MAGSAYSAY INC v.

AGAN
G.R. No. L-6393/ Jan 31, 1955 / Reyes, J. / TRANSPO- / PSPAMBID
PETITIONER
A. Magsaysay Inc
RESPONDENTS Anastacio Agan
SUMMARY. SS San Antonio, owned by Magsaysay, had cargo belonging to Agan. The ship
ran aground after having a stopover so Magsaysay had it refloated. Agan did not make a
deposit/bond to answer for the contribution to the average. The court ruled that the expenses
incurred in floating the ship is not general average:
(1) Vessel and cargo were at the time in no imminent danger
(2) The cargo, without need of expensive salvage operation, have been unloaded by
the owners
(3) Salvage operation was for the benefit of the vessel and not for the purpose of
saving the cargo
(4) Expenses or damages incurred were not taken through proper legal steps and
authority
DOCTRINE. It is the deliverance from an immediate, impending peril, by a common
sacrifice, that constitutes the essence of general average
FACTS.
1. The S S "San Antonio", vessel owned and operated by Magsaysay, left Manila on October
6, 1949, bound for Basco, Batanes, vis Aparri, Cagayan, with general cargo belonging to
different shippers, among them Agan.
2. The vessel reached Aparri on the 10th of that month, and after a day's stopover in that
port, weighed anchor to proceed to Basco.
3. While still in port, it ran aground at the mouth of the Cagayan river, and, attempts to
refloat it under its own power having failed, Magsaysay had it refloated by the Luzon
Stevedoring Co. at an agreed compensation.
4. Once afloat the vessel returned to Manila to refuel and then proceeded to Basco, the port
of destination. There the cargoes were delivered to their respective owners or consignees,
who, with the exception of defendant, made a deposit or signed a bond to answer for their
contribution to the average.
5. On the theory that the expenses incurred in floating the vessel constitute general average
to which both ship and cargo should contribute, plaintiff brought the present action in CFI
Manila to make Agan pay his contribution, which, as determined by the average adjuster,
amounts to P841.40
6. Agan, in his answer, denies liability to his amount, alleging, among other things, that the
stranding of the vessel was due to the fault, negligence and lack of skill of its master, that
the expenses incurred in putting it afloat did not constitute general average, and that the
liquidation of the average was not made in accordance with law.
ISSUES & RATIO.
WON the general average for floating a vessel included the expenses incurred in floating
the ship - NO
1. (NOTE: the stranding of plaintiff's vessel was due to the sudden shifting of the
sandbars at the mouth of the river which the port pilot did not anticipate. The
standing may, therefore, be regarded as accidental, and the question is whether the
expenses incurred in floating a vessel so stranded should be considered general
average and shared by the cargo owners)
2. Under the Coe of Commerce, averages are classified into simple or particular and
general or gross.

simple or particular averages include all expenses and damages caused to

the vessel or cargo which have not inured to the common benefit (Art.
809), and are, therefore, to be borne only by the owner of the property
gave rise to same (Art. 810);

general or gross averages include "all the damages and expenses which are
deliberately caused in order to save the vessel, its cargo, or both at the
same time, from a real and known risk" (Art. 811). Being for the common
benefit, gross averages are to be borne by the owners of the articles
saved (Art. 812).
3. While the expenses incurred in putting plaintiff's vessel afloat may well come under
number 2 of article 809-which refers to expenses suffered by the vessel "by reason
of an accident of the sea of the force majuere" and should therefore be classified
as particular average, the said expenses do not fit into any of the specific cases of
general average enumerated in article 811. No. 6 of this article does mention
"expenses caused in order to float a vessel," but it specifically refers to "a vessel
intentionally stranded for the purpose of saving it" and would have no application
where, as in the present case, the stranding was not intentional.
Do the expenses come within the legal concept of the general average?
1. Requisites of General Average according to Tolentino:

there must be a common danger. This means, that both the ship and the
cargo, after has been loaded, are subject to the same danger, whether
during the voyage, or in the port of loading or unloading; that the danger
arises from the accidents of the sea, dispositions of the authority, or faults
of men, provided that the circumstances producing the peril should be
ascertained and imminent or may rationally be said to be certain and
imminent. This last requirement excludes measures undertaken against a
distant peril.

that for the common safety part of the vessel or of the cargo or both is
sacrificed deliberately.

that from the expenses or damages caused follows the successful saving
of the vessel and cargo.

that the expenses or damages should have been incurred or inflicted after
taking proper legal steps and authority.
2. On the 1st requisite: NOPE. The vessel ran aground in fine weather inside the port
at the mouth of a river, a place described as "very shallow". It is the deliverance
from an immediate, impending peril, by a common sacrifice, that constitutes the
essence of general average. In the present case there is no proof that the vessel had
to be put afloat to save it from imminent danger. What does appear from the
testimony of plaintiff's manager is that the vessel had to be salvaged in order to
enable it "to proceed to its port of destination." But it is the safety of the property,
and not of the voyage, which constitutes the true foundation of the general average.
3. 2nd requisite: NOPE. the expenses in question were not incurred for the common
safety of vessel and cargo, since they, or at least the cargo, were not in imminent
peril. The cargo could, without need of expensive salvage operation, have been
unloaded by the owners if they had been required to do so.
4. 3rd requisite: NOPE. the salvage operation, it is true, was a success. But as the
sacrifice was for the benefit of the vessel to enable it to proceed to destination
and not for the purpose of saving the cargo, the cargo owners are not in law bound to
contribute to the expenses.
5. 4th requisite: LESLIE KNOPE. it does not appear that the expenses here in question
were incurred after following the procedure laid down in article 813.

DECISION.
Decision appealed from is REVERSED

G. URRUTIA & CO. v BACO RIVER PLANTATION

NO. 7675 / APR 20 2001 / MORELAND J. / TRANSPO - Collisions Classes and Effects /
LATLimbaring
NATURE
Petition for review on certiorari of CA decision
PETITIONERS
G. Urrutia & Co.
RESPONDENTS
Baco River Plantation and M. Garza

Findings of the TC: Nuestra Senora del Pilar was sailing erratically. It did not have proper
watch on board. It also crossed the course of Mangyan. Mangyan, on the other hand, is also
guilty of contributory negligence. Despite the erratic movements of the steamer, Mangyan
proceeded directly on its course regardless of consequences when it couldve maneuvered
so as to avoid the collision.
SC sustained the findings of the TC. Since the gross negligence of the steamship is the
proximate cause of the accident, Baco River was entitled to recover upon its counter claim.

SUMMARY. A steamship and a schooner collided. As a result, the steamship sank.

The TC found the steamships negligence as the proximate cause of the accident.
It noted however that the schooner is liable for contributory negligence because it
kept a steady course despite the fact that it already noticed the steamship sailing
erratically. SC held that the schooner had the right and duty to keep its course and
in doing so, only the steamship is liable.
DOCTRINE. Nautical rules require that, where a steamship and sailing vessel are
approaching each other from opposite directions, or on intersecting lines, the
steamship, from the moment the sailing vessel is seen, shall watch with the highest
diligence her course and movements so as to be able to adopt such timely means
of precaution as will necessarily
prevent the two boats from coming in contact.
Nautical rules also require that, where a steamship and a sailing vessel are
approaching each other from opposite directions, or on intersecting lines, the
sailing vessel is required to keep her course unless the circumstances are such as
to render a departure from the rule necessary in order to avoid immediate danger.
Where a steamship and a sailing vessel are approaching each other bow on, or on
intersecting lines, the steamship must give way. In case of a collision between such
vessels the steamship is prima facie in fault.

10.WON Mangyan was negligent in continuing its course without variation up to the
moment it found itself in extremis NO.
Articles 20 & 21 of the Internation Rules for the Prevention of Collisions at Sea
o ART. 20: If two ships, one of whichis a sailing ship and the other a steam ship, are
proceeding in such directions as to involve risk of collision, the steam ship shall keep
out of the way of the sailing ship
o ART 21: Where by any of these rules one of two vessels is to keep out of the way, the
other shall keep her course and speed
Generally speaking in collisions between vessels, there are 3 divisions of time or zones:
1. FIRST DIVISION covers all the time up to the moment when the risk of collision
may be said to have begun. Within this zone, no rule is applicable because none is
necessary. Each vessel is free to direct its course as it deems best without reference to
the movement of the other vessel.
2. SECOND DIVISION covers the time between the moment when the risk of collision
begins and the moment when it has become a practical certainty
3. THIRD DIVISION covers the time between the moment when collision has become
a practical certainty and the moment of actual contact.
In this case, it was when Mangyan was passing through the THIRD ZONE that it changed
its course to port in order to avoid the collision. This act may be said to have been done in
extremis HOWEVER, Mangyan still cannot be held responsible.
THE COURT CITED SEVERAL AUTHORITIES: all point out to the fact that in cases of
collision between a steamship and a sailing vessel, the sailing vessel does not have just the
right but the DUTY to keep its course.
o According to the American and English Encyclopedia of Law1 - in case of collision
between a steam vessel and a sail vessel, the presumption is against the steam vessel.
o Hughes on Admiralty: The mere approach of the two vessels does not bring about risk
of collision. The steamer may assume that the sail vessel will do her duty and do
nothing to embarrass her. Hence the steamer may shape her course so as to avoid the
sail vessel. Article 21 renders it obligatory on the vessel which has the right of way
to pursue her course. She must rely on the other vessel to avoid the collision and
not embarrass her by any maneuver. All she need do is to do nothing. Then the other
vessel knows what to expect and navigates accordingly. In collisions between steam
and sail vessels the steamer's defense is almost invariably that the sail vessel changed
her course.
o Spencer on Marine Collisions: The duties imposed upon vessels are of a mutual
character; and where the statute directs one to give way to the other, it imposes an
equal duty upon the latter to continue on its course, and a change of course on its part
is as unlawful as it would be for the other to refuse to yield the right of way. The duties
imposed upon vessels are of a mutual character; and where the statute directs one to
give way to the other, it imposes an equal duty upon the latter to continue on its
course, and a change of course on its part is. The duty of one vessel to keep her
course is not intended by the rules as a privilege conferred, but as an obligation

READ SUMMARY AND DOCTRINE FIRST!!!!!

FACTS.
A collision occurred between steamship Nuestra Senora del Pilar and schooner Mangyan.
o The steamship, before the actual collision was sailing erratically. Mangyan, on the
other hand, kept her course steady until just before the actual contact.
As a result of the collision, the steamship sank and 8 people were killed.
G. Urrutia and Co., owners of the steamship, brought an action against Baco River
Plantation to recover the value of the destroyed steamer.
Baco River, on the other hand, denied the allegations and filed a counterclaim for damages
for the injuries sutained by their vessel.
o M. Garza sought to intervene alleging that the steamer was carrying for him
merchandise worth several thousand pesos.
ISSUES & RATIO.
9. Which of the two vessels was negligent in failing to conform to the International Rules
for the Prevention of Collisions at Sea STEAMER! As it was handled in a grossly
negligent manner.

1 Subject to the general rules of evidence in collision cases as to the burden of proof, in the case of a collision between a steam vessel and a sail vessel, the presumption is against the steam vessel, and she must

show that she took the proper measures to avoid a collision

o
o

imposed, in order to enable the other vessel with certainty to keep out of the way. as
unlawful as it would be for the other to refuse to yield the right of way.
American and English Encyclopedia of Law: But it must be a strong case which puts
the sail vessel in the wrong for obeying the rule to hold her course, for the court must
clearly see, not only that a deviation from the rule would have prevented the collision,
but that the officer in charge of the sail vessel was guilty of negligence or a culpable
want of seamanship in not perceiving the necessity for a departure from the rule and
acting accordingly. The sail vessel is justified in holding her course to the last
minute possible for the steamship to avoid her by making the necessary maneuver
In the case St. John v Paine: As a general rule, therefore, when meeting a sailing
vessel, whether close hauled or with the wind free, the latter has a right to keep her
course, and it is the duty of the steamer to adopt such precautions as will avoid
her. By an adherence to this rule on the' part of the sailing vessel the steamer with a
proper lookout will be enabled, when approaching in an opposite direction, to adopt the
necessary measures to avoid the danger, and she will have a right to assume that the
sailing vessel will keep her course. If the latter fails to do this, the fault will be
attributable to her, and the master of the steamer will be responsible only for a fair
exertion of the power of his vessel to avoid the collision under the unexpected change
of the course of the other vessel, and the circumstances of the case.
Case of the Ottawa: Rules of navigation are obligatory from the time the necessity for
precaution begins, and continue to be applicable as the vessels advance, so long as the
means and opportunity to avoid the danger remain; but they do not apply to a vessel
required to keep her course after the approach is so near that the collision is inevitable,
and are equally inapplicable to vessels of every description while they are yet so
distant from each other that measures of precaution have not become necessary
The Fannie case: Schooner has the duty to keep its course. It is up to the
steamship to do whatever is necessary to avoid the collision. If the sailing vessel
does not change its course, the steamer alone is answerable for the collision.
The Sea Gull case: Steamers approaching a sail ship in such a direction as to involve
risk of collision are required to keep out of the way of the sail ship; but the sail ship is
required to keep her course unless the circumstances are such as to render a
departure from the rule necessary in order to avoid immediate danger.
Etc. etc. paulit ulit lang.

From the foregoing authorities, and under the facts of the case, Baco River Plantation is
entitled to recover upon its counterclaim.
DECISION.
Petition GRANTED. CA decision SET ASIDE.
NOTES
WON M. Garza may intervene NO. no legal interest in the matter in litigation

GOVERNMENT OF THE P.I. v. PHILIPPINE STEAMSHIP CO.

G.R. No. 18957 / JAN 16, 1923 / STREET, J. / TRANSPO - Accidents and Damages in
Maritime Commerce - Collisions / MLCAMITAN
NATURE
Appeal from a CFI judgment
PETITIONERS
The Government of the Philippine Islands
RESPONDENTS
Philippine Steamship Co., Inc. and Fernandez Hermanos
SUMMARY. A collision occurred between the vessel Isabel, which was then carrying the
sacks of rice owned by the Philippine Government, and the steamship Antipolo which was
owned by Phil. Steamship Co. The TC held that both vessels were liable negligent. The
Antipolos mate was negligent in having permitted the vessel to approach directly towards
the Isabel until the two were in dangerous proximity, but it is not clear if the Isabel was
negligent in keeping on its course as it may have had the right of way. The SC affirmed,
ruling that since Isabel was a total loss, Phil. Steamship Co. should shoulder the entire loss
suffered by the Phil. Government.
DOCTRINE. Where both vessels are negligent, both shall be solidarily responsible for
the damage occasioned to their cargoes.
Where a collision occurs and one is sunk with total loss of both ship and cargo, the owner
of the other vessel is liable to any shipper of cargo aboard the sunken vessel to the full
extent of the value thereof; and it makes no difference that the negligence imputable to the
two vessels may have differed somewhat in character and degree and that the negligence
of the sunken ship was somewhat more marked than that of the other.
Under Arts. 827 and 828, the rule of liability announced in Art. 827 is applicable not only
to the case where both vessels may be shown to be actually blameworthy but also to the
case where it is obvious that only one was at fault but the proof does not show which.
FACTS.
The vessel Isabel left the port of Manila with 911 sacks of rice belonging to the
Government. After 4 hours, the watch and the mate on the bridge of the Isabel saw the light
of another vessel on its way to Manila and coming towards Isabel. At about the same time
both the watch and mate on the bridge of the Antipolo also saw the Isabel.
When the mate of the Antipolo, who was then at the wheel, awoke to the danger of the
situation and saw the Isabel "almost on top of him," to use the words of the committee on
marine accidents reporting the incident, he put his helm hard to the starboard. Had the mate
of the Isabel done the same, no accident would occur.
However, he at once placed his own helm hard to port, with the result that his boat veered
around directly in the path of the other vessel and a collision became inevitable.
The Isabel immediately sank, with total loss of vessel and cargo, though the members of
her crew were picked up from the water and saved.
TC: both negligent - Antipolo was clearly negligent in having permitted that vessel to
approach directly towards the Isabel but it is not clear that the Isabel was chargeable with
negligence in keeping on its course; for this boat had its jib sail hoisted, and may for that
reason be considered to have had the right of way.
Negligence shortly preceding the moment of collision is, however, undoubtedly chargeable
to the Isabel, for the incorrect and incompetent way in which this vessel was then handled,
probably because the mate was on continuous duty during the whole preceding day and
night, and was either dozing or inattentive.
ISSUES & RATIO.
WON both vessels were negligent - YES

The SC agrees with the TC that both were negligent, and although the negligence on the part
of the mate of the incoming vessel preceded the negligence on the part of the mate of the
outgoing vessel by an appreciable interval of time, the first vessel cannot on that account be
absolved from responsibility.
Where both vessels are to blame, both shall be solidarily responsible for the damage
occasioned to their cargoes. As the Isabel was a total loss and cannot sustain any part of this
liability, the burden of responding to the Government of the Philippine Islands, as owner of the
rice embarked on the Isabel, must fall wholly upon the owner of the other ship, that is, upon
the Philippine Steamship Company, Inc.

DECISION.
Judgment affirmed.
NOTES.
ARTICLE 827. If the collision is imputable to both vessels, each one shall suffer its own
damages, and both shall be solidarily responsible for the losses and damages occasioned to
their cargoes.
ARTICLE 828. The provisions of the preceding article are applicable to the use in which it
cannot be determined which of the two vessels has caused the collision.

SMITH BELL & CO. v. CA

G.R. No.L-56294 / May 20 1991/ Feliciano, J../TRANSPO-Collision/JMQAquino
NATURE
Petition for Review on Certiorari
PETITIONERS
SMITH BELL AND COMPANY (PHILIPPINES), INC. and TOKYO
MARINE AND FIRE INSURANCE CO., INC.
RESPONDENTS
THE COURT OF APPEALS and CARLOS A. GO THONG AND CO.
SUMMARY. Don Carlos, operated by Go Thong and Co., collided with the Yotai Maru, a
Japanese Merchant Vessel. SC reversed the finding of the CA and held that the negligence
of Don Carlos was the proximate cause of the damage.
DOCTRINE. The failure of the Don Carlos to have on board, on the night of the collision, a
"proper look-out" constitutes negligence.
FACTS.

