TRANSPORTATION LAW CASES FOR FINALS

1.

ABOITIZ SHIPPING VS. GENERAL ACCIDENT FIRE AND

LIFE (GR NO. 100446 JANUARY 21, 1993)

Facts: Petitioner is a corporation engaged in the business of

maritime trade as a carrier. As such, it owned and operated the
M/V P/ ABOITIZ, a common carrier that sank on voyage from Hong
Kong to Manila. Private respondent GAFLAC is a foreign insurance
company pursuing its remedy as a subrogee of several cargo
consignees whose respective cargo sank with the said vessel and
for which it has priory paid. The sinking of vessel gave rise to
filling of suit to recover the lost cargo either by shippers, their
successors-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
fortuitous event.
Issue: Whether or not the doctrine of limited liability is applicable
to the case?
Held:
Rights of the parties to claim against an agent or owner of vessel
may be compared to those of creditors against an insolvent
corporation whose assets are not enough to satisfy the totality of
claims against it.
Creditors must limit their recovery to what is left in the name of
the corporation
In the sinking of a vessel, the claimants of creditors are limited in
their recovery to the remaining value of accessible assets. In the
case of lost vessel, these assets are the insurance proceeds and
pending freightage for the particular voyage.
2.

CHUA YEK HONG V. IAC

FACTS: Petitioner loaded 1,000 sacks of copra on board a vessel

owned by respondents, for shipment from Puerto Galera to Manila.
Along its way, the vessel capsized and sank. Petitioner filed an
action for damages for breach of contract of carriage.
ISSUE: Whether respondents can avail of the limited liability
HELD: The shipowners or agents liability is merely co-extensive
with his interests in the vessel such that the total loss thereof
results in its extinction. The total destruction of the vessel
extinguishes maritime liens as there is no longer any res to which
it can attach. The primary law is the Civil Code and in default
thereof, the Code of Commerce and other special laws are applied.
Since the Civil Code contains no provisions regulating liability of
shipowners or agents in the event of total loss or destruction of
the vessel, it is the provisions of the Code of Commerce that
govern in this case.
3.

MONARCH INSURANCE VS. CA

Facts: The M/V P. Aboitiz left Hong Kong for Manila at about 7:30
in the evening of October 29, 1980 after securing a departure
clearance from the Hong Kong Port Authority. The departure was
delayed for two hours because he (Capt. Racines) was observing
the direction of the storm that crossed the Bicol Region. He
proceeded with the voyage only after being informed that the
storm had abated. The M/V P. Aboitiz sank at about 7:00 p.m. of
October 31, 1980.
Justo Iglesias, meteorologist of PAGASA, testified in both cases that
during the inclusive dates of October 28-31, 1980, a stormy
weather condition prevailed within the Philippine area of
responsibility, particularly along the sea route from Hong Kong to
Manila, because of tropical depression "Yoning."
Petitioners Allied and Equitable refuted the allegation that the M/V
P. Aboitiz and its cargo were lost due to force majeure, relying
mainly on the marine protest filed by Capt. Racines under scale
No. 4 that describes the sea condition as "moderate breeze," and
"small waves becoming longer, fairly frequent white horses."
Monarch and Tabacalera are insurance carriers of lost cargoes.
They indemnified the shippers and were consequently subrogated
to their rights, interests and actions against Aboitiz. Because
Aboitiz refused to compensate Monarch, it filed two complaints
against Aboitiz. In its answer with counterclaim, Aboitiz rejected
responsibility for the claims on the ground that the sinking of its
cargo vessel was due to force majeure or an act of God.
Aboitiz had repeatedly failed to appear in court, it then allowed
Monarch and Tabacalera to present evidence ex-parte. The
survey established that on her voyage to Manila from Hong
Kong, the vessel did not encounter weather so inclement
that Aboitiz would be exculpated from liability for losses.
The survey added that the seaworthiness of the vessel was in
question especially because the breaches of the hull and the
serious flooding of two (2) cargo holds occurred simultaneously in
"seasonal weather."
In due course, the trial court rendered judgment against Aboitiz. It
was appealed to the Court of Appeals but the appeal was
dismissed for its failure to file appellant's brief.
Consequently, Monarch and Tabacalera moved for execution of
judgment. The trial court granted the motion and issued separate
writs of execution. However, Aboitiz, invoking the real and

hypothecary nature of liability in maritime law, filed an urgent

motion to quash the writs of execution.
According to Aboitiz, since its liability is limited to the
value of the vessel which was insufficient to satisfy the
aggregate claims of all 110 claimants, to indemnify
Monarch and Tabacalera ahead of the other claimants
would be prejudicial to the latter.
Aboitiz filed with the Court of Appeals a petition for certiorari and
prohibition with prayer for preliminary injunction and/or temporary
restraining order, the same was granted by the court.
Issue: Whether or not the respondent Court of Appeals erred in
finding, upon review, that Aboitiz is entitled to the benefit of the
limited liability rule.
Held: NO.
Rule on Limited Liability
The petitioners assert in common that the vessel M/V P. Aboitiz did
not sink by reason of force majeure but because of its
unseaworthiness and the concurrent fault and/or negligence of
Aboitiz, the captain and its crew, thereby barring Aboitiz from
availing of the benefit of the limited liability rule.
After reviewing the records of the instant cases, we categorically
state that by the facts on record, the M/V P. Aboitiz did not go
under water because of the storm "Yoning." Captain Racines also
testified in open court that the ill-fated M/V P. Aboitiz was two
hundred (200) miles away from storm "Yoning" when it sank.
On the matter of Aboitiz' negligence, we adhere to our ruling
in Aboitiz Shipping Corporation v. Court of Appeals, that found
Aboitiz, and the captain and crew of the M/V P. Aboitiz to
have been concurrently negligent. The said survey established
that the cause of the sinking of the vessel was the leakage of
water into the M/V P. Aboitiz.
The failure of Aboitiz to present sufficient evidence to exculpate
itself from fault and/or negligence in the sinking of its vessel in the
face of the foregoing expert testimony constrains us to hold
that Aboitiz was concurrently at fault and/or negligent with
the ship captain and crew of the M/V P. Aboitiz. This is in
accordance with the rule that in cases involving the limited liability
of shipowners, the initial burden of proof of negligence or
unseaworthiness rests on the claimants. However, once the
vessel owner or any party asserts the right to limit its
liability, the burden of proof as to lack of privity or
knowledge on its part with respect to the matter of
negligence or unseaworthiness is shifted to it. This burden,
Aboitiz had unfortunately failed to discharge. That Aboitiz failed to
discharge the burden of proving that the unseaworthiness of its
vessel was not due to its fault and/or negligence should not
however mean that the limited liability rule will not be applied to
the present cases. The peculiar circumstances here demand
that there should be no strict adherence to procedural
rules on evidence lest the just claims of shippers/insurers
be frustrated. The rule on limited liability should be applied in
accordance with the latest ruling in Aboitiz Shipping Corporation v.
General Accident Fire and Life Assurance Corporation, Ltd.,
promulgated on January 21, 1993, that claimants be treated as
"creditors in an insolvent corporation whose assets are not enough
to satisfy the totality of claims against it."
4. THE PHILIPPINE AMERICAN GENERAL INSURANCE
COMPANY, INC., petitioner, vs. COURT OF APPEALS and
FELMAN SHIPPING LINES, respondents.
FACTS: On March 1, 1987, San Miguel Corporation insured several
beer bottle cases with petitioner Philippine American General
Insurance Company. The cargo were loaded on board the M/V
Peatheray Patrick-G to be transported from Mandaue City to Bislig,
Surigao
del
Sur.
After having been cleared by the Coast Guard Station in Cebu the
previous day, the vessel left the port of Mandaue City for Bislig,
Surigao del Sur on March 2, 1987. The weather was calm when the
vessel started its voyage.
The following day, M/V Peatheray Patrick-G listed and
subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a
consequence thereof, the cargo belonging to San Miguel
Corporation was lost.
Petitioner paid San Miguel Corporation the full amount of the cargo
pursuant to the terms of their insurance contract, and as subrogee
filed with the Regional Trial Court (RTC) of Makati City a case for
collection against private respondents to recover the amount it
paid.
Meanwhile, the Board of Marine Inquiry conducted its own
investigation and found that the cause of the sinking of the vessel
was the existence of strong winds and enormous waves in Surigao
del Sur, a fortuitous event that could not have been for seen at the
time the M/V Peatheray Patrick-G left the port of Mandaue City. It

was further held by the Board that said fortuitous event was the
proximate and only cause of the vessel's sinking.
ISSUE: Whether or not respondent MGG should be held liable.
HELD: No. [Common carriers, from the nature of their business
and for reasons of public policy, are mandated to observe
extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them. Owing to this high
degree of diligence required of them, common carriers, as a
general rule, are presumed to have been at fault or negligent if
the goods transported by them are lost, destroyed or if the same
deteriorated.
However, this presumption of fault or negligence does not arise in
the cases enumerated under Article 1734 of the Civil Code:
Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the
following causes only:(1) Flood, storm, earthquake, lightning or
other natural disaster or calamity;(2) Act of the public enemy in
war, whether international or civil;(3) Act or omission of the
shipper or owner of the goods;(4) The character of the goods or
defects in the packing or in the containers;(5) Order or act of
competent public authority.]
[In the case at bar, the issues may be narrowed down to whether
the loss of the cargo was due to the occurrence of a natural
disaster, and if so, whether such natural disaster was the sole and
proximate cause of the loss or whether private respondents were
partly to blame for failing to exercise due diligence to prevent the
loss of the cargo.
The parties do not dispute that on the day the M/V Peatheray
Patrick-G sunk, said vessel encountered strong winds and huge
waves ranging from six to ten feet in height. The vessel listed at
the port side and eventually sunk at Cawit Point, Cortes, Surigao
del Sur.
The Court of Appeals, citing the decision of the Board of Marine
Inquiry in the administrative case against the vessel's crew (BMI-646-87), found that the loss of the cargo was due solely to the
existence of a fortuitous event, particularly the presence of strong
winds and huge waves at Cortes, Surigao del Sur on March 3,
1987:
5.
INSURANCE COMPANY OF NORTH AMERICA VS.
ASIAN TERMINALS
On November 9, 2002, Macro-Lito Corporation, through M/V
DIMI P vessel, 185 packages of electrolytic tin free steel,
complete and in good condition.
The goods are covered by a bill of lading, had a declared value
of $169,850.35 and was insured with the Insurance Company of
North America (Petitioner) against all risk.
The carrying vessel arrived at the port of Manila on November
19, 2002, and when the shipment was discharged therefrom, it
was noted that 7 of the packages were damaged and in bad
condition.
On November 21, 2002, the shipment was then turned over to
the custody of Asian Terminals. Inc. (Respondent) for storage and
safekeeping pending its withdrawal by the consignee.
On November 29, 2002, prior to the withdrawal of the
shipment, a joint inspection of the said cargo was conducted. The
examination report showed that an additional 5 packages were
found to be damaged and in bad order.
On January 6, 2003, the consignee, San Miguel Corporation
filed separate claims against both the Petitioner and the
Respondent for the damage caused to the packages.
The Petitioner then paid San Miguel Corporation the amount of
PhP 431,592.14 which is based on a report of its independent
adjuster. The Petitioner then formally demanded reparation
against the Respondent for the amount it paid San Miguel
Corporation.
For the failure of the Respondent to satisfy the demand of the
Petitioner, the Petitioner filed for an action for damages with the
RTC of Makati.
ISSUE/S:
1.) Whether or not the trial court committed an error in
dismissing the complaint of the petitioner based on the one-year
prescriptive period for filing a suit under the COGSA to an arrastre
operator? YES.
2.) Whether or not the Petitioner is entitled to recover actual
damages against the Respondent? YES, but only PhP164,428.76
HELD:
The term carriage of goods covers the period from the time
when the goods are loaded to the time when they are discharged
from the ship. Thus, it can be inferred that the period of time when
the goods have been discharged from the ship and given to the
custody of the arrastre operator is not covered by the COGSA.

