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SPECIAL LAWS IN TRANSPORTATION A. Carriage of Goods by Sea Act 1. Eastern Shipping Lines v. Margarine-Verkaufs-Union GmbH - (KUNG) FACTS: Margarine-Verkaufs- Union GmbH, a West German corporation not engaged in business in the Philippines, was the consignee of 500 long tons of Philippine copra in bulk with a total value of US$108,750.00 shipped from Cebu City on board Eastern Shipping Lines (a Philippine corporation) vessel, the SS EASTERN PLANET for discharge at Hamburg, Germany. Eastern Shippings b ill of lading for the cargo provided that except as otherwise stated herein and in the Charter Party, the contract shall be governed by the laws of the Flag of the Ship carrying the goods. In case of average, same shall be adjusted according to York-Antwerp Rules of 1950. While the vessel was off Gibraltar, a fire broke out aboard the vessel and caused water damage to the copra shipment in the amount of US$591.38. Eastern Shipping rejected Margarines claim for payment of the damage. Margarine filed on 18 June 1966 in the Manila CFI its complaint against Eastern Shipping as defendant for recovery of the same and US$250.00-attorneys fees and expenses of litigation. After trial, the lower court rejected Eastern Shippings defense that it was not liable under Philippine Law for the damage which did not exceed 5% of Margarines interest in the cargo and rendered judgment on 25 April 1969 ordering the Eastern Shipping to pay to Margarine the sum of US$591.38, with interest at the legal rate from the date of the filing of the complaint until fully paid, plus US$250.00 as attorneys fees and the costs of the suit. A petition for review on questions of law was filed with the Supreme Court. The Supreme Court affirmed the appealed judgment holding Eastern Shipping liable under the terms of its own bill of lading for the damage suffered by Margarines copra cargo on board petitioners vessel, but sets aside the award of attorneys fees to Margarine for lack of any statement or reason in the lower courts judgment that would justify the award. Thus, the appealed judgment is affirmed with the modification that the award of attorneys fees is set aside; with costs against Eastern Shipping. ISSUE: Should Article 848 of the Code of Commerce govern this case despite the bill of lading which expressly contained for the application of the York-Antwerp Rules which provide for MARGARINEVERKAUFS-UNION GmbHs fun recovery of the damage loss? HELD: NO. 1. Article 848 of the Code of Commerce does not apply as there is the clause agreement to the contrary in the bill of lading (application of the York-Antwerp Rules of 1950). Article 848 of the Code of Commerce which would bar claims for averages not exceeding 5% of the claimants interest cannot be applied for the reason that the bill of lading contains an agreement to the contrary for it is expressly provided in the last sentence of the first paragraph that In case of average, same shall be adjusted according to York Antwerp Rules of 1950. The insertion of said condition is expressly authorized by CA 65 which has adopted in toto the U.S. Carriage of Goods by Sea Act. Now, it has not been shown that said rules limit the recovery of damage to cases within a certain percentage or proportion that said damage may bear to claimants interest either in the vessel or cargo as provided in Article 848 of the Code of Commerce. On the contrary, Rule 3 of said York-Antwerp Rules expressly states that Damage done to a ship and cargo, or either of them, by water or otherwise, including damage by breaching or scuttling a burning ship, in extinguishing a fire on board the ship, shall be made good as general average . . .

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2. Being a contract of adhesion, inconsistency or ambiguity construed against author (Eastern Shipping). There is a clear and irreconcilable inconsistency between the York-Antwerp Rules expressly adopted by the parties as their contract under the bill of lading which sustains Margarines claim and the codal article cited by Eastern Shipping which would bar the same. What is involved is a contract of adhesion as embodied in the printed bill of lading issued by Eastern Shipping for the shipment to which Margarine as the consignee merely adhered, having no choice in the matter, and consequently, any ambiguity therein must be construed against Eastern Shipping as the author. 2. Delgado Bros v. Home Insurance (MAGSUMBOL) Doctrine: Maritime law is inapplicable to determination of liability of arrastre operator. FACTS: Respondent Home Insurance Co. filed a case against petiotioner alleging that Victor Bijou & Co of New York shipped at New York for Manila aboard the vessel S.S. Leoville, and consigned to the Judy Philippines Inc of Manila, a shipment of 1 case Linen Handkerchief and 2 cases cotton piece goods, for which, the New York agent of said vessel, the Barber Steamship Lines, inc issued a bill of llaiding. Said shipment was insured with respondent by the shipper and/or consignee. The vessel arrived at the Port of Manila and was unloaded complete and in good order from said vessel by petitioner. However, thpetitioner delivered the same to the consignee with 1 case of Linen Handkerchief in bad order, with a shortage of 503 yards of Linen Print Handkerchiefs, to the prejudice, loss and damage of shipper and/or consignee. Respondent paid the amount of damage, hence,it wants to subrogated to rights of the shipper and/or consignee. Petitioner, on the other hand, alleges as a special defence that since no claim whatsoever was filed by respondent or the consignee, or their representativess against petitioner within the 15-day period from the date of the arriveal of the goods before they could file a suit within 1 year from the date of said arrival at the Port of Manila, petitioner is completey reliieved and released of any and all liability for loss and damage under the law and in accordance with the pertinent provisions of the Management Contract with the Bureau of Customs, covering the operation of the Arrastre Service for the Port of Manila. ISSUE: W/N the arrastre service is maritime in nature, and therefore, actions against arrestre operator properly come under the jurisdiction of CFI. HELD: No. In case of controversy involving both maritime and non-maritime subject matter, admiralty will not take cognizance of incidental maritime matters connected therewith but will relegate the whole controversy to the appropiate tribunal Arrastre operator's functions are (1) to receive, handle, care for, and deliver all merchandise imported and exported, upon or passing over Government-owned wharves and piers, (2) record or check all merchandise which may be delivered to said port at shipside, and; (3) furnish light, and water services and other incidental services in order to undertake its arrastre service. There is nothing in the abovementioned functions which relate to the trade and business of navigation nor to the use of operation of vessels. Both as to the nature of the functions and the place of their performance, petitioner's services are clearly not maritime.

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To give admiralty jurisdiction over a contract as maritime, such contract must relate to the trade and business of the sea; it must be essentially and fully maritime in its character; it must provide for maritime services, maritime transactions, or maritime casualties. 3. Malayan v. Manila Port (PABALAN) FACTS: Malayan insured the following goods: 1. shipment of 343 cartons and two crates of electrical surface raceways and fittings from US on board the SS Pioneer Ming 2. three cases upper leather from US carried on board the same SS "Pioneer Ming" 3. 18 cases of auto parts shipped from the US on board the SS "Pioneer Ming" 4. 15 cases black umbrella cloth from Japan 15 cases black umbrella cloth The goods were delivered at the port of Manila and thereafter discharged into the custody of Manila Port Service. The goods were thereafter discovered to be short or incomplete as follows: 1. One carton was pilfered of its contents while six cartons were not delivered. 2. The leather delivered was short of 111-! square feet. 3. One case of that shipment was pilfered of its contents. 4. Two cases of the shipment were pilfered of contents. Malayan, as subrogee of the goods, paid the value to the consignees and thereafter collected from Manila Port. CFI ordered payment of Manila Port to Malayan Insurance, thus the appeal.

ISSUE: W/N Manila Port is liable. HELD: YES. 1. It is now futile for defendants to pass on liability to the carriers which are not parties to this action. Defendants argue that the fact that the shipments were received by defendant Manila Port Service complete, does not mean that the goods were received in "good order". This is immaterial. Because plaintiff's claim is for short delivery and pilferage and therefore, the question of WON the shipments were discharged into the custody of defendant Manila Port cannot be anymore disputed. Consequently, liability cannot be shifted to the carriers. 2. Under the presumption in Article 1265 of the Civil Code that whenever "the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his fault, unless there is proof to the contrary." Because there is no proof that the losses occurred either without defendants' fault or by reason of caso fortuito, defendants are liable. 3. There is no necessity for proof of date of discharge and thus the absence of which is not material to the 15-day filing requirement. Provisional claims on each of the shipments were filed well within the 15-day period following the arrival of each of the vessels. And although the provisional claims do not specify the value of the goods lost and were not accompanied by supporting papers, the jurisprudence is that such claims substantially fulfill the requirement.

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4. Since the value of each claim is admitted and considering that plaintiff is entitled thereto as earlier expressed in this opinion and upon the terms of the stipulation just quoted, the lower court was correct in sentencing defendants to pay the total amount therein stated. 5. The amount of P1,447.51 shall bear legal interest from the date of the decision. Award of attorneys' fees is affirmed. 4. Chiok Ho v. Compania Maritima & Manila Port Service (PEREZ) FACTS: During May 11 to 15, 1960, a shipment of 69 cases containing radio parts was discharged from the vessel S.S. Samar of the Compania Maritima and placed in the Special Cargo Corral of the Manila Port Service. The shipment was then delivered to the consignee who discovered that 4 cases from the 69 cases of radio parts were missing. The total invoice value of the radio parts contained in the missing cases is P3,402.50. The shipment having been assigned to Chiok Ho (petitioner/ consignee) made a formal demand upon the Manila Port Service for the payment of the P3,402.50. The Manila Port Service, in its defense, contends that Section 15 of the management contract entered into between the Bureau of Customs and the Manila Port Service regarding the said shipment that any claim for loss should be filed within 15 days from the date of discharge of the last package of the shipment from the carrying vessel. Thus defendants contend that Chiok Hos claim is already barred and consequently, his action should be dismissed. Chiok Ho, on the other hand, asserts that he did not have ample time to file a claim because the shipment was only delivered to him after the expiration of the 15 day period. Furthermore, there is not enough data to prove when the goods were actually delivered to the consignee ISSUE: Could Chiok Ho still claim payment for the lost shipment? HELD: Yes. There is a presumption that the claim was filed within the reglementary period. It is not enough that the consignee be notified of the discharge of the shipment from the carrying vessel in order that the provision of a management agreement requiring that a claim for loss be filed with the arrastre operator within 15 days from the date of discharge of the last package from the carrying vessel may be applicable. It is equally important to indicate the date when the shipment was actually delivered to the consignee in order that he may be given the chance to discover if there is something missing or lost in the shipment. Only in this way can he be informed of the loss and file the necessary claim. Moreover, a stipulation in a management contract limiting the liability of the arrastre operator is a matter of defense for the operator. Thus, in the absence of proof to the contrary, it should be presumed that the claim was filed within the reglementary period. 5. Go Chan v. Aboitiz (SANTOS)

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FACTS: As owner of 200 boxes of canned milk placed on board the S. S. Daniel R. Hill for transportation from New Orleans, U. S. A. to Cebu City, plaintiff Go Chan & Co., Inc. sued defendant as the agent of said vessel. The complaint alleged that in February, 1947 such cargo was delivered to it minus 24 cases; and that the value of the shortage was P416.68. The defendant answered that the loss was due to a peril of the sea, and that anyway the action was barred because more than one year had elapsed from February 1947 to May 1950 when the complaint was filed. ISSUE: WON plaintiff is barred by prescription. HELD: Yes. In Chua Kuy v. Everett Steamship Corporation we ruled that the prescriptive period of one year established in the Carriage of Goods by Sea Act modified pro tanto the provisions of Act No. 190 as to goods transported to and from Philippine ports in foreign trade. Said American Act provides as follows: In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered; provided, that if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered." (Subsec. 6, sec. 3, Title I) Thru Mr. Justice Bautista Angelo this Court explained: The claim that the prescriptive period to be considered in this case is that embodied in the Code of Civil Procedure is untenable for the simple reason that this is a general law which only applies to cases not covered by any special act. As we have already stated, the transaction under consideration is covered by the Carriage of Goods by Sea Act, and since this is a special act, its provisions must of necessity limit or restrict a law of general application. To hold otherwise would be to render nugatory the prescriptive provision contained in that special act. Because this action was not filed within one year from February, 1947 when the cargo was delivered or should have been delivered, the law discharged this defendant from all liability in connection with the carriage of said goods. 6. Elser v. Court of Appeals (VILLAFUERTE) Doctrines: Provisions of Bill of Lading contrary to Carriage of Goods by Sea Act (COGSA) are null and void. Under COGSA, a carrier can only be discharged from liability in respect of loss or damage if the suit is not brought within one year after the delivery of the goods or the date when the goods should have been delivered. Nature: This is a petition for review of a decision of the Court of Appeals which affirms that of court of origin, dismissing the complaint. FACTS: In December 1945, the goods specified in a Bill of Lading, were shipped from New York to Manila, and were received by the consignee Udharam Bazar and Co., except one case of vanishing

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cream valued at P159.78. The goods were insured against damage or loss by the Atlantic Mutual Insurance Co. Udharam Bazar claimed for indemnity of the loss from Atlantic, and was eventually paid by the latter's agent, E. E. Elser Inc., the amount involved, that is, P159.78. The Court of Appeals held that petitioners have already lost their right to press their claim against respondent because of their failure to serve notice thereof upon the carrier within 30 days after receipt of the notice of loss or damage as required by clause 18 of the bill of lading which was issued concerning the shipment of the merchandise which had allegedly disappeared. In this respect, the court said that, "appellant unwittingly admitted that they were late in claiming the indemnity for the loss of the case of the vanishing cream as their written claim was made on April 25, 1946, or more than 30 days after they had been fully aware of said loss," and because of this failure, the Court said the action of petitioners should, and must, fall. Petitioners now contend that this finding is erroneous in the light of the provisions of the Carriage of Goods by Sea Act of 1936, which apply to this case, the same having been made an integral part of the covenants agreed upon in the bill of lading. Clause 18 of the bill of lading provides that the owner should not be liable for loss or damage of cargo unless written notice thereof was given to the carrier within 30 days after receipt of the goods. However, Section 3 of the Carriage of Goods by Sea Act provides that even if a notice of loss or damage is not given as required, "that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods." ISSUE: Which of the two provisions should prevail? HELD: Section 3 of the Carriage of Goods by Sea Act prevails. Clause 18 must of necessity yield to the provisions of the Carriage of Goods by Sea Act in view of the proviso contained in the same Act which says: "Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods or lessening such liability otherwise than as provided in this Act, shall be null and void and of no effect." (Sec. 3) This means that a carrier cannot limit its liability in a manner contrary to what is provided for in said Act, and so clause 18 of the bill of lading must of necessity be null and void. 7. Mayer Steel Pipe Corp. v. CA (ATIENZA) FACTS: In 1983, petitioner Hongkong Government Supplies Department (Hongkong) contracted petitioner Mayer Steel Pipe Corporation (Mayer) to manufacture and supply various steel pipes and fittings. From August to October, 1983, Mayer shipped the pipes and fittings to Hongkong. Prior to the shipping, petitioner Mayer insured the pipes and fittings against all risks with private respondents South Sea Surety and Insurance Co., Inc. (South Sea) and Charter Insurance Corp. Industrial Inspection certified all the pipes and fittings to be in good order condition before they were loaded in the vessel. Nonetheless, when the goods reached Hongkong, it was discovered that a substantial portion thereof was damaged.

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Respondent Charter paid petitioner Hongkong the amount of HK$64,904.75. Petitioners demanded payment of the balance of HK$299,345.30 representing the cost of repair of the damaged pipes. Private respondents refused to pay because the insurance surveyor's report allegedly showed that the damage is a factory defect. For their defense, private respondents averred that they have no obligation to pay the amount claimed by petitioners because the damage to the goods is due to factory defects which are not covered by the insurance policies. The trial court ruled in favor of petitioners. It found that the damage to the goods is not due to manufacturing defects. However, the CA set aside the decision of the trial court and dismissed the complaint on the ground of prescription. It held that the action is barred under Section 3(6) of the Carriage of Goods by Sea Act since it was filed only on April 17, 1986, more than two years from the time the goods were unloaded from the vessel. Section 3(6) of the Carriage of Goods by Sea Act provides that "the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered." Respondent court ruled that this provision applies not only to the carrier but also to the insurer, citing Filipino Merchants Insurance Co., Inc. vs. Alejandro. ISSUE: W/N Section 3(6) of the Carriage of Goods by Sea Act applies to insurers. HELD: NO. Under this provision, only the carrier's liability is extinguished if no suit is brought within one year. But the liability of the insurer is not extinguished because the insurer's liability is based not on the contract of carriage but on the contract of insurance. A close reading of the law reveals that the Carriage of Goods by Sea Act governs the relationship between the carrier on the one hand and the shipper, the consignee and/or the insurer on the other hand. It defines the obligations of the carrier under the contract of carriage. It does not, however, affect the relationship between the shipper and the insurer. The latter case is governed by the Insurance Code. The Filipino Merchants case is different from the case at bar. In Filipino Merchants, it was the insurer which filed a claim against the carrier for reimbursement of the amount it paid to the shipper. In the case at bar, it was the shipper which filed a claim against the insurer (In this case, the claim was not filed against the carrier). 8. Yek Tong v. American (BAUTISTA) FACTS: Yek Tong filed an action against APL. APL filed a motion to dismiss on the ground of prescription. APL alleged that the goods in question arrived in Manila on June 17, 1952 CFI granted APLs MTD. Yek Tong appealed contending that its extrajudicial demand on August 22, 1952 should have suspended its action. Yek Tong used as basis the Code of Civil Procedure. ISSUE: W/N Yek Tongs CoA has prescribed. YES.

