[G.R. No. 71238. March 19, 1992.

LUFTHANSA GERMAN AIRLINES, Petitioner, v. INTERMEDIATE APPELLATE COURT and

SPOUSES HENRY H. ALCANTARA and TERESITA ALCANTARA, Respondents.
Guerrero & Torres for Petitioner. Page |
Oscar A. Inocentes & Associates Law Office for Private Respondents.
1
SYLLABUS: WAIVER OF APPLICABILITY THEREOF ON CARRIER’S LIABILITY; WHEN
AVAILABLE; CASE AT BAR. — The respondent court found that petitioner waived the applicability
of the Warsaw Convention to the case at bar when it offered private respondent a higher amount
than that which is provided in the said law and failed to raise timely objections during the trial when
questions and answers were brought out regarding the actual claims and damages sustained by
Alcantara which were even subjected to lengthy cross examination by Lufthansa’s counsel.

-Henry Alcantara shipped the 13 luggage with Lufhansa. The weight is 180 kilograms but he did
not declare the contents. When it arrived in manila, the consignee Teresita Alcantara claimed the
luggage but it was only 12, the one is missing.

-Lufhansa were informed of the missing luggage but the tracing were fruitless.

-Respondents demand the production within 10 days but the petitioner did not comply so a case
was field before CFI of Manila.

-In an answer Lufthansa allege that the Warsaw Convention limits the liability of the carrier to a
sum of 250 francs per kilo ($20.00 per kilo or $9.07 per pound), unless a higher value is declared in
advance and additional charges are paid by the passenger and the conditions of the contract as
set forth in the air waybill expressly subject the contract of carriage of cargo to the Warsaw
Convention. The petitioner also alleged that it never acted fraudulently or in bad faith so as to
entitle respondent spouses to moral damages and attorney’s fees, nor did it act in a wanton,
fraudulent, reckless, oppressive or malevolent manner as to entitle spouses to exemplary
damages.

RTC – in favor of spouses. Granted actual damages of 200K, atty’s fees 20k

IAC – affirmed CFI

ISSUE - whether or not the private respondents are entitled to an award of damages beyond the
liability set forth in the Warsaw Convention and in the Airwaybill of Lading.

RULING in favor of the Spouses Alcantara. The petitioner waived the applicability of the Warsaw
Convention to the case at bar when it offered private respondent a higher amount than that which
is provided in the said law and failed to raise timely objections during the trial when questions and
answers were brought out regarding the actual claims and damages sustained by Alcantara which
were even subjected to lengthy cross examination by Lufthansa’s counsel.

"The Convention does not thus operate as an exclusive enumeration of the instances of an airline’s
liability, or as an absolute limit of the extent of that liability.

The Convention’s provisions, in short, do not `regulate or exclude liability for other breaches of
contract by the carrier’ or misconduct of its officers and employees, or for some particular or
exceptional type of damage. Otherwise, `an air carrier would be exempt from any liability for
damages in the event of its absolute refusal, in bad faith, to comply with a contract of carriage,
which is absurd.’ Nor may it for a moment be supposed that if a member of the aircraft complement
should inflict some physical injury on a passenger, or maliciously destroy or damage the latter’s
property, the Convention might successfully be pleaded as the sole gauge to determine the Page |
carrier’s liability to the passenger. Neither may the Convention be invoked to justify the disregard of
some extraordinary sort of damage resulting to a passenger and preclude recovery therefor 2
beyond the limits set by said Convention. It is in this sense that the Convention has been applied,
or ignored, depending on the peculiar facts presented by each case.

The contract of air carriage generates a relation attended with a public duty. Neglect or
malfeasance of the carrier’s employees could give ground for an action for damages (Zulueta v.
Pan American World Airways, Inc., 43 SCRA 37 [1972]). Common carriers are liable for the
missing goods for failure to comply with its duty (American Insurance Co., Inc. v. Macondray & Co.,
Inc., 39 SCRA 494 [171]).
G.R. Nos. 100374-75 November 27, 1992

RUFINO Y. LUNA, RODOLFO J. ALONSO and PORFIRIO RODRIGUEZ, petitioners, vs.HON.

