CHAPTER 16
Compania Maritima
Elser Inc. v. CA
96 Phil 264 (1654)
FACTS:
The goods specified in the Bill of Lading were shipped on the 'S.S. Sea Hydra,' of
Isthmian Steamship Company, from New York to Manila, and were received by the
consignee 'Udharam Bazar and Co.', except one case of vanishing cream valued at
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.
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 in question provided that 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 COGSA 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 these two provisions should prevail? Is it that contained in clause
18 of the bill of lading, or that appearing in the Carriage of Goods by Sea Act?
HELD: COGSA should prevail
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 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." (Section 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.
Ang v.
133 SCRA 600 (1984)
FACTS:
This case involves the recovery of damages by the consignee from the carrier in
case of misdelivery of the cargo which action was dismissed by the trial court on
the grounds of lack of cause of action and prescription.
The defendants filed a motion to dismiss Ang's complaint on the ground of lack of
cause of action. Ang opposed the motion. As already stated, the trial court on May
22, 1964 dismissed the complaint on the grounds of lack of cause of action and
prescription since the action was filed beyond the one-year period provided in the
Carriage of Goods by Sea Act.
ISSUE: Whether or not Ang’s action for damages has prescribed.
HELD: NO
Action for damages for misdelivery of cargo by an ocean-going vessel is not 1 year
but 10 years from date cause of action accrued, as distinguished from loss of cargo.
In the American Steamship Agencies cases, it was held that the action of Ang is
based on misdelivery of the cargo which should be distinguished from loss thereof.
The one-year period provided for in section 3 (6) of the Carriage of Goods by Sea
Act refers to loss of the cargo. What is applicable is the four-year period of
prescription for quasi-delicts prescribed in article 1146 (2) of the Civil Code or ten
years for violation of a written contract as provided for in article 1144 (1) of the
same Code.
As Ang filed the action less than three years from the date of the alleged
misdelivery of the cargo, it has not yet prescribed. Ang, as indorsee of the bill of
lading, is a real party in interest with a cause of action for damages.
Dole Philippines v. Maritime Co. of the Phil
G.R. No. L-61352 February 27, 1987
FACTS:
This appeal relates to a claim for loss and/or damage to a shipment of machine
parts sought to be enforced by the consignee, appellant Dole Philippines, Inc.
against the carrier, Maritime Company of the Philippines, under the provisions of
the Carriage of Goods by Sea Act.
Dole argues that since the provisions of the Civil Code are, by express mandate of
said Code, suppletory of deficiencies in the Code of Commerce and special laws in
matters governed by the latter, and there being "*** a patent deficiency *** with
respect to the tolling of the prescriptive period ***" provided for in the Carriage of
Goods by Sea Act, prescription under said Act is subject to the provisions of Article
1155 of the Civil Code on tolling and because Dole's claim for loss or damage made
on May 4, 1972 amounted to a written extrajudicial demand which would toll or
interrupt prescription under Article 1155, it operated to toll prescription also in
actions under the Carriage of Goods by Sea Act.
ISSUE: whether or not Article 1155 of the Civil Code providing that the
prescription of actions is interrupted by the making of an extrajudicial written
demand by the creditor is applicable to actions brought under the Carriage of
Goods by Sea Act which, in its Section 3, paragraph 6
HELD: NO
Written extrajudicial demand by the creditor does not toll the running of the one
year prescriptive period under the Act.
Period to file an action even under a new period having already lapsed without
filing the action, the right of action had prescribed.
Sea Land Service Inc. v. IAC
G.R. 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.
Paulino Cue, the consignee, made formal claim upon Sea-Land for the value of the lost
shipment allegedly amounting to P179,643.48. Sea-Land offered to settle for US$4,000.00,
or its then Philippine peso equivalent of P30, 600.00. asserting that said amount
represented its maximum liability for the loss of the shipment under the package limitation
clause in the covering bill of lading. Cue rejected the offer and thereafter brought suit for
damages against Sea-Land
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.
HELD: YES
Nothing contained in section 4(5) of the Carriage of Goods by Sea Act already quoted is
repugnant to or inconsistent with any of the just-cited provisions of the Civil Code. Said
section merely gives more flesh and greater specificity to the rather general terms of Article
1749 (without doing any violence to the plain intent thereof) and of Article 1750, to give
effect to just agreements limiting carriers' liability for loss or damage which are freely and
fairly entered into.
