Yangco vs.

Laserna Case Digest

Yangco vs. Laserna
(73 Phil 330)

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

Issue: Whether the shipowner or agent is liable for damages for the consequent death of its passengers
notwithstanding the total loss of the vessel?

Held: The petitioner is absolved from all complaints.

Under Article 587 – “the ship agent shall also be civilly liable for indemnities in favor of third persons which arise
from the conduct of the captain in the vigilance over the goods which the vessels carried; BUT he may exempt
himself therefrom by abandoning the vessel with all her equipment and the freight he may have earned during
the voyage.”

Whether the abandonment of the vessel sought by the petitioner in the case was in accordance with the law or
not, is immaterial. The vessel having totally perished, any act of abandonment would be idle ceremony.

“NO VESSEL, NO LIABILITY.”

Yangco v. Lasema73 Phil 330 (1941)

FACTS:The steamer S. S. Negros, belonging to petitioner Teodoro R. Yangco, left the port ofRomblon on its return trip
to Manila. Typhoon signal No. 2 was then up, of whichfact the captain was duly advised and his attention thereto
called by the passengersthemselves before the vessel set sail. The boat was overloaded.As the sea became
increasingly violent, the captain ordered the vessel to turn left,evidently to return to port, but in the maneuver, the
vessel was caught sidewise by abig wave which caused it to cap size and sink. Many of the passengers died in
themishap.These respondents instituted in the Court of First Instance of Capiz separate civilactions against petitioner
here to recover damages for the death of the passengersaforementioned.ISSUE:May the shipowner or agent,
notwithstanding the total loss of the vessel asa result of the negligence of its captain, be properly held liable in
damages for theconsequent death of its passengers?HELD: NOBut assuming that petitioner is liable for a breach of
contract of carriage, theexclusively "real and hypothecary nature" of maritime law operates to limit suchliability to
the value of the vessel, or to the insurance thereon, if any. In the instantcase it does not appear that the vessel was
insured.Whether the abandonment of the vessel sought by the petitioner in the instantcase was in accordance with
law or not, is immaterial. The vessel having totallyperished, any act of abandonment would be an idle ceremony

Dela Torre v. Court of Appeals, G.R. No. 160088, 160565, [July 13, 2011], 669 PHIL160-181

FACTS:Respondent Crisostomo G. Concepcion owned LCT-Josephine, a vessel registeredwith the Philippine Coast
Guard. Concepcion entered into a “PreliminaryAgreement” with Roland de la Torre for the dry-docking and repairs of
the saidvessel as well as for its charter afterwards.While the payloader was on the deck of the LCT-Josephine
scooping a load of theSAND AND GRAVEL, the vessel’s ramp started to move downward, the vessel tiltedand sea
water rushed in. Shortly thereafter, LCT-Josephine sank.Concepcion demanded that PTSC/ Roland refloat LCT-
Josephine. The latter assuredConcepcion that negotiations were underway. Unfortunately, this did
notmaterialize.Thus, the RTC declared that the “efficient cause of the sinking of the LCT-JOSEPHINEwas the improper
lowering or positioning of the ramp,” which was well within thecharge or responsibility of the captain and crew of the
vessel.ISSUE:Whether or not the Limited Liability Rule shall be applied to petitioners.HELD:NOWith respect to
petitioners’ position that the Limited Liability Rule under the Codeof Commerce should be applied to them, the
argument is misplaced. The said rulehas been explained to be that of the real and hypothecary doctrine in maritime
lawwhere the shipowner or ship agent’s liability is held as merely co-extensive with hisinterest in the vessel such that
a total loss thereof results in its extinction. In thisjurisdiction, this rule is provided in three articles of the Code of
Commerce. These

INTERNATIONAL CONTAINER TERMINAL SERVICES, INC. vs. PRUDENTIAL GUARANTEE & ASSURANCE CO., INC. G.R.
No. 134514, December 8, 1999
Thursday, January 29, 2009 Posted by Coffeeholic Writes

Labels: Case Digests, Commercial Law

Facts: Mother vessel Tao He loaded and received on board in San Francisco, California, a shipment of five lots of
canned foodstuff complete and in good order and condition for transport to Manila in favor of Duel Food Enterprises
(consignee) under “shipper’s load and count”.

The shipment arrived at the port of Manila and discharged by the vessel MS Wei He in favor of ICTSI for safekeeping.
The brokerage withdrew the shipment and delivered the same to the consignee. An inspection there revealed that
161 cartoons were missing valued at P85,984.40. Consignee learned of such shortage on June 4, 1990. It filed claim
for loss on October 2, 1990. Claim for indemnification of the loss having been denied by ICTSI and the brokerage,
consignee sought payment from Prudential (insurer) under the marine cargo policy.

The appellate court found ICTSI negligent in its duty to exercise due diligence over the shipment. It also ruled that the
filing of a claim depended on the issuance of a certificate of loss by ICTSI based on the liability clause printed on the
back of the arrastre and wharfage receipt. Since ICTSI did not issue such a certificate despite being informed of the
shortage, the 15-day period given to the consignee for filing a formal claim never began. Prudential, therefore can
hold the ICTSI liable for the shortage.

Issues:

1) Was ICTSI negligent in its duty to exercise due diligence over the shipment?

2) Did the consignee fail to file a formal claim within the period stated on the dorsal side of the arrastre and wharfage
receipt?

Held: 1) No. The consigned goods were shipped under “shipper’s load and count”. This means that the shipper was
solely responsible for the loading of the container, while the carrier was oblivious to the contents of the shipment.
Protection against pilferage of the shipment was the consignee’s lookout. The arrastre operator was not required to
verify the contents of the container received and to compare them with those declared by the shipper because as
earlier stated, the cargo was at the shipper’s load and count. The arrastre operator was expected to deliver to the
consignee only the container received from the carrier.

The legal relationship between the arrastre and consignee is akin to that between a warehouseman and a depositor.
As to both the nature of the functions and the place of their performance, arrastre operator’s services are clearly not
maritime in character.

