TRANSPORTATION LAW

FINAL EXAMNINATION
December 14, 2018

1. On July 19, 1990, Cardia Limited (CARDIA) shipped on board the vessel M/V Pakarti Tiga at Shanghai
Port China, 8,260 metric tons or 165,200 bags of Grey Portland Cement to be discharged at the Port of Manila
and delivered to its consignee, Heindrich Trading Corp. (HEINDRICH). The subject shipment was insured with
respondents, FGU Insurance Corp. (FGU) and Pioneer Insurance and Surety Corp. (PIONEER), against all risks
under Marine Open Policy No. 062890275 for the amount of P18,048,421.00. P.T. Pakarti Tata (PAKARTI)
owns the subject vessel that it chartered to Shinwa Kaiun Kaisha Ltd. (SHINWA). Representing itself as owner
of the vessel, SHINWA entered into a charter party contract with Sky International, Inc. (SKY), an agent of Kee
Yeh Maritime Co. (KEE YEH), which further chartered it to Regency Express Lines S.A. (REGENCY), Thus, it
was REGENCY that directly dealt with consignee HEINDRICH, and accordingly, issued Clean Bill of Lading.
On July 23, 1990, the vessel arrived at the Port of Manila and the shipment was discharged. However, upon
inspection of HEINDRICH and petitioner Ace Navigation Co., Inc. (ACENAV), agent of CARDIA, it was found
that out of the 165,200 bags of cement, 43,905 bags were in bad order and condition. Unable to collect the
sustained damages in the amount of P1,423,454.60 from the shipper, CARDIA, and the charterer, REGENCY,
the respondents, as co-insurers of the cargo, each paid the consignee, HEINDRICH, the amounts of P427,036.40
and P284,690.94, respectively, and consequently became subrogated to all the rights and causes of action
accruing to HEINDRICH. On August 8, 1991, respondents filed a complaint for damages against the following
defendants: "REGENCY EXPRESS LINES, S.A./UNKNOWN CHARTERER OF THE VESSEL TAKARTI
TIGA'/UNKNOWN OWNER and/or DEMIFE (sic) CHARTERER OF THE VESSEL TAKARTI TIGA', SKY
INTERNATIONAL, INC. and/or ACE NAVIGATION COMPANY, INC." Maintaining that it was not a party to
the bill of lading, ACENAV asserts that it cannot be held liable for the damages sought to be collected by the
respondents. It also alleged that since its principal, CARDIA, was not impleaded as a party-
defendant/respondent in the instant suit, no liability can therefore attach to it as a mere agent. Who are the
parties in the bill of lading?
2. Juan, a paying passenger, noted the stipulation at the back of the bus ticket stating that the liability of
the bus company is limited to P1,000.00 in case of injuries to its passengers and to P500.00 in case of loss or
damage to baggage caused by the negligence or willful acts of its employees. Upon arrival at his destination,
Juan got into an altercation with the ticket conductor, who pulled out a knife and inflicted several wounds on
Juan. The bus driver intervened, heaping abusive language on Juan and completely destroying Juan's baggage
which contained expensive goods worth P3,000.00. The hospital expenses for Juan would probably amount to at
least P6,000.00. Give the extent of the liability of the bus company.
3. Mabuhay Lines, Inc., a common carrier, entered into a contract with Company X, whereby it agreed to
furnish Company X, for a fixed amount, a bus for a company excursion on its anniversary day. It was agreed
that Company X would have the use of the bus and its driver from 7:00 A.M. to 7:00 P.M. on the stipulated date,
and that the bus driver would be obliged to follow the instructions of the company's general manager as to the
places to be visited. Company X agreed to bear the cost of the gasoline consumed. The transportation contract
signed by Company X contained a stipulation that Mabuhay Lines, Inc., would be exempt from liability on
account of acts or omissions of its employees. On the return trip from the excursion site, the bus had an accident
and several employees of Company X were injured. State the liability, if any, of Mabuhay Lines, Inc.
4. A takes a plane from Manila bound for Cagayan de Oro via Cebu, where there was a change of planes.
A arrived at Cagayan de Oro safely, but to his dismay, his two suitcases were left behind in Cebu. The airline
company assured him that the suitcases would come in the next flight but they never did. A claims P1,000.00
damages for the loss of the both suitcases, but the airline is willing to pay only P400.00 on the ground that the
airline ticket stipulates that unless a higher value is declared; any claim for loss cannot exceed P200.00 for each
luggage. A had not declared a greater value, despite the fact that the clerk had called his attention to the
stipulation in the ticket. Is A entitled to P1,000.00 or only P400.00? Explain.
5. Doña Buding checked in at the PAL counter of the Manila Domestic Airport on a flight to Bacolod.
Noticing that Doña Buding had two baggages being checked in, the counter clerk called her attention to the
stipulation in the plane ticket and asked if she was going to make any declaration on the value of the same, but
Doña Buding just looked at him and did not say anything. The plane arrived in Bacolod, but the two baggages
were nowhere to be found. PAL promised to deliver the two baggages the next day, but it never did. Doña
Buding sued PAL, claiming P10,000.00 damages for the loss of the two baggages. PAL answered that it was
liable for P200.00 for the plane ticket clearly stipulated that: "That total liability of the carrier for lost or
damaged baggage is limited to P100.00 per baggage, unless the passenger declares a higher valuation in excess
of P100.00 but not in excess, however, of a total valuation of P1,000.00 and unless additional charges are paid
pursuant to Carrier's Tariffs." The trial court ruled in favor of PAL. Comment on the legality of the court's
decision.