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HELD: First: Yek Tong failed to deny APLs allegation that the goods arrived on July 17, 1952. This failure can be interpreted as admission. Second: Courts could take judicial notice of the fact that a vessel leaving Japan on June 18, 1952 can arrive in Manila by July 17, 1952. Third: In a case governed by the Carriage of Goods by Sea Act, the general provisions of the Code of Civil Procedure on prescription should not be applied. In Chua Kuy v. Everett Steamship, it was held that Art. 1155 of the NCC cannot be made to apply because it would have the effect of extending the one-year period of prescription fixed in the Carriage of Goods by Sea Act. The purpose of the Act is to resolve all matters affecting transportation of goods by sea in as short time as possible. And the application of Art. 1155 would result in permitting delays in the settlement of said questions. 9. Aetna Insurance v. Barber Steamship (BISNAR) FACTS: " Aetna Insurance Company, as insurer, filed a complaint against Barber Steamship Lines, Inc., Luzon Stevedoring Corporation and Luzon Brokerage Corporation. It sought to recover the sum of P12,100.06 as the amount of the damages which were caused to a cargo of truck parts shipped on the SS Turandot . The insurer paid the damages to Manila Trading & Supply Company, the consignee. " Barber Steamship Lines, Inc. alleged that it was a foreign corporation not licensed to do business in the Philippines, that it was not engaged in business here, that it had no Philippine agent and that it did notown nor operate the SS Turandot. " Aetna filed a manifestation stating that the name of defendant Barber Steamship Lines, Inc. wasincorrect and that the correct name was Barber Line Far East Service. " Barber Line Far East Service moved for the dismissal of the amended complaint on the grounds (1)that it is not a juridical person and, hence, it could not be sued; (2) that the court had no jurisdictionover its person; (3) that it was not the real party in interest and (4) that the action had prescribedaccording to the bill of lading and the Carriage of Goods by Sea Act. " The case was dismissed as to Barber Line Far East Service based on the prescription period.

ISSUE: Whether the action of Aetna Insurance Company against Barber Line Far East Service, as ventilated in its amended complaint, which was filed on April 7, 1965, had prescribed. HELD: Yes. The trial court correctly held that the one-year statutory and contractual prescriptive period had already expired .The one year period commenced on February 25, 1964 when the damaged cargo was delivered to the consignee. Aetna invokes: the rule that where the original complaint states a cause of action but does it imperfectly, and afterwards an amended complaint is filed, correcting the defect, the plea of prescription will relate to the time of the filing of the original complaint.- Untenable. The filing of the original complaint interrupted the prescriptive period as to Barber Steamship Lines, Inc. but not as to Barber Line Far East Service, an entity supposedly distinct from the former. That ruling would apply to

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defendants Luzon Stevedoring Corporation and Luzon Brokerage Corporation. But it would not apply to Barber Line Far East Service which was impleaded for the first time in the amended complaint. 10. Shell Chemical Company v. Manila Port Service (BOMBALES) Shipper: Asiatic Petroleum Corp Consignee: Shell Chemical Company ComCarrier: SS Fernview Arraste Operator: Manila Port Service FACTS: Petitioner (Shell) was the consignee of 15 drums of synthetic resin shipped by Asiatic Petroleum Corporation of NYC on board the SS Fernview. The vessel arrived in Manila on August 7, 1963 and was unloaded and subsequently delivered the next day in good order to the Manila Port Service (arrastre operator). Manila Port Service delivered to Petitioner 14 drums (1 drum was missing). On January 25 1964, Petitioner filed a formal claim against Manila Port Service for the value of the undelivered cargo but the arrastre refused to pay contending paragraph 15 of the management contract b/w arrastre and Bureau of Customs which provides that Manila Port Service shall be relieved and released of any and all responsibility or liability for loss, damage, misdelivery and or nondelivery of goods UNLESS suit in the court of proper jurisdiction is brought within 1 year from the date of discharge or from the date the claim for value have been rejected or denied PROVIDED such claim have been filed within 15 days. Petitioner instead of filing its claim within 15 days, ANTICIPATED the damage by filing a provisional claim 15 days BEFORE the arrival of the vessel (July 23, 1962). ISSUE: W/N the action filed by petitioner should be dismissed. HELD: Yes. Petitioner did not file any claim within the fifteen day period. The filing of such a claim was a condition precedent to the institution of the suit for damages. The purpose of the requirement that a claim should be filed within the fifteen-day period is to apprise the arrastre operator of the existence of a claim and to enable it to check on the validity of the claimant's demand while the facts are still fresh in the recollection of the persons who took part in the undertaking and the pertinent papers are still available. The provisional claim which Shell Chemical Company filed on July 23, 1962, fifteen days before the vessel's arrival at the port of Manila in anticipation of any possible shortage or damage, was premature and speculative. It was not in compliance with paragraph 15. Even the filing of a provisional claim on the day of the vessels arrival but one day prior to the discharge of the cargo was held to be a noncompliance with paragraph 15. Hence, failure to file the claim within the fifteen-day period prescribed in paragraph 15 relieves the arrastre contractor of any liability for nondelivery of the cargo and is a bar to the court action. 11. Mitsui O.S.K. Lines LTD v. CA (CARIAGA)

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FACTS: Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage through Meister Transport, Inc., an international freight forwarder, with private respondent Lavine Loungewear Manufacturing Corporation to transport goods of the latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to France 28 days from initial loading. On July 24, 1991, petitioners vessel loaded private respondents container van for carriage at the said port of origin. However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with the result that the shipment arrived in Le Havre only on November 14, 1991. The consignee allegedly paid only half the value of the said goods on the ground that they did not arrive in France until the off season in that country. The remaining half was allegedly charged to the account of private respondent which in turn demanded payment from petitioner through its agent. As petitioner denied private respondents claim, the latter filed a case in the RTC. Petitioner filed a motion to dismiss alleging that the claim against it had prescribed under the Carriage of Goods by Sea Act. The RTC denied petitioners motion as well as its subsequent motion for reconsideration. On petition for certiorari, the CA sustained the RTCs decision. Thus, prompted herein petition. ISSUE: W/N private respondents action is for loss or damage to goods shipped within the mea ning of 3(6) of the Carriage of Goods by Sea Act (COGSA). HELD: No, the suit below is not for loss or damage to goods contemplated in 3(6). The question of prescription of action is not governed by the COGSA, but by Art. 1144 of the Civil Code which provides for a prescriptive period of ten years. Sec. 3, Art. 6 of the COGSA provides: Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the delivery. Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection. In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered: Provided, that, if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered.

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In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the Carriage of Goods by Sea Act, loss contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot be recovered. The rationale behind limiting the said definitions to such parameters is not hard to find or fathom. As this Court held in Ang: Said one-year period of limitation is designed to meet the exigencies of maritime hazards. In a case where the goods shipped were neither lost nor damaged in transit but were, on the contrary, delivered in port to someone who claimed to be entitled thereto, the situation is different, and the special need for the short period of limitation in cases of loss or damage caused by maritime perils does not obtain. In the case at bar, there is neither deterioration nor disappearance nor destruction of goods caused by the carriers breach of contract. Whatever reduction there may have been in the value of the goods is not due to their deterioration or disappearance because they had been damaged in transit. Indeed, what is in issue in this petition is not the liability of petitioner for its handling of goods as provided by 3(6) of the COGSA, but its liability under its contract of carriage with private respondent as covered by laws of more general application. 12. Tan v. American President (CLETO) FACTS: Plaintiff entered into a contract with the Kent Sales Co., Inc., of New York City, through the latters agents in Manila, the Peoples Trading, for the importation of 2,000 cases of fresh hen eggs, for a total price of $45,520, to be shipped on the S.S. Marine Leopard, sailing from New York on August 7, 1946. Upon arrival in San Francisco, California, American Presidents unloaded the 2,000 cases of eggs from the S.S. Marine Leopard, which resumed its voyage, arriving in Singapore in Septembe r, 1946. The eggs were later shipped on another of American Presidents ships, the S.S. General Meigs, on November 27, 1946, which arrived in Manila on December 26, 1946. The eggs arrived late, with many in a deteriorated condition, and thus the plaintiff was not able to realize the full value of the sale of the eggs. He claimed that the damage to the eggs was caused by their exposure to hot temperatures in San Francisco, the poor handling of the cargo, as well as the transshipping on another of American Presidents ships. As a special defense, American President claimed that while Plaintiff received the goods in question on December 26, 1946, he brought suit on May 25, 1948, more than a year from the receipt of the goods, and so Plaintiffs action had prescribed under section 3, paragraph 6 of the Carriage of Goods by Sea Act. After trial, the Court below found that Plaintiff had suffered a loss of P25,896.81 by reason of the delayed arrival of his cargo of eggs. The Court, however, found Defendants defense of prescription meritorious, and so dismissed the case. From the judgment of dismissal, Plaintiff Tan Liao appealed to this Court.

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ISSUE: W/N the present case falls within the prescriptive provision of the Carriage of Goods by Sea Act (section 3, paragraph 6). In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered:chanroblesvirtuallawlibrary Provided, That, if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered. HELD: Tan Liao argued that the action referred to in the provision is one for loss or damage, either apparent or concealed to the goods, and not one for a breach of the contract of carriage on t he part of the carrier where, as in this case, it is guilty of delay in the shipment of the goods, causing losses and damages to the consignee. ! The distinction drawn is more apparent than real: actually, any and all injury or damages suffered by the goods, while in transit and in the custody of the carrier, amounts to a breach of the contract of carriage, unless due to fortuitous event ; for the carrier is bound to transport the goods safely and so breaches its contract if it neglects such duty. Tan Liao also made a distinction between damage to the goods and damages to the shipper or consignee, and claims that while the former falls within the prescriptive period in question, the latter is governed by the provisions of the Code of Civil Procedure (now the New Civil Code) on limitation of actions. ! We see no difference between the two . Whatever damage or injury is suffered by the goods while in transit would result in loss or damage to either the shipper or the consignee. ! As long as it is claimed, therefore that the losses or damages suffered by the shipper or consignee were due to the arrival of the goods in damaged or deteriorated condition, the action is still basically one for damage to the goods, and must be filed within the period of one year from delivery or receipt under the Carriage of Goods by Sea Act. Tan Liao furthermore urged that the action referred to refers only to loss or damage to the goods in relation to their loading, handling, storage, carriage, custody, care, and discharge, and does not cover or include loss or damage due to the wrongful and unreasonable delay in their transportation. ! The argument is equally untenable. The obligation of the carrier to carry the goods naturally includes the duty not to delay their transportation, so unjustified delay, the carrier is held liable therefor. Besides, the damages or losses claimed to have been suffered on account of the unreasonable delay in the shipment of his cargo, still arose from the arrival of the goods in decayed and damaged state. The damage might not have been covered by the prescriptive provision of the Carriage of Goods by Sea Act if such damages were due, not to the deterioration and decay of the goods while in transit, but to other causes independent of the condition of the cargo upon arrival, like a drop in their market value. Re: Tan Liaos proposition that the Carriage of Goods by Sea Act does not repeal the provisions of the Code of Civil Procedure on prescription of actions, it had already been ruled that the prescriptive period of one year established in the Carriage of Goods by Sea Act modified pro tanto the provisions of Act No. 190 as to goods transported to and from Philippine ports in foreign trade, the former being a special act while the latter is a law of general application.

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The decision appealed from is affirmed.

13. Esso Standard v. MRR (DE JESUS) FACTS: On May 10, 1962, May 7, 1962, and May 30, 1962, four shipments owned by Esso Standard Eastern arrived onboard the following vessels: "Genevieve Lykes," "Pioneer Moor" and "Pioneer Main" respectively. Because of loss and damage caused to the four shipments, Esso filed a complaint in the City Court of Manila on February 1, 1964 for the sum of P2,691.18 against Manila Railroad and Manila Port Service, the arrastre operators for the port of Manila. On January 7, 1966, the City Court rendered, on the basis of the stipulation of facts (p. 32, Original CFI Records) entered into on November 20, 1964 by both parties. Motion for reconsideration denied. Esso appealed to the Court of First Instance of Manila, Branch V. On the basis of another stipulation of facts (p. 69, Id) entered into on September 2, 1965 by both parties and of the annexes of the stipulation of facts submitted before the City Court of Manila which were adopted by them as part of their respective evidence before the Court of First Instance of Manila, said Court of First Instance rendered on September 23, 1965 a decision reversing that of the City Court of Manila. ISSUE: Whether Essos right to bring this action has already prescribed, the same having been brought beyond one (1) year from the dates of discharge of the shipments in question. HELD: No, the right to bring the action has not yet prescribed. The Supreme Court ruled that in cases where the arrastre contractor does not act on the claim one way or the other within the period of one year from the date of discharge of the last package, the claim should be deemed constructively denied or rejected upon the expiration of one year therefrom. In the facts of the case, the dates of discharge from the vessels "Genevieve Lykes," "Pionee Moor" and "Pioneer Main" are May 10, 1962, May 7, 1962, and May 30, 1962, respectively; that provisional claims therefor have all been seasonably filed but that the same have not been acted upon by MRR. Applying the above-stated rule, said claims are then deemed constructively denied upon the expiration of one year from May 10, 1962, May 7, 1962, and May 30, 1962 or more exactly on May 10, 1963, May 7,1963, and May 30, 1963, respectively. Counting from these dates the one-year period within which action may be filed, the Supreme Court then found that this suit which has been filed on February 1, 1964 has not yet been barred by prescription. 14. Filipro v. MRR (FERNANDEZ) FACTS: Filipro was the consignee of 7 shipments of goods. The arrastre operator was Manila port service, a subsidiary of Manila Railroad Company. There was a Management Contract between Filipro and Manila Port services covering the discharge of the cargo. Section 15 of the contract says in part: in any event the contractor(arrastre operator) shall be relieved and released of any and all liability for loss, damage, misdelivery and/or non-delivery of goods, unless suit in the court of proper jurisdiction is brought within one year from the date of discharge of the goods or from the date when the claim for the value of such goods has been rejected or denied by the contractor within 15 days from the date of discharge of the last package from the carrying vessel. Note: Filipro could file a suit within one year from date of discharge of the goods, meaning the date of discharge of the last package or from date of denial of claim.

