SPECIAL LAWS
WON the Municipal Court of Manila has no jurisdication to try the case
II. Admiralty and Maritime Commerce
Concept of Admiralty; Jurisdiction over admiralty cases
Batas Pambansa Blg. 129, Sec. 19 (3), Sec. 33(1)
1. International Harvester v. Aragon, 84 Phil 363
FACTS:
The respondent-appellant, Yaras and Company, Far East, filed a complaint in
the Municipal Court of Manila against the Manila Terminal Co., Inc., and
International Harvester Company of the Philippines. The complaint alleges that
the defendant Manila Terminal Co., Inc., is in charge of the custody and
delivery to the respective owners of cargoes discharged at the Government
piers in the City of Manila; that the defendant International Harvester Company
of the Philippines is the agent in the Philippines of the vessel Belle of the Sea;
that the S/S Belle of the Sea took on board at Los Angeles, California, U. S.
A., goods for shipment to Manila, Philippines; that the S/S Belle of the
Sea arrived in Manila and discharged her cargo at the Government piers under
the supervision and custody of the defendant Manila Terminal Co., Inc.; that
out of the goods covered by Bill of Lading No. 105, one carton of assorted
samples was not delivered to Yaras and Company; and said merchandise was
lost through the negligence either of the Manila Terminal Co., Inc., or of the
International Harvester Company of the Philippines. The complaint prayed for
judgment either against the defendant Manila Terminal Co., Inc., or the
International Harvester Company of the Philippines.
Before the trial could be proceeded with, the International Harvester of the
Philippines filed a motion to dismiss, on the ground that the Municipal Court of
Manila had no jurisdiction to try case because the action involves admiralty or
maritime jurisdiction, which motion was overruled by the municipal court on
December 16, 1947. In due time, the International Harvester Company of the
Philippines filed in the Court of First Instance of Manila a petition for prohibition
(civil case No. 4328) against the Hon. Crisanto Aragon, Judge of the Municipal
Court of Manila, and Yaras and Company Far East, for the purpose of
restraining said respondent judge from proceeding with civil case No. IV-262
in so far as the International Harvester Company of the Philippines was
concerned, on the ground that admiralty or maritime jurisdiction is involved.
After trial, the Court of First Instance of Manila rendered judgment favor of the
petitioners, International Harveter Company of the Philippines, ordering the
respondent judge of the municipal court to desist from taking cognizance of
civil case No. IV-262 as against the International Harvester Company of the
Philippines. From this judgment the respondents have appealed.
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ISSUE:
because the action involves admiralty or maritime jurisdiction.
HELD:
Yes.
Admiralty has jurisdiction over all maritime contracts, in whatever form,
wherever they were executed or are to be performed, but not over non-
maritime contracts, (2 Corpus Juris Secundum, p. 84.) Whether or not a
contract is maritime depends not on the place where the contract is made and
is to be executed, making the locality the test, but on the subject-matter of the
contract, making the true criterion a maritime service or a maritime transaction.
(Id., p. 85.) Specifically, admiralty has jurisdiction of a proceeding in rem or
in personam for the breach of a contract of affreightment, whether evidenced
by a bill of lading or a charter party. (Id., pp. 90-91.) And typical of a controversy
over contracts of affreightment is a suit of one party against the other for loss
of or damage to the cargo. (1 American Jurisprudence, p. 567.) This is the very
case now before us, because the respondent Yaras and Company seeks to
recover from the petitioner International Harvester Company of the Philippines
the value of a certain lost cargo.
The respondent Yaras and Company cannot invoke the rule against multiplicity
of suits, for the simple reason that said rule has to be subservient to the
superior requirement that the court must have jurisdiction. In view of our
conclusion that the cause of action of said respondent against International
Harvester Company of the Philippines involves admiralty over which the courts
of first instance have original jurisdiction (Par. 4, Sec. 56, Act No. 136 of the
Philippine Commission, as reproduced in sec. 43 [d] of Republic Act No. 296),
and to which the jurisdiction of the justice of the peace courts (including
municipal courts) does not extend (sec. 68, Act No. 136 of the Philippine
Commission, as amended by Commonwealth Act No. 4090, reproduced in par,
2, sec. 88, Republic Act No. 296), the respondent judge was properly
restrained from further proceeding with civil case No. IV-262.
We hold also that prohibition is the proper remedy, since the respondent judge
was taking cognizance of the case over which he had no jurisdiction and his
order overruling the motion to dismiss filed by the petitioner-appellee is
interlocutory and therefore not appealable. (Sec. 2 of Rule 67, Rules of Court
2.) At any rate, the remedy of appeal available when the case shall have been
decided on the merits, is inadequate.
The appealed judgment is therefore affirmed, with costs against the appellant
Yaras and Company. So ordered.
Vessels
Meaning
2. Lopez v. Duruelo, 52 Phil. 229
F: Augusto Lopez, of Silay, Occidental Negros, wanted to embark on the
interisland steamer San Jacinto bound for Iloilo. The steamer was anchored
some half a mile from the shore or port of Silay. In order to board the steamer,
Lopes boarded the motor boat Jison at the landing which was then engaged
in conveying passengers and luggage to and from the steamer. Whether due
to negligence or incompetence of Duruelo, the engineer of Jison aged 16, as
alleged, the boat approached too near to the stern of the steamer wherein it
was struck by the still turning propeller of the steamer. The boat sunk and
Lopez was thrown into the water against the propeller wherein he suffered a
bruise in the breast, two serious fractures of the bones of the left leg and a
compound fracture of the left femur. As a result, Lopez was hospitalized from
February 28 to October 19, 1927 or eight months. Lopez filed a complaint and
sought damages amounting to P120,000 alleging that he suffered injuries due
to the negligence and inexperience having only been in its third day of
apprenticeship on the day of the accident. It was also alleged that Jison was
overloaded when it carried 14 passengers instead of its capacity for eight or
nine. The defendants assigned in it demurrer that the plaintiff did not show a
right of action since the complaint did not allege that a protest had been
presented by the plaintiff within 24 hours after the occurrence, to the
competent authority of the port where the accident occurred as provided under
the Code of Commerce. CFI dismissed the complaint, hence the appeal.
Held : Assuming that article 835 of the Code of Commerce states a condition
precedent to the maintenance of an action in a case requiring protest, such as
protest is nevertheless not necessary in the case at bar. The article is found in
the section dealing with collisions and the context shows the collisions
intended are collisions of sea-going vessels. Said article cannot be applied to
small boats engaged in river and bay traffic. The vessels intended in the Third
Book of the Code of Commerce which deals with maritime commerce and in
which Art. 865 is found was evidently intended to define the law relative to
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merchant vessels and marine shipping, and the vessels intended in that Book
are such as are run by masters having special training with the elaborate
apparatus of crew and equipment indicated in the Code. The word "vessel"
used in the section was not intended to include all ships, craft, or floating
structures of every kind without limitation, and the provision of that section
should not be held to include minor craft engaged only in river or bay traffic.
Vessels of minor nature, such as river boats and those carrying passengers
from ship to shore are governed as to their liability in passengers, by the Civil
Code.
The word ship and vessel, in their grammatical sense are applied to designate
every kind of craft, large or small, merchant or war, a signification which does
not differ essentially from its juridical meaning according to which vessels for
the purpose of the Code of Commerce, are considered not only those engaged
in navigation whether coastwise or high seas, but also floating docks,
pontoons,dredges, scows, and other floating apparatus for the service of the
industry or maritime commerce.
Yet notwithstanding these principles from which it would seem that any floating
apparatus which serves directly for the transportation of things or persons or
which indirectly is related to this industry, ought to be subjected to the
principles of the Code with reference to ownership, transfer, rights,
registrations, etc. they are not applicable to small craft which are only subject
to administrative regulations in the matter of port service and in the fishing
industry.
But even if The Code Of Commerce was applicable, a protest still need not be
made since under Art. 836, want of protest cannot prejudice a person not in a
condition to make known his wishes. A person who has suffered injuries like
that of the plaintiff cannot be supposed to be in a condition to make a protest.
Nature and acquisition of vessels- Art. 573, 574, 585, Art. 712, Civil Code
Registration; certificates issued; distinctions
Tariff and Customs Code, Secs. 802, et seq.
PD 761, as amended by PD 1064, 1521
Significance of registration of transaction affecting vessels
3. Arroyo v. Yu, 54 Phil. 511
FACTS:
The appeal of Yu relates to the preferences to the ten lorchas as between
herself and the PNB.
Among the facts found by the trial judge is that they were owned by Lim Ponzo
Navigation Co. They were mortgaged to Po Pauco to guarantee a loan of
P20,000. This was duly registered with the register of deeds. Po Pauco later
mortgaged them in favor of PNB and registered with the register of deeds but
was recorded in the Office of Collector of Customs much later. Meanwhile, Yu
secured a judgment against Lim Ponzo Navigation Co. The notice of seizure
was recorded by the collector of customs of Iloilo on which date the records of
the office disclosed the vessels as free from encumbrances.
ISSUE:
W/N the mortgage should be registered in the Bureau of Customs?
HELD:
The fact that this mortgage was not registered in the Bureau of Customs of the
port of Iloilo until March 5th of this year does not invalidate it; since it was
proved at the trial of this case that such deferred registration was due to certain
doubts entertained by the collector of customs of the port of Iloilo touching the
applicability of Act No. 3324, amending section 1176 of the Administrative
Code; and that said collector only decided to admit and register said mortgage
upon lochas China and Cuylim in March of this year after receipt of advice from
Manila regarding the applicability of Act No. 3324, which was approved on
December 4, 1926, to a mortgage executed on November 6, 1918, in favor of
a Chinese subject a prohibition not found in the original section 1176 of the
Administrative Code, but which went into effect when the aforementioned Act
No. 3324, approved on December 4, 1926, took effect.
It is clear that section 1171 of the Administrative Code has modified the
provisions of the Chattel Mortgage Law, Act No. 1508, particularly section 4
thereof. It is now not necessary for a chattel mortgage of a vessel to be noted
in the registry of the register of deeds. On the other hand, it is essential that a
record of documents affecting the title of a vessel be entered in the office of
the collector of customs, at a port of entry The law as now existing is designed
to protect persons who deal with a vessel on the strength of the record title.
Mortgages on vessels, although not recorded, are good as between the
parties. But as against creditors of the mortgagor, an unrecorded mortgage is
invalid.
4. Rubiso v. Rivera, 37 Phil. 72
FACTS: Gelito & Co. was owned by Bonifacio Gelito and Chinaman Sy Qui.
One of the properties of the company was a pilot ship/merchant vessel called
Valentina, whose ownership is at question here.
A series of sales had taken place:
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1. First, Gelito had sold is 2/3 share to Chinaman Sy Qui.
2. When Sy Qui acquired full ownership of the company, he sold Valentina to
Florentino Rivera for P2,500 on January 4, 1915. The sale was registered in
the Bureau of Customs over two months later on March 17, 1915.
3. Shorty after the sale to Rivera, a suit was brought against Sy Qui to enforce
payment of a certain sum of money. Valentina was placed at a public auction
and was purchased by Sy Quis creditor, Fausto Rubiso. He bought the vessel
for P55.45. The sale was registered in the Office of the Collector of Customs
on January 27, 1915 and in the commercial registry on March 14, 1925.
The first buyer, Florentino Rivera, contends that he had lost the ship when it
got stranded somewhere in Batangas. He claims that Rubiso took possession
of the vessel without his knowledge or consent. Rivera seeks to be indemnified
for the profits he could have collected from the vessels voyages had Rivera
not taken it.
ISSUE: Who is the rightful owner of the merchant vessel--Rivera or Rubiso?
HELD: Rubiso. It is true that the sale to Rivera had taken place prior to the
public auction where Rubiso bought the vessel, but the same was entered in
the customs registry only on March 17, 1915. Rubiso, however, had acted
more swiftly by registering the property much earlier in the Office of the
Collector Customs and in the commercial registry in the same month. Although
the sale to Rivera had taken place first, the registration made by Rubiso was
made earlier.
Rubiso did the smart thing by registering the property at the commercial
registry. Pursuant to Article 573 of the Code of Commerce, the acquisition of
a vessel must be registered at the commercial registry in order to bind third
parties. Such registration is necessary and indispensible in order that the
purchasers rights may be maintained against a claim filed by third persons.
With respect to the rights of two purchasers, whichever of them first registered
his acquisition of the vessel is the one entitled to enjoy the protection of the
law. By first registration, he becomes the absolute owner of the boat and is
freed from all encumbrances and claims by strangers.
Persons Participating in Maritime Commerce
Shipowners and shipagents- Art. 586 - 608; 618
5. Standard Oil v. Castelo, 42 Phil. 256
Facts:
By contract of charter dated February 8, 1915, Manuel Lopez Castelo, as
owner, let the small interisland steamer B a t a n g u e o for the term of one
year to Jose Lim Chumbuque for use in the conveying of cargo between
certain ports of the Philippine Islands In this contract it was stipulated that the
ofcers and crew of the B a t a n g u e o should be supplied by the owner, and
that the charterer should have no other control over the captain, pilot, and
engineers than to specify the voyages that they should make and to require
the owner to discipline or relieve them as soon as possible in case they should
fail to perform the duties respectively assigned to them. While the boat was
being thus used by the charterer in the interisland trade, the Standard Oil
Company delivered to the agent of the boat in Manila a quantity of petroleum
to be conveyed to the port of Casiguran, in the Province of Sorsogon. For this
consignment a bill of lading of the usual form was delivered, with the stipulation
that freight should be paid at the destination. Said bill of lading contained no
provision with respect to the storage of the petroleum, but it was in fact placed
upon the deck of the ship and not in the hold. While the boat was on her way
to the port mentioned, and off the western coast of Sorsogon, a violent typhoon
passed over that region, and while the storm was at its height the captain was
compelled for the safety of all to jettison the entire consignment of petroleum
consisting of two hundred cases. When the storm abated the ship made port,
and thirteen cases of the petroleum were recovered, but the remainder was
wholly lost. To recover the value of the petroleum thus jettisoned but not
recovered, the present action was instituted by the Standard Oil Company
against the owner of the ship in the Court of First Instance of Manila, where
judgment was rendered in favor of the plaintiff. From this judgment the
defendant appealed.
Issue:
Who is the person, or persons, who are liable to make good this loss, and what
are the conditions under which the action can be maintained?
