ABROGAR vs. COSMOS BOTTLING COMPANY and INTERGAMES INC.

G.R. No. 064749 March 15, 2017

Facts:
This case involves a claim for damages arising from the negligence causing the death of a participant
in an organized marathon bumped by a passenger jeepney on the route of the race. The issues
revolve on whether the organizer and the sponsor of the marathon were guilty of negligence, and, if
so, was their negligence the proximate cause of the death of the participant; on whether the
negligence of the driver of the passenger jeepney was an efficient intervening cause; on whether the
doctrine of assumption of risk was applicable to the fatality; and on whether the heirs of the fatality
can recover damages for loss of earning capacity of the latter who, being then a minor, had no gainful
employment.
In the RTC decision dated May 10, 1991, judgment was rendered in favor of plaintiffs-spouses
Romulo Abrogar and Erlinda Abrogar and against defendants Cosmos Bottling Company, Inc. and
Intergames, Inc., ordering both defendants, jointly and severally, to pay and deliver to the plaintiffs
the amounts of Twenty Eight Thousand Sixty One Pesos and Sixty Three Centavos (P28,061.63) as
actual damages; One Hundred Thousand Pesos (P100,000.00) as moral damages; Fifty Thousand
Pesos (P50,000.00) as exemplary damages and Ten Percent (10%) of the total amount of One
Hundred Seventy Eight Thousand Sixty One Pesos and Sixty Three Centavos (P178,061,63) or
Seventeen Thousand Eight Hundred Six Pesos and Sixteen Centavos (P17,806.16) as attorney's fees.
On the cross-claim of defendant Cosmos Bottling Company, Inc., defendant Intergames, Inc, is hereby
ordered to reimburse to the former any and all amounts which may be recovered by the plaintiffs
from it by virtue of this Decision.
The RTC observed that the safeguards allegedly instituted by Intergames in conducting the marathon
had fallen short of the yardstick to satisfy the requirements of due diligence as called for by and
appropriate under the circumstances; that the accident had happened because of inadequate
preparation and Intergames' failure to exercise due diligence; that the respondents could not be
excused from liability by hiding behind the waiver executed by Rommel and the permission given to
him by his parents because the waiver could only be effective for risks inherent in the marathon, such
as stumbling, heat stroke, heart attack during the race, severe exhaustion and similar occurrences;
that the liability of the respondents towards the participants and third persons was solidary, because
Cosmos, the sponsor of the event, had been the principal mover of the event, and, as such, had
derived benefits from the marathon that in turn had carried responsibilities towards the participants
and the public; that the respondents' agreement to free Cosmos from any liability had been an
agreement binding only between them, and did not bind third persons; and that Cosmos had a cause
of action against Intergames for whatever could be recovered by the petitioners from Cosmos.
All parties appealed to the CA. The petitioners contended that the RTC erred in not awarding
damages for loss of earning capacity on the part of Rommel for the reason that such damages were
not recoverable due to Rommel not yet having finished his schooling; and that it would be premature
to award such damages upon the assumption that he would finish college and be gainfully employed.
The CA reduced the issues to four, namely:
1. Whether or not appellant Intergames were negligent in its conduct of the 1st Pop Cola Junior
Marathon" held on June 15, 1980 and if so, whether its negligence was the proximate cause of the
death of Rommel Abrogar.
2. Whether or not appellant Cosmos can be held jointly and solidarity liable with appellant
Intergames for the death of Rommel Abrogar, assuming that appellant Intergames is found to have
been negligent in the conduct of the Pop Cola marathon and such negligence was the proximate
cause of the death of Rommel Abrogar.
3. Whether or not the appellants Abrogar are entitled to be compensated for the "loss of earning
capacity" of their son Rommel.
4. Whether or not the appellants Abrogar are entitled to the actual, moral, and exemplary damages
granted to them by the Trial Court. In its assailed judgment on March 10, 2004 and in view of the fact
that both defendants are not liable for the death of Rommel Abrogar, appellants-spouses are not
entitled to actual, moral, exemplary damages as well as for the "loss of earning capacity" of their son.
The third and fourth issues are thus moot and academic. UPON THE VIEW OF THIS CASE, THUS, the
judgment appealed from must be, as it hereby is, REVERSED and SET ASIDE and another entered
DISMISSING the complaint a quo. The appellants shall bear their respective costs.
Issues:
1. Whether or not the CA gravely erred in reversing the RTC Decision, (and) in holding that
respondent Intergames was not negligent considering that:
A. Respondent Intergames failed to exercise the diligence of a good father of the family in the
conduct of the marathon in that it did not block off from traffic the marathon route; and
B. Respondent Intergames' preparations for the race, including the number of marshal during the
marathon, were glaringly inadequate to prevent the happening of the injury to its participants.
2. Whether or not the CA gravely erred in reversing the RTC Decision, (and) in holding that the
doctrine of assumption of risk finds application to the case at bar even though getting hit or run over
by a vehicle is not an inherent risk in a marathon race. Even assuming arguendo that deceased
Abrogar made such waiver as claimed, still there can be no valid waiver of one's right to life and limb
for being against public policy.
3. Whether or not the CA gravely erred in reversing the RTC Decision (and) in absolving respondent
Cosmos from liability to petitioners on the sole ground that respondent Cosmos' contract with
respondent Intergames contained a stipulation exempting the former from liability.
4. Whether or not the CA gravely erred in reversing the RTC Decision and consequently holding
respondents free from liability, (and) in not awarding petitioners with actual, moral and exemplary
damages for the death of their child, Rommel Abrogar.
