Litimco v La Mallorca

Facts:
Tomas Litimco filed a petition before the Public Service Commission (PSC) praying for authority to operate a TPU service on the line Manila-Malolos via Sta. Isabel with the use of 10 units. Several operators filed written oppositions.

Before PSC could render its decision, La Mallorca, another operator, moved to reopen the case stating that if the petition to operate the line proposed be granted it would work to its prejudice and so it requested a reopening in order that it may file its opposition. The motion was granted.

However, instead of presenting evidence in support of its opposition, La Mallorca moved for postponement, only to announce days later that instead of merely objecting to the petition, it decided to file an application under a separate number (Case No. 63120) requesting for authority to operate the same line applied for by petitioner by rerouting 4 of its 10 round trip units of the line Malolos-Manila via Guiguinto.

The PSC rendered decision denying petitioner’s application but granting that of respondent on the ground that the latter has a better right to render the service applied for.

Petitioner contends that the Public Service Commission erred because:
1. his application was filed much ahead than that of respondent and as such it is entitled to preference
2. in awarding the line to respondent it in effect gave recognition to the unfair attitude of respondent
3. to grant the service in favor of respondent will work to the prejudice of the riding public for it would be allowing respondent to abandon a portion of its service on its original line Manila-Malolos via Guiguinto, a service which was previously found to promote the need and convenience of the people in said territory.

Respondent reasoned out that its:
1. application for rerouting will not involve any increase of trips or units nor will involve the purchase of new trucks, while that of petitioner would call for the use of 10 new trucks, which means a further depletion of the already depleted dollar reserve of our government
2. application for re-routing will not involve the acquisition of an operating right over the national highway from Malolos railroad crossing up to Guiguinto, while, on the other hand, petitioner’s application will involve the acquisition of a new operating right

Issue:
Who has a better right to render the service?

Held:
Litimco. Since it is admitted that he is financially competent and able to operate the line proposed and is also an operator of a bus line from Manila to Malolos via Bulacan, we see no plausible reason why he should not be given preference to operate the service applied for considering that he is the first one to apply for such line.

This is in accord with the policy to stave off any act of discrimination or partiality against any application for operation of a new line. While there may be cases where an applicant, even if ahead in time, was not given the service, it is because it was proven that he was financially incompetent, or otherwise disqualified, to render the service, If an applicant is qualified financially, and is able to undertake the service, he should be given the preference as a matter of fairness and justice.

Priority in the filing of the application for a certificate of public convenience is, other conditions being equal, an important factor in determining the right of the public service companies.

The argument that the application of petitioner for the operation of the new line calls for the purchase of 10 new trucks is of no consequence, if the operation will redound to the benefit of the riding public. The operation of a new line as a general proposition always involves a new investment which may happen even with old operators. In the course of operation, and with the passing of time, new equipment and facilities may be found necessary to maintain an efficient service, which additional expenditure cannot certainly be considered as a cause for disruption of the service. This is a matter of finance which concerns exclusively the one who desires to operate the new line.

At any rate, the new line merely covers 7 kilometers of new territory which traverses three sparsely populated barrios, and considering that respondent did not deem it necessary to cover said territory except after the passing of many years, and only thought of giving the service when petitioner filed his application, fairness requires that preference be given to petitioner.

Republic v PLDT

Facts:
PLDT and RCA Communications Inc (which is not a party to this case but has contractual relations with e parties) entered into an agreement where telephone messages, coming from the US and received by RCA's domestic station could automatically be transferred to the lines of PLDT and vice versa.

The Bureau of Telecommunications set up its own Government Telephone System (GTS) by renting the trunk lines of PLDT to enable government offices to call private parties. One of the many rules prohibits the use of the service for his private use.

Republic of the Philippines entered into an agreement with RCA for a joint overseas telephone service where the Bureau would convey radio-telephone overseas calls received by the RCA's station to and from local residents.

PLDT complained that the Bureau was violating the conditions for using the trunk lines not only for the use of government offices but even to serve private persons or the general public. PLDT gave a notice that if violations were not stopped, PLDT would sever the connections -which PLDT did.