On 3 May 1970, 3:50 a.m., on the approaches to the port of Manila near Caballo
Island, a collision took place between the M/V Don Carlos, an inter-island vessel
owned and operated by Carlos A. Go Thong and Company (Go Thong), and the
M/S Yotai Maru, a merchant vessel of Japanese registry.
o The Don Carlos was then sailing south bound leaving the port of Manila
for Cebu, while the Yotai Maru was approaching the port of Manila,
coming in fromKobe, Japan. The bow of the Don Carlos rammed the
portside (left side) of the Yotai Maru inflicting a 3 cm. gaping hole on
her portside near Hatch 3, through which seawater rushed in and flooded
that hatch and her bottom tanks, damaging all the cargo stowed therein.

The consignees of the damaged cargo got paid by their insurance companies.The
insurance companies in turn, having been subrogated to the interests of the
consignees of thedamaged cargo, commenced actions against Go Thong for damages
sustained by the variousshipments in the then CFI of Manila.

2 cases were filed in the CFI of Manila. The first case was commenced or 13 March
1971 by Smith Bell and Company (Philippines), Inc and Sumitomo Marine and
Fire Insurance Company Ltd., against Go Thong, in Branch 3, which was presided
over by Judge Bernardo P. Fernandez. The second case was filed on 15 March 1971
by Smith Bell and Company (Philippines), Inc. and Tokyo Marine and Fire
Insurance Company, Inc. against Go Thong in Branch 4, which was presided over
by then Judge, later Associate Justice of this Court, Serafin R. Cuevas.

In both cases, the Manila CFI held that the officers and crew of the Don Carlos
had been negligent, that such negligence was the proximate cause of the collision
and accordingly held Go Thong liable for damages to the insurance companies. Both
decisions were appealed to the CA.

Aug 8 1978: CA through Justice LB Reyes affirmed Fernandez's decision.

Nov 26 1980: CA through Justice Sison reversed the Cuevas decision and held the
offices of the Yotai Maru at fault in the collision with the Don Carlos and dismissed
the insurance companies' complaint

Petitioners insurance companies filed the instant petition arguing that:

o Sison Decision had disregarded the rule of res judicata
o Sison erred in accepting Go Thong's defense that the question of fault on
the part of the Yotai Maru had been settled by the compromise agreement
between the owner of the Yotai Maru and Go Tong as owner of the Don
Carlos
o Sison erred in holding that the Yotai maru had been negligent and at fault
in collision with the Don Carlos [relevant]

ISSUES & RATIO.

1. WON Sison Decision had disregarded the rule of res judicata YES
The Court of Appeals fell into clear and reversible error when it disregarded the Decision
of this Court affirming the Reyes Decision. Where the second action between the same
parties is upon a different claim or demand, the judgment in the prior action operates as an
estoppel only as to those matters in issue or points controverted, upon the determination of
which the finding or judgment was rendered. In fine, the previous judgment is conclusive in
the second case, only as those matters actually and directly controverted and determined and
not as to matters merely involved therein. This is the rule on 'conclusiveness of judgment'
embodied in subdivision (c) of Section 49 of Rule 39 of the Revised Rules of' Court.
In the case at bar, the issue of which vessel ("Don Carlos" or "Yotai Maru") had been
negligent, or so negligent as to have proximately caused the collision between them, was an
issue that was actually, directly and expressly raised, controverted and litigated in C.A.-G.R.
No. 61320-R. Reyes, L.B., J., resolved that issue in his Decision and held the "Don Carlos" to
have been negligent rather than the "Yotai Maru" and, as already noted, that Decision was
affirmed by this Court in G.R. No. L-48839 in a Resolution dated 6 December 1978. The
Reyes Decision thus became final and executory approximately two (2) years before the Sison
Decision, which is assailed in the case at bar, was promulgated. Applying the rule of
conclusiveness of judgment, the question of which vessel had been negligent in the collision
between the two (2) vessels, had long been settled by this Court and could no longer be
relitigated in C.A.-G.R. No. 61206- R. Private respondent Go Thong was certainly bound by
the ruling or judgment of Reyes, L.B., J. and that of this Court.
2.

WON Sison erred in accepting Go Thong's defense that the question of fault on
the part of the Yotai Maru had been settled by the compromise agreement
between the owner of the Yotai Maru and Go Tong as owner of the Don Carlos
YES
An offer to compromise does not, in legal contemplation, involve an admission on the
part of a defendant that he is legally liable, nor on the part of a plaintiff that his claim or
demand is groundless or even doubtful, since the compromise is arrived at precisely with
a view to avoiding further controversy and saving the expenses of litigation. True it is that
by virtue of the compromise agreement, the owner of the "Yotai Maru" paid a sum of money to
the owner of the "Don Carlos." Nowhere, however, in the compromise agreement did the
owner of the "Yotai Maru " admit or concede that the "Yotai Maru" had been at fault in the
collision. The familiar rule is that "an offer of compromise is not an admission that anything is
due, and is not admissible in evidence against the person making the offer." A compromise is
an agreement between two (2) or more persons who, in order to forestall or put an end to a
lawsuit, adjust their differences by mutual consent, an adjustment which everyone of them
prefers to the hope of gaining more, balanced by the danger of losing more.
3.

WON Sison erred in holding that the Yotai maru had been negligent and at
fault in collision with the Don Carlo - YES
Examining the facts as found by Judge Cuevas, the Court believes that there are three
(3) principal factors which are constitutive of negligence on the part of the "Don Carlos,"
which negligence was the proximate cause of the collision.
(1) The failure of the "Don Carlos" to comply with the requirements of Rule 18 (a) of the
International Rules of the Road ("Rules")," which provides as follows
(a) When two power-driven vessels are meeting end on, or nearly end on, so as to
involve risk of collision, each shall alter her course to starboard, so that each may
pass on the port side of the other. This Rule only applies to cases where vessels are

meeting end on or nearly end on, in such a manner as to involve risk of collision,
and does not apply to two vessels which must, if both keep on their respective
course, pass clear of each other. The only cases to which it does apply are when each
of two vessels is end on, or nearly end on, to the other; in other words, to cases in
which, by day, each vessel sees the masts of the other in a line or nearly in a line
with her own; and by night to cases in which each vessel is in such a position as to
see both the sidelights of the other. It does not apply, by day, to cases in which a
vessel sees another ahead crossing her own course; or, by night, to cases where the
red light of one vessel is opposed to the red light of the other or where the green
light of one vessel is opposed to the green light of the other or where a red light
without a green light or a green light without a red light is seen ahead, or Where both
green and red lights are seen anywhere but ahead.
Here, the evidence shows that each vessel made a visual sighting of each other ten minute
before the collision which occurred at 0350. German's version of the incident that followed,
was that "Don Carlos" was proceeding directly to [a] meeting [on an] "end-on or nearly end-on
situation". He also testified that "Yotai Maru's' headlights were "nearly in line at 0340
A.M." (t.s.n., June 6, 1974) clearly indicating that both vessels were sailing on exactly
opposite paths. Rule 18 (a) of the International Rules of the Road provides as follows:
xxx

xxx

xxx

And yet German altered "Don Carlos" course by five degrees to the left at 0343 hours
instead of to the right (t.s.n. June 6, 1974, pages 4445) which maneuver was the error that
caused the collision in question. Why German did so is likewise explained by the evidence
on record. "Don Carlos" was overtaking another vessel, the "Don Francisco", and was then at
the starboard (right side) of the aforesaid vessel at 3:40 a.m. It was in the process of overtaking
"Don Francisco" that "Don Carlos' was finally brought into a situation where he was meeting
end-on or nearly end-on "Yotai Maru, thus involving risk of collision.
Whereas the "Yotai Maru" did comply with its obligations under Rule 18 (a). As the "Yotai
Maru" found herself on an "end-on" or a "nearly end-on" situation vis-a-vis the "Don Carlos, "
and as the distance between them was rapidly shrinking, the "Yotai Maru" turned starboard (to
its right) and at the same time gave the required signal consisting of one short horn blast. The
"Don Carlos" turned to portside (to its left), instead of turning to starboard as demanded by
Rule 18 (a). The "Don Carlos" also violated Rule 28 (c) for it failed to give the required signal
of two (2) short horn blasts meaning "I am altering my course to port." When the "Yotai Maru"
saw that the "Don Carlos" was turning to port, the master of the "Yotai Maru" ordered the
vessel turned "hard starboard" at 3:45 a.m. and stopped her engines; at about 3:46 a.m. the
"Yotai Maru" went "full astern engine." 20 The collision occurred at exactly 3:50 a.m.
(2) "Don Carlos" failed to have on board that night a "proper look-out" as required by
Rule I (B) Under Rule 29 of the same set of Rules, all consequences arising from the
failure of the "Don Carlos" to keep a "proper look-out" must be borne by the "Don
Carlos." "Don Carlos" did not have "look-out" whose sole and only duty is only to act as
Such. A "proper look-out" is one who has been trained as such and who is given no other duty
save to act as a look-out and who is stationed where he can see and hear best and maintain
good communication with the officer in charge of the vessel, and who must, of course, be
vigilant. Judge Cuevas wrote: The "look-out" should have no other duty to perform. He has
only one duty, that which its name impliesto keep "look-out". So a deckhand who has other
duties, is not a proper "look-out". The navigating officer is not a sufficient "look-out". Neither
the captain nor the [helmsman] in the pilothouse can be considered to be a "look-out" within
the meaning of the maritime law. Nor should he be stationed in the bridge. He should be as
near as practicable to the surface of the water so as to be able to see low-lying lights.

It is hardly probable that neither Benito German (Second Mate) or Leo Enriquez (position not
stated in the case*) may qualify as "look-out" in the real sense of the word.
(3) Second Mate Benito German was, immediately before and during the collision, in
command of the "Don Carlos." According to Judge Cuevas, the evidence on record clearly
discloses that "Don Carlos" was, at the time of the collision and immediately prior thereto,
under the command of Benito German, a second mate although its captain, Captain Rivera,
was very much in the said vessel at the time. The defendant's evidence appears bereft of any
explanation as to why second mate German was at the helm of the aforesaid vessel when
Captain Rivera did not appear to be under any disability at the time.
The fact that second mate German was allowed to be in command of "Don Carlos" and
not the chief or the sailing mate in the absence of Captain Rivera, gives rise to no other
conclusion except that said vessel [had] no chief mate. Otherwise, the defense evidence
should have at least explained why it was German, only a second mate, who was at the helm
of the vessel "Don Carlos" at the time of the fatal collision.
Worst still, aside from German's being only a second mate, is his apparent lack of
sufficient knowledge of the basic and generally established rules of navigation. For
instance, he appeared unaware of the necessity of employing a "look- out" which is manifest
even in his testimony before the Board of Marine Inquiry on the same subject. There is,
therefore, every reasonable ground to believe that his inability to grasp actual situation and the
implication brought about by inadequacy of experience and technical know-how was mainly
responsible and decidedly accounted for the collision of the vessels involved in this case.
DECISION.
Nov 26 1980 CA decision reversed. Sep 22 1975 decision (of CFI manila) reinstated and
affirmed in toto.
NOTES.
Cf. G. Urrutia and Company
The Court disagrees with Sison's view that by imposing an exclusive obligation upon one of
the vessels, the "Yotai Maru, " to avoid the collision, the Court of Appeals not only chose to
overlook all the above facts constitutive of negligence on the part of the "Don Carlos;" it also
in effect used the very negligence on the part of the "Don Carlos" to absolve it from
responsibility and to shift that responsibility exclusively onto the "Yotai Maru" the vessel
which had observed carefully the mandate of Rule 18 (a). Moreover, G. Urrutia and Company
v. Baco River Plantation Company invoked by the Court of Appeals seems simply
inappropriate and inapplicable. For the collision in the Urrutia case was between a sailing
vessel, on the one hand, and a power-driven vessel, on the other; the Rules, of course,
imposed a special duty on the power-driven vessel to watch the movements of a sailing
vessel, the latter being necessarily much slower and much less maneuverable than the powerdriven one. In the case at bar, both the "Don Carlos" and the "Yotai Maru" were power-driven
and both were equipped with radar; the maximum speed of the "Yotai Maru" was thirteen (13)
knots while that of the "Don Carlos" was eleven (11) knots. Moreover, as already noted, the
"Yotai Maru" precisely took last minute measures to avert collision as it saw the "Don Carlos"
turning to portside: the "Yotai Maru" turned "hard starboard" and stopped its engines and then
put its engines "full astern."

G. URRUTIA & COMPANY v. THE PASIG STEAMER AND LIGHTER CO.

G.R. No. 7294 / March 22, 1912 / TORRES, J. / Salvage Law / EFHDy
NATURE
APPEAL from CFI
PETITIONERS
G. Urrutia & Company
RESPONDENTS
Pasig Steamer and Lighter Co.
SUMMARY. Defendant ship sent a distress signal requesting it to be towed to safety, to
which plaintiff ship did. Thereafter, plaintiff sued defendant for payment for the salvage
service, to which defendant denied. SC held that since there is no express law governing
salvage, Civil Code provision (specifically on lease of services) governs. So that when
plaintiff exposed itself to danger to rescue defendant, it should be rewarded for its services.
DOCTRINE. There being no express legislation exactly applicable to cases of salvage, nor
legal principles thereto relating established by the courts, pursuant to the second paragraph
of article 6 of the Civil Code, we must fall back upon the customs of the place, and in the
absence thereof, general principles of law.

FACTS.
Plaintiff G. Urrutia & Company is the owner of the ship Nuestra Seora del Pilar,
meanwhile defendant Pasig Steamer and Lighter Co. is the owner of the ship San Juan.
San Juan was caught in a cyclone/raging storm and sent a signal displaying the message
"Am unable to navigate. Will you tow me to a safe anchorage?" to which Nuestra rendered
salvage service to the San Juan by taking it to a safe port.
Plaintiff is now suing defendant for remuneration for the salvage service rendered.
Defendant merely filed a demurrer, which was denied by the trial court.
ISSUES & RATIO.
11.WON defendant is liable to pay for the salvage service. YES.
There being no express legislation exactly applicable to cases of salvage, nor legal
principles thereto relating established by the courts, pursuant to the second paragraph of
article 6 of the Civil Code, we must fall back upon the customs of the place, and in the
absence thereof, general principles of law.
When so important a service is rendered as that of salving a vessel with its crew and the
cargo it carries, from a positive danger to which it is exposed, strict justice demands that
whoever effects so meritorious a service should receive adequate remuneration therefor, not
only on account of the act performed in behalf of the ship-owner and the crew, but also
because of the danger run by the vessel which made the salvage, due to the circumstances
that existed at the time such service was rendered.
In a lease of work or services, says article 1544 of the Civil Code, one of the parties binds
himself to execute a work or to render a service to the other for a specified price. In
accordance with the provisions of this article, the service rendered in the natural course of
events and at an ordinary time must be remunerated, unless the service be rendered
gratuitously at the express will of the server.
So that, when the steamer Nuestra Seora del Pilar responded to the call for help, made by
means of signals displayed by the captain of the steamer San Juan, in the midst of a violent
storm, which signals conveyed the information that the latter vessel was unable to navigate
for the reason indicated and inquired whether the steamer signaled would tow it to a safe
anchorage, it is only just that the steamer San Juan, after having been saved from the danger
and conducted within the bay, called a shipyard, of the Island of Mindoro, should pay, in
recompense for such valuable and extraordinary service, due and proper remuneration to the

owner of the salving vessel, Nuestra Seora del Pilar, once it was satisfactorily proved that
the San Juan could not be guided by its rudder, or navigated by the use of its engine, on
account of a cable having become wrapped and entangled in its propeller, so that, as a
consequence of the said storm, the steamer rolled heavily and was exposed to certain wreck
or stranding upon the coasts of the adjacent islands.
The principle has been established by the courts of the United States that when a vessel has
been disabled by the breaking of its shaft at sea and hoists signals asking for aid, and
another vessel goes to its relief and takes it in tow, such service rendered is one of salvage,
and not merely of towage.
The towage of a vessel in peril to some place of security, when it is unable by itself to reach
the same, is a service of salvage.
Hence it is not here a question of a simple service of towage in ordinary and normal
weather, but of an extraordinary act of salvage performed in behalf of the steamer San Juan,
in exceptional circumstances and while a cyclone was raging over the part of the sea where
the salved vessel then was, which, in the midst of such peril, was unable to govern its
movements through its engine on account of the inserviceability of its propeller.
Compensation in such cases as that which occurred to the San Juan, deserves to be
considered as a reward for the service rendered by the Nuestra Seora del Pilar in the midst
of a peril to which the rescued as well as the salving steamer was exposed, and it is proper
that such reward should be made, not only because of the salvage of the vessel and of the
goods it carried and the rescue of its crew, but also in order that it may serve as an incentive
to render prompt and efficient aid in such cases when requested by those who in the midst
of such unfortunate circumstances are urgently in need thereof; and especially when the
salvor is a merchant vessel and therefore more entitled to remuneration for the service
rendered.
DECISION. Judgment AFFIRMED.

ERLANGER & GALINGER v. SWEDISH EAST ASIATIC CO.

GR 10051 / March 9, 1916 / Narvasa, J./Transpo-Nominal damages/MAPEsquivias
NATURE
Petition for review on certiorari
PETITIONERS
Erlanger & Galinger
RESPONDENTS
Swedish East Asiatic Co. et al, Oelwerke Teutonia, New Zealand
Insurance Co.
SUMMARY Upon an invitation from the UN, Dr. Felipa Pablo was to present a scientific
paper in Italy. Pursuant to this, she booked with airline ALITALIA. She arrived in Milan a
day before the meeting, but her luggage was delayed because it was in one of the
succeeding flights coming from Rome. However, her luggage was nowhere to be found.
Distraught, Pablo just returned to Manila without presenting. She filed an action against
ALITALIA. The lower courts awarded P40k nominal damages; ALITALIA contested the
award. SC held the award was proper, considering the embarrassment and annoyance
caused to her and the organizers, as well as the loss of the opportunity to represent UP and
the Philippines in the prestigious event.
DOCTRINE. Nominal damages are adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be vindicated and recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered. A prayer "for such other
and further just and equitable relief in the premises" is broad enough to comprehend an
application as well for nominal damages.

FACTS.

May 7, 1913: The steamship Nippon (loaded with copra and general merchandise)
sailed from Manila to Singapore. The next day, it went aground on Scarborough
Reef.

The next day, the chief officer and 9 members of the crew reached the coast of Santa
Cruz, Zambales. The chief officer sent a telegram to the Director of the Bureau of
Navigation, asking for immediate assistance for the Nippon. In the evening, he sent
another telegram, saying, little hope of saving ship.

May 12: Govt ordered the coast guard cutter Mindoro with life-saving appliances to
the scene of the wreck.