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The 7 shipments have problems of non-delivery in bad order and condition. Filipro filed provisional claims for each of the shipment within 15 days from discharge of the last package for each shipment, in short, only the provisional claims were filed within 15 days shipment. Manila port claims the provisional claims did not contain any reference to an amount or value of the damage to the goods. Manila port did not reply to the claims of Filipro. Since there was no action on the port of Manila port, Filipro decided to sue both Manila port and Manila railroad. Filipro filed a suit at the CFI of manila for recovery of the losses and damages to the shipped goods as well as for lost profits ISSUE: W/N Filipro had complied with the provisions of paragraph 15 of the management contract in the filing of claims? HELD: Yes. Manila port and Manila railroad contend that the period for filing the plaintiffs complaint should be computed solely from the date of discharge of the goods from the carrying vessel inasmuch as the claims made by the plaintiff have not been expressly rejected or denied by them. Since the complaint was filed one year after the date of the last discharge of the goods, appellants maintain that it should be deemed barred. The contention is without merit for it overlooks the fact that Filipro has, under the management contract, two periods within which to file its action, namely: A. one year from the date of discharge of the goods, and B. one year from the rejection or denial of its claim for the value thereof. Obviously, Manila port cannot, by not acting on Filipros claim, one way or another, deprive the latter of one of these alternatives. Such would be the result, were we to accept Manila Ports and Manila Railroads contention. Considering however, that no action, implied or express, was taken by the defendants-appellants on plaintiffs claim, how then shall one year prescription period be computed? The right of the plaintiff to sue the defendants might be questionable in the absence of any act or omission clearly the rejection or denial of said claims by the defendants. Hence, it has been repeatedly held, the latest of which is union carbide phil. Inc. vs manila railroad, that, in case of inaction on the part of the arrastre operator, he shall be deemed to have rejected or denied the importers claim upon the expiration of one year from the date when the last package was discharged and that the period within which to file suit shall then begin to run. Furthermore, the SC said that the filing of the provisional claims within 15 days from the discharge of the last package was substantial compliance with the requirements of section 15 of the management contract. The cited provisions does not require the filing of a formal claim which state the value of the damaged goods. A provisional claim may be sufficient even if the value of the goods involved were not stated therein, provided it describes said goods sufficiently to permit its identification by the operator and the determination by the latter of the facts relevant thereto, such as the name of the carrying vessel, its date of arrival, the corresponding bill of lading or other shipping documents in which the value of the goods is set forth, etc. while the facts are still fresh in the minds of the persons who took part in the transaction and while the pertinent documents are still available. 15. PECO v. Manila Port (1971) - (FORTES) FACTS: This is a joint decision on 7 cases involving Manila Port Service as defendant.

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The suits are all claims against Manila Port as arrester service provider in the port of Manila. Claims are suits for damages to and/or loss of goods consigned to the plaintiffs or their subrogors or assignors. In the case of PECO, it is consignee of 97 cases, 30 were in bad condition and 13 were damaged. Arrastre charges were paid on basis of weight and measurement not value. The Paragraph 15 of the management contract of Manila Port as arrastre contractor in the Port limits its liability to P500 for each package unless the value is otherwise specified or manifested, and the corresponding arrastre charges had been paid. This includes all damages that may be suffered on account of loss, destruction, or damage of any merchandise. o while in the custody or under the control of the CONTRACTOR upon any pier, wharf or other designated place under the supervision of the Bureau of Customs o suit on claims against the arrastre must also be brought within 1 year from the discharge of the goods o or from the date when the claim for the value of such goods have been rejected or denied by the arrastre CONTRACTOR o provided that such claim shall have been filed with the arrester CONTRACTOR within fifteen (15) days from the date of discharge of the last package from the carrying vessel PECO and the other claimants are claiming the CIF Value of the goods and not merely the P500 specified in the Contract of Manila Port with the Bureau of Customs ISSUES: 1. W/N Manila Port is liable for the value of the packages (meaning more than P500 per package)? - NO 2. W/N the claims against the arrastre have prescribed. - NO HELD: 1. Manila Port is liable only of up to P500 pesos per package only, unless a higher value is declared. P500 embraces not only the actual amount of costs, insurance and freight (CIF Value) but even marginal fees which had been paid in connection with the shipment. Manila Port is liable for the CIF value of the goods in question and other legitimate expenses incurred in connection therewith, all of which, however, shall not exceed P500.00 for each package. 2. On Prescription: Not yet prescribed as Manila Port has not acted on the claims. Manila had neither rejected nor denied plaintiff's claim, in view of which the same should be deemed constructively denied or rejected only upon the expiration of one year from the date of discharge of the last package. 16. Union Carbide Philippines, Inc. v. Manila Railroad Co. (GAUDIEL)

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FACTS: The vessel Daishin Maru arrived in Manila with a cargo of 1,000 bags of synthetic resin consigned to General Base Metals, Inc. which later sold the cargo to Union Carbide Philippines, Inc. That cargo was delivered to the Manila Port Service in good order and condition except for twenty- five bags which were in bad order (Par. IV and Annexes C to C-25 of Stipulation of Facts). Eight hundred ninety-eight (898) bags of resin (out of the 1,000 bags) were delivered by the customs broker to the consignee. One hundred two bags were missing. The contents of twenty-five bags were damaged or pilfered while they were in the custody of the arrastre operator. The 152 bags of resin (102 missing and 50 damaged) were valued at $12.65 a bag or a total value of $1,992.80, which amount at the prevailing rate of exchange of P3.85 to the American dollar, is equivalent to P7,402.78 (Annex I of Stipulation of Facts). The consignee, through the customs broker, filed on January 3, 1962 with the Manila Port Service, as arrastre operator, and the American Steamship Agencies, Inc., as agent of the carrier, a provisional claim advising them that the shipment in question was "shorthanded, short delivered and/or landed in bad order" (Annexes E and F of Stipulation of Facts). ISSUE: W/N action under COGSA already prescribed. HELD: Supreme Court ruled, the trial court's judgment is affirmed insofar as it dismissed plaintiffappellant's claim against defendant American Steamship Agencies, Inc. on the ground of prescription. The trial court in its decision of January 15, 1964 dismissed the case as to the carrier's agent on the ground that the action had already prescribed because it was not "brought within one year after delivery of the goods", as contemplated in section 3(6) of the Carriage of Goods by Sea Act. With respect to the consignee's claim against the arrastre operator, the trial court found that the provisional claim was filed within the fifteen-day period fixed in paragraph 15 of the arrastre contract. Yet, in spite of that finding, the trial court dismissed the action against the arrastre operator (p. 65, Record on Appeal). Union Carbide appealed to the Court of Appeals on questions of fact and of law, That Appellate Court elevated the case to this Court because in its opinion the appeal raises only the legal issue of prescription (Resolution of May 10, 1967 in CA-G. R. No. 33743-R). Claim against the carrier's agent.-There is no question that, as shown in the twenty-five tally sheets, 975 bags of resin were delivered by the carrier in good order to the arrastre operator and that only twenty-five (25) bags were damaged while in the carrier's custody (Annexes C to C-25 and K-1 of Stipulation of Facts). The one-year period within which the consignee should sue the carrier is computed from "the delivery of the goods or the date when the goods should have been delivered". The Carriage of Goods by Sea Act provides: In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered: Provided, That if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered.

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In the case of any actual or apprehended loss or damage the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. (Commonwealth Act No. 65, adopting U.S. Public Act No. 521 of April 16,1936). 17. Eastern and Australian Steamship Co., Ltd. v. Great American Insurance Co. and CFI Manila (ITARALDE) FACTS: Jackson and Spring shipped from Sydney, Australia under Bill of Lading No. 31 for delivery to Manila in favour of Benguet Consolidated, 1 case of impellers on board SS Chitral, vessel owned and operated in the Philippines by petitioner Eastern. The shipment was insured with Respondent Great American. Vessel arrived in Manila but failed to discharge the shipment. Consignee made claim but petitioner failed to make delivery. Respondent Great American paid the consignee the value of the shipment, and as subrogee, initiated this complaint. Petitioner maintained that they should only be liable limited to L100 Sterling or P1,544.40 as stipulated in the Bill of Lading. Respondent argued that liability should be based on COGSA pursuant to Sec. 4 (5), and liability should be $500 or P3,217.50. Lower Court applied COGSA. ISSUE: W/N petitioner should only be liable based on what is stipulated in the Bill of Lading? When is COGSA rules applicable to liability for loss of goods? HELD: YES. The first part of the provision of Section 4 (5) of the Carriage of Goods by Sea Act limits the melee, amount that may be recovered by the shipper in the absence of an agreement as to the nature and value of goods shipped. Said provision does not prescribe the minimum and hence, it could be any amount which is below $500.00. Clause 17 of the questioned Bill of Lading also provides the melee, for which the carrier is liable. It prescribes that the carrier may only be held liable for an amount not more than L100 Sterling which is below the melee, limit required in the Carriage of Goods by Sea Act. The second paragraph of Section 4 (5) of the Carriage of Goods by Sea Act prescribing the melee, amount shall not be less than $500.00 refers to a situation where there is an agreement other than set forth in the Bill of Lading providing for a melee, higher than $500.00 per package. In the case at bar, it is apparent that there had been no agreement between the parties, and hence, Clause 17 of the Bill of Lading shall prevail. The condition imposed in Clause 17 of the Bill of Lading should not be read in the light of second paragraph of Section 4 (5) of the Carriage of Goods by Sea Act, is well taken. Indeed, it would be to render ineffective the very intent of the law setting the sum of $500.00 as the melee, liability of the vessel/carrier, per package, in the, absence of a higher valuation of the goods as indicated in the Bail of Lading. By providing that $500.00 is the maximum liability, the law does not disallow an agreement for liability at a lesser amount. Significantly, Article 1749 of the New Civil Code expressly allows the limitation of the carrier's liability. Art. 1749 A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. (This right as stipulated in American jurisprudence): A stipulation in a contract of carriage that the carrier will not be liable beyond a specified amount unless the shipper declares the goods to have a greater value is generally deemed to be valid and will operate to limit the carrier's liability, even if the loss or damage results from the carrier's negligence. Pursuant to such provision, where the shipper is silent as to

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the value of his goods, the carrier's liability for loss or damage thereto is limited to the amount specified in the contract of carriage and where the shipper states the value of his goods, the carrier's liability for loss or damage thereto is limited to that amount. Under a stipulation such as this, it is the duty of the shipper to disclose, rather than the carrier's to demand the true value of the goods and silence on the part of the shipper will be sufficient to limit recovery in case of loss to the amount stated in the contract of carriage. 18. Eastern Shipping Lines v. CA and HSBC (GR 80936, 17 October 1990) (KUNG) FACTS: On 24 February 1980, the Nanyo Corporation of Kobe, Japan shipped a cargo consisting of 5 packages of supplies and materials for 1200 W x 2500 LMM Apron Feeder and 2 00 W x 5850 LMM Apron Feeder, covered by a bill of lading. The cargo was loaded on board the S/S Eastern Adventure destined for Manila. The vessel is operated by Eastern Shipping Lines. The bill of lading was consig ned to Shippers Order, with Address Arrival Notice to Consolidated Mines Inc. 6799 Ayala Avenue, Makat i, Metro Manila, Philippines. The cargo arrived in Manila on 4 March 1980. A few days later, on the basis of an Undertaking for Delivery of Cargo but without the surrender of the original bill of lading presented by Consolidated Mines (CMI), Eastern Shipping released the shipment in question to CMI. In said guaranty, CMI undertook to indemnify Eastern Shipping harmless from all demands, claiming liabilities, actions and expenses About 5 months later, or specifically on 19 August 1980, Eastern Shipping received from Hongkong and Shanghai Bank (HSBC), a letter stating that HSBC holds title to the goods and has possession of the full set of original bills of lading, and that it is unable to locate the cargo and that it appeared that Eastern Shipping has released it to CMI. Considering that there was no reply from Eastern Shipping, HSBC wrote another demand letter through counsel dated 29 October 1980 in contemplation of a legal action against Eastern Shipping should it not make good HSBCs claim. On 23 December 1980 CMI wrote a letter to HSBC admitting that they received the shipment in question due to a guarantee executed by them, and requested HSBC that legal action be held off for at least 30 days, promising to settle its account with HSBC from the funds it was expecting from Benguet Corporation. On 14 January 1981, Eastern Shipping wrote a reply to HSBC, stating therein that it regrets releasing the cargo without the consent of HSBCs client, but that it was constrained to release the same in view of the consignees strong representation and guarantee that they will settle their obligation with the bank. Eastern Shipping requested that HSBC advise the former if the consignee be unable to comply with its requirement after 30 days.CMI having failed to fulfill its promise, HSBC filed a complaint before the then CFI of Rizal against Eastern Shipping praying for actual and compensatory damages in the amount of $168,521.16 representing the value of the goods covered by the Bill of Lading, exemplary damage in the amount deemed just by the court and P50,000 attorneys f ees plus expenses of litigation and judicial costs. On 15 August 1981, Eastern Shipping filed a third party complaint against CMI seeking reimbursement from the latter of whatever pecuniary obligations Eastern Shipping may be liable to HSBC, as well as moral damages. During trial, CMI filed a Motion to Stay Action in view of the pendency of involuntary insolvency proceedings commenced against it in the meantime by its creditors which included HSBC. This motion was denied by the trial court. On the basis of the evidence presented by HSBC and Eastern Shipping, as CMI failed to present its evidence, the court on 15 January 1985 rendered judgment in favor HSBC and against Eastern Shipping, ordering the latter to pay the sum of $168,521.16 or its equivalent in Philippine Currency representing the value of the goods covered by the Bill of Lading plus interest thereon from the filing of the complaint, until fully paid; P20,000.00 as and for attorneys fees and to pay the costs. With respect to the Third Party Complaint, the Court rendered judgment in favor of Eastern Shipping and against the CMI ordering the latter to pay all the liabilities of the former in favor of HSBC consisting of the value of the goods covered by the Bill of Lading in the sum of $168,521.16 or its

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equivalent in Philippine Currency plus interest from the filing of the third party complaint until fully paid; attorneys fees of P20,000.00 and to pay the costs. Its motion for reconsideration having been denied, Eastern Shipping appealed to the Court of Appeals. On 30 June 1987, the Court of Appeals rendered the decision affirming the appealed decision in toto. Eastern Shipping filed a motion for reconsideration, but the same was denied on 24 November 1987. Hence, the petition for review. The Supreme Court granted the petition, set aside the decision and order of the Court of Appeals, dismissed the complaint before the trial court for lack of merit but without prejudice to HSBC pursuing its claims against CMI in the proper proceedings. 1. Bill of lading refer to CMI, not HSBC, as consignee. At the outset, the Bill of Lading which was issued by the carrier but contained articles furnished by the Shipper, shows on its face that the Shipment is consigned TO SHIPPERS ORDER with ADDRESS ARRIVAL NOTICE TO CONSOLIDATED MINES INC. 6799 AYALA AVE. MAKATI, METRO MANILA, PHILIPPINES. Nowhere did the Bill of Lading refer to HSBC as the consignee or the one to be notified. The foregoing information, without more, in effect makes CMI for all practical intents and purposes the party named and ordered to receive the goods. 2. Eastern Shipping not expected to look beyond face of bill of lading. Eastern Shipping, not being privy to any transaction between HSBC and CMI, cannot be expected to look beyond what is contained on the face of the bill of lading and guess which of the many banks in Metro Manila or some other unrevealed corporation could possibly be the consignee. To consider otherwise would not be sound business practice as Eastern Shipping would be forced to wait for the real owner of the goods to show up, perhaps in vain. The shipment consisted of machinery materials and supplies for a mining company named in the bill of lading. In the absence of contrary instructions or at least knowledge of other facts, the carrier is not ordinarily expected to deliver mining equipment to an unnamed or unknown party lurking for several months. 3. Nature of Bill of lading; Macondray v. Acting Commissioner of Customs, Phoenix Assurance v. US Lines In Macondray and Company Inc. v. Acting Commissioner of Customs (62 SCRA 427 [1975]), it was held that a bill of lading is ordinarily merely a convenient commercial instrument designed to protect the importer or consignee. And in Phoenix Assurance Co., Ltd. v. United States Lines (22 SCRA 674 [1968]), it was held that as a receipt, a bill of lading recites the place and date of shipment, describes the goods as to quantity, weight, dimensions, identification marks, condition, quality and value. 4. CMI owner of goods in question; other evidences (1) HSBC expressly admitted in its complaint that pursuant to the Bill of lading the shipment was issued To Shippers Order. It never alleged therein that it was the consignee of the shipment in question. Similarly, by HSBCs own documentary evidence, CMI is the buyer-owner of the shipment. (2) the Buyer referred to in the Certificate issued by the shipper Nanyo Corporation should perforce refer to CMI, as that it certified that the Original Consular Invoice had been airmailed directly to Buyer, and

