Pan American Airways vs. IAC.

GR L-70462, 11
August 1988
FACTS: Jose Rapaldas is on board a flight for Pan
Am Flight 841 from Guam to Manila. While standing in
line to board the flight at the Guam airport, Rapadas was
ordered by Pan Am's hand carry control agent to checkin his Samsonite attache case. Rapadas protested
pointed to the fact that other co-passengers were
permitted to hand carry bulkier baggage. But for fear that
he would miss the flight, he agreed to check it in. He
gave his attach case to his brother who happened tube
around without declaring its contents or the value of its
contents.
Upon his arrival in Manila, he was given all his check-in
baggage except the attache case. Because Rapadas felt
ill, he sent his son to request for search of the missing
luggage. Eventually, Rapadas received a letter from Pan
Am's counsel offering to settle the claim for the sum
of $160.00 representing Pan Am's alleged limit of liability
for loss or damage to a passengers personal property
under the contract of carriage between Rapadas and
Pan Am.
ISSUE: Is Pan American Airways liable for the lost
check-in baggage?
COURT RULING:
Notice of limited liability in airline tickets
On page 2 of the airline ticket, it states that the Warsaw
Convention governs in case of death or injury to the
passenger or of loss, damage or destruction to a
passenger's luggage. It says: "If the passenger's journey
involves an ultimate destination or stop in a country, the
Warsaw Convention may be applicable and the
conversation governs and in most cases, limits the
liability of carriers for death or personal injury and in
respect of loss or damage to baggage."
Passenger is expected to be vigilant with respect to his
baggage
In this case, Rapadas actually manifested a disregard
with the airline rules insofar as his baggages are
concerned. He failed to state the value of the said checkin baggage and failed to remove whatever check-in
valuables he had in which should have been placed in
his allowable hand-carry baggage instead.
EASTERN
SHIPPING
LINES,
INTERMEDIATE APPELLATE COURT

INC

vs.

Facts:
June, 1977 M/S ASIATICA, a Vessel operated by
Eastern Shipping Lines was bound for Manila from
Japan. It loaded:
* 5,000 pieces of colorized lance pipes in 28 packages
valued at P256,039.00 consigned to Philippine Blooming
Mills Co., Inc.,
*7 cases of spare parts valued at P92,361.75, consigned
to Central Textile Mills, Inc.
Both were insured from marine risks with Development
Insurance and Surety Corp.
*It also took 128 cartoons of garment fabrics and
accessories in 2 containers consigned to Mariveles
Apparel Corp
*2 Cases of surveying instruments consigned to Aman
Enterprises and General Merchandise.
The shipments were insured with DOWA Fire and
Marine Insurance Co. and Nisshin Fire and marine
Insurance Co. respectably.

En Route from Kobe to Manila the vessel caught fire

and sank losing all its shipment. The insurance
companies paid for the insurance of the above
mentioned shipments. A case is then instituted a case to
redeem the insurance that they paid to the various
companies against Eastern Shipping Lines. They
contend that Eastern should not be exempted from
liability because it was not able to exercise due diligence
in preventing the occurrence of the fire as well as its
unseaworthiness.
Eastern Shipping invoked the Carriage of Goods by Sea
Act as a defense wherein it is said to be exempt from the
said liability. The Fire was said to be one of the
exempting circumstance under the act. It also contended
that it the fire occurred as a fortuitous event such as a
natural disaster or calamity which leads them to
conclude that they should not be made liable.
Issue:
What Law Should be applied in case of breach in the
said shipment
In case of conflict what law should be applied ( COGSA
and New Civil Code)
Held:
It is the law of the country to which the goods are to be
transported.
Article 1753. The law of the country to which the goods
are to be transported shall govern the liability of the
common carrier for their loss, destruction, or
deterioration.
Furthermore, the issue of Conflict of Law is then settled
by the Supreme Court. Wherein According to COGSA
(CARRIAGE OF GOODS BY SEA ACT) it is then
provides for the exception on the part of the common
carrier in cases of fire while in the journey. On the
contrary according New Civil Code of the Philippines
Article 1734, Common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes: (1) flood,
storm, earthquake, lightning or other natural disaster or
calamity.
It is then provided under Article 1766 that In all matters
not regulated by this Code, the rights and obligations of
common carriers shall be governed by the Code of
Commerce and by Special laws It is therefore be the
New Civil Code that shall be applied before the said
COGSA. The law of the destination would then be
applicable over the special laws such as the COGSA.
COGSA will only be applicable in cases where the
matter is not regulated by the Code.
SEA-LAND SERVICE V IAC
Facts: Sea-land, a foreign shipping and forwarding
company licensed to do business in the Philippines,
received from Seaborne Trading Company in California
a shipment consigned to Sen Hiap Hing. The shipper not
having declared the value of the shipment, no value was
indicated in the BOL. The shipment was discharged in
Manila, and while awaiting transshipment to Cebu the
cargo was stolen and never recovered. The lower court
sentences Sea-land to pay Cue the value of the lost
cargo, the unrealized profit and attorneys fees. The CA
affirmed the decision, hence the petition.
Issue: Whether or not the consignee of seaborne freight
is bound by stipulations in the covering bill of lading
limiting to a fixed amount the liability of the carrier for
loss or damage to the cargo where its value is not
declared in the bill.