2) Yes. 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 the 15-day period from the date of discharge of the last package
from the carrying vessel.” The filing within the period is in the nature of a prescriptive period for bringing an action
and is a condition precedent to holding the arrastre operator liable. In an endeavor to promote fairness, equity and
justness, however, a long line of cases has held that the 15-day period for filing claims should be counted from the
date the consignee learns of the loss, damage or misdelivery of goods.

In the case at bar, the consignee had all the time to make a formal claim from the day it discovered the shortage in
the shipment, which was June 4, 1990, as shown by the records. By the time the claim for the loss was filed on
October 2, 1990, four months had already elapsed from the date of delivery. In any event, within 15 days from the
time the loss was discovered, the consignee could have filed a provisional claim, which would have constituted
substantial compliance with the rule. Its failure to do so relieved the arrastre operator of any liability for the non-
delivery of the goods. The rationale between the time limit is that, without it, a consignee could too easily concoct or
fabricate claims and deprive the arrastre operator of the best opportunity to prove immediately their veracity.

FAR EASTERN SHIPPING COMPANY vs. COURT OF APPEALS G.R. No. 130068 October 1, 1998

Facts: M/V Pavlodar owned and operated by the Far Eastern Shipping Company (FESC) arrived at the port of Manila. Senen
Gavino was assigned by the Manila Pilot's Association (MPA) to conduct docking manuevers for the safe berthing of the
vessel. Gavino stationed himself in the bridge, with the master of the vessel, Victor Kavankov, beside him. When the vessel
was already about 2000 feet from the pier, Gavino ordered the anchor dropped. Kavankov relayed the orders to the crew of
the vessel. However the anchor did not hold as expected. The speed of the vessel did not slacken. A commotion ensued
between the crew members. When Gavino inquired about the commotion, Kavankov assured Gavino that there was nothing
to it. The bow of the vessel rammed into the apron of the pier causing considerable damage to the pier. PPA filed a
complaint for a sum of money against FESC, Gavino and MPA. CA ruled in favor of PPA holding them liable with MPA
(employer of Kavankov) entitled to reimbursement from Gavino.

Issue: Are the counsels for the parties committed acts which require the exercise of the court's disciplinary powers?

Held: YES. The records show that the law firm of Del Rosario and Del Rosario thru its associate, Atty Tria, is the counsel of
record for FESC in both GR no 130068 and GR no 130150. GR 130068 which is assigned to the Court's second division,
commenced with the filing of a verified motion for extension of time which contained a certification against forum shopping
signed by counsel Tria stating that to the best of his knowledge there is no action or proceeding pending in the SC, CA or
any other tribunal. Reviewing the records, the court finds that the petition filed by MPA in GR no, 130150 then pending with
the third division was duly filed with a copy thereof furnished by registered mail to counsel for FESC (atty Tria). It would be
fair to conclude that when FESC filed its petition GR no 130068, it would aready have received a copy of the copy of the
petition by MPA. It wa therefore encumbent upon FESC to inform the court of the pending action. But considering that it
was a superfluity at that stage of the proceeding , it being unnecessary to file such certification of non forum shopping with a
mere motion for extension, the court disregarded such error. On the other hand it took the OSG, representing PPA, an
ordinately and unreasonably long period of time to file its comment, thus unduly delaying the resolution of these cases. In
GR no 130068, it took 210 days before the OSG filed its comment. FESC was not even furnished with a copy. In Gr no
130150 it took 180 days before comment was filed. This disinclination of the OSG to seasonably file required pleadings
constitutes deplorable disservice to the public and can only be categorized as inefficiency on the part of the govt law office.
Counsel for FESC, the law firm of Del Rosario and Del Rosario, specifically its asscociate Tria is reprimaded and warned
that a repetition of the same acts shall be dealt with severely. The original members of the legal tean of the OSG are
admonished and warned tha a repetition shall also be dealt with more stringently. Baka lang itanong kung ano ruling: The
decision of the CA is affirmed. Gavino, MPA and FESC are declared solidarily liable with MPA entitled to reimbursement
from Gavino for such amount of the adjudged pecuniary liability in excess of the amount equivalent to 75% of its prescribed
reserved fund.

SMITH BELL AND COMPANY PHILS. V. CA (G.R. NO. L-56294)

Facts:

M/V “Don Carlos,” an inter-island vessel owned and operated by private respondent Go Thong was sailing south
bound for Cebu, when it collided with M/S “Yotai Maru,” a merchant vessel of Japanese registry which was
approaching the port of Manila coming in from Kobe, Japan. The bow of the “Don Carlos” rammed the left side of the
“Yotai Maru” inflicting a gaping hole through which seawater rushed in and flooded the hatch, damaging all the cargo
stowed therein. The consignees of the damaged cargo having been paid by their insurance companies, the latter in
turn commenced actions against private respondent Go Thong for damages sustained by the various shipments. 2
cases were filed before the RTC. The first case (Smith Bell and Sumitomo Insurance v. Go Thong) reached the SC
which ruled in finality that negligence was with the officers and crew of “Don Carlos.” On the contrary, the second
case (Smith Bell and Tokyo Insurance v. Go Thong) was decided by the CA holding the officers and crew of “Yotai
Maru” at fault in the collision. Hence the present petition.

Issue:

Whether or not inscrutable fault is present in said collision.

Ruling: NO.

The Court believes that there are three (3) principal factors which are constitutive of negligence on the part of the
“Don Carlos,” which negligence was the proximate cause of the collision.