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certified that advance copies of Commercial Invoice Packing List and Bill of Lading were airmailed directly to Buyer. (3) HSBC has established by its own documentary evidence, more particularly, the Consular Invoice dated 25 February 1980, issued in Tokyo, Japan by the Foreign Service of the Republic of the Philippines, that the consignee of the shipment in question is CMI. Hence, in view of the admissions of HSBC, exceptional circumstances allow a deviation from the general rule regarding the surrender of the bill of lading. The rule cannot always be absolute. 7. Article 353 of Code of Commerce Assuming that CMI may not be considered consignee, Eastern Shipping cannot be faulted for releasing the goods to CMI under the circumstances, due to its lack of knowledge as to who was the real consignee in view of CMIs strong representations and letter of undertaking wherein it stated that the bill of lading would be presented later. This is precisely the situation covered by the last paragraph of Article 353 of the Code of Commerce, i.e. If in case of loss or for any other reason whatsoever, the consignee cannot return upon receiving the merchandise the bill of lading subscribed by the carrier, he shall give said carrier a receipt of the goods delivered this receipt producing the same effects as the return of the bill of lading. 9. Eastern Shipping in good faith Under the special circumstances of the present case, equity favors Eastern Shipping which proved that it was in good faith while both CMI and HSBC cannot claim the same. While the goods in question were released on 4 March 1980 the records show that HSBC received the original bill of lading, as per testimony of its witness Ederlina Crisostomo, only on April 1980 or long after the goods had been released. This circumstance goes against the claims of HSBC. Thus HSBC in its original demand letter stated, We are unable to locate the cargo and it would appear that it has been released by you to Consolidated Mines, Inc. This proves that it had fore-knowledge of the prior release to CMI. And to make things worse, HSBC, despite CMIs admission that it received the goods, sued only Eastern Shipping while at the same time claiming for the value of the goods in the involuntary insolvency proceedings of CMI which the Bank itself, together with others, initiated. Only later developments led to the present case. 11. HSBC more negligent party as against Eastern Shipping It becomes more evident that HSBC is the more negligent party as against Eastern Shipping when aside from having allowed CMI to be designed in the bills of lading, as the party to be notified, it allowed the latter to be designated as the consignee in the Consular Invoice, the original of which was directly furnished to CMI by and as certified to by the shipper Nanyo Corporation. With such vast powers, akin to an agent of HSBC, CMI acted within its authority, and even if it acted on its own. 13. Bad faith by both HSBC and CMI For almost 6 months from the arrival of the goods HSBC did not do anything to claim the cargo. It could not possibly be left around lying idle when on the face of the bill of lading, there was a named owner to be notified. On the other hand, CMI secured the release of the goods through misrepresentation before Eastern Shipping without settling its account with HSBC and thereafter did not bother to present evidence before the trial court, leaving Eastern Shipping holding an empty bag as it were. These circumstances also prove bad faith on the part of CMI. Under the exceptional circumstances and applying especially

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strong considerations of equity, Eastern Shipping did not commit any fault sufficient to render it liable to HSBC. On the contrary, it was HSBC and CMI who were obviously in bad faith in dealing with Eastern Shipping. B. Republic Act 6235 C. DOTC-DTI Joint Administrative Order No. 1 Series of 2012. D. International Freight Forwarding 1. Merit Freight International Inc. v. Federal Express Pacific Inc. (MAGSUMBOL) E. Warsaw Convention 1. American Airlines v. CA (PABALAN) FACTS: Private respondent Amadeo Seno purchased from Singapore Airlines in Manila conjunction tickets. In Geneva, the petitioner decided to forego his trip to Copenhagen, and go straight to New York. A new ticket was issued by American Airlines. Private respondent exchanged the unused portion of the conjunction ticket from International Air Transport Association clearing house in Geneva. Private respondent filed an action for damages before the RTC of Cebu for the alleged embarrassment and mental anguish he suffered at the Geneva Airport when the petitioners security officers prevented him from boarding the plane, detained him for about an hour and allowed him to board the plane only after all the passengers have boarded. American Airlines assails the trial courts order denying the petitioners motion to dismiss the action for damages filed by the private respondent for lack of jurisdiction under section 28 (1) of the Warsaw Convention. ISSUE: W/N the Philippine courts have jurisdiction over the action for damages. HELD: The Supreme Court ruled that the case was properly filed in the Philippines. It held that the petitioner American Airlines acted as an agent of the Singapore Airlines under IATA rules and as an agent of the principal carrier the petitioner may be held liable under contract of carriage in Manila. Petitioners main argument is that the issuance of a new ticket in Geneva created a contract of carriage separate and distinct from that entered by the private respondent in Manila. This is without merit for the contract of carriage between the private respondent and Singapore Airlines although performed by different carriers under a series of airline tickets, including that issued by petitioner, constitutes a single operation. Members of the IATA are under a general pool partnership agreement wherein they act as agent of each other in the issuance of tickets to contracted passengers. Art 1(3) of the Warsaw Convention states: "Transportation to be performed by several successive carriers shall be deemed, for the purposes of this convention, to be one undivided transportation, if it has been regarded by the parties as a single operation, whether it has been agreed upon under the form of a single contract or a series of contracts, and it shall not lose its international character merely because one contract or series of contracts is to be performed entirely within the territory subject of the sovereignty, suzerainty, mandate or authority of the same high contracting party." 2. PAL v. CA (PEREZ)

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FACTS: On Jan 1990, plaintiff Gilda Mejia testified that on Jan 27, 1990 she took a PAL plane from San Francisco to Manila. She brought with her a slightly used Microwave oven (Sharp -brand). When shipped, PAL inspected it and it was in good condition. Gilda did not declare the value of the microwave because she was advised by a PAL employee not to. When she arrived in Manila, she gave her sister permission to claim her baggage, and took a connecting flight to Bacolod. It was later on discovered that the front door of the microwave was broken, thereby rendering it unserviceable. They demanded from PAL thru Atty. Paco P30,000 for the damages although a brand new one costs P40,000, but PAL refused to pay. PAL claims that plaintiffs claim was not investigated until after the filing of the formal claim on Aug. 13, 1990. During the investigation, plaintiff failed to submit positive proof of the value of the cargo. Hence her claim was denied. Also, Gildas claim was filed out of time un der the Air Way Bill which provides: a) the person is entitled to delivery must make a complaint in writing to the carrier in case: 1) Visible damages to the goods, immediately after discovery of the damage and at the latest within 14 days from the receipt of the goods. The trial court thereafter ruled in favour of Gilda, by saying that the plaintiff only failed to present the value of the cargo because she was advised by a PAL employee in San Francisco not to. Also, Gilda testified that she immediately submitted a baggage freight claim to PAL, but her claim was passed around until she was referred to a certain Atty Paco. The baggage freight claim is sufficient compliance with the formal claim as per the trial court. PAL claims that the trial court erred in finding that PALs liability is not limited by the said provisions of the airway bill. ISSUE: Is limited liability (Warsaw Convention), by way of the airway bill stipulations, not applicable in this case? HELD: Yes. The Principle of limited liability is not applicable in this case because there was willful misconduct on the part of the PAL employees. According to the SC, the appellate court was correct when it declared the non-application of the limited liability under the Condition of the Contracts contained in the airway bill. The Warsaw Convention has the force and effect of law in the Philippines, but it does not operate as an exclusive enumeration of the instances when a carrier shall be liable for a breach of contract or as an absolute limit to the extent of liability, nor does it preclude the operation of the Civil Code or other pertinent laws. It is as much part of Philippine law as the Civil Code, Code of Commerce and other municipal special laws, and the provisions therein contained, specifically on the carriers liability, are operative in the Philippines but only in appropriate situations. 3. Santos v. Northwest (SANTOS) FACTS: The petitioner is a minor and a resident of the Philippines. Private respondent Northwest Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A. and licensed to do business and maintain a branch office in the Philippines.

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On October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San Francisco. U.S.A., for his flight from San Francisco to Manila via Tokyo and back. The scheduled departure date from Tokyo was December 20, 1986. No date was specified for his return to San Francisco. On December 19, 1986, the petitioner checked in at the NOA counter in the San Francisco airport for his scheduled departure to Manila. Despite a previous confirmation and re-confirmation, he was informed that he had no reservation for his flight from Tokyo to Manila. He therefore had to be wait-listed. On March 12, 1987, the petitioner sued NOA for damages in the RTC of Makati. On April 13, 1987, NOA moved to dismiss the complaint on the ground of lack of jurisdiction, citing Article 28(1) of the Warsaw Convention, reading as follows: Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the contract has been made, or before the court at the place of destination. The private respondent contended that the Philippines was not its domicile nor was this its principal place of business. Neither was the petitioners ticket issued in this country nor was his destin ation Manila but San Francisco in the United States. Lower court granted the dismissal, CA affirmed. ISSUE: WON the Philippines has jurisdiction over the case. HELD: No jurisdiction. The Convention is a treaty commitment voluntarily assumed by the Philippine government and, as such, has the force and effect of law in this country. The petitioners allegations are not convincing enough to overcome this presumption. Apparently, the Convention considered the four places designated in Article 28 the most convenient forums for the litigation of any claim that may arise between the airline and its passenger, as distinguished from all other places. By its own terms, the Convention applies to all international transportation of persons performed by aircraft for hire. Whether the transportation is "international" is determined by the contract of the parties, which in the case of passengers is the ticket. When the contract of carriage provides for the transportation of the passenger between certain designated terminals "within the territories of two High Contracting Parties," the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of the airline and its passenger. The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of the contract of carriage or, specifically in this case, the ticket between the passenger and the carrier. Examination of the petitioners ticket shows that his ultimate destination is San Francisco. Although the date of the return flight was left open, the contract of carriage between the parties indicates that NOA was bound to transport the petitioner to San Francisco from Manila. Manila should therefore be considered merely an agreed stopping place and not the destination. 4. Sabena Belgian v. CA (VILLAFUERTE)

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Doctrine: The Warsaw Convention denies to the carrier availment of the provisions which exclude or limit his liability if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to wilful misconduct, or if the damage is similarly caused by any agent of the carrier acting within the scope of his employment. FACTS: Private respondent MA. PAULA SAN AGUSTIN was a passenger on board Flight SN 284 of defendant airline originating from Casablanca to Brussels, Belgium on her way back to Manila. She checked in her luggage which contained her valuables all amounting to $4,265.00, for which she was issued Tag No. 71423. She stayed overnight in Brussels and her luggage was left on board Flight SN 284. Upon Arrival in Manila, she learned that her luggage was missing and was advised to accomplish and submit a property Irregularity Report which she submitted and filed on the same day. Upon follow up, it remained missing; thus, she filed her formal complaint with the office of Ferge Massed, petitioners Local Manager, demanding immediate attention. Two weeks later she was notified that her luggage was found. But unfortunately plaintiff was informed that the luggage was lost for the second time. She demanded payment but the airline refused to settle the claim. The trial court ruled in favor of Ma. Paula San Agustin. The appellate court affirmed in toto the trial courts judgment. Petitioner airline company, in contending that the alleged negligence of private respondent should be considered the primary cause for the loss of her luggage, avers that, despite her awareness that the flight ticket had been confirmed only for Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be confirmed, she did not retrieve the luggage upon arrival in Brussels. Petitioner insists that private respondent, being a seasoned international traveler, must have likewise been familiar with the standard provisions contained in her flight ticket that items of value are required to be hand-carried by the passenger and that the liability of the airline or loss, delay or damage to baggage would be limited, in any event, to only US$20.00 per kilo unless a higher value is declared in advance and corresponding additional charges are paid thereon. At the Casablanca International Airport, private respondent, in checking in her luggage, evidently did not declare its contents or value. Petitioner cites Section 5(c), Article IX, of the General Conditions of Carriage, signed at Warsaw, Poland, on 02 October 1929, as amended by the Hague Protocol of 1955, generally observed by International carriers, stating, among other things, that: Passengers shall not include in his checked baggage, and the carrier may refuse to carry as checked baggage, fragile or perishable articles, money, jewelry, precious metals, negotiable papers, securities or other valuables. ISSUE: W/N the petitioners liability may be limited by provisions of Warsaw Convention. HELD: No. It remained undisputed that private respondent's luggage was lost while it was in the custody of petitioner. It was supposed to arrive on the same flight that private respondent took in returning to Manila on 02 September 1987. When she discovered that the luggage was missing, she promptly accomplished and filed a Property Irregularity Report. She followed up her claim on 14 September 1987, and filed, on the following day, a formal letter-complaint with petitioner. She felt relieved when, on 23 October 1987, she was advised that her luggage had finally been found, with its contents intact when examined, and that she could expect it to arrive on 27 October 1987. She then waited anxiously only to

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be told later that her luggage had been lost for the second time. Thus, the appellate court, given all the facts before it, sustained the trial court in finding petitioner ultimately guilty of "gross negligence" in the handling of private respondent's luggage. The "loss of said baggage not only once but twice, said the appellate court, "underscores the wanton negligence and lack of care" on the part of the carrier. The above findings, which certainly cannot be said to be without basis, foreclose whatever rights petitioner might have had to the possible limitation of liabilities enjoyed by international air carriers under the Warsaw Convention (Convention for the Unification of Certain Rules Relating to International Carriage by Air, as amended by the Hague Protocol of 1955, the Montreal Agreement of 1966, the Guatemala Protocol of 1971 and the Montreal Protocols of 1975). In Alitalia v. Intermediate Appellate Court, now Chief Justice Andres R. Narvasa, speaking for the Court, has explai ned it well; he said: The Warsaw Convention however denies to the carrier availment of the provisions which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to wilful misconduct, or if the damage is (similarly) caused x x by any agent of the carrier acting within the scope of his employment. The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself completely, and declaring the stated limits of liability not applicable if it is proved that the damage resulted from an act or omission of the carrier, its servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result. The same deletion was effected by the Montreal Agreement of 1966, with the result that a passenger could recover unlimited damages upon proof of wilful misconduct. The Court thus sees no error in the preponderant application to the instant case by the appellate court, as well as by the trial court, of the usual rules on the extent of recoverable damages beyond the Warsaw limitations. Under domestic law and jurisprudence (the Philippines being the country of destination), the attendance of gross negligence (given the equivalent of fraud or bad faith) holds the common carrier liable for all damages which can be reasonably attributed, although unforeseen, to the non-performance of the obligation, 9 including moral and exemplary damages. 5. International Container Terminal Services, Inc. v. Prudential Guarantee & Assurance Co., Inc. (ATIENZA) FACTS: On April 25, 1990, mother vessel "Tao He" loaded and received on board a shipment of five (5) lots of canned foodstuff complete and in good order and condition for transport to Manila in favor of Duel Food Enterprises (consignee). Consignee insured the shipment with Prudential Guarantee and Assurance, Inc. against all risks On May 30, 1990, the shipment arrived at the Port of Manila and was discharged in favor of International Container Terminal Services, Inc. (ICTSI) for safekeeping. On June 1, 1990, A. D. Reyna Customs Brokerage (defendant brokerage) withdrew the shipment and delivered the same to Duel Foods. An inspection thereof revealed that 161 cartons were missing valued at P85,984.40. Claim for indemnification of the loss having been denied by ICTSI and the brokerage, consignee sought payment from Prudential. Consignee received a compromised sum of P66,730.12 in settlement thereof. As Prudential instituted the instant complaint against ICTSI and the Brokerage, ICTSI counters that it observed extraordinary diligence over the subject shipment while under its custody; that the loss is not

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attributable to its fault or its agent, representative or employee; and that consignee failed to file a formal claim against it in accordance with PPA Administrative Order No. 10-81. ISSUE: W/N the formal claim was properly filed. HELD: NO. According to the SC, in order to hold the arrastre operator liable for lost or damaged goods, the claimant should file with the operator a claim for the value of said goods "within fifteen (15) days from the date of discharge of the last package from the carrying vessel. The filing of the claim for loss within the 15-day period is in the nature of a prescriptive period for bringing an action and is a condition precedent to holding the arrastre operator liable. This requirement is a defense made available to the arrastre operator, who may use or waive it as a matter of personal discretion. The said requirement is not an empty formality. It gives the arrastre contractor a reasonable opportunity to check the validity of the claim, while the facts are still fresh in the minds of the persons who took part in the transaction, and while the pertinent documents are still available. Such period is sufficient for the consignee to file a provisional claim after the discharge of the goods from the vessel. 25 For this reason, we believe that the 15-day limit is reasonable. 6. Northwest v. CA (Bautista) FACTS: The plaintiff, [Torres], allegedly on a special mission to purchase firearms for the Philippine Senate, purchased a round trip ticket from defendant [Northwest] for his travel to Chicago and back to Manila. Via defendant's flight, plaintiff left for United States. After purchasing firearms and on the way back to Manila, plaintiff checked-in and presented before defendant's representative his two identical baggage, one of which contained firearms. Defendant's representative required the baggage to be opened and the supporting evidence to be presented. Plaintiff showed them his authorization from the Philippine government and the purchase receipts. Plaintiff thereafter sealed the baggage and defendant's representative placed a red tag on the baggage with firearms with the marking "CONTAINS FIREARMS". Upon arrival in Manila plaintiff was not able to claim one of his baggages. Plaintiff was informed by defendant's representative that his baggage containing firearms was recalled back to Chicago by defendant for US Customs verification. A telex to this effect was shown to plaintiff. After being advised of the arrival of his other baggage, plaintiff claimed and opened the baggage in the presence of defendant's representative and found out that the firearms were missing. A Personal Property Missing Damage Report was issued by defendant to plaintiff. On account of continuous refusal of defendant to settle amicably, plaintiff then prayed before the trial court that defendant be ordered to pay actual damages, moral damages, temperate damages, exemplary damages and attorney's fees. In its answer, defendant pleaded: a) that it was the agents from the US Customs who ordered for the return of the weapons which plaintiff checked-in; b) that when opened in the presence of US Customs agents the box contained no firearms; and c) that since the baggage which was returned back to Chicago did not contain any firearms, then the baggage which plaintiff received upon arrival in Manila must have contained the firearms.