On the same day, the steamship Manchuria sailed from Manila to HK, and was
requested to pass by Scarborough. It arrived before the Mindoro, and took onboard
the captain and the remainder of the crew. They took with them the chronometer, the
ship's register, the ship's articles, the ship's log, and as much of the crew's baggage.

When the Mindoro arrived, it offered assistance, but it was declined. It then
proceeded to the Nippon and removed the balance of the baggage of officers and
crew, without protest of the captain. It went to Santa Cruz and took onboard the chief
officer and 9 members there.

May 13: The Manchuria captain sent a telegram to the Bureau of Navigation saying,
all rescued from the Nippon. Stranded on extreme north end of shoal, full of water.
Ship abandoned. Proceed Hongkong. The Nippon captain saw this one before it was
sent.

May 14: Erlanger & Galinger applied for a charter of a coast guard cutter, to proceed
to the abandoned Nippon. Mindoro was chartered to E&G. They then took
possession of the Nippon until the last of the cargo was shipped to Manila. The
Nippon was temporarily repaired at Olongapo before being brought to Manila.

E&G brought the present action against the insurance companies who represented the
cargo salved from the Nippon (New Zealand Insurance Company agar-agar;
Oelwerke Teutonia copra; Tokio Marine Insurance bean oil; Thames and Mersey
reinsurer of copra) to have the amount of salvage determined.

LC: E&G entitled to recover of the net proceeds from the property salved and sold,
of the value of the property devliered to the claimants.

The insurance companies contest the award of of the proceeds.

ISSUE & RATIO.
(The Court went through US jurisprudence in order to show the general principles of salvage.)

In general, salvage may be defined as a service which one person renders to the owner of a
ship or goods, by his own labor, preserving the goods or the ship which the owner or those
entrusted with the care of them have either abandoned in distress at sea, or are unable to
protect and secure.
It is founded on the equity of remunerating private and individual services performed in
saving, in whole or in part, a ship or its cargo from impending peril, or recovering them after
actual loss. A claim for salvage rests on the principle that, unless the property be in fact saved
by those who claim the compensation, it can not be allowed, however benevolent their
intention and however heroic their conduct.
Three elements are necessary to a valid salvage claim: (1) A marine peril. (2) Service
voluntarily rendered when not required as an existing duty or from a special contract. (3)
Success, in whole or in part, or that the service rendered contributed to such success.
The question whether or not a particular ship and her cargo is a fit object of salvage
depends upon her condition at the time the salvage services are performed.
1. WON the ship was abandoned - YES (QUASI-DERELICT)
E&G: the Nippon was a derelict or quasiderelict, a ship or her cargo which is abandoned and
deserted at sea by those who were in charge of it, without any hope of recovering it or without
any intention of returning to it (animo revertendi).
Oelwerke: The captain and the crew intended only to go to HK and procure assistance.
Whether property is to be adjudged derelict is determined by ascertaining what was the
intention and expectation of those in charge of it when they quitted it. If those in charge
left with the intention of returning, or of procuring assistance, the property is not derelict, but
if they quitted the property with the intention of finally leaving it, it is derelict, and a change of
their intention and an attempt to return will not change its nature.
Whether the intention to return exists in a particular case is always difficult to determine. It is
a rare case when the master of the ship will leave without the intention of returning, if there is
the slightest hope of saving his vessel.
* At the time the plaintiff commenced the attempt to salve what was possible of the
Nippon and cargo, it was justified, from all the conditions existing, in believing that it
had been abandoned and in taking possession, even though the master of the vessel
intended when he left it, to return and attempt salvage. Such intention, if it existed, does
not appear to have been very firmly fixed, considering the leisurely manner in which the
master proceeded after he reached the Port of Hongkong.
Evidence:

Telegram sent by Nippons chief officer (at Zambales) to the Bureau of Navigation
saying, little hope of saving ship.

Telegram sent by Manchurias Captain, after rescuing the remainder of the crew:
Ship abandoned.

After the crewmembers and chief officer arrived in Manila, they made a signed
statement describing the striking of Nippon against the Reef, its filling with water,
and their leaving the steamship, and that they considered their lives in danger and
the ship a wreck, with little hope of saving her.
Report made by Mindoro Captain to Bureau, detailing the events (facts)
Testimony of Capt. Eggert (Nippon) regarding the circumstances of the wreck,
stating:
o That they took the ships log with them when they left the steamship, that
they were mighty glad to get off the ship2 .
o Furthermore, when asked if he had the intention of returning to the ship,
he said, I had hope if the weather continued fine. But that the hope was
so slight that it did not warrant leaving anybody onboard.3
o However, Captain Eggert did not make any determined effort to arrange
for the salvage of the Nippon.

Court determined that the evidence proves that the Nippon was in peril; that the captain
left in order to protect his life and the lives of the crew; that the animo revertendi was
slight. The Court interpreted these factors as making the Nippon a quasi-derelict. The
animus revertendi et recuperandi may thus far have continued with the master, but this mental
hope or purpose must be regarded inoperative and unavailing as an actual occupancy of the
vessel, or manifestation to others of a continuing possession.
The abandonment of a vessel by all on board, when the vessel is in peril, will justify third
parties in taking possession with the bona fide intention of saving the vessel and its cargo
for its owners. The mental hope of the master and the crew will in no way affect the
possession nor the right to salvage.
2. WON the salvage was conducted with skill, diligence, and efficiency YES
While E&G entered upon the salvage proceedings without proper means and not being
adapted by their business to conduct their work, and while it may appear that possibly the
salvage might have been conducted in a better manner and have accomplished somewhat
better results in the saving of the copra cargo, it appears that they quickly remedied their lack
of means and corrected the conduct of the work so that it accomplished fairly good results.

perilous services, voluntarily rendered, and as an inducement to mariners to embark in such

dangerous enterprises to save life and property.
E&G: The expenses incurred should be deducted from the entire amount of the salved
property and the remainder be divided as a reward for the services rendered.
This contention has no basis in the law of salvage compensation. The expenses incurred
by E&G must be borne by them.
It is true that the award should be liberal enough to cover the expenses and give an extra
amount as a reward for the services rendered but the expenses are used in no other way as a
basis for the final award. A part of the risk that the plaintiffs incurred was that the goods salved
would not pay them for the amount expended in salving them.
E&G: The award of the lower court of onehalf is the established rule in cases of derelicts and
should not be disturbed.
Court: It is well established now that the courts have a wide discretion in settling the award.
The award is now determined by the particular facts and the degree of merit.
There is no fixed rule for salvage allowance. The old rule in cases of a derelict was 50 per
cent of the property salved; but under modern decisions and practice, it may be less, or it
may be more.
Courts award:
(a) 40 per cent of the net value of the wet copra salved P16k
(b) 25 per cent of the net value of the dry copra salved P25k
(c) 20 per cent of the net value of the agaragar salved P1k
DECISION.
First, it is hereby ordered and decreed that a judgment be entered against the defendant, the
Oelwerke Teutonia, and in favor of the plaintiff in the sum of P41,721.55. Second, it is further
ordered and decreed that a judgment be entered against the defendant, The New Zealand
Insurance Company (Ltd.), and in favor of the plaintiff, in the sum of P1,127.

They sent men into the hold of the ship and sacked the copra and brought it to Manila where it
was sold. Some of the witnesses contended that other methods should have been used. They
testified that grabs or clam shells would have brought better results, but none of these
witnesses had had any experience in unloading wet copra.
The delay in salving was due to the difficulty in inducing laborers to work with wet copra.
This difficulty would have arisen with any set of salvors and cannot be attributed to a lack of
care or diligence on the part of the plaintiffs.
3. WON the award was justified
Compensation as salvage is not viewed by the admiralty courts merely as pay on the
principle of quantum meruit or as a remuneration pro opere et labore, but as a reward given for

Q. Under what circumstances do you take ashore the ship's articles and register?
A. When I leave the ship myself I have, of course, to take those papers with me.
Q. Every time you leave the ship?
A. No. Every time when I leave it stranded as she was.
3

I mean to say that if the weather continues fine there is no risk, but if there is a typhoon or gale we will be worse off and the ship will be smashed and the crew perish.

ATLANTIC, GULF & PACIFIC CO. v. UCHIDA KISEN KAISHA

No. L-15871 / NOV 7, 1921 / JOHNSON, J. / TRANSPO Salvage Law / MEEMARCILLA
NATURE
Appeal
PETITIONERS
The Atlantic, Gulf, & Pacific Company of Manila and Simmie & Grilk
RESPONDENTS
Uchida Kisen Kaisha and Mitsui Bussan Kaisha, Vicente Madrigal
SUMMARY. The steamship Kyodo Maru sank and was salvaged by The Atlantic, Gulf, &
Pacific Company of Manila and Simmie & Grilk. Uchida and Mitsui offered 75k. Atlantic
wanted more compensation so they sued. SC held that Atlantic and Simmie are only entitled
to 100k (50k for expenses, 50k reward).
DOCTRINE. A salvage award should neither be too liberal nor too stingy. It should
constitute a sufficient compensation for the outlay and effort of the salvors, taking into
consideration the rules prescribed by section 10 of Act No. 2616, and should be liberal
enough to offer an inducement to others to render like services in similar emergencies in the
future.
FACTS.
While the steamship Kyodo Maru was discharging a cargo of coal, the property of the
Vicente Madrigal, in the harbor of Manila, inside the breakwater, one of the lighters
alongside said vessel sank. In swinging with the tide, the Kyodo Maru came violently in
contact with this submerged lighter, the result being that her hull was perforated.
The said steamer began to sink until the forward half of the vessel was entirely submerged,
while the stern half was still afloat. The value of the vessel at the time of the accident was
about P1,300,000.
Atlantic, at the request of the captain and agents of the ship, took possession of the sinking
vessel as salvors and commenced salvage operation at once. At that time they had
submitted 2 propositions to the captain and agents of the ship as to compensation for
the salvage services to be performed: (1) for P150,000 in case of success and
reimbursement of expenses in case of failure, and (2) for P300,000 "no cure no pay." The
plaintiffs were informed that the propositions would be transmitted to the owners of the
vessel in Japan for acceptance or rejection, but they were requested to continue work in the
meantime, upon the understanding that if no special contract should be made they would be
compensated as salvors.
Atlantic was informed that the head office of the steamship company in Japan had, by
cable, rejected both of the above-mentioned propositions, and that it was proposed to settle
with them on the basis of the reasonable value of their services as salvors. Atlantic then
made demand for payment of P150,000. Uchida and Mitsui offered to pay P75,000.
Atlantic brought the present action. (Atlantic originally claimed 300k but reduced it to 275k
in their appeal)
ISSUES & RATIO.
12. WON Atlantic is entitled to P275,000. NO (100K only)
This question of compensation involves two elements: (a) The actual expenses incurred in
the salvage operation, and (b) the reward for services rendered by the plaintiffs as
salvors.

Attached to the complaint is a statement of the expenses alleged to have been incurred by
them, aggregating the sum of P63,074.45.
After a perusal of the luminous briefs of the eminent counsel for both parties, in relation with
the evidence adduced during the trial of the cause, we are persuaded that most of the charges
for expenses made by Atlantic are really exorbitant. Considering all of the facts and
circumstances of this case, and specially the inflated war prices of materials at the time the
salvage in question was performed, we are of the opinion that the sum of P50,000 would be a
very reasonable allowance for Atlantics cash outlay and the rental value of their equipment.
With regard to the reward for salvage services, Uchida and Mitsui maintain that the sum of
P35,000 would be a liberal net award to the salvors.
Section 10 of Act No. 2616 prescribes the rule for determining the reward for salvage.4
Counsel for Uchida and Mitsui, however, assail the validity of said Act (No. 2616) "upon the
ground that salvage is a matter which pertains, both as regard the substantive law and
procedure, to the admiralty jurisdiction of the courts, and that, therefore, it is not within the
scope of the law-making authority of the Philippine Legislature." In support of that contention
counsel call attention to the fact that section 56 of Act No. 136 provided that the Courts of
First Instance shall have original jurisdiction "in all actions in admiralty and maritime
jurisdiction, irrespective of the value of the property in controversy or the amount of the
demand;" and that both the Philippine Bill and the Jones Law provide "that the admiralty
jurisdiction of the Supreme Court and Courts of First Instance shall not be changed except by
act of Congress." Counsel maintain that the phrase "admiralty and maritime jurisdiction, used
in said Act No. 136, and the same phrase used in the Organic Law, are identical in meaning
and that both apply not only to the mere power to hear and decide, but to the maritime law as
a body.
United States vs. Bull: this court held that "an Act of the legislative authority of the Philippine
Government which has not been expressly disapproved by Congress is valid unless its subjectmatter has been covered by Congressional legislation, or its enactment forbidden by some
provision of the organic law."
Even granting, without deciding, that the phrase "admiralty jurisdiction" used in our organic
law applies not only to the power to hear and decide but to the maritime law as a body, still we
are unable to say that Act No. 2616 has effected any change in the admiralty jurisdiction
of this court and the Courts of First Instance. As decided by this court in Heath v Steamer San
Nicolas, the phrase "admiralty and maritime jurisdiction" found in Act No. 136 did not put in
force in these Islands the law, practice, and procedure in force in the admiralty courts in the
United States. The American maritime law not being necessarily in force in these Islands, it is
clear that Act No. 2616 of the Philippine Legislature could not and did not affect the same.
Therefore, following our decision in the Bull case, we are of the opinion and so decide that
Act No. 2616 is valid until expressly disapproved by Congress.
Applying now the rules prescribed by section 10 of said Act No. 2616, above quoted, in
determining the reward for the salvage in question, the following facts should be taken
into account: (1) That the salvage operations in question were performed in Manila Bay,

4 In a case coming under the last preceding section as well as in the absence of an agreement, the reward for salvage or assistance shall be ;ixed by the Court of First Instance of the province where the things salvage are found, taking into

account principally the expenditures made to recover or save the vessel or the cargo or both, the zeal demonstrated, the time employed, the services rendered, the excessive expenses occasioned, the number of persons who aided, the danger
to which they and their vessels were exposed, as well as that which menaced the things recovered or salvaged, and the value of such things after deducting the expenses.

inside the breakwater, where the depth of the water was only about 21 feet at low tide; (2) that
those operations lasted 8 days; (3) that the vessel salved and its cargo were never in danger of
total loss, although it is admitted that if the vessel had sunk and listed, the expenses of
recovering the same would have been considerable; (4) that the salvage operation was
comparatively simple, consisting merely of using pumps to prevent the vessel from sinking
any further, while the salvors were building a cofferdam around the submerged forehatch
preparatory to pumping her out; (5) that there was no danger to the lives and property of the
salvors in view of the proximity to the shore of the place where the work was performed; (6)
that the value of the equipment used, including the launches employed to maintain the ferry
service, was about P300,000; (7) that the plaintiffs' outlay, together with the reasonable rental
value of their equipment, was, as we have heretofore estimated, the sum of P50,000; (8) that
the Kyodo Maru was, at the time she was salved, valued at P1,300,000; (9) that the captain of
said vessel was in a hurry to get her out because he had to meet a new charter in Japan; and
(10) that the plaintiffs accomplished the salvage with energy and promptitude, to the entire
satisfaction of the captain and agents of the vessel.
Considering all of the foregoing facts in relation with the award heretofore made by this court
in other salvage cases, we are persuaded that the sum of P50,000 would be an equitably liberal
net compensation to Atlantic as salvors of the Kyodo Maru. This together with the sum of
P50,000 which we have found should be allowed them for their expenses and the reasonable
rental value of their equipment, makes a total award of the sum of P100,000.
DECISION.
Judgment modified. It is hereby ordered and decreed that the plaintiffs have and recover the
sum of P98,000, Philippine currency, from the defendants Uchida Kisen Kaisha and Mitsui
Bussan Kaisha, jointly and severally, and the sum of P2,000, Philippine currency, from the
defendant Vicente Madrigal, without any findings as to costs in this instance.

BARRIOS v. GO THONG
GR No. L-17192/ MAR 30, 1963 / BARRRERA, J. / TRANSPO-ADMIRALTY AND
MARITIME COMMERCE / RPNICOLAS
NATURE: Appeal
PETITIONERS: Honorio M. Barrios
RESPONDENTS: Carlos A. Go Thong and Company
SUMMARY. Petitioner Honorio Barrios, captain and/or master of the MV Henry I, received or
otherwise intercepted an S.O.S. distress signal by blinkers from the MV Alfredo, owned and/or
operated by respondent Carlos Go Thong & Company. Thereafter, he altered the course of said vessel,
and steered and headed towards the beckoning MV Don Alfredo, which Barrios found to be in trouble,
due to engine failure and the loss of her propeller. Upon getting close to the MV Don Alfredo, with the
consent and knowledge of the captain and/or master of the MV Don Alfredo, Barrios caused the latter
vessel to be tied to, or well-secured and connected with tow lines from the MV Henry, and proceeded
moving until such time that a sister ship of MV Don Alfredo was sighted so that the tow lines were also
released. Brought to the CFI of Manila dismissed the case; with cost against Barrios. Barrios interposed
an appeal.
DOCTRINE. It was held that three elements are necessary to a valid salvage claim, namely, (1) a
marine peril, (2) service voluntarily rendered when not required as an existing duty or from a special
contract, and (3) success in whole or in part, or that the service rendered contributed to such success.
FACTS.

The plaintiff Honorio M. Barrios was, on May 1 and 2, 1958, captain and/or master of the MV Henry
I of the William Lines Incorporated, of Cebu City, plying between and to and from Cebu City and
other southern cities and ports, among which are Dumaguete City, Zamboanga City, and Davao City.

At about 8:00 oclock on the evening of May 1, 1958, plaintiff in his capacity as such captain and/or
master of the aforesaid MV Henry I, received or otherwise intercepted an S.O.S. or distress signal by
blinkers from the MV Don Alfredo, owned and/or operated by the defendant Carlos A. Go Thong &
Company.

Acting on and/or answering the S.O.S. call, the plaintiff Honorio M. Barrios, also in his capacity as
captain and/or master of the MV Henry I, which was then sailing or navigating from Dumaguete
City, altered the course of said vessel, and steered and headed towards the beckoning MV Don
Alfredo, which plaintiff found to be in trouble, due to engine failure and the loss of her propeller, for
which reason, it was drifting slowly southward from Negros Island towards Borneo in the open
China Sea, at the mercy of a moderate easterly wind.