The Petitioner, who filed the present action for the 5 packages

that were damaged while in the custody of the respondent was not
forthright in its claim, as it knew that the damages it sought,
based on the report of its adjuster covered 9 packages. Based on
the report, only four of the nine packages were damaged in the
custody of the Respondent. The Petitioner can be granted only the
amount of damages that is due to it
6.

YU CON VS. IPIL (1916)

FACTS: Respondent, Yu Con (Yu Con), chartered the banca Maria

owned by petitioner Narciso Lauron (Lauron) with Gilcerio Ipil
(Ipil) as its master and Juto Solamo (Solamo) as it supercargo to
transport certain merchandise and money from the port of Cebu to
Catmon. Yu Con loaded the merchandise and delivered the money,
placed in a trunk, to Ipil and Solamo. Allegedly because there was
no more room for Yu Cons trunk, Ipil and Solamo transferred the
money to their own trunk in the stateroom. Before the ship could
sail, the trunk and the money placed therein disappeared.
ISSUES/HELD: Are the petitioners liable for the loss? YES.
RATIONALE: It is therefore beyond all doubt that the loss of the
money occurred through the manifest fault and negligence of Ipil
and Solamo. They failed to take the necessary precautions in order
that the stateroom containing the trunk in which they kept the
money should be properly guarded by members of the crew and
they also did not expressly station some person inside the
stateroom for the guarding and safe-keeping of the trunk. Thus, it
is only proper that the shipowner should be made liable.
7.
INTERORIENT
MARITIME
ENTERPRISES,
INC.,
FIRCROFT SHIPPING CORPORATION AND TIMES SURETY &
INSURANCE CO., INC., PETITIONERS, VS NATIONAL LABOR
RELATIONS COMMISSION AND CONSTANCIA PINEDA,
RESPONDENTS. G.R. NO. 115497 SEPTEMBER 16, 1996
-No transportation-related issue.
8.
CALTEX (PHILS) INC VS SULPICIO LINES, INC., 315
SCRA 709
FACTS: Caltex chartered MT Vector-Tanker of Vector Shipping Corp
to transport its fuel products from Limay, Bataan to Masbate. On
Dec 2, 1987 while enroute the Tanker collided with MV Dona Paz of
Sulpicio Lines Inc resulting to the sinking of the latter vessel and
the death of about 4000 passengers with only 24 survivors.
HELD: The charterer Caltex under a contract of affreightment
has no liability for damages under maritime laws. It is the
shipowner Vector who is liable as it is in possession, control and
navigation of the tanker. As such Vector is a common carrier
subject to the presumption of negligence which it was found guilty
by the Board of Maritime Inquiry in 1988. Thus Vector is liable to
reimburse/indemnify Sulpicio Lines for whatever damages, atty
fees and cost the latter is adjudged to pay. (Note Sulpicio was also
negligent with respects to its passengers overloading which
contrary to maritime rules and regulation- liable for breach of
carriage).
9.
MACONDRAY
&
CO.,
INSURANCE CORPORATION

INC.

VS.

PROVIDENT

FACTS: CANPOTEX SHIPPING SERVICES LIMITED INC., shipped on

board the vessel M/V Trade carrier certain goods in favor of ATLAS
FERTILIZER CORPORATION. Subject shipments were insured with
Provident Insurance Corp. against all risks. When the shipment
arrived, consignee discovered that the shipment sustained losses.
Provident paid for said losses. Formal claims were then filed with
Trade & Transport but MACONDRAY refused and failed to settle the
same. MACONDRAY denies liability over the losses, it, having no
absolute relation with Trade & Transport, the alleged operator of
the vessel who transported the shipment; that accordingly,
MACONDRAY is the local representative of the shipper; the
charterer of M/V Trade Carrier and not party to this case; that it
has no control over the acts of the captain and crew of the carrier
and cannot be held responsible for any damage arising from the
fault or negligence of said captain and crew; that upon arrival at
the port, M/V Trade Carrier discharged the full amount of shipment
as shown by the draft survey.
ISSUE: Whether or not MACONDRAY & CO. INC., as an agent, is
responsible for any loss sustained by any party from the vessel
owned by Trade & Transport.
HELD: Although petitioner is not an agent of Trade & Transport, it
can still be the ship agent of the vessel M/V Trade Carrier. A ship
agent is the person entrusted with provisioning or representing the
vessel in the port in which it may be found. Hence, whether acting
as agent of the owner of the vessel or as agent of the charterer,
petitioner will be considered as the ship agent and may be held
liable as such, as long as the latter is the one that provisions or
represents the vessel.
The trial court found that petitioner was appointed as local agent
of the vessel, which duty includes arrangement for the entrance
and clearance of the vessel. Further, the CA found that the

evidence shows that petitioner represented the vessel. The latter

prepared the Notice of Readiness, the Statement of Facts, the
Completion Notice, the Sailing Notice and Customs Clearance.
Petitioners employees were present at the port of destination one
day before the arrival of the vessel, where they stayed until it
departed. They were also present during the actual discharging of
the cargo. Moreover, Mr. de la Cruz, the representative of
petitioner, also prepared for the needs of the vessel. These acts all
point to the conclusion that it was the entity that represented the
vessel at the port of destination and was the ship agent within the
meaning and context of Article 586 of the Code of Commerce.
10.
KILUSANG MAYO UNO LABOR CENTER VS GARCIA
239 SCRA 538 (1994)
FACTS: The Kilusang Mayo Uno Labor Center (KMU) assails the
constitutionality and validity of a memorandum which, among
others, authorize provincial bus and jeepney operators to increase
or decrease the prescribed transportation fares without application
therefore with the LTFRB, and without hearing and approval
thereof by said agency.
ISSUE: Whether or not the absence of notice and hearing and the
delegation of authority in the increase or decrease of
transportation fares to provincial bus and jeepney operators is
illegal?
HELD: Under Section 16 (c) of the Public Service Act, as amended,
the legislature delegated to the defunct Public Service Commission
the power of fixing the rates of public services. LTFRB, the existing
regulatory body today, is likewise vested with the same under
Executive Order 202.
The authority given by the LTFRB to the bus operators to
set fares over and above the authorized existing fare is illegal and
invalid, as it is tantamount to undue delegation of legislative
authority. Under the maxim potestas delegate non delegari potest
what has been delegated cannot be delegated.
The policy allowing provincial bus operators to change
and increase their fares would result not only to a chaotic situation
but to an anarchic state of affairs. This would leave the riding
public at the mercy of transport operators who may increase fares,
every hour, every day, every month or every year, whenever it
pleases them or whenever they deem it necessary to do so.
Furthermore, under the Section 16 (a) of Public Service Act, there
must be proper notice and hearing in the fixing of rates, to arrive
at a just and reasonable rate acceptable to both the public utility
and the public.
11.
ANG VS. AMERICAN STEAMSHIP AGENCIES (19
SCRA 631)
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 Honkong 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.
ISSUE: Whether or not the Carriage of Goods by Sea Act Section
3, Paragraph 4, applies to the case at bar?
HELD: 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.
12.

TRANS-ASIA SHIPPING VS. CA (254 SCRA 260)

FACTS: Plaintiff (herein private respondent Atty. Renato Arroyo)

bought a ticket from herein petitioner for the voyage of M/V Asia
Thailand Vessel to Cagayan de Oro from Cebu City. Arroyo boarded
the vessel in the evening of November 12, 1991 at around 5:30. At
that instance, plaintiff noticed that some repair works were being
undertaken on the evening of the vessel. The vessel departed at
around 11:00 in the evening with only one engine running.
After an hour of slow voyage, vessel stopped near Kawit
Island and dropped its anchor thereat. After an hour of stillness,
some passenger 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 to their
request and thus the vessel headed back to Cebu City. At Cebu
City, the plaintiff together with the other passengers who
requested to be brought back to Cebu City was 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 the defendant.
On account of this failure of defendant to transport him to
the place of destination on November 12, 1991, plaintiff filed
before the trial court a complaint for damages against the
defendant.
ISSUE: Whether or not the failure of a common carrier to maintain
in seaworthy condition its vessel involved in a contract of carriage
a breach of its duty?
HELD: Undoubtedly, there was, between the petitioner and
private respondent a contract of carriage. Under Article 1733 of
the Civil Code, the petitioner was bound to observed extraordinary
diligence in ensuring the safety of the private respondent. That
meant that the petitioner was pursuant to the Article 1755 off the
said Code, bound to carry the private respondent safely as far as
human care and foresight could provide, using the utmost
diligence of very cautious persons, with due regard for all the
circumstances. The Failure of the common carrier to maintain in
seaworthy condition its vessel involved in a contract of carriage is
a clear breach of its duty prescribed in Article 1755 of the Civil
Code.
13