(1) The first of these factors was the failure of the “Don Carlos” to comply with the requirements of Rule 18 (a) of the
International Rules of the Road which provides as follows: (a) When two power-driven vessels are meeting end on, or
nearly end on, so as to involve risk of collision, each shall alter her course to starboard, so that each may pass on the
port side of the other. The evidence on this factor state that “Don Carlos” altered its course by five degrees to the left
instead of to the right which maneuver was the error that caused the collision in question. Why it did so is because
“Don Carlos” was overtaking another vessel, the “Don Francisco”, and was then at the right side of the aforesaid
vessel. It was in the process of overtaking “Don Francisco” that “Don Carlos” was finally brought into a situation
where he was meeting end-on or nearly end-on “Yotai Maru, thus involving risk of collision.
(2) The second circumstance constitutive of negligence on the part of the “Don Carlos” was its failure to have on
board that night a “proper look-out” as required by Rule I (B) Under Rule 29 of the same set of Rules, all
consequences arising from the failure of the “Don Carlos” to keep a “proper look-out” must be borne by the “Don
Carlos.” In the case at bar, the failure of the “Don Carlos” to recognize in a timely manner the risk of collision with the
“Yotai Maru” coming in from the opposite direction, was at least in part due to the failure of the “Don Carlos” to
maintain a proper look-out.

(3) The third factor constitutive of negligence on the part of the “Don Carlos” relates to the fact that Second Mate
Benito German was, immediately before and during the collision, in command of the “Don Carlos.” Second Mate
German simply did not have the level of experience, judgment and skill essential for recognizing and coping with the
risk of collision as it presented itself that early morning when the “Don Carlos,” running at maximum speed and
having just overtaken the “Don Francisco” then approximately one mile behind to the right side of the “Don Carlos,”
found itself head-on or nearly head on vis-a-vis the “Yotai Maru. ” It is essential to point out that this situation was
created by the “Don Carlos” itself.

FOR ALL THE FOREGOING, the Decision of the Court of Appeals is hereby REVERSED and SET ASIDE.

*Inscrutable Fault – where it cannot be determined which of the 2 vessels caused the collision, each vessel shall
suffer its own damages, and both shall be solidarily responsible for the losses and damages occasioned to their
cargoes.

NATIONAL DEVELOPMENT COMPANY vs. THE COURT OF APPEALS and DEVELOPMENT INSURANCE AND SURETY
CORPORATION

G.R. No. L-49407 19 August 1988

Facts:

National Development Company (NDC) appointed Maritime Company of the Philippines (MCP) as its agent to manage
and operate its vessel, ‘Dona Nati’, for and in behalf of its account. In 1964, while en route to Japan from San
Francisco, Dona Nati collided with a Japanese vessel, ‘SS Yasushima Maru’, causing its cargo to be damaged and lost.
The private respondent, as insurer to the consigners, paid almost Php400,000.00 for said lost and damaged cargo.
Hence, the private respondent instituted an action to recover from NDC.

Issue:

Which laws govern the loss and destruction of goods due to collision of vessels outside Philippine waters?

Ruling:

In a previously decided case, it was held that the law of the country to which the goods are to be transported governs
the liability of the common carrier in case of their loss, destruction or deterioration pursuant to Article 1753 of the
Civil Code. It is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan.

It appears, however, that collision falls among matters not specifically regulated by the Civil Code, hence, we apply
Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of vessels.

Aboitiz shipping vs. General Accident Fire and Life

(GR No. 100446 January 21, 1993)

Facts: Petitioner is a corporation engaged in the business of maritime trade as a carrier. As such, it owned and
operated the M/V P/ ABOITIZ, a common carrier that sank on voyage from Hong Kong to Manila. Private respondent
GAFLAC is a foreign insurance company pursuing its remedy as a subrogee of several cargo consignees whose
respective cargo sank with the said vessel and for which it has priory paid. The sinking of vessel gave rise to filling of
suit to recover the lost cargo either by shippers, their successors-in-interest, or the cargo insurers like GAFLAC as
subrogees. The sinking was initially investigated by the Board of Marine Inquiry, which found that such sinking was
due to fortuitous event.

Issue: Whether or not the doctrine of limited liability is applicable to the case?
Held: The real an hypothecary nature of maritime law simple means that the liability of the carrier in connection with
losses related to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which
stands as the guaranty for their settlement. It has its origin by reason of the conditions and risks attending maritime
trade in its earliest years when such trade was replete with innumerable and unknown hazards since vessels had to
go through largely uncharted waters to ply their trade. Thus, the liability of the vessel owner and agent arising form
the operation of such vessel were confined to the vessel itself, its equipment, freight and insurance, if any, which
limitation served to induce capitalist into effectively wagering their resources against consideration of the large
attainable in the trade.

ERLANGER & GALINGER vs. THE SWEDISH EAST ASIATIC CO., (LTD.)

34 Phil 178

FACTS:

S.S. Nippon was bound for Manila to Singapore, loaded mainly with copra and with some other general
merchandise. The ship struck the Scarborough Reef, and it was filled with water. Immediately the chief
officer wired the Director of Navigation at Manila for assistance for rescue. Shortly thereafter, the captain
and crew left the Nippon and went on board of SS. Manchuria and headed for Hong Kong.

Plaintiff Erlanger & Galinger applied to the Director of Navigation for a charter of a coast guard cutter.
Through the said cutter, the Nippon was floated and towed to Olongapo, where temporary repairs were
made, and then brought to Manila.

The trial court found that the plaintiffs were "entitled to recover one-half of the net proceeds from the
property salved and sold, and one-half the value of the property delivered to the claimants.

ISSUES:

(1) Was the ship abandoned?

(2) Was the salvage conducted with skill, diligence, and efficiency?

(3) Was the award justified?

RULING:

The relief of property from an impending peril of the sea, by the voluntary exertions of those who are
under no legal obligation to render assistance, and the consequent ultimate safety of the property,
constitute a case of salvage.

Three elements necessary for a valid salvage claim: (1) A marine peril. (2) Service voluntarily rendered when
not required as an existing duty or from a special contract. (3) Success, in whole or in part, or that the
service rendered contributed to such success.

(1) The evidence proves that the Nippon was in peril; that the captain left in order to protect his life and
the lives of the crew; that the animo revertendi was slight.