COURT OF APPEALS, HON. CRISTINA M. ESTRADA in her capacity as Presiding Judge, RTC- Page |
Pasig, Br. 69, Metro Manila, HON. TERESITA D. CAPULONG in her capacity as Presiding Judge, 3
RTC-Valenzuela, Br. 172, Metro Manila, and NORTHWEST AIRLINES, INC., respondents.

- Petitioners Rufino Luna, Rodolfo Alonso and Porfirio Rodriguez boarded Flight 020 of private
respondent Northwest Airlines bound for Seoul, South Korea, to attend the four-day Rotary
International Convention from the 21st to the 24th of May 1992. They checked in one (1) piece of
luggage each. After boarding, however, due to engine trouble, they were asked to disembark and
transfer to a Korean Airlines plane scheduled to depart four (4) hours later. They were assured that
their baggage would be with them in the same flight.

-The luggage were allegedly flown to Seattle, USA. It was retrieved 4 days later but the Convention
were almost over.

-13 days after the recovery, the claim was filed but it was disowned by the respondent on the
ground that that it exerted "its best efforts to carry the passenger and baggage with reasonable
dispatch."

- petitioners Luna and Alonso jointly filed a complaint for breach of contract with damages before
the Regional Trial Court of Pasig, Metro Manila but the complaints were dismissed for lack of
cause of action due to petitioners' failure to state in their respective complaints that they filed a
prior claim with private respondent within the prescribed period.

-Contention of the petitioners:

(a) that respondent appellate court disregarded Our ruling in Alitalia v. CA8 where We said that
"[t]he Convention does not thus operate as an exclusive enumeration of the instances of an
airline's liability, or as an absolute limit of the extent of that liability;"
(b) that "petitions to revoke orders and decisions may be entertained even after the time to
appeal had elapsed, in cases wherein the jurisdiction of the court had been exceeded;" 10 and,
(c) that Art. 26 of the Warsaw Convention which prescribes the reglementary period within which
to file a claim cannot be invoked if damage is caused by the carrier's willful misconduct, as
provided by Art. 25 of the same Warsaw Convention.
-Contention of the respondent - it did not receive any demand letter from petitioners within the 21-
day reglementary period, as provided in par. 7 of the Conditions of Contract appearing in the plane
ticket. Since Art. 26. par. (4), of the Warsaw Convention provides that "[f]ailing complaint within the
times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part," the
carrier consequently cannot be held liable for the delay in the delivery of the baggage. In other
words, non-observance of the prescribed period to file a claim bars claimant's action in court for
recovery.

ISSUE - Whether the application of the Warsaw Convention operates to exclude the application of
the provisions of the New Civil Code and the other statutes.
RULING – No. The Convention merely declares the carrier liable for damages in the enumerated
cases, if the conditions therein specified are present. It does not regulate the liability, much less
exempt, the carrier for violating the rights of others which must simply be respected in accordance
with their contracts of carriage. The application of the Convention must not therefore be construed
to preclude the operation of the Civil Code and other pertinent laws. Page |
it is evident that petitioners suffered some special specie of injury for which they should rightly be 4
compensated. Private respondent cannot be allowed to escape liability by seeking refuge in the
argument that the trial courts' orders have attained finality due to petitioners failure to move for
reconsideration or to file a timely appeal therefrom. Technicalities should be disregarded if only to
render to the respective parties that which is their due. Thus, although We have said that certiorari
cannot be a substitute for a lapsed appeal, We have, time and again, likewise held that where a
rigid application of that rule will result in a manifest failure or miscarriage of justice, the rule may be
relaxed.

Hence, considering the broader and primordial interests of justice, particularly when there is grave
abuse of discretion, thus impelling occasional departure from the general rule that the extraordinary
writ of certiorari cannot substitute for a lost appeal, respondent appellate court may legally
entertain the special civil action for certiorari.
G.R. No. 74811 September 30, 1988
Page |
CHUA YEK HONG, petitioner, vs.INTERMEDIATE APPELLATE COURT, MARIANO GUNO, and
5
DOMINADOR OLIT, respondents.