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ISSUES: 1. Northwest contests the right of Torres to actual damages on the following grounds: (a) the loss of firearms was disputed; and (b) the finding of willful misconduct was arbitrary. HELD: Northwest denied in its Answer the material allegations in the complaint and asserted that it was not liable for actual damages because the box containing the alleged lost firearms was the one received by Torres when he arrived in Manila. Even granting that the firearms were lost, its liability was limited by the Warsaw Convention and the contract of transportation to $9.07 per pound, or a total of $640 as the box weighed 70 pounds. They also denied having acted fraudulently or in bad faith. In submitting for summary judgment the matter of its liability only to the maximum allowed in Section 22(2) of the Warsaw Convention, Northwest was deemed to have hypothetically admitted arguendo that the firearms were lost. It did not waive the presentation of evidence that it was not in fact liable for the alleged loss of firearms. Northwests liability for actual damages may not be limited to that prescribed in Section 22(2) of the Warsaw Convention. This is because the Warsaw Convention does not operate as an exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the extent of that liability. It should be deemed a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any willful misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. The Convention's provisions do not "regulate or exclude liability for other breaches of contract by the carrier" or misconduct of its officers and employees, or for some particular or exceptional type of damage. 7. Luna v. CA (BISNAR) Source: Rodriguez, Rufus. The Law on Transportation, Fourth Edition FACTS: On May 19, 1989, at around 8:00 in the morning, the petitioners Rufino Luna, Rodolfo Alonso and Porfirio Rodriguez boarded Flight 020 of private respondent Northwest Airlines bound for Seoul, South Korea, to attend the four-day Rotary International Convention from the 21st to the 24th of May 1989. The checked in one (1) piece of luggage each. After boarding, however, due to engine trouble, they were asked to disembark and transfer to a Korean Airlines plane scheduled to depart four (4) hours later. They were assured that their baggage would be with them in the same flight. When the petitioners arrived in Seoul, they discovered that their personal belongings were nowhere to be found; instead, they were allegedly flown to Seatle, USA. It was not until four (4) days later, and only after repeated representations with Northwest Airlines personnel at the airport in Korea were petitioners able to retrieve their baggage. By then the Convention, which they were hardly able to attend was almost over. HELD: From the facts, it appears that private respondent Northwest Airlines indeed failed to deliver petitioners baggage at the designated time and place. For this what respondent carrier could say was that we exerted all efforts to comply with this condition of the contract. Hence, it is evident that petitioners suffered some special specie of injury for which they should rightly be compensated. Previously, We ruled that the Warsaw Convention was a treaty commitment voluntarily assumed by the Philippine government; consequently, it has the force and effect of law in this country. But, in the same token, We are also aware of jurisprudence that the Warsaw Convention does not operate as an exclusive enumeration of the instances for declaring an airline liable for breach of contract of carriage or as an

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absolute limit of the extent of that liability. The Convention merely declares the carrier liable for damages in the enumerated case, if the conditions therein specified are present. Article 17. The carrier shall be liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking. Article 18. (1) The carrier shall be liable for damage sustained in the event of the destruction or loss of, or of damage to, any checked baggage, or any goods, if the occurrence which caused the damage so sustained took place during the transportation by air. (2) The transportation by air within the meaning of the preceding paragraph shall comprise the period during which the baggage or goods are in charge of the carrier, whether in an airport or on board an aircraft, or, in the case of landing outside an airport, in any place whatsoever. (3) The period of the transportation by air shall not extend to any transportation by land, but sea, or by river performed outside an airport. If, however, such transportation takes place in the performance of a contract for transportation by air, for the purpose of loading, delivery, or transhipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the transportation by air. Article 19. The carrier shall be liable for damage occasioned by delay in the transportation by air of passenger, baggage, or goods. For sure, it does not regulate the liability, much less exempt, the carrier for violating the rights of others which must simply be respected in accordance with their contracts of carriage. The application of the Convention must not therefore be construed to preclude the operation of the Civil Code and other pertinent laws. In fact in Alitalia v. IAC, We awarded Dr. Felipe Pablo nominal damages, the provisions of the Convention notwithstanding. Hence, petitioners' alleged failure to file a claim with the common carrier as mandated by the provisions of the Warsaw Convention should not be a ground for the summary dismissal of their complaints since private respondent may still be held liable for breach of other relevant laws which may provide a different period or procedure for filing a claim. Considering that petitioners indeed filed a claim which private respondent admitted having received on 21 June, 1989, their demand may have very well been filed within the period prescribed by those applicable laws. Consequently, respondent trial courts, as well as respondent appellate court, were in error when they limited themselves to the provisions of the Warsaw Convention and disregarding completely the provisions of the Civil Code. 8. KLM Royal Dutch Airlines v. CA (BOMBALES) FACTS: Spouses Mendoza approached Mr. Reyes, the branch manager of Philippine Travel Bureau, for consultation about a world tour which they were intending to make with their daughter and niece. There are 3 segments of the trip, the longest, was via KLM. Respondents decided that one of the routes they will take was a Barcelona-Lourdes route with knowledge that only one airline, Aer Lingus, served it. Reyes subsequently made the necessary reservations.

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KLM secured seat reservations for the Mendozas and their companions from the carriers which would ferry them throughout their trip, with the exception of Aer Lingus. When the Mendozas left the Philippines, they were issued KLM tickets for the entire trip. However, their coupon for Aer Lingus was marked on request. When they were in Germany, they went to the KLM office and obtained a confirmation from Aer Lingus. At the airport in Barcelona, the Mendozas and their companions checked in for their flight to Lourdes. However, although their daughter and niece were allowed to take the flight, the spouses Mendozas were off loaded on orders of the Aer Lingus manager, who brusquely shoved them aside and shouted at them. So the spouses Mendozas took a train ride to Lourdes instead. Spouses filed a complaint for damages against KLM for breach of contract of carriage. The trial court decided in favor of the Mendozas. On appeal, the CA affirmed the decision. Hence, KLM brings this petition to the Supreme Court. KLM cites Art 30 of the Warsaw Convention, which states: the passenger or his representatives can take action only against the carrier who performed the transportation during which the accident or delay occurred. Also, KLM avers that the front cover of each ticket reads: that liability of the carrier for damages shall be limited to occurrences on its own line. ISSUE: W/N KLM is liable for breach of contract of carriage. HELD: Art. 30 of the Warsaw Convention does not apply to a case where an airline refuses to transport a passenger with a confirmed flight. The article presupposes the occurrence of delay or accident. What is manifested in this case is that the Aer Lingus refused to transport the spouses Mendozas to their planned and contracted destination. Further, SC held that KLM cannot be merely assumed as a ticket-issuing agent for other airlines and limit its liability to untoward occurrences on its own line. As the airline that issued the tickets, KLM was chargeable with the duty and responsibility of specifically informing the spouses of the conditions prescribed in their tickets or to ascertain that the spouses read them before they accepted their passage tickets. Lastly, the court also found that the passage tickets provide that the carriage to be performed therein by several successive carriers is to be regarded as a single operation. 9. Alitalia v. IAC (CARIAGA) FACTS: Dr. Felipa Pablo an associate professor in the UP, and a research grantee of the Philippine Atomic Energy Agency was invited to take part at a meeting of the Department of Research and Isotopes of the Joint FAO-IAEA Division of Atomic Energy in Food and Agriculture of the United Nations in Ispra, Italy. She accepted the invitation, and was then scheduled by the organizers to read a paper. The program announced that she would be the second speaker on the first day of the meeting. To fulfill this engagement, Dr. Pablo booked passage on petitioner airline, ALITALIA. She arrived in Milan on the day before the meeting in accordance with the itinerary and time table set for her by ALITALIA. She was however told by the ALITALIA personnel there at Milan that her luggage was

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"delayed inasmuch as the same was in one of the succeeding flights from Rome to Milan." Her luggage consisted of two (2) suitcases: one contained her clothing and other personal items; the other, her scientific papers, slides and other research material. But the other flights arriving from Rome did not have her baggage on board. Feeling desperate, she went to Rome to try to locate her bags herself. There, she inquired about her suitcases in the domestic and international airports, and filled out the forms prescribed by ALITALIA for people in her predicament. However, her baggage could not be found. Completely distraught and discouraged, she returned to Manila without attending the meeting in Ispra, Italy. Once back in Manila she demanded that ALITALIA make reparation for the damages thus suffered by her. ALITALIA offered her "free airline tickets to compensate her for any alleged damages." She rejected the offer, and forthwith commenced the action. As it turned out, Prof. Pablo's suitcases were in fact located and forwarded to Ispra, Italy, but only on the day after her scheduled appearance and participation. And for some reason or other, the suitcases were not actually restored to Prof. Pablo by ALITALIA until eleven (11) months later, and four (4) months after institution of her action. The CFI rendered judgment in Dr. Pablo's favor. ALITALIA appealed to the IAC but failed to obtain a reversal of the judgment. Thus, prompted herein petition. ISSUES: (1) W/N the Warsaw Convention should be applied to limit ALITALIAs liability. NO! (2) W/N Dr. Pablo is entitled to nominal damages. YES! HELD: (1) NO, the injury suffered by Dr. Pablo cannot be restricted to that prescribed by the Warsaw Convention for delay in the transport of baggage. Under the Warsaw Convention, an air carrier is made liable for damages for: 1) the death, wounding or other bodily injury of a passenger if the accident causing it took place on board the aircraft or in the course of its operations of embarking or disembarking; 2) the destruction or loss of, or damage to, any registered luggage or goods, if the occurrence causing it took place during the carriage by air;" and 3) delay in the transportation by air of passengers, luggage or goods. In these cases, it is provided in the Convention that the "action for damages, however, founded, can only be brought subject to conditions and limits set out" therein. The Warsaw Convention however denies to the carrier availment "of the provisions which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to willful

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misconduct," or "if the damage is similarly caused by any agent of the carrier acting within the scope of his employment." The Convention does not thus operate as an exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the extent of that liability. It should be deemed a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any willful misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. The Convention's provisions, in short, do not "regulate or exclude liability for other breaches of contract by the carrier" or misconduct of its officers and employees, or for some particular or exceptional type of damage. In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of petitioner airline; and Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some special species of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time appointed a breach of its contract of carriage. (2) YES, she is entitled to nominal damages. She is not, of course, entitled to be compensated for loss or damage to her luggage. As already mentioned, her baggage was ultimately delivered to her in Manila, tardily but safely. She is however entitled to nominal damageswhich, as the law says, is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated and recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered. The CA correctly awarded attorney's fees to Dr. Pablo. The law authorizes recovery of attorney's fees inter alia where, as here, "the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest," or "where the court deems it just and equitable." 10. United Airlines v. Uy (CLETO) INTERNATIONAL LAW: Applicability of the Warsaw Convention: the Convention's provisions do not regulate or exclude liability for other breaches of contract by the carrier or misconduct of its officers and employees, or for some particular or exceptional type of damage. Neither may the Convention be invoked to justify the disregard of some extraordinary sort of damage resulting to a passenger and preclude recovery therefor beyond the limits set by said Convention. Likewise, we have held that the Convention does not preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if willful misconduct on the part of the carrier's employees is found or established

FACTS: October 13, 1989 Respondent Willie Uy is a passenger of petitioner United Airlines, bound from San Francisco to Manila. While in San Francisco, it was found that one piece of his luggage was over the maximum weight allowance of 70 kg. per bag. A United Airlines employee rebuked him and in a loud voice, in front of the milling crowd, ordered him to repack his things accordingly. Wishing not to create a scene, Willie did as asked. Unfortunately, his luggage was still overweight so the airline billed him overweight charges. Willie offered to pay the charges with a Miscellaneous Charge Order (MCO) or

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an airline pre-paid credit but the same employee, and an airline supervisor, refused to honor it, contending that there were discrepancies in the figures. Thus, Willie was forced to pay the charges with his American Express credit card. Upon arrival in Manila, Willie discovered that one of his bags had been slashed and its contents, amounting to US$5,310.00, stolen. October 16, 1989 he sent his first letter of demand to United Airlines. The airline did not refute Willies allegations and mailed a check representing payment of his loss based on the maximum liability of US$9.70 per pound. Willie, thinking the amount to be grossly inadequate to compensate him for his losses as well as for the indignities he was subjected to, sent two more letters to petitioner airline, one dated January 4, 1990 and the other dated October 28, 1991, demanding out-of-court settlement of P1,000,000.00. June 9, 1992 Willie filed a complaint for damages before the Philippine courts. He had two causes of action: (1) the shabby and humiliating treatment he received from petitioners employees at the San Francisco Airport which caused him extreme embarrassment and social humiliation; and (2) the slashing of his luggage and the loss of personal effects amounting to US$5,310.00. For its part, United Airlines moved to dismiss the complaint on the ground that it was filed out of time. Under Art. 29 of the Warsaw Convention, the right to damages shall be extinguished if an action is not brought within 2 years. However, the second paragraph of the said provision stated that the method of calculating the period of limitation shall be determined by the law of the court to which the case is submitted. It is Willies position that our rules on interruption of pres criptive period should apply. When he sent his letters of demand, the 2-year period was tolled, giving him ample time to file his complaint. The trial court ordered the dismissal of the case, holding that Art. 29(2) refers not to the local forums rules in interrupting the prescriptive period but only to the rules of determining the time in which the action was deemed commenced (meaning filed). Willie filed his motion for reconsideration of the order of dismissal only on the 14th day. The trial court denied his motion and 2 days later Willie filed his notice of appeal. United Airlines this time contended that the notice of appeal was filed beyond the 15-day reglementary period and should therefore be dismissed. The CA, however, took cognizance of the case in the interest of justice and ruled in favour of respondent. Hence, this petition for certiorari.

ISSUE: Whether or not the action for damages is barred by the lapse of the 2-year prescriptive period under Art. 29 of the Warsaw Convention.