Held: Yes. There is no question of the right of a

consignee in a bill of lading to recover from the carrier or
shipper for loss of, or damage to, goods being
transported under said bill, although that document may
have been drawn up only by the consignor and the
carrier without the intervention of the consignee.
Since the liability of a common carrier for loss of or
damage to goods transported by it under a contract of
carriage so governed by the laws of the country of
destination and the goods in question were shipped from
the United States to the Philippines, the liability of SeaLand has Cue is governed primarily by the Civil Code,
and as ordained by the said Code, supplementary, in all
matters not cluttered thereby, by the Code of Commerce
and special laws. One of these supplementary special
laws is the Carriage of goods by Sea Act (COGSA),
made applicable to all contracts for the carriage by sea
to and from the Philippines Ports in Foreign Trade by
Comm. Act. 65.
Even if Section 4(5) of COGSA did not list the validity
and binding effect of the liability limitation clause in the
bill of lading here are fully substantial on the basis alone
of Article 1749 and 1750 of the Civil Code. The justices
of such stipulation is implicit in its giving the owner or
shipper the option of avoiding accrual of liability limitation
by the simple expedient of declaring the value of the
shipment in the bill of lading.
The stipulation in the bill of lading limiting the liability of
Sea-Land for loss or damages to the shipment covered
by said rule to US$500 per package unless the shipper
declares the value of the shipment and pays additional
charges is valid and binding on Cue.
SARKIES TOURS v CA
FACTS:
On August 31, 1984, Fatima boarded petitioners De
luxe bus in Manila on her way to Legaspi City. Her
brother helped her load three pieces of luggage
containing all of her optometry review books, materials

and equipment, trial contact lenses, passport and visa.

Her belongings were kept in the baggage compartment
and during the stopover at Daet, it was discovered that
only one bag had remained in the baggage
compartment. Some of the passengers suggested
retracing the route to try to recover the items, but the
driver ignored them and proceeded to Legaspi City.
Fatima reported the loss to her mother, who went to
petitioners office. Petitioner merely offered her one
thousand pesos for each piece of luggage lost, which
she turned down. Fatima asked the help of radio stations
and even from Philtranco bus drivers who plied the same
route. Thus, one of Fatimas bags was recovered.
Respondents, through counsel, demanded satisfaction
of their complaint from petitioner. Petitioner apologized
through a letter. After more than nine months of fruitless
waiting, respondents decided to file the case.
The trial court ruled in favor of respondents. On appeal,
the appellate court affirmed the trial courts judgment.
Issue: Whether or not petitioner is liable for the lost
baggages of Fatima.
Held: The petitioner is liable for the lost baggages.
Under the Civil Code, common carriers from the nature
of their business and for reasons of public policy are
bound to observe extraordinary diligence and vigilance
over goods transported by the, and this liability last
from the time the goods are unconditionally placed in the
possession of, and received by the carrier for
transportation until the same are delivered, actually or
constructively, by the carrier to the person who has a
right to receive them, unless the loss is due to any of
the excepted causes under Article 1734 thereof.
In the case at bar, the cause of the loss was petitioners
negligence in not ensuring that the doors of the baggage
compartment of its bus were securely fastened. As a
result of this lack of care, almost all the baggage was
lost to the prejudice of the paying passengers. Thus,
petitioner is held liable.
The Court affirmed the decision of the Court of Appeals
with modification.