[G.R. NO.
156087 : May 8, 2009] or boarding passengers in Manila and
KUWAIT AIRWAYS,
CORPORATION, v. PHILIPPINE
AIRLINES, INC.
FACTS:
On 21 October 1981, Kuwait Airways and
Philippine Airlines entered into a
Commercial Agreement, annexed to
which was a Joint Services
Agreement between the two airlines. The
Commercial Agreement covered a twice
weekly Kuwait Airways flight on the
route Kuwait-Bangkok-Manila and vice
versa. The agreement stipulated that "only
3rd and 4th freedom traffic rights between
Kuwait and Manila and vice versa will be
exercised. No 5th freedom traffic rights
will be exercised between Manila on the
one hand and Bangkok on the other."
The "freedom traffic rights" referred to in
the Agreement are the so-called "five
freedoms" contained in the International
Air Transport Agreement (IATA) signed
in Chicago on 7 December 1944. Under
the IATA, each contracting State agreed
to grant to the other contracting states,
five "freedoms of air." Among these
freedoms were "[t]he privilege to put
down passengers, mail and cargo taken on
in the territory of the State whose
nationality the aircraft possesses". (Third
Freedom); "[t]he privilege to take on
passengers, mail or cargo destined for the
territory of the State whose nationality the
aircraft possesses" (Fourth Freedom); and
the right to carry passengers from one's
own country to a second country, and
from that country to a third country (Fifth
Freedom).
In essence, the Kuwait Airways flight was
authorized to board passengers in Kuwait
and deplane them in Manila, as well as to
board passengers in Manila and deplane
them in Kuwait. At the same time, with
the limitation in the exercise of Fifth
Freedom traffic rights, the flight was
barred from boarding passengers in
Bangkok and deplaning them in Manila,
deplaning them in Bangkok.
The Commercial Agreement likewise
adverted to the annexed Joint Services
Agreement covering the Kuwait-Manila
(and vice versa) route, which both airlines
had entered into "[i]n order to reflect the
high level of friendly relationships
between [Kuwait Airways] and
[Philippine Airlines] and to assist each
other to develop traffic on the route." The
Agreement likewise stipulated that
"[u]ntil such time as [Philippine Airlines]
commences its operations to or via
Kuwait, the Joint Services shall be
operated with the use of [Kuwait
Airways] aircraft and crew."
Most pertinently for our purposes, under
Article 2.1 of the Commercial
Agreement, Kuwait Airways obligated
itself to "share with Philippine Airlines
revenue earned from the uplift of
passengers between Kuwait and Manila
and vice versa."
The Commercial Agreement and the
annexed Joint Services Agreement was
subsequently amended by the parties six
times between 1981 and 1994. At one
point, in 1988, the agreement was
amended to authorize Philippine Airlines
to operate provisional services, referred to
as "ad hoc joint services," on the Manila-
Kuwait (and vice versa) route for the
period between April to June 1988. In
1989, another amendment was agreed to
by the parties, subjecting the uplift of
cargo between Kuwait and Manila to the
same revenue sharing arrangement as the
uplift of passengers. From 1981 until
when the present incidents arose in 1995,
there seems to have been no serious
disagreements relating to the contract.
In April of 1995, delegations from the
Philippines and Kuwait (Philippine Panel
and Kuwait Panel) met in Kuwait. The
talks culminated in a Confidential
Memorandum of Understanding (CMU)
entered into in Kuwait on 12 April 1995.
Among the members of the Philippine
Panel were officials of the Civil
Aeronautics Board (CAB), the
Department of Foreign Affairs (DFA),
and four officials of Philippine Airlines:
namely its Vice-President for Marketing,
Director for International Relations,
Legal Counsel, and a Senior International
Relations Specialist. Dr. Victor S.
Linlingan, the Head of the Delegation and
Executive Director of the CAB, signed
the CMU in behalf of the Government of
the Republic of the Philippines.
On 15 May 1995, Philippine Airlines
received a letter from Dawoud M. Al-
Dawoud, the Deputy Marketing & Sales
Director for International Affairs of
Kuwait Airways, addressed to Ms.