Republic sued PLDT commanding PLDT to execute a contract, through the Bureau, for the use of the facilities of defendant's telephone system throughout the Philippines under such terms and conditions as the court finds it reasonable.

Issue:
Whether or not Republic can command PLDT to execute the contract.

Held:
No. The Bureau was created in pursuance of a state policy reorganizing the government offices to meet the exigencies attendant upon the establishment of a free Gov't of the Phil.

When the Bureau subscribed to the trunk lines, defendant knew or should have known that their use by the subscriber was more or less public and all embracing in nature.

The acceptance by the defendant of the payment of rentals, despite its knowledge that the plaintiff had extended the use of the trunk lines to commercial purposes, implies assent by the defendant to such extended use. Since this relationship has been maintained for a long time and the public has patronized both telephone systems, and their interconnection is to the public convenience, it is too late for the defendant to claim misuse of its facilities, and it is not now at liberty to unilaterally sever the physical connection of the trunk lines.

To uphold PLDT's contention is to subordinate the needs of the general public.

Mecenas v CA

Facts:
M/T Tacloban (barge-type oil tanker) collided with M/V Don Juan ( inter-island vessel carrying 750 passengers). When the collision occurred, the sea was calm, the weather fair and visibility good. As a result, M/V Don Juan sank and the passengers perished.

Petitioner was the parent of the passenger who died. They file an action for damages alleging the negligence of Capt. Santisteban (captain of Don Juan) and Negros Navigation (owner of Don Juan).

Issue:
1. Who was negligent?
2. Whether or not Capt. Santisteban and Negros Navigation was negligent.

Held:
1. M/V Tacloban was primarily and solely at fault. M/V Don Juan was also at fault.

Rule 18 of the International Rules of the Road which requires 2 power-driven vessels meeting end on or nearly end on each to alter her course to starboard so that each vessel may pass on the port side of each other.

In the case, M/V Tacloban, as held by the report of the Commandant of the Philippine Coast Guard, failed to follow the Rules. Hence, she was deemed negligent.

However, route observance of the International Rules of the Road will not relieve a vessel from responsibility if the collision could have been avoided by proper skill on her part or even a departure from the rules.

M/V Don Juan having sighted M/V Tacloban when it was still a long way off was negligent in failing to take early preventive action and in allowing the 2 vessels to come into close quarters as to render the collision inevitable when there was no necessity for passing so near M/V Tacloban for Don Juan could choose its own distance. It is noteworthy that M/V Tacloban upon turning hard to port shortly before the moment of collision, signaled its intention to do so by giving 2 short blasts with its horn. Don Juan gave no answering horn blast to signal it's own intention and proceeded to turn hard to starboard.

2. Yes. The behavior of the captain -playing mahjong "before and up to the time of collision" constituted gross negligence. This behavior is unacceptable on the part of the master of a vessel to whose hands the lives of at least 750 passengers were entrusted.

It does not matter that the Captain was off-duty or on-duty. Realistically speaking, there is no such thing as off-duty hours for the master of the vessel at sea that is a common carrier who is required extraordinary diligence. Hence, Negros Navigation in permitting or in failing to discover and correct such behavior is also grossly negligent.

Notes:
Starboard -right
Port -left

Wild Valley v CA

Facts:
Philippine Roxas (owned by Phil. Pres. Lines), vessel, arrived in Venezuela to load iron ore. When vessel was ready to leave the port, Mr. Vasquez (official pilot of Venezuela) was designated to navigate the vessel through the Orinoco River.

The master of the vessel, Captain Colon, was at the bridge with the pilot when the vessel left the port. Captain Colon left the bridge when the vessel was underway.

The vessel experienced some vibrations but the pilot assured that they were just a result of the shallowness of the vessel. The vessel again experienced vibrations which led to the vessel being run aground in the Orinoco River, obstructing the ingress and egress of vessels.

As a result of the blockage, the Malandrinon (vessel owned by Wildvalley Shipping) was unable to sail out that day. For this reason, Wild Valley commenced an action for damages.

Issue:
1. Whether or not fault can be attributed to the master(captain) of Philippine Roxas for the grounding of said vessel.

2. Whether or not the doctrine of res ipsa loquitor applies.

Held:
1. No. It's the pilot's fault!

