Transportation Law Case Digest

TRANSPORTATION LAW SEMI FINALS CASE DIGEST
CHAPTER I – BILL OF LADING AND OTHER In its Original Complaint, DBI claimed that
FORMALITIES under Bill of Lading Number AC/MLLA601317, ASTI
and/or ACCLI is “to release and deliver the
1. DESIGNER BASKET INC. VS. AIR SEA cargo/shipment to the consignee, x x x, only after the
TRANSPORT INC. & ASIA CARGO CONTAINER original copy or copies of [the] Bill of Lading is or are
LINES INC. GR 184513 MARCH 9, 2016 surrendered to them; otherwise, they become liable to
FACTS: the shipper for the value of the shipment.” DBI also
DBI is a domestic corporation engaged in the averred that ACCLI should be jointly and severally
production of housewares and handicraft items for liable with its co defendants because ACCLI failed to
export. Sometime in October 1995, Ambiente, a register ASTI as a foreign corporation doing business in
foreign-based company, ordered from DBI5 223 the Philippines. In addition, ACCLI failed to secure a
cartons of assorted wooden items (the shipment).The license to act as agent of ASTI.
shipment was worth Twelve Thousand Five Hundred
Ninety and Eighty-Seven Dollars (US$12,590.87) and ISSUE: WON ASTI, ACCLI, and Ambiente are solidarily
payable through telegraphic transfer. liable to DBI for the value of the shipment
Ambiente designated ACCLI as the forwarding
agent that will ship out its order from the Philippines to HELD: NO. A bill of lading is defined as "a written
the United States (US). ACCLI is a domestic acknowledgment of the receipt of goods and an
corporation acting as agent of ASTI, a US based agreement to transport and to deliver them at a
corporation engaged in carrier transport business, in specified place to a person named or on his order." It
the Philippines. may also be defined as an instrument in writing,
On January 7, 1996, DBI delivered the signed by a carrier or his agent, describing the freight
shipment to ACCLI for sea transport from Manila and so as to identify it, stating the name of the consignor,
delivery to Ambiente at 8306 Wilshire Blvd., Suite the terms of the contract of carriage, and agreeing or
1239, Beverly Hills, California. To acknowledge receipt directing that the freight be delivered to bearer, to
and to serve as the contract of sea carriage, ACCLI order or to a specified person at a specified place.
issued to DBI triplicate copies of ASTI Bill of Lading No.
AC/MLLA601317. A bill of lading, when issued by the carrier to the
DBI retained possession of the originals of the shipper, is the legal evidence of the contract of
bills of lading pending the payment of the goods by carriage between the former and the latter. It defines
Ambiente. On January 23, 1996, Ambiente and ASTI the rights and liabilities of the parties in reference to
entered into an Indemnity Agreement the contract of carriage. The stipulations in the bill of
(Agreement).Under the Agreement, Ambiente lading are valid and binding unless they are contrary to
obligated ASTI to deliver the shipment to it or to its law, morals, customs, public order or public policy.
order “without the surrender of the relevant bill(s) of
lading due to the non-arrival or loss thereof.” The general rule is that upon receipt of the goods, the
In exchange, Ambiente undertook to indemnify consignee surrenders the bill of lading to the carrier
and hold ASTI and its agent free from any liability as a and their respective obligations are considered
result of the release of the shipment. cancelled. The law, however, provides two exceptions
Thereafter, ASTI released the shipment to where the goods may be released without the
Ambiente without the knowledge of DBI, and without it surrender of the bill of lading because the consignee
receiving payment for the total cost of the shipment. can no longer return it.
DBI then made several demands to Ambiente
for the payment of the shipment, but to no avail. Thus, These exceptions are when the bill of lading gets
on October 7, 1996, DBI filed the Original Complaint lost or for other cause. In either case, the
against ASTI, ACCLI and ACCLI’s incorporators- consignee must issue a receipt to the carrier
stockholders for the payment of the value of the upon the release of the goods. Such receipt shall
shipment in the amount of US$12,590.87 or Three produce the same effect as the surrender of the
Hundred ThirtyThree and Six Hundred Fifty-Eight Pesos bill of lading. We have already ruled that the non-
(₱333,658.00), plus interest at the legal rate from surrender of the original bill of lading does not violate
January 22, 1996, exemplary damages, attorney’s fees the carrier’s duty of extraordinary diligence over the
and cost of suit. goods (Republic v. Lorenzo Shipping Corporation).
Property of Ismael Catalino A. Maestre Jr. Page 1 of 26

Thus, we held that the surrender of the original bill of cargo against BPI/MS and Mitsui as cargo insurers. As
lading is not a condition precedent for a common a result, BPI/MS and Mitsui became subrogated
carrier to be discharged of its contractual obligation. in place of and with all the rights and defenses
Clearly, law and jurisprudence is settled that the accorded by law in favor of Calamba Steel.
surrender ofthe original bill of lading is not absolute; Opposing the complaint, ATI denied the allegations and
that in case of lossor any other cause, a common insisted that the coils in two shipments
carrier may release the goods to the consignee even were already damaged upon receipt from ESLI’s
without it. vessels. It likewise insisted that it exercised due
diligence in the handling of the shipments and invoked
2. Eastern Shipping Lines vs. BPI/MS Insurance that in case of adverse decision, its liability
Corp., G.R. 182864, Jan. 12, 2015 should not exceed P5,000.00 pursuant to Section 7.01,
FACTS: Article VII of the Contract for Cargo Handling
For two separate transactions in 2004, Services between Philippine Ports Authority (PPA) and
Sumitomo Corporation, a corporation based in ATI.
Yokohama, Japan shipped on board the vessels of On its part, ESLI denied the allegations of the
petitioner Eastern Shipping Lines Inc. (ESLI) coils of complainants and averred that the damage to
various steel sheet for transportation and delivery at both shipments was incurred while the same were in
the port of Manila in favor of consignee Calamba the possession and custody of ATI and/or of the
Steel Center located in Saimsim, Calamba, Laguna. consignee or its representatives.
The Shipments were insured with the respondents The RTC Makati City rendered a decision finding both
BPI/MS Insurance Corporation (BPI/MS) and Mitsui the ESLI and ATI liable for the damages
Sumitomo Insurance Company (Mitsui) against all sustained by the two shipments. Upon appeal, Both
risks. ESLI and ATI invoked the limitation of liability of
The first shipment arrived at the port of Manila in an US$500.00 per package as provided in Commonwealth
unknown condition and was turned over to Act No. 65 or the Carriage of Goods by Sea Act
Asian Terminals Inc. (ATI) for safekeeping. Upon (COGSA). The CA absolved ATI from liability in its
withdrawal of the shipment by Calamba Steel, it was decision.
found out that part of the shipment was damaged and For two separate transactions in 2004,
was in bad order condition such that there was a Sumitomo Corporation, a corporation based in
Request for Bad Order Survey. It was found out that Yokohama, Japan shipped on board the vessels of
the damage amounted to US$4,598.85 prompting petitioner Eastern Shipping Lines Inc. (ESLI) coils of
Calamba Steel to reject the damaged shipment for various steel sheet for transportation and delivery at
being unfit for the intended purpose. the port of Manila in favor of consignee Calamba
Sumitomo Corporation again shipped on board Steel Center located in Saimsim, Calamba, Laguna.
ESLI’s vessel coils of various Steel for The Shipments were insured with the respondents
transportation to and delivery at the port of Manila in BPI/MS Insurance Corporation (BPI/MS) and Mitsui
favor of Calamba Steel. Again, the shipment was Sumitomo Insurance Company (Mitsui) against all
insured by respondents against all risk. The risks.
second shipment arrived at the port of Manila The first shipment arrived at the port of Manila in an
partly unknown condition and was turned over to
damaged and in bad order. The coils sustained further Asian Terminals Inc. (ATI) for safekeeping. Upon
damage during the discharge from vessel to withdrawal of the shipment by Calamba Steel, it was
shore until its turnover to ATI’s custody for found out that part of the shipment was damaged and
safekeeping. Upon withdrawal from ATI and delivery to was in bad order condition such that there was a
Calamba Steel, As it did before, Calamba Steel Request for Bad Order Survey. It was found out that
rejected the damaged shipment for being unfit for the the damage amounted to US$4,598.85 prompting
intended purpose. Calamba Steel to reject the damaged shipment for
Calamba Steel attributed the damages on both being unfit for the intended purpose.
shipments to ESLI as the carrier and ATI as the Sumitomo Corporation again shipped on board
arrastre operator in charge of the handling and ESLI’s vessel coils of various Steel for
discharge of the coils and filed a claim against them. transportation to and delivery at the port of Manila in
When ESLI and ATI refused to pay, Calamba Steel filed favor of Calamba Steel. Again, the shipment was
an insurance claim for the total amount of the

an insurance claim for the total amount of the insured by respondents against all risk. The
cargo against BPI/MS and Mitsui as cargo insurers. As second shipment arrived at the port of Manila
a result, BPI/MS and Mitsui became subrogated partly
in place of and with all the rights and defenses damaged and in bad order. The coils sustained further
accorded by law in favor of Calamba Steel. damage during the discharge from vessel to
Opposing the complaint, ATI denied the allegations and shore until its turnover to ATI’s custody for
insisted that the coils in two shipments safekeeping. Upon withdrawal from ATI and delivery to
were already damaged upon receipt from ESLI’s Calamba Steel, As it did before, Calamba Steel
vessels. It likewise insisted that it exercised due rejected the damaged shipment for being unfit for the
diligence in the handling of the shipments and invoked intended purpose.
that in case of adverse decision, its liability Calamba Steel attributed the damages on both
should not exceed P5,000.00 pursuant to Section 7.01, shipments to ESLI as the carrier and ATI as the
Article VII of the Contract for Cargo Handling arrastre operator in charge of the handling and
Services between Philippine Ports Authority (PPA) and discharge of the coils and filed a claim against them.
ATI. When ESLI and ATI refused to pay, Calamba Steel filed
On its part, ESLI denied the allegations of the an insurance claim for the total amount of the
complainants and averred that the damage to cargo against BPI/MS and Mitsui as cargo insurers. As
both shipments was incurred while the same were in a result, BPI/MS and Mitsui became subrogated
the possession and custody of ATI and/or of the in place of and with all the rights and defenses
consignee or its representatives. accorded by law in favor of Calamba Steel.
The RTC Makati City rendered a decision finding both Opposing the complaint, ATI denied the allegations and
the ESLI and ATI liable for the damages insisted that the coils in two shipments
sustained by the two shipments. Upon appeal, Both were already damaged upon receipt from ESLI’s
ESLI and ATI invoked the limitation of liability of vessels. It likewise insisted that it exercised due
US$500.00 per package as provided in Commonwealth diligence in the handling of the shipments and invoked
Act No. 65 or the Carriage of Goods by Sea Act that in case of adverse decision, its liability
(COGSA). The CA absolved ATI from liability in its should not exceed P5,000.00 pursuant to Section 7.01,
decision. Article VII of the Contract for Cargo Handling
Sumitomo Insurance Company (Mitsui) against all

sustained by the two shipments. Upon appeal, Both were already damaged upon receipt from ESLI’s
ESLI and ATI invoked the limitation of liability of vessels. It likewise insisted that it exercised due
US$500.00 per package as provided in Commonwealth diligence in the handling of the shipments and invoked
Act No. 65 or the Carriage of Goods by Sea Act that in case of adverse decision, its liability
(COGSA). The CA absolved ATI from liability in its should not exceed P5,000.00 pursuant to Section 7.01,
decision. Article VII of the Contract for Cargo Handling
Sumitomo Insurance Company (Mitsui) against all sustained by the two shipments. Upon appeal, Both
risks. ESLI and ATI invoked the limitation of liability of
The first shipment arrived at the port of Manila in an US$500.00 per package as provided in Commonwealth
unknown condition and was turned over to Act No. 65 or the Carriage of Goods by Sea Act
Asian Terminals Inc. (ATI) for safekeeping. Upon (COGSA). The CA absolved ATI from liability in its
withdrawal of the shipment by Calamba Steel, it was decision.
found out that part of the shipment was damaged and For two separate transactions in 2004,
was in bad order condition such that there was a Sumitomo Corporation, a corporation based in
Request for Bad Order Survey. It was found out that Yokohama, Japan shipped on board the vessels of
the damage amounted to US$4,598.85 prompting petitioner Eastern Shipping Lines Inc. (ESLI) coils of
Calamba Steel to reject the damaged shipment for various steel sheet for transportation and delivery at
being unfit for the intended purpose. the port of Manila in favor of consignee Calamba
Sumitomo Corporation again shipped on board Steel Center located in Saimsim, Calamba, Laguna.
ESLI’s vessel coils of various Steel for The Shipments were insured with the respondents
transportation to and delivery at the port of Manila in BPI/MS Insurance Corporation (BPI/MS) and Mitsui
favor of Calamba Steel. Again, the shipment was Sumitomo Insurance Company (Mitsui) against all
an insurance claim for the total amount of the insured by respondents against all risk. The
cargo against BPI/MS and Mitsui as cargo insurers. As second shipment arrived at the port of Manila
a result, BPI/MS and Mitsui became subrogated partly
in place of and with all the rights and defenses damaged and in bad order. The coils sustained further
accorded by law in favor of Calamba Steel. damage during the discharge from vessel to
Opposing the complaint, ATI denied the allegations and shore until its turnover to ATI’s custody for
insisted that the coils in two shipments safekeeping. Upon withdrawal from ATI and delivery to