Held:
That the owner of the ship is a person to whom the plaintiff in this case may
immediately look for reimbursement to the extent above stated is deducible
not only from the general doctrines of admiralty jurisprudence but from the
provisions of the Code of Commerce applicable to the case. It is universally
recognized that the captain is primarily the representative of the owner; and
article 586 of the Code of Commerce expressly declares that both the owner
of the vessel and the n a vie r o , or charterer, shall be civilly liable for the acts
of the master. In this connection, it may be noted that there is a discrepancy
between the meaning of n a vie r o , in article 586 of the Code of Commerce,
where the word is used in contradistinction to the term "owner of the vessel" (
p r o p ie t a rio ), and in article 587 where it is used alone, and apparently in a
sense broad enough to include the owner. Fundamentally the word " n a vie r
o " must be understood to refer to the person undertaking the voyage, who in
one case may be the owner and in another the charterer. But this is not vital
to the present discussion. The real point to which we direct attention is that, by
the express provision of the Code, the owner of the vessel is civilly liable for
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the acts of the captain; and he can only escape from this civil liability by
abandoning his property in the ship and any freight that he may have earned
on the voyage (arts. 587, 588, Code of Comm.).
Now, by article 852 of the Code of Commerce-the captain is required to initiate
the proceedings for the adjustment, liquidation, and distribution of any gross
average to which the circumstances of the voyage may have given origin; and
it is therefore his duty to take the proper steps to protect any shipper whose
goods may have been jettisoned for the general safety.
It is sufficient to say that the captain is required to take the necessary steps to
effect the adjustment, liquidation, and distribution of the general average. In
the case before us the captain of the vessel did not take those steps; and we
are of the opinion that the failure of the captain to take those steps gave rise
to a liability for which the owner of the ship must answer.
In considering the question now before us it is important to remember that the
owner of the ship ordinarily has vastly more capital embarked upon a voyage
than has any individual shipper of cargo. Moreover, the owner of the ship, in
the person of the captain, has complete and exclusive control of the crew and
of the navigation of the ship, as well as of the disposition of the cargo at the
end of the voyage. It is therefore proper that any person whose property may
have been cast overboard by order of the captain should have a right of action
directly against the ship's owner for the breach of any duty which the law may
have imposed on the captain with respect to such cargo.
Responsibilities and liabilities
6. Yu Con v. Ipil, 41 Phil 770
Facts:
Yu delivered to Ipil and Solamo P 450 for delivery from Catmon to Cebu aboard
a banca named Maria of which Lauron was the owner and Ipil and Solamo,
the master and supercargo, respectively. The money together with various
merchandise belonging to plaintiff was to be carried from the port of Cebu to
Catmon in Cebu. The money was placed by Yu in his trunk and was transferred
to that of Ipil. That night, the window of the stateroom in which the trunk
containing the money was kept was broken through by persons not identified
and through which the said trunk was stolen. It was found at the trial that Ipil
and Solamo were negligent in guarding the money because they were sound
asleep at the time of the theft and they assigned no one to stand guard during
the night. Their defense was that Yu chartered and had control and
responsibility of the banca and that the theft was due to Yu's negligence. The
CFI held Ipil and Solamo negligent and held Lauron liable as ER and
shipowner under Articles 586, 587 and 618 of the Code of Commerce.
Issue:
Whether or not defendants-appellants are liable
Held:
Yes. Ipil and Solamo, as carriers and depositories of the money were liable
under the Civil Code, the theft not being a fortuitous event or of force majeure
and they being manifestly negligent and at fault.
As to the liability of Lauron, the SC proceeded by first defining the banca
"Maria" as within the meaning of the term "vessel." Thus, according to the
foregoing definitions (by the Mercantile Code, by Reus in Commentaries on
the Code of Commerce, and by Blanco) we hold that the banca "Maria"
chartered by Yu Con from Lauron, was a "vessel" under Mercantile Law and
the Code of Commerce. Ipil, the master of the banca, was also held to be the
captain (masters are to small vessels as captains are to big ones). Under Arts.
587 and 618, the shipowner shall be civilly liable to third persons when the
captain of the vessel causes the damage or loss to goods entrusted to him by
said third persons under a contract to carry said goods. Thus, it is well and
god that the shipowner be not held criminally liable for such crimes or quasi
crimes but he cannot be excused from liability for the damage and harm which
in consequence of those acts may be suffered by the third parties who
contracted with the captain in his double capacity of agent and subordinate of
the shipowner himself. In maritime commerce, the shippers and passengers
in making contracts with the captain do so through the confidence they have
in the shipowner who appointed him.
The owner of a minor craft who has equipped and victualed it for the purpose
of using it in the transportation of merchandise from one port to another of
these Islands is under the law a shipowner, and the master of the craft is to be
considered as its captain in the legal acceptation of this word, and the former
must be held civilly liable for indemnities in favor of third parties to which the
conduct of the latter of them may give rise in the custody of the effects laden
on the craft, and for all losses which, through his fault or negligence, may occur
to the merchandise or effects delivered to him for that transportation as well
as for the damages suffered by their transportation, as those who contracted
with him, in consequence of misdemeanors and crimes committed by him or
by the members of the crew of the craft.
7. Manila Steamship v. Abdulhaman, 100 Phil. 32
FACTS:
From 7 to 8 oclock in the evening of May 4, 1948, the M/L
Consuelo V, laden with car-goes and passengers left the port of Zamboanga
City bound for Siokon under the command of Faustino Macrohon. She was
then towing a kumpit, named Sta. Maria Bay. The weather was good and fair.
Among her passengers were the Plaintiff Insa Abdulhaman, his wife Carimla
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Mora and their five children. The Plaintiff and his wife paid their fare before the
voyage started.
On that same night the M/S Bowline Knot was navigating
from Maribojoc towards Zambo-anga.
Between 9:30 to 10:00 in the evening the dark clouds bloated
with rain began to fall and the gushing strong wind began to blow steadily
harder, lashing the waves into a choppy and roaring sea. Such weather lasted
for about an hour and then it became fair although it was showering and the
visibility was good enough.
When some of the passengers of the M/L Consuelo V were
then sleeping and some were lying down awake, all of a sudden they felt the
shocking collision of the M/L Consuelo V and a big motorship, which later on
was identified as the M/V Bowline Knot.
Because the M/L Consuelo V capsized, her crew and
passengers, before realizing what had happened, found themselves swimming
and floating on the crest of the waves and as a result of which nine (9)
passengers were dead and missing and all the cargoes carried on said boat,
in-cluding those of the Plaintiff as appear in the list, Exhibit A, were also lost.
Among the dead passengers found were Maria, Amlasa,
Bidoaya and Bidalla, all surnamed Inasa, while the body of the child Abdula
Inasa of 6 years of age was never recovered. Before the collision, none of the
passengers were warned or informed of the impending danger as the collision
was so sudden and unexpected. All those rescued at sea were brought by the
M/V Bowline Knot to Zamboanga City.
CA Ruling: Court held the owners of both vessels solidarily liable to Plaintiff for
the damages caused to him by the collision, under Article 827 of the Code of
Commerce; but exempted Defend-ant Lim Hong To from liability by reason of
the sinking and total loss of his vessel, the M/L Consue-lo V, while the other
Defendant, the Manila Steamship Co., owner of the M/S Bowline Knot, was
ordered to pay all of Plaintiffs damages in the amount of P20,784.00 plus one-
half of the costs.
ISSUE:
Whether or not the Manila Steamship be exempt from liability to the plaintiff
under Article 1903 of the Civil Code because it had exercised the diligence of
a good father of a family in the selection of its employees, particularly Third
Mate Simplicio Ilagan, the officer in command of its vessels, the M/S Bowline
Knot, at the time of the collision.
RULING:
YES, Manila Steamedfish is liable. The defense is untenable.
Points:
It is easy to see that to admit the defense of due diligence of
a bonus paterfamilias (in the selec-tion and vigilance of the officers and crew)
as exempting the shipowner from any liability for their faults, would render
nugatory the solidary liability established by Article 827 of the Code of Com-
merce for the greater protection of injured parties. Shipowners would be able
to escape liability in practically every case, considering that the qualifications
and licensing of ship masters and offic-ers are determined by the State, and
that vigilance is practically impossible to exercise over offic-ers and crew of
vessels at sea. To compel the parties prejudiced to look to the crew for
indemnity and redress would be an illusory remedy for almost always its
members are, from captains down, mere wage earners.
While it is true that Plaintiffs action against Petitioner is based
on a tort or quasi-delict, the tort in question is not a civil tort under the Civil
Code but a maritime tort resulting in a collision at sea, governed by Articles
826-939 of the Code of Commerce.
Under Article 827 of the Code of Commerce, in case of
collision between two vessels imputable to both of them, each vessel shall
suffer her own damage and both shall be solidarily liable for the damages
occasioned to their cargoes. The characteristic language of the law in making
the ves-sels solidarily liable for the damages due to the maritime collision
emphasizes the direct nature of the responsibilities on account of the collision
incurred by the shipowner under maritime law, as distinguished from the civil
law and mercantile law in general. This direct responsibility is recog-nized in
Article 618 of the Code of Commerce under which the captain shall be civilly
liable to the ship agent, and the latter is the one liable to third persons, as
pointed out in the collision case of Yueng Sheng Exchange & Trading Co. vs.
Urrutia & Co: The responsibility involved in the present action is that derived
from the management of the vessel, which was defective on account of lack of
skill, negligence, or fault, either of the captain or of the crew, for which the
captain is responsible to the agent, who in his turn is respon-sible to the third
party prejudiced or damaged. (Article 618, Code of Commerce).
In fact, it is a general principle, well established maritime law
and custom, that shipowners and ship agents are civilly liable for the acts of
the captain (Code of Commerce, Article 586) and for the indemnities due the
third persons (Article 587); so that injured parties may immediately look for
reimbursement to the owner of the ship, it being universally recognized that
the ship master or captain is primarily the representative of the owner
The doctrine of limited liability, Art. 587
8. Manila Steamship v. Abdulhaman, supra
Facts:
Insa Abdulhaman together with his wife and five children boarded M/L
Consuelo V in Zamboanga City. The said ship was bound for Siokon under the
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command of Faustino Macrohon. On that same night, M/S Bowline Knot was
navigating from Marijoboc towards Zamboanga. Around 9:30 to 10:00 in the
evening of May 4, 1948, while some of the passengers of the M/L Consuelo V
were then sleeping and some lying down awake, a shocking collision suddenly
occurred. The ship that collided was later on identified as the M/V Bowline
Knot. M/L Consuelo V capsized that resulted to the death of 9 passengers and
the loss of the cargoes on board. The Court held the owners of both vessels
solidarily liable to plaintiff for damages caused to the latter under Article 827
of the Code of Commerce but exempted defendant Lim Hong To from liability
due to the sinking and total loss of his vessel. While Manila steamship, owner
of the Bowline Knot was ordered to pay all of plaintiffs damages. Petitioner
Manila Steamship Co. pleads that it is exempt from any liability under Article
1903 of the Civil Code because it had exercised the diligence of a good father
of a family in the selection of its employees, particularly the officer in command
of the M/S Bowline Knot.
Issue:
Whether or not petitioner Manila Steamship Co. is exempt from any liability
under Art. 1903 of the Civil Code
Held:
NO. Petitioner is not exempted from liabilities. While it is true that plaintiffs
action against petitioner is based on a tort or quasi delict, the tort in question
is not a civil tort under the Civil Code but a maritime tort resulting in a collision
at sea, governed by Articles 826-939 of the Code of Commerce. Under Art.
827 of the Code of Commerce, in case of collision between two vessels
imputable to both of them, each vessel shall suffer her own damage and both
shall be solidarily liable for the damages occasioned to their cargoes. The
shipowner is directly and primarily responsible in tort resulting in a collision at
sea, and it may not escape liability on the ground that exercised due diligence
in the selection and supervision of the vessels officers and crew.
9. Yangco v. Laserna, 73 Phil. 330
FACTS:
The steamer S.S. Negros, belonging to petitioner here, Teodoro R. Yangco,
left the port of Romblon on its retun trip to Manila. Typhoon signal No. 2 was
then up, of which fact the captain was duly advised and his attention thereto
called by the passengers themselves before the vessel set sail. The boat was
overloaded as indicated by the loadline which was 6 to 7 inches below the
surface of the water. Baggage, trunks and other equipments were heaped on
the upper deck, the hold being packed to capacity. In addition, the vessel
carried thirty sacks of crushed marble and about one hundred sacks of copra
and some lumber. The passengers, numbering about 180, were overcrowded,
the vessel's capacity being limited to only 123 passengers. After two hours of
sailing, the boat encountered strong winds and rough seas between the
islands of Banton and Simara, and as the waves splashed the ladies' dresses,
the awnings were lowered. As the sea became increasingly violent, the captain
ordered the vessel to turn left, evidently to return to port, but in the manuever,
the vessel was caught sidewise by a big wave which caused it to capsize and
sink. Many of the passengers died in the mishap, among them being Antolin
Aldaa and his son Victorioso, husband and son, respectively, of Emilia
Bienvenida who, together with her other children and a brother-in-law, are
respondents in G.R. No. 47447; Casiana Laserna, the daughter of
respondents Manuel Laserna and P.A. de Laserna in G.R. 47448; and Genaro
Basaa, son of Filomeno Basaa, respondent in G.R. No. 47449. These
respondents instituted in the Court of First Instance of Capiz separate civil
actions against petitioner here to recover damages for the death of the
passengers aforementioned. The court awarded the heirs of Antolin and
Victorioso Aldana the sum of P2,000; the heirs of Casiana Laserna, P590; and
those of Genaro Basana, also P590. After the rendition of the judgment to this
effcet, petitioner, by a verified pleading, sought to abandon th evessel to the
plainitffs in the three cases, together with all its equipments, without prejudice
to his right to appeal. The abandonment having been denied, an appeal was
taken to the Court of Appeals, wherein all the judgmnets were affirmed except
that which sums was increased to P4,000. Petitioner, now deceased, appealed
and is here represented by his legal representative.
ISSUE:
WON the shipowner or agent, notwithstanding the total loss of the vessel as a
result of the negligence of its captain, be properly held liable in damages for
the consequent death of its passengers?
HELD:
No.
We are of the opinion and so hold that this question is controlled by the
provisions of article 587 of the Code of Commerce. Said article reads:
The agent shall also be civilly liable for the indemnities in favor of third
persons which arise from the conduct of the captain in the care of the
goods which the vessel carried; but he may exempt himself therefrom
by abandoning the vessel with all her equipments and the freight he
may have earned during the voyage.
The provisions accords a shipowner or agent the right of abandonment; and
by necessary implication, his liability is confined to that which he is entitled as
of right to abandon "the vessel with all her equipments and the freight it may
have earned during the voyage." It is true that the article appears to deal only
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 7
with the limited liability of shipowners or agents for damages arising from the
misconduct of the captain in the care of the goods which the vessel carries,
but this is a mere deficiency of language and in no way indicates the true extent
of such liability. The consensus of authorities is to the effect that
notwithstanding the language of the aforequoted provision, the benefit of
limited liability therein provided for, applies in all cases wherein the shipowner
or agent may properly be held liable for the negligent or illicit acts of the
captain.