6. X shipped through MN Kalayaan, spare parts worth P500,000.00. The bill of lading limits the liability
of the carrier to P500.00 and contains a notation indicating the amount of the letter of credit (i.e., P500,000.00)
which X obtained from a bank to import the spare parts. The spare parts were not delivered to X so X sued the
carrier for P500,000.00. Decide.
7. Martin Nove shipped an expensive video equipment to a friend in Cebu. Martin had bought the
equipment from Hong Kong for $5,000. The equipment was shipped through MIS Lapu-lapu under a bill of
lading which contained the following provision in big bold letters: "The limit of the carrier's liability for any loss
or damage to cargo shall be P200 regardless of the actual value of such cargo, whether declared by its shipper or
otherwise." The cargo was totally damaged before reaching Cebu. Martin Nove claimed for the value of his
cargo ($5,000) instead of just P200.00 as per limitation on the bill of lading. Is there any legal basis for Nove's
claim?
8. In a plane ticket stub of Air Manila (AMI), there appears a statement that the liability "if any loss or
damage of checked in baggage or for delay in the delivery thereof of the AMI "is limited to its value and unless
the passenger declares in advance a higher valuation and pays an additional charge therefore, the value shall be
conclusively deemed not to exceed P100.00 for each ticket." A passenger whose baggage was lost in transit from
Manila to Cebu sued for a higher amount, i.e., P5,000.00. May AMI successfully claim that the above statement
precludes the plaintiff from asking more than P100.00? Decide. Give reasons for your answers.
9. A, in Holland, shipped on board a vessel owned by B, 500 cases of canned milk to consignee C in
Iloilo. Upon arrival, the vessel discharged the canned milk into the custody and possession of the arrastre
operator appointed by the Bureau of Customs. In the Bill of Lading, it was stipulated that the vessel is no longer
liable for the cargo upon its delivery to the hands of the customs authorities. The cargo checker of the arrastre
found the cargo to be in good order. Upon delivery to the consignee, a marine surveyor found 20 cases of milk
missing. C sued B for the value of the missing cases on the ground that under the contract of carriage, B was
obliged to deliver the cargo safely to the consignee and that the stipulation limiting the liability of the carrier is
contrary to morals and public policy. B disclaims liability for short delivery. Decide the dispute, with reasons.
10. Discuss whether or not the following stipulations in a contract of carriage of a common carrier are
valid: B) a stipulation limiting the sum that may be recovered by the shipper or owner to 90% of the value of the
goods in case of loss due to theft: b) A stipulation that in the event of loss, destruction or deterioration of goods
on account of the defective condition of the vehicle used in the contract of carriage, the carrier's liability is
limited to the value of the goods appearing in the bill of lading unless the shipper or owner declares a higher
value.
11. :Suppose "A" was riding on an airplane of a common carrier when the accident happened and "A"
suffered serious injuries. In an action by "A" against the common carrier, the latter claimed that — (1) there was
a stipulation in the ticket issued to "A" absolutely exempting the carrier from liability from the passenger's death
or injuries and notices were posted by the common carrier dispensing with the extraordinary diligence of the
carrier, and (2) "A" was given a discount on his plane fare thereby reducing the liability of the common carrier
with respect to "A" in particular. Are those defenses valid? What are the defenses available to any common
carrier to limit or exempt it from liability?
12. On December 19, 2000, Novartis Consumer Health Philippines, Inc. (NOVARTIS) imported from
Jinsuk Trading Co. Ltd., (JINSUK) in South Korea, 19 pallets of 200 rolls of Ovaltine Power, 18 Glaminated
plastic packaging material. In order to ship the goods to the Philippines, JINSUK engaged the services of Protop
Shipping Corporation (PROTOP), a freight forwarder likewise based in South Korea, to forward the goods to
their consignee, NOVARTIS. The Bill of Lading issued by PROTOP provides that the cargo was on freight
prepaid basis and on "shipper's load and count" which means that the "container [was] packed with cargo by one
shipper where the quantity, description and condition of the cargo is the sole responsibility of the shipper."
Likewise stated in the bill of lading is the name Sagawa Express Phils., Inc., (SAGAWA) designated as the
entity in the Philippines which will obtain the delivery contract. PROTOP shipped the cargo through Dongnama
Shipping Co. Ltd. (DONGNAMA) which in turn loaded the same on M/V Heung-A Bangkok V-019 owned and
operated by Heung-A Shipping Corporation, (HEUNG-A), a Korean corporation, pursuant to a 'slot charter
agreement' whereby a space in the latter's vessel was reserved for the exclusive use of the former. Wallem
Philippines Shipping, Inc. (WALLEM) is the ship agent of HEUNG-A in the Philippines. NOVARTIS insured
the shipment with Philam Insurance Company, Inc. (PHILAM, now Chartis Philippines Insurance, Inc.) against
all loss, damage, liability, or expense before, during transit and even after the discharge of the shipment from the
carrying vessel until its complete delivery to the consignee's premises. The vessel arrived at the port of Manila,
South Harbor, on December 27, 2000 and was discharged without exception into the possession, custody and
care of Asian Terminals, Inc. (ATI) as the customs arrastre operator. The shipment was thereafter withdrawn on
January 4, 2001 by NOVARTIS' appointed broker, Stephanie Customs Brokerage Corporation (STEPHANIE)
from ATI's container yard. The shipment reached NOVARTIS' premises on January 5, 2001. Upon inspection, it
was discovered that the boxes of the shipment were wet and damp. The boxes on one side of the van were in
disarray while others were opened or damaged due to the dampness. Parts of the container van were damaged
and rusty. There were also water droplets on the walls and the floor was wet. Since the damaged packaging
materials might contaminate the product they were meant to hold, the entire shipment was rejected. Chemical
analysis showed that the cause of wetting in the carton boxes and kraft paper/lining materials as well as the
aluminum foil laminated plastic packaging material, was salt water. The issues that were resolved are as follows:
(a) Whether HEUNG-A, WALLEM and PROTOP are liable for the damage to the shipment; and if so (b)
Whether HEUNG-A's liability can be limited to US$500 per package pursuant to the COGSA.
