BRITISH AIRWAYS vs.

CA

Mahtani decided to visit his relatives in Bombay, India. In anticipation

of his visit, he obtained the services of a certain Mr. Gumar to
prepare his travel plans. The latter, in turn, purchased a ticket from
BA.
Since BA had no direct flights from Manila to Bombay, Mahtani had to
take a flight to Hongkong via PAL, and upon arrival in Hongkong he
had to take a connecting flight to Bombay on board BA.
Mahtani arrived in Bombay he discovered that his luggage was
missing and that upon inquiry from the BA representatives, he was
told that the same might have been diverted to London. After
patiently waiting for his luggage for one week, BA finally advised him
to file a claim by accomplishing the "Property Irregularity Report."
Mahtani filed his complaint for damages and attorney's fees against
BA and Mr. Gumar before the trial court.
BA filed its answer with counter claim to the complaint raising, as
special and affirmative defenses, that Mahtani did not have a cause
of action against it. BA filed a third-party complaint against PAL
alleging that the reason for the non-transfer of the luggage was due
to the latter's late arrival in Hongkong.
PAL filed its answer to the third-party complaint, wherein it
disclaimed any liability, arguing that there was, in fact, adequate
time to transfer the luggage to BA facilities in Hongkong.
Furthermore, the transfer of the luggage to Hongkong authorities
should be considered as transfer to BA.
Trial court rendered its decision in favor of Mahtani, dismissed the
3rd party complaint against PAL.
BA appealed to the Court of Appeals, which however, affirmed the
trial court's findings.

(2) In the transportation of checked baggage and goods, the liability of

the carrier shall be limited to a sum of 250 francs per kilogram, unless
the consignor has made, at time the package was handed over to the
carrier, a special declaration of the value at delivery and has paid a
supplementary sum if the case so requires. In that case the carrier will
be liable to pay a sum not exceeding the declared sum, unless he proves
that the sum is greater than the actual value to the consignor at
delivery.

ISSUE: WON BA is liable to Mahtani. YES.

Before we resolve the issues raised by BA, it is needful to state that

the nature of an airline's contract of carriage partakes of two types,
namely: a contract to deliver a cargo or merchandise to its
destination and a contract to transport passengers to their
destination. A business intended to serve the traveling public
primarily, it is imbued with public interest, hence, the law governing
common carriers imposes an exacting standard. Neglect or
malfeasance by the carrier's employees could predictably furnish
bases for an action for damages.
In the instant case, it is apparent that the contract of carriage was
between Mahtani and BA. Moreover, it is indubitable that his luggage
never arrived in Bombay on time. Therefore, as in a number of cases

we have assessed the airlines' culpability in the form of damages for

breach of contract involving misplaced luggage.
In determining the amount of compensatory damages in this kind of
cases, it is vital that the claimant satisfactorily prove during the trial
the existence of the factual basis of the damages and its causal
connection to defendant's acts.
Admittedly, in a contract of air carriage a declaration by the
passenger of a higher value is needed to recover a greater amount.
Article 22(1) of the Warsaw Convention, provides as follows:

American jurisprudence provides that an air carrier is not liable for

the loss of baggage in an amount in excess of the limits specified in
the tariff which was filed with the proper authorities, such tariff being
binding, on the passenger regardless of the passenger's lack of
knowledge thereof or assent thereto. This doctrine is recognized in
this jurisdiction.
Notwithstanding the foregoing, we have, nevertheless, ruled against
blind reliance on adhesion contracts where the facts and
circumstances justify that they should be disregarded.
In addition, we have held that benefits of limited liability are subject
to waiver such as when the air carrier failed to raise timely
objections during the trial when questions and answers regarding the
actual claims and damages sustained by the passenger were asked.
Given the foregoing postulates, the inescapable conclusion is that BA
had waived the defense of limited liability when it allowed Mahtani to
testify as to the actual damages he incurred due to the
misplacement of his luggage, without any objection.
Parenthetically, the Court of Appeals should have been cognizant of
the well-settled rule that an agent is also responsible for any
negligence in the performance of its function. And is liable for
damages which the principal may suffer by reason of its negligent
act. Hence, the Court of Appeals erred when it opined that BA, being
the principal, had no cause of action against PAL, its agent or subcontractor.
Also, it is worth mentioning that both BA and PAL are members of the
International Air Transport Association (IATA), wherein member
airlines are regarded as agents of each other in the issuance of the
tickets and other matters pertaining to their relationship. Therefore,
in the instant case, the contractual relationship between BA and PAL