In the light of all the foregoing, we therefore hold that if the shipowner or agent
may in any way be held civilly liable at all for injury to or death of passengers
arising from the negligence of the captain in cases of collisions or shipwrecks,
his liability is merely co-extensive with his interest in the vessel such that a
total loss thereof results in its extinction. In arriving at this conclusion, we have
not been unmindful of the fact that the ill-fated steamship Negros, as a vessel
engaged in interisland trade, is a common carrier (De Villata v. Stanely, 32
Phil., 541), and that the as a vessel engaged in interisland trade, is a common
carrier (De Villata v. Stanely, 32 Phil., 541), and that the relationship between
the petitioner and the passengers who died in the mishap rests on a contract
of carriage. But assuming that petitioner is liable for a breach of contract of
carriage, the exclusively "real and hypothecary nature" of maritime law
operates to limit such liability to the value of the vessel, or to the insurance
thereon, if any. In the instant case it does not appear that the vessel was
insured.
Whether the abandonment of the vessel sought by the petitioner in the instant
case was in accordance with law of not, is immaterial. The vessel having totally
perished, any act of abandonment would be an idle ceremony.
Judgement is reversed and petitioner is hereby absolved of all the complaints,
without costs.
10. Abueg v. San Diego, 77 Phil 730
F: Bartolome San Diego was the owner of 2 motorships, San Diego II and
Bartolome S. Dionisia Abueg is the widow of Amado Nunez, who was a
machinist on board the M/S San Diego II. Marciana de Salvacion is the widow
of Victoriano Salvacion, who was a machinist on board the M/S Bartolome S.
Rosario Oching is the widow of Francisco Oching, who was the captain of the
M/S Bartolome S.
The 2 ships, while engaged in fishing operations around Mindoro Island on
October 1941, were caught by a typhoon as a consequence of which they were
sunk and totally lost. Nunez, Salvacion and Oching while acting in their
capacities perished in the shipwreck. The vessels were not covered by any
insurance. The widows were awarded compensation under the Workmen's
Compensation Act by the CFI.
From these Code of Commerce provisions counsel for appellant draws the
conclusion that appellant's liability, as owner of the two motor ships lost or
sunk as a result of the typhoon that lashed the island of Mindoro on October
1, 1941, was extinguished.
Which law should apply? Code of Commerce or Maritime Law?
Held : The nature of the liability of the shipowner or agent embodied in the
provisions of the Maritime Law. To offset against these adverse conditions and
to encourage shipbuilding and maritime commerce, it was deemed necessary
to confine the liability of the owner or agent arising from the operation of a ship
to the vessel, equipment, and freight, or insurance, if any, so that if the
shipowner or agent abandoned the ship, equipment, and freight, his liability
was extinguished.
the provisions of the Code of Commerce invoked by appellant have no room
in the application of the Workmen's Compensation Act which seeks to improve,
and aims at the amelioration of, the condition of laborers and employees.
The provisions of the Code of Commerce regarding maritime commerce have
no room in the application of the Workmen's Compensation Act which seeks
to improve, and aims at the amelioration of, the condition of laborers and EEs.
Said Act creates a liability to compensate EEs and laborers in cases of injury
received by or inflicted upon them, while engaged in the performance of their
work or employment, or the heirs and dependents of such laborers and EEs in
the event of death caused by their employment.
The officers of motor ships engaged in fishing are industrial EEs and are
entitled to the benefits of the Workmen's Compensation Act. If an accident is
compensable under the WCA, it must be compensated even when the
workman's right is not recognized by or is in conflict with other provisions of
the Civil Code or Code of Commerce. The reason is that the WCA was enacted
in abrogation of existing laws.
11. Aboitiz Shipping v. General Accident Fire and Life Assurance
Corporation, Ltd., 217 SCRA 359
FACTS:
Abboitiz Shipping is a corporation organized and operating under Philippine
laws and engaged in the business of maritime trade as a carrier. As such, it
owned and operated "M/V P. ABOITIZ," a common carrier which sank on a
voyage from HK to the Philippines on October 31, 1980. General Accident Fire
and Life Assurance Corporation, Ltd. (GAFLAC), on the other hand, is a
foreign insurance company pursuing its remedies as a subrogee of several
cargo consignees whose respective cargo sank with the said vessel and for
which it has priorly paid.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 8
The incident of said vessel's sinking gave rise to the filing of suits for recovery
of lost cargo either by the shippers, their successor-in-interest, or the cargo
insurers like GAFLAC as subrogees. The sinking was initially investigated by
the Board of Marine Inquiry which found that such sinking was due to force
majeure and that subject vessel, at the time of the sinking was seaworthy. This
administrative finding notwithstanding, the trial court found against the carrier
on the basis that the loss subject matter therein did not occur as a result of
force majeure. Thus, in said case, plaintiff GAFLAC was allowed to prove, and
was later awarded, its claim. This decision in favor of GAFLAC was elevated
all the way up to the Supreme Court
It is in this factual milieu that the instant petition seeks a pronouncement as to
the applicability of the doctrine of limited liability on the totality of the claims vis
a vis the losses brought about by the sinking of the vessel M/V P. ABOITIZ, as
based on the real and hypothecary nature of maritime law.
ISSUE:
Whether or not the Limited Liability Rule warrants immediate stay of execution
of judgment to prevent impairment of other creditors' shares?
HELD:
The real and hypothecary nature of maritime law simply means that the liability
of the carrier in connection with losses related to maritime contracts is confined
to the vessel, which is hypothecated for such obligations or which stands as
the guaranty for their settlement. It has its origin by reason of the conditions
and risks attending maritime trade in its earliest years when such trade was
replete with innumerable and unknown hazards since vessels had to go
through largely uncharted waters to ply their trade. It was designed to offset
such adverse conditions and to encourage people and entities to venture into
maritime commerce despite the risks and the prohibitive cost of shipbuilding.
Thus, the liability of the vessel owner and agent arising from the operation of
such vessel were confined to the vessel itself, its equipment, freight, and
insurance, if any, which limitation served to induce capitalists into effectively
wagering their resources against the consideration of the large profits
attainable in the trade.
The rights of a vessel owner or agent under the Limited Liability Rule are akin
to those of the rights of shareholders to limited liability under our corporation
law. Both are privileges granted by statute, and while not absolute, must be
swept aside only in the established existence of the most compelling of
reasons. In the absence of such reasons, this Court chooses to exercise
prudence and shall not sweep such rights aside on mere whim or surmise, for
even in the existence of cause to do so, such incursion is definitely punitive in
nature and must never be taken lightly.
Specific rights and prerogatives- Art. 575, 593, 594, 596, 601

Captains and Masters
Qualifications and licensing- Rep. Act 5173, Sec. 3; Art. 609
Powers and Duties- Art. 610, 611, 612, 622, 624, 625
12. Inter Orient v. NLRC, 235 SCRA 269
FACTS: Captain Tayong was hired by Trenda World Shipping and Sea Horse
Ship Management through Inter-Orient Maritime Enterprises for a period of 1
year. He took command of Inter-Orients vessel in Hong Kong. He was
instructed to replenish bunker and diesel fuel, to sail forthwith to Richard Bay,
South Africa, and there to load 120, 000 metric tons of coal. Since a storm
would hit Hong Kong, precautionary measures were taken to secure t he
vessels safety considering that the turbo-charger was leaking and the vessel
w as 14 years old. Captain Tayong followed-up the requisition by the former
Captain for supplies of oxygen and acetylene, necessary for the welding-repair
of the turbo-charger and economizer. The vessel sailed to Singapore. On the
way to Singapore, the vessel stopped in the middle of the ocean for 6 hours
and 45 minutes due to a leaking economizer. He was instructed to shut down
the economizer and use the auxiliary boiler instead. When the vessel arrived
in Singapore, the Chief Engineer reminded Captain Tayong that the oxygen
and acetylene supplies had not been delivered. Upon inquiry, the Captain was
informed that the supplies could only be delivered on Aug. 1 as the stores had
closed. Captain Tayong called the shipowner, Seahorse Ship Management
and informed them that the departure of the vessel for South Africa may be
affected because of the delay in the delivery of the supplies. He was advised
to contact Mr. Clark, the Technical Director. According to Mr. Clark, after being
informed that the ship cannot travel without the supplies, Captain Tayong
agreed with him when he said by shutting off the water to the turbo chargers
and using the auxiliary boilers, there should be no further problem. According
to Captain Tayong, he was informed by Sea Horse to wait for the supplies.
Captain Tayong immediately sailed for South Africa upon the delivery of the
supplies. Upon reaching South Africa, Captain Tayong was instructed to turn-
over his post to the new captain. He was thereafter repatriated to the
Philippines. He was not informed of the charges against him. He then instated
a complaint for illegal dismissal.
ISSUE: WON Captain Tayong was illegally dismissed.
HELD: Yes. It is well settled in this jurisdiction that confidential and managerial
employees cannot be arbitrarily dismissed at any time, and without cause as
reasonably established in an appropriate investigation. Such employees, too,
are entitled to security of tenure, fair standards of employment and the
protection of labor laws. The captain of a vessel is a confidential and
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 9
managerial employee within the meaning of the above doctrine. A master or
captain, for purposes of maritime commerce, is one who has command of a
vessel. A captain commonly performs three (3) distinct roles: (1) he is a
general agent of the shipowner; (2) he is also commander and technical
director of the vessel; and (3) he is a representative of the country under whose
flag he navigates. Of these roles, by far the most important is the role
performed by the captain as commander of the vessel; for such role (which, to
our mind, is analogous to that of "Chief Executive Officer" [CEO] of a present-
day corporate enterprise) has to do with the operation and preservation of the
vessel during its voyage and the protection of the passengers (if any) and crew
and cargo. In his role as general agent of the shipowner, the captain has
authority to sign bills of lading, carry goods aboard and deal with the freight
earned, agree upon rates and decide whether to take cargo. The ship captain,
as agent of the shipowner, has legal authority to enter into contracts with
respect to the vessel and the trading of the vessel, subject to applicable
limitations established by statute, contract or instructions and regulations of
the shipowner. To the captain is committed the governance, care and
management of the vessel. Clearly, the captain is vested with both
management and fiduciary functions.
It is plain from the records of the present petition that Captain Tayong was
denied any opportunity to defend himself. Petitioners curtly dismissed him from
his command and summarily ordered his repatriation to the Philippines without
informing him of the charge or charges levelled against him, and much less
giving him a change to refute any such charge.
A ship's captain must be accorded a reasonable measure of discretionary
authority to decide what the safety of the ship and of its crew and cargo
specifically requires on a stipulated ocean voyage. The captain is held
responsible, and properly so, for such safety. He is right there on the vessel,
in command of it and (it must be presumed) knowledgeable as to the specific
requirements of seaworthiness and the particular risks and perils of the voyage
he is to embark upon. The applicable principle is that the captain has control
of all departments of service in the vessel, and reasonable discretion as to its
navigation. It is the right and duty of the captain, in the exercise of sound
discretion and in good faith, to do all things with respect to the vessel and its
equipment and conduct of the voyage which are reasonably necessary for the
protection and preservation of the interests under his charge, whether those
be of the shipowners, charterers, cargo owners or of underwriters. It is a basic
principle of admiralty law that in navigating a merchantman, the master must
be left free to exercise his own best judgment. The requirements of safe
navigation compel us to reject any suggestion that the judgment and discretion
of the captain of a vessel may be confined within a straitjacket, even in this
age of electronic communications. Indeed, if the ship captain is convinced, as
a reasonably prudent and competent mariner acting in good faith that the
shipowner's or ship agent's instructions (insisted upon by radio or telefax from
their officers thousand of miles away) will result, in the very specific
circumstances facing him, in imposing unacceptable risks of loss or serious
danger to ship or crew, he cannot casually seek absolution from his
responsibility, if a marine casualty occurs, in such instructions.
Prohibited acts and transactions- Art. 613, 614, 615, 617, 621, 583
Other Officers and Crew
Contracts and formalities, Art. 634
Duties and liabilities, Art. 635
Rights, Art. 636 - 647
Supercargoes, Art. 649-651
Arrastre operator
13. Asian Terminals, Inc. v. Daehan Fire & Marine Insurance Co. Ltd, G.R.
No. 171194, 4 February 2010
Facts:
On July 8, 2000, Doosan Corporation (Doosan) shipped twenty-six (26) boxes
of printed aluminum sheets on board the vessel H e u n g - A D r a g o n owned
by Dongnama Shipping Co., Ltd. (Dongnama). The shipment was covered by
Bill of Lading No. DNALHMBUMN010010 and consigned to Access
International, with address at No. 9 Parada St., San Juan, Metro Manila.
Doosan insured the subject shipment with respondent Daehan Fire and Marine
Insurance Co., Ltd. under an "all-risk" marine cargo insurance policy, payable
to its settling agent in the Philippines, the Smith Bell & Co., Inc. (Smith Bell).
On July 12, 2000, the vessel arrived in Manila and the containerized van was
discharged and unloaded in apparent good condition, as no survey and
exceptions were noted in the Equipment Interchange Receipt (EIR) issued by
petitioner. The container van was stored in the Container Yard of the Port. On
July 18, 2000, Access International requested 9 9 from petitioner and the
licensed Customs Broker, Victoria Reyes Lazo (V. Reyes Lazo), a joint survey
of the shipment at the place of storage in the Container Yard, but no such
inspection was conducted. On July 19, 2000, V. Reyes Lazo withdrew, and
petitioner released, the shipment and delivered it to Access International's
warehouse in Binondo, Manila. While the shipment was at Access
International's warehouse, the latter, together with its surveyor, Lloyd's
Agency, conducted an inspection and noted that only twelve (12) boxes were
accounted for, while fourteen (14) boxes were missing. Access International
thus led a claim against petitioner and V. Reyes Lazo for the missing shipment
amounting to $34,993.28. For failure to collect its claim, Access International
sought indemnification from respondent in the amount of $45,742.81. 13 13
On November 8, 2000, respondent paid the amount of the claim and Access
International accordingly executed a Subrogation Receipt in favor of the
former.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 10
Issue:
1. WHETHER OR NOT PETITIONER ATI IS LIABLE FOR THE LOSS TO THE
SUBJECT SHIPMENT NOTWITHSTANDING THE ACKNOWLEDGMENT BY
THE CONSIGNEE'S BROKER/REPRESENTATIVE IN THE EQUIPMENT
INTERCHANGE RECEIPT THAT THE SHIPMENT WAS RECEIVED IN
GOOD ORDER AND WITHOUT EXCEPTION.
2. WHAT IS THE EXTENT OF PETITIONER ATI'S LIABILITY, IF ANY?
Held:
Respondent, as insurer, was subrogated to the rights of the consignee,
pursuant to the subrogation receipt executed by the latter in favor of the former.
The relationship, therefore, between the consignee and the arrastre operator
must be examined. This relationship is akin to that existing between the
consignee and/or the owner of the shipped goods and the common carrier, or
that between a depositor and warehouseman. In the performance of its
obligations, an arrastre operator should observe the same degree of diligence
as that required of a common carrier and a warehouseman. Being the
custodian of the goods discharged from a vessel, an arrastre operator's duty
is to take good care of the goods and to turn them over to the party entitled to
their possession. The loss of 14 out of 26 boxes of printed aluminum sheets is
undisputed. It is, likewise, settled that Dongnama (the shipping company) and
Uni-ship were absolved from liability because respondent realized that they
had no liability based on the EIR issued by Dongnama. This resulted in the
withdrawal of the complaint against them.