At about 8:25 p.m. on the same day, May 1, 1958, the MV Henry I, under the command of the
plaintiff, succeeded in getting near the MV Don Alfredo in fact as near as about seven meters
from the latter ship and with the consent and knowledge of the captain and/or master of the MV
Don Alfredo, the plaintiff caused the latter vessel to be tied to, or well-secured and connected with
two lines from the MV Henry I; and in that manner, position and situation, the latter had the MV
Don Alfredo in tow and proceeded towards the direction of Dumaguete City, as evidenced by a
written certificate to this effect executed and accomplished by the Master, the Chief Engineer, the
Chief Officer, and the Second Engineer, of the MV Don Alfredo, who were then on board the latter
ship at the time of the occurrence.

At about 5:10 oclock the following morning, May 2, 1958, or after almost nine hours during the
night, with the MV Don Alfredo still in tow by the MV Henry I, and while both vessels were
approaching the vicinity of Apo Islands off Zamboanga town, Negros Oriental, the MV Lux, a sister
ship of the MV Don Alfredo, was sighted heading towards the direction of the aforesaid two vessels,
reaching then fifteen minutes later, or at about 5:25 oclock on that same morning.

Thereupon, at the request and instance of the captain and/or master of the MV Don Alfredo, the
plaintiff caused the tow lines to be released, thereby also releasing the MV Don Alfredo.

Plaintiff insists that the service they provided amounted to salvage and must be compensated.

CFI dismissed the case. SC affirms.

ISSUES & RATIO.

13.

WON the service rendered by plaintiff to defendant constituted "salvage" or "towage" NO

and YES
It is not a salvage service. Salvage has been defined as the compensation allowed to persons by whose
assistance a ship or her cargo has been saved, in whole or in part, from impending peril on the sea, or in
recovering such property from actual loss, as in case of shipwreck, derelict, or recapture. In the Erlanger
& Galinger case, it was held that three elements are necessary to a valid salvage claim, namely, (1) a
marine peril, (2) service voluntarily rendered when not required as an existing duty or from a special
contract, and (3) success in whole or in part, or that the service rendered contributed to such success.
There was no marine peril to justify a valid salvage claim by Barrios against Go Thong. It appears that
although Go Thongs vessel in question was, on the night of 1 May 1958, in a helpless condition due to
engine failure, it did not drift too far from the place where it was. The weather was fair, clear, and good.
The waves were small and too slight, so much so, that there were only ripples on the sea, which was quite
smooth. During the towing of the vessel on the same night, there was moonlight. Although said vessel was
drifting towards the open sea, there was no danger of its foundering or being stranded, as it was far from
any island or rocks. In case of danger of stranding, its anchor could be released, to prevent such
occurrence. There was no danger that Go Thongs vessel would sink in view of the smoothness of the sea
and the fairness of the weather. That there was absence of danger is shown by the fact that said vessel or
its crew did not even find it necessary to lower its launch and two motor boats, in order to evacuate its
passengers aboard. Neither did they find occasion to jettison the vessels cargo as a safety measure.
Neither the passengers nor the cargo were in danger of perishing. All that the vessels crew members could
not do was to move the vessel on its own power. That did not make the vessel a quasi-derelict.
It can be considered as a quasi-contract of towage created in the spirit of the new Civil Code. In
consenting to Barrios offer to tow the vessel, Go Thong (through the captain of its vessel MV Don
Alfredo) thereby impliedly entered into a juridical relation of towage with the owner of the vessel MV
Henry I, captained by Barrios, the William Lines.

14. WON plaintiff may recover from defendant compensation for such service. NO
If the contract thus created is one for towage, then only the owner of the towing vessel, to the exclusion of
the crew of the said vessel, may be entitled to remuneration. The courts have to draw a distinct line
between salvage and towage; for the reason that a reward ought sometimes to be given to the crew of the
salvage vessel and to other participants in salvage services, and such reward should not be given if the
services were held to be merely towage. The master and members of the crew of a tug were not entitled to
participate in payment by liberty ship for services rendered by tug which were towage services and not
salvage services. The distinction between salvage and towage is of importance to the crew of the salvaging
ship, for the following reasons: If the contract for towage is in fact towage, then the crew does not have
any interest or rights in the remuneration pursuant to the contract. But if the owners of the respective
vessels are of a salvage nature, the crew of the salvaging ship is entitled to salvage, and can look to the
salved vessel for its share.
Barrios cannot invoke equity in support of his claim for compensation against Go Thong. There being an
express provision of law (Art. 2142, Civil Code) applicable to the relationship created in the case, i.e. that
of a quasi-contract of towage where the crew is not entitled to compensation separate from that of the
vessel, there is no occasion to resort to equitable considerations.
DECISION.
WHEREFORE, finding no reversible error in the decision of the court a quo appealed from, the same is
hereby affirmed in all respects, with costs against the plaintiff-appellant. So ordered.
NOTES.
The pertinent provision of the Salvage Law (Act No. 2616), provides:
SECTION 1. When in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew,
or shall have been abandoned by them, and picked up and conveyed to a safe place by other persons, the
latter shall be entitled to a reward for the salvage. Those who, not being included in the above paragraph,
assist in saving a vessel or its cargo from shipwreck, shall be entitled to a like reward.

COASTWISE LIGHTERAGE CORP. v. CA

G.R. No. 114167/ July 12, 1995/ Francisco, J. /Charter parties /GRACEgar
NATURE
PETITION for review by certiorari of a decision of the Court of
Appeals
PETITIONERS
Coastwise Lighterage Corporation
RESPONDENTS
Court of Appeals, Philippine General Insurance Company
SUMMARY. Coastwise and Pag-asa Sales entered into a contract wherein the former will
transport molasses for the latter. However, on its way to Manila, Coastwises barge met an
accident which resulted to the contamination of the molasses. Pag-asa Sales rejected the
shipment and filed for formal claim with its insurer, PhilGen. Insurer paid and now seeks
recovery from Coastwise by virtue of the subrogation principle.
DOCTRINE. Under the demise or bareboat charter of the vessel, the charterer will
generally be regarded as the owner for the voyage or service stipulated. The charterer mans
the vessel with his own people and becomes the owner pro hac vice, subject to liability to
others for damages caused by negligence. To create a demise, the owner of a vessel must
completely and exclusively relinquish possession, command and navigation thereof to the
charterer, anything short of such a complete transfer is a contract of affreightment (time or
voyage charter party) or not a charter party at all.
On the other hand a contract of affreightment is one in which the owner of the vessel leases
part or all of its space to haul goods for others. It is a contract for special service to be
rendered by the owner of the vessel and under such contract the general owner retains the
possession, command and navigation of the ship, the charterer or freighter merely having
use of the space in the vessel in return for his payment of the charter hire. . . . .
FACTS.
1. Pag-asa Sales, Inc. entered into a contract to transport molasses from Negros to
Manila with Coastwise. Upon reaching Manila Bay, however, one of the barges of
Coastwise struck an unknown sunken object (which turned out to be a submerged
derelict vessel), and water gushed in through a hole 2 inches wide and 22 inches
long.
2. As a result of the incident, the molasses were contaminated and rendered unfit for
the use it was intended. Pag-asa Sales rejected the shipment as a total loss and filed a
formal claim with its insurer, Phil. General Insurance Co. The latter paid Pag-asa.
3. So now, Phil. General Insurance is seeking to recover the amount of P700,000 which
it paid to Pag-asa. PhilGen claims to be subrogated to all the contractual rights and
claims which Pag-asa may have against Coastwise.
4. TC ruled in favor of PhilGen. CA- affirmed
ISSUES & RATIO.
1. WON Coastwise was transformed into a private carrier by virtue of the
contract of affreightment which it entered into with Pag-asa NOPE.
Coastwise: I have a charter agreement with Pag-asa and based on Home Insurance
Company v. American Steamship, I was transformed into a common carrier.

SC: Coastwise reliance with the aforementioned case is misplaced. There are two kinds of
charter parties: 1) demise or bareboat charter and 2) contract of affreightment (time or
voyage charter party).
To create a demise, the owner of a vessel must completely and exclusively relinquish
possession, command and navigation thereof to the charterer, anything short of such a
complete transfer is a contract of affreightment (time or voyage charter party) or not a
charter party at all. On the other hand a contract of affreightment is one in which the
owner of the vessel leases part or all of its space to haul goods for others. . An owner
who retains possession of the ship though the hold is the property of the charterer,
remains liable as carrier and must answer for any breach of duty as to the care, loading
and unloading of the cargo
Although a charter party may transform a common carrier into a private one, the same
however is not true in a contract of affreightment on account of the aforementioned
distinctions between the two.
Coastwise actually admitted that it entered into a contract of affreightment and the SC
agreed since Pag-asa only leased three of the formers vessels. Because of this, Coastwise
was not converted into a private carrier.
The presumption of negligence that attaches to common carriers, once the goods it
transports are lost, destroyed or deteriorated, applies to Coastwise in this case and it
failed to rebut such presumption. Jesus Constantino, the patron of the vessel, admitted
that he was not licensed. Hence, Coastwise cannot safely claim to have exercised
extraordinary diligence5 , by placing a person whose navigational skills are questionable,
at the helm of the vessel which eventually met the fateful accident. It may also logically,
follow that a person without license to navigate, lacks not just the skill to do so, but also
the utmost familiarity with the usual and safe routes taken by seasoned and legally
authorized ones. Had the patron been licensed, he could be presumed to have both the
skill and the knowledge that would have prevented the vessel's hitting the sunken derelict
ship that lay on their way.
2. WON PhilGen was subrogated into the rights of the consignee YES.
If the insured property is destroyed or damaged through the fault or negligence of a party other
than the assured, then the insurer, upon payment to the assured will be subrogated to the rights
of the assured to recover from the wrongdoer to the extent that the insurer has been obligated
to pay. Payment by the insurer to the assured operated as an equitable assignment to the
former of all remedies which the latter may have against the third party whose negligence or
wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow
out of, any privity of contract or upon written assignment of claim. It accrues simply upon
payment of the insurance claim by the insurer.6
DECISION.
Petition denied. Judgement affirmed.

5 Art. 609. Captains, masters, or patrons of vessels must be Filipinos, have legal capacity to contract in accordance with this code, and prove the skill capacity and quali;ications necessary to command and direct the vessel, as established by

marine and navigation laws, ordinances or regulations, and must not be disquali;ied according to the same for the discharge of the duties of the position. . . .
6 Art. 2207. If the plaintiffs property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated

to the rights of the insured against the wrongdoer or the person who violated the contract. . . .

CALTEX PHILIPPINES v. SULPICIO LINES

G.R. No. 131166 / Sept 30, 1999 / Pardo, J. / Charter Parties/ KGarcia
PETITIONERS
Caltex Philippines, Inc.
RESPONDENTS
Sulpicio Lines, etc.
SUMMARY. Caltex shipped its fuel cargo aboard MT Vector via a voyage charter party.
Said vessel collided with Dona Paz, resulting to the death of almost all its passengers and
crew. Sulpicio, owner of the passenger ship, wants to hold Caltex liable for the accident as
well, for the latters alleged negligence in choosing to ship its cargo through an unseaworthy
ship. Court held that Caltex (charterer) is not liable.
DOCTRINE. If the charter is a contract of affreightment, which leaves the general owner in
possession of the ship as owner for the voyage, the rights and the responsibilities of
ownership rest on the owner. The charterer is free from liability to third persons in respect
of the ship.
FACTS.

On December 20, 1987, motor tanker MV Vector, carrying petroleum products of Caltex,
collided in the open sea with passenger ship MV Doa Paz,

It caused the death of all but 25 of the latters passengers.

Among those who died were Sebastian Canezal and his daughter Corazon Canezal.

On March 22, 1988, the board of marine inquiry found that Vector Shipping Corporation
was at fault.

On February 13, 1989, Teresita Caezal and Sotera E. Caezal, Sebastian Caezals wife
and mother respectively, filed with the Regional Trial Court of Manila a complaint for
damages arising from breach of contract of carriage against Sulpicio Lines.

Sulpicio filed a third-party complaint against Vector and Caltex. The trial court dismissed
the complaint against Caltex, but the Court of Appeals included the same in the liability.
Hence, Caltex filed this petition.
ISSUES/ RATIO.
1. WON the charterer of a sea vessel is liable for damages resulting from a collision
between the chartered vessel and a passenger ship? NO

The charterer has no liability for damages under Philippine Maritime laws.
Petitioner and Vector entered into a contract of affreightment, also known as a voyage
charter.
A charter party is a contract by which an entire ship, or some principal part thereof, is let
by the owner to another person for a specified time or use; a contract of affreightment is
one by which the owner of a ship or other vessel lets the whole or part of her to a
merchant or other person for the conveyance of goods, on a particular voyage, in
consideration of the payment of freight.
A contract of affreightment may be either time charter, wherein the leased vessel is leased
to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for
a single voyage.
In both cases, the charter-party provides for the hire of the vessel only, either for a
determinate period of time or for a single or consecutive voyage, the ship owner to supply
the ships store, pay for the wages of the master of the crew, and defray the expenses for
the maintenance of the ship.
If the charter is a contract of affreightment, which leaves the general owner in possession
of the ship as owner for the voyage, the rights and the responsibilities of ownership rest
on the owner. The charterer is free from liability to third persons in respect of the ship.

2. WON MT Vector is a common carrier YES

The charter party agreement did not convert the common carrier into a private carrier.

The parties entered into a voyage charter, which retains the character of the vessel as a
common carrier.

It is imperative that a public carrier shall remain as such, notwithstanding the charter of
the whole or portion of a vessel by one or more persons, provided the charter is limited to
the ship only, as in the case of a time-charter or voyage charter.

It is only when the charter includes both the vessel and its crew, as in a bareboat or
demise that a common carrier becomes private, at least insofar as the particular voyage
covering the charter-party is concerned. Indubitably, a ship-owner in a time or voyage
charter retains possession and control of the ship, although her holds may, for the
moment, be the property of the charterer.

A common carrier is a person or corporation whose regular business is to carry

passengers or property for all persons who may choose to employ and to remunerate him.
16 MT Vector fits the definition of a common carrier under Article 1732 of the Civil
Code.

The public must of necessity rely on the care and skill of common carriers in the
vigilance over the goods and safety of the passengers, especially because with the modern
development of science and invention, transportation has become more rapid, more
complicated and somehow more hazardous.

For these reasons, a passenger or a shipper of goods is under no obligation to conduct an

inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant
its seaworthiness.
3. WON Caltex is liable for damages under the CC No

The charterer of a vessel has no obligation before transporting its cargo to ensure that the
vessel it chartered complied with all legal requirements.

The duty rests upon the common carrier simply for being engaged in "public service."

The relationship between the parties in this case is governed by special laws.

Because of the implied warranty of seaworthiness, shippers of goods, when transacting

with common carriers, are not expected to inquire into the vessels seaworthiness,
genuineness of its licenses and compliance with all maritime laws.

To demand more from shippers and hold them liable in case of failure exhibits nothing
but the futility of our maritime laws insofar as the protection of the public in general is
concerned. Such a practice would be an absurdity in a business where time is always of
the essence.

Considering the nature of transportation business, passengers and shippers alike

customarily presume that common carriers possess all the legal requisites in its operation.
DECISION.
Caltex not liable.

MAGELLAN MFG MKTG CORP v. CA

G.R. No. 95529 / August 22,1991/ REGALADO, J./TRANSPO-BILL OF LADING/Miggy
NATURE
Petition for Review on Certiorari
PETITIONERS
MAGELLAN MANUFACTURING MARKETING CORPORATION
RESPONDENTS
CA, ORIENT OVERSEAS CONTAINER LINES and F.E. ZUELLIG,
INC.

SUMMARY. MMMC shipped anahaw fans to Choju Co.The letter of credit

stipulates that that they should procure an on-board Bill of Lading and there should
be no transshipment. MMMC violated the 2 conditions. MMMC argues that the
shipping agent was at fault for the violation of the requirements. Respondents
averred that MMMC was aware that the bill of lading was not an on-board bill of
lading and that there will be transshipment. SC ruled in favor of private
respondents
DOCTRINE. It is presumed that the stipulations of the bill were, in the absence of
fraud, concealment or improper conduct, known to the shipper, and he is generally
bound by his acceptance whether he reads the bill or not.

As applied: James Cu himself, in his capacity as president of MMMC, personally received

and signed the bill of lading. There clearly appears on the face of the bill of lading under
column PORT OF TRANSHIPMENT" an entry HONGKONG". Moreover, James Cu, in his
testimony on cross examination, categorically stated that he knew for a fact that the shipment
was to be unloaded in Hong Kong from the MV Pacific Despatcher to be transferred to a
mother vessel, the MV Oriental Researcher, and that the bill of lading issued was NOT an on
board bill of lading
Concepts:
A bill of lading operates both as a receipt and as a contract. It is a receipt for the goods
shipped and a contract to transport and deliver the same as therein stipulated. As a contract, it
names the parties, which includes the consignee, fixes the route, destination, and freight rates
or charges, and stipulates the rights and obligations assumed by the parties. Being a contract, it
is the law between the parties who are bound by its terms and conditions provided that these
are not contrary to law, morals, good customs, public order and public policy. A bill of lading
usually becomes effective upon its delivery to and acceptance by the shipper. It is presumed
that the stipulations of the bill were, in the absence of fraud, concealment or improper
conduct, known to the shipper, and he is generally bound by his acceptance whether he
reads the bill or not.

FACTS.

Magellan Manufacturers Marketing Corp. (MMMC) entered into a contract with Choju
Co. of Yokohama, Japan to export 136,000 anahaw fans for and in consideration of
$23,220.00.

MMMC then contracted F.E. Zuellig, a shipping agent, to ship the anahaw fans through
Orient Overseas Container Lines, Inc., (OOCL) specifying that he needed an onboard 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
However, the payment was refused by the buyer allegedly because there was no onboard
bill of lading, and there was a transhipment of goods. As a result of the refusal of the
buyer to accept, the anahaw fans were shipped back to Manila by appellees, for which the
latter demanded from appellant payment of P246,043.43. Appellant abandoned the whole
cargo and asked appellees for damages.

MMMCs arguments: (1) Orient and Zuellig at fault for the refusal of Choju Co. to take
delivery of the exported anahaw fans because of violation of the terms and conditions of
the letter of credit which specified the requirement for an (i) on board bill of lading and
(ii) the prohibition against transhipment of goods, (2) they should pay whatever it was not
able to earn from Choju Co., Ltd., amounting to P1 74,150.00 and other damages like
attorneys fees.