is one of agency, the former being the principal, since it was the one
which issued the confirmed ticket, and the latter the agent.
Accordingly, to deny BA the procedural remedy of filing a third-party
complaint against PAL for the purpose of ultimately determining who
was primarily at fault as between them, is without legal basis. After
all, such proceeding is in accord with the doctrine against multiplicity
of cases which would entail receiving the same or similar evidence
for both cases and enforcing separate judgments therefor. It must be
borne in mind that the purpose of a third-party complaint is precisely
to avoid delay and circuitry of action and to enable the controversy
to be disposed of in one suit. It is but logical, fair and equitable to
allow BA to sue PAL for indemnification, if it is proven that the latter's
negligence was the proximate cause of Mahtani's unfortunate
experience, instead of totally absolving PAL from any liability.
JAL vs. ASUNCION
Michael and Jeanette Asuncion left Manila on board Japan Airlines
(JAL) bound for Los Angeles. Their itinerary included a stop-over in
Narita and an overnight stay at Hotel Nikko Narita. Upon arrival at
Narita, Mrs. Noriko of JAL endorsed their applications for shore pass
and directed them to the Japanese immigration official. A shore pass
is required of a foreigner aboard a vessel or aircraft who desires to
stay in the neighborhood of the port of call for not more than 72
hours.
Japanese immigration official noted that Michael appeared shorter
than his height as indicated in his passport. Because of this
inconsistency, respondents were denied shore pass entries and were
brought instead to the Narita Airport Rest House where they stayed
overnight.
Respondents filed a complaint for damages claiming that JAL did
not fully apprise them of their travel requirements and that they
were rudely and forcibly detained at Narita Airport.
JAL denied the allegations of respondents. It maintained that the
refusal of the Japanese immigration authorities to issue shore passes
to respondents is an act of state which JAL cannot interfere with or
prevail upon. Consequently, it cannot impose upon the immigration
authorities that respondents be billeted at Hotel Nikko instead of the
airport resthouse.
Trial Court favored Asuncion and held JAL liable to pay: expenses,
moral, exemplary, attorneys fees; dismissed JALs counterclaim for
litigation expenses, exemplary damages and attorneys fees.
On appeal, Court of Appeals affirmed TCs decision.
ISSUE: WON JAL is guilty of breach of contract. NO

Under Article 1755 of the Civil Code, a common carrier such as JAL is
bound to carry its passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances. 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 be transported on that flight and on that date
and it becomes the carriers obligation to carry him and his luggage
safely to the agreed destination. If the passenger is not so
transported or if in the process of transporting he dies or is injured,
the carrier may be held liable for a breach of contract of carriage.
We find that JAL did not breach its contract of carriage with
respondents. It may be true that JAL has the duty to inspect whether
its passengers have the necessary travel documents, however, such
duty does not extend to checking the veracity of every entry in these
documents. JAL could not vouch for the authenticity of a passport
and the correctness of the entries therein. The power to admit or not
an alien into the country is a sovereign act which cannot be
interfered with even by JAL. This is not within the ambit of the
contract of carriage entered into by JAL and herein respondents. As
such, JAL should not be faulted for the denial of respondents shore
pass applications.
Moral damages may be recovered in cases where one willfully
causes injury to property, or in cases of breach of contract where the
other party acts fraudulently or in bad faith. Exemplary damages
are imposed by way of example or correction for the public good,
when the party to a contract acts in wanton, fraudulent, oppressive
or malevolent manner. Attorneys fees are allowed when
exemplary damages are awarded and when the party to a suit is
compelled to incur expenses to protect his interest. There being no
breach of contract nor proof that JAL acted in wanton, fraudulent or
malevolent manner, there is no basis for the award of any form
of damages.
We find that the Court of Appeals correctly dismissed JALs
counterclaim for litigation expenses, exemplary damages and
attorneys fees. The action was filed by respondents in utmost good
faith and not manifestly frivolous. Respondents honestly believed
that JAL breached its contract. A persons right to litigate should not
be penalized by holding him liable for damages. This is especially
true when the filing of the case is to enforce what he believes to be
his rightful claim against another although found to be erroneous.