In a claim for loss led by the consignee (or the insurer), the burden of proof to
show compliance with the obligation to deliver the goods to the appropriate
party devolves upon the arrastre operator. Since the safekeeping of the goods
is its responsibility, it must prove that the losses were not due to its negligence
or to that of its employees. To prove the exercise of diligence in handling the
subject cargoes, petitioner must do more than merely show the possibility that
some other party could be responsible for the loss or the damage. It must
prove that it exercised due care in the handling thereof. Petitioner failed to do
this. Instead, it insists that it be exonerated from liability, because the customs
broker's representative received the subject shipment in good order and
condition without exception. The appellate court's conclusion on this matter is
instructive.
Clearly, petitioner cannot be excused from culpability simply because another
person could be responsible for the loss. This is especially true in the instant
case because, while the subject shipment was in petitioner's custody, Access
International requested 39 39 that a joint survey be conducted at the place of
storage.
Accidents and Damages in Maritime Commerce
Averages
Nature and kinds, Art. 806 - 808
Simple or Particular
Defined, Art. 809
Effects, Art. 810
14. Standard Oil v. Castelo, supra
Facts:
By contract of charter dated February 8, 1915, Manuel Lopez Castelo, as
owner, let the small interisland steamer Batangueo for the term of one year
to Jose Lim Chumbuque for use in the conveying of cargo between certain
ports of the Philippine Islands. In this contract it was stipulated that the officers
and crew of the Batangueo should be supplied by the owner, and that the
charterer should have no other control over the captain, pilot, and engineers
than to specify the voyages that they should make and to require the owner to
discipline or relieve them as soon as possible in case they should fail to
perform the duties respectively assigned to them.
While the boat was being thus used by the charterer in the interisland trade,
the Standard Oil Company delivered to the agent of the boat in Manila a
quantity of petroleum to be conveyed to the port of Casiguran, in the Province
of Sorsogon. For this consignment a bill of lading of the usual form was
delivered, with the stipulation that freight should be paid at the destination.
Said bill of lading contained no provision with respect to the storage of the
petroleum, but it was in fact placed upon the deck of the ship and not in the
hold.
While the boat was on her way to the port mentioned, and off the western coast
of Sorsogon, a violent typhoon passed over that region, and while the storm
was at its height the captain was compelled for the safety of all to jettison the
entire consignment of petroleum consisting of two hundred cases. When the
storm abated the ship made port, and thirteen cases of the petroleum were
recovered, but the remainder was wholly lost.
Issue:
Whether the loss of this petroleum was a general average loss or a particular
loss to be borne solely by the owner of the cargo
Held:
The loss of the petroleum was a general average loss.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 11
Jettisoned goods carried on deck, according to the custom of trade, by steam
vessels navigating coastwise and inland waters, are entitled to contribution as
a general average loss.
If the marine ordinances allow cargo to be laden on deck in coastwise
navigation, the damages suffered by such merchandise shall not be dealt with
as particular average (art. 809 [3], Comm. Code). On the other hand,
merchandise laden on the upper deck of the vessel shall contribute in the
general average if it should be saved; but that there shall be no right to
indemnity if it should be lost by reason of being jettisoned for the general
safety, except when the marine ordinances allow its shipment in this manner
in coastwise navigation (art 855, Comm. Code).
It is evident that the loss of this petroleum is a general and not a special
average, with the result that the plaintiff is entitled to recover in some way and
from somebody an amount bearing such proportion to its total loss as the value
of both the ship and the saved cargo bears to the value of the ship and entire
cargo before the jettison was effected.
That the owner of the ship is a person to whom the plaintiff in this case may
immediately look for reimbursement to the extent above stated is deducible
not only from the general doctrines of admiralty jurisprudence but from the
provisions of the Code of Commerce applicable to the case. It is universally
recognized that the captain is primarily the representative of the owner; and
article 586 of the Code of Commerce expressly declares that both the owner
of the vessel and the naviero, or charterer, shall be civilly liable for the acts of
the master. By the express provision of the Code, the owner of the vessel is
civilly liable for the acts of the captain; and he can only escape from this civil
liability by abandoning his property in the ship and any freight that he may have
earned on the voyage (arts. 587, 588, Code of Comm.).
By article 852 of the Code of Commerce-the captain is required to initiate the
proceedings for the adjustment, liquidation, and distribution of any gross
average to which the circumstances of the voyage may have given origin; and
it is therefore his duty to take the proper steps to protect any shipper whose
goods may have been jettisoned for the general safety. In ordinary practice
this, we suppose, would be primarily accomplished by requiring the
consignees of other cargo, as a condition precedent to the delivery of their
goods to them, to give a sufficient bond to respond for their proportion of the
general average. But it is not necessary here to inquire into details. It is
sufficient to say that the captain is required to take the necessary steps to
effect the adjustment, liquidation, and distribution of the general average. In
the case before us the captain of the vessel did not take those steps; and we
are of the opinion that the failure of the captain to take those steps gave rise
to a liability for which the owner of the ship must answer.
The making of the liquidation is not a condition precedent to the liability of the
shipowner to the shipper whose property has been jettisoned.
The owner of the ship ordinarily has vastly more capital embarked upon a
voyage than has any individual shipper of cargo. Moreover, the owner of the
ship, in the person of the captain, has complete and exclusive control of the
crew and of the navigation of the ship, as well as of the disposition of the cargo
at the end of the voyage. It is therefore proper that any person whose property
may have been cast overboard by order of the captain should have a right of
action directly against the ship's owner for the breach of any duty which the
law may have imposed on the captain with respect to such cargo. To adopt
the interpretation of the law for which the appellant contends would place the
shipowner in a position to escape all responsibility for a general average of
this character by means of the delinquency of his own captain. This cannot be
permitted. The evident intention of the Code, taken in all of its provisions, is to
place the primary liability upon the person who has actual control over the
conduct of the voyage and who has most capital embarked in the venture,
namely, the owner of the ship, leaving him to obtain recourse, as it is very easy
to do, from other individuals who have been drawn into the venture as
shippers.
It results that the plaintiff is entitled to recover in this action.
Gross or General
Defined, Art. 811, 817, 818
Essential Requisites, Art. 813, 814, 860
15. Magsaysay Inc. v. Agan, 96 Phil. 504
FACTS:
The S S "San Antonio", vessel owned and operated by
plaintiff, left Manila on October 6, 1949, bound for Basco, Batanes, vis Aparri,
Cagayan, with general cargo belonging to different shippers, among them the
defendant. The vessel reached Aparri on the 10th of that month, and af-ter a
day's stopover in that port, weighed anchor to proceed to Basco. But 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, plaintiff have it refloated by the
Luzon Stevedoring Co. at an agreed compensation. 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.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 12
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 the Court of First Instance of Manila to
make defendant pay his contribution, which, as determined by the average
adjuster, amounts to P841.40. Defendant, 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. After trial, the
lower court found for plaintiff and rendered judgment against the defendant for
the amount of the claim, with legal interests. From this judgment defendant
had appealed directly to this Court.
ISSUE:
Whether or not the expenses incurred in floating a vessel so stranded should
be considered as gen-eral average and shared by the cargo owners.
RULING:
No, the plaintiff not made out a case for general average.
Points:
The law on averages is contained in the Code of Commerce.
Under that law, averages are classi-fied into simple or particular and general
or gross. Generally speaking, simple or particular aver-ages 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); while general or gross
averages include "all the damages and ex-penses 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).
In classifying averages into simple o particular and general or
gross and defining each class, the Code (Art. 809 and 811) at the same time
enumerates certain specific cases as coming specially under one or the other
denomination. Going over the specific cases enumerated we find that, 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 ex-penses 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.
Requisites for general average:
1. There must be a common danger the evidence does not Liquidation of particular average, Art. 869
disclose that the expenses sought to be recovered from defendant were
incurred to save vessel and cargo from a common danger. The vessel ran Arrivals Under Stress
aground in fine weather inside the port at the mouth of a river, a place
described as "very shallow". It would thus appear that vessel and cargo were Causes, Art. 819 and 820
at the time in no imminent danger or a danger which might "rationally be sought Formalities, Art. 819, 822
to be certain and imminent." It is, of course, conceivable that, if left indefinitely Expenses, Art. 821, 822
at the mercy of the ele-ments, they would run the risk of being destroyed. But Responsibility of Captain, Arts. 823-825
as stated at the above quotation, "this last requirement excludes measures
undertaken against a distant peril." It is the deliverance from an immediate, Collisions
impending peril, by a common sacrifice, that constitutes the essence of general
average. Classes and Effects
2. That for the common safety part of the vessel or of the cargo
or both is sacrificed deliber-ately the expenses in question were not incurred Fortuitous, Art. 830, 832
for the common safety of vessel and cargo, since they, or at least the cargo, Culpable, Art. 826, 827 and 831
were not in imminent peril. The cargo could, without need of expensive salvage Inscrutable Fault, Art. 828
operation, have been unloaded by the owners if they had been required to do
so. Presumption of loss by collision, Art. 833
3. That from the expenses or damages caused follows the
successful saving of the vessel and cargo the salvage operation, it is true, Liabilities
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 shipowner or agent, Art. 837, 838
cargo, the cargo owners are not in law bound to contribute to the expenses. captain, pilot, others, Art. 829, 834
4. That the expenses or damages should have been incurred or conditions, protests; Art. 835, 836, 839
inflicted after taking proper le-gal steps and authority the final requisite has
not been proved, for it does not appear that the expenses here in question Shipwrecks, Art. 840 - 843
were incurred after following the procedure laid down in arti-cle 813 et seq.
Salvage Law (Act No. 2616)
SUMMARY OF RULING: (from uberdigest, hehe)
No. General averages contemplate that the stranding of the 16. Barrios v. Go Thong, 7 SCRA 535
vessel is intentionally done in order to save the vessel itself from a certain and Facts:
imminent danger. Here, the stranding was acci-dental and it was made afloat Petitioner Honorio Barrios, captain and/or master of the MV Henry I, received
for the purpose of saving the voyage and not the vessel. Note that this or otherwise intercepted an S.O.S. distress signal by blinkers from the MV
happened on a fine weather day. Also, it cannot be said that the towing was Alfredo, owned and/or operated by respondent Carlos Go Thong & Company.
made to save the cargos, for the cargos were not in danger imminent danger. 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,
Effects, Art. 812 due to engine failure and the loss of her propeller. Upon getting close to the
Jettison, Art. 815, 816 MV Don Alfreco, with the consent and knowledge of the captain and/or master
Jason Clauses (See York-Antwerp Rules, Rule D) 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
Proof and Liquidation of Averages moving until such time that a sister ship of MV Don Alfredo was sighted so that
the tow lines were also released.
Modes, Art. 846, 847, 848
Appraisal of general average, Art. 850 -855; 857 Brought to the CFI of Manila, the court therein dismissed the case; with cost
Liquidation of general average, Art. 858, 865 - 869 against Barrios. Barrios interposed an appeal.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 13
Issue:
Whether under the facts of the case, the service rendered by plaintiff to
defendant constituted "salvage" or "towage", and if so, whether plaintiff may
recover from defendant compensation for such service.
Held:
No. 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.
Herein, 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.
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
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 14
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.
Special Contracts of Maritime Commerce
Charter Parties
Definition
Kinds
17. Planters Products v. CA, supra
Planters Products, Inc. (PPI) purchased from Mitsubishi International
Corporation (Mitsubishi) 9, 329. 7069 metric tons of Urea 46% fertilizer which
the latter shipped in bulk aboard the cargo vessel M/V Sun Plum owned by
Kyosei Kisen Kabushiki Kaisha (KKK) from Alaska, USA to San Fernando, La
Union, Philippines.
Prior to its voyage, a time charter-party on the vessel pursuant to the Uniform
General Charter was entered into between Mitsubishi as shipper/charter and
KKKK as shipowner.
Before landing the fertilizer aboard the vessel, four of her holds were
presumably inspected by the charterers representative and found fit to take a
load of urea in bulk pursuant to par. 16 of the charter-party.
After the Urea fertilizer was loaded in bulk by the stevedores hired by and
under the supervision of the shipper, the steel hatches were closed with heavy
in lids, covered with three layers of tarpaulin, then tied with steel bonds. The
hatches remained closed and tightly sealed through the entire voyage.
Upon the arrival of the vessel at her port of call, the steel pontoon were opened
with the use of the vessels boom.
Petitioner unloaded the cargo from the holds into its steelbodied dump trucks
which were parked alongside the berth, using metal scoops attached to the
ship, pursuant to the terms and conditions of the charter-partly (which provided
for an F.I.O.S. clause). The hatches remained open throughout the duration of
the discharge. Each time a dump truck was filled up, its load of Urea was
covered with tarpaulin before it was transported to the consignee's warehouse
located some fifty (50) meters from the wharf. Midway to the warehouse, the
trucks were made to pass through a weighing scale where they were
individually weighed for the purpose of ascertaining the net weight of the cargo.
The port area was windy, certain portions of the route to the warehouse were
sandy and the weather was variable, raining occasionally while the discharge
was in progress. The petitioner's warehouse was made of corrugated
galvanized iron (GI) sheets, with an opening at the front where the dump trucks
entered and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI
sheets were placed in-between and alongside the trucks to contain spillages
of the fertilizer. It actually took 11 days for PPI to unload the cargo.
According to the report of the private marine and cargo surveyor (Cargo
Superintendents Company Inc. (CSCI) hired by PPI, there is shortage in the
cargo of 106. 726 M/T and that a portion of the Urea fertilizer approximating
18 M/T were rendered unfit for commerce, having been polluted with sand,
rust and dirt. PPI then sent a claim letter to Soriamont Steamship Agencies
(SSA), the resident agent of the carrier KKK for 245, 969. 31 php representing
the cost of the alleged shortage in the goods shipped and the diminution in
value of that portion said to have been contaminated with dirt. SSA did not
respond to the claim for payment because according to them, what they
received was just a request for shortlanded certificate and not a formal claim
which was denied because they had nothing to do with the discharge of the
shipment
RTC: It was incumbent upon the SSA to prove that the shortage of
contamination sustained by the cargo is attributable to the fault or negligence
on the part of the shipper (PPI) in the loading, stowing, trimming and discharge
of the cargo. SSA failed to destroy the presumption of negligence against
them, thus, they are liable.
CA: Reversed the ruling of the lower court. It is an old and well settled rule that
if the plaintiff (PPI), upon whom rests the burden of proving his cause of action,
fails to show in satisfactory manner the facts upon which he bases his claim,
the defendant (SSA) is under no obligation to prove his defense. PPI failed to
prove the basis of its cause of action
ISSUE:
Whether or not a common carrier becomes a private carrier by reason of a
charter-party.