-Petitioner contracted with the herein private respondent to deliver 1,000 sacks of copra, valued at
P101,227.40, on board the vessel M/V Luzviminda I owned by the latter. However it did not reach
its destination, the vessel capsized and sank with all its cargo.

-Petitioner instituted a complaint against private respondent for breach of contract incurring
damages.

-Private respondent’s defense is that even assuming that the alleged cargo was truly loaded
aboard their vessel, their liability had been extinguished by reason of the total loss of said vessel.

-RTC rendered judgment in favor of Chua Yek Hong however CA reversed the decision by
applying Article 587 of the Code of Commerce and the doctrine in Yangco vs. Lasema (73 Phil.
330 [1941]) and held that private respondents' liability, as ship owners, for the loss of the cargo is
merely co-extensive with their interest in the vessel such that a total loss thereof results in its
extinction.

ISSUE - Whether or not respondent Appellate Court erred in applying the doctrine of limited liability
under Article 587 of the Code of Commerce as expounded in Yangco vs. Laserna, supra.

RULING - If the ship owner or agent may in any way be held civilly liable at all for injury to or death
of passengers arising from the negligence of the captain in cases of collisions or shipwrecks, his
liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in
its extinction. (Yangco vs. Laserna, et al., supra).

The limited liability rule, however, is not without exceptions, namely: (1) where the injury or death to
a passenger is due either to the fault of the ship owner, or to the concurring negligence of the ship
owner and the captain (Manila Steamship Co., Inc. vs. Abdulhaman supra); (2) where the vessel is
insured; and (3) in workmen's compensation claims Abueg vs. San Diego, supra). In this case,
there is nothing in the records to show that the loss of the cargo was due to the fault of the private
respondent as shipowners, or to their concurrent negligence with the captain of the vessel. The
judgment sought to be reviewed is hereby AFFIRMED
 Page |
SECOND DIVISION
6
G.R. No. 92735. June 8, 2000
MONARCH INSURANCE CO., INC., TABACALERA INSURANCE CO., INC and Hon. Judge
AMANTE PURISIMA, Petitioners, v. COURT OF APPEALS and ABOITIZ SHIPPING
CORPORATION, Respondents.
[G.R. No. 94867. June 8, 2000
ALLIED GUARANTEE INSURANCE COMPANY, Petitioner, v. COURT OF APPEALS, Presiding
Judge, RTC Manila, Br. 24 and ABOITIZ SHIPPING CORPORATION, Respondents.
[G.R. No. 95578. June 8, 2000
EQUITABLE INSURANCE CORPORATION, Petitioner, v. COURT OF APPEALS, Former First
Division Composed of Hon. Justices RODOLFO NOCON, PEDRO RAMIREZ, and JESUS
ELBINIAS and ABOITIZ SHIPPING CORPORATION, Respondents.

- 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.

RULING - 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."
 Page |
7
G.R. No. 100446 January 21, 1993

ABOITIZ SHIPPING CORPORATION, petitioner, vs. GENERAL ACCIDENT FIRE AND LIFE
ASSURANCE CORPORATION, LTD., respondent.

Petitioner is a corporation engaged in the business of maritime trade as a carrier who owned and
operated the M/V P/ ABOITIZ, a common carrier that sank on a voyage. Private respondent
General Accident Fire and Life Assurance Corporation, Ltd. (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. Notwithstanding such finding, the trial court found against the carrier
on the basis that the loss was not due to force majeure. The attempted execution of the judgment
award in said case gave rise to this case. Aboitiz contends that the Limited Liability Rule warrants
immediate stay of execution of judgment to prevent impairment of other creditor’s shares.

ISSUE: WON the doctrine of limited liability is applicable to the case?