Calamba Steel, As it did before, Calamba Steel reject the damaged shipment for being unfit for the
rejected the damaged shipment for being unfit for the intended purpose.
intended purpose. The second shipment arrived at the port of
Calamba Steel attributed the damages on both Manila partly damaged and in bad order. The coils
shipments to ESLI as the carrier and ATI as the sustained further damage during the discharge from
arrastre operator in charge of the handling and vessel to shore until its turnover to (Asian Terminals
discharge of the coils and filed a claim against them. Inc.) ATI’s custody for safekeeping.
When ESLI and ATI refused to pay, Calamba Steel filed
an insurance claim for the total amount of the Upon withdrawal from ATI and delivery to
cargo against BPI/MS and Mitsui as cargo insurers. As Calamba Steel, it was found out that the damage
a result, BPI/MS and Mitsui became subrogated amounted to US$12,961.63. As it did before, Calamba
in place of and with all the rights and defenses Steel rejected the damaged shipment for being unfit
accorded by law in favor of Calamba Steel. for the intended purpose.
Opposing the complaint, ATI denied the allegations and Calamba Steel attributed the damages on both
insisted that the coils in two shipments shipments to ESLI as the carrier and ATI as
were already damaged upon receipt from ESLI’s the arrastre operator in charge of the handling and
vessels. It likewise insisted that it exercised due discharge of the coils and filed a claim against them.
diligence in the handling of the shipments and invoked When ESLI and ATI refused to pay, Calamba Steel filed
that in case of adverse decision, its liability an insurance claim for the total amount of the cargo
should not exceed P5,000.00 pursuant to Section 7.01, against BPI/MS and Mitsui as cargo insurers. As a
Article VII of the Contract for Cargo Handling result, BPI/MS and Mitsui became subrogated in place
Services between Philippine Ports Authority (PPA) and of and with all the rights and defenses accorded by law
ATI. in favor of Calamba Steel.
On its part, ESLI denied the allegations of the
complainants and averred that the damage to ATI denied denied the allegations and insisted
both shipments was incurred while the same were in that the coils in two shipments were already damaged
the possession and custody of ATI and/or of the upon receipt from ESLI’s vessels. It likewise insisted
consignee or its representatives. that it exercised due diligence in the handling of the
The RTC Makati City rendered a decision finding both shipments and invoked that in case of adverse
the ESLI and ATI liable for the damages decision, its liability should not exceed P5,000.00
sustained by the two shipments. Upon appeal, Both pursuant to Section 7.01, Article VII of the Contract for
ESLI and ATI invoked the limitation of liability of Cargo Handling Services between Philippine Ports
US$500.00 per package as provided in Commonwealth Authority (PPA) and ATI. A cross-claim was also filed
Act No. 65 or the Carriage of Goods by Sea Act against ESLI denying the allegations of the
(COGSA). The CA absolved ATI from liability in its complainants and averred that the damage to both
decision. shipments was incurred while the same were in the
For two separate transactions in 2004, possession and custody of ATI and/or of the consignee
Sumimoto Corporation, a corporation based in Japan or its representatives. It also filed a cross-claim
shipped on board the vessels of petitioner Eastern against ATI for indemnification in case of liability.
Shipping Lines Inc. (ESLI) coils of various steel sheets
for transportation and delivery at the port of Manila in RTC Makati City rendered a decision finding
favour of the consignee Calamba Steel Center. The both the ESLI and ATI liable for the damages sustained
Shipments were insured with the respondent BPI/MS by the two shipments.
Insurance Corporation (BPI/MS) and Mitsui Sumimoto
Insurance Company (Mitsui) against all risk. ESLI and ATI filed their respective appeals
First shipment was arrived at the port of Manila before the Court of Appeals on both questions of fact
in an unknown condition and was turned over to ATI and law.
for safekeeping. Upon withdrawal of the shipment by
the Calamba Steel’s representative, it was found out ESLI argued that the trial court erred when it
that part of the shipment was damaged and was in bad found BPI/MS has the capacity to sue and when it
order condition such that there was a Request for Bad assumed jurisdiction over the case. It also questioned
Order Survey. It was found out that the damage the ruling on its liability since the Survey Reports
amounted to US$4,598.85 prompting Calamba Steel to indicated that the cause of loss and damage was due

to the through handling of ATI’s stevedores during common carrier for their loss, destruction or
discharge from vessel to shore and during loading deterioration. The Code takes precedence as the
operation onto the trucks. It invoked the limitation of primary law over the rights and obligations of
liability of US$500.00 per package as provided in common carriers with the Code of Commerce and
Commonwealth Act No. 65 or the Carriage of Goods by COGSA applying suppletorily. The New Civil Code
Sea Act (COGSA). ATI insisted on the applicability of provides that a stipulation limiting a common
the provision of COGSA on limitation of liability. CA carrier’s liability to the value of the goods
absolved ATI from liability and denied ESTI’s petition. appearing in the bill of lading is binding, unless
the shipper or owner declares a greater value. In
ISSUE: addition, a contract fixing the sum that may be
1. What is the Liability of the ESLI? recovered by the owner or shipper for the loss,
2. What is the limitation of the liability of ESLI? destruction, or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and
HELD: has been fairly and freely agreed upon. COGSA, on
1. The report of the Cargo Surveyor of Philippine Japan the other hand, provides under Section 4,
Marine Surveyors and Sworn Measurers Corporation, Subsection 5 that an amount recoverable in
Mario A. Manuel, shows that, the employees and case of loss or damage shall not exceed
forklift operators of [ESLI] and [ATI] were very US$500.00 per package or per customary freight
negligent in the handling of the subject cargoes in both unless the nature and value of such goods have
first and second shipments. ESLI cannot invoke its been declared by the shipper before shipment
non-liability solely on the manner the cargo was and inserted in the bill of lading. Accordingly, the
discharged and unloaded. The actual condition of the issue whether or not ESLI has limited liability as a
cargoes upon arrival prior to discharge is equally carrier is determined by either absence or presence of
important and cannot be disregarded. Proof is needed proof that the nature and value of the goodshave been
that the cargo arrived at the port of Manila in good declared by Sumitomo Corporation and inserted in the
order condition and remained as such prior to its bills of lading.
handling by ATI. There is no question about the declaration of
the nature, weight and description of the goods on the
In maritime transportation, a bill of lading is issued by first bill of lading. The bills of lading represent the
a common carrier as a contract, receipt and symbol of formal expression of the parties’ rights, duties and
the goods covered by it. If it has no notation of any obligations. It is the best evidence of the intention of
defect or damage in the goods, it is considered as a the parties which is to be deciphered from the
"clean bill of lading." A clean bill of lading constitutes language used in the contract, not from the unilateral
prima facie evidence of the receipt by the carrier of the post facto assertions of one of the parties, or of third
goods as therein described. Based on the bills of lading parties who are strangers to the contract. Thus, when
issued, it is undisputed that ESLI received the two the terms of an agreement have been reduced to
shipments of coils from shipper Sumitomo Corporation writing, it is deemed to contain all the terms agreed
in good condition at the ports of Yokohama and upon and there can be, between the parties and their
Kashima, Japan. However, upon arrival at the port of successors in interest, no evidence of such terms other
Manila, some coils from the two shipments were partly than the contents of the written agreement.
dented and crumpled as evidenced by the Turn Over As to the non-declaration of the value of the
Survey of Bad Order Cargoes prior to turnover to ATI. goods on the second bill of lading, we see no error on
Mere proof of delivery of the goods in good order to a the part of the appellate court when it ruled that there
common carrier and of their arrival in bad order at was a compliance of the requirement provided by
their destination constitutes a prima facie case of fault COGSA. The declaration requirement does not
or negligence against the carrier. If no adequate require that all the details must be written down
explanation is given as to how the deterioration, loss, on the very bill of lading itself. It must be
or destruction of the goods happened, the emphasized that all the needed details are in the
transporter shall be held responsible. invoice, which "contains the itemized list of
goods shipped to a buyer, stating quantities,
2. In the issue of limitation of liability, the law prices, shipping charges," and other details
of the country to which the goods are to be which may contain numerous sheets. Compliance
transported shall govern the liability of the can be attained by incorporating the invoice, by way of

reference, to the bill of lading provided that the former no longer serve their intended purpose. The position
containing the description of the nature, value and/or taken by the consignee was that even those bags
payment of freight charges is as in this case duly which still had some contents were considered as total
admitted as evidence. losses as the remaining contents were contaminated
Wherefore, the petition for review on certiorari with foreign matters and therefore did not (sic) longer
of ESLI was denied and the decision of the CA was serve the intended purpose of the material. Each bag
affirmed. was valued, taking into account the customs duties
and other taxes paid as well as charges and the
3. Philippine American General Insurance Co, Et conversion value then of a dollar to the peso, at
Al. v. Sweet Lines, Inc. , G.R. No. 87434, Aug. 5, P110.28 per bag.
1992 The court rendered judgement of the
FACTS: petitioners but due to the reversal on appeal by
On or about March 1977, the vessel SS respondent court of the trial court's decision on the
"VISHVA YASH" belonging to or operated by the ground of prescription, in effect dismissing the
foreign common carrier, took on board at Baton Rouge, complaint of herein petitioners, and the denial of their
LA, two (2) consignments of cargoes for shipment to motion for reconsideration, petitioners filed the instant
Manila and later for transhipment to Davao City, petition for review on certiorari.
consisting of 600 bags Low Density Polyethylene 631 The respondent carrier duly raised prescription
and another 6,400 bags Low Density Polyethylene 647, as an affirmative defense in its answer setting forth
both consigned to the order of Far East Bank and Trust paragraph 5 of the pertinent bills of lading which
Company of Manila, with arrival notice to Tagum comprised the stipulation thereon by parties, to wit:
Plastics, Inc., Madaum, Tagum, Davao City. Said
cargoes were covered, respectively, by Bills of Lading 5. Claims for shortage, damage, must be made at the time
of delivery to consignee or agent, if container shows exterior
Nos. 6 and 7 issued by the foreign common carrier
signs of damage or shortage. Claims for non-delivery,
(Exhs. E and F). The necessary packing or Weight List misdelivery, loss or damage must be filed within 30 days
(Exhs. A and B), as well as the Commercial Invoices from accrual. Suits arising from shortage, damage or loss,
non-delivery or misdelivery shall be instituted within 60 days
(Exhs. C and D) accompanied the shipment. The
from date of accrual of right of action. Failure to file claims
cargoes were likewise insured by the Tagum Plastics
or institute judicial proceedings as herein provided
Inc. with plaintiff Philippine American General constitutes waiver of claim or right of action. In no case shall
Insurance Co., Inc. carrier be liable for any delay, non-delivery, misdelivery,
loss of damage to cargo while cargo is not in actual custody
In the course of time, the said vessel arrived at
of carrier.
Manila and discharged its cargoes in the Port of Manila
for transhipment to Davao City. For this purpose, the
The petitioners asserted in their reply that that such
foreign carrier awaited and made use of the services of
agreements are what the Supreme Court considers as
the vessel called M/V "Sweet Love" owned and
contracts of adhesion and, consequently, the
operated by defendant interisland carrier.
provisions therein which are contrary to law and public
Subject cargoes were loaded in Holds Nos. 2
policy cannot be availed of by answering defendant as
and 3 of the interisland carrier. These were
valid defences.
commingled with similar cargoes belonging to
Evergreen Plantation and also Standfilco.
Petitioners alleged shorter prescriptive period which is
On May 15, 1977, the shipment(s) were
in the nature of a limitation on petitioners' right of
discharged from the interisland carrier into the custody
recovery is unreasonable and that SLI has the burden
of the consignee. A later survey conducted on July 8,
of proving otherwise, citing the earlier case of
1977, upon the instance of the plaintiff, shows of said
Southern Lines, Inc. vs. Court of Appeals, et al. 28
shipment totalling 7,000 bags, originally contained in
They postulate this on the theory that the bills of
175 pallets, only a total of 5,820 bags were delivered
lading containing the same constitute contracts of
to the consignee in good order condition, leaving a
adhesion and are, therefore, void for being contrary to
balance of 1,080 bags. Such loss from this particular
public policy, supposedly pursuant to the dictum in
shipment is what any or all defendants may be
Sweet Lines, Inc. vs. Teves, et al. They futher
answerable to. Some of the 1,080 bags were torn, the
contended that since the liability of private
contents thereof partly spilled or were fully/partially
respondents has been clearly established, to bar
emptied, but, worse, the contents thereof
petitioners' right of recovery on a mere technicality will
contaminated with foreign matters and therefore could
pave the way for unjust enrichment.