HELD:
No, petition is dismissed.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 15
Points:
A "charter-party" is defined as 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;
20
a contract of affreightment by which the owner of a ship or other
vessel lets the whole or a part of her to a merchant or other person for the
conveyance of goods, on a particular voyage, in consideration of the payment
21
of freight; Charter parties are of two types: (a) contract of affreightment which
involves the use of shipping space on vessels leased by the owner in part or
as a whole, to carry goods for others; and, (b) charter by demise or bareboat
charter, by the terms of which the whole vessel is let to the charterer with a
transfer to him of its entire command and possession and consequent control
over its navigation, including the master and the crew, who are his servants.
Contract of affreightment may either be time charter, wherein the vessel is
leased to the charterer for a fixed period of time, or voyage charter, wherein
the ship is leased for a single voyage.
22
In both cases, the charter-party
provides for the hire of vessel only, either for a determinate period of time or
for a single or consecutive voyage, the shipowner to supply the ship's stores,
pay for the wages of the master and the crew, and defray the expenses for the
maintenance of the ship.
When the petitioner chartered the vessel M/V Sun Plum, the ship captain,
its officers and compliment were under the employ of the shipowner and
therefore continued to be under its direct supervision and control. Hardly then
we can charge the charterer, a stranger to the crew and to the ship with the
duty of caring his cargo wen the charterer did not have any control of the
means in doing so. This is evident in the present case considering that the
steering of the ship, the manning of the decks, the determination of the course
of the voyage and other technical incidents of maritime navigation were all
consigned to the officers and crew who were screened, chosen and hired by
the shipowner. It is therefore imperative that a public carrier 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 time
charter or voyage charter. This is evident in the present case considering that
the steering of the ship, the manning of the decks, the determination of the
course of the voyage and other technical incidents of maritime navigation were
all consigned to the officers and crew who were screened, chosen and hired
27
by the shipowner.
It is therefore 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 shipowner 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.
It has been proven that the respondent carrier has sufficiently overcome, by
clear and convincing proof, the prima facie presumption of negligence. The
hatches remained close and tightly sealed while the ship was in transit as the
weight of the steel covers made it impossible for a person to open without the
use of the ships boom.
The Supreme Court agreed with respondent carrier that bulk shipment
of highly soluble goods like fertilizer carries with it the risk of loss or damage.
More so, with a variable weather condition prevalent during its unloading, as
was the case at bar. This is a risk the shipper or the owner of the goods has
to face. Clearly, respondent carrier has sufficiently proved the inherent
character of the goods which makes it highly vulnerable to deterioration; as
well as the inadequacy of its packaging which further contributed to the loss.
On the other hand, no proof was adduced by the petitioner showing that the
carrier was remise in the exercise of due diligence in order to minimize the loss
or damage to the goods it carried.
18. Coastwise Lighterage Corp. v. CA, 245 SCRA 796
F: Pag-asa Sales, Inc. entered into a contract to transport molasses from
Negros to Manila. w/ Coastwise, using the latter's dumb barges. The barges
were towed in tandem by the tugboat MT Marcia, w/c is likewise owned by
Coastwise.
Upon reaching Mla. Bay, while approaching Pier 18, one of the barges,
"Coastwise 9," struck an unknown sunken object. The forward buoyancy
compartment was damaged, and water gushed in through a hole 2 inches wide
and 22 inches long. As a consequence, the molasses at the cargo tanks were
contaminated and rendered unfit for the use it was intended. This prompted
the consignee, Pag-asa to reject the shipment of molasses as a total loss.
Thereafter, Pag-asa filed a formal claim w/ the insurer of its cargo, herein
private respondent Phil. Gen. Insurance Co. (Philgen) and against the carrier,
herein petitioner Coastwise. Coastwise denied the claim and it was Philgen
w/c paid the consignee the amount of P700,000 representing the value of the
damaged cargo of molasses.
In turn, Phil-gen filed an action agsint Coastwise bef. RTC-Mla. seeking to
recover the P700,000 it paid to Pag-asa. RTC ruled in favor of Philgen. CA
affirmed the RTC decision. Hence, this petition.
W/N petitioner Coastwise Lighterage was transformed into a private carrier, by
virtue of the contract of affreightment which it entered into with the consignee,
Pag-asa Sales, Inc.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 16
The distinction between the two kinds of charter parties (i.e. bareboat or
demise and contract of affreightment)
Coastwise, by the contract of affreightment, was not converted into a private
carrier, but remained a common carrier.-- Under the demise or bareboat
charter of the vessel, the charterer will generally be regarded as the owner of
the voyage or service stipulated. The charterer mans the vessel w/ 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
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. . . . .
Petitioner admits that the contract it entered into w/ the consignee was one of
afreightment. We agree. Pag-asa only leased 3 of petitioner's vessels, in order
to carry cargo from one point to another, but the possession, command and
navigation of the vessels remained w/ petitioner.
Coastwise Lighterage, by the contract of affreightment, was not converted into
a private carrier, but remained a common carrier and was still liable as such.
Clearly, petitioner Coastwise Lighterage's embarking on a voyage with an
unlicensed patron violates this rule. It cannot safely claim to have exercised
extraordinary diligence, 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 to Pier 18.
As a common carrier, petitioner is liable for breach of the contract of carriage,
having failed to overcome the presumption of negligence with the loss and
destruction of goods it transported, by proof of its exercise of extraordinary
diligence.
W/N the insurer was subrogated into the rights of the consignee against the
carrier, upon payment by the insurer of the value of the consignee's goods lost
while on board one of the carrier's vessels.
Undoubtedly, upon payment by respondent insurer PhilGen of the amount of
P700,000.00 to Pag-asa Sales, Inc., the consignee of the cargo of molasses
totally damaged while being transported by petitioner Coastwise Lighterage,
the former was subrogated into all the rights which Pag-asa Sales, Inc. may
have had against the carrier, herein petitioner Coastwise Lighterage.
19. Lea Mer Industries v. Malayan Insurance, supra
FACTS:
Ilian Silica Mining entered into a contract of carriage with the petitioner, Lea
Mer Industries Inc. for the shipment of 900 metric tons of silica sand worth
P565,000. The cargo was consigned to Vulcan Industrial and Mining
Corporation and was to be shipped from Palawan to Manila. The silica sand
was boarded to Judy VII, the vessel leased by Lea Mer. However, during the
course of its voyage, the vessel sank which led to the loss of the cargo.
Consequently, the respondent, as the insurer, paid Vulcan the value of the lost
cargo. Malayan Insurance Co., Inc. then collected from the petitioner the
amount it paid to Vulcan as reimbursement and as its exercise on the right of
subrogation. Lea Mer refused to pay which led Malayan to institute a complaint
with the RTC. The RTC dismissed the complaint stating that the loss was due
to a fortuitous event, Typhoon Trining. Petitioner did not know that a typhoon
was coming and that it has been cleared by the Philippine Coast Guard to
travel from Palawan to Manila. The CA reversed the ruling of the trial court for
the reason that said vessel was not seaworthy when it sailed to Manila.
ISSUE:
Whether or not the petitioner is liable for the loss of the cargo?
HELD:
YES. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods, or
both -- by land, water, or air -- when this service is offered to the public for
compensation Petitioner is clearly a common carrier, because it offers to the
public its business of transporting goods through its vessels.
Thus, the Court corrects the trial courts finding that petitioner became a private
carrier when Vulcan chartered it. Charter parties are classified as contracts of
demise (or bareboat) and affreightment, which are distinguished as follows:
Under the demise or bareboat charter of the vessel, the charterer will generally
be considered as owner for the voyage or service stipulated. The charterer
mans the vessel with his own people and becomes, in effect, 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.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 17
The distinction is significant, because a demise or bareboat charter indicates
a business undertaking that is private in character. Consequently, the rights
and obligations of the parties to a contract of private carriage are governed
principally by their stipulations, not by the law on common carriers.[22]
The Contract in the present case was one of affreightment, as shown by the
fact that it was petitioners crew that manned the tugboat M/V Ayalit and
controlled the barge Judy VII. Necessarily, petitioner was a common carrier,
and the pertinent law governs the present factual circumstances.
Common carriers are bound to observe extraordinary diligence in their
vigilance over the goods and the safety of the passengers they transport, as
required by the nature of their business and for reasons of public
policy.Extraordinary diligence requires rendering service with the greatest skill
and foresight to avoid damage and destruction to the goods entrusted for
carriage and delivery.
Common carriers are presumed to have been at fault or to have acted
negligently for loss or damage to the goods that they have transported.
Forms and Effects, Art. 652-657
Rights and Obligations of Shipowners, Art. 669-678
Obligations of charterers, Arts. 679-687
20. Caltex Philippines v. Sulpicio Lines, G.R. 131166, 30 September 1999
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,
causing 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.
ISSUE: Is the charterer of a sea vessel liable for damages resulting from a
collision between the chartered vessel and a passenger ship?
HELD: No.
First: 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.
Second: MT Vector is a common carrier. 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.
Third: Is Caltex liable for damages under the Civil Code? 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
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 18
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.
Rescission, Art. 688 - 692
Loans on Bottomry and Respondentia
Loan on Bottomry, defined
Loan on Respondentia, defined
Character of Loan, Art. 719
Forms and Requisites, Art. 720-722
On What Constituted, Art. 724-725
Amount, Art. 723, 726-727
By Whom, Art. 728, 617, 611, 583
Effects of Contract, Art. 719, 729, 726, 727 and 730
Bill of Lading
Contents, Art. 706, 707 , 713, 714
Probative Value, Art. 709, 710
Construction
21. Heacock v. Macondray, 42 Phil 90
Facts:
On or about the 5th day of June, 1919, the plaintiff caused to be delivered on
board the steamship B olt o n C a s tle , then in the harbor of New York, four
cases of merchandise one of which contained twelve (12) 8-day Edmond
clocks, properly boxed and marked for transportation to Manila, and paid
freight on said clocks from New York to Manila in advance. The said steamship
arrived in the port of Manila on or about the 10th day of September, 1919,
consigned to the defendant herein as agent and representative of said vessel
in said port. Neither the master of said vessel nor the defendant herein, as its
agent, delivered to the plaintiff the aforesaid twelve 8-day Edmond clocks,
although demand was made upon them for their delivery. The invoice value of
the said twelve 8-day Edmond clocks in the city of New York was P22 and the
market value of the same in the City of Manila at the time when they should
have been delivered to the plaintiff was P420. The bill of lading issued and
delivered to the plaintiff by the master of the said steamship Bolt on Castle
contained, among others, the following clauses: "1. It is m u t u ally a g r e e d
that the value of the goods receipted for above does not exceed $500 per
freight ton, or, in proportion for any part of a ton, unless the value be expressly
stated herein and ad valorem freight paid thereon." " Also , that in the event
of claims for short delivery of, or damage to, cargo being made, the carrier
shall not be liable for more than the net invoice price plus freight and insurance
less all charges saved, and any loss or damage for which the carrier may be
liable shall be adjusted pro rata on the said basis." The case containing the
aforesaid twelve 8-day Edmond clocks measured 3 cubic feet, and the freight
ton value thereof was $1,480, U. S. currency. No greater value than $500, U.
S. currency, per freight ton was declared by the plaintiff on the aforesaid
clocks, and no ad valorem freight was paid thereon. On or about October 9,
1919, the defendant tendered to the plaintiff P76.36, the proportionate freight
ton value of the aforesaid twelve 8-day Edmond clocks, in payment of plaintiff's
claim, which tender plaintiff rejected.
Issue:
May a common carrier, by stipulations inserted in the bill of lading, limit its
liability for the loss of or damage to the cargo to an agreed valuation of the
latter?
Held:
Three kinds of stipulations have often been made in a bill of lading. The r s t is
one exempting the carrier from any and all liability for loss or damage
occasioned by its own negligence. The s e c o n d is one providing for an
unqualied limitation of such liability to an agreed valuation. And the t hir d is
one limiting the liability of the carrier to an agreed valuation unless the shipper
declares a higher vale and pays a higher rate of freight. According to an almost
uniform weight of authority, the rst and second kinds of stipulations are invalid
as being contrary to public policy, but the third is valid and enforceable.
A reading of clauses 1 and 9 of the bill of lading here in question, however,
clearly shows that the present case falls within the third stipulation, to wit: That
a clause in a bill of lading limiting the liability of the carrier to a certain amount
unless the shipper declares a higher value and pays a higher rate of freight, is
valid and enforceable. This proposition is supported by a uniform lien of
decisions of the Supreme Court of the United States rendered both prior and
subsequent to the passage of the Harter Act, from the case of Hart v s .
Pennsylvania R. R. Co. (decided Nov. 24, 1884; 112 U. S., 331), to the case
of the Union Pacific
In the case of Hart v s . Pennsylvania R. R. Co., s u p r a , it was held that
"where a contract of carriage, signed by the shipper, is fairly made with a
railroad company, agreeing on a valuation of the property carried, with the rate
of freight based on the condition that the carrier assumes liability only to the
extent of the agreed valuation, even in case of loss or damage by the
negligence of the carrier, the contract will be upheld as proper and lawful mode
of recurring a due proportion between the amount for which the carrier may be
responsible and the freight he receives, and protecting himself against
extravagant and fanciful valuations."
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 19
It seems clear from the foregoing authorities that the clauses (1 and 9) of the
bill of lading here in question are not contrary to public order. Article 1255 of
the Civil Code provides that "the contracting parties may establish any
agreements, terms and conditions they may deem advisable, provided they
are not contrary to law, morals or public order." Said clauses of the bill of lading
are, therefore, valid and binding upon the parties thereto.
Passengers on Sea Voyage
Nature of Contract, Art. 695
Obligations of Passengers, Art. 693, 699, 704, 694, 700
Rights of Passengers, Art. 697, 698
22. Sweet Lines v. CA, 121 SCRA 769
Facts:
Private respondents purchased first-class tickets from petitioner at the latter's
office in Cebu City. They were to board petitioner's vessel, M/V Sweet Grace,
bound for Catbalogan, Western Samar. Instead of departing at the scheduled
hour of about midnight on July 8, 1972, the vessel set sail at 3:00 A.M. of July
9, 1972 only 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, 1972 at around 8:00 A.M.
Instead of docking at Catbalogan, which was the first port of call, the vessel
proceeded direct to Tacloban at around 9:00 P.M. of July 10, 1972. Private
respondents had no recourse but to disembark and board a ferryboat to
Catbalogan.
Hence, this suit for damages for breach of contract of carriage which the Trial
Court, affirmed by respondent Appellate Court, awarded.
Issue:
Whether or not there was breach of contract on the part of petitioner
Held:
Yes.
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. 614, Code of Commerce)
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. (ART. 698, Code of
Commerce)
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.
There was no fortuitous event or force majeure which prevented the vessel
from fulfilling its undertaking of taking private respondents to Catbalogan.