Thus, petitioner filed the complaint for damages, praying that

respondent be ordered to pay P5 million as moral damages, P2
million as nominal damages, P1 million as exemplary damages,
P300,000.00 as attorneys fees, P200,000.00 as litigation expenses,
and cost of the suit.
Summons, together with a copy of the complaint, was served on the
respondent through Echevarria, General Manager of Euro-Philippine
Airline Services, Inc.
Respondent, by way of special appearance through counsel, filed a
Motion to Dismiss on grounds of lack of jurisdiction over the case and
over the person of the respondent. Respondent alleged that only the
courts of London, United Kingdom or Rome, Italy, have jurisdiction
over the complaint for damages pursuant to the Warsaw Convention,
Article 28(1) of which provides:
An action for damages must be brought at the option of the plaintiff,
either before the court of domicile of the carrier or his principal place of
business, or where he has a place of business through which the contract
has been made, or before the court of the place of destination.

Thus, since a) respondent is domiciled in London; b) respondents

principal place of business is in London; c) petitioner bought her
ticket in Italy (through Jeepney Travel S.A.S, in Rome); and d) Rome,
Italy is petitioners place of destination, then it follows that the
complaint should only be filed in the proper courts of London, United
Kingdom or Rome, Italy.

Likewise, it was alleged that the case must be dismissed for lack of
jurisdiction over the person of the respondent because the summons
was erroneously served on Euro-Philippine Airline Services, Inc.
which is not its resident agent in the Philippines.

RTC Makati granted the Motion to Dismiss on the ground of lack of

jurisdiction; service of summons was rendered moot; principles of
international law bound the Philippines.
MR denied; Petition for review on certiotari was filed.
ISSUE: WON Phil. Courts have jurisdiction over a tortuous
conduct committed against a Fil citizen by airline personnel
of foreign carrier beyond territorial limit. NO.

LHUILLIER vs. BA

Petitioner Edna Diago Lhuillier filed a Complaint for damages against

respondent British Airways before the RTC of Makati City. She alleged
that she took respondents flight from London, United Kingdom to
Rome, Italy. Once on board, she allegedly requested Halliday, one of
the respondents flight attendants, to assist her in placing her handcarried luggage in the overhead bin. However, Halliday allegedly
refused to help and assist her, and even sarcastically remarked that
"If I were to help all 300 passengers in this flight, I would have a
broken back!"
And another flight attendant, Kerrigan, singled her out from among
all the passengers in the business class section to lecture on plane
safety which made her appear to the other passengers to be
ignorant, uneducated, stupid, and in need of lecturing on the safety
rules and regulations of the plane. Affronted, petitioner assured
Kerrigan that she knew the planes safety regulations being a
frequent traveler. Thereupon, Kerrigan allegedly thrust his face a
mere few centimeters away from that of the petitioner and
menacingly told her that "We dont like your attitude."
She complained to respondents ground manager and demanded an
apology. However, the latter declared that the flight stewards were
"only doing their job."

The Republic of the Philippines is a party to the Warsaw Convention.

It took effect on February 13, 1933. The Convention was concurred in
by the Senate, through its Resolution No. 19, on May 16, 1950. The
Philippine instrument of accession was signed by President Elpidio
Quirino on October 13, 1950, and was deposited with the Polish

government on November 9, 1950. The Convention became

applicable to the Philippines on February 9, 1951. On September 23,
1955, President Ramon Magsaysay issued Proclamation No. 201,
declaring our formal adherence thereto, "to the end that the same
and every article and clause thereof may be observed and fulfilled in
good faith by the Republic of the Philippines and the citizens
thereof." The Convention is thus a treaty commitment voluntarily
assumed by the Philippine government and, as such, has the force
and effect of law in this country.
For the purposes of this Convention the expression "international
carriage" means any carriage in which, according to the contract
made by the parties, the place of departure and the place of
destination, whether or not there be a break in the carriage or a
transhipment, are situated either within the territories of two High
Contracting Parties, or within the territory of a single High
Contracting Party, if there is an agreed stopping place within a
territory subject to the sovereignty, suzerainty, mandate or authority
of another Power, even though that Power is not a party to this
Convention. A carriage without such an agreed stopping place
between territories subject to the sovereignty, suzerainty, mandate
or authority of the same High Contracting Party is not deemed to be
international for the purposes of this Convention.