13. While docking the vessel, "Taurus," the master, through negligence, damaged the wharf and the
merchandise loaded on the deck. The owner of the wharf and the owner of the damaged merchandise sued the
owner of the vessel and master of the vessel for the damage.a) What is the basis of the liability of the owner of
the vessel with respect to the damage to the wharf? b) With respect to the damage to the merchandise?

14. X, a businessman boarded a Pantranco bus bound for Dagupan City where he would meet Y, to arrange
a business transaction. Somewhere in San Fernando, Z, the Deputy Sheriff, intercepted and seized the Pantranco
but at the instance of W who had earlier obtained from the court a writ of attachment. As a result of the seizure
by the sheriff, X failed to reach Dagupan City where he was supposed to transact business. Feeling aggrieved by
the loss of an otherwise juicy transaction, sued Pantranco for breach of contract. Decide.
15. A, as paying passenger, boarded a plan of X & Co., a duly authorized air carrier bound from Manila to
Cebu. On the way, the plane exploded in mid-air, and crashed, causing the death of all persons on board. It was
determined that the mid-air explosion was due to the explosive device contained in a suitcase by another
passenger in the ill-fated aircraft. If you are the judge, how will you rule?
16. On September 1, 1983, Korean Air Lines (KAL) Flight 007, while on its way to New York, strayed off-
course into the airspace of the then Union of Soviet Socialist Republic (USSR). The USSR military sot it down
over the sea of Japan thereby resulting in the death of 269 passengers. It was established that the crew repeatedly
made aware of the deviation but elected not to reported the deviation, continued the flight and continued to
report being on course. Was there willful misconduct that is contemplated under the Warsaw Convention?
17. PR purchased from S Airlines in Manila conjunction tickets for Manila -Singapore - Athens -Larnaca -
Rome - Turin - Zurich - Geneva - Copenhagen - New York. X Airline was not a participating airline in any of the
segments in the itinerary under the said conjunction tickets. In Geneva the PR decided to forego his trip to
Copenhagen and to go straight to New York and in the absence of a direct flight under his conjunction tickets
from Geneva to New York, PR on June 7, 1989 exchanged the unused portion of the conjunction ticket for a
one-way ticket from Geneva to New York from the petitioner airline. X Airline issued its own ticket to PR in
Geneva and claimed the value of the unused portion of the conjunction ticket from the IATA clearing house in
Geneva. Later, PR filed an action for damages against X Airline before the regional trial court of Cebu for the
alleged embarassment and mental anguish he suffered at the Geneva Airport when the petitioner’s security
officers prevented him from boarding the plane, detained him for about an hour and allowed him to board the
plane only after all the other passengers have boarded. One of the defenses relied upon by X Airline is that the
case cannot be filed in Manila because the ticket was issued in Geneva and no part of the flight of X Airline
occurred in Manila. Is such defense tenable?
18. Pablo Esparadon, a duly-licensed ship captain of the MN Don Jose was drunk while he was on duty as
such, and while M/V Don Jose was sailing from Manila to the Visayas. As a consequence thereof, the WV Don
Jose rammed another vessel near Corregidor, causing both vessel to sink completely and thus become total
losses. The cargo owner of both sunken vessels sued the owner of the WV Don Jose for their losses. Is the ship
owner of MN Don Jose liable? Explain your answer?
19. Toni, a copra dealer, loaded 1,000 sacks of copra on board the vessel M/V Tonichi (a common carrier
engaged in coastwise trade owned by Ichi) for shipment from Puerto Galera to Manila. The cargo did not reach
Manila because the vessel capsized and sank with all its cargo. When Toni sued Ichi for damages based on
breach of contract, the latter invoked the “limited liability rule.” a) What do you understand of the rule invoked
by Ichi? b) Are there exceptions to the limited liability rule.
20. X, a rich trader, boarded the MN Cebu, a small vessel within a value P3M and owned by Y, plying the
route Cotabato to Pagadian City. X had in his possession a diamond worth ₱5M. The vessel has a capacity, of 40
passengers. Near Pagadian, the vessel met equally weather and was hit by six-foot waves every three seconds.
Soon, water entered the engine room and the hull of the vessel. The patron of the water ordered the distribution
of life belts to the passengers. He told them the vessel was sinking and for them to take care of themselves. The
Vessel turned out to be overloaded by 20 passengers and had no sufficient life belts. X failed to get a life belt
and died when the vessel totally sunk. The heirs of X sued Y for ₱IOM damages. Y raised the defense of limited
liability. Decide.
21. Captain Hook, the ship captain of MN Peter Pan, overloaded the MN Peter Pan, as a consequence of
which the vessel sank in the middle of the 8qu Sea, and nothing whatsoever was recovered. The owners of the
cargo and the heirs of the three passengers of the vessel tiled an action for damages in the amount of ₱500,000
against Mr. Wendy, the owner. Will the action prosper? Reasons.
22. X shipping Company spent almost a fortune in refitting and repairing its luxury passenger vessel, the
MV Marina, which plied the inter- island routes of the company from La Union in the north to Davao City in the
south. The MV Marina met an untimely fate during its poet-repair voyage. It sank off the coast of Zambales
while en route to La Union from Manila. The investigation showed that the captain alone was negligent. There
were no casualties in that disaster. Faced with a claim for the payment of the refitting and repair, X Shipping
Company asserted exemption from liability on the basis of the hypothecary or limited liability rule under Article
537 of the Code of Commerce. Is X Shipping Company’s assertion valid? Explain.