Mechanical defects in the carrier are not considered a caso fortuito that
exempts the carrier from responsibility.
Even granting arguendo that the engine failure was a fortuitous event, it
accounted only for the delay in departure. When the vessel finally left the port
of Cebu on July 10, 1972, there was no longer any force majeure that justified
by-passing a port of call. The vessel was completely repaired the following day
after it was towed back to Cebu. In fact, after docking at Tacloban City, it left
the next day for Manila to complete its voyage.
The reason for by-passing the port of Catbalogan was to enable the vessel to
catch up with its schedule for the next week. There were 50 passengers for
Tacloban compared to 20 passengers for Catbalogan, so that the Catbalogan
phase could be scrapped without too much loss for the company.
Petitioner cannot rely on the conditions in small bold print at the back of the
ticket reading: "The passenger's acceptance of this ticket shall be considered
as an acceptance of the following conditions: 3. In case the vessel cannot
continue or complete the trip for any cause whatsoever, the carrier reserves
the right to bring the passenger to his/her destination at the expense of the
carrier or to cancel the ticket and refund the passenger the value of his/her
ticket; 11. The sailing schedule of the vessel for which this ticket was issued is
subject to change without previous notice."
Even assuming that those conditions are squarely applicable to the case at
bar, petitioner did not comply with the same. It did not cancel the ticket nor did
it refund the value of the tickets to private respondents. Besides, it was not the
vessel's sailing schedule that was involved. Private respondents' complaint is
directed not at the delayed departure the next day but at the by-passing of
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 20
Catbalogan, their destination. Had petitioner notified them previously, and
offered to bring them to their destination at its expense, or refunded the value
of the tickets purchased, perhaps, this controversy would not have arisen.
Furthermore, the conditions relied upon by petitioner cannot prevail over
Articles 614 and 698 of the Code of Commerce.
The voyage to Catbalogan was "interrupted" by the captain upon instruction of
management. The "interruption" was not due to fortuitous event or force
majeure nor to disability of the vessel. Having been caused by the captain
upon instruction of management, the passengers' right to indemnity is evident.
The owner of a vessel and the ship agent shall be civilly liable for the acts of
the captain.
Under Article 2220 of the Civil Code, moral damages are justly due in breaches
of contract where the defendant acted fraudulently or in bad faith. Bad faith
means a breach of a known duty through some motive or interest or illwill. Self-
enrichment or fraternal interest, and not personal illwill, may have been the
motive, but it is malice nevertheless.
Petitioner did not give notice to private respondents as to the change of
schedule of the vessel. Knowing fully well that it would take no less than 15
hours to e ect the repairs of the damaged engine, petitioner instead made
announcement of assurance that the vessel would leave within a short period
of time, and when private respondents wanted to leave the port and gave up
the trip, petitoner's employees would come and say, `we are leaving, already.'
Petitioner did not o er to refund private respondents' tickets nor provide them
with transportation from Tacloban City to Catbalogan.
23. Trans-Asia Shipping v. CA, 254 SCRA 260
FACTS:
Plaintiff, herein private respondent Atty. Renato Arroyo, a public
attorney, bought a ticket from defendant, herein petitioner, a corporation
engaged in inter-island shipping, for the voyage of M/V Asia Thailand vessel
to Cagayan de Oro City from Cebu City on November 12, 1991.
At around 5:30 in the evening of November 12, 1991, plaintiff boarded
the M/V Asia Thai-land vessel. At that instance, plaintiff noticed that some
repair works were being undertaken on the engine of the vessel. The vessel
departed at around 11:00 in the evening with only one (1) engine running.
After an hour of slow voyage, the vessel stopped near Kawit Island
and dropped its anchor thereat. After half an hour of stillness, some
passengers demanded that they should be allowed to return to Cebu City for
they were no longer willing to continue their voyage to Cagayan de Oro City.
The captain acceded [sic] to their request and thus the vessel headed back to
Cebu City.
At Cebu City, plaintiff together with the other passengers who
requested to be brought back to Cebu City, were allowed to disembark.
Thereafter, the vessel proceeded to Cagayan de Oro City. Plaintiff, the next
day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City,
likewise a vessel of defendant.
On account of this failure of defendant to transport him to the place of
destination on No-vember 12, 1991, plaintiff filed before the trial court a
complaint for damages against defendant.
In his pre-trial brief, the private respondent asserted that his complaint
was an action for damage&arising from bad faith, breach of contract and from
tort, with the former arising from the petitioners failure to cary [him to his place
of destination as contracted, while the latter from the conduct of the petitioner
resulting in the infliction of emotional distress to the private respondent
ISSUE:
In case of interruption of a vessels voyage and the consequent delay in that
vessels arrival at its port of destination, is the right of a passenger affected
thereby to be determined and governed by the vague Civil Code provision on
common carriers, or shall it be, in the absence of a specific pro-vision thereon,
governed by Art. 698 of the Code of Commerce?
RULING:
Article 698 must then be read together with Articles 2199, 2200, 2201, and
2208 in relation to Article 21 of the Civil Code.
- it means that the petitioner is liable for any pecuniary loss or loss of
profits which the private re-spondent may have suffered by reason thereof. For
the private respondent, such would be the loss of income if unable to report to
his office on the day he was supposed to arrive were it not for the delay. This,
however, assumes that he stayed on the vessel and was with it when it there-
after resumed its voyage; but he did not. As he and some passengers resolved
not to complete the voyage, the vessel had to return to its port of origin and
allow them to disembark. The private respondent then took the petitioners
other vessel the following day, using the ticket he had pur-chased for the
previous days voyage.
- Any further delay then in the private respondents arrival at the port of
destination was caused by his decision to disembark. Had he remained on the
first vessel, he would have reached his desti-nation at noon of 13 November
1991, thus been able to report to his office in the afternoon. He, therefore,
would have lost only the salary for half of a day. But actual or compensatory
damages must be proved,[30] which the private respondent failed to do. There
is no convincing evidence that he did not receive his salary for 13 November
1991 nor that his absence was not excused.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 21
As to the rights and duties of the parties strictly arising out of such
delay, the Civil Code is silent. However, as correctly pointed out by the
petitioner, Article 698 of the Code of Commerce specif-ically provides for such
a situation. It reads: In case a voyage already begun should be interrupt-ed,
the passengers shall be obliged to pay the fare in proportion to the distance
covered, without right to recover for losses and 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 a passenger
should agree to await the repairs, he may not be required to pay any increased
price of passage, but his living expenses during the stay shall be for his own
account. This article applies supple-torily pursuant to Article 1766 of the
Civil Code..
Responsibilities of Captain, Art. 701, 702, 705, 612, 703; Art. 1754, Civil Code
Carriage of Goods by Sea Act (Commonwealth Act. No. 65; Public Act No.
th
521, 74 US Congress)
24. Ang v. American Steamship Agencies, 19 SCRA 123
Facts:
Yau Yue Commercial Bank of Hongkong agreed to sell 140 packages of
galvanized steel durzinc sheets to Herminio Teves for $32,458.26. Said
agreement was subject to the following terms: the purchase price should be
covered by a bank draft which should be paid by Teves in exchange for the
delivery to him of the bill of lading to be deposited with honking and Shanghai
Bank of Manila; that Teves would present said bill of lading to carriers agent,
American Steamship Agencies which would then issue the permit to deliver
imported articles to be presented to the Bureau of customs to obtain the
release of the articles. Yau Yue shipped the articles aboard S.S. Tensai Maru
owned by Nissho Shipping Co., of which the American Shipping is the agent
in the Philippines.
When the Articles arrived in manila, Honkong Shanghais Bank notified Teves
of the arrival of the goods and requested for the payment of the demand draft.
Teves, however, failed to pay the demand draft. So, the bank returned the bill
of lading and the demand draft to Yau Yue which endorsed the bill of lading to
Domingo Ang.
Despite his non-payment, Teves was able to obtain a bank guarantee in favor
of the American Steamship Agencies, the carriers agent. Thus, Teves
succeeded in securing a permit to deliver imported articles from the carriers
agent, which he presented to the Bureau of Customs, that released the said
articles to him.
Subsequently, Domingo Ang claimed the articles from American Steamship,
by presenting the indorsed bill of lading, but he was informed that it had
delivered the articles to Teves. Ang filed a complaint in the Court of First
Instance of Manila against American shipping agencies, for having wrongfully
delivered the goods. The American Steamship filed for a motion to dismiss,
citing the carriage of Goods by Sea Act, section 3 paragraph 4, which states:
in any event, the carrier and the ship shall be discharged from all liability in
respect to loss or damage unless suit is brought within one year, after delivery
of goods or the date when the goods should have been delivered. Thus, the
lower court dismissed the action, on the ground of prescription.
Issue:
Whether or not the Carriage of Goods by Sea Act Section 3, Paragraph 4,
applies to the case at bar?
Held:
No. The provision of the law speaks of loss or damage. But there was no
damage caused to the goods which were delivered intact to Herminio Teves.
As defined by the Civil Code and as applied to section 3, paragraph 4, of the
Carriage of Goods by sea Act, loss contemplates a situation where no
delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared that their existence is
unknown or they cannot be recovered. It does not include a situation where
there was indeed delivery, but delivery to the wrong person.
The applicable rule on prescription is that found in the Civil Code, either: ten
years for breach of contract or four years for quasi-delict. In either case, the
plaintiffs cause of action has not yet prescribed. Thus, the case is remanded
to the court a quo for further proceedings.
25. F.H. Stevens v. Nordeutscher, 6 SCRA 180
FACTS:
Plaintiff commenced this action in the Court of First Instance of Manila. It
alleged in the complaint that it had shipped from Hamburg to Manila, aboard
the "MS SCHWABENSTEIN", a vessel of defendant Norddeuscher Lloyd,
2,000 pieces of prismatical thermometers valued at $650; that said vessel
arrived at Manila; that the master of said vessel notified the plaintiff, thru its
broker, of the delivery of said goods; that, upon examination of the case
containing the same, it turned out that 1,154 pieces of said thermometers
valued at $342.74, were missing and/or destroyed; that plaintiff 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; that,
despite several demands, defendant had refused and failed to pay said sum
of $342.74; that, as a consequence, plaintiff had, also, incurred damages and
unrealized profits; and that an action instituted in the Municipal Court of Manila
was dismissed by said court without any trial on the merits, upon the ground
of lack of jurisdiction over the subject-matter of the case, inasmuch as the
same involved the exercise of admiralty and maritime jurisdiction.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 22
Defendant moved to dismiss the complaint upon the ground that plaintiff's
causes of action had prescribed, it having been filed on June 24, 1960, or more
than a year from May 21, 1959, when plaintiff was notified of the delivery of
the case containing the thermometers in question. This motion having been
granted and the complaint dismissed, plaintiff interposed this appeal,
maintaining that the period of one (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 forty-seven (47)
days, less than one (1) year has elapsed from May 21, 1959 to June 24, 1960,
when this case was filed in the court of first instance. In support of this
pretense, plaintiff invokes Article 1155 of the Civil Code of the Philipines,
reading: 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.
ISSUE:
WON the cause of action has prescribed.
HELD:
No.
The action commenced by the plaintiff in the Municipal Court of Manila, on
April 27, 1960, was dismissed June 13, 1960, or over twenty (20) days after the
expiration of the period of one (1) year, beginning from May 21, 1959, within
which plaintiff's 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 (Tolentino
Vitug, 39 Phil., 126; Smith vs. McNeal, 100 U.S. 426, 27 L. ed. 986). The case
at bar was commenced on June 24, 1960, or within the period last mentioned.
WHEREFORE, the order appealed from is reversed and this case remanded
to the lower court for further proceedings, with costs of this instance against
defendant Norddeuscher Lloyd. It is so ordered.
III. International Air Transport
(Unless otherwise indicated, reference is to the Warsaw Convention, 51 O.G.
5084; Presidential Proclamation No. 201, 51 O.G. 4933 [Oct. 1955])
See also Carriage by Air Act (Montreal Convention, 1999)
Constitutionality
26. Santos v. Northwest, 210 SCRA 256
F: 1. A Filipino minor was informed by Northwest that he had no reservations
for his flights, and had to be waitlisted, despite a previous confirmation. He
sued for damages. Northwest moved to dismiss on the ground of lack of
jurisdiction based on Art.28 (1) of the Warsaw Convention, where the
complaint could be instituted in the territory of one of the contracting parties
before the court of the
(1) domicile of the carrier;(2) principal place of business;(3) where it has a
place of business through which the contract had been made; and(4) place
of destination.
FIRST ISSUE: W/NOT THE WARSAW CONVENTION IS
UNCONSTITUTIONAL?
HELD: No. Art. 28 (1) of Warsaw Con. is constitutional. Although the case can
be decided on other grounds without resolving the constitutional question, the
Warsaw Convention is a treaty commitment voluntarily
assumed by the Philippine Government and as such, has the force and effect
of law. The presumption is that this joint legislative-executive act was first
carefully studied and determined to be constitutional before it was adopted.
Petitioner's allegation have not overcome this presumption. Moreover, the
treaty since 1950 has not been rejected by the Philippine Government.
SECOND ISSUE: W/NOT THE WC SHOULD BE RENDERED IRRELEVANT
BY THE DOCTRINE OF REBUS SIC STANTIBUS?
HELD: No. The circumstance that the airline industry was still in infancy when
the Convention was made, alone, is not sufficient justification for the rejection
of the treaty at this time. The changes recited by petitioner were not entirely
unforeseen although they were expected in a general sense only. (Check
Art.41).
THIRD ISSUE: W/NOT THE REQUISITS OF THE WC IS MERELY A
MATTER OF VENUE OR JURISDICTION?
HELD: Jurisdiction(1) The wording of Art. 32, which indicates the places
where the action for damages "must" be brought, underscores the mandatory
nature of Art. 28 (1).(2) This characterization is consistent with one of the
objectives of the convention, which is to regulate in a uniform manner the
conditions of international transportation by air.
FOURT ISSUE: W/NOT PHILIPPIN COURTS HAVE JURISDICTION OVER
THIS CASE?
HELD: No. Art. 28 (1) provides that an action for damage must be brought at
the option of the plaintiff: (a) before the court of the domicile of the carrier;(b)
the court of its principal place of business;(c) the court where it has a place
of business thru w/c the contract had been made;(d) the court of the place of
destination.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 23
In this case, the ff. were not followed, and hence the Philippines, not being one
of the courts mentioned in Art.28 (1), does not have jurisdiction over the case.
(1) court of domicile is Minnesota, U.S.A;(2) principal place of business of
carrier is also U.S.A;(3) place of business where contract was made was in
San Francisco;(4) place of destination is also San Francisco, Santos having
purchased a round trip-ticket from SFO-TYO-MNL, then back to TYO- SFO.
The "ultimate destination" being San Francisco.