Article 28(1). In fact, the last sentence of Article 32 specifically deals with
the exclusive enumeration in Article 28(1) as "jurisdictions," which, as such,
cannot be left to the will of the parties regardless of the time when the
damage occurred.

Private respondent and his companions took the PAL flight to

Singapore and upon their arrival, they proceeded to the Singapore
Airlines office to check-in for their flight to Jakarta scheduled at 8:00
oclock in the same evening. Singapore Airlines rejected the tickets
of private respondent and his group because they were not endorsed
by PAL. It was explained to private respondent and his group that if
Singapore Airlines honored the tickets without PALs endorsement,
PAL would not pay Singapore Airlines for their passage. Private
respondent tried to contact PALs office at the airport, only to find out
that it was closed.

They were forced to purchase tickets from Garuda Airlines and board
its last flight bound for Jakarta. When they arrived in Jakarta at about
12:00 oclock midnight, the party who was supposed to fetch them
from the airport had already left and they had to arrange for their
transportation to the hotel at a very late hour. After the series of
nerve-wracking experiences, private respondent became ill and was
unable to participate in the tournament.
Private respondent brought the matter to the attention of PAL. He
sent a demand letter to PAL and another to Singapore Airlines.
However, both airlines disowned liability and blamed each other for
the fiasco. They filed a Complaint for Damages before the RTC
seeking compensation for moral damages in the amount of
P1,000,000.00 and attorneys fees.
PAL filed a Motion to Dismiss on the ground that the said complaint
was barred on the ground of prescription under Section 1(f) of Rule
16 of the Rules of Court. PAL argued that the Warsaw Convention,
particularly Article 29 thereof, governed this case, as it provides that
any claim for damages in connection with the international

Under Article 28(1) of the Warsaw Convention, the plaintiff may bring
the action for damages before
1. the court where the carrier is domiciled;
2. the court where the carrier has its principal place of business;
3. the court where the carrier has an establishment by which the
contract has been made; or
4. the court of the place of destination.

We further held that Article 28(1) of the Warsaw Convention is

jurisdictional in character. Thus:

A number of reasons tends to support the characterization of Article

28(1) as a jurisdiction and not a venue provision. First, the wording of Article
32, which indicates the places where the action for damages "must" be
brought, underscores the mandatory nature of Article 28(1). Second, this
characterization is consistent with one of the objectives of the Convention,
which is to "regulate in a uniform manner the conditions of international
transportation by air." Third, the Convention does not contain any provision
prescribing rules of jurisdiction other than Article 28(1), which means that
the phrase "rules as to jurisdiction" used in Article 32 must refer only to

PAL vs. SAVILLO

Private respondent was invited to participate in the 1993 ASEAN
Seniors Annual Golf Tournament held in Jakarta, Indonesia. He and
several companions decided to purchase their respective passenger
tickets from PAL with the following points of passage: MANILASINGAPORE-JAKARTA-SINGAPORE-MANILA. Private respondent and his
companions were made to understand by PAL that its plane would
take them from Manila to Singapore, while Singapore Airlines would
take them from Singapore to Jakarta.