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.
ART. 1750. A contract fixing the sum that may be recovered by the owner or shipper
for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been fairly and freely agreed upon.
Consignee by making claim for loss on the basis of the bill of lading, to all intents and
purposes accepted said bill. He becomes bound by all stipulations contained therein
whether on the front or the back thereof. Respondent cannot elude its provisions simply
because they prejudice him and take advantage of those that are beneficial. Secondly, the
fact that respondent shipped his goods on board the ship of petitioner and paid the
corresponding freight thereon shows that he impliedly accepted the bill of lading which was
issued in connection with the shipment in question, and so it may be said that the same is
finding upon him as if it had been actually signed by him or by any other person in his behalf.
Maritime Agencies v. CA
G.R. No. 77638 July 12, 1990
FACTS:
Transcontinental Fertilizer Company of London chartered from Hongkong Island
Shipping Company of Hongkong the motor vessel named "Hongkong Island" for the
shipment of bagged urea from USSR to the Philippines. The parties signed a Uniform
General Charter.
Atlas Fertilizer was the consignee of said shipment. Maritime Agencies & Services,
Inc. was appointed as the charterer’s agent and Macondray Company, Inc. as the
owner’s agent. The consignee filed a claim against Maritime for the shortlanded
bags. The latter appealed and pleads non-liability on the ground that it was only the
charterer's agent and should not answer for whatever responsibility might have
attached to the principal.
Union (insurance) asks for the modification of the decision of the respondent court
so as to make Maritime solidarily and solely liable, its principal not having been
impleaded and so not subject to the jurisdiction of our courts.
ISSUE: Whether or not Maritime as agent should be held liable for damages
HELD: NO
As regards the goods damaged or lost during unloading, the charterer is liable
therefor, having assumed this activity under the charter party "free of expense to
the vessel." The difficulty is that Transcontinental has not been impleaded in these
cases and so is beyond our jurisdiction. The liability imposable upon it cannot be
borne by Maritime which, as a mere agent, is not answerable for injury caused by
its principal. It is a well-settled principle that the agent shall be liable for the act or
omission of the principal only if the latter is undisclosed.
NOTE: The responsibility for cargo loss fails on the one who agreed to perform the
duty involved in accordance with the terms of most voyage charters.
The principle is true in the present cases where the charterer was
responsible for loading, stowage and discharging at the ports visited while the
owner was responsible for the care of the cargo during the voyage.
Mayer Steel Pipe vs. Court of Appeals
G.R. No. 124050. June 19, 1997
FACTS:
Petitioner Hongkong Government Supplies Department (Hongkong) contracted
petitioner Mayer Steel Pipe Corporation (Mayer) to manufacture and supply various
steel pipes and fittings. 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. (Charter).
However, when the goods reached Hongkong, it was discovered that a substantial
portion thereof was damaged. Petitioners filed a claim against private respondents
for indemnity under the insurance contract. 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.
Respondent court affirmed the finding of the trial court that the damage is not due
to factory defect and that it was covered by the "all risks" insurance policies issued
by private respondents to petitioner Mayer. However, it 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.
ISSUE: Whether or not the liability of the insurer is extinguished on the ground of
prescription under COGSA
HELD: NO
Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship
shall be discharged from all liability for loss or damage to the goods if no suit is filed
within one year after delivery of the goods or the date when they should have been
delivered. Under this provision, only the 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.
NOTE: Bill of Rights of Air Passengers and Carrier Obligations
An insurance contract is a contract whereby one party, for a consideration known
CHAPTER II. RIGHT TO BE PROVIDED WITH ACCURATE INFORMATION BEFORE
as the premium, agrees to indemnify another for loss or damage which he may
PURCHASE
suffer from a specified peril.
Section 4. Right to Full, Fair, and Clear Disclosure of the Service Offered and All the
An "all risks" insurance policy covers all kinds of loss other than those due to willful
and fraudulent act of the insured. Thus, when private respondents issued the "all Terms and Conditions of the Contract of Carriage.
risks" policies to petitioner Mayer, they bound themselves to indemnify the latter in
case of loss or damage to the goods insured. Such obligation prescribes in ten years, Section 5. Right to Clear and Non-Misleading Advertisements of, and Important
in accordance with Article 1144 of the New Civil Code. Reminders Regarding Fares.