Held:
1. Yes. Negligence is the failure to observe for the protection of the interests of another person that
degree of care, precaution, and vigilance which the circumstances justly demand, whereby such
other person suffers injury. Under Article 1173 of the Civil Code, it consists of the "omission of that
diligence which is required by the nature of the obligation and corresponds with the circumstances of
the person, of the time and of the place. The Civil Code makes liability for negligence clear under
Article 2176, and Article 20.
2. Yes. The doctrine of assumption of risk means that one who voluntarily exposes himself to an
obvious, known and appreciated danger assumes the risk of injury that may result therefrom. It rests
on the fact that the person injured has consented to relieve the defendant of an obligation of
conduct toward him and to take his chance of injury from a known risk, and whether the former has
exercised proper caution or not is immaterial. In other words, it is based on voluntary consent,
express or implied, to accept danger of a known and appreciated risk; it may sometimes include
acceptance of risk arising from the defendant's negligence, but one does not ordinarily assume risk of
any negligence which he does not know and appreciate. As a defense in negligence cases, therefore,
the doctrine requires the concurrence of three elements, namely; the plaintiff must know that the
risk is present;he must further understand its nature; and his choice to incur it must be free and
voluntary. Neither was the waiver by Rommel, then a minor, an effective form of express or implied
consent in the context of the doctrine of assumption of risk. There is ample authority, cited in
Prosser, to the effect that a person does not comprehend the risk involved in a known situation
because of his youth, or lack of information or experience, and thus will not be taken to consent to
assume the risk. Clearly, the doctrine of assumption of risk does not apply to bar recovery by the
petitioners.
3. No. The sponsorship of the marathon by Cosmos was limited to financing the race. Cosmos did
nothing beyond that, and did not involve itself at all in the preparations for the actual conduct of the
race. This verity was expressly confirmed by Intergames, through Castro, Jr.
4. Yes. Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are
the natural and probable consequences of the act or omission complained of. It is not necessary that
such damages have been foreseen or could have reasonably been foreseen by the defendant.

MONARCH INSURANCE CO., INC vs. COURT OF APPEALS and ABOITIZ SHIPPING CORPORATION
G.R. No. 92735. June 8, 2000
FACTS:
Monarch and Tabacalera are insurance carriers of lost cargoes. They indemnified the shippers and
were consequently subrogated to their rights, interests and actions against Aboitiz, the cargo carrier.
Because Aboitiz refused to compensate Monarch, it filed two complaints against Aboitiz which were
consolidated and jointly tried.
Aboitiz rejected responsibility for the claims on the ground that the sinking of its cargo vessel was
due to force majeure or an act of God. Aboitiz was subsequently declared as in default and allowed
Monarch and Tabacalera to present evidence ex-parte.
ISSUE:
Whether or not the doctrine of limited liability applies in the instant case.
HELD:
Yes.
The failure of Aboitiz to present sufficient evidence to exculpate itself from fault and/or negligence in
the sinking of its vessel in the face of the foregoing expert testimony constrains us to hold that
Aboitiz was concurrently at fault and/or negligent with the ship captain and crew of the M/V P.
Aboitiz. [This is in accordance with the rule that in cases involving the limited liability of shipowners,
the initial burden of proof of negligence or unseaworthiness rests on the claimants. However, once
the vessel owner or any party asserts the right to limit its liability, the burden of proof as to lack of
privity or knowledge on its part with respect to the matter of negligence or unseaworthiness is
shifted to it. This burden, Aboitiz had unfortunately failed to discharge.] That Aboitiz failed to
discharge the burden of proving that the unseaworthiness of its vessel was not due to its fault and/or
negligence should not however mean that the limited liability rule will not be applied to the present
cases. The peculiar circumstances here demand that there should be no strict adherence to
procedural rules on evidence lest the just claims of shippers/insurers be frustrated. The rule on
limited liability should be applied in accordance with the latest ruling in Aboitiz Shipping Corporation
v. General Accident Fire and Life Assurance Corporation, Ltd.,] promulgated on January 21, 1993, that
claimants be treated as "creditors in an insolvent corporation whose assets are not enough to satisfy
the totality of claims against it."
PAN AMERICAN AIRWAYS INC V. JOSE K. RAPADAS, G.R. NO 60673 (1992)
FACTS:
Private respondent Jose Rapadas purchased a plane ticket from Pan American Airways bound for
Manila from Guam.
1. On January 16, 1975, while Rapadas was waiting to check in at the Guam Airport, he was
ordered by Pan American’s hand carry control agent to check-in his Samsonite attaché case. Rapadas
protested; arguing that other co-passengers were allowed to hand carry bulkier baggage
2. As such, he went to the end of line hoping that he would not have to register his luggage.
However, the same man in charge of hand carry control ordered him to register his bag
3. Fearing that he would miss his flight, he agreed to check it in. He then gave his bag to his
brother who happened to be around and who checked it in for him, without declaring its contents or
the value thereof
4. Upon arrival in Manila, Rapadas claimed and was given all his checked-in luggage without the
exception of the Samsonite attaché case. As such, Rapadas filed a claim with petitioner’s Manila
Baggage Service. However, Pan American was unable to locate the lost bag.
5. As such, Pan Am Airways offered to settle the lost for $160 representing the airline’s limit of
liability for loss or damage to a passenger’s personal property under the contract of carriage between
Rapadas and Pan Am.