transportation of persons is subject to the prescription period of two

years. Since the Complaint was filed on 15 August 1997, more than
three years after PAL received the demand letter on 25 January
1994, it was already barred by prescription.
RTC issued an Order denying the Motion to Dismiss. It maintained
that the provisions of the Civil Code and other pertinent laws of the
Philippines, not the Warsaw Convention, were applicable to the
present case.
Court of Appeals, dismissed the Petition for Certiorari filed by PAL
and affirmed the Order of the RTC. It pronounced that the application
of the Warsaw Convention must not be construed to preclude the
application of the Civil Code and other pertinent laws. By applying
Article 1144 of the Civil Code, which allowed for a ten-year
prescription period, the appellate court declared that the Complaint
filed by private respondent should not be dismissed.
ISSUE: WON the Warsaw Convention is applicable in this
case. NO, it must be Civil Code.
The Warsaw Convention applies to "all international transportation of
persons, baggage or goods performed by any aircraft for hire." It
seeks to accommodate or balance the interests of passengers
seeking recovery for personal injuries and the interests of air carriers
seeking to limit potential liability. It employs a scheme of strict
liability favoring passengers and imposing damage caps to benefit
air carriers. The cardinal purpose of the Warsaw Convention is to
provide uniformity of rules governing claims arising from
international air travel; thus, it precludes a passenger from
maintaining an action for personal injury damages under local law
when his or her claim does not satisfy the conditions of liability under
the Convention.
Article 19 of the Warsaw Convention provides for liability on the part
of a carrier for "damages occasioned by delay in the transportation
by air of passengers, baggage or goods." Article 24 excludes other
remedies by further providing that "(1) in the cases covered by
articles 18 and 19, any action for damages, however founded, can
only be brought subject to the conditions and limits set out in this
convention." Therefore, a claim covered by the Warsaw Convention
can no longer be recovered under local law, if the statute of
limitations of two years has already lapsed.
Court notes that jurisprudence in the Philippines and the United
States also recognizes that the Warsaw Convention does not
"exclusively regulate" the relationship between passenger and
carrier on an international flight. This Court finds that the present
case is substantially similar to cases in which the damages sought
were considered to be outside the coverage of the Warsaw
Convention.

In United Airlines v. Uy, this Court distinguished between the (1)

damage to the passengers baggage and (2) humiliation he suffered
at the hands of the airlines employees. The first cause of action was
covered by the Warsaw Convention which prescribes in two years,
while the second was covered by the provisions of the Civil Code on
torts, which prescribes in four years.

AMERICAN AIRLINES vs. CA

Private respondent purchased from Singapore Airlines in Manila

conjunction tickets for Manila-Singapore-Athens-Larnaca-Rome-TurinZurich-Geneva-Copenhagen-New York. The petitioner was not a
participating airline in any of the segments in the itinerary under the
said conjunction tickets. In Geneva the petitioner 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, the
private respondent exchanged the unused portion of the conjunction
ticket for a one-way ticket from Geneva to New York from the petitioner
airline. Petitioner issued its own ticket to the private respondent in
Geneva and claimed the value of the unused portion of the conjunction
ticket from the IATA clearing house in Geneva.
Private respondent filed an action for damages before the RTC of
Cebu for the alleged embarrassment 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.
The petitioner filed a motion to dismiss for lack of jurisdiction of
Philippine courts to entertain the said proceedings under Art. 28(1) of
the Warsaw Convention.
The trial court denied the motion. The order of denial was elevated to
the Court of Appeals which affirmed the ruling of the trial court. Both
the trial and the appellate courts held that the suit may be brought in
the Philippines under the pool partnership agreement among the IATA

members, which include Singapore Airlines and American Airlines,

wherein the members act as agents of each other in the issuance of
tickets to those who may need their services.
The contract of carriage perfected in Manila between the private
respondent and Singapore Airlines binds the petitioner as an agent of
Singapore Airlines and considering that the petitioner has a place of
business in Manila, the third option of the plaintiff under the Warsaw
Convention i.e. the action may be brought in the place where the
contract was perfected and where the airline has a place of business, is
applicable.
ISSUE: WON the contract of transportation between the
petitioner and private respondents would be considered as
single transaction. YES