23. MV Mariposa, one of five passenger ships owned by Marina Navigation Co., sank off the coast of
Mindoro while en route to Iloilo City. More than 200 passengers perished in the disaster. Evidence showed that
the ship captain ignored typhoon bulletins issued by PAGASA during the 24-hour period immediately prior to
the vessel’s departure from Manila. The bulletins warned all types of sea crafts to avoid the typhoon’s expected
path near Mindoro. To make matters worse, he took more load than was allowed for the ship’s rated capacity.
Sued for damages by the victim’s surviving relatives, Marina Nav. Co contented 1) that its liability, if any, had
been extinguished with the sinking of MV Mariposa; 2) that assuming it had not been so extinguished, such
liability should be limited to the loss of the cargo. Are these contentions meritorious in the context of applicable
provisions of the Code of Commerce?
24. Two vessels figured in a collision along the Straits of Guimaras resulting in considerable loss of cargo.
The damaged vessels were safely conducted to the Port of Iloilo. Passenger A failed to file a maritime protest. B,
a non-passenger but a shipper who suffered damage to his cargo, likewise did not tile a maritime protest at
all.What is a maritime protest? Can A and B successfully maintain and recover losses and damages arising from
the collision? Reason briefly.
25. On February 10, 1927, the plaintiff, who is a resident of the municipality of Silay, Occidental Negros,
was desirous of embarking upon the interisland steamer San Jacinto in order to go to Iloilo. This boat was at the
time in the anchoring ground of the port of Silay, some half a mile distant from the port. The plaintiff therefore
embarked at the landing in the motor boat Jison, which was then engaged in conveying passengers and luggage
back and forth from the landing to boats at anchor, and which was owned and Operated by the defendant Albino
Jison, with Juan Duruelo as patron. The engineer (maquinista) aboard on this trip was one Rodolin Duruelo, a
boy of only 16 years of age. He is alleged to have been a mere novice without experience in the running of
motor boats; and the day of the occurrence now in contemplation is said to have been the third day of his
apprenticeship in this capacity. It is alleged that the Jison, upon this trip, was grossly overladen, having aboard
14 passengers, while its capacity was only for eight or nine.
26. As the motor boat approached the San Jacinto in a perfectly quiet sea, it came too near to the stern of
the ship, and as the propeller of the ship had not yet ceased to turn, the blades of the propeller struck the motor
boat and sank it at once. It is alleged in the complaint that the approach of the Jison to this dangerous proximity
with the propeller of the San Jacinto was due to the fault, negligence and lack of skill of the defendant Juan
Duruelo, as patron of the Jison. As the Jison sank, the plaintiff was thrown into the water against the propeller,
and the revolving blades inflicted various injuries upon him, consisting of a bruise in the breast, two serious
fractures of the bones of the left leg, and a compound fracture of the left femur. As a consequence of these
injuries the plaintiff was kept in bed in a hospital in the City of Manila from the February 28 until October 19 of
the year 1927, or approximately eight months. The plaintiff then filed an action for damages against the
defendant. The defendant moved to dismiss the complaint on the ground that the complaint does not allege that a
protest had been presented by the plaintiff, within 24 hours after the occurrence, to the competent authority at
the port where the accident occurred in accordance to Article 835 of the Code of Commerce. Is protest under
Article 835 necessary?
27. X Mining Co. shipped a cargo of machineries on board the S/S Good Ship which was chartered by the
Able Shipping Co., a foreign corporation represented in the Philippines by its agent, Best Lines, Inc. When the
goods were delivered to the consignee, Y Corporation, they were found to have sustained losses. The insurer,
Sunshine Insurance Co., paid for the losses, thereby subrogating itself to the rights of X Mining Co. of Y Mining
Co. vis-a-vis the shipping company and the shipping agent. Upon arrival of the S/S Good Ship in Manila, Beet
Lines, Inc. took charge of the following: (a) unloading of the cargo and issuing of cargo receipts in its name for
the purpose of evidencing the condition and the discharge of the cargo from the vessel to the arrastre operator
and/or unto the barge lighters; (b) filing and processing of claims against the vessel S/S Good Ship for
damages/losses sustained by the cargo. When Sunshine Insurance Co. sued both Able Shipping Co. and Best
Lines, Inc. the latter contended that it was a disclosed agent and could not therefore be held liable, despite the
insolvency of Able Shipping Co. Rule on the contention of Best Lines, Inc. with reasons.
28. S shipped goods from Australia on board a foreign vessel owned and operated by X Shipping Co.,
based in Australia and represented in the Philippines by R. The goods were consigned to T of Manila and
insured by U against all risks. Upon arrival in Manila Bay, the goods were discharged from the vessel to a
lighter owned by the Bay Brokerage Co. When delivered to and received by T. the goods were found to have
sustained losses or damages. Evidence disclosed that the damage occurred while the goods were in the custody
of the carrier.The insurance company paid the amount of the loss but sought reimbursement from X and/or R. R
disclaimed any liability alleging that he is a mere agent of X, and having acted as agent of a disclosed principal
is, therefore, not liable. Can the insurance company recover from R? Reasons.
29. Under a charter party, XXO trading Company shipped sugar to Coca-Cola Company through SS
Negros Shipping Corp., insured by Capitol Insurance Company. The cargo arrived but with shortages. Coca-
Cola demanded from Capitol Insurance Co. P500.00 in settlement for XXO Trading. The MM Regional Trial
Court, where the civil suit was filed, “absolved the insurance company, declaring that under the Code of
Commerce, the shipping agent is civilly liable for damages in favor of third persons due to the conduct of the
carrier’s captain, and the stipulation in the charter party exempting the owner from liability is not against public
policy. Coca-Cola appealed. Will its appeal prosper? Reason briefly.