The court called upon to determine the applicability of the limitation provision
must first be vested with the appropriate jurisdiction. If the carrier is indeed is
indeed not guilty of WILLFUL MISCONDUCT, it can avail itself of the
limitations set forth in this article. But it can be done only if the action has first
been commenced properly under the rules set forth in Art.28 (1).
Notes: The enumeration of the causes of action in the WC is not an exclusive
list. You can have a cause of action even if it is not:(a) death or wounding of
passenger;
(b) damage or loss or destruction of checked baggage; (c) delay in
transportation of passengers, luggage and goods.
The case of Northwest is actually overbooking. Delay still a cause of action
under WC.
Note however, that the limitations of liability in the Convention favors the
carrier.
When applicable, Art 1(1)
27. Lhuillier v. British Airways, G.R. No. 171092, 15 March 2010
FACTS:
Edna Diago Lhuillier took British Airway flight 548 from London to Rome. Once
on board, she requested Julian Halliday, one of its 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!". Edna
further alleged that when the plane was about to land in Rome, another flight
attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the
passengers in the business class section to lecture on plane safety. Upon
arrival in Rome, petitioner complained to British Airwayss ground manager
and demanded an apology. However, the latter declared that the flight
stewards were "only doing their job."
Edna then filed a complaint against British Airways before the Regional Trial
Court (RTC) of Makati City. Summons, together with a copy of the complaint,
was served on British Airways through Violeta Echevarria, General Manager
of Euro-Philippine Airline Services, Inc. British Airways filed a Motion to
Dismiss on grounds of lack of jurisdiction over the case and over the person
of the respondent. It alleged that only the courts of London, United Kingdom
or Rome, Italy, have jurisdiction over the complaint for damages pursuant to
the Warsaw Convention, Article 28(1). The RTC of Makati City granted the
Motion to Dismiss. Edna filed a Motion for Reconsideration but the motion was
denied. Hence, this petition.
ISSUE:
Whether or not the 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
HELD:
NO.It is settled that the Warsaw Convention has the force and effect of law in
this country. 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 United Kingdom and
Italy, which are both signatories to the Warsaw Convention. It is provided in
Article 1 of the Warsaw Convention that 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. 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".
The High Contracting Parties referred to herein were the signatories to the
Warsaw Convention and those which subsequently adhered to it.
In this case, petitioners place of departure was London, United Kingdom while
her place of destination was Rome, Italy. Both the United Kingdom 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. Under Article 28(1) of
the Warsaw Convention, the plaintiff may bring the action for damages before
(1) the court where the carrier is domiciled; (2) the court where the carrier has
its principal place of business; (3) the court where the carrier has an
establishment by which the contract has been made; or (4) the court of the
place of destination.
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 first and second jurisdictional rules, the petitioner may bring
her case before the courts of London in the United Kingdom. In the passenger
ticket and baggage check presented by both the petitioner and respondent, it
appears that the ticket was issued in Rome, Italy. Consequently, under the
third jurisdictional rule, the petitioner has the option to bring her case before
the courts of Rome in Italy. Finally, both the petitioner and respondent aver
that the place of destination is Rome, Italy, 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.
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 24
The Court finds 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 Lhuillers complaint is within the purview of
the Warsaw Convention. 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.
Liabilities under the Convention, Art. 17, 18, 19
28. Northwest v. Cuenca, 14 SCRA 1063 supra
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 attorneys 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.
ISSUES: 1. WON the Warsaw Convention relative to transportation by air is
not in force in the Philippines 2. WON Cuenca has a cause of action. 3. WON
the award of nominal damages is proper.
HELD: 1. We deem it unnecessary to pass upon the first assignment of error
because the same is the basis of the second assignment of error, and the latter
is devoid of merit, even if we assumed the former to be well taken.
2. Yes. Petitioner argues that pursuant to these provisions, 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. This
pretense is not borne out by the language of said Articles. The same merely
declare the carrier liable for damages in the enumerated cases, if the
conditions therein specified are present. Neither said provisions nor others in
the aforementioned Convention regulate or exclude liability for other breaches
of contract by 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. Yes. The third assignment of error is based upon Medina vs. Cresencia (52
Off. Gaz. 4606), and Quijano vs. Philippine Air Lines (CA-G.R. No. 21804).
Neither case is, however, in point, aside from the fact that the latter is not
controlling upon us. 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.
Moreover, there are special reasons why the P20,000.00 award in favor of
respondent herein is justified, even if said award were characterized as
nominal damages. When his contract of carriage was violated by the petitioner,
respondent held the office of Commissioner of Public Highways of the Republic
of the Philippines. Having boarded petitioner's plane in Manila with a first class
ticket to Tokyo, he was, upon arrival at Okinawa, transferred to the tourist class
compartment. Although he revealed that he was traveling in his official capacity
as official delegate of the Republic to a conference in Tokyo, an agent of
petitioner rudely compelled him, in the presence of other passengers, to move,
over his objection, to the tourist class, under threat of otherwise leaving him in
Okinawa. In order to reach the conference on time, respondent had no choice
but to obey.
Since the offense had been committed with full knowledge of the fact that
respondent was an official representative of the Republic of the Philippines,
the sum of P20,000 awarded as damages may well be considered as merely
nominal. At any rate, 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
29. Alitalia v. IAC, 192 SCRA 10
Facts:
Dr. Felipa Pablo an associate professor in the University of the Philippines,
1 1 and a research grantee of the Philippine Atomic Energy Agency was
invited to take part at a meeting of the Department of Research and Isotopes
of the Joint FAO-IAEA Division of Atomic Energy in Food and Agriculture of
the United Nations in Ispra, Italy. 2 2 She was invited in view of her specialized
knowledge in "foreign substances in food and the agriculture environment."
She accepted the invitation, and was then scheduled by the organizers, to read
a paper on "The Fate of Radioactive Fusion Products Contaminating
Vegetable Crops." 3 3 The program announced that she would be the second
speaker on the rst day of the meeting. 4 4 To fulll this engagement, Dr. Pablo
booked passage on petitioner airline, ALITALIA. She arrived in Milan on the
day before the meeting in accordance with the itinerary and time table set for
her by ALITALIA. She was however told by the ALITALIA personnel there at
Milan that her luggage was "delayed inasmuch as the same . . . (was) in one
of the succeeding ights from Rome to Milan." 5 5 Her luggage consisted of two
(2) suitcases: one contained her clothing and other personal items; the other,
her scientic papers, slides and other research material. But the other ights
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 25
arriving from Rome did not have her baggage on board. By then feeling
desperate, she went to Rome to try to locate her bags herself. There, she
inquired about her suitcases in the domestic and international airports, and
lled out the forms prescribed by ALITALIA for people in her predicament.
However, her baggage could not be found. Completely distraught and
discouraged, she returned to Manila without attending the meeting in Ispra,
Italy. prcd Once back in Manila she demanded that ALITALIA make reparation
for the damages thus suffered by her. ALITALIA offered her "free airline tickets
to compensate her for any alleged damages. . . ." She rejected the offer, and
forthwith commenced the action 6 6 which has given rise to the present
appellate proceedings
Issue:
Whether or not the Warsaw Convention should have been applied to limit
ALITALIA'S liability
Held:
NO.
Under the Warsaw Convention, an air carrier is made liable for damages for:
1) the death, wounding or other bodily injury of a passenger if the accident
causing it took place on board the aircraft or in the course of its operations of
embarking or disembarking; 17 2) the destruction or loss of, or damage to, any
registered luggage or goods, if the occurrence causing it took place during the
carriage by air;" and 3) delay in the transportation by air of passengers,
luggage or goods.
In these cases, it is provided in the Convention that the "action for damages,
however, founded, can only be brought subject to conditions and limits set out"
therein. The Convention also purports to limit the liability of the carriers in the
following manner: 1. In the carriage of passengers the liability of the carrier for
each passenger is limited to the sum of 250,000 francs . . . Nevertheless, by
special contract, the carrier and the passenger may agree to a higher limit of
liability. 2. a) In the carriage of registered baggage and of cargo, the liability of
the carrier is limited to a sum of 250 francs per kilogramme, unless the
passenger or consignor has made, at the time when the package was handed
over to the carrier, a special declaration of interest in delivery at destination
and has paid a supplementary sum if the case so requires. In that case the
carrier will be liable to pay a sum not exceeding the declared sum, unless he
proves that sum is greater than the actual value to the consignor at delivery.
b) In the case of loss, damage or delay of part of registered baggage or cargo,
or of any object contained therein, the weight to be taken into consideration in
determining the amount to which the carrier's liability is limited shall be only
the total weight of the package or packages concerned. Nevertheless, when
the loss, damage or delay of a part of the registered baggage or cargo, or of
an object contained therein, affects the value of other packages covered by
the same baggage check or the same air way bill, the total weight of such
package or packages shall also be taken into consideration in determining the
limit of liability. 3. As regards objects of which the passenger takes charge
himself the liability of the carrier is limited to 5000 francs per passenger. 4. The
limits prescribed . . shall not prevent the court from awarding, in accordance
with its own law, in addition, the whole or part of the court costs and of the
other expenses of litigation incurred by the plaintiff. The foregoing provision
shall not apply if the amount of the damages awarded, excluding court costs
and other expenses of the litigation, does not exceed the sum which the carrier
has offered in writing to the plaintiff within a period of six months from the date
of the occurrence causing the damage, or before the commencement of the
action, if that is later. The Warsaw Convention however denies to the carrier
availment "of the provisions which exclude or limit his liability, if the damage is
caused by his willful misconduct or by such default on his part as, in
accordance with the law of the court seized of the case, is considered to be
equivalent to 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 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. Such a proposition is not borne out by the language of the Convention,
as this Court has now, and at an earlier time, pointed out. 25 25 Moreover,
slight reection readily leads to the conclusion that it should be deemed a limit
of liability only in those cases where the cause of the death or injury to person,
or destruction, loss or damage to property or delay in its transport is not
attributable to or attended by any willful misconduct, bad faith, recklessness,
or otherwise improper conduct on the part of any official or employee for which
the carrier is responsible, and there is otherwise no special or extraordinary
form of resulting injury. The Convention's provisions, in short, do not "regulate
or exclude liability for other breaches of contract by the carrier" 26 26 or
misconduct of its ofcers and employees, or for 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, which is absurd." 27 27 Nor may it for a moment be
supposed that if a member of the aircraft complement should inflict some
physical injury on a passenger, or maliciously destroy or damage the latter's
property, the Convention might successfully be pleaded as the sole gauge to
determine the carrier's liability to the passenger. Neither may the Convention
be invoked to justify the disregard of some extraordinary sort of damage
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resulting to a passenger and preclude recovery therefor beyond the limits set
by said Convention. It is in this sense that the Convention has been applied,
or ignored, depending on the peculiar facts presented by each case.
Limitations on Liability, Art. 22
30. Pan Am v. IAC, 164 SCRA 268, supra
Facts:
Rene V. Pangan, president and general manager of the Sotang Bastos and
Archer Productions, while in San Francisco, California and Primo Quesada of
Prime Films, San Francisco, California, entered into an agreement whereby
the former, for and in consideration of the amount of US $2,500.00 per picture,
bound himself to supply the latter with three films. 'Ang Mabait, Masungit at
ang Pangit,' 'Big Happening with Chikiting and Iking,' and 'Kambal Dragon' for
exhibition in the United States. It was also their agreement that Pangan, et al.
would provide the necessary promotional and advertising materials for said
films on or before May 30, 1978.
On his way home to the Philippines, Pangan visited Guam where he contacted
Leo Slutchnick of the Hafa Adai Organization. Pangan likewise entered into a
verbal agreement with Slutchnick for the exhibition of two of the films above-
mentioned at the Hafa Adai Theater in Guam on May 30, 1978 for the
consideration of P7,000.00 per picture. Pangan undertook to provide the
necessary promotional and advertising materials for said films on or before the
exhibition date on May 30, 1978.
On May 18, 1978, Pangan obtained from Pan Am's Manila Office, through the
Your Travel Guide, an economy class airplane ticket for passage from Manila
to Guam on Flight No. 842 of May 27, 1978.
On May 27, 1978, two hours before departure time Pangan was at the
defendant's ticket counter at the Manila International Airport and presented his
ticket and checked in his two luggages, for which he was given baggage claim
tickets. The two luggages contained the promotional and advertising materials,
the clutch bags, barong tagalog and his personal belongings. Subsequently,
Pangan was informed that his name was not in the manifest and so he could
not take Flight No. 842 in the economy class. Since there was no space in the
economy class, Pangan took the first class because he wanted to be on time
in Guam to comply with his commitment, paying an additional sum of $112.00.
When plaintiff Pangan arrived in Guam on the date of May 27, 1978, his two
luggages did not arrive with his flight, as a consequence of which his
agreements with Slutchnick and Quesada for the exhibition of the films in
Guam and in the United States were cancelled. Thereafter, he filed a written
claim for his missing luggages.

The Court of First Instance ordered Pan Am to pay for P83,000.00 for actual
damages. Pan Am contended that such award was beyond the limitation of
liability set forth in the Warsaw Convention, the provisions of such being found
at the back of the ticket.
Issue:
Whether or not Pangan is bound by such Warsaw provisions and, hence, is
entitled only to $600 ($20 standard x $30 kilos)
Held:
Yes. On the basis of the stipulations printed at the back of the ticket, petitioner
contends that its liability for the lost baggage of private respondent Pangan is
limited to $600.00 ($20.00 x 30 kilos) as the latter did not declare a higher
value for his baggage and pay the corresponding additional charges.
To support this contention, petitioner cites the case of Ong Yiu v. Court of
Appeals, where the Court sustained the validity of a printed stipulation at the
back of an airline ticket limiting the liability of the carrier for lost baggage to a
specified amount and ruled that the carrier's liability was limited to said amount
since the passenger did not declare a higher value, much less pay additional
charges.
We find the ruling in Ong Yiu squarely applicable to the instant case. Such
provisions have been held to be a part of the contract of carriage, and valid
and binding upon the passenger regardless of the latter's lack of knowledge or
assent to the regulation.
In view thereof petitioner's liability for the lost baggage is limited to $20.00 per
kilo or $600.00, as stipulated at the back of the ticket.
To sustain the view that "to apply the Warsaw Convention which limits a
carrier's liability to US$9.07 per pound or US$20.00 per kilo in cases of
contractual breach of carriage ** is against public policy" is utterly misplaced,
to say the least.
It is quite clear that the Court never intended to, and in fact never did, rule
against the validity of provisions of the Warsaw Convention. Consequently, by
no stretch of the imagination may said quotation from Northwest be considered
as supportive of the appellate court's statement that the provisions of the
Warsaw Convention limited a carrier's liability are against public policy.
When limitations unavailable, Art. 3, 25
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31. Cathay Pacific v. CA, supra
FACTS:
On 19 October 1975, respondent Tomas L. Alcantara was a first class
passenger of petitioner Cathay Pacific Airways, Ltd. on its Flight No. CX-900
from Manila to Hongkong and onward from Hongkong to Jakarta on Flight No.