The Warsaw Convention to which the Republic of the Philippines is a

party and which has the force and effect of law in this country applies to
all international transportation of persons, baggage or goods performed
by an aircraft gratuitously or for hire. As enumerated in the Preamble of
the Convention, one of the objectives is "to regulate in a uniform manner
the conditions of international transportation by air". The contract of
carriage entered into by the private respondent with Singapore Airlines,
and subsequently with the petitioner, to transport him to nine cities in
different countries with New York as the final destination is a contract of
international transportation and the provisions of the Convention
automatically apply and exclusively govern the rights and liabilities of
the airline and its passengers. This includes section 28 (1) which
enumerates the four places where an action for damages may be
brought.
The contract of carriage between the private respondent and Singapore
Airlines although performed by different carriers under a series of airline
tickets, including that issued by the petitioner, constitutes a single
operation. Members of the IATA are under a general pool partnership
agreement wherein they act as agent of each other in the issuance of
tickets to contracted passengers to boost ticket sales worldwide and at
the same time provide passengers easy access to airlines which are
otherwise inaccessible in some parts of the world.
Booking and reservation among airline members are allowed even by
telephone and it has become an accepted practice among them. A
member airline which enters into a contract of carriage consisting of a
series of trips to be performed by different carriers is authorized to
receive the fare for the whole trip and through the required process of
interline settlement of accounts by way of the IATA clearing house an
airline is duly compensated for the segment of the trip serviced.
Thus, when the petitioner accepted the unused portion of the
conjunction tickets, entered it in the IATA clearing house and undertook
to transport the private respondent over the route covered by the
unused portion of the conjunction tickets, i.e., Geneva to New York, the
petitioner tacitly recognized its commitment under the IATA pool

arrangement to act as agent of the principal contracting airline,

Singapore Airlines, as to the segment of the trip the petitioner agreed to
undertake. As such, the petitioner thereby assumed the obligation to
take the place of the carrier originally designated in the original
conjunction ticket.
The petitioner's argument that it is not a designated carrier in the
original conjunction tickets and that it issued its own ticket is not
decisive of its liability. The new ticket was simply a replacement for the
unused portion of the conjunction ticket, both tickets being for the same
amount of US$2,760 and having the same points of departure and
destination. By constituting itself as an agent of the principal carrier the
petitioner's undertaking should be taken as part of a single operation
under the contract of carriage executed by the private respondent and
Singapore Airlines in Manila.
The quoted provision of the Warsaw Convention Art. 1(3) clearly states
that a contract of air transportation is taken as a single operation
whether it is founded on a single contract or a series of contracts. The
number of tickets issued does not detract from the oneness of the
contract of carriage as long as the parties regard the contract as a single
operation. The evident purpose underlying this Article is to promote
international air travel by facilitating the procurement of a series of
contracts for air transportation through a single principal and obligating
different airlines to be bound by one contract of transportation.
Petitioner's acquiescence to take the place of the original designated
carrier binds it under the contract of carriage entered into by the private
respondent and Singapore Airlines in Manila.
The third option of the plaintiff under Art 28 (1) of the Warsaw
Convention e.g., to sue in the place of business of the carrier wherein
the contract was made, is therefore, Manila, and Philippine courts are
clothed with jurisdiction over this case. We note that while this case was
filed in Cebu and not in Manila the issue of venue is no longer an issue
as the petitioner is deemed to have waived it when it presented
evidence before the trial court.

SAVELLANO vs. NW

Savellano was a Cabugao, Ilocos Sur mayor for many terms, former
Chairman of the Commission on Elections and Regional Trial Court
(RTC) judge. His wife, Virginia is a businesswoman and operates
several rural banks in Ilocos Sur. The couple's son Deogracias was, at
the time [of] the incident subject of the case, the Vice-Governor of
Ilocos Sur.
Petitioners departed from San Francisco, USA on board Northwest
Airlines (NW) Flight 27, Business Class, bound for Manila, Philippines

using the NW round-trip tickets which were issued at [respondent's]