30. X owns the ship M/V Aguinaldo. He bareboat chartered the ship to Y who appointed all its crew
members from the captain down to its last official. Y then transported a shipment of 10,000 bags of sugar
belonging to Z. Through the negligence of the ship captain, half of the sugar was damaged due to sea water.
Since Y is bankrupt, Z sued the captain and X. Will the suit succeed?
31. X chartered the ship of Y to transport his logs from Zamboanga to Manila. In the course of their
voyage, the ship met a storm and had to dock in Cebu for three days. Z, the captain of the ship borrowed
P20,000.00 from X on the pretext that he would need the money for the repair of the ship. Z misappropriated the
money and converted it to his own benefit. What is the liability of Y, if any?
32. Private respondents purchased first-class tickets from petitioner at the latter’s office in Cebu City. They
were to board petitioner’s vessel, M/V Sweet Grace, bound for Catbalogan, Western Samar. Instead of departing
at the scheduled hour of about midnight on July 8, 1972, the vessel set sail at 3:00 A.M. of July 9, 1972 only to
be towed back to Cebu due to engine trouble, arriving there at about 4:00 P.M. on the same day. Repairs having
been accomplished, the vessel lifted anchor again on July 10, 1972 at around 8:00 A.M. Instead of docking at
Catbalogan, which was the first port of call, the vessel proceeded direct to Tacloban at around 9:00 PM. of July
10, 1972. Private respondents had no recourse but to disembark and board a ferryboat to Catbalogan. Is the
carrier liable to the private respondent?
33. The Sand Developing Corporation enters into a voyage charter with XYZ Shipping Corporation, over
the latter’s vessel, M/V Lady Love. Before the Sand Development Corporation could load it, XYZ Shipping
Corporation sold M/V Lady Love to Oslob Maritime Corp., which decided to load it for its own amount. a) May
XYZ Shipping Corporation validly ask for the rescission of the Charter Party? If so, can Sand Development
Corporation recover damages? To what extent? b) If the Oslob Maritime Corporation, did not load it for its own
account, is it bound by the charter party? c) Explain the meaning of “Owner Pro Hac Vice” of the vessel. In
what kind of charter party does this obtain?
34. O’Farrel y Cia, operating under the tradename Malaysian Navigation Company, entered into an
agreement with the Manila Electric Co. whereby the Malaysian Navigation Co. undertook to transport seventy-
five thousand tons of coal (10 per cent more or less), from Hongay to Manila at the freight rate of four pesos and
fifty centavos (4.50), per ton of 1,016 kilos, less a rebate of 1 per cent. The agreement provides that “loading to
be for account and risk of shippers according to customary quick dispatch subject to turn of mines.” The practice
followed by the parties in the performance of this contract was that, upon the receipt of information in Manila by
the defendant company from the coal company, advising that a cargo of coal was, or soon would be available in
Hongay, the message was turned over to O’Farrel y Cia, and the latter company made the arrangements for the
sending of a boat to Hongay. But delay in the taking on of coal occurred in Hongay, owing to the inability of the
coal company to deliver the coal to the waiting boats. The preponderance of the proof shows that this delay was
due to the fact that the cranes of the coal company at Hongay were defective and often out of order. At any rate
the result was that the plaintiff’s boats were frequently kept waiting in the port; and it in fact appears that
altogether they were held there idle one hundred twenty-three days, to say nothing of the time occupied in the
lading of the ships after their turn had come for taking cargo. Hence, these delays were attributable to the coal
company. Malaysian Navigation Company is now demanding payment of demurrage from the Manila Electric
Company. Will the claim prosper?
35. MV SuperFast, a passenger-cargo vessel owned by SF Shipping Company plying the inter-island
routes, was on its way to Zamboanga City from the Manila port when it accidentally, and without fault or
negligence of anyone on the ship, hit a huge floating object. The accident caused damage to the vessel and loss
of an accompanying crated cargo of passenger PR. In order to lighten the vessel and save it from sinking and in
order to avoid risk of damage to loss of the rest of the shipped items (none of which was located on the deck),
some had to be jettisoned. SF Shipping had the vessel repaired at its port of destination. SF Shipping thereafter
filed a complaint demanding all the other cargo owners to share in the total repair costs incurred by the company
and in the value of the lost and jettisoned cargoes. In answer to the complaint, the shippers’ sole contention was
that, under the Code of Commerce, each damaged party should bear its or his own damage and those that did not
suffer any loss or damage were not obligated to make any contribution in favor of those who did. Is the shipper’s
contention valid? Explain.
36. The SS “San Antonio,” vessel owned and operated by plaintiff, left Manila on October 6, 1949, bound
for Basco, Batanes, via Aparri, Cagayan, with general cargo belonging to different shippers, among them the
defendant. The vessel reached Aparri on the 10th of that month, and after a day's stopover in that port, weighed
anchor to proceed to Basco. But while still in port, it ran aground at the mouth of the Cagayan River due to the
unforeseeable sudden shifting of the sandbars at the mouth of the river. Attempts to refloat it under its own
power having failed, plaintiff had it refloated by the Luzon Stevedoring Co. at an agreed compensation in order
to enable it “to proceed to its port of destination.” Once afloat the vessel returned to Manila to refuel and then
proceeded to Basco, the port of destination. There the cargoes were delivered to their respective owners or
consignees, who, with the exception of defendant, made a deposit or signed a bond to answer for their
contribution to the average. Is the cost of refloating considered a general average?
37. Two vessels coming from the opposite directions collided with each other due to fault imputable to both.
What are the liabilities of the two vessels with respect to the damage caused to them and their cargoes?