There being no contractual obligation, the master was only required to give ordinary diligence in accordance with Article 1173 of the New Civil Code. In the case, the master exercised due diligence when the vessel sailed only after the main engine, machine rise and other auxiliaries were checked and found to be in good running condition and when the master left a competent officer - the pilot who is experienced in navigating the Orinoco River.

Philippine rules on pilotage enunciate the duties and responsibilities of a master of a vessel and its pilot. The law is explicit in saying that the master remains the overall commander of the vessel even when there is a pilot on board. He remains in control despite the presence of a pilot who is temporarily in charge of the vessel. It is NOT required of him to be on bridge while the vessel is being navigated by a pilot.

Furthermore, the Orinoco River being a compulsory pilotage channel necessitated the engaging of a pilot who was presumed to be knowledgeable of every shoal, bank, deep and shallow ends of the river. Admitting his limited knowledge of the River, Captain Colon deemed it best to rely on the knowledge and experience of pilot Vasquez to guide the vessel safely.

The pilot should have been aware of the portions which are shallow and which are not. His failure to determine the depth of the river and his decision to plod on his set course, in all probability, caused damage to the vessel. Thus, he is negligent and liable for the grounding.

2. NO. The elements of res ipsa loquitor are:
-accident was of such character as to warrant inference that it would not have happened except for defendant's negligence
-accident must have been caused by an agency/instrumentality within the exclusive management or control of the person charged with the negligence complained of
-accident must not have been due to any voluntary action or contribution on the part of the person injured.

There was a temporary shift of control over the ship from the master to the pilot on a compulsory pilotage channel. Thus, requisites 1 and 2 (negligence and control) are not present in the following situation.

China Airlines v CA (G.R. No. 129988)

Facts:
Respondents, Antonio Salvador and Rolando Lao planned to travel to Los Angeles, California to pursue a cable business deal involving the distribution of Filipino films. Initially, Morelia Travel Agency booked their flight with China Airlines (CAL).

Upon discovering that Morelia charged higher rates than American Express Travel (Amexco), they dropped the services of Morelia. Lao called Amexco claiming that he and Salvador had a confirmed booking with CAL. Lao then gave to Amexco the record locator number that CAL issued previously to Morelia. CAL confirmed the booking.

When the respondents were at the airport, CAL prevented them from boarding because their names were not in the passenger's manifest. CAL cancelled the reservations when Morelia revoked the booking. But the respondents were able to get a flight with Northwest Airlines.

Issue/s:
1. Whether or not there was a breach in the contract of carriage.
2. Whether or not there there was bad faith.
3. Whether or not there was sufficient claims for damages.

Held:
1. Yes. When an airline issues a ticket to a passenger confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger has every right to expect that he would fly on that flight and on that date.

When CAL did not allow respondents, who were in possession of the confirmed tickets, from boarding its airplane because their names were not in the manifest, it ocnsituted a breach of contract of carriage.

2. No. Bad faith should always be established by clear and convincing evidence since the law always presumes good faith.

In the case, there were three reasons why CAL cancelled the reservations. First was Amexco's unauthorized use of the record locator number. Second was CAL's negligence in confirming the reservations of Amexco. Third was the absence of the correct contact numbers of private respondents. There was no concerted effort on the part of CAL to cancel respondent's reservations in favor of other passengers.

3. Not entitled to moral damages because not every case of mental anguish, fright or anxiety calls for the award of moral damages.

Not entitled to exemplary damages because CAL was not in bad faith and its employees did not act in a wanton, fraudulent, reckless, oppressive or malevolent manner.

Not entitled to actual damages because respondents did not shell out any money for their CAL tickets. Respondents would have been entitled to the price difference between the tickets of CAL and Northwest had the latter cost more than the former but this was not the case. Evidence shows that Northwest tickets ($625) cost less than CAL tickets ($629). The court cannot order reimbursement of the Northwest tickets because this would have enabled respondents to fly for free. The cost of the tickets were a necessary expense that private respondents could not pass on to CAL.

Entitled to nominal damages of P5,000 when the plaintiff suffers some species of injury not enough to warrant an award of actual damages.