HELD: YES. The provisions under the Code of Commerce provides that limited liability rule covers
only civil liabilities for injuries to third parties (Art. 587), acts of the captain (Art. 590) and collisions
If these circumstances are attendant then the only time the Limited Liability Rule does not apply is
when there is an actual finding of negligence on the part of the vessel owner or agent. In this case,
there has been no actual finding of negligence on the part of Aboitiz. The cause of the sinking of
the vessel was because of unseaworthiness due to the failure of the crew and the master to
exercise extraordinary diligence. There appears to have been no evidence presented sufficient to
form a conclusion that petitioner shipowner itself was negligent.

PRINCIPLE/S:
1) Real and hypothecary nature of maritime law meaning
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 guaranty for their settlement.
Thus, the liability of the vessel owner and agent arising from the operation of such vessel were
confined to the vessel itself, its equipment, freight, and insurance, if any, which limitation served to
induce capitalists into effectively wagering their resources against the consideration of the large
profits attainable in the trade.

2) Origins of real and hypothecary nature

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. It was designed to offset such adverse
 conditions and to encourage people and entities to venture into maritime commerce despite the
risks and the prohibitive cost of shipbuilding.

3) Rights of a vessel owner or agent under the Limited Liability Rule are akin to those of the rights
of shareholders to limited liability under our corporation law.
Both are privileges granted by statute, and while not absolute, must be swept aside only in the Page |
established existence of the most compelling of reasons 8
4) Rights of parties to claim against an agent or owner of a vessel may be compared to those of
creditors against an insolvent corporation whose assets are not enough to satisfy the totality of
claims against it.
·         Each individual creditor may prove the actual amount of their respective claims but this does not
mean that they shall be allowed to recover fully.
·         The claimants or creditors are limited in their recovery to the remaining value of accessible assets.
o   Insolvent corporation - residual assets of the corporation left over from its operations
o   Lost vessel - insurance proceeds and pending freightage for the particular voyage
·         No claimant can be given precedence over the others by the simple expedience of having filed or
completed its action than the rest.
·         Execution of judgment must be stayed pending completion of all cases occasioned by the subject
sinking.
o   Pro-rated share of each claim can only be found after all the cases shall have been decided.

5) GR: Once a decision becomes final and executory, it is the ministerial duty of the court to order
its execution
Exceptions:
a) Special and exceptional nature where it becomes the imperative in the higher interest of justice
to direct the suspension of its execution (Vecine v. Geronimo, 59 OG 579);
b)  Whenever it is necessary to accomplish the aims of justice (Pascual v Tan, 85 Phil. 164);
c) When certain facts and circumstances transpired after the judgment became final which would
render the execution of the judgment unjust (Cabrias v. Adil, 135 SCRA 354). (at p. 201)
 Page |
9
[G.R. No. 101503. September 15, 1993.]
PLANTERS PRODUCTS, INC., Petitioner, v. COURT OF APPEALS, SORIAMONT STEAMSHIP
AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA, Respondents.
Gonzales, Sinense, Jimenez & Associates for Petitioner.
Siguion Reyna, Montecillo & Ongsiako Law Office for Private Respondents.

 June 16 1974: Mitsubishi International Corporation (Mitsubishi) of New York, U.S.A., 9,329.7069