When a man finds property thus temporarily left to the mercy of the elements, whether from necessity or
any other cause, though not finally abandoned and legally derelict, and he takes possession of it with the
bona fide intention of saving it for the owner, he will not be treated as a trespasser. On the contrary, if by
his exertions he contributes materially to the preservation of the property, he will entitle himself to a
remuneration according to the merits of his service as a salvor.

(2) The plaintiffs were diligent in commencing the work and were careful and efficient in its pursuit and
conclusion. While the plaintiff entered upon the salvage proceedings without proper means and not being
adapted by their business to conduct their work, and while it may appear that possibly the salvage might
have been conducted in a better manner and have accomplished somewhat better results in the saving of
the copra cargo, yet it appears that they quickly remedied their lack of means and corrected the conduct of
the work so that it accomplished fairly good results.

(3) The award granted to the plaintiff must be reduced.

Compensation as salvage is a reward given for perilous services, voluntarily rendered, and as an
inducement to mariners to embark in such dangerous enterprises to save life and property.

One of the grounds for liberality in salvage awards is the risk assumed by the salvor, — that he can have no
recompense for service or expense unless he is successful in the rescue of property, and that his reward
must be within the measure of his success. In other words, he can only have a portion, in any event; and
the fact that his exertions were meritorious and that their actual value, or the expense actually incurred,
exceeded the amount produced by the service, cannot operate to absorb the entire proceeds against the
established rules of salvage.

Barrios vs. Go Thong

GR L-17192, 30 March 1963)

FACTS:

Petitioner Honorio Barrios, captain and/or master of the MV Henry I, received or otherwise intercepted an S.O.S.
distress signal by blinkers from the MV Alfredo, owned and/or operated by respondent Carlos Go Thong & Company.
Thereafter, he altered the course of said vessel, and steered and headed towards the beckoning MV Don Alfredo,
which Barrios found to be in trouble, due to engine failure and the loss of her propeller. Upon getting close to the MV
Don Alfreco, with the consent and knowledge of the captain and/or master of the MV Don Alfredo, Barrios caused
the latter vessel to be tied to, or well-secured and connected with tow lines from the MV Henry, and proceeded
moving until such time that a sister ship of MV Don Alfredo was sighted so that the tow lines were also released.

Brought to the CFI of Manila, the court therein dismissed the case; with cost against Barrios. Barrios interposed an
appeal.

ISSUE:

Whether under the facts of the case, the service rendered by plaintiff to defendant constituted "salvage" or
"towage", and if so, whether plaintiff may recover from defendant compensation for such service.

HELD:

It is not a salvage service.

Salvage defined

“Salvage” has been defined as “the compensation allowed to persons by whose assistance a ship or her cargo has
been saved, in whole or in part, from impending peril on the sea, or in recovering such property from actual loss, as in
case of shipwreck, derelict, or recapture.”

Elements for a valid salvage claim; Erlanger & Galinger case

In the Erlanger & Galinger case, it was held that three elements are necessary to a valid salvage claim, namely, (1) a
marine peril, (2) service voluntarily rendered when not required as an existing duty or from a special contract, and (3)
success in whole or in part, or that the service rendered contributed to such success.

No marine peril to justify valid salvage claim

There was no marine peril to justify a valid salvage claim by Barrios against Go Thong. It appears that although Go
Thong’s vessel in question was, on the night of 1 May 1958, in a helpless condition due to engine failure, it did not
drift too far from the place where it was. The weather was fair, clear, and good. The waves were small and too slight,
so much so, that there were only ripples on the sea, which was quite smooth. During the towing of the vessel on the
same night, there was moonlight. Although said vessel was drifting towards the open sea, there was no danger of its
foundering or being stranded, as it was far from any island or rocks. In case of danger of stranding, its anchor could
be released, to prevent such occurrence. There was no danger that Go Thong’s vessel would sink in view of the
smoothness of the sea and the fairness of the weather. That there was absence of danger is shown by the fact that
said vessel or its crew did not even find it necessary to lower its launch and two motor boats, in order to evacuate its
passengers aboard. Neither did they find occasion to jettison the vessel’s cargo as a safety measure. Neither the
passengers nor the cargo were in danger of perishing. All that the vessel’s crew members could not do was to move
the vessel on its own power. That did not make the vessel a quasi-derelict.

Contract of towage perfected even without written agreement

Herein, in consenting to Barrios’ offer to tow the vessel, Go Thong (through the captain of its vessel MV Don Alfredo)
thereby impliedly entered into a juridical relation of “towage” with the owner of the vessel MV Henry I, captained by
Barrios, the William Lines.

Only owner entitled to remuneration in towage

If the contract thus created is one for towage, then only the owner of the towing vessel, to the exclusion of the crew
of the said vessel, may be entitled to remuneration. The courts have to draw a distinct line between salvage and
towage; for the reason that a reward ought sometimes to be given to the crew of the salvage vessel and to other
participants in salvage services, and such reward should not be given if the services were held to be merely towage.
The master and members of the crew of a tug were not entitled to participate in payment by liberty ship for services
rendered by tug which were towage services and not salvage services. The distinction between salvage and towage is
of importance to the crew of the salvaging ship, for the following reasons: If the contract for towage is in fact towage,
then the crew does not have any interest or rights in the remuneration pursuant to the contract. But if the owners of
the respective vessels are of a salvage nature, the crew of the salvaging ship is entitled to salvage, and can look to the
salved vessel for its share.

Equity cannot be resorted if there is an express provision of law

Barrios cannot invoke equity in support of his claim for compensation against Go Thong. There being an express
provision of law (Art. 2142, Civil Code) applicable to the relationship created in the case, i.e. that of a quasi-contract
of towage where the crew is not entitled to compensation separate from that of the vessel, there is no occasion to
resort to equitable considerations.