Section 6. Right Against Misleading and Fraudulent Sales Promotion Practices.

CHAPTER III. RIGHT TO RECEIVE THE FULL VALUE OF THE SERVICE PURCHASED

Section 7. Right to Transportation and Baggage Conveyance.

Section 8. Right to be Processed for Check-In.

Section 9. Right to Sufficient Processing Time.

Section 10. Right to Board Aircraft for the Purpose of Flight.

EXCEPT: when there is legal or other valid cause, such as, but not limited to,
immigration issues, safety and security, health concerns, non-appearance at the
boarding gate at the appointed boarding time, or government requisition of space.

CHAPTER IV. RIGHT TO COMPENSATION

Section 11. Right to Compensation and Amenities in Case of Cancellation of Flight

Section 12. Right to Compensation and Amenities in Case of Flight Delay and
Exceptions Thereto.

Section 13. Compensation under Section 10 as Liquidated Damages.

Section 14. Right to Compensation for Delayed, Lost, and Damaged Baggage.

Section 15. Right to Compensation In Case of Death or Bodily Injury of a Passenger.

Section 16. Right to Immediate Payment of Compensation.

Luzon Stevedoring v. Public Service Commission
93 PHIL 735 (1953)
FACTS:
The transportation service which was the subject of complaint was not casual or
incidental. It had been carried on regularly for years at almost uniform rates of
charges. Although the number of the company's customers was limited, the value
of goods, transported was not incon siderable. It did not have the same customers
all the time embraced in the complaint, and there was no reason to believe that it
would not accept, and there was nothing to prevent it from accepting, new
customers that might be willing to avail of its services to the extent of its capacity.
HELD:
Applying the plain letter of Commonwealth Act No. 146, it is a public utility, and to
restrain it from further operating its watercraft to transport goods for hire or
compensation between points in the Philippines until the rates it proposes to
charge are approved by the Public Service Commission, does not invade private
rights of property or contract. The constitutionality of Commonwealth Act No. 146
was upheld, implicity in Luzon Brokerage Co. vs. Public Service Com mission [40 Off.
Gaz., Supp. 7, p. 271] and explicitly in Pangasinan Transportation Co. vs. Public
Service Commission [70 Phil., 221].
NOTES:
HIRE OF VESSEL VS LEASE OF VESSEL
Where the lighters and tugboats in question were not leased, but used to carry
goods for compensation at a fixed rate for a fixed weight, they must be deemed to
have been hired, hired in the sense that the shippers did not have direction,
control, and maintenance thereof, which is a characteristic feature of lease.
DETERMINATION WHETHER A FIRM OR COMPANY IS A PUBLIC UTILITY
Public Utility, even where the term is not defined by statute, is not determined by
the number of people actually served. Nor does the mere fact that service is
rendered only under contract prevent a company from being a public utility. [43
Am. Jur., 573; Luzon Brokerage Co. vs. Public Service Commission, 40 Off. Gaz.,
Supp. 7, p. 271.] On the other hand, causal or incidental service devoid of public
character and interest is not brought within the category of public utility. The
demarkation line is not susceptible of exact description or definition, each being
governed by its circumstance.
San Pablo v. Pantranco
153 SCRA 199
FACTS:
San Pablo vs. Pantranco
G.R. No. L-61461, August 21, 1987
FACTS:
PANTRANCO, a domestic corp. engaged in the land transportation business with
PUB service for passengers and freight, bought a vessel named M/V “Black Double”
to be used for its project to operate a ferry service to carry its passenger buses and
freight trucks between Allen and Matnog in connection with its trips to Tacloban
City.
PANTRANCO claims that the ferry service is merely a necessary and incidental to its
main service of transporting its passengers and that there is no need to obtain a
separate certificate for public convenience. The BOT consequently rendered its
decision holding that the ferryboat service is part of PANTRANCO’s CPC thereby
granting the latter the authority to operate a private ferryboat service.
Furthermore, it said that the ferryboat service is a private carrier because it will be
used exclusively to transport the company’s own buses, passengers and freight
trucks. It will cater exclusively to the needs of its own clientele and will not offer
itself indiscriminately for hire or for compensation to the general public.
ISSUE: WON the sea can be considered as a continuation of the highway
HELD: NO
Matnog and Allen are separated by an open sea it cannot be considered as a
continuation of highway. Respondent PANTRANCO should secure a separate CPC for
the operation of an interisland or coastwise shipping service in accordance with the
provisions of law. Its CPC as a bus transportation cannot be merely amended to
include this water service under the guise that it is a mere private ferry service.
Thus the Court holds that the water transport service between Matnog and Allen is
not a ferryboat service but a coastwise or interisland shipping service. Before
private respondent may be issued a franchise or CPC for the operation of the said
service as a common carrier, it must comply with the usual requirements of filing an
application, payment of the fees, publication, adducing evidence at a hearing and
affording the oppositors the opportunity to be heard, among others, as provided by
law.
Cogeo-Cubao Operator’s and Driver’s Association v. CA authorization from the Public Service Commission and in violation of the right of
207 SCRA 343 (1992) respondent corporation to operate its services in the said route under its certificate
of public convenience.
FACTS:

In 1983, a CPC to operate a jeepney service was issued to Lungsod Silangan

transport Services to ply the Cogeo Cubao route. Cogeo Cubao Operators and
Drivers AssociaTon (CCODA), composed of jeepney drivers and operators in the
area, was perturbed by Resolution No. 9 of the Lungsod Silangan Board, which
adopted a “Bandera system”, wherein a member of the cooperative can queue on
behalf of passengers in exchange for a fee of twenty pesos (which would be set
aside for the Christmas program ofdrivers and other benefits), CCODA formed a
human barricade on November 11, 1985 and assumed the dispatching of passenger
jeepneys. As a result, Lungsod Silangan sued them for damages. CCODA denied the
insinuation of a take over and at the same Time raised the defense that it was
formed not to compete with Lungsod Silangan. The RTC ordered the payment of
actual damages and a³orney’s fees to Lungsod Silangan

ISSUE: Whether or not the petitioner usurped the property right of the
respondent which entitles the latter to the award of nominal damages

HELD: YES

A certification of public convenience is included in the term "property" in the broad

sense of the term. Under the Public Service Law, a certificate of public convenience
can be sold by the holder thereof because it has considerable material value and is
considered as valuable asset (Raymundo v. Luneta Motor Co., et al., 58 Phil. 889).
Although there is no doubt that it is private property, it is affected with a public
interest and must be submitted to the control of the government for the common
good (Pangasinan Transportation Co. v. PSC, 70 Phil 221). Hence, insofar as the
interest of the State is involved, a certificate of public convenience does not confer
upon the holder any proprietary right or interest or franchise in the route covered
thereby and in the public highways (Lugue v. Villegas, L-22545, Nov . 28, 1969, 30
SCRA 409). However, with respect to other persons and other public utilities, a
certificate of public convenience as property, which represents the right and
authority to operate its facilities for public service, cannot be taken or interfered
with without due process of law. Appropriate actions may be maintained in courts
by the holder of the certificate against those who have not been authorized to
operate in competition with the former and those who invade the rights which the
former has pursuant to the authority granted by the Public Service Commission (A.L.
Ammen Transportation Co. v. Golingco. 43 Phil. 280).

In the case at bar, the trial court found that petitioner association forcibly took over
the operation of the jeepney service in the Cogeo-Cubao route without any
1. Article XII, 1987 Constitution route and whatever may be its classification, freight or carrier service or any class,
express service, steamboat, or steamship line, pontines, ferries, and water craft,
Section 11. No franchise, certificate or any other form of authorization for the engaged in the transportation of passengers and freight or both, shipyard, marine
operation of a public utility shall be granted except to citizens of the Philippines or repairshop, [warehouse], wharf or dock, ice plant, ice refrigeration plant, canal,
to corporations or associations organized under the laws of the Philippines at least irrigation system, gas, electric light, heat and power, water supply and power,
60% of whose capital is owned by such citizens, nor shall such franchise, certificate petroleum, sewerage system, wire or wireless communications system, wire or
or authorization be exclusive in character or for a longer period than fifty years. wireless broadcasting stations and other similar public services..." [Sec. 13(b)]
Neither shall any franchise or right be granted except under the condition that it (Albano vs Reyes)
shall be subject to amendment, alteration or repeal by the Congress when the
common good so requires. The State shall encourage equity participation in public
utilities by the general public. The participation of foreign investors in the governing
body of any public utility enterprise shall be limited to their proportionate share in
its capital, and all the executive and managing officers of such corporation or
association must be citizens of the Philippines.

Section 17. In times of national emergency, when the public interest so requires,
the State may, during the emergency and under reasonable terms prescribed by it,
temporarily take over or direct the operation of any privately owned public utility or
business affected with public interest.

Section 18. The State may, in the interest of national welfare or defense, establish
and operate vital industries and, upon payment of just compensation, transfer to
public ownership utilities and other private enterprises to be operated by the
Government.

Section 19. The State shall regulate or prohibit monopolies when the public interest
so requires. No combinations in restraint of trade or unfair competition shall be
allowed.

A public utility is a business or service engaged in regularly supplying the public with
some commodity or service of public consequence such as electricity, gas, water,
transportation, telephone or telegraph service. Apart from statutes which define
the public utilities that are within the purview of such statutes, it would be difficult
to construct a definition of a public utility which would fit every conceivable case.
As its name indicates, however, the term public utility implies a public use and
service to the public. (Am. Jur. 2d V. 64, p.549.) (Albano vs Reyes)

The Public Service Act (CA No. 146 as amended) provides that the term public
service "includes every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger, or both with or without fixed