Luque v Villegas

Facts:
Petitioners ( who are passengers from Cavite and Batangas who ride on buses to and from their province and Manila) and some public service operators of buses and jeeps assail the validity of Ordinance 4986and Administrative Order 1.

Ordinance 4986 states that PUB and PUJs shall be allowed to enter Manila only from 6:30am to 8:30pm every day except Sundays and holidays.

Petitioners contend that since they possess a valid CPC, they have already acquired a vested right to operate.

Administrative Order 1 issued by Commissioner of Public Service states that all jeeps authorized to operate from Manila to any point in Luzon, beyond the perimeter of Greater Manila, shall carry the words "For Provincial Operation".

Issue:
1. Whether or not the said regulations are valid.
2. Whether or not Ordinance 4986 destroys vested rights to operate in Manila.

Held:
1. YES! Using the doctrine in Lagman vs. City of Manila, Petitioner's Certificate of Public Convenience was issued subject to the condition that operators shall observe and comply with all the rules and regulations of the PSC relative to PUB service.

The purpose of the ban is to minimize the problem in Manila and the traffic congestion, delays and accidents resulting from the free entry into the streets of Manila and the operation around said streets.

Both Ordinance 4986 and AO 1 fit into the concept of promotion and regulation of general welfare.

2. NO! A vested right is some right or interest in the property which has become fixed and established and is no longer open to doubt or controversy. As far as the State is concerned, a CPC constitutes neither a franchise nor a contract, confers no property right, and is a mere license or privilege.

The holder does not acquire a property right in the route covered, nor does it confer upon the holder any proprietary right/interest/franchise in the public highways.

Neither do bus passengers have a vested right to be transported directly to Manila. The alleged right is dependent upon the manner public services are allowed to operate within a given area. It is no argument that the passengers enjoyed the privilege of having been continuously transported even before outbreak of war. Times have changed and vehicles have increased. Traffic congestion has moved from worse to critical. Hence, there is a need to regulate the operation of public services.

Mirasol v The Robert Dollar Co. (G.R. No. L-29721)

Doctrine:
Shippers who are forced to ship goods on an ocean liner or any other ship have some legal rights, and when goods are delivered on board ship in good order and condition, and the shipowner delivers them to the shipper in bad order and condition, it then devolves upon the shipowner to both allege and prove that the goods were damaged by the reason of some fact which legally exempts him from liability; otherwise, the shipper would be left without any redress, no matter what may have caused the damage.

Facts:
As a third special defense, defendant quoted clause 13 of the bill of lading, in which it is stated that in no case shall it be held liable “for or in respect to said merchandise or property beyond the sum of S250 for any piece, package or any article not enclosed in a package, unless a higher value is stated herein and ad valorem freight paid or assessed thereon,” and that there was no other agreement.

The plaintiff wrote the defendant a letter as follows: "I wish to file claim of damage." Plaintiff contends that he is entitled to P700 for his Encyclopedia Britannica which was damaged during shipment.

Defendant alleges that the damage, if any, was caused by “sea water,” and that the bill of lading exempts defendant from liability for that cause. That damage by “sea water” is a shipper’s risk, and that defendant is not liable.

Issue: Whether or not damage by sea water is a shipper's risk.

Held:
In the case of The Kengsington decided by the Supreme Court of the U.S.:
The stipulation in a steamship passenger's ticket, which compels him to value his baggage, at a certain sum, far less than it is worth, or, in order to have a higher value put upon it, to subject it to the provisions of the Harter Act, by which the carrier would be exempted from all the liability therefore from
errors in navigation or management of the vessel of other negligence is unreasonable and in conflict with public policy.

In the case, defendant having received the two boxes in good condition, its legal duty was to deliver them to the plaintiff in the same condition in which it received them. From the time of their delivery to the defendant in New York until they are delivered to the plaintiff in Manila, the boxes were under the control and supervision of the defendant and beyond the control of the plaintiff. The defendant having admitted that the boxes were damaged while in transit and in its possession, the burden of proof then shifted, and it devolved upon the defendant to both allege and prove that the damage was caused by reason of some fact which exempted it from liability. As to how the boxes were damaged, when or where, was a matter peculiarly and exclusively within the knowledge of the defendant and in the very nature of things could not be in the knowledge of the plaintiff. To require the plaintiff to prove as to when and how the damage was caused would force him to call and rely upon the employees of the defendant’s ship, which in legal effect would be to say that he could not recover any damage for any reason. That is not the law.