MOF COMPANY, INC. VS. SHIN YANG BROKERAGE

FACTS: On October 25, 2001, Halla Trading Co., a company based

in Korea, shipped to Manila secondhand cars and other articles on
board the vessel Hanjin Busan 0238W. The bill of lading covering
the shipment, i.e., Bill of Lading No. HJSCPUSI14168303, [2] which
was prepared by the carrier Hanjin Shipping Co., Ltd. (Hanjin),
named respondent Shin Yang Brokerage Corp. (Shin Yang) as the
consignee and indicated that payment was on a Freight Collect
basis, i.e., that the consignee/receiver of the goods would be the
one to pay for the freight and other charges in the total amount of
P57,646.00.
The shipment arrived in Manila on October 29, 2001. Thereafter,
petitioner MOF Company, Inc. (MOF), Hanjins exclusive general
agent in the Philippines, repeatedly demanded the payment of
ocean freight, documentation fee and terminal handling charges
from Shin Yang. The latter, however, failed and refused to pay
contending that it did not cause the importation of the goods, that
it is only the Consolidator of the said shipment, that the ultimate
consignee did not endorse in its favor the original bill of lading and
that the bill of lading was prepared without its consent.
Thus, on March 19, 2003, MOF filed a case for sum of
money before the Metropolitan Trial Court of Pasay City (MeTC
Pasay). MOF alleged that Shin Yang, a regular client, caused the
importation and shipment of the goods and assured it that ocean
freight and other charges would be paid upon arrival of the goods
in Manila. Yet, after Hanjin's compliance, Shin Yang unjustly
breached its obligation to pay. MOF argued that Shin Yang, as the
named consignee in the bill of lading, entered itself as a party to
the contract and bound itself to the Freight Collect arrangement.
MOF thus prayed for the payment of P57,646.00 representing
ocean freight, documentation fee and terminal handling charges
as well as damages and attorneys fees.
Claiming that it is merely a consolidator/forwarder and
that Bill of Lading No. HJSCPUSI14168303 was not endorsed to it
by the ultimate consignee, Shin Yang denied any involvement in
shipping the goods or in promising to shoulder the freightage. It
asserted that it never authorized Halla Trading Co. to ship the

articles or to have its name included in the bill of lading. Shin Yang
also alleged that MOF failed to present supporting documents to
prove that it was Shin Yang that caused the importation or the one
that assured payment of the shipping charges upon arrival of the
goods in Manila.
ISSUE: The issue for resolution is whether a consignee, who is not
a signatory to the bill of lading, is bound by the stipulations
thereof.
HELD: Corollarily, whether respondent who was not an agent of
the shipper and who did not make any demand for the fulfilment
of the stipulations of the bill of lading drawn in its favor is liable to
pay the corresponding freight and handling charges.
The bill of lading is oftentimes drawn up by the shipper/consignor
and the carrier without the intervention of the consignee.
However, the latter can be bound by the stipulations of the bill of
lading when a) there is a relation of agency between the shipper
or consignor and the consignee or b) when the consignee
demands fulfilment of the stipulation of the bill of lading which
was drawn up in its favor. [12]
In sum, a consignee, although not a signatory to the
contract of carriage between the shipper and the carrier, becomes
a party to the contract by reason of either a) the relationship of
agency between the consignee and the shipper/ consignor; b) the
unequivocal acceptance of the bill of lading delivered to the
consignee, with full knowledge of its contents or c) availment of
the stipulation pour autrui, i.e., when the consignee, a third
person, demands before the carrier the fulfilment of the stipulation
made by the consignor/shipper in the consignees favor,
specifically the delivery of the goods/cargoes shipped. [16]
In the instant case, Shin Yang consistently denied in all of its
pleadings that it authorized Halla Trading, Co. to ship the goods on
its behalf; or that it got hold of the bill of lading covering the
shipment or that it demanded the release of the cargo. Basic is the
rule in evidence that the burden of proof lies upon him who
asserts it, not upon him who denies, since, by the nature of things,
he who denies a fact cannot produce any proof of it. [17] Thus,
MOF has the burden to controvert all these denials, it being
insistent that Shin Yang asserted itself as the consignee and the
one that caused the shipment of the goods to the Philippines.
14. EDGAR COKALIONG SHIPPING LINES, INC., PETITIONER,
VS.
UCPB
GENERAL
INSURANCE
COMPANY,
INC.,
RESPONDENT.
The liability of a common carrier for the loss of goods may, by
stipulation in the bill of lading, be limited to the value declared by
the shipper. On the other hand, the liability of the insurer is
determined by the actual value covered by the insurance policy
and the insurance premiums paid therefor, and not necessarily by
the value declared in the bill of lading.
Facts:
Sometime on December 11, 1991, Nestor Angelia delivered to the
Edgar Cokaliong Shipping Lines, Inc. (now Cokaliong Shipping
Lines), [petitioner] for brevity, cargo consisting of one (1) carton of
Christmas decor and two (2) sacks of plastic toys, to be
transported on board the M/V Tandag on its Voyage No. T-189
scheduled to depart from Cebu City, on December 12, 1991, for
Tandag, Surigao del Sur. [Petitioner] issued Bill of Lading No. 58,
freight prepaid, covering the cargo. Nestor Angelia was both the
shipper and consignee of the cargo valued, on the face thereof, in
the amount of P6,500.00. Zosimo Mercado likewise delivered
cargo to [petitioner], consisting of two (2) cartons of plastic toys
and Christmas decor, one (1) roll of floor mat and one (1) bundle
of various or assorted goods for transportation thereof from Cebu
City to Tandag, Surigao del Sur, on board the said vessel, and said
voyage. [Petitioner] issued Bill of Lading No. 59 covering the cargo
which, on the face thereof, was valued in the amount of
P14,000.00. Under the Bill of Lading, Zosimo Mercado was both
the shipper and consignee of the cargo.

Shortly thereafter, Feliciana Legaspi filed a claim, with

[respondent], for the value of the cargo insured under Marine Risk
Note No. 18409 and covered by Bill of Lading No. 59. She
submitted, in support of her claim, a Receipt, dated December 11,
1991, purportedly signed by Zosimo Mercado, and Order Slips
purportedly signed by him for the goods he received from
Feliciana Legaspi valued in the amount of P110,056.00.
[Respondent] approved the claim of Feliciana Legaspi and drew
and issued UCPB Check No. 612939, dated March 9, 1992, in the
net amount of P99,000.00, in settlement of her claim after which
she executed a Subrogation Receipt/Deed, for said amount, in
favor of [respondent]. She also filed a claim for the value of the
cargo covered by Bill of Lading No. 58. She submitted to
[respondent] a Receipt, dated December 11, 1991 and Order Slips,
purportedly signed by Nestor Angelia for the goods he received
from Feliciana Legaspi valued at P60,338.00. [Respondent]
approved her claim and remitted to Feliciana Legaspi the net
amount of P49,500.00, after which she signed a Subrogation
Receipt/Deed, dated March 9, 1992, in favor of [respondent].
On July 14, 1992, [respondent], as subrogee of Feliciana Legaspi,
filed a complaint anchored on torts against [petitioner], with the
Regional Trial Court of Makati City, for the collection of the total
principal amount of P148,500.00, which it paid to Feliciana Legaspi
for the loss of the cargo, praying that judgment be rendered in its
favor and against the [petitioner]
Issues: (1) Is petitioner liable for the loss of the goods? (2) If it is
liable, what is the extent of its liability?
HELD: The Petition is partly meritorious.
First Issue: Liability for Loss
Petitioner argues that the cause of the loss of the goods, subject of
this case, was force majeure. It adds that its exercise of due
diligence was adequately proven by the findings of the Philippine
Coast Guard.
We are not convinced. The uncontroverted findings of the
Philippine Coast Guard show that the M/V Tandag sank due to a
fire, which resulted from a crack in the auxiliary engine fuel oil
service tank. Fuel spurted out of the crack and dripped to the
heating exhaust manifold, causing the ship to burst into flames.
The crack was located on the side of the fuel oil tank, which had a
mere two-inch gap from the engine room walling, thus precluding
constant inspection and care by the crew.
Having originated from an unchecked crack in the fuel oil service
tank, the fire could not have been caused by force majeure.
Broadly speaking, force majeure generally applies to a natural
accident, such as that caused by a lightning, an earthquake, a
tempest or a public enemy.[14] Hence, fire is not considered a
natural disaster or calamity and the common carrier shall be
presumed to have been at fault or to have acted negligently,
unless it proves that it has observed the extraordinary diligence
required by law.
Where loss of cargo results from the failure of the officers of a
vessel to inspect their ship frequently so as to discover the
existence of cracked parts, that loss cannot be attributed to force
majeure, but to the negligence of those officials.[16]
Second Issue: Extent of Liability
The records show that the Bills of Lading covering the lost goods
contain the stipulation that in case of claim for loss or for damage
to the shipped merchandise or property, [t]he liability of the
common carrier x x x shall not exceed the value of the goods as
appearing in the bill of lading. The attempt by respondent to make
light of this stipulation is unconvincing. As it had the consignees
copies of the Bills of Lading, it could have easily produced those
copies, instead of relying on mere allegations and suppositions.
However, it presented mere photocopies thereof to disprove
petitioners evidence showing the existence of the above
stipulation.

On December 12, 1991, Feliciana Legaspi insured the cargo,

covered by Bill of Lading No. 59, with the UCPB General Insurance
Co., Inc., [respondent] for brevity, for the amount of P100,000.00
against all risks under Open Policy No. 002/91/254 for which she
was issued, by [respondent], Marine Risk Note No. 18409 on said
date. She also insured the cargo covered by Bill of Lading No. 58,
with [respondent], for the amount of P50,000.00, under Open
Policy No. 002/91/254 on the basis of which [respondent] issued
Marine Risk Note No. 18410 on said date.

A stipulation that limits liability is valid as long as it is not against

public policy. In Everett Steamship Corporation v. Court of Appeals,
the Court stated:

When the vessel left port, it had thirty-four (34) passengers and
assorted cargo on board, including the goods of Legaspi. After the
vessel had passed by the Mandaue-Mactan Bridge, fire ensued in
the engine room, and, despite earnest efforts of the officers and
crew of the vessel, the fire engulfed and destroyed the entire
vessel resulting in the loss of the vessel and the cargoes therein.
The Captain filed the required Marine Protest.

15. BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V.

AND
JARDINE
DAVIES
TRANSPORT
SERVICES,INC.,
PETITIONERS, VS. PHILIPPINE FIRST INSURANCE CO., INC.,
RESPONDENTS, G.R. NO. 143133, JUNE 5, 2002

A stipulation in the bill of lading limiting the common carriers

liability for loss or destruction of a cargo to a certain sum, unless
the shipper or owner declares a greater value, is sanctioned by
law, particularly Articles 1749 and 1750 of the Civil Code which
provides:

Proof of the delivery of goods in good order to a common carrier

and of their arrival in bad order at their destination constitutes
prima facie fault or negligence on the part of the carrier. If no
adequate explanation is given as to how the loss, the destruction

or the deterioration of the goods happened, the carrier shall be

held liable therefor.
FACTS: On June 13, 1990, CMC Trading A.G. shipped on board the
M/V 'Anangel Sky' at Hamburg, Germany 242coils of various Prime
Cold Rolled Steel sheets for transportation to Manila consigned to
the Philippine Steel Trading Corporation. On July 28, 1990, M/V
Anangel Sky arrived at the port of Manila and, within the
subsequent days, discharged the subject cargo. Four (4) coils were
found to be in bad order. Finding the four (4) coils in their
damaged state to be unfit for the intended purpose, the consignee
Philippine Steel Trading Corporation declared the same as total
loss. Petitioners refused to submit to the consignee's claim.
Consequently, respondent paid the consignee and was subrogated
to the latter's rights. Subsequently, respondent instituted this
complaint for recovery of the amount paid by them, to the
consignee as insured. Petitioners imputed that the damage and/or
loss was due to pre-shipment damage. In addition thereto, they
argued that their liability, if there be any, should not exceed the
limitations of liability provided for in the bill of lading and other
pertinent laws.
ISSUES/HELD:
1.

Whether or not a notation in the bill of lading at the time

of loading is sufficient to show pre-shipment damage and
to exempt herein defendants from liability.
NO. Mere proof of delivery of the goods in good order to a
common carrier and of their arrival in bad order at their
destination constitutes a prima facie case of fault or
negligence against the carrier.
If no adequate
explanation is given as to how the deterioration, the loss
or the destruction of the goods happened, the transporter
shall be held responsible. Petitioners failed to rebut the
prima facie presumption of negligence in the case at bar.
True, the words "metal envelopes rust stained and slightly
dented" were noted on the Bill of Lading; however, there
is no showing that petitioners exercised due diligence to
forestall or lessen the loss. Having failed to discharge the
burden of proving that they have exercised the
extraordinary diligencerequired by law, petitioners cannot
escape liability for the damage to the four coils.

2.

Whether or not the consignee/plaintiff filed the required

notice of loss within the time required by law.
YES. Pursuant to Section 3, paragraph 6 of the Carriage of
Goods by Sea Act (COGSA), a failure to file anotice of
claim within three dayswill not bar recovery if it is
nonetheless filed within one year. This one-year
prescriptive period also applies to the shipper, the
consignee, the insurer of the goods or any legal holder of
the bill of lading. In the present case, the cargo was
discharged on July 31, 1990, while the Complaint was
filed by respondent on July 25, 1991, within the one-year
prescriptive period.

3.

Whether or not the "PACKAGE LIMITATION" of liability

under Section 4 (5) of COGSA is applicable.
YES. In the case before us, there was no stipulation in the
Bill of Lading limiting the carrier's liability. Neither did the
shipper declare a higher valuation of the goods to be
shipped. This fact notwithstanding, the insertion of the
words "L/C No. 90/02447 cannot be the basis for
petitioners' liability. A notation in the Bill of Lading which
indicated the amount of the Letter of Credit obtained by
the shipper for the importation of steel sheets did not
effect a declaration of the value of the goods as required
by the bill. In the light of the foregoing, petitioners'
liability should be computed based on US$500 per
package and not on the per metric ton price declared in
the Letter of Credit.

16. FABRE VS. CA (259 SCRA 426 G.R. NO. 111127, JULY 26,
1996)
FACTS: Petitioners Engracio Fabre, Jr. and his wife were owners of a
Mazda minibus. They used the bus principally in connection with a
bus service for school children which they operated in Manila. It
was driven by Porfirio Cabil.
On November 2, 1984 private respondent Word for the World
Christian Fellowship Inc. (WWCF) arranged with the petitioners for
the transportation of 33 members of its Young Adults Ministry from
Manila to La Union and back in consideration of which private
respondent paid petitioners the amount of P3,000.00.
The usual route to Caba, La Union was through Carmen,
Pangasinan. However, the bridge at Carmen was under repair, so
that petitioner Cabil, who was unfamiliar with the area (it being his
first trip to La Union), was forced to take a detour through the
town of Ba-ay in Lingayen, Pangasinan. At 11:30 that night,
petitioner Cabil came upon a sharp curve on the highway. The road
was slippery because it was raining, causing the bus, which was

running at the speed of 50 kilometers per hour, to skid to the left

road shoulder. The bus hit the left traffic steel brace and sign
along the road and rammed the fence of one Jesus Escano, then
turned over and landed on its left side, coming to a full stop only
after a series of impacts. The bus came to rest off the road. A
coconut tree which it had hit fell on it and smashed its front
portion. Because of the mishap, several passengers were injured
particularly Amyline Antonio.
Criminal complaint was filed against the driver and the spouses
were also made jointly liable. Spouses Fabre on the other hand
contended that they are not liable since they are not a common
carrier.
ISSUE: Whether the spouses Fabre are common carriers?
HELD: Petition was denied. Spouses Fabre are common carriers.
The Supreme Court held that this case actually involves a
contract of carriage. Petitioners, the Fabres, did not have to be
engaged in the business of public transportation for the provisions
of the Civil Code on common carriers to apply to them. As this
Court has held: 10 Art. 1732, 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 for compensation, offering their services to the public.
The above article makes no distinction between one
whose principal business activity is the carrying of persons or
goods or both, and one who does such carrying only as an
ancillary activity (in local idiom, as "a sideline"). Article 1732 also
carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of
the general population. We think that Article 1732 deliberately
refrained from making such distinctions.
17. MCC INDUSTRIAL SALES CORPORATION, PETITIONER,
VS. SSANGYONG CORPORATION, RESPONDENTS.
-There is no transportation-related issue
18. UCPB GENERAL INSURANCE case G.R. No.168433, Feb
10, 2009
c
Deadline for claim.
San Miguel Corporation (SMC) purchased
three (3) units of waste water treatment plant with accessories
from a company in Taiwan. After its arrival at the port of Cebu and
clearance from the Bureau of Customs, the goods were delivered
to and received by SMC at its plant site on August 2, 1991. It was
then discovered that one electrical motor of DBS Drive Unit Model
DE-30-7 was damaged. Pursuant to an insurance agreement, UCPB
paid SMC the amount of P1,703,381.40 representing the value of
the damaged unit. In turn, SMC executed a Subrogation Form
dated March 31, 1992 in favor of UCPB, which them filed an action
against the respondents for the amount it paid to SMC. The trial
court ruled in favor of UCPB but the Court of Appeals reversed. The
Supreme Court affirmed the decision of the Court of Appeals and
held that under Article 366 of the Code of Commerce, the claim for
damage or average must be made within 24 hours from receipt of
the merchandise if, as in this case, damage cannot be ascertained
merely from the outside packaging of the cargo. The Supreme
Court affirmed its earlier rulings that the 24-hour claim
requirement is a condition precedent to the accrual of a right of
action against a carrier for loss of, or damage to, the goods. The
shipper or consignee must allege and prove the fulfillment of the
condition. Otherwise, no right of action against the carrier can
accrue in favor of the former.
CORPORATION VS. CHEMOIL LIGHTERAGE HITE GOLD
CORPORATION G.R. No. 136888. June 29, 2005
Facts:
Philippine Charter Insurance Corporation is a domestic corporation
engaged in the business of non-life insurance. Respondent
Chemoil Lighterage Corporation is also a domestic corporation
engaged in the transport of goods. On 24 January 1991, Samkyung
Chemical Company, Ltd., based in South Korea, shipped 62.06
metric tons of the liquid chemical DIOCTYL PHTHALATE (DOP) on
board MT TACHIBANA which was valued at US$90,201.57 and
another 436.70 metric tons of DOP valued at US$634,724.89 to
the Philippines. The consignee was Plastic Group Phils., Inc. in
Manila. PGP insured the cargo with Philippine Charter Insurance
Corporation against all risks. The insurance was under Marine
Policies No. MRN-30721[5] dated 06 February 1991. Marine
Endorsement No. 2786[7] dated 11 May 1991 was attached and
formed part of MRN-30721, amending the latters insured value to
P24,667,422.03, and reduced the premium accordingly. The ocean
tanker MT TACHIBANA unloaded the cargo to the tanker barge,
which shall transport the same to Del Pan Bridge in Pasig River

and haul it by land to PGPs storage tanks in Calamba, Laguna.