HELD: Supreme Court held that although the 2-year prescriptive period under the Warsaw Convention has lapsed, it did not preclude the application of other pertinent provisions of the Civil Code. Thus, the action for damages could still be filed based on tort which can be filed within 4 years from the time cause of action accrued. As for the action pertaining to the loss of the contents of the luggage, while it was well within the bounds of the Warsaw Convention, the Supreme Court found that there was an exception to the applicability of the 2-year prescriptive period that is when the airline employed delaying tactics and gave the passenger the run-around. Applicability of the Warsaw Convention: Courts have discretion whether to apply them or not Within our jurisdiction we have held that the Warsaw Convention can be applied, or ignored, depending on the peculiar facts presented by each case. Thus, we have ruled that the Convention's provisions do

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not regulate or exclude liability for other breaches of contract by the carrier or misconduct of its officers and employees, or for some particular or exceptional type of damage. Neither may the Convention be invoked to justify the disregard of some extraordinary sort of damage resulting to a passenger and preclude recovery therefor beyond the limits set by said Convention. Likewise, we have held that the Convention does not preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if willful misconduct on the part of the carrier's employees is found or established. Respondent's complaint reveals that he is suing on two (2) causes of action: (a) the shabby and humiliating treatment he received from petitioner's employees at the San Francisco Airport which caused him extreme embarrassment and social humiliation; and, (b) the slashing of his luggage and the loss of his personal effects amounting to US $5,310.00. While his second cause of action - an action for damages arising from theft or damage to property or goods - is well within the bounds of the Warsaw Convention, his first cause of action -an action for damages arising from the misconduct of the airline employees and the violation of respondent's rights as passenger - clearly is not. Action for damages arising from the misconduct of the airline employees and the violation of the respondents rights as passengers is covered under the Civil Code Consequently, insofar as the first cause of action is concerned, respondent's failure to file his complaint within the two (2)-year limitation of the Warsaw Convention does not bar his action since petitioner airline may still be held liable for breach of other provisions of the Civil Code which prescribe a different period or procedure for instituting the action, specifically, Art. 1146 thereof which prescribes four (4) years for filing an action based on torts. Exception to the Application of the 2-year prescriptive period: When airline employed delaying tactics As for respondent's second cause of action, indeed the travaux preparatories of the Warsaw Convention reveal that the delegates thereto intended the two (2)-year limitation incorporated in Art. 29 as an absolute bar to suit and not to be made subject to the various tolling provisions of the laws of the forum. This therefore forecloses the application of our own rules on interruption of prescriptive periods. Article 29, par. (2), was intended only to let local laws determine whether an action had been commenced within the two (2)-year period, and within our jurisdiction an action shall be deemed commenced upon the filing of a complaint. Since it is indisputable that respondent filed the present action beyond the two (2)-year time frame his second cause of action must be barred. Nonetheless, it cannot be doubted that respondent exerted efforts to immediately convey his loss to petitioner, even employed the services of two (2) lawyers to follow up his claims, and that the filing of the action itself was delayed because of petitioner's evasion. Verily, respondent filed his complaint more than two (2) years later, beyond the period of limitation prescribed by the Warsaw Convention for filing a claim for damages. However, it is obvious that respondent was forestalled from immediately filing an action because petitioner airline gave him the runaround, answering his letters but not giving in to his demands. True, respondent should have already filed an action at the first instance when his claims were denied by petitioner but the same could only be due to his desire to make an out-of-court settlement for which he cannot be faulted. Hence, despite the express mandate of Art. 29 of the Warsaw Convention that an action for damages should be filed within

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two (2) years from the arrival at the place of destination, such rule shall not be applied in the instant case because of the delaying tactics employed by petitioner airline itself. Thus, private respondent's second cause of action cannot be considered as time-barred under Art. 29 of the Warsaw Convention. WHEREFORE, the assailed Decision of the Court of Appeals reversing and setting aside the appealed order of the trial court granting the motion to dismiss the complaint, as well as its Resolution denying reconsideration, is AFFIRMED. Let the records of the case be remanded to the court of origin for further proceedings taking its bearings from this disquisition.

F. Ship Mortgage Decree 1. Crescent Petroleum v. MV Lor (DE JESUS) FACTS: M/V "Lok Maheshwari" is an ocean vessel of Indian registry owned by Shipping Corporation of India (SCI), organized under Indian Laws and owned by the Government of India. It was time-chartered by SCI to Halla Merchant Marine Co. Ltd., a South Korean company. Halla, in turn, sub-chartered the vessel through a time charter to Transmar Shipping, Inc. which further sub-chartered the vessel to Portserv Limited (Portserv). Both Transmar and Portserv are corporations organized under the laws of Canada. On or about November 1, 1995, Portserv requested Crescent Petroleum, Ltd. A corporation organized and existing under the laws of Canada; engaged in the business of selling petroleum and oil products for the use and operation of oceangoing vessels, to deliver marine fuel oils (bunker fuels) to the Lok Maheshwari. Crescent granted and confirmed the request through an advice via facsimile dated November 2, 1995. As security for the payment of the bunker fuels and related services, Crescent received two (2) checks in the amounts of US$100,000.00 and US$200,000.00. Thus, Crescent contracted with its supplier, Marine Petrobulk Limited, another Canadian corporation, for the physical delivery of the bunker fuels to the Vessel. On or about November 4, 1995, Marine Petrobulk delivered the bunker fuels amounting to US$103,544 inclusive of barging and demurrage charges to the Lok Maheshwari at the port of Pioneer Grain, Vancouver, Canada. The Chief Engineer Officer of the Vessel duly acknowledged and received the delivery receipt. Marine Petrobulk issued an invoice to Crescent for the US$101,400.00 worth of the bunker fuels. Crescent then issued a check for the same amount in favor of Marine Petrobulk, which check was duly encashed. Having paid Marine Petrobulk, Crescent issued a revised invoice dated November 21, 1995 to "Portserv Limited, and/or the Master, and/or Owners, and/or Operators, and/or Charterers of M/V Lok Maheshwari" in the amount of US$103,544.00 with instruction to remit the amount on or before December 1, 1995. The period lapsed and several demands were made but no payment was received. Also, the checks issued to Crescent as security for the payment of the bunker fuels were dishonored for insufficiency of funds. As a consequence, Crescent incurred additional expenses of US$8,572.61 for interest, tracking fees, and legal fees. On May 2, 1996, while Lok Maheshwari was docked at the port of Cebu City, Crescent instituted before the RTC of Cebu City an action "for a sum of money with prayer for temporary restraining order and writ of preliminary attachment" against Lok Maheshwari and SCI, Portserv and Transmar.

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ISSUE: W/N a maritime lien may be enforced on the vessel, Lok Maheshwari in accordance with PD 1521 or the Ship Mortgage Decree of 1978. HELD: No. The Court ruled that PD 1521 cannot apply. It based its reason on US rulings (Particularly in the Lauritzen v. Larsen) since PD 1521 was patterned after the U.S. Ship Mortgage Act of 1920 and the Liberian Maritime Law. According to the US rulings, for a maritime lien to exist the following factors should be considered: (1) place of the wrongful act; (2) law of the flag; (3) allegiance or domicile of the injured; (4) allegiance of the defendant shipowner; (5) place of contract; (6) inaccessibility of foreign forum; and (7) law of the forum. First, out of the seven basic factors listed in the case of Lauritzen, Philippine law only falls under one the law of the forum. All other elements are foreign Canada is the place of the wrongful act, of the allegiance or domicile of the injured and the place of contract; India is the law of the flag and the allegiance of the defendant ship owner. Second, PD 1521 was enacted to primarily to protect Filipino suppliers and not intended to create a lien from a contract for supplies between foreign entities delivered in a foreign port. Third, the public policy behind the law is to develop the domestic shipping industry, opening up Philippine Courts to foreign suppliers by granting them maritime lien un der our laws even if theyre not entitled would encourage forum shopping. Lastly, the submission of Crescent is not in keeping with the reasonable expectation of the parties to the contract. Indeed, when the parties entered into a contract for supplies in Canada, they could not have intended the laws of a remote country like the Philippines to determine the creation of a lien by mere accident of the Lok Maheshwaris being in the Philippine territory. It is under Canadian Laws Crescent should Crescent prove the existence of a maritime lien: In light of the interests of the various foreign elements involved, it is clear that Canada has the most significant interest in this dispute. The injured party is a Canadian corporation, the sub-charterer which placed the orders for the supplies is also Canadian, the entity which physically delivered the bunker fuels is in Canada, the place of contracting and negotiation is in Canada, and the supplies were delivered in Canada. 2. PNB/NDC v. CA (FERNANDEZ) FACTS: To finance seven ocean-going vessels, the Philippine International Shipping Corporation (PISC) applied for and was granted by petitioner National Investment and Development Corporation (NIDC) guaranty accommodations. Two of the three guaranty accommodations were in favour of petitioner PNB to finance the acquisition of 5 vessels. As security for theses guaranty accommodations, PISC executed in favour of petitioners chattel mortgage documents wherein the 7 vessels purchased were used as security. Meanwhile, on March 12, 1979, PISC entered into a Contract Agreement with Hong Kong United Dockyards for the repair and conversion of the vessel M/V Asean Liberty (one of the 7 vessels purchased) at a contract price of HK$2,200,000.00.

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On May 28, 1979, the Central Bank of the Philippines authorized PISC to open with private respondent China Banking Corporation (China Bank) a standby letter of credit for US$545,000.00 in favour of Citibank, N.A. (Citibank) to cover the repair and partial conversion of the vessel M/V Asean Liberty. China Bank issued the irrevocable Standby Letter of Credit. On September 17, 1979, a Promissory note for US$545,000.00 was executed by PISC in favour of Citibank pursuant to the Loan Agreement for US$545,000.00 between PISC, as borrower, and Citibank, as lender. Upon failure of PISC to fulfil its obligations under the said promissory note, Citibank sent to private respondent China Bank a letter drawing on the Letter of Credit. China Bank instructed its correspondent Irving Trust Co., by cable, to pay to Citibank the amount of US$242,225.00. On May 10, 1983, for failure of PISC to settle its obligations in the amount of US$64,789,470.96, petitioner PNB conducted, thru the Sheriffs Office, an auction sale of the mortgaged vessels, except f or the vessel M/V Asean Objective. Petitioner NIDC emerged as the highest bidder in these auctions. PISC instituted before the RTC of Makati, a civil case against petitioners for the annulment of the foreclosure and auction sale of its vessels and damages. The RTC dismissed the case and NIDC acquired the vessels. Complaints in intervention were filed by a number of companies, which included Lloyds and China Bank, for recovery upon maritime liens against the proceeds of the sale of the foreclosed vessels. The parties concerned, except for intervenors Lloyds and China Bank, eventually submitted a Compromise Agreement. Intervenor China Bank claims are predicated on (1) a China Bank Standy Letter of Credit in favour of Citibank, (2) a loan worth US$2.7M to reduce PISCs overhead expenses, and (3) a China Bank commercial letter of credit to PISC in favour of Bank of America for the repair of the vessels. China Bank claimes are premised on the above being preferred maritime liens. NIDC rejects said claims as not being maritime lines, much less preferred maritime liens. The RTC ruled that the claim of private respondent CBC was not a preferred maritime line but was merely a loan extended to PISC by CBC. The CA however reversed. ISSUES: (1) W/N China Banks claim for US$242,225.00 is in the nature of a maritime lien? YES. (2) W/N China Banks maritime lien a preferred lien? YES. HELD: (1) The applicable law on the matter is Presidential Decree No. 1521, otherwise known as the Ship Mortgage Decreee of 1978, specifically Sections 17 and 21. Under these provisions, any person furnishing repairs, supplies, or other necessaries to a vessel on credit will have a maritime lien on the said vessel. Such maritime lien, if it arose prior to the recording of a preferred mortgage lien, shall have priority over the said mortgage lien. In the instant case, it was Hongkong United Dockyards Ltd. which originally possessed a maritime lien over the vessel M/V Asian Liberty by virtue of its repair of the said vessel on credit. The provisions of the contract agreement indubitably show that credit was given to the vessel M/V Asean Liberty by Hongkong

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United Dockyards ltd. and as a result, a maritime lien in favour of Hongkong United Dockyards Ltd. was constituted. It is the contention of China Bank that it ultimately acquired the maritime lien of Hongkong United Dockyards Ltd. over the vessel M/V Asean Liberty. In the documentary evidence presented by China Bank, it is clear that China Banks claim is predicated on the paym ent it made to Citibank by virtue of the Irrevocable Letter of Credit it established in the latters favor. In short, China Bank was a guarantor of the loan extended by Citibank to PISC. It was Citibank, which advanced the money to PISC. It was only upon the failure of PISC to fulfil its obligations under its promissory note to Citibank that China Bank was called upon by Citibank to exercise its duties under the Standby Letter of Credit. It is the holding of the appellate court that China Bank stepped into the shoes of Hongkong United Dockyards Ltd. by legal subrogation and thus acquired the maritime lien of the latter over the vessel M/V Asean Liberty. On this point, petitioners argue that the entirety of the documentary evidence of China Bank does not show that the latter actually paid off the maritime lienholder for the repair of M/V Asean Liberty as required by Section 21 of the Ship Mortgage Act of 1978. The Federal Maritime Lien Act of the United States, like our Ship Mortgage Decree of 1978, provides that any person furnishing repairs, supplies, towage or use of drydock or maritime railway, or other necessaries, to any foreign or domestic vessel on the order of the owner of such vessel, or of a person authorized by the owner of such vessel, or of a person authorized by the owner has a maritime lien on the vessel which may be enforced by suit in rem. As held by the public respondent Court of Appeals, those who provide credit to a master of a vessel for the purpose of discharging a maritime lien also acquire a lien over the said vessel. Likewise, advances to discharge maritime liens create a lien on the vessel, and one advancing money to discharge a valid lien gets a lien of equal dignity with the one discharged. Under these doctrines, a person who extends credit for the purpose of discharging a maritime lien is not entitled to the said lien where the funds were not furnished to the ship on the order of the master and there was no evidence that the money was actually used to pay debts secured by the lien. As applied in the instant case, it becomes necessary to prove that the credit advanced by Citibank to PISC was actually utilized for the repair and conversion of the vessel M/V Asean Liberty. Otherwise, Citibank could not have acquired the maritime lien of Hongkong United Dockyards, Ltd. over the vessel M/V Asean Liberty. Contrary to the assertions of petitioners, the records are replete with documents that show that the proceeds of the loans were used for the repair and conversion of the v essel M/V Asean Liberty. It is clear that the amount used for the repair of the vessel M/V Asean Liberty was advanced by Citibank and was utilized for the purpose of paying off the original maritime lienor, Hongkong United Dockyards, Ltd. China Bank, as guarantor, was itself subrogated to all the rights of Citibank as against PISC, the latters debtor. (2) In the case at bench, petitioners mortgage lien arose on September 25, 1979 when the said mortgage was registered with the Philippine Coast Guard Headquarters. As such, in order for the maritime lien of China Bank to be preferred over the mortgage lien of petitioners, the same must have arisen prior to the recording of the mortgage on September 25, 1979.