M/T of Urea 46% fertilizer bought by Planters Products, Inc. (PPI) on aboard the cargo vessel
M/V "Sun Plum" owned by private Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska,
U.S.A., to Poro Point, San Fernando, La Union, Philippines, as evidenced by Bill of Lading 
 May 17 1974: a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform
General Charter was entered into between Mitsubishi as shipper/charterer and KKKK as
shipowner, in Tokyo, Japan
 Before loading the fertilizer aboard the vessel, 4 of her holds were all presumably inspected by
the charterer's representative and found fit
 The hatches remained closed and tightly sealed throughout the entire voyage
 July 3, 1974: PPI unloaded the cargo from the holds into its steelbodied dump trucks which were
parked alongside the berth, using metal scoops attached to the ship, pursuant to the terms and
conditions of the charter-partly 
 hatches remained open throughout the duration of the discharge
 Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it
was transported to the consignee's warehouse located some 50 meters from the wharf
 Midway to the warehouse, the trucks were made to pass through a weighing scale where
they were individually weighed for the purpose of ascertaining the net weight of the cargo. 
 The port area was windy, certain portions of the route to the warehouse were sandy and
the weather was variable, raining occasionally while the discharge was in progress.
 Tarpaulins and GI sheets were placed in-between and alongside the trucks to contain
spillages of the ferilizer
 It took 11 days for PPI to unload the cargo
 Cargo Superintendents Company Inc. (CSCI), private marine and cargo surveyor, was hired by
PPI to determine the "outturn" of the cargo shipped, by taking draft readings of the vessel prior
to and after discharge
 shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating
18 M/T was contaminated with dirt
 Certificate of Shortage/Damaged Cargo prepared by PPI 
 short of 94.839 M/T and about 23 M/T were rendered unfit for commerce,
having been polluted with sand, rust and dirt 
  PPI sent a claim letter 1974 to Soriamont Steamship Agencies (SSA), the resident agent of
the carrier, KKKK, for P245,969.31 representing the cost of the alleged shortage in the goods
shipped and the diminution in value of that portion said to have been contaminated with dirt
 SSA: what they received was just a request for shortlanded certificate and
not a formal claim, and that they "had nothing to do with the discharge of the Page |
shipment 
10
 RTC: failure to destroy the presumption of negligence against them, SSA are liable
 CA: REVERSED - failed to prove the basis of its cause of action
ISSUE: W/N a time charter between a shipowner and a charterer transforms a common carrier into
a private one as to negate the civil law presumption of negligence in case of loss or damage to its
cargo
HELD: NO. petition is DISMISSED
 When PPI chartered the vessel M/V "Sun Plum", the ship captain, its officers and
compliment were under the employ of the shipowner and therefore continued to be
under its direct supervision and control. Hardly then can we charge the charterer, a
stranger to the crew and to the ship, with the duty of caring for his cargo when the
charterer did not have any control of the means in doing so
 carrier has sufficiently overcome, by clear and convincing proof, the prima
facie presumption of negligence. The hatches remained close and tightly sealed while
the ship was in transit as the weight of the steel covers made it impossible for a person
to open without the use of the ship's boom.
 bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or
damage. More so, with a variable weather condition prevalent during its unloading
 This is a risk the shipper or the owner of the goods has to face. Clearly,
KKKK has sufficiently proved the inherent character of the goods which
makes it highly vulnerable to deterioration; as well as the inadequacy of its
packaging which further contributed to the loss. 
 On the other hand, no proof was adduced by the petitioner showing that the
carrier was remise in the exercise of due diligence in order to minimize the
loss or damage to the goods it carried.
 Page |
11

Teodoro R. Yangco, etc vs Manuel Laserna et al

Nos. 47447-47449 October 29, 1941
-At about one o'clock in the afternoon of May 26, 1927, the steamer S. S. Negros, belonging to
petitioner Yangco, left the port of Romblon on its return trip to Manila. Typhoon signal No. 2 was
then up, of which fact the captain was duly advised and his attention thereto called by the
passengers themselves before the vessel set sail. The boat was overloaded as indicated by the
load-line which was 6 to 7 inches below the surface of the water. The vessel carried thirty sacks of
crushed marble and about one hundred sacks of copra and some lumber. The passengers,
numbering about 180, were overcrowded, the vessel's capacity being limited to only 123
passengers.

-After two hours of sailing, the boat encountered strong winds and rough seas. 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 side wise by a big wave which caused it to capsize and sink.
Many of the passengers died in the mishap. The heirs and family members, herein respondents,
instituted in the trial court separate civil actions against petitioner to recover damages for the death
of the passengers
aforementioned.

-trial court awarded indemnity to the heirs of passengers.

- After the rendition of the judgment to this effect,petitioner, by a verified pleading, sought to
abandon the
vessel to the plaintiffs (respondents in the instant case), together with all its equipment’s, without
prejudice to his right to appeal. The abandonment having been denied, an appeal was taken to the
CA, wherein all the judgments were affirmed.
- Petitioner, now deceased, appealed and is here represented his legal representative.