Respondents argument: 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

LC: in favor of private respondents (contents of the bill of lading where it is clearly
indicated that there will be transshipment)
CA affirmed with modifications as to MMMCs liability

The acceptance of the bill without dissent raises the presumption that all the terms
therein were brought to the knowledge of the shipper and agreed to by him and in the
absence of fraud or mistake, he is estopped from thereafter denying that he assented to
such terms.The holding in most jurisdictions has been that a shipper who receives a bill of
lading without objection after an opportunity to inspect it, and permits the carrier to act on it
by proceeding with the shipment is presumed to have accepted it as correctly stating the
contract and to have assented to its terms.

ISSUES & RATIO.

1. WON Orient and Zuellig is at fault. NO.
When MMMC received the bill of lading, it was tantamount to adherence to the terms
and conditions as embodied therein. The petitioner had full knowledge of, and actually
consented to, the terms and conditions of the bill of lading thereby making the same
conclusive as to it, and it cannot now be heard to deny having assented thereto

Bills of lading constitute a class of contracts of adhesion.It will be recalled that petitioner
entered into the contract with Choju Co., Ltd. way back on May 20? 1980 or over a month
before the expiry date of the letter of credit on June 30, 1980, thus giving it more than ample
time to find a carrier that could comply with the requirements of shipment under the letter of
credit. It is conceded that bills of lading constitute a class of contracts of adhesion.

On board bill of lading distinguished from a received for shipment bill of lading.
on board bill of lading is one in which it is stated that the goods have been received on board
the vessel which is to carry the goods, whereas a received for shipment bill of lading is one in
which it is stated that the goods have been received for shipment with or without specifying
the vessel by which the goods are to be shipped.
Received for shipment bills of lading are issued whenever conditions are not normal and
there is insufficiency of shipping space. An on board bill of lading is issued when the goods
have been actually placed aboard the ship with every reasonable expectation that the shipment
is as good as on its way.
As applied: It is understandable that a party to a maritime contract would require an on
board bill of lading because of its apparent guaranty of certainty of shipping as well as
the seaworthiness of the vessel which is to carry the goods. MMMC was aware that
Choju Co. required an on board bill of lading. On crossexamination, it was established
that MMMC, through its aforesaid president, was aware that the bill of lading that was
issued was not an on board bill of lading. It is only to be expected that those long engaged
in the export industry should be familiar with. business usages and customs.

2. WON there was transhipment. YES.

Transhipment, in maritime law, is defined as the act of taking cargo out of one ship and
loading it in another, or the transfer of goods from the vessel stipulated in the contract
of affreightment to another vessel before the place of destination named in the contract
has been reached, or the transfer for further transportation from one ship or
conveyance to another.
There is transhipment whether or not the same person, firm or entity owns the vessels. In other
words, 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.
As applied: There is transshipment. Transhipment of freight without legal excuse however
competent and safe the vessel into which the transfer is made is a violation of the contract and
an infringement of the right of the shipper and subjects the carrier to liability if the freight is
lost even by a cause otherwise excepted. It is highly improbable to suppose that private
respondents, having been engaged in the shipping business for so long, would be unaware of
such a custom of the trade as to have undertaken such transhipment without petitioners
consent and unnecessarily expose themselves to a possible liability.
DECISION.
Affirmed with modification
NOTES.
Argument of MMMC: There was mistake in documentation on the part of private respondents,
and such a mistake militates against the conclusiveness of the bill of lading insofar as it
reflects the terms of the contract between the parties, as an exception to the parol evidence
rule,
SC:
Under the parol evidence rule, the terms of a contract are rendered conclusive upon the parties,
and evidence aliunde is not admissible to vary or contradict a complete and enforceable
agreement embodied in a document subject to well defined exceptions which do not obtain in
this case.
SC: 1370 CC: "(i)f the terms of the contract are clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of the stipulations shall control.
1371 CC: "(i)n order to judge the intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered.
! The terms of the contract as embodied in the bill of lading are clear and thus obviates the
need for any interpretation. The intention of the parties which is the carriage of the cargo under
the terms specified thereunder and the wordings of the bill of lading do not contradict each
other. The terms of the contract being conclusive upon the parties and judging from the
contemporaneous and subsequent actuations of petitioner, to wit, personally receiving and
signing the bill of lading and paying the freight charges, there is no doubt that petitioner must
necessarily be charged with full knowledge and unqualified acceptance of the terms of the bill
of lading and that it intended to be bound thereby.

SWEET LINES v. CA

b.

April 28, 1983 / Melencio-Herrera,.J. / Passenger on Sea Voyage > Rights of Passengers / MCTFOJAS

PETITIONERS
RESPONDENTS

Sweet Lines, Inc.

Court of Appeals, Micaela Quintos, Fr. Jose Bacatan, Marciano Cabras,
Andrea Veloso

SUMMARY. Ship set sail to Catbalogan from Cebu, only to be towed back for repairs.
Thereafter, the ship by-passed Catbalogan, going directly to Tacloban. Distressed
passengers had to take a ferry from TAC to CAT. They sued for breach of contract. Court
held that there was no force majeure that could have prevented them of going to CAT. Also,
the fine print at the back did not relieve them of any responsibility. If at most, it gave them
an opportunity to make it up to the passengers by either finding another way to transport
them to the destination or by refunding the ticket.
DOCTRINE. The crucial factor then is the existence of a fortuitous event or force majeure.
Without it, the right to damages and indemnity exists against a captain who fails to fulfill
his undertaking or where the interruption has been caused by the captain exclusively.
FACTS.
Herein private respondents bought first-class tickets from Cebu to Catbalogan, to leave
around midnight on July 8. However, for some unknown reason, the vessel set sail 3 hours
later. It had to be towed back to Cebu due to engine trouble, arriving there at about 4:00
P.M. on the same day. Repairs having been accomplished, the vessel lifted anchor again on
July 10 around 8:00 A.M. Instead of docking at Catbalogan, it proceeded directly to
Tacloban. Having no recourse, private respondents disembarked and boarded a ferry to
Catbalogan.
Private respondents then instituted this case for damages for breach of contract.
Sweet Liness defenses:
Force majeure was the reason for the non-docking at Catbalogan; and
There was fine print at the back of the ticket that disclaimed liabilities on any changes
in schedule or ports of call.
ISSUES & RATIO.
1. Whether they can be excused from liability due to force majeure
-- NO.
Such force majeure did not exactly prevent them from docking at
Catbalogan.
According to the court, Articles 6147 and 6988 govern the case at hand. The crucial factor then
is the existence of a fortuitous event or force majeure. Without it, the right to damages and
indemnity exists against a captain who fails to fulfill his undertaking or where the captain has
exclusively caused the interruption.
As found by the lower courts, there was no fortuitous event or force majeure which prevented
the vessel from fulfilling its undertaking of taking private respondents to Catbalogan.
The mechanical defects in the carrier are not considered a caso fortuito that
a.
exempts the carrier from responsibility. 9
7

Even granting arguendo that the engine failure was a fortuitous event, it
accounted only for the delay in departure. When the vessel finally left the port of
Cebu, there was no longer any force majeure that justified by-passing a port of
call. The vessel was completely repaired. In fact, after docking at Tacloban City,
it left the next day for Manila to complete its voyage.
The GM admitted that the reason for bypassing Catbalogan was to catch up
with its schedule for the next week. Since only 20 passengers are going to
Catbalogan, that part can be scrapped without too much loss for the
company.

The voyage to Catbalogan was "interrupted" by the captain upon instruction of management.
The "interruption" was not due to fortuitous event or for majeure nor to disability of the vessel.
Having been caused by the captain upon instruction of management, the passengers'
right to indemnity is evident. The owner of a vessel and the ship agent shall be civilly
liable for the acts of the captain.
2.

Whether the fine print excused them from liability

NO. Even if it did, they were remiss in their duty as stated in the fine print.
The court said that the company cannot rely on such stipulation (no reason why). The phrase
vessel cannot continue or complete the trip for any cause whatsoever cannot prevail over the
abovementioned provisions of the Code of Commerce.
Even if they were bound, they did not comply with the same. It did not cancel the ticket nor
did it refund the value of the tickets to private respondents. Besides, it was not the vessel's
sailing schedule that was involved. Private respondents' complaint is directed not at the
delayed departure the next day but at the by- passing of Catbalogan, their destination. Had
petitioner notified them previously, and offered to bring them to their destination at its
expense, or refunded the value of the tickets purchased, PERHAPS, this controversy would
not have arisen.
Damages
Moral: Yes
Reasons:
(1)
Defendants-appellants did not give notice to plaintiffs- appellees as to the change of
schedule of the vessel;
(2)
Knowing fully well that it would take no less than fifteen hours to effect the repairs
of the damaged engine, defendants-appellants instead made announcement of assurance that
the vessel would leave within a short period of time, and when plaintiffs-appellees wanted to
leave the port and gave up the trip, defendants-appellants' employees would come and say, 'we
are leaving, already.'
(3)
Defendants-appellants did not offer to refund plaintiffs-appellees' tickets nor provide
them with transportation from Tacloban City to Catbalogan.
(4)
Finding by the lower court of BF is binding on the SC.
Attorneys Fees: Yes
Exemplary: No

ART. 614. A captain who, having agreed to make a voyage, fails to fulfill his undertaking, without being prevented by fortuitous event or force majeure, shall indemnify all the losses which his failure may cause, without prejudice to criminal penalties which may be proper.

ART. 698. In case of interruption of a voyage already begun, the passengers shall only be obliged to pay the fare in proportion to the distance covered, without right to recover damages if the interruption is due to fortuitous event or force majeure, but with a right to
indemnity, if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel, and the passenger should agree to wait for her repairs, he may not be required to pay any increased fare of passage, but
his living expenses during the delay shall be for his own account.
9

Necesito v Paras

TRANS-ASIA SHIPPING LINES, INC v CA and ATTY. RENATO ARROYO

G.R. No. 118126 / Mar. 4, 1996 / Davide, Jr., J. / TRANSPO - Rights of Passenger/ MBPAres
NATURE
Petition for Review on Certiorari under Rule 45
PETITIONERS
Trans-Asia Shipping Lines, Inc.
RESPONDENTS
CA and Atty. Renato Arroyo

SUMMARY. The vessel that the plaintiff was on had engine trouble even before the
voyage began. When it stalled for half an hour, the passengers demanded they be returned
to the port. Some passengers, including plaintiff, disembarked. Plaintiff had to go on
another vessel to reach Cagayan de Oro. Plaintiff then filed an action for damages based
on breach of contract for failure of Trans-Asia to transport him to his place of destination
and for torts, for the way they were handled. The CA awarded damages, basing its decision
on Civil Code provisions. Defendants argue that Code of Commerce Art. 698 applies. SC
said both applies. Art. 698 must be read together with the Civil Code provisions. SC
awarded the damages, but not actual damages since plaintiff himself left the voyage.

- Trans-Asia failed to exercise the utmost diligence due all common carriers, in complete
disregard of the safety of the passengers.
- Applied Art. 1755 in relation to Arts. 2201, 2208, 2217 and 2232 of CC
Defendants argue that, in determining the right of passengers, the Code of Commerce,
Article 69810 applies in the absence of a specific provision in case of interruption of
voyage, not the vague Civil Code provisions on common carriers.
- Also argued na OA lang yung PR because the sea was calm during the voyage.
ISSUES & RATIO.
Which code applies in determining rights of passengers in case of delay in vessels both
Since the Civil Code is silent as to such situation, Article 698 of Code of Commerce must
then be read together with Articles 2199-2201 and 2208 of the Civil Code. The laws of
primary application are the provisions on common carriers under the Civil Code, and for all
other matters not regulated thereby, the Code of Commerce and special laws.
First and foremost, the petitioner failed to exercise the extraordinary diligence due him as a
common carrier (article 1755). But, there was no delay in the commencement of its voyage
(Article 1169). If any delay was incurred, it was after the commencement of such voyage.

DOCTRINE. For there to be liability for any pecuniary loss resulting from interruption of
voyage, the passenger must be on that voyage.
FACTS.
Atty. Arroyo (Private Respondents: PR), a public attorney bought a ticket for the voyage of
M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on Nov. 12, 1991
Before the voyage started, PR noticed that some repair works were being undertaken on the
engine of the vessel. Nevertheless, the voyage pushed through.
After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor
thereat. So after half an hour of stillness, some passengers demanded that they should be
allowed to return to Cebu City.
Captain acceded and the vessel headed back. PRs version: they were arrogantly told to
disembark and were unceremoniously dumped, without the necessary precautions against
possible injury to them, and thus, exacerbated the passengers mental distress (he seemed to
be arguing that the vessel left him).
The vessel proceeded to Cagayan de Oro City.
The next day, the PR boarded the M/V Asia Japan for its voyage to CdO.
PR filed a case for damages, asserting that it was an action arising from bad faith, breach of
contract (for failure of Trans-Asia to carry him to his place of destination) and from tort
(for the conduct of the officers of Trans-Asia resulting in his emotional distress).
TC: Complaint dismissed. Also action was only for breach of contract.
- PR was negligent in not asking if the voyage was going to push through. IT was his fault
that he was left.
- Articles 1170, 1172 and 1173 of CC applies.
CA: Reversed.
- Awarded 20k moral damages, 10k exemplary damages, 5k attorneys fees
- Did not allow the grant of damages for the delay in the performance of the obligation
since the demand requirement was not met.
- Also found that PR rendered it useless for petitioner to perform its obligation.
- The stoppage was because one of the engines of the vessel broke down. The crew knew
from the start that the vessel was not in its sailing condition.

Applying the aforementioned articles (also see underlined part of the footnoted provision), the
petitioner is liable for any pecuniary loss or loss of profits which the plaintiff may have
suffered. However, this assumes that he stayed on the vessel and was with it when it resumed
its voyage; but he did not. Any further delay then in the PRs arrival at the port of destination
was caused by his decision to disembark. If he remained on the first vessel, he would have
reached his destination at noon of November 13. He would have been able to report to his
office in the afternoon. Hence, any loss in his salary would have been lesser (half day lang). In
addition, PR did not present convincing evidence that he did not receive his salary or that his
absence was not excused. Hence, no actual or compensatory damages are allowed.
Petitioner is liable for moral and exemplary damages. With full awareness that its vessel was
unseaworthy, it deliberately disregarded its solemn duty to exercise extraordinary diligence.
PR being OA cannot exculpate or mitigate petitioners liability. On the contrary, such a claim
demonstrates they lack of genuine concern for the safety of the passengers. The passengers
were not stoics; becoming alarmed, anxious, or frightened at the stoppage of a vessel at sea in
an unfamiliar zone at nighttime was expected, more so in the light of the many tragedies at sea
resulting in the loss of lives of hopeless passengers and damage to property simply because
common carriers failed in their duty to exercise extraordinary diligence in the performance of
their obligations.
Attorneys fees may not be awarded. There was no factual, legal and equitable justification for
such.

DECISION.
Petition DENIED. CA decision affirmed subject to the deletion of the attorneys fees.

ART. 698. In case of interruption of a voyage already begun, the passengers shall only be obliged to pay the fare in proportion to the distance covered, without right to recover damages if the interruption is due to fortuitous
event or force majeure, but with a right to indemnity, if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel, and the passenger should agree to wait
for her repairs, he may not be required to pay any increased fare of passage, but his living expenses during the delay shall be for his own account.
10

EASTERN SHIPPING LINES v. IAC

G.R. No. L-69044 & 71478 / May 29, 1987 / MELENCIO-HERRERA, J. / Carriage of Goods by Sea
Act / Rad Isnani

PETITIONER
RESPONDENTS

Eastern Shipping Lines

(G.R. No. L-69044) Intermediate Appellate Court and Development
Insurance & Surety Corp.
(G.R. No. 71478) Nisshin Fire & Marine Insurance Co., and Dowa Fire
& Marine Insurance Co.

SUMMARY. A vessel of Eastern Shipping Lines bound to Manila caught fire and sank.
ESL is arguing that it is not liable since fire is a fortuitous event. SC held that they are liable
because fire is not considered a natural disaster as it almost always is caused by some act of
man. ESL must discharge the burden of proving that it exercised extraordinary diligence
which it failed to do.
DOCTRINE. Law of the country is the governing law. However, in matters not regulated
by the Code (Civil Code), the rights and obligations of a common carrier shall be governed
by the Code of Commerce and by special laws. COGSA is therefore applicable suppletorily.
As per COGSA, liability is limited to $500 per package (maximum). Liability is lower if
such is the actual damage suffered.
FACTS.
G.R. No. L-69044
A vessel operated by Eastern Shipping Lines (ESL), loaded at Kobe, Japan for
transportation to Manila, 5000 pieces of calorized lance pipes in 28 packages
consigned to Philippine Blooming Mills Co., Inc., and 7 cases of spare parts
consigned to Central Textile Mills, Inc.
Both sets of goods were insured with Development Insurance and Surety Corp.
(DISC)
G.R. No. 71478
The same vessel took on board 128 cartons of garment fabrics and accessories
consigned to Mariveles Apparel Corp., and 2 cases of surveying instruments
consigned to Aman Enterprises.
The 128 cartons were insured for their stated value by Nisshin Fire & Marine
Insurance Co. (NISSHIN), and the 2 cases by Dowa Fire & Marine Insurance Co.,
Ltd. (DOWA)
The vessel caught fire and sank, resulting in the total loss of ship and cargo.

DISC, having been subrogated unto the rights of the two insured companies, filed
suit against Eastern Shipping for the recovery of the amounts it had paid to the
insured
ESL denied liability mainly on the ground that the loss was due to an extraordinary
fortuitous event, hence, it is not liable under the law.
TC: Judgment in favor of DISC
G.R. No. 71478
NISSHIN and DOWA, as subrogees of the insured, filed suit against ESL for the
recovery of the insured value of the cargo lost
They imputed unseaworthiness of the ship and non-observance of extraordinary
diligence by ESL.
ESL denied liability on the principal grounds that:
o The fire which caused the sinking of the ship is an exempting circumstance
under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA)11 ; and
o When the loss of fire is established, the burden of proving negligence of the
vessel is shifted to the cargo shipper
TC: Judgment in favor of NISSHIN and DOWA
ISSUE & RATIO.
1. Which law should govern? The Civil Code provisions on Common carriers or the
COGSA? Civil Code.
The law of the country to which the goods are to be transported governs the liability
of the common carrier in case of their loss, destruction or deterioration.
As the cargoes were transported from Japan to the Philippines, the liability of ESL is
governed primarily by the Civil Code.
However, in all matters not regulated by said Code, the rights and obligations of
common carrier shall be governed by the Code of Commerce and by special laws.
Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the
provisions of the Civil Code.
2.