existence of which with its attendant stipulations they
ISSUE: cannot now be allowed to deny.
1. Was the court correct in dismissing the petition of
PHILAMGEN based on the stipulations of the bill of 2. Yes. The filing of a claim with the carrier within the
lading? time limitation therefor under Article 366 actually
2. Is paragraph 5 of the said bill of lading valid? constitutes a condition precedent to the accrual of a
right of action against a carrier for damages caused to
HELD: the merchandise. The shipper or the consignee must
1. NO. Even granting that petitioners' averment in allege and prove the fulfilment of the condition and if
their reply amounts to a denial, it has the procedural he omits such allegations and proof, no right of action
earmarks of what in the law on pleadings is called a against the carrier can accrue in his favor. As the
negative pregnant, that is, a denial pregnant with the requirements in Article 366, restated with a slight
admission of the substantial facts in the pleading modification in the assailed paragraph 5 of the bills of
responded to which are not squarely denied. It is in lading, are reasonable conditions precedent, they are
effect an admission of the averment it is directed to. not limitations of action. Being conditions precedent,
Thus, while petitioners objected to the validity of such their performance must precede a suit for enforcement
agreement for being contrary to public policy, the and the vesting of the right to file spit does not take
existence of the bills of lading and said stipulations place until the happening of these conditions.
were nevertheless impliedly admitted by them.
The non-presentation of the bills of lading in The contract of shipment contains a reasonable
their brief and earlier on in the appellate proceedings requirement of giving notice of loss of or injury to the
in this case, hence it is too late in the day to now allow goods, the giving of such notice is a condition
the litigation to be overturned on that score, for to do precedent to the action for loss or injury or the right to
so would mean an over-indulgence in technicalities. enforce the carrier's liability. Such requirement is not
Hence, for the reasons already advanced, the non- an empty formalism. The fundamental reason or
inclusion of the controverted bills of lading in the purpose of such a stipulation is not to relieve the
formal offer of evidence cannot, under the facts of this carrier from just liability, but reasonably to inform it
particular case, be considered a fatal procedural lapse that the shipment has been damaged and that it is
as would bar respondent carrier from raising the charged with liability therefor, and to give it an
defense of prescription. Petitioners' feigned ignorance opportunity to examine the nature and extent of the
of the provisions of the bills of lading, particularly on injury. This protects the carrier by affording it an
the time limitations for filing a claim and for opportunity to make an investigation of a claim while
commencing a suit in court, as their excuse for non- the matter is fresh and easily investigated so as to
compliance therewith does not deserve serious safeguard itself from false and fraudulent claims.\
attention.
It is to be noted that the carriage of the cargo Stipulations in bills of lading or other contracts of
involved was effected pursuant to an "Application for shipment which require notice of claim for loss of
Delivery of Cargoes without Original Bill of Lading" or damage to goods shipped in order to impose
issued on May 20, 1977 in Davao City with the liability on the carrier operate to prevent the
notation therein that said application corresponds to enforcement of the contract when not complied
and is subject to the terms of bills of lading MD-25 and with, that is, notice is a condition precedent and
MD-26. It would be a safe assessment to interpret this the carrier is not liable if notice is not given in
to mean that, sight unseen, petitioners acknowledged accordance with the stipulation, as the failure to
the existence of said bills of lading. By having the comply with such a stipulation in a contract of
cargo shipped on respondent carrier's vessel and later carriage with respect to notice of loss or claim
making a claim for loss on the basis of the bills of for damage bars recovery for the loss or damage
lading, petitioners for all intents and purposes suffered.
accepted said bills. Having done so, they are bound by
all stipulations contained therein. Verily, as petitioners In the case at bar, there is neither any showing of
are suing for recovery on the contract, and in fact even compliance by petitioners with the requirement for the
went as far as assailing its validity by categorizing it as filing of a notice of claim within the prescribed period
a contract of adhesion, then they necessarily admit nor any allegation to that effect. It may then be said
that there is such a contract, their knowledge of the that while petitioners may possibly have a cause of

action, for failure to comply with the above condition modification has been sanctioned by the Supreme
precedent they lost whatever right of action they may Court. In the case of Ong Yet (M)ua Hardware Co., Inc.
have in their favor or, token in another sense, that vs. Mitsui Steamship Co., Ltd., et al., 59 O.G. No. 17,
remedial right or right to relief had prescribed. p. 2764, it ruled that Art. 366 of the Code of
Commerce can be modified by a bill of lading
The shipment in question was discharged into the prescribing the period of 90 days after arrival of the
custody of the consignee on May 15, 1977, and it ship, for filing of written claim with the carrier or
was from this date that petitioners' cause of action agent, instead of the 24-hour time limit after delivery
accrued, with thirty (30) days therefrom within which provided in the aforecited legal provision.
to file a claim with the carrier for any loss or damage
which may have been suffered by the cargo and Tested, too, under paragraph 5 of said Bill of Lading, it
thereby perfect their right of action. The findings of is crystal clear that the commencement of the instant
respondent court as supported by petitioners' formal suit on May 12, 1978 was indeed fatally late. In view
offer of evidence in the court below show that the of the express provision that "suits arising from
claim was filed with SLI only on April 28, 1978, . . . damage or loss shall be instituted within 60 days
way beyond the period provided in the bills of lading from date of accrual of right of action," the present
and violative of the contractual provision, the action necessarily fails on ground of prescription.
inevitable consequence of which is the loss of
petitioners' remedy or right to sue. Even the filing of A perusal of the pertinent provisions of law on the
the complaint on May 12, 1978 is of no remedial or matter would disclose that there is no constitutional or
practical consequence, since the time limits for the statutory prohibition infirming paragraph 5 of subject
filing thereof, whether viewed as a condition precedent Bill of Lading. The stipulated period of 60 days is
or as a prescriptive period, would in this case be reasonable enough for appellees to ascertain the facts
productive of the same result, that is, that petitioners and thereafter to sue, if need be, and the 60-day
had no right of action to begin with or, at any rate, period agreed upon by the parties which shortened the
their claim was time-barred. statutory period within which to bring action for breach
of contract is valid and binding.
It must be noted, at this juncture, that the aforestated
time limitation in the presentation of claim for loss or As explained above, the shortened period for filing
damage, is but a restatement of the rule prescribed suit is not unreasonable and has in fact been
under Art. 366 of the Code of Commerce which reads generally recognized to be a valid business
as follows: practice in the shipping industry. Petitioners'
Art. 366. Within the twenty-four hours advertence to the Court's holding in the Southern Lines
following the receipt of the merchandise, the case, supra, is futile as what was involved was a claim
claim against the carrier for damage or for refund of excess payment. We ruled therein that
average which may be found therein upon non-compliance with the requirement of filing a notice
opening the packages, may be made, of claim under Article 366 of the Code of Commerce
provided that the indications of the damage does not affect the consignee's right of action against
or average which gives rise to the claim the carrier because said requirement applies only to
cannot be ascertained from the outside part cases for recovery of damages on account of loss of or
of the packages, in which case the claims damage to cargo, not to an action for refund of
shall be admitted only at the time of the overpayment, and on the further consideration that
receipt. neither the Code of Commerce nor the bills of lading
therein provided any time limitation for suing for
After the periods mentioned have elapsed, or
refund of money paid in excess, except only that it be
the transportation charges have been paid,
filed within a reasonable time.
no claim shall be admitted against the carrier
with regard to the condition in which the
Withal, it has merely to be pointed out that the
goods transported were delivered.
aforementioned report bears this notation at the lower
part thereof: "Damaged by Mla. labor upon unloading;
Gleanable therefrom is the fact that subject
B/L noted at port of origin," as an explanation for the
stipulation even lengthened the period for
cause of loss of and/or damage to the cargo, together
presentation of claims thereunder. Such
with an iterative note stating that "(t)his Copy should

be submitted together with your claim invoice or declared unfit for human consumption and was
receipt within 30 days from date of issue otherwise eventually declared as a total loss.6
your claim will not be honored."
As a result, BSFIL made a formal claim against APL
Moreover, knowledge on the part of the carrier of the and Pioneer Insurance. The latter hired an independent
loss of or damage to the goods deducible from the insurance adjuster, which found that the shipment was
issuance of said report is not equivalent to nor does it wet because of the water which seeped inside the
approximate the legal purpose served by the filing of container van APL provided. Pioneer Insurance paid
the requisite claim, that is, to promptly apprise the BSFIL Pl 95,505.65 after evaluating the claim.7
carrier about a consignee's intention to file a claim and
thus cause the prompt investigation of the veracity and Having been subrogated to all the rights and cause of
merit thereof for its protection. It would be an unfair action of BSFIL, Pioneer Insurance sought payment
imposition to require the carrier, upon discovery in the from APL, but the latter refused. This prompted
process of preparing the report on losses or damages Pioneer Insurance to file a complaint for sum of money
of any and all such loss or damage, to presume the against APL.
existence of a claim against it when at that time the
carrier is expectedly concerned merely with accounting MTC granted the complaint and ordered APL to pay
for each and every shipment and assessing its Pioneer Insurance the amount claimed plus six percent
condition. Unless and until a notice of claim is (6%) interest per annum from the filing of the
therewith timely filed, the carrier cannot be expected complaint until fully paid, and ₱10,000.00 as attorney's
to presume that for every loss or damage tallied, a fees. It explained that by paying BSFIL, Pioneer
corresponding claim therefor has been filed or is Insurance was subrogated to the rights of the insured
already in existence as would alert it to the urgency for and, as such, it may pursue all the remedies the
an immediate investigation of the soundness of the insured may have against the party whose negligence
claim. The report on losses and damages is not the or wrongful act caused the loss. The MTC declared that
claim referred to and required by the bills of lading for as a common carrier, APL was bound to observe
it does not fix responsibility for the loss or damage, but extraordinary diligence. It noted that because the
merely states the condition of the goods shipped. The goods were damaged while it was in APL's custody, it
claim contemplated herein, in whatever form, must be was presumed that APL did not exercise extraordinary
something more than a notice that the goods have diligence, and that the latter failed to overcome such
been lost or damaged; it must contain a claim for presumption.
compensation or indicate an intent to claim.
RTC concurred with the MTC. But CA reversed the
4. Pioneer Insurance and Surety Corp vs. APL. decisions of the trial courts and ruled that the present
Co. PTE. Ltd., G.R. 226345, Aug. 2, 2017 action was barred by prescription. The appellate court
FACTS: noted that under Clause 8 of the Bill of Lading, the
On January 13, 2012, the shipper, Chillies carrier shall be absolved from any liability unless a
Export House Limited, turned over to respondent APL case is filed within nine (9) months after the delivery
Co. Pte. Ltd. (APL) 250 bags of chili pepper for of the goods. It explained that a shorter prescriptive
transport from the port of Chennai, India, to Manila. period may be stipulated upon, provided it is
The shipment, with a total declared value of reasonable. The CA opined that the nine-month
$12,272.50, was loaded on board MN Wan Hai 262. In prescriptive period set out in the Bill of Lading was
turn, BSFIL Technologies, Inc. (BSFIL), as consignee, reasonable and provided a sufficient period of time
insured the cargo with petitioner Pioneer Insurance within which an action to recover any loss or damage
and Surety Corporation (Pioneer Insurance). 5 arising from the contract of carriage may be instituted.
The appellate court pointed out that as
On February 2, 2012, the shipment arrived at the port subrogee, Pioneer Insurance was bound by the
of Manila and was temporarily stored at North Harbor, stipulations of the Bill of Lading, including the shorter
Manila. On February 6, 2012, the bags of chili were period to file an action. It stated that the contract had
withdrawn and delivered to BSFIL. Upon receipt the force of law between the parties and so it could not
thereof, it discovered that 76 bags were wet and countenance an interpretation which may undermine
heavily infested with molds. The shipment was the stipulations freely agreed upon by the parties.