Shippers who are forced to ship goods on an ocean liner or any other ship have some legal rights, and when goods are delivered on board ship in good order and condition, and the shipowner delivers them to the shipper in bad order and condition, it then devolves upon the shipowner to both allege and prove that the goods were damaged by the reason of some fact which legally exempts him from liability; otherwise, the shipper would be left without any redress, no matter what may have caused the damage.

The defendant has not even attempted to prove that the two cases were wet with sea water by fictitious event, force majeure or nature and defect of the things themselves. Consequently, it must be presumed that it was by causes entirely distinct and in no manner imputable to the plaintiff, and of which the steamer President Garfield or any of its crew could not have been entirely unaware.

The fact that the cases were damaged by “sea water,” standing alone and within itself, is not evidence that they were damaged by force majeure or for a cause beyond the defendant’s control. The words “perils of the sea,” as stated in defendant’s brief apply to “all kinds of marine casualties, such as shipwreck, foundering, stranding,” and among other things, it is said: “Tempest, rocks, shoals, icebergs and other obstacles are within the expression,” and “where the peril is the proximate cause of the loss, the shipowner is excused.” “Something fortuitous and out of the ordinary course is involved in both words ‘peril’ or ‘accident’.”

Universal Shipping Lines, Inc. v IAC (G.R. No. 74125)

Facts:
SEVALCO Limited, owned and operated by the petitioner, shipped from Rotterdam Netherlands, to Bangkok, Thailand, aboard its M/V "TAIWAN", 2 cargoes of 50 palletized cartons. They were respectively consigned to S. Lersen Company, Ltd. and Muang Ngarm Retreads,Ltd. Both shipments were insured with the private respondent, Alliance Assurance Company, Ltd., a foreign insurance company domiciled in London, England.

Despite the arrival of the vessel at Bangkok, the cargo covered by Bill of Lading No. RB-15 was not unloaded nor delivered to the consignee, S. Lersen Company, Ltd. The shipment under Bill of Lading No. RB-16 was delivered to Muang Ngarm Retreads, Ltd. with a shortage in weight because the cargoes had been either totally or partially dissolved in saltwater which flooded the vessel where they had been stored.

Upon arrival in Manila, Arturo C. Saavedra, master of M/V "TAIWAN" filed a marine protest stating that the source of the water could not be definitely ascertained where it comes from. He was suspecting of some leakage of suction pipes and that hold No. 2 cannot be inspected on account of the full cargoes inside the hold, rendering it to be inaccessible.

The consignees filed their respective formal claims for loss and damage to their cargoes. The insurer paid both claims in the amounts of £I2,180 and £2,547.18 for the loss and damage to their cargoes.

Private respondent, as insurer-subrogee, filed an action in the Court of First Instance of Manila to recover from the petitioner and its Manila agent, Carlos Go Thong & Company, what it paid the consignees of the cargo.

Issue:
1. Whether or not petitioner liable for the damage/loss suffered by the subject shipments

2. Whether or not private respondent has capacity to sue in this jurisdiction

3. Whether or not in private respondent's cause of action has not yet prescribed

Held:
1. No. It was incumbent upon the defendants to prove that the losses and damages were due to causes other than the negligence or fault of their employees. Said defendants have not adduced proof on this point. It having been shown that the losses and damages were incurred while the shipments were in the custody of the M/V' Taiwan' the liability of its owner/operator and shipping agent is clear-they must pay for the losses and damages sustained by the consignees as a consequence of the breach of contract of water transportation.

2. Yes, The private respondent may sue in Philippine courts upon the marine insurance policies issued by it abroad to cover international-bound cargoes shipped by a Philippine carrier, even if it has no license to do business in this country, for it is not the lack of the prescribed license (to do business in the Philippines) but doing business without such license, which bars a foreign corporation from access to our courts.