Who has the burden of proof to show negligence of the carrier? Eastern Shipping
Lines.
As per the Art. 173512, the burden is upon ESL to prove that it has exercised the
extraordinary diligence required by law.
Note: Fire is not considered a natural disaster or calamity within the contemplation
of Art. 173413 for it arises almost invariably from some act of man or by human
means; it does not fall within the category of an act of God unless caused by
lightning or by other natural disaster or calamity

G.R. No. L-69044

11

Sec. 4(2)(b), COGSA. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from xxx
(b) Fire, unless caused by the actual fault or privity of the carrier.
12

Art. 1735, CC. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, 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 observed extraordinary diligence as required in article 1733.
Art. 1734, CC. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:
(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.
13

3.

Having failed to discharge the burden of proving that it had exercised the
extraordinary diligence required by law, Eastern Shipping Lines cannot escape
liability for the loss of the cargo
As it was at fault, it cannot seek the protective mantle of Sec. 4(2), COGSA. (See
footnote 1)
There was actual fault of the carrier shown by lack of diligence in that when the
smoke was noticed:
o the fire was already big and must have started 24 hours before the same
was noticed;
o after the cargoes were stored in the hatches, no regular inspection was
made as to their condition during the voyage.

What is the extent of the carriers liability?

Art. 1749. A stipulation that the common carrier's liability as limited to the value of the
goods appearing in the bill of lading, unless the shipper or owner declares a greater value,
is binding.
G.R. No. L-69044
No stipulation in the Bills of Lading limiting the carriers liability for the loss/
destruction of the goods;
No declaration of a higher value of the goods;
Hence, Eastern Shipping Lines liability should not exceed US $500 per package (as
provided in Sec. 4(5) of the COGSA 14), or its peso equivalent, at the time of
payment of the value of the goods lost, but in no case more than the amount of
damage actually sustained.

DECISION.
ESL liable as above stated.

14

Sec. 4(5), COGSA. (5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500
per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such
goods have been declared by the shipper before shipment and inserted in bill of lading. This declaration if embodied in the bill of lading shall be prima facie evidence, but all be conclusive on the carrier.
By agreement between the carrier, master or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum
shall not be less than the figure above named. In no event shall the carrier be Liable for more than the amount of damage actually sustained. xxx

F.H. STEVENS & CO. INC v. NORDEUSCHER LLOYD

GR No L-17730/ Sept 29, 1962/ Concepcion, J/ Carriage of Goods by Sea Act / Chad

Nature:
Petitioner:
Respondent:

Recovery of Value of Loss/Damages to Goods

F.H. Stevens & Co Inc
ordeuscher Lloyd

SUMMARY.
May 15, 1959- arrival of ship carrying goods
May 21, 1959- notification of company
April 27, 1960- first action for damages were filed
June 13, 1960- dismissed
June 24, 1960- second action was filed
Case at Court: whether the second action has prescribed given that it has been filed more
than a year since May 21, 1959, when Stevens Co was notified of the delivery.
DOCTRINE. The 1-year prescription period is under Commonwealth Act No. 65, in
relation to Carriage of Goods by Sea Act.
Under Section 49 of Act No. 190 or the Carriage of Goods by Sea Act, the period within
which plaintiff could initiate the present case was renewed for another year, beginning from
June 14, 1960, the time when the first action was dismissed. The case at bar was
commenced on June 24, 1960, or within the period last mentioned.
FACTS.

F. H. Stevens & Co. shipped 2,000 pieces of prismatical thermometers (valued at $650)
from Hamburg to Manila, aboard the "MS SCHWABENSTEIN", a vessel of
Norddeuscher Lloyd.

May 21, 1959-- After the MS Schwabenstein arrived at Manila, the master of said vessel
notified the company, through its broker, of the delivery of said goods.
o Upon examination, it turned out that 1,154 pieces of the thermometers
($342.74) were missing and/or destroyed.

Stevens Co. immediately filed the corresponding notice of loss and/or short delivery,
followed by the corresponding notice and formal claim for loss and/or short delivery.
Stevens Co. also claims to have incurred damages in the sums of P1,000, as attorney's
fees, and P664.70, as unrealized profits.
o Lloyd however, refused and failed to pay said sum of $342.74 as well as other
damages.

April 27, 1960-- the first action was instituted by Stevens Co. in the Municipal Court of
Manila for the recovery of the value of said thermometers and damages.
o MunCourt dismissed the case without trial on the merits, citing lack of
jurisdiction, as it involved the exercise of admiralty and maritime jurisdiction.

June 24, 1960second action was filed.

o This was also dismissed, on the ground that the cause of action had prescribed.
o It having been filed more than a year from May 21, 1959, when Stevens Co.
was notified of the delivery of the case containing the thermometers in
question.

Thus this appeal, maintaining that the period of 1 year prescribed in Commonwealth Act
No. 65, in relation to Carriage of Goods by Sea Act within which the liability of
carriers, based upon a contract of carriage goods by sea, may be enforced by suit was
suspended by the commencement of the first action in the municipal court, on April 27,
1960, that the running of said period was resumed or continued on June 13, 1960, when
said action was dismissed; and that, excluding said period from April 27, 1960 to June 13,
1960, or 47 days, less than 1 year has elapsed from May 21, 1959 to June 24, 1960, when
this case was filed in the court of first instance.

ISSUE. WON the cause of action has already prescribed NO

RATIO.

In support of its contention, Stevens Co. invokes Article 1155 of the Civil Code:
The prescription of actions is interrupted when they filed before the court, when
there is a written extrajudicial command by the creditors, and when there is any
written acknowledged judgment of the debt by the debtor.

The dismissal of the case has to be reversed, also in view of the provisions section 49 of
Act No. 190 or the Carriage of Goods by Sea Act, which says:
If, in an action commenced, in due time, a judgment for the plaintiff be reversed, or
if the plaintiff fail otherwise than upon the merits, and the time limited for the
commencement of such action has, at the date of such reversal or failure, expired,
the plaintiff, or, if he die and the cause of action survive, his representatives may
commence a new action within one year after such date, and this provision shall
apply to any claim asserted in any pleading by a defendant.

The action commenced by Stevens Co. on April 27, 1960, was dismissed June 13, 1960,
or over twenty (20) days after the expiration of the period of 1 year, beginning from May
21, 1959, within which its action could be brought pursuant to Commonwealth Act No.
65, in relation to the Carriage of Goods by Sea Act. Under said section of Act No. 190,
the period within which plaintiff could initiate the present case was renewed, therefore,
for another year, beginning from June 14, 1960. The case at bar was commenced on
June 24, 1960, or within the period last mentioned.

The cases cited by Lloyd are not in point AND WRITTEN IN SPANISH, for the
dismissal of the companys complaint was not due to its desistance or voluntary
abandonment.
DISPOSITIVE. MunCourt reversed. Case remanded.

SANTOS v. NORTHWEST

G.R. No.101538 / June 23, 1992 / Cruz, J./Constitutionality

PETITIONERS
RESPONDENTS

Augusto Benedicto Santos III, represented by his dad Augusto

Benedicto Santos
Northwest Orient Airlines and CA

SUMMARY. Despite confirming his flight for Manila, petitioner was only waitlisted for the
Tokyo-Manila leg. He thus sued NOA in the Philippines. Lower court dismissed the case,
citing Article 28(1) of the Warsaw Convention.
DOCTRINE. SC ruled that 1) Article 28(1) of the Warsaw Convention is constitutional and
2) Petitioner cannot file his action in the Philippines because:
a) Article 28(1) is a jurisdiction, not a venue provision
b) Destination should be understood as the ultimate destination
c) Even if the action was based on tort, the Warsaw Convention still applies.
FACTS.

October 21 1986: petitioner Gus purchased from NOA a roundtrip ticket in San
Francisco for his flight from San Francisco to Manila via Tokyo and back. (No
date specified for his return to San Fran)

On December, he checked in for his flight at the San Francisco airport. Despite a
previous confirmation
and re-confirmation, he was informed that he had no reservation for the TokyoManila leg. Thus, he was
waitlisted.

March 12 1987, he sued NOA for damages in the Makati RTC. NOA moved to
dismiss the complaint
on lack of jurisdiction. NOA cited Article 28(1) (An action for damages must be brought, at
the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the Court
having jurisdiction where the carrier is ordinarily resident, or has his principal place of business, or has an
establishment by which the contract has been made or before the Court having jurisdiction at the place of
destination.) of the Warsaw Convention and argued that the complaint could be

instituted only in the territory of one of the High Contracting Parties before:
o The court of the domicile of the carrier
o The court of its principal place of business

o The court where it has a place of business through which the contract had been
made
o The court of the place of destination
NOA contended that the PH was not its domicile nor was it its principal place of
business. Thus the RTC dismissed the complaint. CA affirmed such ruling of the
RTC.
Petitioner now raises two issues before the SC:
o Constitutionality of 28(1) of the Warsaw Convention; and
o Jurisdiction of PH courts over the case

ISSUE & RATIO.

1) WON Article 28(1) of the Warsaw Convention is constitutional. YES
2) WON Philippine courts have jurisdiction in the case at hand. NO
1) Article 28(1) of the Warsaw Convention is constitutional

A. It is presumed to be constitutional and petitioner has not shown any proof to the contrary.
- Petitioner contends that the provision violates his right to due process and equal protection.
- PH is a party to the Convention for the Unification of Certain Rules Relating to International
Transportation by Air, or the Warsaw Convention. The Convention was concurred in by the
Senate on
May 16, 1950 and became applicable to the PH on Feb 9, 1951
- On September 1955, President Magsaysay issued Proclamation No. 201, declaring our
formal adherence
thereto to the end that the same and every article and clause thereof may be observed and
fulfilled in
good faith by the Republic of the PH and the citizens thereof.
- Thus it is a treaty commitment voluntarily assumed by the PH Government = has the force
and effect of
law in this country
- The treaty was a joint legislative-executive act. The presumption is that it was 1st carefully
studied and
determined to be constitutional before it was adopted.
B. Article 28(1) is still applicable despite the change in the circumstances
- Petitioner is invoking the doctrine of rebus sic stantibus (things thus standing). Under this
doctrine, non-performance of a treaty obligation is justified if the conditions with relation
to which the parties contracted have changed so materially and so unexpectedly as to
create a situation in which the exaction of performance would be unreasonable.
o According to him, some provisions in the Convention were intended to protect the
airline industry under the conditions prevailing then and which have long ceased to
exist.
- The Court admits that the Convention was drafted on the infancy of the airline industry.
Still, that circumstance alone is not sufficient justification for the rejection of the treaty at this
time. The changes petitioner cited were not entirely unforeseen although they were
expected in a general sense. The Convention itself has a provision which allowed
improvements to its provisions
- But the most important thing is that the treaty has not been rejected by the Philippine
government. The doctrine of rebus sic stantibus does not operate automatically to render the
treaty inoperative. There is a necessity for a formal act or rejection, usually by head of
state, with a statement of reasons why compliance cannot be done.
o Even the Warsaw Convention itself, under Article 39, allows a contracting state do
denounce the treaty without an expressed justification.
C. Constitutional guaranty of access to courts refers only to courts with appropriate
jurisdiction
- Gus is alleging the expenses he would have to incur to go to the US would be a constructive
denial of
his right to access to our courts for the protection of his rights.
- But the Court ruled that (read subsection C.)
- He cant just go to any court for redress. If he is barred from going here, its because the
courts here
have no jurisdiction over his claim.
2) The Makati RTC had no jurisdiction to decide on his claim
A. Article 28(1) is not merely a rule of venue

- Petitioner argues that the Warsaw Convention is just a rule on venue and could thus be
waived when
defendant NOA did not cite it as a ground in its Motion to Dismiss
- The Court 1st established that the Warsaw Convention is the law which governs the contract
between
Gus and NOA. Article 1 paragraph 2 (This Convention applies to all international carriage of persons, luggage

or goods performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air
transport undertaking.) of the Warsaw Convention states that the provisions of the Convention

automatically apply and govern the rights and liabilities of the airline and its passenger in case
of international transportation (see definition below). In this case, the contract is the ticket.
Since the ticket specifies a flight from the US to Manila, then the provisions of the Warsaw
Convention are governing
o "international transportation" shall mean any transportation in which, according to the contract made by the
parties, the place of departure and the place of destination, whether or not there be a break in the
transportation or a transshipment, are situated [either] within the territories of two High Contracting Parties .
..

- Court ruled that Article 28(1) is a jurisdiction provision

o The wording of Article 32, which indicates the places where the action for
damages must be brought, underscores the mandatory nature of Article 28
o Characterizing it as a jurisdiction provision is consistent with one of the
conventions objectives which is the regulation in a uniform manner of the condition
of international air transportation
o The Convention does not contain any provision prescribing rules of jurisdiction
other than Article 28(1)
- Thus, where the matter is governed by the Warsaw Convention, jurisdiction takes
on a dual concept
o In the international sense, jurisdiction must be established under Article 28(1)
o Following the establishment of the countries where a case may be filed, the
jurisdiction of a particular court must be established pursuant to the applicable
domestic law.
- Even if Article 28(1) is a venue provision, talo pa rin si Gus since, as stated by the CA, the
gist of NOAs motion to dismiss is that the Philippines is not the proper place where Santos
can file the action.
B. Destination should be defined as the ultimate destination where the plaintiff could file a
case
- Petitioner Gus cites Aanestad v Air Canada (LA-Montreal and back) where, as in this case,
the date and time for the return to Los Angeles was not stated. There, it was held that since the
date and time for LA was not stated, then Montreal must be considered as the destination
- However, the SC agreed with the case cited by NOA. In Butz v British Airways, it was held
that the place of destination referred to in the Warsaw Convention in a trip consisting of
several parts is the ultimate destination that is accorded treaty jurisdiction. This is
because the carrier is legally bound to transport the passenger back to the place of origin
- The place of destination is determined by the terms of the contract. An examination of Gus
ticket shows that his ultimate destination is San Fran. Although the date of the return was left
open, the contract of carriage between the parties indicates that NOA was bound to transport
Gus back to San Francisco from Manila
C. The definition of domicile cannot be stretched as to include the Philippines as a domicile of
NOA

- Petitioner argues that the Convention was originally written in French and as stated by
American courts, the French meaning has to be considered. In French, the term domicile
means any country
where the carrier has a branch office
- The SC did not agree with petitioner. 1st, in Campagnie Nationale Air France v Gilberto it
was stated
that courts have defined domicile in the Warsaw Convention as the one customarily regarded
as the
place where it is incorporated
- Notably, the term domicile of the carrier, as can be seen in Article 28(1) is only one of the
places where the complaint is allowed to be filed. By specifying three other places, the article
meant clearly these other 3 places were not comprehended in the term domicile
D. Article 28(1) also apples to actions based on tort.
- In his complaint, petitioner avers that NOA committed a tort. Citing two American cases, he
argues
Article 28(1) of the Warsaw Convention does not apply if the action is based on tort
- However, the cases cited by petitioner were negated by Husserl v Swiss Air Transport
Company. In
that case, the court discussed that although Article 24 (1. In the cases covered by Articles 18 and 19 any

action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention.
2. In the cases covered by Article 17 the provisions of the preceding paragraph also apply, without prejudice to the
questions as to who are the persons who have the right to bring suit and what are their respective rights) excludes any

relief not provided in the Convention, it does not however, limit the kind of cause of action
on which the relief may be founded. Any action regardless of the type of the action on
which relief is founded, can be brought subject to the conditions and limitations
established by the Warsaw Convention.
- Petitioner misinterpreted Article 25 (1. The carrier shall not be entitled to avail himself of the provisions of
this Convention which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such default on
his part as, in accordance with the law of the Court seised of the case, is considered to be equivalent to wilful misconduct.
2. Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused as aforesaid by
any agent of the carrier acting within the scope of his employment.) of the Warsaw Convention in stating that

NOA, based on the formers allegations, cannot use the Warsaw Convention as a ground for
dismissal. Article 25 is just a limitation provision which can be decided on after a court
has been conferred jurisdiction based on the Warsaw Convention
E. Civil Code Article 24 cannot be used
- Lastly, petitioner cites Article 24 CC in saying that since he is a person who is at a
disadvantage
compared to NOA, then Courts should be favorable to him.
- The SC reiterated that such provision can be considered only when a court has jurisdiction to
try the
case in the 1st place.
DECISION.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

NORTHWEST AIRLINES v. CUENCA

G.R. No. L-22425 / August 31, 1965 / Concepcion, J./Liabilities under the Warsaw
Convention/RLSOLIS
NATURE
Action for Damages for Alleged Breach of Contract
PETITIONERS
Northwest Airlines
RESPONDENTS
Nicolas L. Cuenca and Court of Appeals (Special 6th Division)
SUMMARY. Cuenca boarded Northwest Airlines in Manila with first class ticket to Tokyo,
marked W/L. He was then the Commissioner of Public Highways travelling in his official
capacity. Upon arrival at Okinawa, he was rudely compelled to move to the tourist class,
under threat of leaving him in Okinawa. He had no choice but to obey because he had to
attend a conference. He filed an action for damages for breach of contract. CFI awarded him
moral damages, exemplary damages and attorneys fees. CA affirmed except the exemplary
damages and converted the moral damages to nominal damages. Northwest argues that
Cuenca has no cause of action against it, based on the Warsaw Convention. SC affirmed CA
and held the cause of action of Cuenca is based on Northwests refusal to comply with a
contract of carriage in bad faith.
DOCTRINE. The language of the articles merely declare the carrier liable for damages in
the enumerated cases, if the conditions specified are present. It does not regulate or exclude
liability for other breaches of contract by the carrier.
FACTS.
Nicolas Cuenca, Commissioner of Public Highways, boarded Northwest Airlines in Manila
with first class ticket to Tokyo, marked W/L (meaning wait listed). Upon arrival at
Okinawa, he was transferred to the tourist class compartment.
Despite the fact that he revealed that he was travelling in his official capacity as official
delegate of the Republic to a conference in Tokyo, a Northwest agent rudely compelled him
in the presence of other passengers to move, over his objection, to the tourist class, under
threat of leaving him in Okinawa.
Cuenca filed an action for damages for breach of contract.
CFI: Northwest to pay Cuenca P20,000 moral damages + P5,000 exemplary damages with
interest until fully paid + P2,000 attys fees and litigation expenses
CA affirmed except as to P5,000 exemplary damages which was eliminated, and P20,000
moral damages converted to nominal damages

The cases Medina v Cresenciaand Quijano v PAL, used by petitioner as basis for his
argument, is not in point and not controlling.In the first case, this Court eliminated a
P10,000 award for nominal damages, because the aggrieved party had already been awarded
P6,000 as compensatory damages, P30,000 as moral damages and P10,000 as exemplary
damages, and "nominal damages cannot co-exist with compensatory damages." In the case
at bar, the Court of Appeals has adjudicated no such compensatory, moral and exemplary
damages to respondent herein.
Special reasons for awarding P20,000 as nominal damages
Cuenca was travelling in his official capacity and had no choice but to obey his transfer
from first class to tourist class.
Even if his ticket was marked W/L, having paid the first class fare in full and having been
given first class accommodation from Manila to Okinawa, he was entitled to believe that his
first class reservation was confirmed and would be kept until his ultimate destination,
Tokyo.
Northwest has not tried to explain or even alleged that the person to whom respondent's first
class seat was given had a better right.
Considering that petitioner's agent had acted in a wanton, reckless and oppressive manner,
said award may also be considered as one for exemplary damages.
DECISION.
WHEREFORE, the decision appealed from is hereby affirmed, with costs against the
petitioner. It is so ordered.
NOTES.
Warsaw Convention
ART. 17. The carrier shall be liable for damages sustained in the event of the death or
wounding of a passenger or any other bodily injury suffered by a passenger, if the accident
which caused the damage so sustained took place on board the aircraft or in the course of any
of the operations of embarking or disembarking.
ART. 18. (1) The carrier shall be liable for damage sustained in the event of the destruction or
loss of, or of damage to, any checked baggage, or any goods, if the occurrence which caused
the damage so sustained took place during the transportation by air.
(2) The transportation by air within the meaning of the preceding paragraph shall comprise the
period during which the baggage or goods are in charge of the carrier, whether in an airport or
on board an aircraft, or, in the case of a landing outside an airport, in any place whatsoever.