Elser, Inc. vs. CA | Bautista Angelo (1954)

FACTS
 E. E. Elser Inc. is the agent of Atlantic Mutual Insurance Co. They are claiming from International Harvester Co., agent of
Isthmian Steamship Company for the value of lost goods it paid to the consignee of the goods Udharam Bazar and Co.
(vanishing cream, valued at P159.78)
 The goods were shipped on the S.S. Sea Hydra of Isthmian Steamship Company, from New York to Manila.
 CA 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: YES

ISSUES/HELD
 WON petitioners have already lost their right to press their claim against respondent? – NO.
 WON COGSA applies to shipment in question, assuming that trade then between the Philippines and the United States was not
a "foreign trade" (Phils then still being a territory or possession of the United States)? – YES.
 WON petitioners have overcome the presumption that the goods were delivered in the bill of lading – YES.

RATIONALE
1ST ISSUE
 It appearing that the Carriage of Goods by Sea Act of 1936 was made an integral part of the bill of lading by express
stipulation, it cannot be ignored or disregarded in determining the equities of the parties.
 The Carriage of Goods by Sea Act of 1936 was accepted and adopted by our government by the enactment of Commonwealth
Act No. 65 making said Act "applicable to all contracts for the carriage in foreign trade."
 Section 3 of the Carriage of the Goods by Sea Act of 1936 provides: (6) XXX 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.
 Regardless of whether the notice of loss or damage has been given, the shipper can still bring an action to recover said loss or
damage within one year after the delivery of the goods
 Clause 18 must of necessity yields to the provisions of the Carriage of Goods by Sea Act in view of the proviso contained in the
same Act (Section 3[8]) 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."
2ND ISSUE
 The COGSA may have application to the present case it appearing that the parties have expressly agreed to make and
incorporate the provisions of said Act as integral part of their contract of carriage. This is an exception to the rule regarding the
applicability of said Act. This is expressly recognized by section 13 of said Act which contains the following proviso:
o in this Act shall be held to apply to contracts for carriage of gods by sea between any port of the United States or its
possessions, and any other port of the United States or its possessions: Provided, however, That any bill of lading or
similar document of title which evidence of a contract for the carriage of goods by sea between such
ports, containing an express statement that it shall be subject to the provisions of this Act, shall be
subjected hereto as fully as if subject hereto by the express provisions of this Act .
3RD ISSUE
 The required notice was given by the petitioners to the carrier or its agent on April 25, 1946. That notice is sufficient to
overcome the above presumption within the meaning of the law.
Ang vs. American Steamship Agencies, Inc. | Bengzon (1967)

FACTS
 Yau Yue Commercial Bank Ltd. of Hongkong (Yau Yue) agreed to sell galvanized steel durzinc sheets to
Herminio Teves (Teves).
o It was agreed that the bill of lading would be delivered to Teves upon payment of a bank draft with Hongkong and
Shanghai Bank (HSBC), Manila.
o Upon presentment of the bill of lading to the carrier’s agent, the latter would issue a “Permit to Deliver Imported Articles”
to secure the release of the goods from the Bureau of Customs.
 Thus, Yau Yue shipped the articles through the Nissho Shipping Co., Ltd. of Japan, of which respondent American Steamship
Agencies, Inc. (American) is the agent in the Philippines.
 The articles eventually arrived in Manila.
o Teves was notified by HSBC and requested payment of the bank draft.
o Teves did not pay and this prompted HSBC to make a protest; they also returned the bill of lading to Yau Yue.
o Yau Yue subsequently indorsed the bill of lading to petitioner Domingo Ang (Ang).
 Meanwhile, even if he had not paid the draft, Teves was able to get a bank guaranty in favor of American that he
would surrender the bill of lading to the latter.
o Relying on the guaranty, American issued the permit to Teves which allowed him to obtain the goods from Customs.
 Subsequently, Ang demanded the goods from American but he was informed that they were already delivered to
Teves.
 Thus, Ang filed a complaint against American.
 American filed a motion to dismiss because the complaint was filed beyond the one-year prescriptive period
expressed in Sec. 3 (6), par. 41 of the Carriage of Goods by Sea Act (COGSA).
 The trial court dismissed the complaint.
 Hence, this petition.

ISSUES/HELD
Has Ang’s cause of action prescribed? – NO.

RATIONALE
 The provision only speaks of “loss or damage”; since there was no damage to the goods, the relevant question is whether
there was loss of the goods which would trigger the application of the provision.
 “Loss” is not defined in the COGSA; thus, recourse must be made to the Civil Code because Art. 18 thereof states
that its provisions shall supply deficiencies in special laws.
o Art. 1189 defines the word “loss” for purposes of suspending the efficacy of an obligation to give; since the contract
of carriage, in this case, is also obligation to give, such definition applies.
o Thus, “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.
o It doe not include a situation where there was indeed delivery – but delivery to the wrong person, or a
misdelivery, as in this case.
 In a motion to dismiss, a defendant hypothetically admits the truth of the allegations of fact contained in the complaint.
o From the allegations of the complaint, the goods cannot be deemed “lost”; there was only a misdelivery to
Teves.
 There being no loss or damage to the goods, the provision in the COGSA expressing the prescriptive period does
not apply.
o The one-year period of limitation is designed to meet the exigencies of maritime hazards.
o In a case where the goods shipped were neither lost or 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

1
In any event, the carrier and the ship shall be discharged from all liability in respect to loss or damage unless suit is brought within one year after delivery of the goods
or the date when the goods should have been delivered.
 limitation in cases of loss or damage caused by maritime perils does not obtain.
 The applicable prescriptive period, for suits not predicated on loss or damages but on alleged misdelivery, is
that found in the Civil Code, namely, either ten years for breach of a written contract or four years for quasi-
delict (Arts. 1144[1], 1146).