Upon inspection by PGP, the samples taken from the shipment
showed discoloration demonstrating that it was damaged. PGP
then sent a letter where it formally made an insurance claim for
the loss it sustained.
Petitioner requested the GIT Insurance Adjusters, Inc. (GIT), to
conduct a Quantity and Condition Survey of the shipment which
issued a report stating that DOP samples taken were discolored.
Inspection of cargo tanks showed manhole covers of ballast tanks
ceilings loosely secured and that the rubber gaskets of the
manhole covers of the ballast tanks re-acted to the chemical
causing shrinkage thus, loosening the covers and cargo ingress.
Petitioner paid PGP the full and final payment for the loss and
issued a Subrogation Receipt. Meanwhile, PGP paid the respondent
the as full payment for the latters services.
On 15 July 1991, an action for damages was instituted by the
petitioner-insurer against respondent-carrier before the RTC, Br.16,
City of Manila. Respondent filed an answer which admitted that it
undertook to transport the shipment, but alleged that before the
DOP was loaded into its barge, the representative of PGP,
Adjustment Standard Corporation, inspected it and found the same
clean, dry, and fit for loading, thus accepted the cargo without any
protest or notice. As carrier, no fault and negligence can be
attributed against respondent as it exercised extraordinary
diligence in handling the cargo.
Issues:
1. Whether or not the Notice of Claim was filed within the required
period.
2. Whether or not the damage to the cargo was due to the fault or
negligence of the respondent.
Held:
We have examined the evidence, and We are unable to find any
proof of compliance with the required period, which is fatal to the
accrual of the right of action against the carrier.
Nothing in the trial courts decision stated that the notice of claim
was relayed or filed with the respondent-carrier immediately or
within a period of twenty-four hours from the time the goods were
received. The Court of Appeals made the same finding. Having
examined the entire records of the case, we cannot find a shred of
evidence that will precisely and ultimately point to the conclusion
that the notice of claim was timely relayed or filed.
The requirement that a notice of claim should be filed within the
period stated by Article 366 of the Code of Commerce is not an
empty or worthless proviso.
The object sought to be attained by the requirement of the
submission of claims in pursuance of this article is to compel the
consignee of goods entrusted to a carrier to make prompt demand
for settlement of alleged damages suffered by the goods while in
transport, so that the carrier will be enabled to verify all such
claims at the time of delivery or within twenty-four hours
thereafter, and if necessary fix responsibility and secure evidence
as to the nature and extent of the alleged damages to the goods
while the matter is still fresh in the minds of the parties.
The filing of a claim with the carrier within the time limitation
therefore actually constitutes a condition precedent to the accrual
of a right of action against a carrier for loss of, or damage to, the
goods. The shipper or consignee must allege and prove the
fulfilment of the condition. If it fails to do so, no right of action
against the carrier can accrue in favour of the former. The
aforementioned requirement is a reasonable condition precedent;
it does not constitute a limitation of action.
Considering that we have resolved the first issue in the negative, it
is therefore unnecessary to make a resolution on the second issue.
20. MAYER STEEL PIPE CORPORATION case, [G.R. No.
124050. June 19, 1997]
Facts; Shipper, prior to shipping, insured the merchandise against
all risks with South Sea Surety. During the voyage, the
merchandise were damaged. Insurer opposed claim on the ground,
among others, that it was filed more than one (1) year from
discovery of the damage to the merchandise and therefore barred
by the provisions of COGSA.
HELD: Section 3(6) of the Carriage of Goods by Sea Act states that
the carrier and the ship shall be discharged from all liability for

loss or damage to the goods if no suit is filed within one year after
delivery of the goods or the date when they should have been
delivered. Under this provision, only the carriers liability is
extinguished if no suit is brought within one year. But the liability
of the insurer is not extinguished because the insurers liability is
based not on the contract of carriage but on the contract of
insurance. A close reading of the law reveals that the Carriage of
Goods by Sea Act governs the relationship between the carrier on
the one hand and the shipper, the consignee and/or the insurer on
the other hand. It defines the obligations of the carrier under the
contract of carriage. It does not, however, affect the relationship
between the shipper and the insurer.
21. SPOUSES ONG V CA
FACTS: Spouses Ong sustained injuries when Inland Bus, which
was owned by Inland Trailways under a Lease Agreement with
Philtranco, slowed down to avoid a cargo truck but was hit from
behind by another bus, owned and operated by Philtranco. The
court ruled, base on the police report, that the proximate cause of
the accident was the bumping of the bus from behind hence
ruled against Philtranco and awarded damages. However, this
police report was contested as it was formally offered as evidence
but merely as an annex to Inlands answer.
ISSUE: Whether damages were properly awarded.
HELD: The fundamental principle of the law on damages is that
one injured by a breach of contract (in this case, the contract of
transportation) or by a wrongful or negligent act or omission shall
have a fair and just compensation, commensurate with the loss
sustained as a consequence of the defendant's acts. Hence, actual
pecuniary compensation is the general rule, except where the
circumstances warrant the allowance of other kinds of damages.
Actual damages Actual damages are such compensation or
damages for an injury that will put the injured party in the position
in which he had been before he was injured. They pertain to such
injuries or losses that are actually sustained and susceptible of
measurement. Except as provided by law or by stipulation, a party
is entitled to adequate compensation only for such pecuniary loss
as he has duly proven. To be recoverable, actual damages must be
pleaded and proven in Court. No such proof was offered to the
P10,000 claim of damages. At the most, documentary evidence
showed P3, 977 only as damages. Moral Damages and Diminution
of use of arm A person is entitled to the physical integrity of his or
her body, and if that integrity is violated, damages are due and
assessable. However, physical injury, like loss or diminution of use
of an arm or a limb, is not a pecuniary loss. Indeed, it is nor
susceptible of exact monetary estimation. Thus, the usual practice
is to award moral damages for physical injuries sustained. In the
case at bar, it was sufficiently shown during the trial that Francia's
right arm could not function in a normal manner and that, as a
result, she suffered mental anguish and anxiety. Thus, an increase
in the amount of moral damages awarded, from P30,000 to
P50,000, appears to be reasonable and justified. Renato also
suffered mental anxiety and anguish from the accident. Thus, he
should be separately awarded P30,000 as moral damages.
Unrealized Income Protesting the deletion of the award for
Francia's unrealized income, petitioners contend that Francia's
injuries and her oral testimony adequately support their claim. The
Court disagrees. Although actual damages include indemnification
for profits which the injured party failed to obtain (lucro cesante or
lucrum cesans), the rule requires that said person produce the
"best evidence of which his case is susceptible. The petitioners
failed to do so, as she could have returned to work despite the
plaster in her arm. Attorney fees Counsel's performance, however,
does not justify the award of 25 percent attorney's fees. It is wellsettled that such award is addressed to sound judicial discretion
and subject to judicial control. Only a 10% attorneys fee is
awarded. Art. 2197.
22. AUGUSTO LOPEZ v. JUAN DURUELO, G.R. No. 29166.
October 22, 1928.

Facts: On February 10, 1927, plaintiff Augusto Lopez was desirous

of embarking upon the interisland steamer San Jacinto in order to
go to Cebu, the plaintiff embarked at the landing in the motorboat
Jison which was engaged in conveying passengers and luggage
back and forth from the landing to the boats at anchor.
As the motorboat approached San Jacinto in a perfectly quiet sea,
it came too near to the stern of the ship, and as the propeller of
the ship had not yet ceased to turn, the blades of the propeller
strucked the motorboat and sank it at once. As it sank, the plaintiff
was thrown into the water against the propeller, and the revolving
blades inflicted various injuries upon him. The plaintiff was
hospitalized. He filed a complaint seeking to recover damages
from the defendant. The defendant however alleged that the
complaint does not have a right of action, a demurrer was
submitted directed to the fact that the complaint does not allege
that the protest had been presented by the plaintiff, within twentyfour hours after the occurrence to the competent authority at the

port where the accident occurred as provided for Article 835 of the
Code of Commerce.
Issue: Whether the motorboat Jison is a vessel provided for by
Article 835 of the Code of Commerce?
Held: The word vessel as used in the third section of tile IV, Book
III of the Code of Commerce, dealing with collisions, does not
include all ships, craft or floating structures of any kind without
limitation. The said section does not apply to minor craft engaged
in a river and bay traffic.Therefore, a passenger on boat like the
Jison, is not required to make protest as a condition precedent to
his right of action for the injury suffered by him in the collision
described in the complaint.Article 835 of the Code of Commerce
does not apply.
23. LUZON STEVEDORING CORPORATION VS. COURT OF
APPEALS (156 SCRA 169)
Facts: A maritime collision occurred between the tanker CAVITE
owned by LSCO and MV Fernando Escano (a passenger ship)
owned by Escano, as a result the passenger ship sunk. An action in
admiralty was filed by Escano against Luzon. The trial court held
that LSCO Cavite was solely to blame for the collision and held
that Luzons claim that its liability should be limited under Article
837 of the Code of Commerce has not been established. The Court
of Appeals affirmed the trial court. The SC also affirmed the CA.
Upon two motions for reconsideration, the Supreme Court gave
course to the petition.
Issue: Whether or not in order to claim limited liability under
Article 837 of the Code of Commerce, it is necessary that the
owner abandon the vessel
Held: Yes, abandonment is necessary to claim the limited liability
wherein it shall be limited to the value of the vessel with all the
appurtenances and freightage earned in the voyage. However, if
the injury was due to the ship owners fault, the ship owner may
not avail of his right to avail of limited liability by abandoning the
vessel.
The real nature of the liability of the ship owner or agent is
embodied in the Code of Commerce. Articles 587, 590 and 837 are
intended to limit the liability of the ship owner, provided that the
owner or agent abandons the vessel. Although Article 837 does
not specifically provide that in case of collision there should be
abandonment, to enjoy such limited liability, said article is a mere
amplification of the provisions of Articles 587 and 590 which
makes it a mere superfluity.
The exception to this rule in Article 837 is when the vessel is
totally lost in which case there is no vessel to abandon, thus
abandonment is not required. Because of such loss, the liability of
the owner or agent is extinguished. However, they are still
personally liable for claims under the Workmens Compensation
Act and for repairs on the vessel prior to its loss.
In case of illegal or tortious acts of the captain, the liability of the
owner and agent is subsidiary. In such cases, the owner or agent
may avail of Article 837 by abandoning the vessel. But if the injury
is caused by the owners fault as where he engages the services of
an inexperienced captain or engineer, he cannot avail of the
provisions of Article 837 by abandoning the vessel. He is
personally liable for such damages.
In this case, the Court held that the petitioner is a t fault and since
he did not abandon the vessel, he cannot invoke the benefit of
Article 837 to limit his liability to the value of the vessel, all
appurtenances and freightage earned during the voyage.

24. YANGCO VS. LASERNA (73 PHIL 330)

Facts: On the afternoon of May 26, 1927, the steamer SS Negros
left the port of Romblon on its return trip to Manila. Typhoon signal
no. 2 was then up and in fact, the passengers duly advised the
captain before sailing. The boat was overloaded. After 2 hours of
sailing, the boat encountered strong winds and rough seas
between the islands of Banton and Simara. While in the act of
maneuvering, the vessel was caught sidewise by a big wave which
caused it to capsize and sink. Many of the passengers died on the
mishap. Civil actions were instituted in the CFI of Capiz, the
petitioner sought to abandon the vessel to the plaintiffs in three
cases.
Issue: Whether the shipowner or agent is liable for damages for
the consequent death of its passengers notwithstanding the total
loss of the vessel?
Held: The petitioner is absolved from all complaints.