38. Vessels "U" and "V"collided with each other causing damage to both vessels. Vessel "U" had the last
clear chance to avoid collision but failed to do so. Is the doctrine of last clear chance in tort applicable to
collisions of vessels at sea under the Code of Commerce? Which vessel should shoulder the liability for the
damage suffered by both vessels and by the cargo?
39. Vessels "U" and "V" collided with each other causing damage to both vessels. Vessel U had the last
clear chance of avoiding the collision but failed to do so. Assume that the negligence of the captain of vessel
"U" was the proximate cause of the collision, while the negligence of the captain of vessel "V" was merely
contributory. To which vessel should the collision be deemed imputable?
40. If it cannot be determined which of the two vessels was at fault resulting in the collision, which party
should bear the damage caused to the vessels and the cargoes? Explain.
41. There was a severe typhoon when the vessel M/V Fortuna collided with M/V Suerte. It is conceded that
the typhoon was a major cause of the collision, although there was a strong possibility that it could have been
avoided if the captain of the M/V Fortuna was not drunk and the captain of M/V Suerte was not asleep at the
time of the collision. Who should bear the damages to the vessels and their cargoes?
42. In a collision between M/T Manila, a Tanker Don Claro, an inter-island vessel, M/V Dom Claro sank
and many of its passengers drowned and died. All its cargoes were lost. The collision occurred at night time but
the sea was calm, the weather fair and visibility was good. Prior to the collision and while still four nautical
miles apart, M/V Don Claro sighted M/T Manila on its radar screen. M/T Manila had no radar equipment. As for
speed, M/V Don Claro was twice as fast as M/T Manila.At the time of the collision, M/T Manila failed to follow
Rule 19 of the International Rules of the road which requires two vessels meeting head on to change their course
by each vessel steering to star board (right) so that each vessel may pass on the port side (left) of the other, M/T
Manila signified that it would turn to port side and steered accordingly, thus resulting in the collision. M/T
Claro's captain was off-duty and was having a drink at the ship's bar at the time of the collision. Who would you
hold liable for the collision?
43. In the morning of April 2, 1977, the southbound FS-190 belonging to William Lines, Inc. reached the
waters of the Verde Island Passage. About the same time, the M.S. General del Pilar, another inter-island vessel
owned by the General Shipping, was likewise in the same waters, steaming northward to Manila. The vessels,
coming from opposite directions and towards each other, suddenly collided at a certain point of the passage
which resulted in the sinking of FS-190, together with all its cargoes, part of which belonged to Tanya, who was
a paying passenger and Rafael, who was a shipper. Tanya and Rafael brought action in court to recover for their
losses and for damages arising from the collision. Were they under obligation to file a maritime protest for a
successful maintenance of the action? Why?
44. The steamer Subic, owned by the defendant, collided with the launch Euclid owned by the plaintiff, in
the Bay of Manila at an early hour on the morning of January 9, 1911, and the Euclid sank five minutes
thereafter. The defendant filed an action to recover the value of the Euclid. The court below held from the
evidence submitted that the Euclid was worth at a fair valuation P10,000.00 and that both vessels were
responsible for the collision; and that the loss should be divided equally between the respective owners,
P5,000.00 to be paid to the plaintiff by the defendant, and P5,000.00 to be borne by the plaintiff himself. Is the
decision of the trial court?
45. On September 13, 1914, the British steamer Bengloe owned by W. Thompson & Co., while en route
from Manila to European ports, stranded on the Mayone shoal in the Sulu sea some 25 miles from Brook's Point
on the Island of Palawan. At this time, Jose Fernandez, O. N. Holmsen, and M. A. Macleod, now plaintiffs, were
residents of Palawan. On learning of the abandonment of the Bengloe by her crew, these gentlemen formed a
partnership, with a capital of P1,500.00, for the purpose of salving the vessel and cargo. They hired the launch
Florence of between thirty and forty tons capacity from the provincial authorities of Puerto Princesa, and with a
number of laborers proceeded to the wreck to ascertain its condition, where they arrived on October 7. They
immediately took possession of the vessel and removed 14.937 kilos of copra and certain furniture and effects,
of the approximate value of P2,500.00. Holmes and Fernandez proceeded with the launch to Brook's Point, the
copra and other effects were stored in the Government warehouse. The copra being perishable was later sold by
an order of court and the proceeds amounting to P2,051.63 deposited with the clerk of court. The other articles
were left in the custody of the provincial treasurer of Palawan. Holmsen and Fernandez began negotiations with
various owners of vessels in Manila, including the Neil Macleod and one of the Pujalte boats. Neither of these
boats, however, was ever chartered or placed at the disposition of the plaintiffs.
46. In the meantime, the London Salvage Association acting in the interest of the underwriters of the ship
and the cargo, and with the consent of the ship's agents, engaged Ker & Co. to take charge of the salvage
operations. The latter firm in its turn employed William Swan, an engineer and marine surveyor, to conduct the
work. Swan left Manila on the Coast Guard Cutter Polillo on October 6 for the scene of the wreck. On the way
there, the Polillo intercepted the Paglima, which had the captain and members of the crew of the Bengloe on
board, and took them back to the wreck. Swan, the captain of the Bengloe, and their assistants arrived at the
wreck on October 9, that is, two days after the arrival of Fernandez, Holmsen, and Macleod, and after the copra
and other effects had been removed. Macleod and the two laborers found on board were shown scant hospitality
by the second party, and were pointedly given to understand that their presence was not desired. Against his
vigorous protest, MaCleod was finally forced to leave the vessel by the captain of the Polillo and a lieutenant of
the Constabulary sent to the wreck with constabulary soldiers to protect it from plunder. When the other
plaintiffs Holmsen and Fernandez, returned on the launch, they were prevented from taking any further part in
the salvage operations.Were the first salvors (Fernandez, Holmsen and Macleod) properly compelled to leave
the vessel?Were the first salvors entitled to full salvage compensation?