Dole Philippines, Inc. vs. Maritime Co. of the Phils. | Narvasa (1987)
(on separate sheet)

Mayer Steel Pipe Corporation vs. CA | Puno (1997)

FACTS
 The Hong Kong Government contracted Mayer Steel Corporation to manufacture and supply steel pipes and fittings. Prior to
the shipping, Mayer insured these pipes and fittings against all risks with South Sea Surety and Charter Insurance Corp.
Industrial Inspection Inc. was appointed as third-party inspector.
 After examining the pipes and fittings, Industrial Inspection certified that they are in good order condition. However, when the
goods reached Hong Kong, it was discovered that a substantial portion thereof was damaged.
 Hongkong and Mayer demanded payment of the cost of repair of the damaged pipes. South Sea and Charter refused to pay
because the insurance surveyor’s report allegedly showed that the damage is a factory defect.
 Trial court found in favor of the insured. It found that the damage to the goods is not due to manufacturing defects. It also
noted that the insurance contracts were “all risks” policies which insure against all causes of conceivable loss or damage. The
only exceptions are those excluded in the policy, or those sustained due to fraud or intentional misconduct on the part of the
insured.
 CA: set aside the decision of the trial court and dismissed the complaint on the ground of prescription. It held that the action
was barred under Sec. 3(6) of the Carriage of Goods by Sea Act (COGSA) since it was filed only on April 17, 1986, more than
two years from the time the goods were unloaded from the vessel.

ISSUES/HELD
Whether or not the action is barred by prescription. NO.

RATIONALE
 Sec. 3(6) of the COGSA states that the carrier and the ship shall be discharged from all liability for loss or damage to the goods
if no suit is filed within one year after delivery of the goods or the date when they should have been delivered.
 Under this provision, only the 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.
 The COGSA governs the relationship between the carrier on the one hand and the shipper, consignee and/or the insurer
on the other hand. It defines the obligations of the carrier under the contract of carriage. It does not 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.
 The ruling therein should apply only to suits against the carrier filed either by the shipper/consignee/ insurer. When the court
said in Filipino Merchants that Section 3(6) of the Carriage of Goods by Sea Act applies to the insurer, it meant
that the insurer, like the shipper, may no longer file a claim against the carrier beyond the one-year period
provided in the law.
 But it does not mean that the shipper may no longer file a claim against the insurer because the basis of the insurer’s liability is
the insurance contract. (Such obligation prescribes in ten years, in accordance with Article 1144 of the New Civil Code.)

SEA LAND SERVICE INC v IAC and PAULINO CUE (SEN HIAP HING)

GR No. 75118 August 31, 1987

FACTS: Sea-Land, a foreign shipping and forwarding company licensed to do business in the Philippines, received from Sea-borne Trading Company in
California, a shipment consigned to Sen Hiap Hing, the business name used by Cue. The shipper not having declared the value of the shipment , no value was
indicated in the bill of lading. The shipment was discharged in Manila, and while awaiting transshipment to Cebu, the cargo was stolen and never recovered. The
trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine currency value of the lost cargo, P55, 814 for unrealized profit and P25,000 for
attorney’s fees. CA affirmed the trial court’s decision.

ISSUE: Whether or not the consignee of seaborne freight is bound by stipulations in the covering bill of lading limiting to a fixed amount the liability of the carrier
for loss or damage to the cargo where its value is not declared in the bill.

RULING: There is no question of the right of a consignee in a bill of lading to recover from the carrier or shipper for loss of, or damage to, goods being
transported under said bill, although that document may have been drawn up only by the consignor and the carrier without the intervention of the consignee.
Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage is governed by the laws of the country of
destination and the goods in question were shipped from the United States to the Philippines, the liability of Sea-Land has Cue is governed primarily by the Civil
Code, and as ordained by the said Code, supplementary, in all matters not cluttered thereby, by the Code of Commerce and special laws. One of these
supplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the carriage
by sea to and from the Philippines Ports in Foreign Trade by Comm. Act. 65. Even if Section 4(5) of COGSA did not list the validity and binding effect of the
liability limitation clause in the bill of lading here are fully substantial on the basis alone of Article 1749 and 1750 of the Civil Code. The justices of such stipulation
is implicit in its giving the owner or shipper the option of avoiding accrual of liability limitation by the simple expedient of declaring the value of the shipment in the
bill of lading. The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the shipment covered by said rule to US$500 per package
unless the shipper declares the value of the shipment and pays additional charges is valid and binding on Cue.
Luzon Stevedoring Co. Inc. and Visayan Stevedore Transportation Co. vs. Public Service Commission

93 Phil. 735 | Tuason, J.

Facts: Petitioners are engaged in the stevedoring or lighterage and harbor towage business. They are also engaged in
interisland service which consist of hauling cargoes such as sugar, oil, fertilizer and other commercial commodities.
There is no fixed route in the transportation of these cargoes, the same being left at the indication of the owner or
shipper of the goods. Petitioners, in their hauling business, serve only a limited portion of the public.

The Philippine Shipowners’ Association complained to the Public Service Commission that petitioners were engaged
in the transportation of cargo in the Philippines for hire or compensation without authority or approval of the
Commission. The rates petitioners charged resulted in ruinous competition.

The Public Service Commission restrained petitioners from further operating their watercraft to transport goods for
hire or compensation between points in the Philippines until the commission approves the rates they propose to
charge.

Issue: Whether the petitioners fall under the definition in Section 13 (b) of the Public Service Law (C.A. Act No. 146)?

Held: Yes. It is not necessary under said definition that one holds himself out as serving or willing to serve the public
in order to be considered public service. It is not necessary, in order to be a public service, that an organization be
dedicated to public use, i.e., ready and willing to serve the public as a class. It is only necessary that it must in some
way be impressed with a public interest; and whether the operation of a business is a public utility depends upon
whether or not the service rendered by it is of a public character and of public consequence and concern.

It can scarcely be denied that the contracts between the owners of the barges and the owners of the cargo at bar
were ordinary contracts of transportation and not of lease. Petitioners’ watercraft was manned entirely by crews in
their employ and payroll, and the operation of the said craft was under their direction and control, the customers
assuming no responsibility for the goods handled on the barges.