ISSUES & RATIO.

1. WoN the Warsaw Convention, relative to transportation by air, is in force in the
Philippines YES
2. WoN Respondent has cause of action - YES
Petitioners argument: Based on Articles 17 to 19 of the Warsaw Convention, an air "carrier
is liable only" in the event of death of a passenger or injury suffered by him, or of
destruction or loss of, or damage to any checked baggage or any goods, or of delay in the
transportation by air of passengers, baggage or goods.
SC: The language of the articles merely declare the carrier liable for damages in the
enumerated cases, if the conditions specified are present. It does not regulate or exclude
liability for other breaches of contract by the carrier. Under petitioner's theory, an air carrier
would be exempt from any liability for damages in the event of its absolute refusal, in bad
faith, to comply with a contract of carriage, which is absurd.
3. WoN the P20,000 nominal damages should be removed NO.

(3) The period of the transportation by air shall not extend to any transportation by land, by
sea, or by river performed outside an airport. If, however, such transportation takes place in the
performance of a contract for transportation by air, for the purpose of loading, delivery, or
transhipment, any damage is presumed, subject to proof to the contrary, to have been the result
of an event which took place during the transportation by air.
ART. 19. The carrier shall be liable for damage occasioned by delay in the transportation by
air of passengers, baggage, or goods.

ALITALIA v. IAC

G.R. No.71929 / December 4 1990 / Narvasa, J./Transpo/PS i<3u

NATURE
PETITIONERS
RESPONDENTS

Petition for Certiorari.

Alitalia, et al.
IAC and Felipa E. Pablo.

FACTS.
Felipa Pablo, an associate professor in UP and a research grantee of the Phil. Atomic Energy
Agency, was invited to take park in a meeting of the Dept of Research and Isotopes of the
UN in Ispra, Italy for her specialized knowledge in foreign substances in food and the
agriculture environment. She booked passage on petitioner airline Alitalia to fulfill her
engagement to be the 2nd speaker on the first day of the meeting.
She arrived in Milan on the day before the meeting. However, her luggage was delayed in
as much as the same was in one of the succeeding flights from Rome to Milan. It consisted
of 2 suitcases (clothing and other personal items; her scientific papers, slides and other
research material). Other flights have failed to arrive with her luggage.
She went to Rome to locate her bags. However, the baggage could not be found. She
returned to Manila without attending the meeting in Ispra, Italy, feeling distraught and
discouraged.
She demanded that Alitalia pay damages. Alitalia offered her free airline tickets but it was
rejected by Pablo.
As it turned out, the luggage were in fact located and forwarded to Ispra, Italy, but only on
the day after her scheduled appearance and participation at the UN meeting. He could not
accept delivery as she was already on her way back to Manila. The suitcases were not
restored to her until 11 months later and after 4 months after institution of her action.
CFI rendered judgment in Pablos favor (P20,000 Nominal Damages, P5,000 Attys Fees).
IAC affirmed the CFI (Increased total damages to P40,000).
ISSUES & RATIO.
3. WON the Warsaw Convention should have been applied to limit Alitalias liability.
YES. But she is entitled to nominal damages.

The Warsaw convention denies to the carrier availment of the provisions which
exclude or limit his liability if the damage is caused by his willful misconduct or if
the damage is similarly caused 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 willful misconduct.
The Convention does not serve as an exclusive enumeration of the instances of the
airlines liability, or as an absolute limit of the extent of that liability. Its provisions
do not regulate or exclude liability for other breaches of contract by the carrier or
misconduct of its officers and employees, or fore some particular or exceptional type
of damage. Otherwise, an air carrier would be exempt from any liability for damages
in the event of its absolute refusal, in bad faith, to comply with a contract of
carriage.
In the case at bar, no bad faith or improper conduct may be ascribed to the
employees of petitioner airline. However, the opportunity to claim the honor or
distinction as to be invited in a UN conference (which could have brought honor as
well to UP) was irretrievably lost to her because of the breach of contract. There can

be no doubt that Pablo underwent profound distress and anxiety, which gradually
turned into panic and despair when she finally realized that she would no longer be
able to take part in the conference.
She is not entitled to be compensated for loss or damage to her luggage as her
baggage was ultimately delivered to her in Manila. She is entitled to nominal
damages, which is adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated and recognized, and not for
the purpose of indemnifying the plaintiff for any loss suffered.

DECISION. WHEREFORE, no error being perceived in the challenged decision of the Court
of Appeals, it appearing on the contrary to be entirely in accord with the facts and the law, said
decision is hereby AFFIRMED, with costs against the petitioner.

PAN AM v. IAC

1. What amount is Pan Am liable for? Limited to $20 per kilo as stipulated in the
ticket

G.R. No. 70462/ OCT 8, 2003 / CORTES, J./TRANSPO-Common Carriage of Goods/JMB

NATURE
PETITIONERS
RESPONDENTS

Petition to Review IAC Decision

Pan American World Airways, Inc
IAC, Rene Pangan, Sotang Bastos Productions and Archer Productions

SUMMARY. Pangan entered into a contract with a company in San Francisco and another
company in Guam for the exhibition of his films in said places. He purchased a Pan Am
ticket and took the flight to Guam to comply with his commitments therein. Upon arrival,
however, his 2 luggages containing the required promotional material did not arrive with his
flight. Pangan claimed that his inability to deliver the promotional material on time caused
the cancellation of the exhibition contracts. The CFI, affirmed by the IAC, awarded actual
damages and attorneys fees, disregarding Pan Ams limitations of liability found on the
ticket. The SC set aside the IACs decision and ruled that Pan Ams liability for the lost
baggage is limited to $20 per kilo or $600 as stipulated on the ticket. It ruled that since
Pangan had not informed Pan Am that the exhibition contracts would be breached if his
luggage was not delivered on time, then this was a liability that Pan Am could not have
foreseen, and therefore could not have assumed.
DOCTRINE In the absence of a showing that Pan Am's attention was called to the special
circumstances requiring prompt delivery Pangan's luggages, Pan Am cannot be held liable
for the cancellation of Pangan's contracts as it could not have foreseen such an eventuality
when it accepted the luggages for transit.

1.

2.

FACTS.

Rene Pangan, President and GM of Sotang Bastos and Archer Production, entered into 2
separate contracts with (1) Prime Films in San Francisco, CA and (2) Hafa Adai
Organization in Guam to exhibit the ff. films on May 30, 1978: (a) Ang Mabait, Masungit
at ang Pangit, (b) Big Happening with Chikiting and Iking, and (c) Kambal Dragon.
Pangan was also to provide the promotional material.

On May 18, Pangan purchased an economy class ticket from Pan Ams Manila Office
through Your Travel Guide, a tour and travel office. The flight was from Manila to Guam
on May 27. On May 27, two hours before departure time, Pangan checked in his two
pieces of luggage containing promotional and advertising materials (worth P12,900), and
clutch bags and barongs, (worth P4,400) as well as his personal belongings.

Pangan was informed that his name was not in the manifest and so he could not take the
flight in economy class. Pangan ended up flying first class so as to get to Guam in time to
comply with his commitment, paying an additional sum of $112.00.

When Pangan arrived in Guam on May 27, his luggage did not arrive with his flight, as a
consequence of which his agreements for the exhibition of the films in Guam and in the
US were cancelled. Hence this case for damages.

CFI: Pan Am liable to Pangan for the ff:

1. actual damages P83,000 with 14% interest from Dec. 6, 1978 when the
complaint was filed until fully paid + attys fees of P10,000
2. additional actual damages of P8,123.34 with 14% interest from Dec. 6, 1978
until fully paid
3. costs of suit

Pan Ams argument: CFIs award of actual damages was beyond the limitation of liability
set forth in the Warsaw Convention and the contract of carriage. Liability should be
limited to $600 ($20.00 x 30 kilos). Cited Ong Yiu v. CA.

IAC affirmed CFI citing Northwest Airlines v. Cuenca.

ISSUES & RATIO.

3.

Based on the conditions stipulated in the airline ticket, Pan Ams liability is limited to $20
per kilo since Pangan did not declare a higher value in advance nor did he pay for
additional charges (pertinent portions of ticket below):
a. Notice If the passenger's journey involves an ultimate destination or stop in a
country other than the country of departure the Warsaw Convention may be
applicable and the Convention governs and in most cases limits the liability of
carriers for death or personal injury and in respect of loss of or damage to baggage.
b. Conditions of Contract 2. Carriage hereunder is subject to the rules and
limitations relating to liability established by the Warsaw Convention unless such
carriage is not "international carriage" as defined by that Convention.
c. Notice of Baggage Liability Limitations Liability for loss, delay, or damage to
baggage is limited as follows unless a higher value is declared in advance and
additional charges are paid: (1) for most international travel (including domestic
portions of international journeys) to approximately $9.07 per pound ($20.00 per
kilo) for checked baggage and $400 per passenger for unchecked baggage.
SC also mentioned several cases
a. Ong Yiu vs. CA is squarely applicable in this case as both contain similar provisions
limiting liability, and in Ong Yiu the provision was deemed valid.
b. Shewaram vs. PAL is not applicable since the ruling there was premised on the
finding that the conditions printed at the back of the ticket were so small and hard to
read that they would not warrant the presumption that the passenger was aware of
the conditions and that he had freely and fairly agreed thereto. In the instant case,
similar facts were neither alleged nor shown.
c. The Court clarified that contrary to the IACs interpreation of the Northwest Airlines
vs. Cuenca case, that case did not pronounce that the provisions of the Warsaw
Convention limiting a carrier's liability are against public policy, and thus the IACs
reliance on the ruling for such a reading was erroneous.
d. The rule laid down in Mendoza v. PAL (1952) could not be any clearer. It also
involved a film to be exhibited abroad.
a. Under Art. 1107 of the (Old) Civil Code, a debtor in good faith like the
defendant herein, may be held liable only for damages that were foreseen
or might have been foreseen at the time the contract of transportation was
entered into. The trial court correctly found that the defendant company
could not have foreseen the damages that would be suffered by Mendoza
upon failure to deliver the can of film for the reason that the plans of
Mendoza to exhibit that film during the town fiesta and his preparations,
specially the announcement of said exhibition by posters and
advertisement in the newspaper, were not called to the defendants
attention.
b. SC held in that case that PAL was in good faith and could not have
foreseen the damages that would be suffered by the passenger Mendoza
since his plans and circumstances were not brought to PALs attention
beforehand.
c. The US case of Chapman v. Fargo, was cited therein, and also involved
films BUT the plaintiff informed the carrier that the shipment involved
motion picture films to be exhibited abroad. Still, the Supreme Court of
NY refused to award the plaintiff special damages because the carrier was
not notified of such unusual or extraordinary damages as the probable
result of breach at the time of or prior to contracting.
As applied

Applying the foregoing ruling to the facts of the instant case, in the absence of a
showing that Pan Am's attention was called to the special circumstances requiring
prompt delivery Pangan's luggages, Pan Am cannot be held liable for the
cancellation of Pangan's contracts as it could not have foreseen such an eventuality
when it accepted the luggages for transit.
The Court is unable to uphold the Intermediate Appellate Courts disregard of the
rule laid down in Mendoza and affirmance of the trial courts conclusion that petitioner is
liable for damages based on the finding that [t]he undisputed fact is that the contracts of
the plaintiffs for the exhibition of the films in Guam and California were cancelled
because of the loss of the two luggages in question.The evidence reveals that the
proximate cause of the cancellation of the contracts was Pangan's failure to deliver
the promotional and advertising materials on the dates agreed upon. For this Pan
Am cannot be held liable. Pangan had not declared the value of the 2 luggages he
had checked in and paid additional charges. Neither was Pan Am privy to
respondents' contracts nor was its attention called to the condition therein requiring
delivery of the promotional and advertising materials on or before a certain date.
The SC set aside IACs decision and ordered Pan Am to pay Pangan only the amount
of $600 or its equivalent in PH currency at the time of actual payment, and also deleted
the attorneys fees.

NOTE: The provision itself was never cited in the ponencia, but the ratio reflects the
content of Art. 2201. However, the old Civil Code provision upon which it is based (Art.
1107) was cited, as part of the Courts discussion on the precedent set in Mendoza vs.
PAL.
o Article 2201. In contracts and quasi-contracts, the damages for
which the obligor who acted in good faith is liable shall be those
that are the natural and probable consequences of the breach of
the obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.
o In case of fraud, bad faith, malice or wanton attitude, the obligor
shall be responsible for all damages which may be reasonably
attributed to the non-performance of the obligation. (1107a)

DECISION.
Petition granted, IAC Decision set aside.

TWA v. CA

G.R. No. L-78656 / August 30, 1988 / GANCAYCO, J. / Warsaw Convention When Limitations
Unavailable / Rad Isnani

PETITIONER
RESPONDENTS

Trans World Airlines

Court of Appeals and Rogelio Vinluan

SUMMARY. Atty. Vinluan twice confirmed his first class accommodation with TWA for his
NY-SF flight, but upon check-in, was downgraded, treated rudely, and discriminated against
in favor of white people.
SC: Above fact, coupled with TWAs switching to a smaller aircraft for economy and in
disregard of the comforts of its passengers, amounted to bad faith, which warrants moral
damages in favor of Vinluan.
DOCTRINE. In relation to the limitations on liability provided in the Warsaw Convention,
they do not apply when the carrier acted recklessly or with knowledge that knowledge will
probably result.
FACTS.

In April 1979, respondent Atty. Rogelio Vinluan had to travel to the Europe and the
United States for several of his clients. He contracted with Japan Airlines to transport him
first class from Manila to Tokyo, Moscow, Paris, Hamburg, Zurich, New York, Los
Angeles, Honolulu, and back to Manila.

While in Paris, Vinluan went to the Trans World Airlines (TWA) Office at Charles De
Gaulle Airport to confirm his first class accommodations on the New YorkSan
Francisco flight. He received a validated stub, which was attached to his New York ticket.
He also called TWA early on the morning of his flight date, in order to reconfirm his
reservation, and he was even requested to indicate his preferred seat.

Early on his flight date, Vinluan checked in, but was informed that no first class seat was
available for him. When he demanded an explanation from TWA staff, he was rebuffed,
and was even treated rudely when a certain Mr. Braam on the staff threatened, Dont
argue with me. I have a very bad temper. Vinluan was thus forced to take an economy
class seat. While waiting to depart, however, Vinluan observed that white guys who
checked in later than him had been given preference to first class seats, which had
become available due to no show passengers.

Vinluan thus filed this action for damages, alleging breach of contract and bad faith. TWA
contends that due to maintenance problems, they had to change to a smaller aircraft with
only 16 first class seats. They allege that they had advised passengers that
accommodations would be on a first-come, first-serve basis.
ISSUE & RATIO.
1. W/N Vinluan is entitled to moral damages. YES.
TWA had acted in bad faith. Vinluans first class reservation had been confirmed twice, yet
upon check-in, TWA unceremoniously told him that there was no first class seat available for
him, and that he had to be downgraded to economy class. He was even threatened by one of
the staff. Worse, several Caucasians who had arrived much later than him were accommodated
in first class seats.
It is obvious that he was subject to discrimination. Further, it was proven that the switch to a
smaller aircraft was because only 138 economy class passengers confirmed. Hence, TWA is
deemed to have sacrificed the comfort of its first class passengers, for the sake of economy.
The Court deemed this inattention and lack of care for the interest of passengers tantamount to
bad faith.

DECISION.
TWA liable.

LUNA v. CA

G.R. Nos. 100374-75 / Nov. 27, 1992 / Belossilo, J. / Conditions on imposition of liability / Chad

Nature:
Recovery of Damages for Missing Baggage
Petitioner:
Rufino Y. Luna, Rodolfo J. Alonso and Porfirio Rodriguez
Respondent:
CA, Judge Cristina Estrada, Judge Teresita Capuling of the RTC, and
Northwest Airlines, Inc.
SUMMARY. Luna et al flew to Seoul for a four-day convention but their baggage was
brought elsewhere. It only arrived in Seoul 4 days later. They filed an action for breach of
contract with damages. The court dismissed for lack of cause of action-- failure to state in
their respective complaints that they filed a prior claim with private respondent within the
prescribed period of 21 days. SC reversed and reinstated the complaints.
DOCTRINE. The Warsaw Convention does not operate as an exclusive enumeration of the
instances for declaring an airline liable for breach of contract of carriage or as an absolute
limit of the extent of that liability. The application of the Convention must not therefore
be construed to preclude the operation of the Civil Code and other pertinent laws.
FACTS.

19 May 1989, at around 8:00 am: Rufino Luna, Rodolfo Alonso and Porfirio Rodriguez
boarded Flight 020 of Northwest Airlines bound for Seoul, SoKor, to attend the four-day
Rotary International Convention from the 21-24 May 1992, with one (1) piece of luggage
each for check-in.

The first plane had engine trouble, and they were asked to disembark transfer to a Korean
Airlines plane scheduled to depart four (4) hours later. They were assured that their
baggage would be with them in the same flight.