6. Rapadas refused and filed an action for damages against Pan Am. He alleged that Pan Am
singled him out in ordering his luggage to be checked in and that the airlines neglected in its duty in
handling and safekeeping his luggage. He alleged that the value of the lost bag and its contents was
$42,403.90, the loss resulted in his failure to pay certain monetary obligations, failure to remit money
sent through him to relatives, inability to enjoy the fruits of his retirement and vacation pay earned
from working in Tonga Construction Co
7. In its answer, Pan Am acknowledged responsibility for the loss of the suitcase but asserted that
the claim was subject to the notice of baggage liability limitations printed at the back of the plane
ticket and posted in its offices
8. The trial court held in favor of Rapadas, rejecting Pan Am’s claim that its liability under the
passenger ticket is only up to $160. CA affirmed the same
ISSUE:
WON a passenger is bound by the terms of a passenger ticket declaring the limitations of liability set
forth in the Warsaw Convention
HELD:
Yes. The Convention governs the availment of the liability limitations where the baggage check is
combined with or incorporated in the passenger ticket which complies with the provisions of Article
3, par. 1(c). (Article 4, par. 2) In the case at bar, the baggage check is combined with the passenger
ticket in one document of carriage.

The provisions in the plane ticket sufficient to govern the limitations of liabilities of the airline for loss
of luggage. The passenger, upon contracting with the airline and receiving the plane ticket, was
expected to be vigilant insofar as his luggage is concerned. If the passenger fails to adduce evidence
to overcome the stipulations, he cannot avoid the application of the liability limitations.
The facts show that the private respondent actually refused to register the attaché case and chose to
take it with him despite having been ordered by the PAN AM agent to check it in. In attempting to
avoid registering the luggage by going back to the line, private respondent manifested a disregard of
airline rules on allowable hand-carried baggage. Prudence of a reasonably careful person also
dictates that cash and jewelry should be removed from checked-in-luggage and placed in one's
pockets or in a hand-carried Manila-paper or plastic envelope.
The alleged lack of enough time for him to make a declaration of a higher value and to pay the
corresponding supplementary charges cannot justify his failure to comply with the requirement that
will exclude the application of limited liability. Had he not wavered in his decision to register his
luggage, he could have had enough time to disclose the true worth of the articles in it and to pay the
extra charges or remove them from the checked-in-luggage. Moreover, an airplane will not depart
meantime that its own employee is asking a passenger to comply with a safety regulation.

Passengers are also allowed one hand-carried bag each provided it conforms to certain prescribed
dimensions. If Mr. Rapadas was not allowed to hand-carry the lost attaché case, it can only mean that
he was carrying more than the allowable weight for all his luggage or more than the allowable
number of hand-carried items or more than the prescribed dimensions for the bag or valise. The
evidence on any arbitrary behavior of a Pan Am employee or inexcusable negligence on the part of
the carrier is not clear from the petition. Absent such proof, we cannot hold the carrier liable because
of arbitrariness, discrimination, or mistreatment.
It does not mean, however, that passengers are always bound to the stipulated amounts printed on a
ticket, found in a contract of adhesion, or printed elsewhere but referred to in handouts or forms.
The reasons behind stipulations on liability limitations arise from the difficulty, if not impossibility, of
establishing with a clear preponderance of evidence the contents of a lost valise or suitcase. Unless
the contents are declared, it will always be the word of a passenger against that of the airline. If the
loss of life or property is caused by the gross negligence or arbitrary acts of the airline or the contents
of the lost luggage are proved by satisfactory evidence other than the self-serving declarations of one
party, the Court will not hesitate to disregard the fine print in a contract of adhesion. Otherwise, the
Court is constrained to rule on the basis of the provisions of the contract.

1. COMMERCIAL LAW; COMMON CARRIER; WARSAW CONVENTION; INTERNATIONAL CARRIAGE;

DEFINED. — The Warsaw Convention, as amended, specifically provides that it is applicable to
international carriage which it defines in Article 1, par. 2 as follows: "(2) For the purposes of this
Convention, the expression 'international carriage' means any carriage in which, according to the
agreement between the parties, the place of departure and the place of destination, whether or not
there be a breach in the carriage or a transhipment, are situated either within the territories of two
High Contracting Parties or within the territory of a single High Contracting Party if there is an agreed
stopping place within the territory of another State, even if that State is not a High Contracting Party.
Carriage between two points within the territory of a single High Contracting Party without an agreed
stopping place within the territory of another State is not international carriage for the purposes of
this Convention." ("High Contracting Party" refers to a state which has ratified or adhered to the
Convention, or which has not effectively denounced the Convention [Article 40A(1)]).
2. ID.; ID.; ID.; ID.; PLANE TICKETS; BEING A CONTRACT OF ADHESION THOUGH NOT ENTIRELY
PROHIBITED; BLIND RELIANCE THEREON, NOT ENCOURAGED. — The Convention governs the
availment of the liability limitations where the baggage check is combined with or incorporated in the
passenger ticket which complies with the provisions of Article 3, Par. 1 (c). (Article 4, Par. 2) In the
case at bar, the baggage check is combined with the passenger ticket in one document of carriage.