C.A. No. 146 clearly declares that an enterprise of any of the kinds therein enumerated is a public service if conducted
for hire or compensation even if the operator deals only with a portion of the public or limited clientele. Public utility,
even where the term is not defined by statute, is not determined by the number of people actually served.

The Public Service Law was enacted not only to protect the public against unreasonable charges and poor, inefficient
service, but also to prevent ruinous competition.

Just as the legislature may not declare a company or enterprise to be a public utility when it is not inherently such, a
public utility may not evade control and supervision of its operation by the government by selecting its customers
under the guise of private transactions.

Doctrine: An enterprise of any of the kinds enumerated in the Public Service Law is a public service if conducted for
hire or compensation even if the operator deals only with a portion of the public or with limited clientele.

G.R. No. 115381 December 23, 1994

KILUSANG MAYO UNO LABOR CENTER, petitioner,

vs.

HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD, and the
PROVINCIAL BUS OPERATORS ASSOCIATION OF THE PHILIPPINES, respondents.

FACTS:

In 1990, DOTC Sec. Oscar Orbos issued Memo Circular to LTFRB Chair Remedios Fernando to allow provincial bus to
change passenger rates w/in a fare range of 15% above or below the LTFRB official rate for a 1yr. period. This is in line
with the liberalization of regulation in the transport sector which the government intends to implement and to make
progress towards greater reliance on free market forces.

Fernando respectfully called attention of DOTC Sec. that the Public Service Act requires publication and notice to
concerned parties and public hearing. In Dec. 1990, Provincial Bus Operators Assoc. of the Phils. (PBOAP) filed an
application for across the board fare rate increase, which was granted by LTFRB. In 1992, then DOTC Sec. Garcia
issued a memo to LTFRB suggesting a swift action on adoption of procedures to implement the Department Order &
to lay down deregulation policies. Pursuant to LTFRB Guideline, PBOAP, w/o benefit of public hearing announced a
20% fare rate increase.

Petitioner Kilusang Mayo Uno (KMU) opposed the move and filed a petition before LTFRB w/c was denied. Hence the
instant petition for certiorari w/ urgent prayer for a TRO, w/c was readily granted by the Supreme Court.

ISSUE:

Whether the authority granted by LTFB to provincial buses to set a fare range above existing authorized fare range is
unconstitutional and invalid.

HELD:

The grant of power by LTFRB of its delegated authority is unconstitutional. The doctrine of Potestas delegate non
delegari (what has been delegated cannot be delegated) is applicable because a delegated power constitutes not only
a right but a duty to be performed by the delegate thru instrumentality of his own judgment. To delegate this power
is a negation of the duty in violation of the trust reposed in the delegate mandated to discharge such duty. Also, to
give provincial buses the power to charge their fare rates will result to a chaotic state of affairs ad this would leave
the riding public at the mercy of transport operators who can increase their rates arbitrarily whenever it pleases or
when they deem it necessary.

Francisco Tatad, e. al. v. Sec Jesus Garcia and Edsa LRT Corp., Ltd.

Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie xie!

GR NO. 114222 April 6, 1995

Francisco Tatad, John Osmena and Rodolfo Biazon, petitioners,

vs.

Hon. Jesus Garcia, in his capacity as the Secretary of the Department of Transportation & Communications, and EDSA
LRT CORPORATION, LTD., respondents.

Facts:

This is a petition under Rule 65 of the Revised Rules of Court to prohibit respondents from further implementing the
“Revised and Restated Agreement to Build, Lease and Transfer a Light Rail Transit System for EDSA and the
Supplemental Agreement to the same project.

Petitioners Francisco Tatad, John Osmena and Rodolfo Biazon are members of the Philippine Senate and are suing in
their capacities as Senators and as taxpayers. Respondent Jesus Garcia was then Secretary of the DOTC, while private
respondent EDSA LRT CORPORATION, Ltd. is a private corporation organized under the laws of Hongkong.

In 1989, DOTC planned to construct a light railway transit line along EDSA, which shall traverse the cities of Pasay,
Quezon, Mandaluyong and Makati. The objective is to provide a mass transit system along EDSA and to alleviate the
congestion in the metropolis.

On March 15, 1990, then DOTC Secretary Oscar Orbos, acting upon a proposal to construct the EDSA LRT III on a
Build-Operate-Transfer (BOT) basis, had invited Elijahu Levin from the Eli Levin Enterprises, Inc to send a technical
team to discuss the project with the DOTC.

On July 9, 1990, RA No. 6957 referred to as the Build-Operate-Transfer (BOT) was signed by then President Corazon
Aquino. The said Act provides for two schemes for the financing, construction and operation of government projects
through private initiative and investment: BOT or Build-Transfer (BT).

In accordance with the provisions of RA 6957 and to set the EDSA LRT III project underway, the Prequalification Bids
and Awards Committee and the Technical Committee were formed.

The prequalification criteria totalling 100% are as follows: a.) Legal aspects – 10%; b.) Management/Organizational
capability – 30%; c.) Financial capability- 30%; and d.) Technical capability – 30%.
Of the 5 applicants, only the EDSA LRT Consortium “met the requirements of garnering at least 21 points per criteria,
except for Legal aspects, and obtaining an over-all passing mark of at least 82 points.” The Legal aspects referred to
provided that the BOT/BT contractor-applicant meet the requirements specified in the Constitution and other
pertinent laws.

Subsequently, Sec. Orbos was appointed Executive Secretary to the President of the Philippines and was replaced by
Nicomedes Prado. The latter recommended the award of the EDSA LRT III project to the sole complying bidder, the
EDSA LRT Consortium, and requested for authority to negotiate with the said firm for the contract pursuant to the
BOT Law. Authority was granted to proceed with the negotiations. The EDSA LRT Consortium submitted its proposal
to DOTC.