When they arrived in Seoul, they discovered that their personal belongings were nowhere
to be found; instead, they were allegedly flown to Seattle, U.S.A. It was not until four (4)
days later, and only after repeated representations with Northwest Airlines personnel at
the airport in Korea were Luna et al able to retrieve their luggage. By then the
Convention, which they were hardly able to attend, was almost over.

Rufino Y. Luna and Rodolfo J. Alonso assert that on 6 June 1989, or thirteen (13) days
after they recovered their luggage, they sent a written claim to private respondent's office
along Roxas Blvd., Ermita, Manila.

Porfirio Rodriguez, on his part, states that he filed his claim on 13 June 1989.

Northwest, in a letter of 21 June 1989, disowned any liability for the delay and averred
that it exerted "its best efforts to carry the passenger and baggage with reasonable
dispatch."

14 July 1989: Luna and Alonso jointly

filed a complaint for breach of contract
with damages (Civil Case No. 58390)

Rodriguez filed his own complaint

(Civil Case No. 3194-V-89)

Upon motion of Northwest, both complaints were dismissed for lack of cause of action
due to failure to state in their respective complaints that they filed a prior claim with
Northwest Airlines within the prescribed period.

Luna and Alonso then filed a petition

for certiorari before the Court of

Appeals

Rodriguez proceeded directly to the SC

on Certiorari for the same purpose.
In a resolution of 26 February 1990,
SC referred his petition to the Court of
Appeals.

26 March 1991: CA applied the

provisions of the Warsaw Convention
and ruling that certiorari was not a
substitute for a lost appeal, dismissed

the petition of Luna and Alonso

7 June 1991: CA denied their motion

for reconsideration

28 February 1991: ruled that the

questioned order of the trial court had
already become final, similarly rejected
the petition of Rodriguez
6 June 1991: denied his motion for
reconsideration.

Hence, this present recourse by petitioners Luna, Alonso and Rodriguez.

Luna et al claim:
(a) that CA disregarded Alitalia v. CA which held that "[t]he 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;
(b) that petitions to revoke orders and decisions may be entertained even after
the time to appeal had elapsed, in cases wherein the jurisdiction of the court had
been exceeded;" and,
(c) that Art. 26 of the Warsaw Convention which prescribes the reglementary
period within which to file a claim cannot be invoked if damage is caused by
the carrier's willful misconduct, as provided by Art. 25 of the same Warsaw
Convention.

Northwest argues:
o It did not receive any demand letter from petitioners within the 21-day
reglementary period, as provided in par. 7 of the Conditions of Contract
appearing in the plane ticket.
Since Art. 26, par. (4), of the Warsaw Convention provides that

"[f]ailing complaint within the times aforesaid, no action shall lie

against the carrier, save in the case of fraud on him part," the carrier
consequently cannot be held liable for the delay in the delivery of the
baggage.
In other words, non- observance of the prescribed period to file a

claim bars claimant's action in court for recovery

o Art. 25, par. (1), of the Warsaw Convention which excludes or limits liability of
common carriers if the damage is caused by its willful misconduct, refers only
to the monetary ceiling on damages found in Art. 22.
o Dismissal orders of respondent courts had already become final

ISSUE. WON Luna et als complaint against Northwest should be dismissed- NO

RATIO.
Complaints are reinstated.
Northwest Airlines indeed failed to deliver petitioners' baggage at the designated time and
place.
o For this, all that it could say was that "[w]e exerted all efforts to comply with
this condition of the contract."
o Luna et al really suffered some special specie of injury for which they should
rightly be compensated.
o Northwest Airlines cannot be allowed to escape liability by seeking refuge in
the argument that the trial courts' orders have attained finality due to petitioners'
failure to move for reconsideration or to file a timely appeal therefrom.

Technicalities should be disregarded if only to render to the

respective parties that which is their due.
Even though certiorari cannot be a substitute for a lapsed appeal, the
rule may be relaxed in case a rigid application of that rule will result
in a manifest failure or miscarriage of justice.

The Warsaw Convention was a treaty commitment voluntarily assumed by the Philippine
government; consequently, it has the force and effect of law in this country.
o However, the Warsaw Convention does not operate as an exclusive
enumeration of the instances for declaring an airline liable for breach of
contract of carriage or as an absolute limit of the extent of that liability.
o The Convention merely declares the carrier liable for damages in the
enumerated cases, if the conditions therein specified are present.
o For sure, it does not regulate the liability, much less exempt, the carrier for
violating the rights of others which must simply be respected in accordance
with their contracts of carriage.
o The application of the Convention must not therefore be construed to
preclude the operation of the Civil Code and other pertinent laws.
o Case in point: Alitalia v. IAC

Hence, failure to file a claim with the common carrier as mandated by the provisions of
the Warsaw Convention should not be a ground for the summary dismissal of their
complaints since a party may still be held liable for breach of other relevant laws which
may provide a different period or procedure for filing a claim.
o Considering that Luna et al indeed filed a claim which Northwest admitted
having received on 21 June 1989, their demand may have very well filed within
the period prescribed by those applicable laws.
RTC and CA were in error when they limited themselves to the
provisions of the Warsaw Convention and disregarding completely
the provisions of the Civil Code.
NOTE: However, Art. 25 of the Convention does not operate to exclude the other
provisions of the Convention if damage is caused by the common carrier's willful
misconduct. It refers only to the monetary ceiling on damages found in Art. 22 should
damage be caused by carrier's willful misconduct.
o Mere failure to deluver the luggage at the designated time and place does not
amount automatically to willful misconduct.
o 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.
DISPOSITIVE. Complaints reinstated for trial.

LHUILLIER v. BRITISH AIRWAYS

G.R. No.171092 / March 15, 2010 / Del Castillo, J./ International Air Transportation

NATURE
PETITIONERS
RESPONDENTS

Petition for review on Certiorari

Edna Diago Lhuillier
British Airways

SUMMARY. Discriminated Passenger. Lhuillier took BAs Flight London-Rome. On Board,

She allegedly asked Julian Halliday, one of the flight attendants, to assist her in placing her
hand-carried luggage in the overhead bin but Halliday refused. When the plane was about to
land in Rome, another flight attendant, Nickolas Kerrigan, singled her out from among all
the passengers in the business class section to lecture on plane safety.
DOCTRINE. It is thus settled that allegations of tortious conduct committed against an
airline passenger during the course of the international carriage do not bring the case outside
the ambit of the Warsaw Convention.
FACTS.
Lhuillier filed a Complaint for damages against British Airways (BA) before RTC Makati
alleging that:

She took BAs flight 548 from London to Rome.

Once on board, she allegedly requested Julian Halliday, one of the flight attendants,
to assist her in placing her hand-carried luggage in the overhead bin.

Halliday allegedly refused to help and assist her, and even sarcastically remarked
that "If I were to help all 300 passengers in this flight, I would have a broken
back!"
When the plane was about to land in Rome, another flight attendant, Nickolas
Kerrigan, singled her out from among all the passengers in the business class section
to lecture on plane safety.
Allegedly, Kerrigan made her appear to the other passengers to be ignorant,
uneducated, stupid, and in need of lecturing on the safety rules and regulations of
the plane.
Lhuillier assured Kerrigan that she knew the planes safety regulations being a
frequent traveler.
Kerrigan allegedly thrust his face a mere few centimeters away from that of the
petitioner and menacingly told her "We dont like your attitude."

Upon arrival in Rome, petitioner complained to BAs ground manager and

demanded an apology.
However, the latter declared that the flight stewards were "only doing their job."
Summons, together with a copy of the complaint, was served on BA through Violeta
Echevarria, General Manager of Euro-Philippine Airline Services, Inc. (EPAS)

BAs defenses:

BA, by way of special appearance through counsel, filed a Motion to Dismiss on

grounds of:
o Lack of jurisdiction over the case
Only the courts of London or Rome have jurisdiction over the complaint
for damages pursuant to the Warsaw Convention (Warsaw Convention. An action
for damages must be brought at the option of the plaintiff, either before the court of domicile of
the carrier or his principal place of business, or where he has a place of business through which
the contract has been made, or before the court of the place of destination.)

a) BA is domiciled in London and its principal place of business is in

London;
c) Lhuillier bought her ticket in Italy and Rome is her place of destination
o Lack of jurisdiction over the person of the respondent.
The summons was erroneously served on EPAS which is not its resident
agent in the Phil.
RTC: BAs Motion to Dismiss GRANTED.

Our Courts have to apply the principles of international law, and are bound by treaty
stipulations.

However, referral to the court of proper jurisdiction does not constitute constructive
denial of plaintiffs
right to have access to our courts since the Warsaw Convention itself provided for
jurisdiction over cases arising from international transportation. Said treaty
stipulations must be complied with in good faith.
Lhuilliers Arguments

Her cause of action arose not from the contract of carriage, but from the tortious
conduct committed by airline personnel of respondent in violation of the provisions
of the Civil Code on Human Relations.

Since the cause of action was not predicated on the contract of carriage, she has the
option to pursue this case in this jurisdiction pursuant to Philippine laws.
ISSUE & RATIO.
Whether Philippine Courts have jurisdiction over a tortious conduct committed against a
Filipino Citizen and resident by airline personnel of a foreign carrier travelling beyond the
territorial limit of any foreign country and thus is outside the ambit of the Warsaw Convention.
NEGATIVE
Ratio decidendi

The Convention is thus a treaty commitment voluntarily assumed by the Philippine

government and, as such, has the force and effect of law in this country.

The Warsaw Convention applies because the air travel, where the alleged tortious
conduct occurred, was between the UK and Italy, which are both signatories to the
Warsaw Convention.

Thus, when the place of departure and the place of destination in a contract of
carriage are situated within the territories of two High Contracting Parties, said
carriage is deemed an "international carriage".

In the case at bench, petitioners place of departure was London while her place of
destination was
Rome. Both the UK and Italy signed and ratified the Warsaw Convention. As such,
the transport of the petitioner is deemed to be an "international carriage" within the
contemplation of the Warsaw Convention.

Since the Warsaw Convention applies in the instant case, then the jurisdiction over
the subject matter of the action is governed by the provisions of the Warsaw
Convention (See footnote 1).
As applied:

In this case, it is not disputed that respondent is a British corporation domiciled in

London, United Kingdom with London as its principal place of business. Hence,
under the 1st and 2nd jurisdictional rules, the petitioner may bring her case before

the courts of London. In the passenger ticket and baggage check presented by both
the petitioner and respondent, it appears that the ticket was issued in Rome.
Consequently, under the 3rd jurisdictional rule, the petitioner has the option to bring
her case before the courts of Rome. Finally, both the petitioner and respondent aver
that the place of destination is Rome, which is properly designated given the routing
presented in the said passenger ticket and baggage check. Accordingly, petitioner
may bring her action before the courts of Rome, Italy. We thus find that the RTC of
Makati correctly ruled that it does not have jurisdiction over the case filed by the
petitioner.
Tortious conduct as ground for the Lhuilliers complaint is within the purview of the
Warsaw Convention.
Cases:
In Santos III v. Northwest Orient Airlines, we held that the allegation of willful
misconduct resulting in a tort is insufficient to exclude the case from the realm of the
Warsaw Convention.
In Carey v. United Airlines, the US Court of Appeals held that the "passenger's
action against the airline carrier arising from alleged confrontational incident
between passenger and flight attendant on international flight was governed
exclusively by the Warsaw Convention, even though the incident allegedly involved
intentional misconduct by the flight attendant."
In Bloom v. Alaska Airlines, the US Court of Appeals held that the "Warsaw
Convention governs actions arising from international air travel and provides the
exclusive remedy for conduct which falls within its provisions." It further held that
the said Convention "created no exception for an injury suffered as a result of
intentional conduct" which in that case involved a claim for intentional infliction of
emotional distress.
It is thus settled that allegations of tortious conduct committed against an airline
passenger during the course of the international carriage do not bring the case
outside the ambit of the Warsaw Convention.

DECISION.
WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional Trial
Court of Makati City, Branch 132, dismissing the complaint for lack of jurisdiction, is
AFFIRMED.
NOTES.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage or goods performed
by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air
transport undertaking.
2. For the purposes of this Convention the expression "international carriage" means any
carriage in which, according to the contract made by the parties, the place of departure and the
place of destination, whether or not there be a break in the carriage or a transshipment, are
situated either within the territories of two High Contracting Parties, or within the territory of a
single High Contracting Party, if there is an agreed stopping place within a territory subject to
the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is
not a party to this Convention. A carriage without such an agreed stopping place between
territories subject to the sovereignty, suzerainty, mandate or authority of the same High
Contracting Party is not deemed to be international for the purposes of this Convention.

UNITED AIRLINES v. UY

G.R. No.127768 / November 19, 1999 / Bellosillo, J./Transpo /PeeSeeCat

NATURE
PETITIONERS
RESPONDENTS

Petition for Review on Certiorari.

United Airlines.
Willie Uy.

FACTS.
On October 13, 1989, Willie J. Uy, a revenue passenger on United Airlines Flight No. 819
for the San Francisco - Manila route, checked in together with his luggage one piece of
which was found to be overweight at the airline counter.
To his utter humiliation, an employee of petitioner rebuked him saying that he should have
known the maximum weight allowance to be 70 kgs. per bag and that he should have
packed his things accordingly.
Then, in a loud voice in front of the milling crowd, she told respondent to repack his things
and transfer some of them from the overweight luggage to the lighter ones.
Not wishing to create further scene, respondent acceded only to find his luggage still
overweight.
The airline then billed him overweight charges which he offered to pay with a
miscellaneous charge order (MCO) or an airline pre-paid credit.
However, the airlines employee, and later its airport supervisor, adamantly refused to honor
the MCO pointing out that there were conflicting figures listed on it.
Despite the explanation from respondent that the last figure written on the MCO represented
his balance, petitioners employees did not accommodate him. Faced with the prospect of
leaving without his luggage, respondent paid the overweight charges with his American
Express credit card.
Uys troubles did not end there. Upon arrival in Manila, he discovered that one of his bags
had been slashed and its contents stolen. He particularized his losses to be around US
$5,310.00.
In a letter, Uy bewailed the insult, embarrassment and humiliating treatment he suffered in
the hands of United Airlines employees, notified petitioner of his loss and requested
reimbursement. Petitioner United did not refute any of respondents allegations and mailed
a check representing the payment of his loss based on the maximum liability of US $9.70
per pound. Respondent, thinking the amount to be grossly inadequate to compensate him
for his losses, as well as for the indignities he was subjected to, sent two (2) more letters to
petitioner airline, demanding an out-of-court settlement of P1,000,000.00. Petitioner United
Airlines did not accede to his demands.
The Complaint
On June 9, 1992, Uy filed a complaint for damages against United Airlines alleging:
o that petitioner airline accorded him ill and shabby treatment to his extreme
embarrassment and humiliation; and, as such he should be paid moral damages
of at least P1,000,000.00, exemplary damages of at least P500,000.00, plus
attorney's fees of at least P50,000.00
o that the damage to his luggage and its stolen contents amounted to around
$5,310.00, and requested reimbursement therefor.
United Airlines moved to dismiss the complaint on the ground that respondents cause of
action had prescribed, invoking Art. 29 of the Warsaw Convention:
o Art. 29 (1) The right to damages shall be extinguished if an action is not
brought within two (2) years, reckoned from the date of arrival at the
destination, or from the date on which the aircraft ought to have arrived, or
from the date on which the transportation stopped.
(2) The method of calculating the period of limitation shall be determined by
the law of the court to which the case is submitted.

Uy countered that par. (1) of Art. 29 of the Warsaw Convention must be reconciled with par.
(2) thereof which states that "the method of calculating the period of limitation shall be
determined by the law of the court to which the case is submitted." Interpreting thus,
respondent noted that according to Philippine laws the prescription of actions is interrupted
"when they are filed before the court, when there is a written extrajudicial demand by the
creditors, and when there is any written acknowledgment of the debt by the debtor."
Since he made several demands upon United Airlines, Uy argues the two (2)-year period of
limitation had not yet been exhausted.
ISSUES & RATIO.
4. WON the Warsaw Convention preclude the operation of the Civil Code and other
pertinent laws NO.
Within our jurisdiction we have held that the Warsaw Convention can be applied,
or ignored, depending on the peculiar facts presented by each case. Convention provisions
do not regulate or exclude liabilities for other breaches of contract by the carrier or
misconduct of its officers and employees, or for some particular or exceptional type of
damage. Neither may the Convention be invoked to justify the disregardof some
extraordinary type of damage. Neither may the Convention be invoked to justify
the disregard of some extraordinary sort of damage resulting to a passenger and preclude
recovery therefore3 beyond the limits et by said convention. Likewise, we have held that the
Convention does not preclude the operation of the Civil Code and other pertinent laws. It
does not regulate, much less exempt, the carrier from liability for damages for violating the
rights of its passengers under the contract of carriage, especially if willful misconduct on the
part of the carriers employees is found or established.

5.

WON respondents cause of action prescribed NO

While his second cause of action (an action for damages arising from theft or damage to
property or goods) is well within the bounds of the Warsaw convention, his first cause of
action (an action for damages arising from the misconduct of the airline employees and the
violation of respondents rights as passengers) clearly is not.

The 2-year limitation incorporated in Art. 29 of the Warsaw Convention as an absolute bar to
suit and not to be made subject to the various tolling provisions of the laws of the forum,
forecloses the application of our own rules on interruption of prescriptive periods. (Art. 29,
par. 2 was indented only to let local laws determine whether an action shall be deemed
commenced upon the filing of a complaint.) Since, it is indisputable that respondent filed the
present action beyond the 2-yearr time frame his second cause of action must be barred.

However, it is obvious that respondent was forestalled from immediately filing an action
because petitioner gave him the runaround, answering his letters but not giving in to his
demands. True, respondent should have already filed an action at the first instance when
petitioner denied his claims but the same could only be due to his desire to make an out-ofcourt settlement for which he cannot be faulted. Hence, despite the express mandate of
Article 29 of the Warsaw Convention that an action for damages should be filed within 2
years from the arrival at the place of destination, such rule shall not be applied in the instant
case because of the delaying tactics employed by petitioner airlines itself. Thus, respondents
second cause of action cannot be considered as time barred.
DECISION.
WHEREFORE, the assailed Decision of the Court of Appeals reversing and setting aside the
appealed order of the trial court granting the motion to dismiss the complaint, as well as its
Resolution denying reconsideration, is AFFIRMED. Let the records of the case be remanded
to the court of origin for further proceedings taking its bearings from this disquisition.