CX-711. The purpose of his trip was to attend the following day, 20 October
1975, a conference with the Director General of Trade of Indonesia, Alcantara
being the Executive Vice-President and General Manager of Iligan Cement
Corporation, Chairman of the Export Committee of the Philippine Cement
Corporation, and representative of the Cement Industry Authority and the
Philippine Cement Corporation. He checked in his luggage which contained
not only his clothing and articles for personal use but also papers and
documents he needed for the conference.
Upon his arrival in Jakarta, respondent discovered that his luggage
was missing. When he inquired about his luggage from CATHAY's
representative in Jakarta, private respondent was told that his luggage was left
behind in Hongkong. For this, respondent Alcantara was offered $20.00 as
"inconvenience money" to buy his immediate personal needs until the luggage
could be delivered to him.
His luggage finally reached Jakarta more than twenty four (24) hours
after his arrival. However, it was not delivered to him at his hotel but was
required by petitioner to be picked up by an official of the Philippine Embassy.
On 1 March 1976, respondent filed his complaint against petitioner
with the Court of First Instance (now Regional Trial Court) of Lanao del Norte
praying for temperate, moral and exemplary damages, plus attorney's fees.
ISSUE:
Whether or not the extent of petitioner's liability for breach of contract should
be limited absolutely to that set forth in the Warsaw Convention.
RULING:
NO, the Supreme Court does not agree.
Points:
Although the Warsaw Convention has the force and effect of law in this
country, being a treaty commitment assumed by the Philippine government,
said convention does not operate as an exclusive enumeration of the
instances for declaring a carrier liable for breach of contract of carriage or
as an absolute limit of the extent of that liability. The Warsaw Convention
declares the carrier liable for damages in the enumerated cases and under
certain limitations. However, it must not be construed to 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, 12 especially if wilfull
 misconduct on the part of the carrier's employees is found or established,
which is clearly the case before Us. For, the Warsaw Convention itself
provides in Art. 25 that
(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 wilfull misconduct or by such default
on his part as, in accordance with the law of the court to which the case is
submitted, is considered to be equivalent to wilfull
misconduct."
(2) Similarly the carrier shall not be entitled to avail himself of the
said provisions, if the damage is caused under the same circumstances by
any agent of the carrier acting within the scope of his employment."
When petitioner airline misplaced respondent's luggage and failed to deliver
it to its passenger at the appointed place and time, some special species of
injury must have been caused to him. For sure, the latter underwent
profound distress and anxiety, and the fear of losing the opportunity to fulfill
the purpose of his trip. In fact, for want of appropriate clothings for the
occasion brought about by the delay of the arrival of his luggage, to his
embarrassment and consternation respondent Alcantara had to seek
postponement of his pre-arranged conference with the Director General of
Trade of the host country.
Conditions on Imposition of Liability, Arts. 26, 28, 29
32. Santos v. Northwest, supra
Facts:
AUGUSTO BENEDICTO SANTOS III is a minor represented by his father,
Augusto Benedicto Santos. Private respondent Northwest Orient Airlines
(NOA) is a foreign corporation with principal office in Minnesota, U.S.A. and
licensed to do business and maintain a branch office in the Philippines.
His flight would be from San Francisco to Manila via Tokyo and back to San
Francisco. His scheduled flight was in December. A day before his departure
he checked with NOA and NOA said he made no reservation and that he
bought no ticket. The next year, due to the incident, he sued NOA for damages.
He sued NOA in Manila. NOA argued that Philippine courts have no jurisdiction
over the matter pursuant to Article 28(1) of the Warsaw Convention, which
provides that complaints against international carriers can only be instituted in:
1. the court of the domicile of the carrier (NOAs domicile is in the USA);
2. the court of its principal place of business (which is San Francisco, USA);
3. the court where it has a place of business through which the contract had
been made (ticket was purchased in San Francisco so thats where the
contract was made);
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 28
4. the court of the place of destination (Santos bought a round trip ticket which
final destination is San Francisco).
The lower court ruled in favor of NOA. Santos III averred that Philippine courts
have jurisdiction over the case and he questioned the constitutionality of Article
28 (1) of the Warsaw Convention.
Issue:
Whether or not Article 28 (1) of the Warsaw Convention is in accordance with
the constitution so as to deprive the Philippine Courts jurisdiction over the case
Held:
No. The Supreme Court ruled that they cannot rule over the matter for the SC
is bound by the provisions of the Warsaw Convention which was ratified by the
Senate. Until & unless there would be amendment to the Warsaw Convention,
the only remedy for Santos III is to sue in any of the place indicated in the
Convention such as in San Francisco, USA.
The SC cannot rule upon the constitutionality of Article 28(1) of the Warsaw
Convention. In the first place, it is a treaty which was a joint act by the
legislative and the executive. The presumption is that it was first carefully
studied and determined to be constitutional before it was adopted and given
the force of law in this country. In this case, Santos was not able to offer any
compelling argument to overcome the presumption.
The place of destination, within the meaning of the Warsaw Convention, is
determined by the terms of the contract of carriage or, specifically in this case,
the ticket between the passenger and the carrier. Examination of the
petitioner's ticket shows that his ultimate destination is San Francisco.
Although the date of the return flight was left open, the contract of carriage
between the parties indicates that NOA was bound to transport the petitioner
to San Francisco from Manila. Manila should therefore be considered merely
an agreed stopping place and not the destination. Article 1(2) also draws a
distinction between a "destination" and an "agreed stopping place." It is the
"destination" and not an "agreed stopping place" that controls for purposes of
ascertaining jurisdiction under the Convention.
The contract is a single undivided operation, beginning with the place of
departure and ending with the ultimate destination. The use of the singular in
this expression indicates the understanding of the parties to the Convention
that every contract of carriage has one place of departure and one place of
destination. An intermediate place where the carriage may be broken is not
regarded as a "place of destination."
33. Luna v. Court of Appeals, 216 SCRA 107
FACTS:
This joint petition for review on certiorari originated from two (2) separate
complaints arising from an airline's delay in the delivery of the luggage of its
passengers at their destination which respondent courts dismissed for lack of
cause of action.

Petitioners Rufino Luna, Rodolfo Alonso and Porfirio Rodriguez boarded Flight
020 of private respondent Northwest Airlines bound for Seoul, South Korea, to
attend the four-day Rotary International Convention. They checked in one (1)
piece of luggage each. After boarding, however, due to engine trouble, they
were asked to disembark and 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 petitioners 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
petitioners able to retrieve their luggage. By then the Convention, which they
were hardly able to attend, was almost over.
Petitioners Rufino Y. Luna and Rodolfo J. Alfonso assert that thirteen (13) days
after they recovered their luggage, they sent a written claim to private
respondent's office along Roxas Blvd., Ermita, Manila. Petitioner Porfirio
Rodriquez, on his part, asserverates that he filed his claim on 13 June 1989.
However, private respondent, is a letter of 21 June 1989, disowned any liability
for the delay and averred that it exerted "its best efforts to carry the passenger
1
and baggage with reasonable dispatch."
Petitioners Luna and Alonso jointly filed a complaint for breach of contract with
damages before the Regional Trial Court of Pasig, while petitioner Rodriquez
filed his own complaint with the Regional Trial Court of Valenzuela. However,
4
upon motion of private respondent, both complaints were dismissed for lack
of cause of action due to petitioners' failure to state in their respective
complaints that they filed a prior claim with private respondent within the
prescribed period.
Petitioners Luna and Alonso then filed a petition for certiorari before the Court
of Appeals to set aside the order of respondent Judge Cristina M. Estrada
granting private respondent's motion to dismiss, while petitioner Rodriquez
proceeded directly to this Court on certiorari for the same purpose. However,
in Our resolution of 26 February 1990, We referred his petition to the Court of
Appeals.
The Third Division of respondent Court of Appeals, applying the provisions of
the Warsaw Convention and ruling that certiorari was not a substitute for a lost
5 mandated by the provisions of the Warsaw Convention should not be a ground
appeal, dismissed the petition of Luna and Alonso, and denied their motion
6
for reconsideration. Meanwhile, the Seventh Division of respondent Court of
Appeals, ruling that the questioned order of the trial court had already become
final, similarly rejected the petition of Rodriquez, and denied his motion for
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7
reconsideration. Hence, this present recourse by petitioners Luna, Alonso
and Rodriguez.
Petitioners grounds were namely: (a) that respondent appellate court
8
disregarded Our ruling in Alitalia v. CA where We said that "[t]he Convention
does not thus operate as an exclusive enumeration of the instances of an
9
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
10
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.
ISSUE:
WON the application of the Warsaw Convention operates to exclude the
application of the provisions of the New Civil Code and the other statutes.
HELD:
No.
Previously, We ruled that the Warsaw Convention was a treaty commitment
voluntarily assumed by the Philippine government; consequently, it has the
15
force and effect of law in this country. But, in the same token, We are also
aware of jurisprudence that the Warsaw Convention does not operate as an
exclusive enumeration of the instances for declaring an airline liable for breach
16
of contract of carriage or as an absolute limit of the extent of that liability. The
Convention merely declares the carrier liable for damages in the enumerated
17
cases, if the conditions therein specified are present. 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. The application of the Convention must not therefore be construed
to preclude the operation of the Civil Code and other pertinent laws. In fact,
in Alitalia v. IAC,
18
We awarded Dr. Felipa Pablo nominal damages, the
provisions of the Convention notwithstanding.
Hence, petitioners' alleged failure to file a claim with the common carrier as
for the summary dismissal of their complaints since private respondent may
still be held liable for breach of other relevant laws which may provide a
different period or procedure for filing a claim. Considering that petitioners
indeed filed a claim which private respondent admitted having received on 21
June, 1989, their demand may have very well been filed within the period
prescribed by those applicable laws. Consequently, respondent trial courts, as
well as respondent appellate court, were in error when they limited themselves
to the provisions of the Warsaw Convention and disregarding completely the
provisions of the Civil Code.
WHEREFORE, the assailed decisions and resolutions of respondent Court of
Appeals are REVERSED and SET ASIDE. The complaints for breach of
contract of carriage with damages in Civil Case No. 3194-V-89 and Civil Case
No. 58390 dismissed by respondent Judges Teresita D. Capulong and Cristina
M. Estrada, respectively, are ordered REINSTATED and given due course
until terminated. No costs.
SO ORDERED.
Liability of successive carriers, Art. 30
34. KLM Loyal Dutch Airlines v. CA, 65 SCRA 237
Article 28(1) of the Warsaw Convention, reading as follows:
Art. 28. (1) An action for damage must be brought at the option of the plaintiff,
in the territory of one of the High Contracting Parties, either before the court of
the domicile of the carrier or of his principal place of business, or where he has
a place of business through which the contract has been made, or before the
court at the place of destination.
petitioner is a minor and a resident of the Philippines. Private respondent
Northwest Orient Airlines (NOA) is a foreign corporation with principal office in
Minnesota, U.S.A. and licensed to do business and maintain a branch office
in the Philippines.
October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San
Francisco. U.S.A., for his flight from San Francisco to Manila via Tokyo and
back. The scheduled departure date from Tokyo was December 20, 1986. No
date was specified for his return to San Francisco.
petitioner checked in at the NOA counter in the San Francisco airport for his
scheduled departure to Manila. Despite a previous confirmation and re-
confirmation, he was informed that he had no reservation for his flight from
Tokyo to Manila. He therefore had to be wait-listed.
petitioner sued NOA for damages in the Regional Trial Court of Makati.
NOA moved to dismiss the complaint on the ground of lack of jurisdiction.
contended that the complaint could be instituted only in the territory of one of
the High Contracting Parties, before:
1. the court of the domicile of the carrier;
2. the court of its principal place of business;
3. the court where it has a place of business through which the contract had
been made;
Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 30
4. the court of the place of destination.
private respondent contended that the Philippines was not its domicile nor was
this its principal place of business. Neither was the petitioner's ticket issued in
this country nor was his destination Manila but San Francisco in the United
States.
W/N (1) the constitutionality of Article 28(1) of the Warsaw Convention; and
The petitioner claims that the lower court erred in not ruling that Article 28(1)
of the Warsaw Convention violates the constitutional guarantees of due
process and equal protection.
The Republic of the Philippines is a party to the Convention for the Unification
of Certain Rules Relating to International Transportation by Air, otherwise
known as the Warsaw Convention
The Convention was concurred in by the Senate, through its Resolution No.
19, on May 16, 1950. The Philippine instrument of accession was signed by
President Elpidio Quirino on October 13, 1950, and was deposited with the
Polish government on November 9, 1950.
On September 23, 1955, President Ramon Magsaysay issued Proclamation
No. 201, declaring our formal adherence thereto. "to the end that the same
and every article and clause thereof may be observed and fulfilled in good faith
by the Republic of the Philippines and the citizens thereof."
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.
PET: He argues that there is no substantial distinction between a person who
purchases a ticket in Manila and a person who purchases his ticket in San
Francisco. The classification of the places in which actions for damages may
be brought is arbitrary and irrational and thus violates the due process and
equal protection clauses.
The treaty which is the subject matter of this petition was a joint legislative-
executive act. The presumption is that it was first carefully studied and
determined to be constitutional before it was adopted and given the force of
law in this country. The petitioner's allegations are not convincing enough to
overcome this presumption.
we agree with the respondent court that this case can be decided on other
grounds without the necessity of resolving the constitutional issue.
If the petitioner is barred from filing his complaint before our courts, it is
because they are not vested with the appropriate jurisdiction under the
Warsaw Convention, which is part of the law of our land.
It does not mean that a person can go to any court for redress of his
grievances regardless of the nature or value of his claim. If the petitioner is
barred from filing his complaint before our courts, it is because they are not
vested with the appropriate jurisdiction under the Warsaw Convention, which
is part of the law of our land.
The place of destination, within the meaning of the Warsaw Convention, is
determined by the terms of the contract of carriage or, specifically in this case,
the ticket between the passenger and the carrier. Examination of the
petitioner's ticket shows that his ultimate destination is San Francisco.
Although the date of the return flight was left open, the contract of carriage
between the parties indicates that NOA was bound to transport the petitioner
to San Francisco from Manila. Manila should therefore be considered merely
an agreed stopping place and not the destination.
the domicile of the carrier is only one of the places where the complaint is
allowed to be filed under Article 28(1). By specifying the three other places, to
wit, the principal place of business of the carrier, its place of business where
the contract was made, and the place of destination, the article clearly meant
that these three other places were not comprehended in the term "domicile."
But we are unable to grant him the relief he seeks because we are limited by
the provisions of the Warsaw Convention which continues to bind us. It may
not be amiss to observe at this point that the mere fact that he will have to
litigate in the American courts does not necessarily mean he will litigate in vain
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Transpo Digests. Atty. Romero. SY 2016-2017. Alvarez. Azarias. Clemena. Federico. Maghirang. Morante. Ragpala. Santos. 31