We have held in the case of Ong Yiu v. Court of Appeals, supra, and reiterated in a similar case where
herein petitioner was also sued for damages, Pan American World Airways v. Intermediate Appellate
Court (164 SCRA 268 [1988]) that: "It (plane ticket) is what is known as a contract of 'adhesion', in
regards which it has been said that contracts of adhesion wherein one party imposes a ready made
form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely
prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres,
he gives his consent. (Tolentino, Civil Code, Vol. IV, 1962 ed., p. 462, citing Mr. Justice J.B.L. Reyes,
Lawyer's Journal, January 31, 1951, p. 49) And as held in Randolph v. American Airlines, 103 Ohio
App. 172, 144 N.E. 2d 878; Rosenchein v. Trans World Airlines, Inc., 349 S.W. 2d 483, 'a contract
limiting liability upon an agreed valuation does not offend against the policy of the law forbidding
one from contracting against his own negligence.' "Considering, therefore, that petitioner had failed
to declare a higher value for his baggage, he cannot be permitted a recovery in excess of P100.00 . . ."
(91 SCRA 223 at page 231)" We hasten to add that while contracts of adhesion are not entirely
prohibited, neither is a blind reliance on them encouraged. In the face of facts and circumstances
showing they should be ignored because of their basically one sided nature, the Court does not
hesitate to rule out blind adherence to their terms. (See Sweet Lines, Inc. v. Teves, 83 SCRA 361, 368-
369 [1978])
3. ID.; ID.; ID.; ID.; ID.; RECEIPT THEREOF BY PASSENGER WILL BIND HIM FROM STIPULATIONS
THEREIN; CASE AT BAR. — The arguments of the petitioner do not belie the fact that it was indeed
accountable for the loss of the attaché case. What the petitioner is concerned about is whether or
not the notice, which it did not fail to state in the plane ticket and which it deemed to have been read
and accepted by the private respondent will be considered by this Court as adequate under the
circumstances of this case. As earlier stated, the Court finds the provisions in the plane ticket
sufficient to govern the limitations of liabilities of the airline for loss of luggage. The passenger, upon
contracting with the airline and receiving the plane ticket, was expected to be vigilant insofar as his
luggage is concerned. If the passenger fails to adduce evidence to overcome the stipulations, he
cannot avoid the application of the liability limitations.
4. ID.; ID.; ID.; ID.; ID.; STIPULATION ON LIABILITY LIMITATION; APPLICATION. — We are not by any
means suggesting that passengers are always bound to the stipulated amounts printed on a ticket,
found in a contract of adhesion, or printed elsewhere but referred to in handouts or forms. We
simply recognize that the reasons behind stipulations on liability limitations arise from the difficulty,
if not impossibility, of establishing with a clear preponderance of evidence the contents of a lost
valise or suitcase. Unless the contents are declared, it will always be the word of a passenger against
that of the airline. If the loss of life or property is caused by the gross negligence or arbitrary acts of
the airline or the contents of the lost luggage are proved by satisfactory evidence other than the self-
serving declarations of one party, the Court will not hesitate to disregard the fine print in a contract
of adhesion. (See Sweet Lines Inc. v. Teves, supra) Otherwise, we are constrained to rule that we
have to enforce the contract as it is the only reasonable basis to arrive at a just award.
5. ID.; ID.; ID. ; ID.; LIABILITY ON LOST UNCHECKED LUGGAGE; RULE; CASE AT BAR. — The attaché
case was originally handcarried does not beg the conclusion that the amount of $4,750.00 in cash
could have been placed inside. It may be noted that out of a claim for US$42,403.90 as the amount
lost, the trial court found for only US$5,228.90 and 100 paengs. The court had doubts as to the total
claim. The lost luggage was declared as weighing around 18 pounds or approximately 8 kilograms.
At $20.00 per kilogram, the petitioner offered to pay $160.00 as a higher value was not declared in
advance and additional charges were not paid. We note, however, that an amount of $400.00 per
passenger is allowed for unchecked luggage. Since the checking-in was against the will of the
respondent, we treat the lost bag as partaking of involuntarily and hurriedly checked-in luggage and
continuing its earlier status as unchecked luggage. The fair liability under the petitioner's own
printed terms is $400.00. Since the trial court ruled out discriminatory acts or bad faith on the part of
Pan Am or other reasons warranting damages, there is no factual basis for the grant of P20,000.00
damages.
6. ID.; ID.; ID.; AWARD OF ATTORNEY'S FEES; NOT PRECLUDED THEREFROM. — As to the question
of whether or not private respondent should be paid attorney's fees, the Court sustains the finding of
the trial court and the respondent appellate court that it is just and equitable for the private
respondent to recover expenses for litigation in the amount of P5,000.00. Article 22(4) of the
Warsaw Convention, as amended does not preclude an award of attorney's fees. That provision
states that the limits of liability prescribed in the instrument "shall not prevent the court from
awarding, in accordance with its own law, in addition, the whole or part of the court costs and other
expenses of litigation incurred by the plaintiff." We, however, raise the award to P10,000.00
considering the resort to the Court of Appeals and this Court.
7. ID.; ID.; CANNOT BE HELD LIABLE IN THE ABSENCE OF ARBITRARINESS, DISCRIMINATION OR
MISTREATMENT ON THE PART OF ITS PERSONNEL. — Passengers are also allowed one handcarried
bag each provided it conforms to certain prescribed dimensions. If Mr. Rapadas was not allowed to
handcarry the lost attaché case, it can only mean that he was carrying more than the allowable
weight for all his luggages or more than the allowable number of handcarried items or more than the
prescribed dimensions for the bag or valise. The evidence on any arbitrary behavior of a Pan Am
employee or inexcusable negligence on the part of the carrier is not clear from the petition. Absent
such proof, we cannot hold the carrier liable because of arbitrariness, discrimination, or
mistreatment.
G.R. No. 168433, February 10, 2009
UCPB General Insurance Co., Inc. vs Aboitiz Shipping Corp.