47. On August 11, 1962, a certain cargo insured with plaintiff corporation was shipped in New York, U.S.A.
aboard "M/S TOREADOR," of which the general agent in the Philippines is appellee Macondray & Co. Inc.
(hereinafter referred to as Macondray). The cargo, with an invoice value of $3,539.61 CIF Cebu, was consigned
to the order of the importer Atlas Consolidated Mining and Development Corporation. Inasmuch as the final
port of call of the "M/S TOREADOR" was Manila, the carrier, in accepting the cargo at the point of shipment,
agreed to transship the same, after its discharge in Manila, aboard an inter-island vessel to its destination in
Cebu. On September 18, 1962 the "M/S TOREADOR" arrived at the port of Manila and on the same date
discharged the cargo in question. Pursuant to the arrangement the cargo was subsequently loaded aboard the "SS
SIQUIJOR, an inter-island vessel. The shipment was finally discharged in Cebu on September 24, 1962. When
the consignee took delivery of the shipment it was found to be short of two pieces of tractor parts. When a case
was filed against Macondray, it moved to dismiss the amended complaint against it on the ground that plaintiff's
action had already prescribed under the provisions of the Carriage of Goods by Sea Act because the reckoning
date was allegedly the date of discharge in Manila. Is the contention tenable?
48. WWW Communications Inc. is an e-commerce company whose present business activity is limited to
providing its clients with all types of information technology hardware. It plans to refocus its corporate direction
of gradually converting itself into a full convergence organization. Toward this objective, the company has been
aggressively acquiring telecommunications businesses and broadcast media enterprises, and consolidating their
corporate structures. The ultimate plan is to have only two organizations: one to own the facilities of the
combined businesses and to develop and produce content materials, and another to operate the facilities and
provide mass media and commercial telecommunications services. WWW Communications will be the flagship
entity which will own the facilities of the conglomerate and provide content to the other new corporation which,
in turn, will operate those facilities and provide the services. WWW Communications seeks your professional
advice on whether or not its reorganized business activity would be considered a public utility requiring a
franchise. What will be your advice? Explain.
49. The private respondent is the owner of the facilities necessary to operate the EDSA LRT III but it is not
enfranchised to operate a public utility. In view of this incapacity, private respondent and DOTC agreed that on
completion date, private respondent will immediately deliver possession of the LRT system by way of lease for
25 years, during which period DOTC shall operate the same as a common carrier and private respondent shall
provide technical maintenance and repair services to DOTC. Technical maintenance consists of providing: (1)
repair and maintenance facilities for the depot and rail lines, services for routine clearing and security; and (2)
producing and distributing maintenance manuals and drawings for the entire system. Private respondent shall
also train DOTC personnel for familiarization with the operation, use, maintenance and repair of the rolling
stock, power plant, substations, electrical, signaling, communications and all other equipment as supplied in the
agreement. By the end of the three-year construction period and upon commencement of normal revenue
operation, DOTC shall be able to operate the EDSA LRT III on its own and train all new personnel by itself.
Fees for private respondent's services shall be included in the rent, which likewise includes the project cost, cost
of replacement of plant equipment and spare parts, investment and financing cost, plus a reasonable rate of
return thereon. Since DOTC shall operate the EDSA LRT III, it shall assume all the obligations and liabilities of
a common carrier. For this purpose, DOTC shall indemnify and hold harmless private respondent from any
losses, damages, injuries or death which may be claimed in the operation or implementation of the system,
except losses, damages, injury or death due to defects in the EDSA LRT III on account of the defective
condition of equipment or facilities or the defective maintenance of such equipment facilities. Is it required for
the private respondent to meet the minimum 60% capitalization requirements under the Constitution?
50. Philippine Gaming Management Corporation (PGMC) entered into a Contract of Lease with Philippine
Charity Sweepstakes Office (PCSO) prescribed under the charter of the PCSO. In the Contract of Lease, PGMC,
the lessor obligated itself to build, at its own expense, all the facilities necessary to operate and maintain a
nationwide on-line lottery system from whom PCSO was to lease the facilities and operate the same. Upon due
examination of the contract, the Court found that PGMC's participation was not confined to the construction and
setting up of the on-line lottery system. It spilled over to the actual operation thereof, becoming indispensable to
the pursuit, conduct, administration and control of the highly technical and sophisticated lottery system.
Assuming for the sake of argument that the activity is a nationalized activity, it required for PGMC to meet the
minimum Filipino capitalization requirement?
51. The Philippine Railway Co. applied that its present rates be considered the maximum and that it be
allowed to fix other lower rates whenever in our opinion it will be to the advantage of the Railway Company to
do so. The Public Service Commission granted Philippine Railway Co. the power of altering its freight rates
whenever it should find it necessary to do so in order to meet the competition of road trucks and autobuses, or to
change its freight rates at will, or to regard its present rates as maximum rates, and to fix lower rates whenever
in the opinion of the Philippine Railway Co. it would be to its advantage to do so. Is the authority given to
Philippine Railway Co. valid?