3. No. Section 3(6), Title I, of the Carriage of Goods by Sea Act (Commonwealth Act No. 65) which provides that:

... the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. ...

This provision of the law admits of an xception: if the one-year period is suspended by express agreement of the parties for in such a case, their agreement becomes the law for them.

The exchange of correspondence between the parties and/or their associates/representatives shows that the parties had mutually agreed to extend the time within which the plaintiff or its predecessors-in-interest may file suit until December 27,1976. When the complaint was filed on June 25, 1976, that deadline had not yet expired.

Philippine Refining Co., Inc. v Jarque et. al.

Doctrine:
It is essential that a record of documents affecting the title to a vessel be entered in the record of the Collector of Customs at the port of entry. Otherwise a mortgage on a vessel is generally like other chattel mortgages as to its requisites and validity

Facts:
Philippine Refining Co., Inc., and Francisco Jarque executed three mortgages on the motor vessels Pandan and Zaragoza. These documents were recorded in the record of transfers and incumbrances of vessels for the port of Cebu and each was therein denominated a "chattel mortgage".

Neither of the first two mortgages had appended an affidavit of good faith. The third mortgage contained such an affidavit, but this mortgage was not registered in the customs house until the period of thirty days prior to the commencement of insolvency proceedings against Francisco Jarque;

A fourth mortgage was executed by Francisco Jarque and Ramon Aboitiz on the motorship Zaragoza and was entered in the chattel mortgage registry of the register of deeds on within the thirty-day period before the institution of insolvency proceedings.

Francisco was declared an insolvent with the result that an assignment of all the properties of the insolvent was executed in favor of Jose Corominas.

Judge Jose M. Hontiveros declined to order the foreclosure of the mortgages, but on the contrary sustained the special defenses of fatal defectiveness of the mortgages.

Issue:
Whether or not the mortgages were defective.

Yes. Vessels are considered personal property under the civil law. Similarly under the common law, vessels are personal property although occasionally referred to as a peculiar kind of personal property. They are subject to mortgage agreeably to the provisions of the Chattel Mortgage Law.

The only difference between a chattel mortgage of a vessel and a chattel mortgage of other personalty is that it is not now necessary for a chattel mortgage of a vessel to be noted in the registry of the register of deeds, but it is essential that a record of documents affecting the title to a vessel be entered in the record of the Collector of Customs at the port of entry. Otherwise a mortgage on a vessel is generally like other chattel mortgages as to its requisites and validity.

In the case, the absence of the affidavit vitiates a mortgage as against creditors and subsequent encumbrancers. As a consequence a chattel mortgage of a vessel wherein the affidavit of good faith required by the Chattel Mortgage Law is lacking, is unenforceable against third persons.

Savellano v Northwest Airlines

Facts:
Savellano, ex-Mayor and former Chairman of COMELEC and wife were expected to arrive at NAIA after 12 hours of travel coming from Seattle. The plane made an emergency landing because a fire started in one of the engines.

They passengers were brought to a hotel. At around midnight, they were awakened by a phone call from Northwest's personnel saying that they would be take a Seattle-Tokyo-Manila route on the flight back to Manila the next day. Upon arrival at the airport they were again advised that they would take an alternative and longer route (Seattle - Los Angeles - Seoul- Manila) back to Manila.

Meanwhile, the other passengers took the first route. Upon arrival of Savellano at Manila, they were teased for taking the longer and tiresome route. They also discovered that their luggage had been ransacked and the contents stolen.

Savellano demanded damages on the ground that they suffered inconvenience, embarrassment and humiliation for taking the longer route.

Issue:
1.Whether or not the bump-off was a breach of the air carriage contract
2. Whether or not Savellano is entitled to actual, moral and exemplary damages.

Held:
1. Yes. In the condition of the airline ticket, there is nothing authorizing Northwest to decide unilaterally what other stopping places Savellano should take and when they should fly. Substituting aircraft without notice is entirely different from changing stopping places or connecting cities without notice. Also, Northwest failed to show a case of necessity for changing the stopping place.