Facts:
On June 1991, 3 units of waste water treatment plant with accessories were purchased by San Miguel
Corp from Super Max Engineering. The goods came from Charleston, USA and arrived in port of
Manila on board MV Scandutch Star. From Manila it was transported to Cebu on board of Aboitiz
Supercon II. In Cebu, with clearance from the Bureau of Customs, the goods were delivered and
received by San Miguel at its plant site. It was then discovered that the motor of the unit was
damaged.
Pursuant to the insurance agreement, UCPB General Insurance paid San Miguel P1,703,381.40
representing the value of the damaged unit. In turn, San Miguel executed a subrogation form in favor
of UCPB. Then, UCPB filed a complaint on Kuly 1992 as subrogee of San Miguel seeking to recover
from Aboitiz. Aboitiz moved to admit East Asiatic Co. as general agent of DAMCO Intermodal System.
RTC held Aboitiz, East Asiatic and DAMCO solidarily liable.
CA reversed the decision of the RTC and ruled that UCPBs right of action did not accrue because
UCPB failed to file a formal notice within 24 hours from the damaged. In a memorandum, UCPB
asserts that the claim requirement does not apply to cases concerning damages to the merchandise
had already been known to the carrier. UCPB revealed that the damage to the cargo was found upon
discharge from the foreign carrier witnessed by the carrier’s representative who signed the request
for bad order survey and the turnover of bad order cargoes. This knowledge, UCPB argues, dispenses
with the need to give the carrier a formal notice of claim. Incidentally, the carrier’s representative
mentioned by UCPB as present at the time the merchandise was unloaded was in fact a
representative of respondent Eagle Express Lines (Eagle Express). UCPB further claims that the issue
of the applicability of Art. 366 of the Code of Commerce was never raised before the trial court and
should, therefore, not have been considered by the CA.
Eagle Express, in its Memorandum dated February 7, 2007, asserts that it cannot be held liable for
the damage to the merchandise as it acted merely as a freight forwarders agent in the transaction. It
allegedly facilitated the transhipment of the cargo from Manila to Cebu but represented the interest
of the cargo owner, and not the carriers.
Aboitiz, on the other hand, points out, in its Memorandum dated March 29, 2007, that it obviously
cannot be held liable for the damage to the cargo which, by UCPBs admission, was incurred not
during transhipment to Cebu on board one of Aboitizs vessels, but was already existent at the time of
unloading in Manila. Aboitiz also argues that Art. 366 of the Code of Commerce is applicable and
serves as a condition precedent to the accrual of UCPBs cause of action against it.
Issue:
Whether any of the remaining parties may still be held liable by UCPB.
Ruling:
UCPB obviously made a gross misrepresentation to the Court when it claimed that the issue
regarding the applicability of the Code of Commerce, particularly the 24-hour formal claim rule, was
not raised as an issue before the trial court. The appellate court, therefore, correctly looked into the
validity of the arguments raised by Eagle Express, Aboitiz and Pimentel Customs on this point after
the trial court had so ill-advisedly centered its decision merely on the matter of extraordinary
diligence.
Interestingly enough, UCPB itself has revealed that when the shipment was discharged and opened at
the ICTSI in Manila in the presence of an Eagle Express representative, the cargo had already been
found damaged. In fact, a request for bad order survey was then made and a turnover survey of bad
order cargoes was issued, pursuant to the procedure in the discharge of bad order cargo. The
shipment was then repacked and transhipped from Manila to Cebu on board MV Aboitiz Supercon II.
When the cargo was finally received by SMC at its Mandaue City warehouse, it was found in bad
order, thereby confirming the damage already uncovered in Manila.
We have construed the 24-hour claim requirement as a condition precedent to the accrual of a right
of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege
and prove the fulfilment of the condition. Otherwise, no right of action against the carrier can accrue
in favor of the former.
The shipment in this case was received by SMC on August 2, 1991. However, as found by the Court of
Appeals, the claims were dated October 30, 1991, more than three (3) months from receipt of the
shipment and, at that, even after the extent of the loss had already been determined by SMCs
surveyor. The claim was, therefore, clearly filed beyond the 24-hour time frame prescribed by Art.
366 of the Code of Commerce.
Petition was denied. CA's decision was affirmed.
Augusto Santos III vs Northwest Orient Airlines
210 SCRA 256
Augusto Benedicto Santos III is a minor represented by his dad. In October 1986, he bought a round
trip ticket from Northwest Orient Airlines (NOA) in San Francisco. His flight would be from San
Francisco to Manila via Tokyo and back to San Francisco. His scheduled flight was in December. A day
before his departure he checked with NOA and NOA said he made no reservation and that he bought
no ticket. The next year, due to the incident, he sued NOA for damages. He sued NOA in Manila. NOA
argued that Philippine courts have no jurisdiction over the matter pursuant to Article 28(1) of the
Warsaw Convention, which provides that complaints against international carriers can only be
instituted in:
1. the court of the domicile of the carrier (NOA’s domicile is in the USA);
2. the court of its principal place of business (which is San Francisco, USA);
3. the court where it has a place of business through which the contract had been made (ticket was
purchased in San Francisco so that’s where the contract was made);
4. the court of the place of destination (Santos bought a round trip ticket which final destination is
San Francisco).
The lower court ruled in favor of NOA. Santos III averred that Philippine courts have jurisdiction over
the case and he questioned the constitutionality of Article 28 (1) of the Warsaw Convention.
ISSUE:
Whether or not Philippine courts have jurisdiction over the matter to conduct judicial review.