ISSUE: does not construe the Bill of Lading any further but
1. Is the responded already barred by prescription? merely applies its terms according to its plain and
2. WON COGSA is not applicable in the case? literal meaning.
HELD:
1. NO. The cardinal rule in the interpretation of CHAPTER II – CARRIAGE OF GOODS BY SEA ACT
contracts is embodied in the first paragraph of Article
1370 of the Civil Code: if the terms of a contract are 5. Insurance Company of North America v. Asian
clear and leave no doubt upon the intention of the Terminals Inc., GR 180784, Feb. 5, 2012
contracting parties, the literal meaning of its FACTS:
stipulations shall control. Where the written terms of  On November 9, 2002, Macro-Lito Corporation,
the contract are not ambiguous and can only be read through M/V “DIMI P” vessel, 185 packages of
one way, the court will interpret the contract as a electrolytic tin free steel, complete and in good
matter of law. condition.
After a closer persual of the the Bill of Lading, the  The goods are covered by a bill of lading, had a
Court finds that its provisions are clear and declared value of $169,850.35 and was insured
unequivocal leaving no room for interpretation. with the Insuracne Company of North America
(Petitioner) against all risk.
In the Bill of Lading, it was categorically stated that the
carrier shall in any event be discharged from all liability  The carrying vessel arrived at the port of Manila on
whatsoever in respect of the goods, unless suit is November 19, 2002, and when the shipment was
brought in the proper forum within nine (9) months discharged therefrom, it was noted that 7 of the
after delivery of the goods or the date when they packages were damaged and in bad condition.
should have been delivered. The same, however, is
qualified in that when the said nine-month period is  On Novermber 21, 2002, the shipment was then
contrary to any law compulsory applicable, the period turned over to the custody of Asian Terminals. Inc.
prescribed by the said law shall apply. (Respondent) for storage and safekeeping pending
its withrawal by the consignee.
2. The present case involves lost or damaged cargo. It
has long been settled that in case of loss or damage of  On November 29, 2002, prior to the withrawal of
cargoes, the one-year prescriptive period under the the shipment, a joint inspection of the said cargo
COGSA applies. It is at this juncture where the parties was conducted. The examination report showed
are at odds, with Pioneer Insurance claiming that the that an additional 5 packages were found to be
one-year prescriptive period under the COGSA damaged and in bad order.
governs; whereas APL insists that the nine-month
prescriptive period under the Bill of Lading applies.  On January 6, 2003, the consignee, San Miguel
Corporation filed separate claims against both the
A reading of the Bill of Lading between the parties Petioner and the Respondent for the damage
reveals that the nine-month prescriptive period is not caused to the packages.
applicable in all actions or claims.1âwphi1 As an
exception, the nine-month period is inapplicable when  The Petitioner then paid San Miguel Corporation
there is a different period provided by a law for a the amound of PhP 431,592.14 which is based on a
particular claim or action-unlike in Philippine American report of its independent adjuster.
where the Bill of Lading stipulated a prescriptive period
for actions without exceptions. Thus, it is readily  The Petitioner then formally demanded reparation
apparent that the exception under the Bill of Lading against the Respondent for the amount it paid San
became operative because there was a compulsory law Miguel Corporation.
applicable which provides for a different prescriptive
period. Hence, strictly applying the terms of the Bill of  For the failure of the Respondent to satisfy the
Lading, the one-year prescriptive period under the demand of the Petitioner, the Petitioner filed for an
COOSA should govern because the present case action for damages with the RTC of Makati.
involves loss of goods or cargo. In finding so, the Court

 The trial court found that indeed, the shipment claim, as it knew that the damages it sought,
suffered additional damage under the custody of based on the report of its adjuster covered 9
the Respondent prior to the turn over of the said packages. Based on the report, only four of the
shipment to San Miguel. nine packages were damaged in the custody of the
Respondent. The Petitioner can be granted only the
 As to the extent of liability, Respondent invoked amount of damages that is due to it.
the Contract for Cargo Handling Services executed
between the Philippine Ports Authority and the 6. Belgian Overseas Chartering and Shipping N.V.
Respondent. Under the contract, the Respondent’s vs. Philippines First Insurance Co., Inc., G.R. No.
liability for damage to cargoes in its custody is 143133, June 5, 2002
limited to PhP5,000 for each package, unless the Facts:
value of the cargo shipment is otherwise specified
or manifested in writing together with the declared - CMC Trading A.G. shipped on board the M/V
Bill of Lading. The trial Court found that the Anangel Sky at Hamburg, Germany 242 coils of various
shipper and consignee with the said requirements. Prime Cold Rolled Steel sheets for transportation to
Manila consigned to the Philippine Steel Trading
 However, the trial court dismissed the complaint Corporation.
on the ground that the Petitioner’s claim was - On July 28, 1990, M/V Anangel Sky arrived at the
barred by the statute of limitations. It held that the port of Manila and, within the subsequent days,
Carriage of Goods by Sea Act (COGSA), embodied discharged the subject cargo. Four (4) coils were found
in Commonwealth Act No. 65 is applicable. The to be in bad order.
trial court held that under the said law, the shipper - Finding the four (4) coils in their damaged state to
has the right to bring a suit within one year after be unfit for the intended purpose, the consignee
the delivery of the goods or the date when the Philippine Steel Trading Corporation declared the same
goods should have been delivered, in respect of as total loss.
loss or damage thereto. - Philippine First Insurance paid the claim of
Philippine Steel and was thus subrogated.
 Petitioner then filed before the Supreme Court a - Philippine First then instituted a complaint for
petition for review on certiorari assailing the trial recovery of the amount paid to the consignee as
court’s order of dismissal. insured.
- Belgian claims that the damage and/or loss was
ISSUE/S: due to pre-shipment damage, to the inherent nature,
1.) Whether or not the trial court committed an error vice or defect of the goods, or to perils, danger and
in dismissing the complaint of the petitioner based on accidents of the sea, or to insufficiency of packing
the one-year prescriptive period for filing a suit under thereof, or to the act or omission of the shipper of the
the COGSA to an arrastre operator? YES. goods or their representatives. Belgian further argued
that their liability, if there be any, should not exceed
2.) Whether or not the Petitioner is entitled to the limitations of liability provided for in the bill of
recover actual damages against the Respondent? YES, lading and other pertinent laws. Finally, Belgian
but only PhP164,428.76 averred that, in any event, they exercised due
diligence and foresight required by law to prevent any
HELD: damage/loss to said shipment.
 The term “carriage of goods” covers the period - The RTC dismissed the complaint.
from the time when the goods are loaded to the - The CA reversed and ruled that Belgian were liable
time when they are discharged from the ship. for the loss or the damage of the goods shipped,
Thus, it can be inferred that the period of time because they had failed to overcome the presumption
when the goods have been discharged from the of negligence imposed on common carriers. As to the
ship and given to the custody of the arrastre extent of Belgian’s liability, the CA held that the
operator is not covered by the COGSA. package limitation under COGSA was not applicable,
because the words "L/C No. 90/02447" indicated that a
 The Petitioner, who filed the present action for the higher valuation of the cargo had been declared by the
5 packages that were damaged while in the shipper.
custody of the respondent was not fortright in its

prescriptive period also applies to the shipper, the
Issues: consignee, the insurer of the goods or any legal holder
1. Whether the notice of loss was timely filed. (Belgian of the bill of lading.
claims that pursuant to Section 3, paragraph 6 of - A claim is not barred by prescription as long as the
COGSA, respondent should have filed its Notice of Loss one-year period has not lapsed. In the present case,
within three days from delivery. They assert that the the cargo was discharged on July 31, 1990, while the
cargo was discharged on July 31, 1990, but that Complaint51 was filed by respondent on July 25, 1991,
respondent filed its Notice of Claim only on September within the one-year prescriptive period.
18, 1990.)
- YES. In this case, there was no stipulation in the
2. Whether the package limitation of liability under Bill of Lading limiting the carrier's liability. Neither did
COGSA is applicable. (Belgian contends that assuming the shipper declare a higher valuation of the goods to
that they are liable their liability should be limited to be shipped. This fact notwithstanding, the insertion of
US$500 per package as provided in the Bill of Lading the words "L/C No. 90/02447 cannot be the basis for
and by Section 4(5)of COGSA Belgian’s liability.
- First, a notation in the Bill of Lading which
indicated the amount of the Letter of Credit obtained
Held: by the shipper for the importation of steel sheets did
not effect a declaration of the value of the goods as
- NO. Mere proof of delivery of the goods in good required by the bill. That notation was made only for
order to a common carrier and of their arrival in bad the convenience of the shipper and the bank
order at their destination constitutes a prima facie case processing the Letter of Credit.
of fault or negligence against the carrier. - Second, a bill of lading is separate from the Other
- In this case, Belgian failed to rebut the prima facie Letter of Credit arrangements. Thus, Belgian’s liability
presumption of negligence. First, as stated in the Bill of should be computed based on US$500 per package
Lading, Belgian received the subject shipment in good and not on the per metric ton price declared in the
order and condition in Germany. Second, prior to the Letter of Credit.
unloading of the cargo, an Inspection Report prepared
and signed by representatives of both parties showed
the steel bands broken, the metal envelopes rust-
stained and heavily buckled, and the contents thereof 7. Loadstar Shipping Co., Inc. vs. CA, 373 Phil.
exposed and rusty. Third, Bad Order Tally Sheet issued 976
by Jardine Davies Transport Services stated that the Facts:
four coils were in bad order and condition. Normally, a LOADSTAR received on board its M/V Cherokee the
request for a bad order survey is made in case there is goods amounting to P6,067,178 which were insured for
an apparent or a presumed loss or damage.Fourth, the the same amount with MIC against various risks
Certificate of Analysis stated that, based on the sample including TOTAL LOSS BY TOTAL LOSS OF THE
submitted and tested, the steel sheets found in bad VESSEL. The vessel, in turn, was insured by Prudential
order were wet with fresh water. Fifth, Belgian -- in a Guarantee & Assurance, Inc. (hereafter PGAI) for P4
letteraddressed to the Philippine Steel --admitted that million.
they were aware of the condition of the four coils found On 20 November 1984, on its way to Manila
in bad order and condition. from the port of Nasipit, Agusan del Norte, the vessel,
along with its cargo, sank off Limasawa Island. As a
- YES. First, the provision of COGSA provides that result of the total loss of its shipment, the consignee
the notice of claim need not be given if the state of the made a claim with LOADSTAR which, however, ignored
goods, at the time of their receipt, has been the the same. As the insurer, MIC paid P6,075,000 to the
subject of a joint inspection or survey. Here, prior to insured in full settlement of its claim, and the latter
unloading the cargo, an Inspection Report as to the executed a subrogation receipt therefor.
condition of the goods was prepared and signed by
representatives of both parties. Second, as stated in MIC filed a complaint against LOADSTAR and
the same provision, a failure to file a notice of claim PGAI, alleging that the sinking of the vessel was due to
within three days will not bar recovery if it is the fault and negligence of LOADSTAR and its
nonetheless filed within one year. This one-year employees. It also prayed that PGAI be ordered to pay