Issue: May the shipowner or agent, not withstanding the total loss of the vessel as a result of the
negligence of its captain, be properly held liable in damages for the consequent death of its
passengers ?

Ruling: NO. The shipowner or agent is not liable.

The Court pronounced that this question is controlled by the provision of Article 587 of
the Code of Commerce. Said article reads:

"The agent shall also be civilly liable for the indemnities in favor of third persons which arise from
the conduct of the captain in the care of the goods which the vessel carried; but he may exempt
himself therefrom by abandoning the vessel with all her equipments and the freight he may have
earned during the voyage."

The provision accords a shipowner or agent the right of abandonment; and by necessary
implication, his liability is confined to that which he is entitled as of right to abandon “the vessel with Page |
all her equipments and the freight it may have earned during the voyage." It is true that the article
appears to deal only with the limited liability of ship owners or agents for damages arising from the 12
misconduct of the captain in the care of the goods which the vessel carries, but this is a mere
deficiency of language and in no way indicates the true extent of such liability.

If the shipowner or agent may in any way be held civilly liable at all for injury to or death of
passengers arising from the negligence of the captain in cases of collisions or shipwrecks, his
liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in
its extinction. In arriving at this conclusion, we have not been unmindful of the fact that the ill-fated
steamship Negros, as a vessel engaged in inter-island trade, is a common carrier, and and that the
relationship between the petitioner and the passengers who died in the mishap rests on a contract
of carriage. But assuming that petitioner is liable for a breach of contract of carriage, the
exclusively "real and hypothecary nature" of maritime law operates to limit such liability to the value
of the vessel, or to the insurance thereon, if any. In the instant case it does not appear that the
vessel was insured.
 Page |
13

Vda. De Lat v. Public Service Commission (Requisites for Grant of Certificate of Public
Convenience)

FACTS:

 Private respondent Roberto C. Diaz filed an application with the respondent Public Service
Commission for a Certificate of Public Convenience and Necessity to operate and maintain an
ice plant service in Davao City
 He alleged that he is financially capable to operate and maintain the proposed service, and that
public necessity and convenience will be promoted in a proper and suitable manner with the
approval of his application.
 The application was published in two newspapers of general circulation and notices were given
to affected parties, including the petitioner.
 There were no oppositions during the hearing of the Application and the Opposition, hence the
Commission declared the case uncontested and received the evidence of private respondent
 Provisional authority was granted to private respondent and was extended twice before finally
granting a CPCN
 Petitioners now contend that decision of the Commission granting the CPCN be set aside and
declared null and void because of the following:

a. The decision was rendered without due process because they were not allowed to cross-
examine the witnesses of private respondent (they claim that their non-appearance
during the hearing was due to their counsel’s mistake)

b. The awarding of the CPCN was based merely on private respondent’s uncorroborated
testimony

c. Such grant would amount to competition that would damage their business

ISSUES:

1. Whether or not the petitioners were deprived of their day in Court to make the proceeding
in the respondent Public Service Commission null and void.

2. Whether or not the private respondent was validly awarded the questioned Certificate of
Public Convenience to operate an ice plant in Davao City.

RATIO:
1. No. It is very clear from the records that the petitioners were given notice and opportunity to be
heard negating the petitioners' declaration that they were deprived of their day in court.
respondent Commission did, that the private respondent duly complied with the required
notice of hearing. There was publication. The petitioners could not have been denied the right
to be heard because as their counsel even admits, he agreed to the setting of the hearing of Page |
the case for August 19, 1970 at 9 o'clock in the morning. Their negligence cannot now be
passed on to the respondent Commission which only did the right thing of proceeding with the 14
case, which had become uncontested.

2. Yes. It cannot be said that the Decision of the respondent Commission is arbitrary. The
application was not outrightly approved upon reception of the evidence of the private
respondent. On the contrary, the respondent Commission took time to consider and weigh
such evidence as can be seen from the fact that the private respondent was granted only a
provisional authority which was twice extended, before the case was finally determined.