2. On moral damages: Northwest is not guilty of bad faith. It appears that the passengers of the distressed flight were randomly divided into 2 groups. One group taking the first route and the other taking the longer route of flight. The selection of who was to take the flight was handled via computer reservation system. Savellano failed to present convincing evidence to back the allegation that Northwest was guilty of bad faith.

On exemplary damages, it is not proper. The unexpected and sudden requirement of having to arrange connecting flights in just a few hours, in addition to the Northwest employees' normal workload was difficult to satisfy perfectly. Northwest is not liable for its imperfection of neglecting to consult with passengers beforehand.

Nominal damages are awarded in this case. The court considered that Savellano suffered the inconvenience of having to wake up early to catch the flight and that they were business class passengers who paid more for better service. It also considered Savellano's social and official status. The court awarded P150,000 as nominal damages in order to vindicate and recognize their right to be notified and consulted.

Notes:
*The rulings of Lopez, Zulueta and Ortigas are not applicable in this case there is no showing that the breach was done with the same entrepreneurial motive as in Lopez or with ill-will as in Zulueta and Ortigas.

*Good faith is presumed while bad faith is a matter of fact that needs to be proved by the party alleging it.

Air France v Carrascoso

Facts:
Air France issued to Carrascoso, a civil engineer, a 1st class round trip ticket from Manila - Rome. During the stopover at Bangkok, the Manager of Air France forced plaintiff to vacate the 1st class seat because there was a "white man" who had better right to the seat.

As a result, he filed a suit against Air France where the CFI Manila granted him moral and exemplary damages.

Issue:
Whether or not Carrascoso was entitled to the 1st class seat and consequently, whether or not he was entitled to the damages awarded.

Held:
Yes to both.
To achieve stability in the relation between passenger and air carrier, adherence to the ticket issued is desirable. Quoting the court, "We cannot understand how a reputable firm like Air France could have the indiscretion to give out tickets it never meant to honor at all. It received the corresponding amount in payment of the tickets and yet it allowed the passenger to be at the mercy of its employees. It is more in keeping with the ordinary course of business that the company should know whether or not the tickets it issues are to be honored or not."

Evidence of bad faith was presented without objection on the part of the Carrascoso. In the case, it could have been easy for Air France to present its manager to testify at the trial or secure his deposition but defendant did neither. There is also no evidence as to whether or not a prior reservation was made by the white man.

The manager not only prevented Carrascoso from enjoying his right to a 1st class seat, worse he imposed his arbitrary will. He forcibly ejected him from his seat, made him suffer the humiliation of having to go to tourist class just to give way to another passenger whose right was not established. Certainly, this is bad faith.

Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal is conduct, injurious language, indignities and abuse from such employees. Any discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier.

Exemplary damages were also awarded. The manner of ejectment fits into the condition for exemplary damages that defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.

*Bad Faith - state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose

DOLE PHILIPPINES, INC. v MARITIME COMPANY OF THE PHILIPPINES

Facts:

The cargo subject of the instant case was discharged in Dadiangas unto the custody of the consignee, Dole Philippines. The corresponding claim for the damages sustained by the cargo was filed by the plaintiff with the defendant, Maritime Company on May 4, 1972.

On June 11, 1973 the plaintiff filed a complaint in the CFI Manila embodying 3 causes of action involving 3 separate and different shipments. The third cause of action therein involved the cargo now subject of this present litigation.

On December 11, 1974, Judge Serafin Cuevas issued an Order dismissing the first two causes of action. The third cause of action which covered the cargo subject of this case now was likewise dismissed but without prejudice as it was not covered by the settlement. Because of the dismissal of the complaint with respect to the third cause of action, DOLE instituted this present complaint on January 6, 1975.

Maritime filed an answer pleading inter alia the affirmative defense of prescription under the provisions of the Carriage of Goods by Sea Act. The Trial Court granted the motion, scheduling the preliminary hearing on April 27, 1977. The record before the Court does not show whether or not that hearing was held, but under date of May 6, 1977, Maritime filed a formal motion to dismiss invoking once more the ground of prescription.

The Trial Court, after due consideration, resolved the matter in favor of Maritime and dismissed the complaint.

Issue:
Whether or not Article 1155 of the Civil Code applies in lieu of the COGSA.