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It is the contention of petitioners that Ch ina Banks maritime lien under its Standby Letter of Credit arose only on March 30, 1983 when China Bank actually paid off the outstanding obligation of PISC to Citibank. Considering that its mortgage lien arose on September 25, 1979, petitioners thus conclude that its lien is preferred as against China Banks maritime lien. A maritime lien constitutes a present right of property in the ship, a jus in re, to be afterward enforced in admiralty by process in rem. From the moment the claim or privilege attaches, it is inchoate, and when carried into effect by legal process, by a proceeding in rem, it relates back to the period when it first attached. In the case at bench, the maritime lien over the vessel M/V Asean Liberty arose or was constituted at the time Hongkong United Drydocks, Ltd. made repairs on the said vessel on credit. As such, as early as March 12, 1979, the date of the contract for the repair and conversion of M/V Asean Liberty, a maritime lien had already attached to the said vessel. When Citibank advanced the amount of US$242,225.00 for the purpose of paying off PISCs debt to Hongkong United Dockyards, Ltd., it acquired the existing maritime lien over the vessel. Thus, when private respondent CBC chose to exercise its right to the maritime lien during the proceedings in the trial court, it was actually enforcing a privilege that attached to the ship as early as March 12, 1979. The maritime lien of private respondent CBC thus arose prior in time to the recording of petitioners mortgage on September 25, 1979. As such, the said maritime lien has priority over the said mortgage lien. 3. Poliand Industrial Limited v. Nantional Development Company, DBP (FORTES) FACTS: Poliand is an assignee of the of the rights of Asian Hardwood over the outstanding obligation of National Development Corporation (NDC), the latter being the owner of Galleon which previously secured credit accommodations from Asian Hardwood for its expenses on provisions, oil, repair, among others. Galleon also obtained loans from Japanese lenders to finance acquisition of vessels which was guaranteed by DBP in consideration of a promise by Galleon to secure a first mortgage on the vessels. DBP later transferred ownership of the vessel to NDC. A collection suit was filed after repeated demands of Poliand for the satisfaction of the obligation from Galleon, NDC and DBP went unheeded. ISSUE: Whether POLIAND has a maritime lien enforceable against NDC or DBP or both. HELD: Yes, Poliand has a maritime lien which is more superior than DBPs mortgage lien. Before POLIANDs claim may be classified as superior to the mortgage constituted on the vessel, it must be shown to be one of the enumerated claims which Section 17, P.D. No. 1521 declares as having preferential status in the event of the sale of the vessel. One of such claims enumerated under Section 17, P.D. No. 1521 which is considered to be superior to the preferred mortgage lien is a maritime lien arising prior in time to the recording of the preferred mortgage. Such maritime lien is described under Section 21, P.D. No. 1521, which reads:

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SECTION 21. Maritime Lien for Necessaries; persons entitled to such lien. Any person furnishing repairs, supplies, towage, use of dry dock or marine railway, or other necessaries to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be necessary to allege or prove that credit was given to the vessel. Under the aforequoted provision, the expense must be incurred upon the order of the owner of the vessel or its authorized person and prior to the recording of the ship mortgage. Under the law, it must be established that the credit was extended to the vessel itself. The trial court found that GALLEONs advances obtained from Asian Hardwood were used to cover for the payment of bunker oil/fuel, unused stores and oil, bonded stores, provisions, and repair and docking of the GALLEON vessels. These expenses clearly fall under Section 21, P.D. No. 1521. The trial court also found that the advances from Asian Hardwood were spent for ship modification cost and the crews salary and wages. DBP contends that a ship modification cost is omitted under Section 17, P.D. No. 1521, hence, it does not have a status superior to DBPs preferred mortgage lien. As stated in Section 21, P.D. No. 1521, a maritime lien may consist in other necessaries spent for the vessel. The ship modification cost may properly be classified under this broad category because it was a necessary expenses for the vessels navigation. As long as an expense on the vessel is indispensable to the maintenance and navigation of the vessel, it may properly be treated as a maritime lien for necessaries under Section 21, P.D. No. 1521." However, Only NDC is liable on the maritime lien. x x x [O]nly NDC is liable for the payment of the maritime lien. A maritime lien is akin to a mortgage lien in that in spite of the transfer of ownership, the lien is not extinguished. The maritime lien is inseparable from the vessel and until discharged, it follows the vessel. Hence, the enforcement of a maritime lien is in the nature and character of a proceeding quasi in rem.[65] The expr ession action in rem is, in its narrow application, used only with reference to certain proceedings in courts of admiralty wherein the property alone is treated as responsible for the claim or obligation upon which the proceedings are based.[66] Considering that DBP subsequently transferred ownership of the vessels to NDC, the Court holds the latter liable on the maritime lien. Notwithstanding the subsequent transfer of the vessels to NDC, the maritime lien subsists. G. Land Transportation and Traffic Code 1. PEOPLE v. Navarra (GAUDIEL) FACTS: The accused-appellants were charged and found guilty by the RTC of illegal recruitment committed in a large scale resulting to economic sabotage and sentenced to life imprisonment. ISSUE: Did the RTC err in disregarding their defense of denial and in finding them guilty of the offense charged? HELD: Denials, without clear and convincing evidence to support them, cannot sway judgment. They are self-serving statements and are inherently weak. Decision of lower court affirmed. Illegal recruitment has 2 essential elements: first, the offender has no valid license or authority required by law to enable him to

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lawfully engage in recruitment or placement of workers; second, the offender undertakes any activity within the meaning of recruitment and placement defined under Article 13 (b), or any prohibited practices enumerated under Art 34 of the Labor Code. A non-licensee or non-holder of authority means any person, corporation or entity without a valid license or authority to engage in recruitment or placement from the Secretary of Labor, or whose license or authority has been suspended, revoked or cancelled by the POEA or the Sec. of Labor. Under Article 13 (b) of the Labor Code, recruitment and placement refer to, any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising, or advertising for employment, locally or abroad, for profit or not: Provided, that any person or entity which in any manner, offers or promises for a fee employment to 2 or more persons shall be deemed engaged in recruitment or placement. Accused-appellants committed acts of recruitment and placement, such as promises to the complainants of profitable employment abroad and acceptance of placement fees. They were also not authorized to recruit workers for overseas employment as certified by the DOLE. Art. 38 (b) of the Labor Code provides that illegal recruitment shall be considered an offense involving economic sabotage if any of the following qualifying circumstances exists: first, when illegal recruitment is committed by a syndicate; second when it is committed in a large scale, committed against three or more persons individually or as a group. 2. Emiliano Manuel and SUPERLINES Transportation Co., Inc. vs. CA - (ITARALDE) The evidence with respect to the issue that Fernando Abcede, Jr. who was not duly licensed, was the one driving the Scout car at the time of the accident, could not simply exempt petit ioners liability because they were the parties at fault for encroaching on the Scout cars lane. Nevertheless, the witnesses presented by petitioners who allegedly saw "the younger Abcede pined behind the drivers wheels," testified on matters that transpired after the accident. Discrediting this allegation, the Court of Appeals noted that none of the aforesaid witnesses actually saw the younger Abcede driving the car and that the younger Abcede could have simply been thrown off his seat toward the steering wheel. FACTS: Private respondents were passengers of Scout car owned by respondent Ramos, which left Manila for Camarines Norte with respondent Fernando Abcede, Sr. as the driver of the vehicle. While negotiating the zigzag road in Bo. Paraiso, Sta. Elena, Camarines Norte, Superline bus driven by Manuel hit it. The Scout car was thrown backwards against a protective railing. All 10 passengers, which included four children, were injured, seven of the victims sustained serious physical injuries. Emiliano Manuel, the driver of the bus, was prosecuted for multiple physical injuries through reckless imprudence in the Municipal Court of Sta. Elena, Camarines Norte. As he could not be found after he ceased reporting for work a few days following the incident, the private respondents filed the instant action for damages based on quasi-delict. Lower court ruled that Superline bus is laible for damages. CA affirmed this decision. One of the issues raised by the SUperline is that they should be exonerated from any liability as it was actually a 19-yrs old Abcede Jr who was driving the car (without drivers licence) when the accident happened. ISSUE: W/N Superline Bus may be exonerated from any liability when the driver of the car it hit does not have a drivers license. HELD: The evidence with respect to the issue that Fernando Abcede, Jr. who was not duly licensed, was the one driving the Scout car at the time of the accident, could not simply exempt petitioners liability because they were the parties at fault for encroaching on the Scout cars lane. Nevertheless, the

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witnesses presented by petitioners who allegedly saw "the younger Abcede pined behind the drivers wheels," testified on matters that transpired after the accident. Discrediting this allegation, the Court of Appeals noted that none of the aforesaid witnesses actually saw the younger Abcede driving the car and that the younger Abcede could have simply been thrown off his seat toward the steering wheel. 3. Nostradamus Villanueva v. Priscilla R. Domingo, et al. (KUNG) FACTS: A car driven by Renato Ocfemia hit a car driven by Leandro Domingo. The registered owner of Ocfemias vehicle was Nostradamus Villanueva, although Villanueva has traded/swapped the vehicle for a Pajero owned by Albert Jaucian/Auto Palace Car Exchange. The Assistant City Prosecutor of Manila recommended the filing of an Information for reckless imprudence resulting to damage to property and physical injuries. The trial court found Villanueva liable and ordered him to pay damages. The Court of Appeals affirmed the trial court but deleted the award for attorneys and appearance fees. Villanueva files a petition for review with the Supreme Court. ISSUE: Whether a registered owner of a vehicle may be held liable for damages arising from an accident involving the said vehicle while it was being operated by the employee of the vehicles buyer without the latters consent and knowledge HELD: Yes, a registered owner of any vehicle is directly and primarily liable to the public and third persons while it is being operated. The petition for review is denied and the Court of Appeals decision is affirmed. The public has a right to assume that the registered owner is the actual owner, to make it easier for them to enforce actions for injuries caused to them by vehicles negligently operated. However, the registered owner may recover from the person to whom he had sold, assigned, or conveyed the vehicle via a thirdparty complaint. The registered owner of any vehicle, even if not used for a public service, should be primarily responsible to the public or third persons while the vehicle is being driven on the streets. The main aim of registration is to identify the owner so that if any accident happens, responsibility can be fixed on a definite individualthe registered owner. The primary purpose is to make certain that the violator shall not escape because of lack of means to discover him. The law, with its aim in mind, does not relieve him directly of the responsibility that the law places upon him as an incident or consequence of registration. If a registered owner is allowed to prove who the supposed transferee is, it would be easy for him to escape responsibility and transfer it to an indefinite person or to one who possesses no property with which to respond financially for the injury or damage. Whether the driver is authorized by the actual owner is irrelevant in determining the liability of the registered owner. To require so would defeat the purpose of the enactment of motor vehicle registration. The registered owner is the operator with respect to the public and third persons. The owner of record is the employer of the driver, the actual owner being considered merely as his agent.

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4. Metro Traffic v. Gonong (MAGSUMBOL) FACTS: Dante S. David, a lawyer, claimed that the rear license plate of his car bwas removed by the Metropolitan Traffic Command while the vehicle was parked on Escolta. Judge Gonong, through a complaint filed by David, held that LOI 43 did not empower petitioner "to detach, remove and confiscate vehicle plates of motor vehicles illegally parked and unattended . It merely authorizes the removal of said vvehicles when they are obstacles to free passage or continued flow of traffic on streets and highways. At any rate, he said, the LOI had been repealed by PD 1605. Moreover, petitioner had not been able to point to any city ordinance to justify the act. Petitioner however reiterates and reinforces its argument in the court below and insists that LOI 43 remains in force despite the issuance of PD 1605. It contends that there is no inconsistency between the two measures because the former deals with illegally parked vehicles anywhere in the Philippines whereas the latter deals with the regulation of the flow of traffic in Metro Manila only. LOI 43: Measures to Effect a Continuing Flow of Transportation on Streets and Highways xxx First offense: the stalled / illegally parked vehicle shall be removed, towed and impounded. Second offense: registry plates of the vehicles shall be confiscated and owner's certificate of registration cancelled. PD 1605 (Granting the Metropolitan Manila Commission Central Powers Related to Traffic Management, Providing Penalties, and for Other Purposes) Sec. 1: MMC shall have the power to impose fines and otherwise discipline drivers and operators of motor vehicles for violation of traffic laws, ordinances, rules and regulations in Metro Manila xxx. Sec. 5: In case of traffic violations, driver's license shall not be confiscated but the erring driver shall be immediately issued a traffic citation ticket xxx. Sec. 8: In so far as Metro Manila area is concerned, all laws, decrees, orders, ordinances, rules and regulations, or parts thereof inconsistent herewith are hereby repealed or modified. ISSUE: W/N MMC has the power to confiscate vehicle plates of illegally parked and unattended motor vehicles. HELD: No. MMC is authorized by PD 1605 to "discipline" or "impose higher penalties" on traffic violators, whatever sanctions it may impose must be "in such amounts and under such penalties as are herein prescribed". Petitioner failed to point to any additional sanctions, instead, it relies on LOI 43. However, it would appear that what the LOI punishes is not a traffic violation, but a traffic obstruction, which is an altogether different offense. A violation imports an intentional breach or disregard of a rule. LOI 43 does not punish illegal parking per se, but parking of stalled vehicles (those that involuntarily stop on the road due to some unexpected trouble). The vehicle is deemed illegally parked because it obstructs the flow of traffic, but only because it has stalled. The obstruction is not deliberate. LOI 43 deals with motor vehicles "that stall on the streets and highways" and not those that are intentionally parked in a public place in violation of a traffic law or regulation. The purpose of the LOI is to discipline motorists into keeping his vehicle in good condition so as not to cause inconvenience.

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5. Baliwag Transit v. CA (PABALAN) FACTS: On 31 July 1980, Leticia Garcia, and her 5-year old son, Allan Garcia, boarded Baliwag Transit Bus 2036 bound for Cabanatuan City driven by Jaime Santiago. They took the seat behind the driver. At about 7:30 p.m., in Malimba, Gapan, Nueva Ecija, the bus passengers saw a cargo truck, owned by A & J Trading, parked at the shoulder of the national highway. Its left rear portion jutted to the outer lane, as the shoulder of the road was too narrow to accommodate the whole truck. A kerosene lamp appeared at the edge of the road obviously to serve as a warning device. The truck driver, and his helper were then replacing a flat tire. Bus driver Santiago was driving at an inordinately fast speed and failed to notice the truck and the kerosene lamp at the edge of the road. Santiagos passengers urged him to slow down but he paid them no heed. Santiago even carried animated conversations with his co-employees while driving. When the danger of collision became imminent, the bus passengers shouted Babangga tayo!. Santiago stepped on the brake, but it was too late. His bus rammed into the stalled cargo truck killing him instantly and the trucks helper, and injury to several others among them herein respondents. Thus, a suit was filed against Baliwag Transit, Inc., A & J Trading and Julio Recontique for damages in the RTC of Bulacan. After trial, it found Baliwag Transit, Inc. liable for having failed to deliver Garcia and her son to their point of destination safely in violation of Garcias and Baliwag Transits c ontractual relation; and likewise found A & J and its truck driver liable for failure to provide its cargo truck with an early warning device in violation of the Motor Vehicle Law. All were ordered to pay solidarily the Garcia spouses. On appeal, the CA modified the trial courts Decision by absolving A & J Trading from liability. ISSUES: 1. W/N kerosene lamp or torch placed at the edge of the road substantially complies with Sec 34(g) of the Land Transportation and Traffic Code, and therefore absolves A&J Trading from liability. 2. W/N Baliwag should be held solely liable for the injuries. HELD: 1. YES. Evidence shows that Recontique and Ecala placed a kerosene lamp or torch at the edge of the road, near the rear portion of the truck to serve as an early warning device. This substantially complies with Section 34 (g) of the Land Transportation and Traffic Code. The law clearly allows the use not only of an early warning device of the triangular reflectorized plates variety but also parking lights or flares visible 100 meters away. Indeed, Col. dela Cruz himself admitted that a kerosene lamp is an acceptable substitute for the reflectorized plates. No negligence, therefore, may be imputed to A & J Trading and its driver, Recontique. Section 34 (g) of the Land Transportation and Traffic Code provides Lights and reflector when parked or disabled. Appropriate parking lights or flares visible one hundred meters away shall be displayed at the corner of the vehicle whenever such vehicle is parked on highways or in places that are not well-lighted or, is placed in such manner as to endanger passing traffic. Furthermore, every motor vehicle shall be provided at all times with built-in reflectors or other similar warning devices either pasted, painted or attached at its front and back which shall likewise be visible at night at least one hundred meters away. No vehicle not provided with any of the requirements mentioned in this subsection shall be registered.

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2. YES. As a common carrier, Baliwag breached its contract of carriage when it failed to deliver its passengers, Leticia and Allan Garcia to their destination safe and sound. Article 1759 of the Civil Code provides that Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the formers employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability of the common carriers do not cease upon proof that they exercised all the diligence of a good father of a family in the selection or supervision of their employees. The Supreme Court affirmed the Decision of the Court of Appeals (CA-GR CV-31246) with the modification reducing the actual damages for hospitalization and medical fees to P5,017.74; without costs. 6. Mallari v. CA (PEREZ) FACTS: ALFREDO MALLARI SR. and ALFREDO MALLARI JR. in this petition for review on certiorari seek to set aside the Decision of the Court of Appeals which reversed the court a quo and adjudged petitioners to be liable for damages due to negligence as a common carrier resulting in the death of a passenger. On 14 October 1987, at about 5:00 o'clock in the morning, the passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned by his co-petitioner Alfredo Mallari Sr. collided with the delivery van of respondent Bulletin Publishing Corp. (BULLETIN, for brevity) along the National Highway in Barangay San Pablo, Dinalupihan, Bataan. Petitioner Mallari Jr. testified that he went to the left lane of the highway and overtook a Fiera which had stopped on the right lane. Before he passed by the Fiera, he saw the van of respondent BULLETIN coming from the opposite direction. It was driven by one Felix Angeles. The sketch of the accident showed that the collision occurred after Mallari Jr. overtook the Fiera while negotiating a curve in the highway. The points of collision were the left rear portion of the passenger jeepney and the left front side of the delivery van of BULLETIN. The two (2) right wheels of the delivery van were on the right shoulder of the road and pieces of debris from the accident were found scattered along the shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom was Israel Reyes who eventually died due to the gravity of his injuries. Manikan On 16 December 1987 Claudia G. Reyes, the widow of Israel M. Reyes, filed a complaint for damages with the Regional Trial Court of Olongapo City against Alfredo Mallari Sr. and Alfredo Mallari Jr., and also against BULLETIN, its driver Felix Angeles, and the N.V. Netherlands Insurance Company. ISSUE: Who should be held responsible for the death of Israel Reyes (one of the jeepneys passengers)? HELD: Petitioner Mallari should be liable. He himself admitted to overataking the Fierra in front of him even if he already saw the Bulletin van on the other lane. This is a punishable act according to the Land Transportation and Traffic Code. The Land Transportation and Traffic Code which provides: Sec. 41. Restrictions on Overtaking and Passing.