We are convinced that the private respondent deserves to be awarded the Certificate of Public
Convenience. He was able to fully satisfy the requisites before such a certificate may be granted,
namely:

(1) the applicant must be a citizen of the Philippines, or a corporation or co-partnership,

association or joint-stock company constituted and organized under the laws of the
Philippines, 60 per centum at least of the stock or paid-up capital of which belong entirely
to citizens of the Philippines;
(2) the applicant must be financially capable of undertaking the proposed service and
meeting the responsibilities incident to its operations; and
(3) the applicant must prove that the operation of the public service proposed and the
authorization to do business will promote the public interest in a proper and suitable
manner.
The allegation of the petitioners that the grant of Certificate of Public Convenience to the private
respondent would result in ruinous competition amounting to damage of their business 12(12) is
unconvincing. In order that the opposition based on ruinous competition may prosper, it must be
shown that the opponent would be deprived of their profits on the capital invested in its business.
The mere possibility of reduction in the earnings of a business is not sufficient to prove ruinous
competition.
 Page |
15

G.R. No. 100727 March 18, 1992

COGEO-CUBAO OPERATORS AND DRIVERS ASSOCIATION, petitioner,
vs. THE COURT OF APPEALS, LUNGSOD SILANGAN TRANSPORT SERVICES, CORP.,
INC., respondents.

• Petitioner – Cogeo-Cubao Operators and Drivers Association

• Respondents - o Court of Appeals o Lungsod Silangan Transport Services, Corp., Inc
• Lesson: Article 21 of the Civil Code

-This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed with
modification the decision of the Regional Trial Court awarding damages in favor of respondent
Lungsod Silangan Transport Services Corp., Inc. (Lungsod Corp. for brevity).

• A Certificate of Public Convenience (CPC) was issued in favor of Lungsod Silangan to ply the
Cogeo Cubao route due to public necessity and convenience.
• Disturbed by plaintiff’s (Lungsod Silangan) Board Resolution No 9 adopting Bandera System, in
which a member of the cooperative is permitted to queue for a passenger at the disputed pathway
in exchange for the ticket worth P20, the proceeds of which shall be utilized for Christmas
programs of the drivers and other benefits.
• Defendants (Association), being a collective body registered with the SEC, formed a human
barricade and assumed the dispatching of passenger jeepneys. Thus, the suit for damages.
• July 31, 1989, the Trial Court decided in favor of respondent Lungsod Corp., ordering the the
defendants to pay P50,000.00 for damages; P10,000.00 for attorney’s fees.
• Association appealed with Court of Appeals, and in COA’s decision on May 27, 1991, it affirmed
the decision of the RTC except with regard to the award of damages and fees.

-The COA modified the RTC’s judgment for the actual amount of damages amounting to
P10,000.00.

Issues: Whether or not the Association violated article 21 of the civil code.

Ruling: Yes. Although there is no question that petitioner can exercise their constitutional right to
redress their grievances with respondent Lungsod Corp., the manner by which this constitutional
right is to be exercised should not undermine public peace and order nor should it violate the legal
rights of other persons.
Article 21 of the Civil Code provides that any person who wilfully causes loss or injury to another in
a manner that is contrary to morals, good customs or public policy shall compensate the latter for
the damage. The provision covers a situation where a person has a legal right which was violated
by another in a manner contrary to morals, good customs or public policy. It presupposes loss or
injury, material or otherwise, which one may suffer as a result of such violation. Page |
It is clear from the facts of this case that petitioner formed a barricade and forcibly took over the 16
motor units and personnel of the respondent corporation. This paralyzed the usual activities and
earnings of the latter during the period of ten days and violated the right of respondent Lungsod
Corp. to conduct its operations thru its authorized officers.

No compelling reason exists to justify the reversal of the ruling of the respondent appellate court in
the case at bar. Article 2222 of the Civil Code states that the court may award nominal damages in
every obligation arising from any source enumerated in Article 1157, or in every case where any
property right has been invaded. Considering the circumstances of the case, the respondent
corporation is entitled to the award of nominal damages.