the insurance proceeds from the loss of the vessel Insurance. The latter hired an independent insurance
directly to MIC, said amount to be deducted from MICs adjuster, which found that the shipment was wet
claim from LOADSTAR. LOADSTAR denied any liability because of the water which seeped inside the container
for the loss of the shippers goods and claimed that the van APL provided. Pioneer Insurance paid BSFIL Pl
sinking of its vessel was due to force majeure. PGAI, 95,505.65 after evaluating the claim. Having been
on the other hand, averred that MIC had no cause of subrogated to all the rights and cause of action of
action against it, LOADSTAR being the party insured. BSFIL, Pioneer Insurance sought payment from APL,
but the latter refused. This prompted Pioneer
The court a quo rendered judgment in favor of Insurance to file a complaint for sum of money against
MIC, prompting LOADSTAR to elevate the matter to APL.
the Court of Appeals, which, however, agreed with the The RTC concurred with the MTC. It agreed
trial court and affirmed its decision in toto. that APL was presumed to have acted negligently
because the goods were damaged while in its custody.
In one of its claims, the Loadstar argued that it is only In addition, the RTC stated that under the Carriage of
liable to the extent dictated by the bill of lading, and Goods by Sea Act (COOSA), lack of written notice shall
MIC cannot claim more than what is in the same not prejudice the right of the shipper to bring a suit
document. within one year after delivery of the goods. Further,
the trial court stated that the shorter prescriptive
Issue: WON Loadstar can only be liable to the extent period set in the Bill of Lading could not apply because
directed by the bill of lading? it is contrary to the provisions of the COGSA.
In its May 26, 2016 decision, the CA reversed
HELD: No. the stipulation in the case at bar effectively the decisions of the trial courts and ruled that the
reduces the common carriers liability for the loss or present action was barred by prescription. The
destruction of the goods to a degree less than appellate court noted that under Clause 8 of the Bill of
extraordinary (Articles 1744 and 1745), that is, the Lading, the carrier shall be absolved from any liability
carrier is not liable for any loss or damage to unless a case is filed within nine (9) months after the
shipments made at owners risk. Such stipulation is delivery of the goods. It explained that a shorter
obviously null and void for being contrary to public prescriptive period may be stipulated upon, provided it
policy. Since the stipulation in question is null and is reasonable. The CA opined that the nine-month
void, it follows that when MIC paid the shipper, it was prescriptive period set out in the Bill of Lading was
subrogated to all the rights which the latter has reasonable and provided a sufficient period of time
against the common carrier, LOADSTAR. within which an action to recover any loss or damage
arising from the contract of carriage may be instituted.
8. Pioneer Insurance Surety Corp. vs. APL CO PTE Issue: Whether or not the nine months prescriptive
Ltd, GR 226345, Aug. 2, 2017 period stipulated shall be the basis in considering the
Facts: January 13, 2012, the shipper, Chillies Export prescriptive period instead of the one year prescriptive
House Limited, turned over to respondent APL Co. Pte. stated by the law.
Ltd. 250 bags of chili pepper for transport from the
port of Chennai, India, to Manila. The shipment was Ruling: The Court ruled in the negative. It is true that
loaded on board MN Wan Hai 262. In tum, BSFIL in Philippine American General Insurance Co., Inc. v.
Technologies, Inc., as consignee, insured the cargo Sweet Lines, Inc. (Philippine American), the Court
with petitioner Pioneer Insurance and Surety recognized that stipulated prescriptive periods shorter
Corporation. than their statutory counterparts are generally valid
On February 2, 2012, the shipment arrived at because they do not affect the liability of the carrier
the port of Manila and was temporarily stored at North but merely affects the shipper’s remedy. The CA,
Harbor, Manila. On February 6, 2012, the bags of chili nevertheless, erred in applying Philippine American in
were withdrawn and delivered to BSFIL. Upon receipt the case at bench as it does not fall squarely with the
thereof, it discovered that 76 bags were wet and present circumstances.
heavily infested with molds. The shipment was It is elementary that a contract is the law
declared unfit for human consumption and was between the parties and the obligations it carries must
eventually declared as a total loss. As a result, BSFIL be complied with in good faith. In Norton Resources
made a formal claim against APL and Pioneer and Development Corporation v. All Asia Bank

Corporation, the Court reiterated that when the terms 9. Benjamin Chu vs. Wallem Phils Shipping Inc.
of the contract are clear, its literal meaning shall and Advance Shipping Corporation, GR 171337,
control, to wit: Jul. 11, 2012
The cardinal rule in the interpretation of FACTS:
contracts is embodied in the first paragraph of Article On November 12, 1990, Cua filed a civil action
1370 of the Civil Code: if the terms of a contract are for damages against Wallem and Advance Shipping
clear and leave no doubt upon the intention of the before the RTC. Cua sought the payment of
contracting parties, the literal meaning of its P2,030,303.52 for damage to 218 tons and for a
stipulations shall control. This provision is akin to the shortage of 50 tons of shipment of Brazilian Soyabean
“plain meaning rule” applied by Pennsylvania courts, consigned to him, as evidenced by Bill of Lading No.
which assumes that the intent of the parties to an 10. He claimed that the loss was due to the
instrument is “embodied in the writing itself, and when respondents failure to observe extraordinary diligence
the words are clear and unambiguous the intent is to in carrying the cargo. Advance Shipping (a foreign
be discovered only from the express language of the corporation) was the owner and manager of M/V Argo
agreement”. It also resembles the “four corners” rule, Trader that carried the cargo, while Wallem was its
a principle which allows courts in some cases to search local agent.
beneath the semantic surface for clues to meaning. A Advance Shipping filed a motion to dismiss the
court’s purpose in examining a contract is to interpret complaint, assailing the RTC s jurisdiction over Cua s
the intent of the contracting parties, as objectively claim; it argued that Cua s claim should have first been
manifested by them. The process of interpreting a brought to arbitration. Cua opposed Advance Shipping
contract requires the court to make a preliminary s argument; he contended that he, as a consignee,
inquiry as to whether the contract before it is was not bound by the Charter Party Agreement, which
ambiguous. A contract provision is ambiguous if it is was a contract between the ship owner (Advance
susceptible of two reasonable alternative Shipping) and the charterers. RTC initially deferred
interpretations. Where the written terms of the resolving the question of jurisdiction until after trial on
contract are not ambiguous and can only be read one the merits,8 but upon motion by Advance
way, the court will interpret the contract as a matter of Shipping,9 the RTC ruled that Cua was not bound by
law. If the contract is determined to be ambiguous, the arbitration clause in the Charter Party Agreement.
then the interpretation of the contract is left to the In the meantime, Wallem filed its own motion
court, to resolve the ambiguity in the light of the to dismiss, raising the sole ground of prescription.
intrinsic evidence. Section 3(6) of the Carriage of Goods by Sea Act
(COGSA) provides that "the carrier and the ship shall
After a closer persual of the the Bill of Lading, be discharged from all liability in respect of loss or
the Court finds that its provisions are clear and damage unless suit is brought within one year after
unequivocal leaving no room for interpretation. In the delivery of the goods." Wallem alleged that the goods
Bill of Lading, it was categorically stated that the were delivered to Cua on August 16, 1989, but the
carrier shall in any event be discharged from all liability damages suit was instituted only on November 12,
whatsoever in respect of the goods, unless suit is 1990 more than one year than the period allotted
brought in the proper forum within nine (9) months under the COGSA. Since the action was filed beyond
after delivery of the goods or the date when they the one year prescriptive period, Wallem argued that
should have been delivered. Cua’s action has been barred.
Cua filed an opposition to Wallem s motion and
The same, however, is qualified in that when referred to the August 10, 1990 telex message sent by
the said nine-month period is contrary to any law Mr. A.R. Filder of Thomas Miller,13 manager of the UK
compulsory applicable, the period prescribed by the P&I Club,14 which stated that Advance Shipping agreed
said law shall apply. The present case involves lost or to extend the commencement of suit for 90 days, from
damaged cargo. It has long been settled that in case of August 14, 1990 to November 12, 1990; the extension
loss or damage of cargoes, the one-year prescriptive was made with the concurrence of the insurer of the
period under the COOSA applies. vessel, the UK P&I Club. A copy of the August 10, 1990
telex was supposedly attached to Cua s opposition.
On February 11, 1992, Wallem filed an
omnibus motion withdrawing its motion to dismiss and
adopting instead the arguments in Advance Shipping s

motion to dismiss. It made an express reservation, the cargo "unless the suit is brought within one year
however, that it was not waiving "the defense of after delivery of the goods or the date when the
prescription and will allege as one of its defenses, such goods should have been delivered."29 Jurisprudence,
defense of prescription and/or laches in its Answer however, recognized the validity of an agreement
should this be required by the circumstances." between the carrier and the shipper/consignee
RTC issued a decision on December 28, 1995, extending the one-year period to file a claim.
ordering the respondents jointly and severally liable to The allegation of an agreement extending the
pay as damages to Cua. The respondents filed an period to file an action in Cua s complaint is a material
appeal with the CA, insisting that Cua s claim is averment that, under Section 11, Rule 8 of the Rules
arbitrable and has been barred by prescription and/or of Court, must be specifically denied by the
laches. CA found the respondents claim of prescription respondents; otherwise, the allegation is deemed
meritorious after finding that the August 10, 1990 admitted.
telex message, extending the period to file an action, A specific denial is made by specifying each
was neither attached to Cua s opposition to Wallem s material allegation of fact, the truth of which the
motion to dismiss, nor presented during trial. The CA defendant does not admit and, whenever practicable,
ruled that there was no basis for the RTC to conclude setting forth the substance of the matters upon which he
that the prescriptive period was extended by the relies to support his denial. The purpose of requiring the
defendant to make a specific denial is to make him
parties agreement. Hence, it set aside the RTC decision
disclose the matters alleged in the complaint which he
and dismissed Cua s complaint. Cua filed a motion for
succinctly intends to disprove at the trial, together with
reconsideration which was denied by the CA. Hence the
the matter which he relied upon to support the denial.
present motion to assail CA rulings.
A review of the pleadings submitted by the
Cua contends that the extension of the period to
respondents discloses that they failed to specifically
file a complaint for damages was a fact that was already
deny Cua s allegation of an agreement extending
admitted by the respondents who may no longer assert
the period to file an action to November 12,
the contrary, unless they sufficiently show that it was
1990. Wallem s motion to dismiss simply referred to the
made through palpable mistake or that no admission was
fact that Cua s complaint was filed more than one year
made. Cua points out that Wallem s motion to dismiss
from the arrival of the vessel, but it did not contain a
raised solely the issue of prescription, which he refuted by
denial of the extension. Advance Shipping s motion to
referring to the August 10, 1990 telex message extending
dismiss, on the other hand, focused solely on its
the prescriptive period. The respondents, on the other
contention that the action was premature for failure to
hand, deny that an admission was made with respect to
first undergo arbitration.
the existence of the August 10, 1990 telex message. The
While the joint answer submitted by the
telex message was never attached to Cua s opposition to
respondents denied Cua s allegation of an extension,
Wallem s motion to dismiss, hence, there was no need for
they did not provide in their joint answer any factual
the respondents to deny its existence. They contend that
basis for their belief that the complaint had prescribed.
Wallem s withdrawal of its motion to dismiss does not
We cannot consider the respondents discussion
amount to an admission of the existence of the telex
on prescription in their Memorandum filed with the
message, nor does it amount to a waiver of the defense
RTC,39 since their arguments were based on Cua s
for prescription. As stated in the June 5, 1992 Order of
supposed failure to comply with Article 366 of the Code of
the RTC, the "defendant [referring to Wallem] moved for
Commerce, not Section 3(6) of the COGSA the relevant
the withdrawal of the Motion to Dismiss without waiving
and material provision in this case. Article 366 of the Code
the defense of prescription."
of Commerce requires that a claim be made with the
carrier within 24 hours from the delivery of the cargo; the
ISSUE: Whether Cua s claim for payment of
respondents alleged that they were informed of the
damages against the respondents has prescribed
damage and shortage only on September 13, 1989,
months after the vessel s arrival in Manila.
HELD: The Court finds that Cua timely filed his claim
Since the COGSA is the applicable law, the
before the trial court. The COGSA is the applicable law
respondent’s argument, not constitute a refutation of
for all contracts for carriage of goods by sea to and
Cua s allegation of extension. Given the respondents
from Philippine ports in foreign trade;28 it is thus the
failure to specifically deny the agreement on the
law that the Court shall consider in the present case
extension of the period to file an action, the Court
since the cargo was transported from Brazil to the
considers the extension of the period as an admitted
Philippines. Under Section 3(6) of the COGSA, the
fact.
carrier is discharged from liability for loss or damage to