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(a) The driver of a vehicle shall not drive to the left side of the center line of a highway in overtaking or passing another vehicle proceeding in the same direction, unless such left side is clearly visible and is free of oncoming traffic for a sufficient distance ahead to permit such overtaking or passing to be made in safety. (b) The driver of a vehicle shall not overtake or pass another vehicle proceeding in the same direction when approaching the crest of a grade, nor upon a curve in the highway, where the drivers view along the highway is obstructed within a distance of five hundred feet ahead except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake or pass another vehicle: Provided, that on a highway, within a business or residential district, having two or more lanes for movement of traffic in one direction, the driver of a vehicle may overtake or pass another vehicle on the right. The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety. When a motor vehicle is approaching or rounding a curve, there is special necessity for keeping to the right side of the road and the driver does not have the right to drive on the left hand side relying upon having time to turn to the right if a car approaching from the opposite direction comes into view. 7. Peza v. Alikpala (SANTOS) FACTS: Two (2) children ran across the path of a vehicle as it was running along the national highway at barrio Makiling Calamba, Laguna. They were killed. The vehicle belonged to a partnership known as Diman & Company, and was then being driven its driver, Perfecto Amar. It was insured with the Empire Insurance Co., Inc. under a so-called 'comprehensive coverage" policy, loss by theft excluded. The policy was in force at the time of the accident. Placida Peza, the managing partner of Diman & Co. filed a claim with the insurance company. Empire refused to pay on the ground that the driver had no authority to operate the vehicle. It appearing, according to Empire, that at the time of the mishap, the driver Perfecto Amar only had a temporary operator's permit (TVR) already expired his drivers license having earlier been confiscated by an agent of the Land Transportation Commission for an alleged violation of Land Transportation and Traffic Rules, he was not permitted by law and was in truth disqualified to operate any motor vehicle; and this operated to relieve it (Empire) from liability under its policy. ISSUE: W/N Empire is liable. HELD: NO. Whether the LTC agent was correct or not in his opinion that driver Amar had violated some traffic regulation warranting confiscation of his license and issuance of a TVR in lieu thereof, this would not alter the undisputed fact that Amar's licence had indeed been confiscated and a TVR issued to him, and the TVR had already expired at the time that the vehicle being operated by him killed two children by accident. Neither would proof of the renewal of Amar's license change the fact that it had really been earlier confiscated by the LTC agent. 8. Anonuevo v. Court of Appeals (VILLAFUERTE)

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Doctrines: The rule on negligence per se must admit qualifications that may arise from the logical consequences of the facts leading to the mishap. The rule on negligence per se must admit qualifications that may arise from the logical consequences of the facts leading to the mishap. The doctrine (and Article 2185, for that matter) is undeniably useful as a judicial guide in adjudging liability, for it seeks to impute culpability arising from the failure of the actor to perform up to a standard established by a legal fiat. But the doctrine should not be rendered inflexible so as to deny relief when in fact there is no causal relation between the statutory violation and the injury sustained. Presumptions in law, while convenient, are not intractable so as to forbid rebuttal rooted in fact. After all, tort law is remunerative in spirit, aiming to provide compensation for the harm suffered by those whose interests have been invaded owing to the conduct of others. FACTS: An accident occurred on 8 February 1989, at around nine in the evening, at the intersection of Boni Avenue and Barangka Drive in Mandaluyong City. Jerome Villagracia was traveling along Boni Avenue on his bicycle, while petitioner Jonas Aonuevo, traversing the opposite lane was driving his Lancer. Aonuevo was in the course of making a left turn towards Libertad Street when the collision occurred. Villagracia sustained serious injuries as a result, which necessitated his hospitalization several times in 1989, and forced him to undergo four (4) operations. The present petition seeks to bar recovery by an injured cyclist of damages from the driver of the car which had struck him. The argument is hinged on the cyclists failure to install safety devices on his bicycle. However, the lower courts agreed that the motorist himself caused the collision with his own negligence. ISSUE: W/N recovery of damages is barred by cyclists failure to install safety devices on his bicycle. HELD: No. It cannot be denied that the statutory purpose for requiring bicycles to be equipped with headlights or horns is to promote road safety and to minimize the occurrence of road accidents involving bicycles. At face value, Villagracias mishap was precisely the danger sought to be guarded against by the ordinance he violated. Aonuevo argues that Villagracias violation should bar the latters recovery of damages, and a simplistic interpretation of negligence per se might vindicate such an argument. But this is by no means a simple case. There is the fact which we consider as proven, that Aonuevo was speeding as he made the left turn, and such negligent act was the proximate cause of the accident. This reckless behavior would have imperiled anyone unlucky enough within the path of Aonuevos car as it turned into the intersection, whether they are fellow motorists, pedestrians, or cyclists. We are hard put to conclude that Villagracia would have avoided injury had his bicycle been up to par with safety regulations, especially considering that Aonuevo was already speeding as he made the turn, or before he had seen Villagracia. Even assuming that Aonuevo had failed to see Villagracia because the bicycle was not equipped with headlights, such lapse on the cyclists part would not have acquitted the driver of his duty to slow down as he proceeded to make the left turn. This court has appreciated that negligence per se, arising from the mere violation of a traffic statute, need not be sufficient in itself in establishing liability for damages. In Sanitary Steam Laundry, Inc. v. Court of Appeals, a collision between a truck and a privately-owned Cimarron van caused the death of three of the vans passengers. The petitioner therein, the owner of the truck, argued that the driver of the Cimarron was committing multiple violations of the Land Transportation and Traffic Code at the time of the accident. The Court, speaking through Justice Mendoza, dismissed these arguments:

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[It] has not been shown how the alleged negligence of the Cimarron driver contributed to the collision between the vehicles. Indeed, petitioner has the burden of showing a causal connection between the injury received and the violation of the Land Transportation and Traffic Code. He must show that the violation of the statute was the proximate or legal cause of the injury or that it substantially contributed thereto. Negligence consisting in whole or in part, of violation of law, like any other negligence, is without legal consequence unless it is a contributing cause of the injury. H. IATA Tariff Rules 1. American Airlines v. CA (ATIENZA) FACTS: Private respondent Amadeo Seno purchased from Singapore Airlines in Manila conjunction tickets for Manila - Singapore - Athens - Larnaca - Rome - Turin - Zurich - Geneva - Copenhagen - New York. The petitioner was not a participating airline in any of the segments in the itinerary under the said conjunction tickets. In Geneva the petitioner decided to forego his trip to Copenhagen and to go straight to New York and in the absence of a direct flight under his conjunction tickets from Geneva to New York, the private respondent on June 7, 1989 exchanged the unused portion of the conjunction ticket for a oneway ticket from Geneva to New York from the petitioner airline (American Airlines). Petitioner issued its own ticket to the private respondent in Geneva and claimed the value of the unused portion of the conjunction ticket from the IATA clearing house in Geneva. However, when he was about to board the plane of American Airlines, petitioners security officers prevented him from boarding the plane, detained him for about an hour and allowed him to board the plane only after all the other passengers have boarded. For the alleged embarrassment and mental anguish he suffered at the Geneva Airport, he filed an action for damages at the RTC of Cebu. The petitioner filed a motion to dismiss for lack of jurisdiction of Philippine courts to entertain the said proceedings under Art. 28 (1) of the Warsaw Convention according to the petitioner states that: Under Art 28 (1) of the Warsaw convention an action for damages must be brought at the option of the plaintiff either before the court of the 1) domicile of the carrier; 2) the carriers principal place of business; 3) the place where the carrier has a place of business through which the contract was made, and; 4) the place of destination. Petitioner lays stress on the fact that the plane ticket for a direct flight from Geneva to New York was purchased by the private respondent from the petitioner by "exchange and cash" which signifies that the contract of carriage with Singapore Airlines was terminated and a second contract was perfected. ISSUE: W/N the Philippine courts have jurisdiction over the action for damages. . HELD: YES. The Supreme Court ruled that the case was properly filed in the Philippines. It held that the petitioner acted as an agent of the Singapore Airlines under IATA rules and as an agent of the principal carrier the petitioner may be held liable under contract of carriage in Manila. Art 1(3) of the Warsaw Convention which states: "Transportation to be performed by several successive carriers shall be deemed, for the purposes of this convention, to be one undivided transportation, if it has been regarded by the parties as a single operation, whether it has been agreed upon under the form of a single contract or a series of contracts, and it shall not lose its international character merely because one contract or series of contracts is to be performed entirely within the territory subject of the sovereignty, suzerainty, mandate or authority of the same High contracting Party."

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The contract of carriage between the private respondent and Singapore Airlines although performed by different carriers under a series of airline tickets, including that issued by petitioner, constitutes a single operation. Members of the IATA are under a general pool partnership agreement wherein they act as agent of each other in the issuance of tickets to contracted passengers to boost ticket sales worldwide and at the same time provide passengers easy access to airlines which are otherwise inaccessible in some parts of the world. Booking and reservation among airline members are allowed even by telephone and it has become an accepted practice among them. A member airline which enters into a contract of carriage consisting of a series of trips to be performed by different carriers is authorized to receive the fare for the whole trip and through the required process of interline settlement of accounts by way of the IATA clearing house an airline is duly compensated for the segment of the trip serviced. Thus, when the petitioner accepted the unused portion of the conjunction tickets, entered it in the IATA clearing house and undertook to transport the private respondent over the route covered by the unused portion of the conjunction tickets, i.e., Geneva to New York, the petitioner tacitly recognized its commitment under the IATA pool arrangement to act as agent of the principal contracting airline. 2. Air France v. CA (BAUTISTA) FACTS: The late Jose G. Gana and his family, numbering nine (the GANAS), purchased from AIR FRANCE through Imperial Travels, a travel agent, nine (9) "open-dated" air passage tickets for the Manila/Osaka/Tokyo/Manila route. The GANAS paid a total of US$2,528.85 for their economy and first class fares. Said tickets were bought at the then prevailing exchange rate of P3.90 per US$1.00. The GANAS also paid travel taxes of P100.00 for each passenger. AIR FRANCE exchanged or substituted the tickets with other tickets for the same route. At this time, the GANAS were booked for the Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May 1970, and for the Tokyo/Manila return trip on AIR FRANCE Flight 187 on 22 May 1970. The GANAS did not depart on 8 May 1970. Sometime in January, 1971, Jose Gana sought the assistance of Teresita Manucdoc, a Secretary of the Sta. Clara Lumber Company where Jose Gana was the Director and Treasurer, for the extension of the validity of their tickets, which were due to expire on 8 May 1971. Teresita enlisted the help of Lee Ella Manager of the Philippine Travel Bureau, who used to handle travel arrangements for the personnel of the Sta. Clara Lumber Company. Ella sent the tickets to Cesar Rillo, Office Manager of AIR FRANCE. The tickets were returned to Ella who was informed that extension was not possible unless the fare differentials resulting from the increase in fares triggered by an increase of the exchange rate of the US dollar to the Philippine peso and the increased travel tax were first paid. Ella then returned the tickets to Teresita and informed her of the impossibility of extension. The GANAS had scheduled their departure on 7 May 1971 or one day before the expiry date. In the morning of the very day of their scheduled departure on the first leg of their trip, Teresita requested travel agent Ella to arrange the revalidation of the tickets. Ella gave the same negative answer and warned her that although the tickets could be used by the GANAS if they left on 7 May 1971, the tickets would no longer be valid for the rest of their trip because the tickets would then have expired on 8 May 1971. Teresita replied that it will be up to the GANAS to make the arrangements. With that assurance, Ella on his own, attached to the tickets validating stickers for the Osaka/Tokyo flight, one a JAL. sticker and the other an SAS (Scandinavian Airways System) sticker. The SAS sticker indicates thereon that it was "Reevaluated by: the Philippine Travel Bureau, Branch No. 2" (as shown by a circular rubber stamp) and signed "Ador", and the date is handwritten in the center of the circle. Then appear under printed headings

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the notations: JL. 108 (Flight), 16 May (Date), 1040 (Time), OK (status). Apparently, Ella made no more attempt to contact AIR FRANCE as there was no more time. The GANAS departed from Manila in the afternoon of 7 May 1971 on board AIR FRANCE Flight 184 for Osaka, Japan. There is no question with respect to this leg of the trip. However, for the Osaka/Tokyo flight on 17 May 1971, Japan Airlines refused to honor the tickets because of their expiration, and the GANAS had to purchase new tickets. They encountered the same difficulty with respect to their return trip to Manila as AIR FRANCE also refused to honor their tickets. They were able to return only after pre-payment in Manila, through their relatives, of the readjusted rates. They finally flew back to Manila on separate Air France Frights on 19 May 1971 for Jose Gana and 26 May 1971 for the rest of the family. On 25 August 1971, the GANAS commenced before the then Court of First Instance of Manila, Branch III, Civil Case No. 84111 for damages arising from breach of contract of carriage. AIR FRANCE traversed the material allegations of the Complaint and alleged that the GANAS brought upon themselves the predicament they found themselves in and assumed the consequential risks; that travel agent Ella's affixing of validating stickers on the tickets without the knowledge and consent of AIR FRANCE, violated airline tariff rules and regulations and was beyond the scope of his authority as a travel agent; and that AIR FRANCE was not guilty of any fraudulent conduct or bad faith. ISSUE: W/N under the environmental milieu, the GANAS have made out a case for breach of contract of carriage entitling them to an award of damages. HELD: No. Pursuant to tariff rules and regulations of the International Air Transportation Association (IATA), an airplane ticket is valid for one year. "The passenger must undertake the final portion of his journey by departing from the last point at which he has made a voluntary stop before the expiry of this limit. That is the time allowed a passenger to begin and to complete his trip. A ticket can no longer be used for travel if its validity has expired before the passenger completes his trip. To complete the trip, the passenger must purchase a new ticket for the remaining portion of the journey. From the foregoing rules, it is clear that AIR FRANCE cannot be faulted for breach of contract when it dishonored the tickets of the GANAS after 8 May 1971 since those tickets expired on said date; nor when it required the GANAS to buy new tickets or have their tickets re-issued for the Tokyo/Manila segment of their trip. Neither can it be said that, when upon sale of the new tickets, it imposed additional charges representing fare differentials, it was motivated by self-interest or unjust enrichment considering that an increase of fares took effect, as authorized by the Civil Aeronautics Board (CAB) in April, 1971. This procedure is well in accord with the IATA tariff rules which provide: All journeys must be charged for at the fare (or charge) in effect on the date on which transportation commences from the point of origin. Any ticket sold prior to a change of fare or charge (increase or decrease) occurring between the date of commencement of the journey, is subject to the above general rule and must be adjusted accordingly. A new ticket must be issued and the difference is to be collected or refunded as the case may be. No adjustment is necessary if the increase or decrease in fare (or charge) occurs when the journey is already commenced. The GANAS cannot defend by contending lack of knowledge of those rules since the evidence bears out that Teresita, who handled travel arrangements for the GANAS, was duly informed by travel agent Ella of the advice of Reno, the Office Manager of Air France, that the tickets in question could not be extended

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beyond the period of their validity without paying the fare differentials and additional travel taxes brought about by the increased fare rate and travel taxes. The conclusion is inevitable that the GANAS brought upon themselves the predicament they were in for having insisted on using tickets that were due to expire in an effort, perhaps, to beat the deadline and in the thought that by commencing the trip the day before the expiry date, they could complete the trip even after.