Held:
No. Article 1155 of the Civil Code provides that the prescription of actions is interrupted by the making of an extrajudicial written demand by the creditor

Section 3, paragraph 6 of the COGSA provides that:

the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered; Provided, That, if a notice of loss or damage, either apparent or conceded, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when.the goods should have been delivered.

1. 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. Since Dole's claim for loss or damage was filed 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.

These arguments might merit weightier consideration were it not for the fact that the question has already received a definitive answer, adverse to the position taken by Dole, in The Yek Tong Lin Fire & Marine Insurance Co., Ltd. vs. American President Lines, Inc.

2. Dole argues that it was error for the court not to have considered the action of plaintiff-appellant suspended by the extrajudicial demand which took place, according to defendant's own motion to dismiss on August 22, 1952.

Court noticed that while plaintiff avoids stating any date when the goods arrived in Manila, it relies upon the allegation made in the motion to dismiss that a protest was filed on August 22, 1952 — which goes to show that plaintiff-appellant's counsel has not been laying the facts squarely before the court for the consideration of the merits of the case. We have already decided that in a case governed by the Carriage of Goods by Sea Act, the general provisions of the Code of Civil Procedure on prescription should not be made to apply. (Chua Kuy vs. Everett Steamship Corp., G.R. No. L-5554, May 27, 1953.) We hold that in such a case the general provisions of the new Civil Code (Art. 1155) cannot be made to apply, as such application would have the effect of extending the one-year period of prescription fixed in the law. It is desirable that matters affecting transportation of goods by sea be decided in as short a time as possible; the application of the provisions of Article 1155 of the new Civil Code would unnecessarily extend the period and permit delays in the settlement of questions affecting transportation, contrary to the clear intent and purpose of the law.

Under Dole's theory, when its claim was received by Maritime, the one-year prescriptive period was interrupted and began to run anew from May 4, 1972, affording Dole another period of one year counted from that date within which to institute action on its claim for damage. Unfortunately, Dole let the new period lapse without filing action. It instituted Civil Case No. 91043 only on June 11, 1973, more than one month after that period has expired and its right of action had prescribed.

Benito v Pan American World Airways

Doctrine: Conditions in a plane ticket exempting the common carrier from liability for damages caused to its passenger due to its negligence are offensive to public policy and void.

Failure to notify passenger or non-availability of flight of which the carrier was aware before the passenger's departure is negligence.

Facts:

Benito and Carnain (moslems) wanted to go to an annual Pilgrimage in Mecca. They booked an air passage from Manila to Jeddah with Sharp Travel Agency thru the manager, Joaquin Gonzales. Air France accepted the booking.

Plaintiffs left Manila at 6 pm, reached Tehran and Beirut as scheduled. Unfortunately, they were informed that the flight for Jeddah left the previous day. Since it was useless for them to wait for the next flight because the ceremonies in the Holy City would have been over, they were forced to return to Manila. The plaintiffs sued Air France and Pan American for damages.

Issue: 

Whether or not Pan American is liable for damages.

Held:

Yes.

Conditions in a plane ticket exempting the common carrier from liability for damages caused to its passenger due to its negligence are offensive to public policy and void.

The condition/stipulation in the ticket provided: “Carrier undertakes to use its best efforts to carry the passenger and baggage with reasonable dispatch, but no particular time is fixed for the commencement or completion of carriage. Subject thereto, carrier may without notice substitute alternate carriers or aircraft and may alter or omit the stopping place shown on the face of the ticket in case of necessity. Times shown in timetables or elsewhere are approximate and not guaranteed, and form no part of this contract. Schedules are subject to change without notice. Carrier assumes no responsibility for making connections

Failure of a common carrier to notify a passenger of the alteration or non-availability of a connecting flight to his place of destination, of which the carrier was aware before the passenger’s departure, is omission to act with diligence and to exercise the necessary precaution in connection with its contract of carriage with the passenger.

The court held that the condition in the tickets exempting a common carrier from liability for damages caused to its passengers due to its negligence, are offensive to public policy and thus void. Article 1760 of the Civil Code prohibits the elimination or limitation of pecuniary responsibility, even by common stipulation, as far as common carriers are concerned