Under Article 587 the ship agent shall also be civilly

liable for indemnities in favor of third persons which arise from the
conduct of the captain in the vigilance over the goods which the
vessels carried; BUT he may exempt himself therefrom by
abandoning the vessel with all her equipment and the freight he
may have earned during the voyage.
Whether the abandonment of the vessel sought by the
petitioner in the case was in accordance with the law or not, is
immaterial. The vessel having totally perished, any act of
abandonment would be idle ceremony.
NO VESSEL, NO LIABILITY.
25. VASQUEZ VS. CA (138 SCRA 553)
FACTS: The litigation involves a claim for damages for the loss at
sea of petitioners respective children after the shipwreck of MV
Pioneer Cebu due to typhoon Klaring in May of 1966. When the
inter-island vessel MV Pioneer Cebu left the Port of Manila in the
early morning of May 15, 1966 bound for Cebu, it had on board the
spouses Alfonso Vasquez and Filipinas Bagaipo and a four-year old
boy, Mario Vasquez, among her passengers. The MV Pioneer Cebu
encountered typhoon Klaring and struck a reef on the southern
part of Malapascua Island, located somewhere north of island of
Cebu and subsequently sunk. The aforementioned passengers
were unheard from since then.
Due to the loss of their children, petitioners sued for
damages before the Court Instance of Manila. Respondent
defended on the plea of force majeure, and extinction of its
liability by the actual loss of the vessel. After proper proceedings,
the trial court awarded damages. On appeal, respondent Court
reversed judgment and absolved private respondent from any
liability. Hence, this Petition for Review on Certiorari.
Issue: Whether the shipowners liability is extinguished despite of
the loss of the ship?
Held: With respect for the private respondents submission that
the total loss of the vessel extinguished its liability pursuant to
Article 587 of the Code of Commerce as construed in Yangco vs.
Laserna, 73 Phil. 330 (1941), suffice it to state that even in the
cited case, it was held that the liability of the shipowner is limited
to the value of the vessel or to the insurance thereon, Despite the
total loss of the vessel therefore, its insurance answers for the
damages that the shipowners agent may be held liable for by
reason of the death of its passengers. Judgment of the CFI
reinstated.
26. LITONJUA SHIPPING VS. NATIONAL SEAMEN BOARD (176
SCRA 189)
Facts: Petitioner Litonjua is the duly appointed local crewing
Managing Office of the Fairwind Shipping Corporation ('Fairwind).
The M/V Dufton Bay is an ocean-going vessel of foreign registry
owned by the R.D. Mullion Ship Broking Agency Ltd. ("Mullion"). On
11 September 1976, while the Dufton Bay was in the port of Cebu
and while under charter by Fairwind, the vessel's master
contracted the services of, among others, private respondent
Gregorio Candongo to serve as Third Engineer for a period of
twelve (12) months with a monthly wage of US$500.00. This
agreement was executed before the Cebu Area Manning Unit of
the NSB. Thereafter, private respondent boarded the vessel. On 28
December 1976, before expiration of his contract, private
respondent was required to disembark at Port Kelang, Malaysia,
and was returned to the Philippines on 5 January 1977. The cause
of the discharge was described in his Seaman's Book as 'by
owner's arrange".
Shortly after returning to the Philippines, private respondent filed a
complaint before public respondent NSB, which complaint was
docketed as NSB-1331-77, for violation of contract, against Mullion
as the shipping company and petitioner Litonjua as agent of the
shipowner and of the charterer of the vessel.
Issues: Whether or not the admiralty law as embodied in the
Philippine Code of Commerce fastens liability for payment of the
crew's wages upon the ship owner, and not the charterer.
Held:
It is well settled that in a demise or bare boat charter, the
charterer is treated as owner pro hac vice of the vessel, the
charterer assuming in large measure the customary rights and
liabilities of the shipowner in relation to third persons who have
dealt with him or with the vessel. In such case, the Master of the
vessel is the agent of the charterer and not of the shipowner. The
charterer or owner pro hac vice, and not the general owner of the
vessel, is held liable for the expenses of the voyage including the
wages.
27. VALENZUELA HARDWOOD VS. CA (30 JUNE 1997,274
SCRA 643)
Facts: On January 16, 1984, plaintiff entered into an agreement
with Seven Brothers Shipping corporation whereby the latter
undertook to load on board its vessel M/V Seven Ambassadors 940
Lauan round logs for shipment from Isabela to Manila. On January
20, plaintiff insured the cargo with South Sea Surety and Insurance

for two million pesos. However on January 25, 1984, the M/V
Seven Ambassador sank, resulting in the loss of petitioners logs.
Pursuant to the loss, petitioner filed a claim with South Sea Surety
and Insurance for the insured amount of the logs, but the latter
refused, denying liability under the policy. Petitioner likewise filed
a formal claim against Seven Brothers Shipping Corporation for the
value of the lost logs, but the latter likewise denied their claim.
The trial court found for the plaintiff, holding South Sea
and Seven Brothers liable for the loss. On appeal, the Court of
Appeals affirmed in part the decision of the trial court. The Court
of Appeals affirmed the liability of South Sea Surety and Assurance
but exonerated Seven Brothers, stating that the latter is a private
carrier therefore the provisions on common carriers is not
applicable to their contract. Hence the present appeal.
Issue: Whether or not respondent Court of Appeals committed a
reversible error in upholding the validity of the stipulation in the
charter party executed between petitioner and Seven Brothers
exempting the latter from liability of loss arising from the
negligence of its captain.
Held: The decision of the Court of appeals is correct. The contract
between petitioner and Seven Brothers is one of Private Carriage
hence the provisions on common carriage do not apply. In a
contract of private carriage parties are free to stipulate that the
responsibility for the cargo rests solely in the charterer, such
stipulations are valid because they are freely entered into by the
parties and the same is not contrary to law, morals, good custom,
public order or public policy.
28. MERCHANTS INSURANCE COMPANY VS. ALEJANDRO
(145 SCRA 42)
Facts: Plaintiff Choa Tiek Seng filed a complaint against the
petitioner before the then Court of First Instance of Manila for
recovery of a sum of money under the marine insurance policy on
cargo. Mr. Choa alleged that the goods he insured with the
petitioner sustained loss and damage in the amount of P35,
987.26. The said goods were delivered to the arrastre operator E.
Razon, Inc., on December 17, 1976 and on the same date were
received by the consignee-plaintiff.
Petitioner disclaims liability and imputes against plaintiff
the commission of fraud. A similar complaint was filed by Joseph
Benzon Chua against the petitioner for recovery under the marine
insurance policy for cargo alleging that the goods insured with the
petitioner sustained loss and damage in the sum of P55,996.49.
The goods were delivered to the plaintiff-consignee on or about
January 25-28, 1977.
Petitioner filed third-party complaints against private
respondents for indemnity, subrogation, or reimbursement in the
event that it is held liable to the plaintiff.
The private respondents, carriers Frota Oceanica
Brasiliera and Australia-West Pacific Line alleged in their separate
answers that the petitioner is already barred from filing a claim
because under the Carriage of Goods by Sea Act, the suit against
the carrier must be filed within one year after delivery of the
goods or the date when the goods should have been delivered
Petitioner contended that provision relied upon by the
respondents applies only to the shipper and not to the insurer of
the goods.
Respondent judge dismissed both third-party complaints.

The fact that the driver was able to use a bus with a faulty
speedometer shows that the employer was remiss in the
supervision of its employees and in the proper care of its vehicles.
Under Arts. 2180 and 2176 of Civil Code, owners and managers
are responsible for damages caused by their employees.
30. PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS.
ARNEL MATARO Y ELIZAGA AND NICK PERUCHO Y SINGSON,
ACCUSED-APPELLANTS.
-No transportation-related issue

31. FRANCISCO ORTIGAS, JR. VS. LUFTHANSA GERMAN

AIRLINES (G.R. NO. L-28773 JUNE 30, 1975)
Facts: Direct appeals of both parties plaintiff, Francisco Ortigas,
and defendant Luthansa German Airlines, from the decision of the
Court of First Instance of Manila Branch Y, condemning the
defendant to pay plaintiff the amount of P100,000 as moral
damages, P30,000 as exemplary or corrective damages, with
interest of both sums at the legal rate from the commencement of
this suit until fully paid, P20,000 as attorneys fees and the costs
for the former failure to comply with its obligation to give first
accommodation to (the latter) a (Filipino) passenger holding a first
class ticket, aggravated by the giving of the space instead to a
Belgian and the improper conduct of its agents in dealing with him
during the occasion of such discriminatory violence of its contract
of carriage.
Issue: Whether Lufthansa is liable for damages?
Held: The court said that when it comes to contracts of common
carriage, inattention and lack of care on the part of the carrier
resulting in the failure of the passenger to be accommodated in
class contracted for amounts to bad faith and fraud which entitles
the passenger to the award of moral damages in accordance with
the 2220 of the Civil Code. But in the instant case, the breach
appears to the graver nature, since the preference given to the
Belgian passenger over plaintiff was done willfully and in wanton
disregard of plaintiffs rights and his dignity as a human being and
as a Filipino, who may not be discriminated against with impunity,
as found by the court below what worsened the situation of
Ortigas was that Lufthansa succeeded in keeping him as its
passenger by assuring him that he would be given first class
accommodation at Cairo, the next station, the proper
arrangements therefore having been made already, when in truth
such was not the case. Although molested and embarrassed to the
point that he had to take nitroglycerine pills to ward off a possible
heart attack, Ortigas hardly had any choice, since his luggage was
already in the plane. To his disappointment, when the plane
reached Cairo, he was told by Lufthansa office there that no word
at all had been received from Rome and they had no space for him
in first class. Worse, similar false representations were made to
him at Dharham and Calcutta. It was only at Bangkok where for
the first time. Ortigas was at last informed that he could have a
first class seat in the leg of the flight, from Bangkok to Hong Kong.
This Ortigas rejected, if only to make patent his displeasure and
indignation at being so inconsiderately treated in the earlier part
of his journey. In the light of all foregoing, there can be no doubt
as to the right of Ortigas to damages, both moral and exemplary.
Precedents we have consistently adhere to so dictate.

Issue: Whether or not the one-year period within which to file a

suit against the carrier and the ship, in case of damage or loss as
provided for in the Carriage of Goods by Sea Act applies to the
insurer of the goods.

32. AIR FRANCE VS CARRASCOSO (18 SCRA 155)

Held: The coverage of the Act includes the insurer of the goods.
Otherwise, what the Act intends to prohibit after the lapse of the
one-year prescriptive period can be done indirectly by the shipper
or owner of the goods by simply filing a claim against the insurer
even after the lapse of one year. This would be the result if we
follow the petitioner's argument that the insurer can, at any time,
proceed against the carrier and the ship since it is not bound by
the time-bar provision. In this situation, the one-year limitation will
be practically useless. This could not have been the intention of
the law which has also for its purpose the protection of the carrier
and the ship from fraudulent claims by having "matters affecting
transportation of goods by sea be decided in as short a time as
possible" and by avoiding incidents which would "unnecessarily
extend the period and permit delays in the settlement of questions
affecting the transportation."