10. Philippine Charter Insurance Corp vs. ISSUE: DID THE COURT OF APPEALS ERRED IN
Neptune Orient Lines/Overseas Agency Services AWARDING RESPONDENTS DAMAGES SUBJECT TO
Inc., GR 145044, June 12, 2008 THE US$500 PER PACKAGE LIMITATION.
FACTS:
On September 30, 1993, L.T. Garments HELD: No.
Manufacturing Corp. Ltd. shipped from Hong Kong Sec. 4, paragraph (5) of the COGSA, which is
three sets of warp yarn on returnable beams aboard applicable to all contracts for the carriage of goods by
respondent Neptune Orient Lines vessel, M/V Baltimar sea to and from Philippine ports in foreign trade,
Orion, for transport and delivery to Fukuyama provides:
Manufacturing Corporation (Fukuyama) of No. 7 Neither the carrier nor the ship shall in any event
Jasmin Street, AUV Subdivision, Metro Manila. be or become liable for any loss or damage to or in
The said cargoes were loaded in Container No. connection with the transportation of goods in an
IEAU-4592750 in good condition under Bill of Lading amount exceeding $500 per package lawful money
of the United States, or in case of goods not
No. HKG-0396180. Fukuyama insured the shipment
shipped in packages, per customary freight unit, or
AGAINST ALL RISKS with petitioner Philippine
the equivalent of that sum in other currency, unless
Charter Insurance Corporation (PCIC) under Marine
the nature and value of such goods have been
Cargo Policy No. RN55581 in the amount of P228,085. declared by the shipper before shipment and
During the course of the voyage, the container inserted in the bill of lading. This declaration, if
with the cargoes fell overboard and was lost. embodied in the bill of lading shall be prima facie
Fukuyama wrote a letter to respondent Overseas evidence, but shall be conclusive on the carrier.
Agency Services, Inc. (Overseas Agency), the agent of

Neptune Orient Lines in Manila, and claimed for the The bill of lading submitted in evidence by
value of the lost cargoes. However, Overseas Agency petitioner did not show that the shipper in Hong
ignored the claim. Hence, Fukuyama sought payment Kong declared the actual value of the goods as insured
from its insurer, PCIC, for the insured value of the by Fukuyama before shipment and that the said value
cargoes, which claim was fully satisfied by PCIC. was inserted in the Bill of Lading, and so no additional
On February 17, 1994, Fukuyama issued a charges were paid. Hence, the stipulation in the bill of
Subrogation Receipt to petitioner PCIC for the latter to lading that the carriers liability shall not exceed
be subrogated in its right to recover its losses from US$500 per package applies.
respondents. PCIC demanded from respondents

reimbursement of the entire amount it paid
to Fukuyama, but respondents refused payment. 11. Unsworth Transport International Inc. vs. CA,
PCIC filed a complaint for damages against et. Al., GR 166250, July 26, 2010
respondents. Respondents filed and answer denying FACTS:
the liability alleging that during the voyage, the vessel On August 31, 1992, the shipper Sylvex
encountered strong winds and heavy seas making the Purchasing Corporation delivered to UTI a shipment of
vessel pitch and roll, which caused the subject 27 drums of various raw materials for pharmaceutical
container with the cargoes to fall manufacturing. UTI issued Bill of Lading No.
[5]
overboard. Respondents contended that the occurrence C320/C15991-2, covering the aforesaid
was a fortuitous event which exempted them from any shipment. The subject shipment was insured with
liability, and that their liability, if any, should not private respondent Pioneer Insurance and Surety
exceed US$500 or the limit of liability in the bill of Corporation in favor of Unilab against all risks under
lading, whichever is lower. and by virtue of Marine Risk Note Number MC RM UL
RTC held that respondents, as common carrier, 0627 92[6] and Open Cargo Policy No. HO-022-RIU.
failed to prove that they observed the required On the same day that the bill of lading was
extraordinary diligence to prevent loss of the subject issued, the shipment was loaded in a sealed 1x40
cargoes in accordance with the pertinent provisions of container van, boarded on APLs vessel M/V Pres.
the Civil Code. Respondents motion for reconsideration Jackson, Voyage 42, and transshipped to APLs M/V
was denied by the RTC in an Order dated February 19, Pres. Taft for delivery to petitioner in favor of the
1996. Respondents appealed to CA but the latter consignee United Laboratories, Inc. (Unilab).
affirmed the decision of the RTC with modification The shipment arrived in the port of Manila on
ordering both respondents ordered to pay jointly and September 30, 1992. On October 6, 1992, petitioner
severally appellee PCIC. received the said shipment in its warehouse after it

stamped the Permit to Deliver Imported Goods ISSUE: IS LIABILITY OF THE PETITIONER SHOULD BE
procured by the Champs Customs Brokerage. LIMITED TO $500 PER PACKAGE PURSUANT TO THE
Three days thereafter, or on October 9, 1992, CARRIAGE OF GOODS BY SEA ACT (COGSA)
Oceanica Cargo Marine Surveyors Corporation CONSIDERING THAT THE VALUE OF THE SHIPMENT
(OCMSC) conducted a stripping survey of the shipment WAS DECLARED PURSUANT TO THE LETTER OF
located in petitioners warehouse. On October 15, CREDIT AND THE PRO FORMA INVOICE.
1992, the arrastre Jardine Davies Transport Services,
Inc. (Jardine) issued Gate Pass No. 7614[12] which HELD:
stated that 22 drums[13] Raw Materials for A bill of lading is a written
Pharmaceutical Mfg. were loaded on a truck with Plate acknowledgement of the receipt of goods and an
No. PCK-434 facilitated by Champs for delivery to agreement to transport and to deliver them at a
Unilabs warehouse. The materials were noted to be specified place to a person named or on his or
complete and in good order in the gate pass.[14] On the her order. It operates both as a receipt and as a
same day, the shipment arrived in Unilabs warehouse contract. It is a receipt for the goods shipped and a
and was immediately surveyed by an independent contract to transport and deliver the same as therein
surveyor, J.G. Bernas Adjusters & Surveyors, Inc. (J.G. stipulated. As a receipt, it recites the date and place of
Bernas). The Report stated: shipment, describes the goods as to quantity, weight,
 1-p/bag torn on side contents partly spilled dimensions, identification marks, condition, quality,
 1-s/drum #7 punctured and retaped on bottom and value. As a contract, it names the contracting
side content lacking parties, which include the consignee; fixes the route,
 5-drums shortship/short delivery destination, and freight rate or charges; and stipulates
the rights and obligations assumed by the parties.
On October 23 and 28, 1992, the same independent
surveyor conducted final inspection surveys which It is to be noted that the Civil Code does not limit the
yielded the same results. Unilabs quality control liability of the common carrier to a fixed amount per
representative rejected one paper bag as unfit for the package. In all matters not regulated by the Civil Code,
intended purpose. the rights and obligations of common carriers are
Unilab filed a formal claim for the damage governed by the Code of Commerce and special laws.
against private respondent and UTI. UTI denied liability Thus, the COGSA supplements the Civil Code by
on the basis of the gate pass issued by Jardine that the establishing a provision limiting the carriers liability in
goods were in complete and good condition. the absence of a shippers declaration of a higher value
The RTC decided in favor of private respondent in the bill of lading. Section 4(5) of the COGSA
and against APL, UTI and petitioner. the CA affirmed provides:
the RTC decision. (5) Neither the carrier nor the ship shall in any event
be or become liable for any loss or damage to or in
The CA rejected UTIs defense that it was
connection with the transportation of goods in an
merely a forwarder, declaring instead that it was a
amount exceeding $500 per package of lawful money
common carrier. The appellate court added that by of the United States, or in case of goods not shipped in
issuing the Bill of Lading, UTI acknowledged packages, per customary freight unit, or the
equivalent of that sum in other currency, unless the
receipt of the goods and agreed to transport and
nature and value of such goods have been declared by
deliver them at a specific place to a person the shipper before shipment and inserted in the bill of
named or his order. CA also rejected petitioners lading. This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but shall not be
claim that its liability should be limited to $500 per
conclusive on the carrier.
package pursuant to the Carriage of Goods by Sea Act
(COGSA) considering that the value of the shipment
In the present case, the shipper did not declare a
was declared pursuant to the letter of credit and the
higher valuation of the goods to be shipped. Contrary
pro forma invoice. As to APL, the court considered it as
to the CAs conclusion, the insertion of the words L/C
a common carrier notwithstanding the non-issuance of
No. LC No. 1-187-008394/ NY 69867 covering
a bill of lading inasmuch as a bill of lading is not
shipment of raw materials for pharmaceutical Mfg. x x
indispensable for the execution of a contract of
x cannot be the basis of petitioners
carriage.
liability.[31] Furthermore, the insertion of an invoice
Unsatisfied, the petitioner come before SC in a
number does not in itself sufficiently and convincingly
petition for review on certiorari.
show that petitioner had knowledge of the value of the
cargo.

CHAPTER III – WARSAW CONVENTION Thus, since a) respondent is domiciled in London;
b) respondent’s principal place of business is in
12. Edna Diago Lhuillier vs. British Airways, GR London; c) petitioner bought her ticket in Italy
171092, Mar. 15, 2010 (through Jeepney Travel S.A.S, in Rome);6 and d)
Facts: Rome, Italy is petitioner’s place of destination, then it
On April 28, 2005, petitioner Edna Diago follows that the complaint should only be filed in the
Lhuillier filed a Complaint for damages against proper courts of London, United Kingdom or Rome,
respondent British Airways before the Regional Trial Italy.
Court (RTC) of Makati City. She alleged that on
February 28, 2005, she took respondent’s flight 548 Likewise, it was alleged that the case must be
from London, United Kingdom to Rome, Italy. Once on dismissed for lack of jurisdiction over the person of the
board, she allegedly requested Julian Halliday respondent because the summons was erroneously
(Halliday), one of the respondent’s flight attendants, to served on Euro-Philippine Airline Services, Inc. which is
assist her in placing her hand-carried luggage in the not its resident agent in the Philippines.
overhead bin. However, Halliday allegedly refused to
help and assist her, and even sarcastically remarked The RTC held that, Courts have to apply the
that "If I were to help all 300 passengers in this flight, principles of international law, and are bound by treaty
I would have a broken back!" stipulations entered into by the Philippines which form
part of the law of the land. One of this is the Warsaw
Petitioner further alleged that when the plane was Convention. Being a signatory thereto, the Philippines
about to land in Rome, Italy, another flight attendant, adheres to its stipulations and is bound by its
Nickolas Kerrigan (Kerrigan), singled her out from provisions including the place where actions involving
among all the passengers in the business class section damages to plaintiff is to be instituted, as provided for
to lecture on plane safety. Allegedly, Kerrigan made under Article 28(1) thereof. The Court finds no
her appear to the other passengers to be ignorant, justifiable reason to deviate from the indicated
uneducated, stupid, and in need of lecturing on the limitations as it will only run counter to the provisions
safety rules and regulations of the plane. Affronted, of the Warsaw Convention. Since the Philippines is not
petitioner assured Kerrigan that she knew the plane’s the place of domicile of the defendant nor is it the
safety regulations being a frequent traveler. principal place of business, our courts are thus
Thereupon, Kerrigan allegedly thrust his face a mere divested of jurisdiction over cases for damages.
few centimeters away from that of the petitioner and Neither was plaintiff’s ticket issued in this country nor
menacingly told her that "We don’t like your attitude." was her destination Manila but Rome in Italy.
Petitioner filed a Motion for Reconsideration but the
Upon arrival in Rome, petitioner complained to motion was denied. Petitioner now comes directly
respondent’s ground manager and demanded an before SC on a Petition for Review on Certiorari on
apology. However, the latter declared that the flight pure questions of law.
stewards were "only doing their job."
Petitioner filed the complaint for damages. ,

respondent, by way of special appearance through Issue: WHETHER X X X PHILIPPINE COURTs HAVE
counsel, filed a Motion to Dismiss on grounds of lack of JURISDICTION OVER A TORTIOUS CONDUCT
jurisdiction over the case and over the person of the COMMITTED AGAINST A FILIPINO CITIZEN AND
respondent. Respondent alleged that only the courts of RESIDENT BY AIRLINE PERSONNEL OF A FOREIGN
London, United Kingdom or Rome, Italy, have CARRIER TRAVELLING BEYOND THE TERRITORIAL
jurisdiction over the complaint for damages pursuant LIMIT OF ANY FOREIGN COUNTRY; AND THUS IS
to the Warsaw Convention. Article 28(1) of which OUTSIDE THE AMBIT OF THE WARSAW CONVENTION.
provides:
An action for damages must be brought at the option of the Held:

plaintiff, either before the court of domicile of the carrier or his
principal place of business, or where he has a place of business The The petition is without merit. The Warsaw
through which the contract has been made, or before the court Convention has the force and effect of law in this
of the place of destination.
country.