Manila ticketing office.
NW Flight 27's pilot made an emergency landing in Seattle after
announcing that a fire had started in one of the plane's engines.
Passengers proceeded to Gate 8 of the Seattle Airport where they
were instructed to go home to Manila the next day, 'using the same
boarding passes with the same seating arrangements.
When they reached the Seatles Airport ground stewardess belatedly
advised them that instead of flying to Manila they would have to
board NW Flight 94, a DC-10 plane, bound for a 3-hour flight to Los
Angeles for a connecting flight to Manila. When Savellano insisted
theirs was a direct flight to Manila, the female ground stewardess
just told them to hurry up as they were the last passengers to board.
Their three small handcarried items which were not padlocked as
they were merely closed by zippers were 'not allowed' to be placed
inside the passengers' baggage compartments of the plane by an
arrogant NW ground stewardess.
Upon arrival at NAIA, they discovered that the would-have-been
handcarried items which were not allowed to be placed inside the
passengers' baggage compartment had been ransacked and the
contents thereof stolen.
Petitioners through counsel demanded from NW the amount of
P3,000,000.00 as damages for what they claimed to be the
humiliation and inconvenience they suffered in the hands of its
personnel. [Respondent] did not accede to the demand, however,
impelling [petitioners] to file a case for damages at the RTC of
Cabugao, Ilocos Sur.
RTC issued sub poena duces tecum, directing NW to submit the
passengers' manifest of the distressed flight from San Francisco to
Tokyo, the passengers' manifest of the same distressed plane from
Seattle to Tokyo, and the passenger manifest of the substitute plane
from Seattle to Los Angeles and Los Angeles to Seoul enroute to
Manila. not complied with; favored petitioners
CA - ruled that petitioners had failed to show respondent's bad faith,
negligence or malice in transporting them via the Seattle-Los
Angeles-Seoul-Manila route. Hence, it held that there was no basis
for the RTC's award of moral and exemplary damages. Neither did it
find any reason to grant attorney's fees.
ISSUE: WON there is breach of contract of carriage. YES

A contract is the law between the parties. Thus, in determining

whether petitioners' rights were violated, we must look into its
provisions, which are printed on the airline ticket. Conditiion 9 in the
agreement states that a "[c]arrier may without notice substitute

alternate carriers or aircraft, and may alter or omit stopping places

shown on the ticket in case of necessity.
The ambiguities in the contract, being one of adhesion, should be
construed against the party that caused its preparation in this
case, respondent. Since the conditions enumerated on the ticket do
not specifically allow it to change stopping places or to fly the
passengers to alternate connecting cities without consulting them,
then it must be construed to mean that such unilateral change was
not permitted.
As a general rule, the factual findings of the CA when supported by
substantial evidence on record are final and conclusive and may not
be reviewed on appeal. An exception to this rule is when the lower
court and the CA arrive at different factual findings. In this case, the
trial court found the presence of bad faith and hence awarded moral
and exemplary damages; while the CA found none and hence
deleted the award of damages. Thus, the Court is now behooved to
review the basis for sustaining the award or deletion of damages.
In the absence of bad faith, ill will, malice or wanton conduct,
respondent cannot be held liable for moral damages. Article 2219 of
the Civil Code enumerates the instances in which moral damages
may be awarded. In a breach of contract, such damages are not
awarded if the defendant is not shown to have acted fraudulently or
with malice or bad faith. Insufficient to warrant the award of moral
damages is the fact that complainants suffered economic hardship,
or that they worried and experienced mental anxiety.
Neither are exemplary damages proper in the present case. The Civil
Code provides that "[i]n contracts and quasi-contracts, the court may
award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner." Respondent
has not been proven to have acted in that manner. At most, it can
only be found guilty of having acted without first considering and
weighing all other possible courses of actions it could have taken,
and without consulting petitioners and securing their consent to the
new stopping places.
Nominal damages are recoverable if no actual, substantial or specific
damages were shown to have resulted from the breach. The amount
of such damages is addressed to the sound discretion of the court,
taking into account the relevant circumstances.

