litigants as well as
in assuring the efficacy and integrity of the judicial process.