The Warsaw Convention applies because the conduct which falls within its provisions." It further
air travel, where the alleged tortious conduct occurred, held that the said Convention "created no exception for
was between the United Kingdom and Italy, which are an injury suffered as a result of intentional
both signatories to the Warsaw Convention. conduct" which in that case involved a claim for
intentional infliction of emotional distress.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of It is thus settled that allegations of tortious
persons, luggage or goods performed by aircraft for reward.
conduct committed against an airline passenger during
It applies equally to gratuitous carriage by aircraft
performed by an air transport undertaking.
the course of the international carriage do not bring
the case outside the ambit of the Warsaw Convention.
2. For the purposes of this Convention the expression
"international carriage" means any carriage in which,
according to the contract made by the parties, the place of
departure and the place of destination, whether or not there 13. Santos III vs. Northwest Orient Airlines, GR
be a break in the carriage or a transhipment, are situated 101538, June 23, 1992
either within the territories of two High Contracting Parties,
Facts:
or within the territory of a single High Contracting Party, if
there is an agreed stopping place within a territory subject
On October 21, 1986, the petitioner purchased
to the sovereignty, suzerainty, mandate or authority of from NOA a round-trip ticket in San Francisco. U.S.A.,
another Power, even though that Power is not a party to this
for his flight from San Francisco to Manila via Tokyo
Convention. A carriage without such an agreed stopping
and back. The scheduled departure date from Tokyo
place between territories subject to the sovereignty,
suzerainty, mandate or authority of the same High was December 20, 1986. No date was specified for his
Contracting Party is not deemed to be international for the return to San Francisco.
purposes of this Convention. (Emphasis supplied)
On December 19, 1986, the petitioner checked

Thus, when the place of departure and the place of
in at the NOA counter in the San Francisco airport for
destination in a contract of carriage are situated within
his scheduled departure to Manila. Despite a previous
the territories of two High Contracting Parties, said
confirmation and re-confirmation, he was informed
carriage is deemed an "international carriage". The
that he had no reservation for his flight from Tokyo to
High Contracting Parties referred to herein were the
Manila. He therefore had to be wait-listed.
signatories to the Warsaw Convention and those which
subsequently adhered to it.
On March 12, 1987, the petitioner sued NOA
In the case at bench, petitioner’s place of
for damages in the Regional Trial Court of Makati. On
departure was London, United Kingdom while her place
April 13, 1987, NOA moved to dismiss the complaint
of destination was Rome, Italy. Both the United
on the ground of lack of jurisdiction. Citing the above-
Kingdom and Italy signed and ratified the Warsaw
quoted article, it contended that the complaint could
Convention. As such, the transport of the petitioner is
be instituted only in the territory of one of the High
deemed to be an "international carriage" within the
Contracting Parties, before:
contemplation of the Warsaw Convention.
Tortious conduct as ground for the petitioner’s
1. the court of the domicile of the carrier;
complaint is within the purview of the Warsaw
2. the court of its principal place of business;
Convention.
3. the court where it has a place of business
through which the contract had been made;
In the case of Carey v. United Airlines, The United
4. the court of the place of destination.
States Court of Appeals (9th Circuit) held that the
"passenger's action against the airline carrier arising
The private respondent contended that the Philippines
from alleged confrontational incident between
was not its domicile nor was this its principal place of
passenger and flight attendant on international flight
business. Neither was the petitioner's ticket issued in
was governed exclusively by the Warsaw Convention,
this country nor was his destination Manila but San
even though the incident allegedly involved intentional
Francisco in the United States.
misconduct by the flight attendant."
The lower court granted the motion and dismissed the

In Bloom v. Alaska Airlines, The United States
case. CA affirmed the decision of the lower court.
Court of Appeals (9th Circuit) held that the "Warsaw
Hence, the instant petition before the Supreme Court.
Convention governs actions arising from international
Issue:
air travel and provides the exclusive remedy for

1. Is Article 28(1) of the Warsaw Convention for a formal act of rejection, usually made by the head
constitutional? of State, with a statement of the reasons why
2. Does the Philippine Courts have jurisdiction over the compliance with the treaty is no longer required.
case
In lieu thereof, the treaty may be denounced
even without an expressed justification for this action.
Held:
Obviously, rejection of the treaty, whether on the
1. The Republic of the Philippines is a party to the
ground of rebus sic stantibus or pursuant to Article 39,
Convention for the Unification of Certain Rules Relating
is not a function of the courts but of the other
to International Transportation by Air, otherwise
branches of government. This is a political act. The
known as the Warsaw Convention. The Convention is
conclusion and renunciation of treaties is the
thus a treaty commitment voluntarily assumed by the
prerogative of the political departments and may not
Philippine government and, as such, has the force and
be usurped by the judiciary. The courts are concerned
effect of law in this country. The treaty which is the
only with the interpretation and application of laws and
subject matter of this petition was a joint legislative-
treaties in force and not with their wisdom or efficacy.
executive act. The presumption is that it was first
carefully studied and determined to be constitutional
before it was adopted and given the force of law in this
14. Philippine Airlines vs. Hon. Adriano Savillo,
country.
et. Al, GR 14954, Jul. 4, 2008
Facts:
2. When the contract of carriage provides for the
This is a Petition for Review on Certiorari under
transportation of the passenger between certain
Rule 45 of the Rules of Court, assailing the Decision of
designated terminals "within the territories of two High
CA in CA-G.R. SP No. 48664 affirming in toto the Order
Contracting Parties," the provisions of the Convention
of RTC dismissing the Motion to Dismiss filed by
automatically apply and exclusively govern the rights
petitioner Philippine Airlines Inc. (PAL) in the case
and liabilities of the airline and its passenger.
entitled, Simplicio Griño v. Philippine Airlines, Inc. and
Singapore Airlines, docketed as Civil Case No. 23773.
Since the flight involved in the case at bar is
Public respondent Hon. Adriano Savillo is the presiding
international, the same being from the United States to
judge of Branch 30 of the Iloilo RTC, where Civil Case
the Philippines and back to the United States, it is
No. 23773 was filed; while private respondent
subject to the provisions of the Warsaw Convention,
Simplicio Griño is the plaintiff in the aforementioned
including Article 28(1), which enumerates the four
case.
places where an action for damages may be brought.
The place of destination, within the meaning of Private respondent was invited to participate in
the Warsaw Convention, is determined by the terms of the 1993 ASEAN Seniors Annual Golf Tournament held
the contract of carriage or, specifically in this case, the in Jakarta, Indonesia. He and several companions
ticket between the passenger and the carrier. decided to purchase their respective passenger tickets
Examination of the petitioner's ticket shows that his from PAL with the following points of passage:
ultimate destination is San Francisco. Although the MANILA-SINGAPORE-JAKARTA-SINGAPORE-MANILA.
date of the return flight was left open, the contract of
carriage between the parties indicates that NOA was Private respondent and his companions were
bound to transport the petitioner to San Francisco from made to understand by PAL that its plane would take
Manila. Manila should therefore be considered merely them from Manila to Singapore, while Singapore
an agreed stopping place and not the destination. Airlines would take them from Singapore to Jakarta.
It is true that at the time the Warsaw

On 3 October 1993, private respondent and his
Convention was drafted, the airline industry was still in
companions took the PAL flight to Singapore and
its infancy. However, that circumstance alone is not
arrived at about 6:00 o’clock in the evening. Upon
sufficient justification for the rejection of the treaty at
their arrival, they proceeded to the Singapore Airlines
this time. The changes recited by the petitioner were,
office to check-in for their flight to Jakarta scheduled at
realistically, not entirely unforeseen although they
8:00 o’clock in the same evening. Singapore Airlines
were expected in a general sense only. The doctrine
rejected the tickets of private respondent and his
of rebus sic stantibus does not operate automatically
group because they were not endorsed by PAL. It was
to render the treaty inoperative. There is a necessity
explained to private respondent and his group that if
Singapore Airlines honored the tickets without PAL’s Code, which allowed for a ten-year prescription period,
endorsement, PAL would not pay Singapore Airlines for the appellate court declared that the Complaint filed by
their passage. Private respondent tried to contact PAL’s private respondent should not be dismissed.
office at the airport, only to find out that it was closed.
ISSUE:
Stranded at the airport in Singapore and left 1. DID COURT OF APPEALS ERRED IN NOT APPLYING
with no recourse, private respondent was in panic and THE PROVISIONS OF THE WARSAW CONVENTION
at a loss where to go; and was subjected to DESPITE THE FACT THAT GRIÑO’S CAUSE OF ACTION
humiliation, embarrassment, mental anguish, serious AROSE FROM A BREACH OF CONTRACT FOR
anxiety, fear and distress. Eventually, private INTERNATIONAL AIR TRANSPORT.
respondent and his companions were forced to
2. COURT OF APPEALS ERRED IN NOT HOLDING THAT
purchase tickets from Garuda Airlines and board its
THE COMPLAINT FILED BY GRIÑO BEYOND THE TWO
last flight bound for Jakarta. When they arrived in
(2)-YEAR PERIOD PROVIDED UNDER THE WARSAW
Jakarta at about 12:00 o’clock midnight, the party who
CONVENTION IS ALREADY BARRED BY PRESCRIPTION
was supposed to fetch them from the airport had
already left and they had to arrange for their
HELD:
transportation to the hotel at a very late hour. After
1. NO.
the series of nerve-wracking experiences, private
The Warsaw Convention applies to "all international
respondent became ill and was unable to participate in
transportation of persons, baggage or goods performed
the tournament
by any aircraft for hire." It seeks to accommodate or
balance the interests of passengers seeking recovery
Upon his return to the Philippines, private respondent
for personal injuries and the interests of air carriers
brought the matter to the attention of PAL. He sent a
seeking to limit potential liability. It employs a scheme
demand letter to PAL on 20 December 1993 and
of strict liability favoring passengers and imposing
another to Singapore Airlines on 21 March 1994.
damage caps to benefit air carriers.16 The cardinal
However, both airlines disowned liability and blamed
purpose of the Warsaw Convention is to provide
each other for the fiasco.
uniformity of rules governing claims arising from
international air travel; thus, it precludes a passenger
On 15 August 1997 Private respondent filed a
from maintaining an action for personal injury
Complaint for Damages before the RTC. PAL filed a
damages under local law when his or her claim does
Motion to Dismiss on the ground that the said
not satisfy the conditions of liability under the
complaint was barred on the ground of prescription
Convention.
under Section 1(f) of Rule 16 of the Rules of
Article 19 of the Warsaw Convention provides
Court. PAL argued that the Warsaw
for liability on the part of a carrier for "damages
Convention, particularly Article 29 thereof, governed
occasioned by delay in the transportation by air of
this case, as it provides that any claim for damages in
passengers, baggage or goods." Article 24 excludes
connection with the international transportation of
other remedies by further providing that "(1) in the
persons is subject to the prescription period of two
cases covered by articles 18 and 19, any action for
years. Since the Complaint was filed on 15 August
damages, however founded, can only be brought
1997, more than three years after PAL received the
subject to the conditions and limits set out in this
demand letter on 25 January 1994, it was already
convention." Therefore, a claim covered by the Warsaw
barred by prescription.
Convention can no longer be recovered under local
law, if the statute of limitations of two years has
RTC issued an Order12 denying the Motion to
already lapsed.
Dismiss. It maintained that the provisions of the Civil
Court notes that jurisprudence in the
Code and other pertinent laws of the Philippines, not
Philippines and the United States also recognizes that
the Warsaw Convention, were applicable to the present
the Warsaw Convention does not "exclusively regulate"
case. The Court of Appeals likewise dismissed the
the relationship between passenger and carrier on an
Petition for Certiorari filed by PAL and affirmed the
international flight. This Court finds that the present
Order of the RTC. It pronounced that the application of
case is substantially similar to cases in which the
the Warsaw Convention must not be construed to
damages sought were considered to be outside the
preclude the application of the Civil Code and other
coverage of the Warsaw Convention.
pertinent laws. By applying Article 1144 of the Civil