HELD:
No. The Supreme Court ruled that they cannot rule over the matter for the SC is bound by the
provisions of the Warsaw Convention which was ratified by the Senate. Until & unless there would be
amendment to the Warsaw Convention, the only remedy for Santos III is to sue in any of the place
indicated in the Convention such as in San Francisco, USA.
The SC cannot rule upon the constitutionality of Article 28(1) of the Warsaw Convention. In the first
place, it is a treaty which was a joint act by the legislative and the executive. The presumption is that
it was first carefully studied and determined to be constitutional before it was adopted and given the
force of law in this country. In this case, Santos was not able to offer any compelling argument to
overcome the presumption.
 (1) Carriage of Goods
1) Saludo v. Court of Appeals
PARTIES:
Pomierski and Son Funeral Home of Chicago – Shipper
C.M.A.S. (Continental Mortuary Air Services) – Shipper’s Agent
Maria Salvacion Saludo – Consignee
Trans World Airlines – Carrier
Philippine Airlines – Carrier
Air Care International – PAL’s Agent
SUMMARY OF FACTS:
On Oct. 26, 1976 the cargo containing the casketed remains of Crispina Saludo was booked for PAL
Flight Number PR-107 leaving San Francisco for Manila on Oct. 27, PAL Airway Bill No. 079-01180454
was issued, not as evidence of receipt of delivery of the cargo on Oct. 26, but merely as a
confirmation of the booking thus made for the San Francisco-Manila flight scheduled on Oct. 27. It
was not until October 28, 1976 that PAL received physical delivery of the body at San Francisco, as
duly evidenced by the Interline Freight Transfer Manifest of the American Airline Freight System and
signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.
FACTS:
After the death of Crispina Galdo Saludo, mother of Aniceto G. Saludo, Jr., Maria Salvacion Saludo,
Leopoldo G. Saludo and Saturnino G. Saludo, in Chicago Illinois, Pomierski and Son Funeral Home of
Chicago, made the necessary preparations and arrangements for the shipment, of the remains from
Chicago to the Philippines. The funeral home had the remains embalmed and secured a permit for
the disposition of dead human body, Philippine Vice Consul in Chicago, Illinois, Bienvenido M.
Llaneta, at the Pomierski & Son Funeral Home, sealed the shipping case containing a hermetically
sealed casket that is airtight and waterproof wherein was contained the remains of Crispina Saludo
Galdo. Pomierski brought the remains to C.M.A.S. (Continental Mortuary Air Services) at the Chicago
airport which made the necessary arrangements such as flights, transfers, etc.; C.M.A.S. is a national
service used by undertakers to throughout the US, they furnish the air pouch which the casket is
enclosed in, and they see that the remains are taken to the proper air freight terminal. C.M.A.S.
booked the shipment with PAL thru the carrier's agent Air Care International, with Pomierski F.H. as
the shipper and Maria Saludo as the consignee. PAL Airway Bill No. 079-01180454 Ordinary was
issued wherein the requested routing was (1) from Chicago to San Francisco on board TWA (Trans
World Airlines) Flight 131 of October 27, 1976 and (2) from San Francisco to Manila on board PAL
Flight No. 107 of the same date, and (3) from Manila to Cebu on board PAL Flight 149 of October 29,
1976.
In the meantime, Maria Salvacion Saludo and Saturnino Saludo, thru a travel agent, were booked
with United Airlines from Chicago to California, and with PAL from California to Manila. But they
changed reservations to TWA after learning from the director of Pomierski FH and confirming by
phone that their mother’s remains should be on that TWA flight. In the airport they saw no body
from the lookout area and was informed when they went to the TWA counter that none was on that
flight. Reluctantly, they took the TWA flight upon assurance of her cousin, Ani Bantug, that he would
look into the matter and inform her about it on the plane or have it radioed to her. But no
confirmation from her cousin reached her that her mother was on the West Coast.
Upon arrival at San Francisco, Maria inquired to the TWA counter, who was still unaware of her
mother’s remains. She informed Pomierski, who immediately called C.M.A.S. It turned out that the
casketed human remains that was issued the PAL Airway Bill was not the remains of Crispina Saludo,
the casket containing her remains was on a plane to Mexico City, there being two bodies at the
terminal, which were somehow switched. Later, C.M.A.S. called saying that they were sending the
remains back to California via Texas. The following day October 28, the shipment or remains of
Crispina Saludo arrived in San Francisco from Mexico on board American Airlines and was transferred
to and/or received by PAL. The shipment was immediately loaded on PAL flight for Manila that same
evening and arrived in Manila on October 30, a day after its expected arrival on October 29.
Petitioners’ counsel informed TWA of the misshipment and eventual delay in the delivery of the
cargo containing the remains of the late Crispin Saludo, and of the discourtesy of its employees to
petitioners Maria Salvacion Saludo and Saturnino Saludo. In a separate letter, addressed to PAL,
petitioners stated that they were holding PAL liable for said delay in delivery and would commence
judicial action should no favorable explanation be given. Both denied liability.
TRIAL COURT AND CA RULING: As earlier stated, the court below absolved the two respondent
airlines companies of liability. The Court of Appeals affirmed the decision of the lower court in toto,
and in a subsequent resolution, denied herein petitioners' motion for reconsideration for lack of
merit.
ISSUE:
Can respondent airline companies be held liable for the delay in the delivery of the casketed remains
of petitioners' mother?