52. On December 14, 1990, the LTFRB authorized provincial bus operators to collect a P0.37 centavo per
kilometer fare for ordinary buses. At the same time, they were allowed to impose and collect a fare range of plus
or minus 15°0 over the authorized rate. Thus PO.37 centavo per kilometer authorized fare plus P0.05 centavos
(which is 1590 of P0.37 centavos) is equivalent to P0.42 centavos, the allowed rate in 1990. Supposing the
LTFRB grants another P0.05 centavo increase per kilometer in 1994, then, the base or reference for computation
would have to be P0.47 centavos (which is P0.42 + P0.05 centavos). If bus operators will exercise their
authority to impose an additional 2000 over and above the authorized fare, then the fare to be collected shall
amount to P0.56 (that is, P0.47 authorized LTFRB rate plus 20% of PO.47 which is P0.29). In effect, commuters
will be continuously subjected, not only to a double fare adjustment but to a compounding fare as well. On their
part, transport operators shall enjoy a bigger chunk of the pie. Aside from fare increase applied for, they can still
collect an additional amount by virtue of the authorized fare range.
Mathematically, the situation translates into the following:
Year** LTFRB authorized Fare Range Fare to be rate*** collected per kilometer
1990 P0.37 15°6 (P0.05) P0.42
1994 P0.42 + 0.05 = 0.47 20°0 (P0.09) P0.56
1998 P0.56 + 0.05 = 0.61 20% (P0.12) P0.73
2002 £0.73 + 0.05 = 0.78 20°0 0'0,16) P0.94
Was the authority given to the bus operators valid?
53. Acme Transportation Co. has a certificate of public convenience to operate buses in southern Luzon
and the Eastern Visayas, including the Manila-Bicol-Samar-Leyte route. In order to get to Samar, its buses take a
ferry from Matnog, Sorsogon, across the Babuyan Channel, an 8-kilometer ride more or less to the coastal town
of Allen Samar. Acme Transportation Co. finds that the fees it pays for the ferry come to quite a substantial
amount each year and it calculates that it will be more economical to have its own ferry to transport its buses. It
therefore applies for an authorization to operate such ferry as an additional unit of equipment for the exclusive
use of its buses on the Manila-Leyte route.
54. X Lighterage Service Co. which has been operating a ferry service on the said route for the past six
years, objects on the following grounds: (a) the certificate of public convenience of Acme is to operate a land
transportation and this does not include ferry service which is already inter-island shipping. It therefore needs a
new certificate of public convenience to operate inter-island transportation, a mere authority to acquire and
operate an additional unit not being sufficient, and (b) granting that the operation of said ferry is within Acme's
certificate of public convenience, X Lighterage Service Co. is a prior proprietor, and since it is giving adequate
service, there is no need for an additional service on said route. In fact Acme Transportation Co. has been
availing itself of the ferry service of X Lighterage Service Co. for several years. Decide with reasons.
55. A was granted by the Board of Transportation a certificate of public convenience to operate 50
provincial buses, plying between Ilocos Norte and Manila, passing through Rizal Avenue Extension then right
on Doroteo Jose. Because of traffic congestion between hours of 7 and 9 o'clock in the morning, and 4 to 8
o'clock in the evening, a municipal ordinance, was passed prohibiting provincial buses from entering Manila on
these hours but allowing them to use one shuttle bus for every five buses. A challenged the validity of the
ordinance, on the ground that it infringes on his certificate of public convenience, and that he acquired a vested
right to enter Manila at anytime of the day, through the aforementioned route. Decide with reasons.
56. Pepay, a holder of a certificate of public convenience, failed to register the complete number of units
required by her certificate. However, she tried to justify such failure by the accidents that allegedly befell her,
claiming that she was shocked and burdened by the successive accidents and misfortunes that she did not know
what she was doing, she was confused and thrown off tangent momentarily, although she always had the money
and financial ability to buy new trucks or repair the destroyed one. Are the reasons given by Pepay sufficient
grounds to excuse her from completing her units? Explain.
57. Mr. Mangasiwa applied for a certificate of public convenience to operate five jeepneys from the
Batasang Pambansa area to Cubao, Q.C. The application was opposed by Hallelujah Transit and Kingdom Bus
Co., because they are already serving the line. They invoked the "prior or old operator rule" in their opposition.
Mangasiwa, in turn, invoked the "prior applicant rule."
58. Discuss the "prior operator rule" and the limitations or provisos on its application. In case of conflict
between the "prior or old operator rule and the "prior applicant rule," which shall prevail? Explain.
59. Robert is a holder of a certificate of public convenience to operate a taxi cab service in Manila and
suburbs. One evening, one of his taxicab units was boarded by three robbers as they escaped after staging a
hold-up. Because of said incident, the Land Transportation and Regulatory Board revoked the certificate of
public convenience of Robert on the ground that said operator failed to render safe, proper and adequate service
as required under Section 19(a) of the Public Service Act. Was the revocation of the certificate of public
convenience of Robert justified? Explain. Should Antonio's and Carlos' joint application be approved? Give your
reasons. a) May the reliance of X on Section 16(m) of Public Service Act be sustained? Explain. a) Was the
revocation of the certificate of public convenience of Robert justified? Explain.
60. Antonio was granted a certificate of public convenience (CPC) in 1986 to operate a ferry between
Mindoro and Batangas using the motor vessel "MV Lotus." He stopped operations in 1988 due to
unserviceability of the vessel. In 1989, Basilio was granted a CPC for the same route. After a few months, he
discovered that Carlos was operating on his route under Antonio's CPC. Because Basilio filed a complaint for
illegal operations with the Maritime Industry Authority, Antonio and Carlos jointly filed an application for sale
and transfer of Antonio's CPC and substitution of the vessel "MV Lotus" with another owned by Carlos. Should
Antonio's and Carlos' joint application be approved? Give your reasons. a) May the reliance of X on Section
16(m) of Public Service Act be sustained? Explain. b) Was X correct in his contention that under Section 17(f)
of the Public Service Act it is only the Commission that can require compliance with the provisions of the
ordinance? Explain.