needs to be heard and established by adequate proof
In United Airlines v. Uy,18 this Court before the RTC, an action based on these allegations
distinguished between the (1) damage to the will not fall under the Warsaw Convention, since the
passenger’s baggage and (2) humiliation he suffered at purported negligence on the part of PAL did not occur
the hands of the airline’s employees. The first cause of during the performance of the contract of carriage but
action was covered by the Warsaw Convention which days before the scheduled flight. Thus, the present
prescribes in two years, while the second was covered action cannot be dismissed based on the statute of
by the provisions of the Civil Code on torts, which limitations provided under Article 29 of the Warsaw
prescribes in four years. Convention.
The profound distress, fear, anxiety and
Similar distinctions were made in American humiliation that private respondent experienced when,
jurisprudence. In Mahaney v. Air France, a passenger despite PAL’s earlier assurance that Singapore Airlines
was denied access to an airline flight between New confirmed his passage, he was prevented from
York and Mexico, despite the fact that she held a boarding the plane and he faced the daunting
confirmed reservation. The court therein ruled that if possibility that he would be stranded in Singapore
the plaintiff were to claim damages based solely on the Airport because the PAL office was already closed.
delay she experienced – for instance, the costs of These claims are covered by the Civil Code provisions
renting a van, which she had to arrange on her own as on tort, and not within the purview of the Warsaw
a consequence of the delay – the complaint would be Convention. Hence, the applicable prescription period
barred by the two-year statute of limitations. However, is that provided under Article 1146 of the Civil Code:
where the plaintiff alleged that the airlines subjected Art. 1146. The following actions must be instituted within
four years:
her to unjust discrimination or undue or unreasonable
(1) Upon an injury to the rights of the plaintiff;
preference or disadvantage, an act punishable under (2) Upon a quasi-delict.
the United States laws, then the plaintiff may claim
purely nominal compensatory damages for humiliation Where the ground on which prescription is based
and hurt feelings, which are not provided for by the does not appear to be indubitable, the court may do
Warsaw Convention. well to defer action on the motion to dismiss until after
trial on the merits. The petition is DENIED. Assailed
In another case, Wolgel v. Mexicana decision of the CA is AFFIRMED.
Airlines,20the court pronounced that actions for
damages for the "bumping off" itself, rather than the 15. United Airlines vs. Willie J. Uy, GR 127768,
incidental damages due to the delay, fall outside the Nov. 19, 1999
Warsaw Convention and do not prescribe in two years. FACTS:
October 13, 1989 – Respondent Willie Uy is a
In the Petition at bar, private respondent’s Complaint passenger of petitioner United Airlines, bound from
alleged that both PAL and Singapore Airlines were San Francisco to Manila. While in San Francisco, it was
guilty of gross negligence, which resulted in his being found that one piece of his luggage was over the
subjected to "humiliation, embarrassment, mental maximum weight allowance of 70 kg. per bag. A
anguish, serious anxiety, fear and distress.” The United Airlines employee rebuked him and in a loud
emotional harm suffered by the private respondent as voice, in front of the milling crowd, ordered him to
a result of having been unreasonably and unjustly repack his things accordingly. Wishing not to create a
prevented from boarding the plane should be scene, Willie did as asked. Unfortunately, his luggage
distinguished from the actual damages which resulted was still overweight so the airline billed him overweight
from the same incident. Under the Civil Code charges. Willie offered to pay the charges with a
provisions on tort, such emotional harm gives rise to Miscellaneous Charge Order (MCO) or an airline pre-
compensation where gross negligence or malice is paid credit but the same employee, and an airline
proven. supervisor, refused to honor it, contending that there
In the case at hand, Singapore Airlines barred private were discrepancies in the figures. Thus, Willie was
respondent from boarding the Singapore Airlines flight forced to pay the charges with his American Express
because PAL allegedly failed to endorse the tickets of credit card. Upon arrival in Manila, Willie discovered
private respondent and his companions, despite PAL’s that one of his bags had been slashed and its contents,
assurances to respondent that Singapore Airlines had amounting to US$5,310.00, stolen.
already confirmed their passage. While this fact still

October 16, 1989 – he sent his first letter of demand HELD:
to United Airlines. The airline did not refute Willie’s Supreme Court held that although the 2-year
allegations and mailed a check representing payment prescriptive period under the Warsaw Convention has
of his loss based on the maximum liability of US$9.70 lapsed, it did not preclude the application of other
per pound. Willie, thinking the amount to be grossly pertinent provisions of the Civil Code. Thus, the action
inadequate to compensate him for his losses as well as for damages could still be filed based on tort which can
for the indignities he was subjected to, sent two more be filed within 4 years from the time cause of action
letters to petitioner airline, one dated January 4, 1990 accrued. As for the action pertaining to the loss of the
and the other dated October 28, 1991, demanding out- contents of the luggage, while it was well within the
of-court settlement of P1,000,000.00. bounds of the Warsaw Convention, the Supreme Court
found that there was an exception to the applicability
June 9, 1992 – Willie filed a complaint for damages of the 2-year prescriptive period – that is when the
before the Philippine courts. He had two causes of airline employed delaying tactics and gave the
action: (1) the shabby and humiliating treatment he passenger the run-around.
received from petitioner’s employees at the San
Francisco Airport which caused him extreme Applicability of the Warsaw Convention: Courts
embarrassment and social humiliation; and (2) the have discretion whether to apply them or not
slashing of his luggage and the loss of personal effects
amounting to US$5,310.00. Within our jurisdiction we have held that the Warsaw
Convention can be applied, or ignored, depending on
For its part, United Airlines moved to dismiss the the peculiar facts presented by each case. Thus, we
complaint on the ground that it was filed out of time. have ruled that the Convention's provisions do not
Under Art. 29 of the Warsaw Convention, the right to regulate or exclude liability for other breaches of
damages shall be extinguished if an action is not contract by the carrier or misconduct of its officers and
brought within 2 years. However, the second employees, or for some particular or exceptional type
paragraph of the said provision stated that the method of damage. Neither may the Convention be invoked to
of calculating the period of limitation shall be justify the disregard of some extraordinary sort of
determined by the law of the court to which the case is damage resulting to a passenger and preclude
submitted. It is Willie’s position that our rules on recovery therefor beyond the limits set by said
interruption of prescriptive period should apply. When Convention. Likewise, we have held that the
he sent his letters of demand, the 2-year period was Convention does not preclude the operation of the Civil
tolled, giving him ample time to file his complaint. Code and other pertinent laws. It does not regulate,
much less exempt, the carrier from liability for
The trial court ordered the dismissal of the case, damages for violating the rights of its passengers
holding that Art. 29(2) refers not to the local forum’s under the contract of carriage, especially if willful
rules in interrupting the prescriptive period but only to misconduct on the part of the carrier's employees is
the rules of determining the time in which the action found or established.
was deemed commenced (meaning “filed”). Willie filed
his motion for reconsideration of the order of dismissal Respondent's complaint reveals that he is suing on two
only on the 14th day. The trial court denied his motion (2) causes of action: (a) the shabby and humiliating
and 2 days later Willie filed his notice of appeal. United treatment he received from petitioner's employees at
Airlines this time contended that the notice of appeal the San Francisco Airport which caused him extreme
was filed beyond the 15-day reglementary period and embarrassment and social humiliation; and, (b) the
should therefore be dismissed. The CA, however, took slashing of his luggage and the loss of his personal
cognizance of the case in the interest of justice and effects amounting to US $5,310.00.
ruled in favour of respondent. Hence, this petition for
certiorari. While his second cause of action - an action for
damages arising from theft or damage to property or
goods - is well within the bounds of the Warsaw
ISSUE: Whether or not the action for damages is Convention, his first cause of action -an action for
barred by the lapse of the 2-year prescriptive damages arising from the misconduct of the airline
period under Art. 29 of the Warsaw Convention employees and the violation of respondent's rights as
passenger - clearly is not.

action for damages should be filed within two (2) years
Action for damages arising from the misconduct of the from the arrival at the place of destination, such rule
airline employees and the violation of the respondent’s shall not be applied in the instant case because of the
rights as passengers is covered under the Civil Code delaying tactics employed by petitioner airline
itself. Thus, private respondent's second cause of
Consequently, insofar as the first cause of action is action cannot be considered as time-barred under Art.
concerned, respondent's failure to file his complaint 29 of the Warsaw Convention.
within the two (2)-year limitation of the Warsaw
Convention does not bar his action since petitioner 16. Cathay Pacific Airways vs. Spouses Vasquez,
airline may still be held liable for breach of other 339 scra 2017 (2003)
provisions of the Civil Code which prescribe a different Facts:
period or procedure for instituting the action, Sps. Dr. Daniel and Maria Luisa Vazquez,
specifically, Art. 1146 thereof which prescribes four (4) resposdents, together with their maid and two friends
years for filing an action based on torts. went to Hongkong for pleasure and business. On their
return flight, they booked Cathay Pacific Airways.
Exception to the Application of the 2-year prescriptive While boarding, they were advised that there was a
period: When airline employed delaying tactics seat change from Business Class to First Class. Dr.
Vazquez refused the upgrade for the reason that it
As for respondent's second cause of action, indeed the would not look nice for them as hosts to travel First
travaux preparatories of the Warsaw Convention reveal Class and their guests, in the Business Class; and that
that the delegates thereto intended the two (2)-year they were going to discuss business matter during the
limitation incorporated in Art. 29 as an absolute bar to flight. Cathay informed the Vazquezes that the
suit and not to be made subject to the various tolling Business Class was fully booked, and that since they
provisions of the laws of the forum. This therefore are Marco Polo Club members, they had the priority to
forecloses the application of our own rules on be upgraded to first class. Dr. Vazquez eventually gave
interruption of prescriptive periods. Article 29, par. in, after being prohibited to take the flight if they
(2), was intended only to let local laws determine would not avail themselves of the privilege. Upon their
whether an action had been commenced within the two return to Manila, the Vazquezes filed a complaint and
(2)-year period, and within our jurisdiction an action demanded to be indemnified for the humiliation and
shall be deemed commenced upon the filing of a embarrassment caused by Cathay’s employees.
complaint. Since it is indisputable that respondent
filed the present action beyond the two (2)-year time Issue:
frame his second cause of action must be Are the Vazquezes obliged to avail the privilege and
barred. Nonetheless, it cannot be doubted that take the First Class flight?
respondent exerted efforts to immediately convey his
loss to petitioner, even employed the services of two Held:
(2) lawyers to follow up his claims, and that the filing No. A contract of carriage existed between Cathay and
of the action itself was delayed because of petitioner's the Vazquezes. They voluntarily and freely gave their
evasion. consent to an agreement whose object was the
transportation of the Vazquezes from Manila to Hong
Verily, respondent filed his complaint more than two Kong and back to Manila, with seats in the Business
(2) years later, beyond the period of limitation Class Section of the aircraft, and whose cause or
prescribed by the Warsaw Convention for filing a claim consideration was the fare paid by the Vazquezes to
for damages. However, it is obvious that respondent Cathay. The Vazquezes should have been consulted
was forestalled from immediately filing an action first whether they wanted to avail themselves of the
because petitioner airline gave him the runaround, privilege or would consent to a change of seat
answering his letters but not giving in to his accommodation before their seat assignments were
demands. True, respondent should have already filed given to other passengers. It should not have been
an action at the first instance when his claims were imposed on them over their vehement objection. By
denied by petitioner but the same could only be due to insisting on the upgrade, Cathay breached its contract
his desire to make an out-of-court settlement for which of carriage with the Vazquezes.
he cannot be faulted. Hence, despite the express Art. 1244. The debtor of a thing cannot compel the
mandate of Art. 29 of the Warsaw Convention that an creditor to receive a different one, although the latter

may be of the same value as, or more valuable than
that which is due.
In obligations to do or not to do, an act or forbearance

cannot be substituted by another act or forbearance
against the obligee’s will.

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TRANSPORTATION LAW SEMI FINALS CASE DIGEST

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Agency Services, Inc. (Overseas Agency), the agent of

respondents. PCIC demanded from respondents

respondents. Respondents filed and answer denying FACTS:

lading, whichever is lower. and by virtue of Marine Risk Note Number MC RM UL

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Petitioner filed the complaint for damages. ,

An action for damages must be brought at the option of the Held:

Property of Ismael Catalino A. Maestre Jr. Page 19 of 26

On December 19, 1986, the petitioner checked

The lower court granted the motion and dismissed the

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It is true that at the time the Warsaw

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In obligations to do or not to do, an act or forbearance

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