On March 28, 1958, the defendant, Air France, through its

authorized agent, Philippine Air Lines, Inc., issued to plaintiff a
"first class" round trip airplane ticket from Manila to Rome. From
Manila to Bangkok, plaintiff traveled in "first class", but at
Bangkok, the Manager of the defendant airline forced plaintiff to
vacate the "first class" seat that he was occupying because, in the
words of the witness Ernesto G. Cuento, there was a "white man",
who, the Manager alleged, had a "better right" to the seat. When
asked to vacate his "first class" seat, the plaintiff, as was to be
expected, refused, and told defendant's Manager that his seat
would be taken over his dead body; a commotion ensued, and,
according to said Ernesto G. Cuento, "many of the Filipino
passengers got nervous in the tourist class; when they found out
that Mr. Carrascoso was having a hot discussion with the white
man [manager], they came all across to Mr. Carrascoso and
pacified Mr. Carrascoso to give his seat to the white man" and
plaintiff reluctantly gave his "first class" seat in the plane after
being threatened that he will be thrown out of the plane if he does
not oblige. The captain of the plane, when asked to intervene,
refused to do so.

In the case at bar, the petitioner's action has prescribed

under the provisions of the Carriage of Goods by Sea Act. Hence,
whether it files a third-party complaint or chooses to maintain an
independent action against herein respondents is of no moment.
29. PESTANO V. SUMAYANG

Facts: Plaintiff, a civil engineer, was a member of a group of 48

Filipino pilgrims that left Manila for Lourdes on March 30, 1958.

Issue: Whether or not there was bad faith on the part of Air
France, petitioner, entitling Rafael Carrascoso, respondent for
moral and exemplary damages as against the petitioner?

Held: The court held in favor of the respondent, Carrascoso.

The responsibility of an employer for the tortious act of its
employees need not be essayed. It is well settled in law. For the
willful malevolent act of petitioner's manager, petitioner, his
employer, must answer.
A contract to transport passengers is quite different in kind
and degree from any other contractual relation. And this, because
of the relation which an air-carrier sustains with the public. Its
business is mainly with the traveling public. It invites people to
avail of the comforts and advantages it offers. The contract of air
carriage, therefore, generates a relation attended with a public
duty. Neglect or malfeasance of the carrier's employees, naturally,
could give ground for an action for damages.
Passengers do not contract merely for transportation.
They have a right to be treated by the carrier's employees with
kindness, respect, courtesy and due consideration. They are
entitled to be protected against personal misconduct, injurious
language, indignities and abuses from such employees. So it is
that any rule or discourteous conduct on the part of employees
towards a passenger gives the latter an action for damages
against the carrier.
33. DR. HERMAN ARMOVIT VS CA, G.R. NO. 88561, APRIL
20, 1990
This is a case which involves a Filipino physician and his family
residing in the United States who came home to the Philippines on
a Christmas visit. They were bumped off at the Manila
International Airport on their return flight to the U.S. because of an
erroneous entry in their plane tickets relating to their time of
departure.
In October 1981, the petitioners decided to spend their Christmas
holidays with relatives and friends in the Philippines, so they
purchased from private respondent, (Northwest Airlines, Inc.) three
(3) round trip airline tickets from the U.S. to Manila and back, plus
three (3) tickets for the rest of the children, though not involved in
the suit. Each ticket of the petitioners which was in the
handwriting of private respondent's tickets sales agent contains
the following entry on the Manila to Tokyo portion of the return
flight:
from Manila to Tokyo, NW flight 002, date 17 January,
time 10:30 A.M. Status, OK.
On their return trip from Manila to the U.S. scheduled on January
17, 1982, petitioner arrived at the check-in counter of private
respondent at the Manila International Airport at 9:15 in the
morning, which is a good one (1) hour and fifteen (15) minutes
ahead of the 10:30 A.M. scheduled flight time recited in their
tickets. Petitioners were rudely informed that they cannot be
accommodated inasmuch as Flight 002 scheduled at 9:15 a.m.
was already taking off and the 10:30 A.M. flight time entered in
their plane tickets was erroneous.
Previous to the said date of departure petitioners re-confirmed
their reservations through their representative Ernesto Madriaga
who personally presented the three (3) tickets at the private
respondent's Roxas Boulevard office. 2 The departure time in the
three (3) tickets of petitioners was not changed when reconfirmed. The names of petitioners appeared in the passenger
manifest and confirmed as Passenger Nos. 306, 307, and 308,
Flight 002. 3
Herein petitioner Dr. Armovit protested in extreme agitation that
because of the bump-off he will not be able to keep his
appointments with his patients in the U.S. Petitioners suffered
anguish, wounded feelings, and serious anxiety day and night of
January 17th until the morning of January 18th when they were
finally informed that seats will be available for them on the flight
that day.
Because of the refusal of the private respondent to heed the
repeated demands of the petitioners for compensatory damages
arising from the aforesaid breach of their air-transport contracts, 4
petitioners were compelled to file an action for damages.
The appellate court observed that private respondent was guilty of
gross negligence not only in the issuance of the tickets by the
erroneous entry of the date of departure and without changing or
correcting the error when the said three (3) tickets were presented
for re-confirmation. Nevertheless it deleted the award of moral
damages on the ground that petitioners did not take the witness
stand to testify on "their social humiliation, wounded feelings and

anxiety, and that the breach of contract was not malicious or

fraudulent." 8
We disagree.
The gross negligence committed by private respondent in the
issuance of the tickets with entries as to the time of the flight, the
failure to correct such erroneous entries and the manner by which
petitioners were rudely informed that they were bumped off are
clear indicia of such malice and bad faith and establish that
private respondent committed a breach of contract which entitles
petitioners to moral damages.
The appellate court observed that the petitioners failed to take the
witness stand and testify on the matter. It overlooked however,
that the failure of the petitioner to appear in court to testify was
explained by them. The assassination of Senator Benigno Aquino,
Jr. on August 21, 1983 following the year they were bumped off
caused turmoil in the country. This turmoil spilled over to the year
1984 when they were scheduled to testify. However, the violent
demonstrations in the country were sensationalized in the U.S.
media so petitioners were advised to refrain from returning to the
Philippines at the time.
Nevertheless, Atty. Raymund Armovit, brother of petitioner Dr.
Armovit, took the witness stand as he was with the petitioners
from the time they checked in up to the time of their ultimate
departure. He was a witness when the check-in officer rudely
informed the petitioners that their flight had already taken off,
while petitioner Dr. Armovit remonstrated that their tickets
reflected their flight time to be 10:30 A.M.; that in anger and
frustration, Dr. Armovit told the said check-in-officer that he had to
be accommodated that morning so that he could attend to all his
appointments in the U.S.; that petitioner Jacqueline Armovit also
complained about not being able to report for work at the
expiration of her leave of absence; that while petitioner had to
accept private respondent's offer for hotel accommodations at the
Philippine Village Hotel so that they could follow up and wait for
their flight out of Manila the following day, petitioners did not use
their meal coupons supplied because of the limitations thereon so
they had to spend for lunch, dinner, and breakfast in the sum of
P1,300.00 while waiting to be flown out of Manila; that Dr. Armovit
had to forego the professional fees for the medical appointments
he missed due to his inability to take the January 17 flight; that the
petitioners were finally able to fly out of Manila on January 18,
1982, but were assured of this flight only on the very morning of
that day, so that they experienced anxiety until they were assured
seats for that flight.
No doubt Atty. Raymund Armovit's testimony adequately and
sufficiently established the serious anxiety, wounded feelings and
social humiliation that petitioners suffered upon having been
bumped off. However, considering the circumstances of this case
whereby the private respondent attended to the plight of the
petitioners, taking care of their accommodations while waiting and
boarding them in the flight back to the U.S. the following day, the
Court finds that the petitioners are entitled to moral damages in
the amount of P100,000.00 each.
By the same token to provide an example for the public good, an
award of exemplary damages is also proper. The award of the
appellate court is adequate.
Nevertheless, the deletion of the nominal damages by the
appellate court is well-taken since there is an award of actual
damages. Nominal damages cannot co-exist with actual or
compensatory damages.

34. CENTENNIAL TRANSMARINE, INC. vs. RUBEN G. DELA

CRUZ, G.R. No. 180719, August 22, 2008
This petition for review on certiorari assails the August 31, 2007
Decision1[1] of the Court of Appeals in CA-G.R. SP No. 91054
reversing the Decision of the National Labor Relations Commission
and finding that respondent Ruben G. Dela Cruz was illegally
dismissed from service, as well as the November 16, 2007
Resolution2[2] denying the motion for reconsideration.