unto the plaintiffs the sum of $43.35 as actual damages; P50,000 as

moral damages; and P6,000 as attorney's fees and costs."
KLM vs. CA

Respondents approached Tirso Reyes, manager of a branch of the

Philippine Travel Bureau, a travel agency, for consultations about a
world tour which they were intending to make with their daughter
and a niece. Reyes submitted to them, after preliminary discussions,
a tentative itinerary which prescribed a trip of thirty-five legs; the
respondents would fly on different airlines. Three segments of the
trip, the longest, would be via KLM. The respondents expressed a
desire to visit Lourdes, France, and discussed with Reyes two
alternate routes, namely, Paris to Lourdes and Barcelona to Lourdes.
The respondents decided on the Barcelona-Lourdes route with
knowledge that only one airline, Aer Lingus, serviced it.
They approved the itinerary prepared for them, and asked Reyes to
make the necessary plane reservations. Reyes went to the KLM, for
which the respondents had expressed preference. The KLM
thereafter secured seat reservations for the respondents and their
two companions from the carriers which would ferry them
throughout their trip, with the exception of Aer Lingus. When the
respondents left the Philippines (without their young wards who had
enplaned much earlier), they were issued KLM tickets for their entire
trip. However, their coupon for the Aer Lingus portion was marked
"RQ" which meant "on request".
Upon arrival at Germany, they went to a KLM office there and
obtained a confirmation from Aer Lingus of seat reservations on flight
861. After meandering in London, Paris and Lisbon, the foursome
finally took wing to Barcelona for their trip to Lourdes, France.
At the airport, although their daughter and niece were allowed to
take the plane, the respondents were off-loaded on orders of the Aer
Lingus manager who brusquely shoved them aside with the aid of a
policeman and who shouted at them, "Conos! Ignorantes Filipinos!"
Respondents, referring to KLM as the principal of Aer Lingus, filed a
complaint for damages with the Court of First Instance of Manila
arising from breach of contract of carriage and for the humiliating
treatment received by them at the hands of the Aer Lingus manager
in Barcelona. After due hearing, the trial court awarded damages to
the respondents as follows: $43.35 or its peso equivalent as actual
damages, P10,000 as moral damages, P5,000 as exemplary
damages, and P5,000 as attorney's fees, and expenses of litigation.
Both parties appealed to the Court of Appeals. The KLM sought
complete exoneration; the respondents prayed for an increase in the
award of damages. In its decision of August 14, 1969 the Court of
Appeals decreed as follows: "Appellant KLM is condemned to pay

ISSUE: WON KLM should be held liable. YES

The applicability insisted upon by the KLM of article 30 of the

Warsaw Convention cannot be sustained. That article presupposes
the occurrence of either an accident or a delay, neither of which took
place at the Barcelona airport; what is here manifest, instead, is that
the Aer Lingus, through its manager there, refused to transport the
respondents to their planned and contracted destination.
The argument that the KLM should not be held accountable for the
tortious conduct of Aer Lingus because of the provision printed on
the respondents' tickets expressly limiting the KLM's liability for
damages only to occurrences on its own lines is unacceptable. As
noted by the Court of Appeals that condition was printed in letters so
small that one would have to use a magnifying glass to read the
words. Under the circumstances, it would be unfair and inequitable
to charge the respondents with automatic knowledge or notice of the
said condition so as to preclude any doubt that it was fairly and
freely agreed upon by the respondents when they accepted the
passage tickets issued to them by the KLM. As the airline which
issued those tickets with the knowledge that the respondents would
be flown on the various legs of their journey by different air carriers,
the KLM was chargeable with the duty and responsibility of
specifically informing the respondents of conditions prescribed in
their tickets or, in the very least, to ascertain that the respondents
read them before they accepted their passage tickets. A thorough
search of the record, however, inexplicably fails to show that any
effort was exerted by the KLM officials or employees to discharge in
a proper manner this responsibility to the respondents.
Consequently, we hold that the respondents cannot be bound by the
provision in question by which KLM unilaterally assumed the role of a
mere ticket-issuing agent for other airlines and limited its liability
only to untoward occurrences on its own lines.
Moreover, as maintained by the respondents and the Court of
Appeals, the passage tickets of the respondents provide that the
carriage to be performed thereunder by several successive carriers
"is to be regarded as a single operation," which is diametrically
incompatible with the theory of the KLM that the respondents
entered into a series of independent contracts with the carriers
which took them on the various segments of their trip. This position
of KLM we reject. The respondents dealt exclusively with the KLM
which issued them tickets for their entire trip and which in effect
guaranteed to them that they would have sure space in Aer Lingus
flight 861.

The breach of that guarantee was aggravated by the discourteous

and highly arbitrary conduct of an official of the Aer Lingus which the
KLM had engaged to transport the respondents on the BarcelonaLourdes segment of their itinerary. It is but just and in full accord
with the policy expressly embodied in our civil law which enjoins

courts to be more vigilant for the protection of a contracting party

who occupies an inferior position with respect to the other
contracting party, that the KLM should be held responsible for the
abuse, injury and embarrassment suffered by the respondents at the
hands of a supercilious boor of the Aer Lingus.