Finding the proposal to be in compliance with the bid requirements, DOTC and EDSA LRT Corporation, Ltd., in
substitution of the EDSA LRT Consortium, entered into an “An Agreement to Build, Lease and Transfer a Light Rail
Transit System for EDSA” under the terms of the BOT Law.

Secretary Prado, thereafter, requested presidential approval of the contract.

Exec. Sec. Franklin Drilon, who replaced Sec. Orbos, informed Sec. Prado that the President could not grant the
requested approval for failure to comply with the requirements of the BOT Law.

In view whereof, Sec. Drilon, the DOTC and private respondent re-negotiated the agreement. On April 22, 1992, the
parties entered into a “Revised and Restated Agreement to Build, Lease and Transfer and Light Rail Transit System for
EDSA. On May 6, 1992, DOTC, represented by Sec. Jesus Garcia, Sec. Prado and private respondent entered into a
Supplemental Agreement to the April Revised Agreement so as to clarify their respective rights and responsibilities.

The two agreements were approved by President Fidel Ramos.

According to the agreements, the EDSA LRT III will use light rail vehicles from the Czech and Slovak Federal Republics
and will have a maximum carrying capacity of 450,000 passengers a day. The system will have its own power facility.
It will also have 13 passenger stations and one depot in 16-hectare government property at North Avenue.

Private respondents shall undertake and finance the entire project required for a complete operational light rail
transit system. Target completion date is approximately 3 years from the implementation date of the contract. Upon
full and partial completion and viability thereof, private respondent shall deliver the use and possession of the
completed portion to DOTC which shall operate the same. DOTC shall pay private respondent rentals on aj monthly
basis through an Irrevocable Letter of Credit. The rentals shall be determined by an independent and internationally
accredited inspection firm to be appointed by the parties.

As agreed upon, private respondent’s capital shall be recovered from the rentals to be paid by the DOTC which, in
turn, shall come from the earnings of the EDSA LRT III. After 25 years and DOTC shall have completed payment of the
rentals, ownership of the project shall be transferred to the latter for a consideration of only US $1.00.

In their petition, petitioners argued that the agreement of April 22, 1992, as amended by the Supplemental
Agreement of May 6, 1993, in so far as it grants EDSA LRT COPORTATION, LTD., a foreign corporation, the ownership
of EDSA LRT III, a public utility, violates the constitution, and hence, is unconstitutional. They contend that the EDSA
LRT III is a public utility, and the ownership and operation thereof is limited by the Constitution to Filipino citizens and
domestic corporations, not foreign corporations like private respondent.

Issue:

Whether or not the EDSA LRT III assumes all the obligations and liabilities of a common carrier.

Held:

What private respondent owns are the rail tracks, rolling stocks like the coaches, rail stations, terminals and the
power plant, not a public utility. While a franchise is needed to operate these facilities to serve the public, they do
not by themselves constitute a public utility. What constitutes a public utility is not their ownership but their use to
serve the public.

Section 11 of Article XII of the Constitution provides:

No franchise, certificate or any other form of authorization for the operation of a public utility shall be granted except
to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least
sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be
exclusive character or for a longer period than 50 years.

The right to operate a public utility may exist independently and separately from the ownership of the facilities
thereof. One can own said facilities without operating them as a public utility, or conversely, one may operate a
public utility without owning the facilities used to serve the public. The devotion of property to serve the public may
be done by the owner or by the person in control thereof who may not necessarily be the owner thereof.

While private respondent is the owner of the facilities necessary to operate the EDSA LRT III, it admits that it is not
enfranchised to operate a public utility. In view of this incapacity, private respondent and DOTC agreed that on
completion date, private respondent will immediately deliver possession of the LRT system by of lease for 25 years,
during which period DOTC shall operate the same as a common carrier and private respondent shall provide technical
maintenance and repair services to DOTC.

Since DOTC shall operate the EDSA LRT III, it shall assume all the obligations and liabilities of a common carrier. For
this purpose, DOTC shall indemnify and hold harmless private respondent from any losses, damages, injuries or death
which may be claimed in the operation or implementation of the system, except losses, damages, injury or death due
to defects in the EDSA LRT III on account of the defective condition of equipment or facilities or the defective
maintenance of such equipment facilities.

Philippine Airlines vs Civil Aeronautics Board Case Digest

Philippine Airlines, Inc. vs. Civil Aeronautics Board

(270 SCRA 538)

Facts: Grand Air applied for a Certificate of Public Convenience and Necessity with the Civil Aeronautics Board (CAB).
The Chief Hearing Officer issued a notice of hearing directing Grand Air to serve a copy of the application and notice
to all scheduled Philippine Domestic operators. Grand Air filed its compliance and requested for a Temporary
Operating Permit (TOP). PAL filed an opposition to the application on the ground that the CAB had no jurisdiction to
hear the application until Grand Air first obtains a franchise to operate from Congress. The Chief Hearing Officer
denied the opposition and the CAB approved the issuance of the TOP for a period of 3 months. The opposition for the
TOP was likewise denied. The CAB justified its assumption of jurisdiction over Grand Air’s application on the basis of
Republic Act 776 which gives it the specific power to issue any TOP or Certificate of Public Convenience and
Necessity.

Issue: Whether or not the CAB can issue a Certificate of Public Convenience and Necessity or TOP even though the
prospective operator does not have a legislative franchise?

Held: Yes, as mentioned by the CAB, it is duly authorized to do so under Republic Act 776 and a legislative franchise is
not necessary before it may do so, since Congress has delegated the authority to authorize the operation of domestic
air transport services to the CAB, an administrative agency. The delegation of such authority is not without limits
since Congress had set specific standard and limitations on how such authority should be exercised.

Public convenience and necessity exists when the proposed facility will meet a reasonable want of the public and
supply a need which the existing facilities do not adequately afford.

Thus, the Board should be allowed to continue hearing the application, since it has jurisdiction over it provided that
the applicant meets all the requirements of the law.