1
2
9

On May 15, 2000, respondent boarded MT Aquidneck and

performed his functions as Chief Officer. However, on September
14, 2000, respondent was relieved of his duties and repatriated to
the Philippines. Failing to get a satisfactory explanation from
petitioners for his relief, respondent filed a complaint for illegal
dismissal with prayer for payment of his salaries for the unexpired
portion of contract, moral and exemplary damages and attorneys
fees on October 7, 2000.
Respondent alleged that while the vessel was docked in
Lake Charles in the United States, another Chief Officer boarded
the vessel. He inquired from the master of the vessel, Captain
Kowalewski, why he had a reliever, however the latter disclaimed
any knowledge. At the same time, he showed respondent an
electronic mail (e-mail) from petitioner B+H Equimar Singapore,
Pte. Ltd. stating that there was an incoming Chief Officer who was
to take over the operations upon boarding.
On April 23, 2001,3[6] Labor Arbiter Francisco A. Robles
rendered a Decision dismissing respondents complaint. He found
that respondent was validly dismissed because he committed acts
in violation of his duties as Chief Officer, amounting to breach of
trust and confidence. He noted that on September 6, 2000, Capt.
Kowalewski wrote in the official log book of the vessel that
respondent failed to follow entry procedures in loading oil tanks
while the vessel was navigating to Aruba; that the Safety Officer of
the vessel also submitted a report on the violations committed by
respondent regarding safety rules on entry procedures; that
respondent admitted his inadequacy or lack of knowledge in
tanker operations; and that respondent was properly apprised of
his violations and was given ample opportunity to be heard.
ISSUE: WON ENTRIES IN THE OFFICIAL LOGBOOK OF A
VESSEL SHOULD NOT BE GIVEN WEIGHT FOR BEING SELFSERVING
1) WON LACK OF SKILL OR INCOMPETENCE IN
HANDLING AN OIL TANKER VESSEL MAY BE
CONSIDERED AS AN ANALOGOUS CAUSE FOR A
VALID TERMINATION OF EMPLOYMENT OF A
CHIEF OFFICER
The petition lacks merit.
Article 627 of the Code of Commerce defines the Chief
Mate, also called Chief Officer or Sailing Mate, as the second chief
of the vessel, and unless the agent orders otherwise, shall take the
place of the captain in cases of absence, sickness, or death, and
shall then assume all his powers, duties, and responsibilities. A
Chief Officer, therefore, is second in command, next only to the
captain of the vessel.
In the instant case, respondent has consistently assailed
the genuineness of the purported entry and the authenticity of
such copy. He alleged that before his repatriation, there was no
entry in the ships official logbook regarding any incident that
might have caused his relief;4[20] that Captain Kowalewskis
signature in such purported entry was forged. 5[21] In support of
his
allegations,
respondent
submitted
three
official
documents6[22] bearing the signature of Capt. Sczepan
Kowalewski which is different from the one appearing in Annex E.
Thus, it was incumbent upon petitioners to prove the authenticity
of Annex E, which they failed to do. Likewise, the purported report
of Capt. Kowalewski dated September 1, 2000 (Annex D), 7[23] and
the statements of Safety Officer Khaldun Nacem Faridi and Chief
Officer Josip Milin (Annexes G8[24] and H9[25]) also cannot be
given weight for lack of authentication.
Although technical rules of evidence do not strictly apply
to labor proceedings, however, in the instant case, authentication
of the above-mentioned documents is necessary because their

3
4
5
6
7
8
9

genuineness is being assailed, and since petitioners offered no

corroborating evidence. These documents and their contents have
to be duly identified and authenticated lest an injustice would
result from a blind adoption of such contents. 10[26] Thus, the
unauthenticated documents relied upon by petitioners are mere
self-serving statements of their own officers and were correctly
disregarded by the Court of Appeals.
Except for the self-serving allegation that respondent was
required to explain why he should not be relieved for being
incompetent, petitioners offered no proof to show that they
furnished respondent a written notice of the charges against him,
or that there was a formal investigation of the charges, or that
respondent was furnished a written notice of the penalty imposed
upon him. Respondent was verbally ordered to disembark the
vessel and was repatriated to the Philippines without being told of
the reasons for his relief.
35. NEGROS NAVIGATION CO., INC., VS. THE COURT OF
APPEALS, RAMON MIRANDA, SPS. RICARDO AND VIRGINIA
DE LA VICTORIA
Facts:
In April of 1980, private respondent Ramon Miranda purchased
from the Negros Navigation Co., Inc. four special cabin tickets for
his wife, daughter, son and niece who were going to Bacolod City
to attend a family reunion. The tickets were for Voyage No. 457-A
of the M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980.
The ship sailed from the port of Manila on schedule.
At about 10:30 in the evening of April 22, 1980, the Don Juan
collided off the Tablas Strait in Mindoro, with the M/T Tacloban City,
an oil tanker owned by the Philippine National Oil Company
(PNOC) and the PNOC Shipping and Transport Corporation
(PNOC/STC). As a result, the M/V Don Juan sank. Several of her
passengers perished in the sea tragedy. The bodies of some of the
victims were found and brought to shore, but the four members of
private respondents families were never found.
Private respondents filed a complaint on July 16, 1980 in the
Regional Trial Court of Manila, Branch 34, against the Negros
Navigation, the Philippine National Oil Company (PNOC), and the
PNOC Shipping and Transport Corporation (PNOC/STC), seeking
damages for the death of Ardita de la Victoria Miranda, 48, Rosario
V. Miranda, 19, Ramon V. Miranda, Jr., 16, and Elfreda de la
Victoria, 26. In its answer, petitioner admitted that private
respondents purchased ticket numbers 74411, 74412, 74413 and
74414; that the ticket numbers were listed in the passenger
manifest; and that the Don Juan left Pier 2, North Harbor, Manila
on April 22, 1980 and sank that night after being rammed by the
oil tanker M/T Tacloban City, and that, as a result of the collision,
some of the passengers of the M/V Don Juan died. Petitioner,
however, denied that the four relatives of private respondents
actually boarded the vessel as shown by the fact that their bodies
were never recovered. Petitioner further averred that the Don Juan
was seaworthy and manned by a full and competent crew, and
that the collision was entirely due to the fault of the crew of the
M/T Tacloban City.
On January 20, 1986, the PNOC and petitioner Negros Navigation
Co., Inc. entered into a compromise agreement whereby petitioner
assumed full responsibility for the payment and satisfaction of all
claims arising out of or in connection with the collision and
releasing the PNOC and the PNOC/STC from any liability to it. The
agreement was subsequently held by the trial court to be binding
upon petitioner, PNOC and PNOC/STC. Private respondents did not
join in the agreement.
ISSUES:
1) Whether the members of private respondents families were
actually passengers of the Don Juan;
2) Whether the ruling in Mecenas v. Court of Appeals, finding the
crew members of petitioner to be grossly negligent in the
performance of their duties, is binding in this case;
3) Whether the total loss of the M/V Don Juan extinguished
petitioners liability; and
4)Whether the damages awarded by the appellate court are
excessive, unreasonable and unwarranted.
HELD:
First. The trial court held that the fact that the victims were
passengers of the M/V Don Juan was sufficiently proven by private
respondent Ramon Miranda, who testified that he purchased
tickets numbered 74411, 74412, 74413, and 74414 at P131.30
each from the Makati office of petitioner for Voyage No. 47-A of the
M/V Don Juan, which was leaving Manila on April 22, 1980. This
was corroborated by the passenger manifest (Exh. E) On which the
numbers of the tickets and the names of Ardita Miranda and her
children and Elfreda de la Victoria appear.
Second. In finding petitioner guilty of negligence and in failing to
exercise the extraordinary diligence required of it in the carriage of
passengers, both the trial court and the appellate court relied on
the findings of this Court in Mecenas v. Intermediate Appellate
Court, which case was brought for the death of other passengers.

10
10

In that case it was found that although the proximate cause of the
mishap was the negligence of the crew of the M/T Tacloban City,
the crew of the Don Juan was equally negligent as it found that the
latters master, Capt. Rogelio Santisteban, was playing mahjong at
the time of collision, and the officer on watch, Senior Third Mate
Rogelio De Vera, admitted that he failed to call the attention of
Santisteban to the imminent danger facing them. This Court found
that Capt. Santisteban and the crew of the M/V Don Juan failed to
take steps to prevent the collision or at least delay the sinking of
the ship and supervise the abandoning of the ship.
Third. The next issue is whether petitioner is liable to pay
damages notwithstanding the total loss of its ship. The issue is not
one of first impression. The rule is well-entrenched in our
jurisprudence that a ship-owner may be held liable for injuries to
passengers notwithstanding the exclusively real and hypothetic
nature of maritime law if fault can be attributed to the ship-owner.
Fourth. Petitioner contends that, assuming that the Mecenas case
applies, private respondents should be allowed to claim only
P43,857.14 each as moral damages because in the Mecenas case,
the amount of P307,500.00 was awarded to the seven children of
the Mecenas couple. Under petitioners formula, Ramon Miranda
should receive P43, 857.14, while the De la Victoria spouses
should receive P97, 714.28
36. R TRANSPORT VS EDUARDO PANTE, GR 162104,
SEPTEMBER 15, 2009

The Court also affirmed the award of moral damages,

citing Spouses Ong vs. CA where moral damages were
given to passengers who suffered physical injuries. It is
the usual practice to award moral damages for physical
injuries sustained. Pante here suffered physical pain,
mental anguish and anxiety as a result of the accident.
P50,000 is proper.
An award of exemplary damages is also proper, as the
driver was manning the bus in a reckless, negligent, and
imprudent manner. This will provide as an example or as
a correction for the public good.

FACTS:

R Transport operates a bus line which transports

passengers from Cubao, Quezon City to Gapan, Nueva
Ecija.

27 January 1995: Pante rode a bus from Cubao (P48 fare).

Along a highway in Bulacan, the bus hit a tree and a
house due to the reckless driving of Johnny Mediquia.

Pante sustained a laceration frontal area, with fracture of

the right humerous11.
o
His operation, confinement, and medications
caused him P30K. He became unemployed as
Goldilocks refused to re-employ him due to his
condition.
o
He had to undergo a second operation after four
years. He spent another P15k.
o
The only assistance petitioner gave was the
amount of P7K to reimburse him for the stainless
steel plate placed in his arm. Other than that,
petitioner refused to assist Pante.

14 March 1995: Pante sued for damages.

Petitioner in its answer denied fault claiming that it

exercised the diligence of a good father of the family in
the selection and supervision of employees, and that the
accident was force majeure.

The case went on for 7 years. The delays were due to the
multiple postponements and unexplained absence of
petitioners counsel. Its rights to cross-examine and
present evidence were eventually forfeited as a
consequence.

RTC ruled in favour of Pante. CA affirmed RTCs decision.

ISSUE: W/N Petitioner is liable for damages despite Pante not

presenting substantial evidence to support his claim.
HELD: YES. Petitioner is liable for damages.

Petitioner, as a common carrier, is expected to exercise

extraordinary diligence, and has the duty to transport its
passengers safely to their destination.
ARTICLE 1756 OF THE CIVIL CODE: In case of death or
injuries to passengers, common carriers are presumed at
fault or negligent unless they are able to prove their
exercise of extraordinary diligence.
ARTICLE 1759: Common carriers are also liable for the
negligence of their employees.
o
The liability of common carriers does not cease
upon proof that they exercised extraordinary
diligence of a good father of the family in the
selection and supervision of employees.
Petitioner cannot claim that it was denied due process
which prevented it from presenting evidence in his
defense. Due to the unexplained absences of his counsel,
the hearings had to be constantly postponed, which
resulted in a 7-year delay of the case. It was given the
opportunity to present its evidence, but was considered
to have waived its right.
Petitioner also contends that the CA and TC erred in
awarding damages in favour of Pante in the amount of
P22,000 based on a statement issued by the Baliuag
Hospital and not based on the receipt. The Court held
that this was without merit since in another case, the
Court awarded damages for hospitalization expenses
based on the statement of account issued by the Makati
Medical Center.

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