HELD:
NO. The jurisprudential dictum, both under American and Philippine law, that "(t)he issuance of a bill
of lading carries the presumption that the goods were delivered to the carrier issuing the bill, for
immediate shipment, and it is nowhere questioned that a bill of lading is prima facie evidence of the
receipt of the goods by the carrier. . . . In the absence of convincing testimony establishing mistake,
recitals in the bill of lading showing that the carrier received the goods for shipment on a specified
date control.”
A bill of lading is a written acknowledgment of the receipt of the goods and an agreement to
transport and deliver them at a specified place to a person named or on his order. Such instrument
may be called a shipping receipt, forwarder's receipt and receipt for transportation. The designation,
however, is immaterial. It has been hold that freight tickets for bus companies as well as receipts for
cargo transported by all forms of transportation, whether by sea or land, fall within the definition.
Under the Tariff and Customs Code, a bill of lading includes airway bills of lading. The two-fold
character of a bill of lading: (1) it is a receipt as to the quantity and description of the goods shipped
and (2) a contract to transport the goods to the consignee or other person therein designated, on the
terms specified in such instrument.
Ordinarily, a receipt is not essential to a complete delivery of goods to the carrier for transportation
but, when issued, is competent and prima facie, but not conclusive, evidence of delivery to the
carrier. Except as modified by statute, it is a general rule as to the parties to a contract of carriage of
goods in connection with which a bill of lading is issued reciting that goods have been received for
transportation, that the recital being in essence a receipt alone, is not conclusive, but may be
explained, varied or contradicted by parol or other evidence.
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the
common carrier begins from the time the goods are delivered to the carrier. This responsibility
remains in full force and effect even when they are temporarily unloaded or stored in transit, unless
the shipper or owner exercises the right of stoppage in transitu, and terminates only after the lapse
of a reasonable time for the acceptance, of the goods by the consignee or such other person entitled
to receive them. And, there is delivery to the carrier when the goods are ready for and have been
placed in the exclusive possession, custody and control of the carrier for the purpose of their
immediate transportation and the carrier has accepted them. Where the carrier has thus accepted
such a delivery, the liability of the common carrier commences eo instanti. Hence, while
extraordinary diligence statutorily required to be observed by the carrier instantaneously
commences upon delivery of the goods thereto, for such duty to commence there must in fact have
been delivery of the cargo subject of the contract of carriage. Only when such fact of delivery has
been unequivocally established can the liability for loss, destruction or deterioration of goods in the
custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of
fault of the carrier under Article 1735 be invoked.
The facts in the case at bar belie the averment that there was delivery of the cargo to the carrier on
October 26, 1976. Rather, the body intended to be shipped, as agreed upon was really placed in the
possession and control of PAL on October 28, and it was from that date that private respondents
became responsible for the agreed cargo under their undertakings in PAL Airway Bill No. 079-
01180454. Consequently, for the switching of caskets prior thereto which was not caused by them,
and subsequent events caused thereby, private respondents cannot be held liable.
It should be noted that, Pomierski F.H., the shipper of Mrs. Saludo's remains, hired C.M.A.S. made all
the necessary arrangements such as flights, transfers, etc. — for shipment of the remains of Crispina
Saludo. Consequently, when the cargo was received from C.M.A.S. at the Chicago airport terminal for
shipment, which was supposed to contain the remains of Crispina Saludo, Air Care International
and/or TWA, had no way of determining its actual contents, since the casket was hermetically sealed
and in an air pouch, to the effect that they had to rely on the information furnished by the shipper
regarding the cargo's content. Neither could open the casket for further verification, since they were
not only without authority to do so, but even prohibited. Thus, no fault and/or negligence can be
attributed to PAL (even if Air Care International should be considered as an agent of PAL) and/or
TWA, the entire fault or negligence being exclusively with C.M.A.S., which had the cargo when the
switching occurred. But with its aforestated functions, C.M.A.S. may accordingly be classified as a
forwarder, which, by accepted commercial practice, is regarded as an agent of the shipper and not of
the carrier. As such, it merely contracts for the transportation of goods by carriers, and has no
interest in the freight but receives compensation from the shipper as his agent. The Court is
therefore, neither prepared to delve into, much less definitively rule on, the possible liability of
C.M.A.S.
Nonetheless, the facts show that petitioners' right to be treated with due courtesy in accordance
with the degree of diligence required by law to be exercised by every common carrier was violated by
TWA and this entitles them, at least, to nominal damages of P40,000.00 from TWA alone.
Transportation Case Digest: Everett Streamship Corp. V. CA (1998)
G.R. No. 122494 October 8, 1998
Lessons Applicable: Contracting Parties (Transportation)
FACTS:
Hernandez Trading Co., Inc. (Hernandez) imported 3 crates of bus spare parts (MARCO C/No. 12,
MARCO C/No. 13 and MARCO C/No. 14), from Maruman Trading Company, Ltd. (Maruman), a
foreign corporation based in Japan.
The crates (covered by Bill of Lading No. NGO53MN) were shipped on board “ADELFAEVERETTE,” a
vessel owned by Everett Orient Lines
Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was
missing
Hernandez made a formal claim for Y1,552,500.00, as shown in an Invoice No. MTM-941, dated
November 14, 1991
Everett Streamship Corp. offered to pay only Y100,000.00 the maximum amount stipulated under
Clause 18 of the covering bill of lading
Hernandez rejected the offer and thereafter instituted a suit for collection
Trial Court: in favor of Hernandez
CA: Affirmed but deleted the award of attorney’s fees
ISSUE:
W/N the limited liability clause in the Bill of Lading is valid
W/N Hernandez as consignee, who is not a signatory to the bill of lading is bound by the stipulations
thereof
HELD:
1. YES.
A stipulation in the bill of lading limiting the common carrier’s liability for loss or destruction of a
cargo to a certain sum, unless the shipper or owner declares a greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the Civil Code which provide:
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 freely and fairly agreed upon.
Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher
than the limited liability of the carrier. Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with the stipulations.
The trial court’s ratiocination that private respondent could not have “fairly and freely” agreed to the
limited liability clause in the bill of lading because the said conditions were printed in small letters
does not make the bill of lading invalid.
contracts of adhesion are valid and binding
Greater vigilance, however, is required of the courts when dealing with contracts of adhesion in that
the said contracts must be carefully scrutinized “in order to shield the unwary (or weaker party) from
deceptive schemes contained in ready-made covenant
Article 24 of the Civil Code which mandates that “(i)n all contractual, property or other relations,
when one of the parties is at a disadvantage on account of his moral dependence, ignorance,
indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his
protection
Maruman Trading, we assume, has been extensively engaged in the trading business. It can not be
said to be ignorant of the business transactions it entered into involving the shipment of its goods to
its customers. The shipper could not have known, or should know the stipulations in the bill of lading
and there it should have declared a higher valuation of the goods shipped. Moreover, Maruman
Trading has not been heard to complain that it has been deceived or rushed into agreeing to ship the
cargo in petitioner’s vessel. In fact, it was not even impleaded in this case.
2. YES.
the right of a party in the same situation as Hernandez, to recover for loss of a shipment consigned to
him under a bill of lading drawn up only by and between the shipper and the carrier, springs from
either a relation of agency that may exist between him and the shipper or consignor, or his status as
stranger in whose favor some stipulation is made in said contract, and who becomes a party thereto
when he demands fulfillment of that stipulation, in this case the delivery of the goods or cargo
shipped
When Hernandez formally claimed reimbursement for the missing goods from Everett and
subsequently filed a case against the it based on the very same bill of lading, it accepted the
provisions of the contract and thereby made itself a party thereto, or at least has come to court to
enforce it.
The commercial Invoice No. MTM-941 does not in itself sufficiently and convincingly show that
Everett has knowledge of the value of the cargo as contended by Hernandez
MACAM vs. COURT OF APPEALS GR No. 125524; August 25, 1999
Facts:
Benito Macam, doing business under name Ben-Mac Enterprises, shipped on board vessel Nen-Jiang,
owned and operated by respondent China Ocean Shipping Co. through local agent Wallem
Philippines Shipping Inc., 3,500 boxes of watermelon covered by Bill of Lading No. HKG 99012, and
1,611 boxes of fresh mangoes covered by Bill of Lading No. HKG 99013. The shipment was bound for
Hongkong with PAKISTAN BANK as consignee and Great Prospect Company of Rowloon (GPC) as
notify party.
Upon arrival in Hongkong, shipment was delivered by respondent WALLEM directly to GPC, not to
PAKISTAN BANK and without the required bill of lading having been surrendered. Subsequently, GPC
failed to pay PAKISTAN BANK, such that the latter, still in possession of original bill of lading, refused
to pay petitioner thru SOLIDBANK. Since SOLIDBANK already pre-paid the value of shipment, it
demanded payment from respondent WALLEM but was refused. MACAM constrained to return the
amount paid by SOLIDBANK and demanded payment from WALLEM but to no avail.
WALLEM submitted in evidence a telex dated 5 April 1989 as basis for delivering the cargoes to GPC
without the bills of lading and bank guarantee. The telex instructed delivery of various shipments to
the respective consignees without need of presenting the bill of lading and bank guarantee per the
respective shipper’s request since “for prepaid shipt ofrt charges already fully paid.” MACAM,
however, argued that, assuming there was such an instruction, the consignee referred to was
PAKISTAN BANK and not GPC.
The RTC ruled for MACAM and ordered value of shipment. CA reversed RTC’s decision.
Issue:
Are the respondents liable to the petitioner for releasing the goods to GPC without the bills of lading
or bank guarantee?
Held:
It is a standard maritime practice when immediate delivery is of the essence, for shipper to request
or instruct the carrier to deliver the goods to the buyer upon arrival at the port of destination without
requiring presentation of bill of lading as that usually takes time. Thus, taking into account that
subject shipment consisted of perishable goods and SOLIDBANK pre-paid the full amount of value
thereof, it is not hard to believe the claim of respondent WALLEM that petitioner indeed requested
the release of the goods to GPC without presentation of the bills of lading and bank guarantee.
To implement the said telex instruction, the delivery of the shipment must be to GPC, the notify party
or real importer/buyer of the goods and not the PAKISTANI BANK since the latter can very well
present the original Bills of Lading in its possession. Likewise, if it were the PAKISTANI BANK to whom
the cargoes were to be strictly delivered, it will no longer be proper to require a bank guarantee as a
substitute for the Bill of Lading. To construe otherwise will render meaningless the telex instruction.
After all, the cargoes consist of perishable fresh fruits and immediate delivery thereof the
buyer/importer is essentially a factor to reckon with.
We emphasize that the extraordinary responsibility of the common carriers lasts until actual or
constructive delivery of the cargoes to the consignee or to the person who has a right to receive
them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was the notify
party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner also
referred to GPC as such in his demand letter to respondent WALLEM and in his complaint before the
trial court. This premise draws us to conclude that the delivery of the cargoes to GPC as
buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to
receive them was proper.