Socorro Gonzaga, the Director for
International Relations of Philippine
Airlines. Both Al-Dawoud and Gonzaga
were members of their country's
respective delegations that had met in
Kuwait the previous month. The letter
stated in part:
Regarding the [Kuwait
Airways/Philippine Airlines]
Commercial Agreement, pursuant to item
4 of the new MOU[,] we will advise our
Finance Department that the Agreement
concerning royalty for 3rd/4th freedom
traffic will be terminated effective April
12, 1995. Although the royalty agreement
will no longer be valid, we are very keen
on seeing that [Philippine Airlines]
continues to enjoy direct participation in
the Kuwait/Philippines market through
the Block Space Agreement and to that
extent we would like to maintain the Jt.
Venture (Block Space) Agreement,
although with some minor modifications.
To this, Gonzaga replied to Kuwait
Airways in behalf of Philippine Airlines
in a letter dated 22 June 1995. Philippine
Airlines called attention to Section 6.5 of
the Commercial Agreement, which read:
This agreement may be terminated by
either party by giving ninety (90) days
notice in writing to the other party.
However, any termination date must be
the last day of any traffic period, e.g.[,]
31st March or 31st October.
Pursuant to this clause, Philippine
Airlines acknowledged the 15 May 1995
letter as the requisite notice of
termination. However, it also pointed out
that the agreement could only be
effectively terminated on 31 October
1995, or the last day of the then current
traffic period. Thus, Philippine Airlines
insisted that the provisions of the
Commercial Agreement "shall continue
to be enforced until such date."
Subsequently, Philippine Airlines insisted
that Kuwait Airways pay it the principal
sum of US$1,092,690.00 as revenue for
the uplift of passengers and cargo for the
period 13 April 1995 until 28 October
1995. When Kuwait Airways refused to
pay, Philippine Airlines filed a
Complaint against the foreign airline with
the Regional Trial Court (RTC) of Makati
City, seeking the payment of the
aforementioned sum with interest,
attorney's fees, and costs of suit. In its
Answer, Kuwait Airways invoked the
CMU and argued that its obligations
under the Commercial Agreement were
terminated as of the effectivity date of the
CMU, or on 12 April 1995. Philippine
Airlines countered in its Reply that it was
"not privy to the [CMU]," though it would
eventually concede the existence of the
CMU.
On 25 October 2002, the RTC rendered a
Decision in favor of Philippine Airlines.
ISSUE:
Whether or not CAB can compel PAL to
terminate the Commercial Agreement
with petitioner.
RULING:
NO.
We do not doubt that the CAB, in the
exercise of its statutory mandate, has the
power to compel Philippine Airlines to
immediately terminate its Commercial
Agreement with Kuwait Airways pursuant
to the CMU. Considering that it is the
Philippine government that has the sole
authority to charter air policy and
negotiate with foreign governments with
respect to air traffic rights, the
government through the CAB has the
indispensable authority to compel local
air carriers to comply with government
determined policies, even at the expense
of economic rights.]
However, this is not a case where the
CAB had duly exercised its regulatory
authority over a local airline in order to
implement or further government air
policy. What happened instead was an
officer of the CAB, acting in behalf not of
the Board but of the Philippine
government, had committed to a foreign
nation the immediate abrogation of
Philippine Airlines’ commercial
agreement with Kuwait Airways.
Nor can we presume, simply because Dr.
Linlingan, Executive Director of the CAB
had signed the CMU in behalf of the
Philippine Panel that he could have done
so bearing the authority of the Board, in
the exercise of regulatory jurisdiction
over Philippine Airlines. For one, the
CAB is a collegial body composed of five
members and no one member–even the
chairman–can act in behalf of the entire
Board. The Board is disabled from
performing as such without a quorum. For
another, the Executive Director of the
CAB is not even a member of the Board,
per R.A. No. 776, as amended.
*The general rule is CAB has the power
to regulate the airline companies/air
transportation industry BUT this case is
an exception.
Full Title: Philippine Airlines, Inc.
versus Civil Aeronautics Board and
Grand International Airways, Inc. –
G.R. No. 119528, March 26, 1997; J.
FACTS:
On Novermber 24, 1994, Grand
International Airways, Inc. (GrandAir)
applied for a Certificate of Public
Convenience and Necessity with the Civil
Aeronautics Board (CAB). The Chief
Hearing Officer of the CAB issued a
Notice of Hearing setting the application
for initial hearing on December 16, 1994
and directing GrandAir to serve a copy of
the application and corresponding notice
to all scheduled Philippine Domestic
operators. On December 14, 1994,
GrandAir filed its Compliance, and
requested for the issuance of a Temporary
Operating Permit(TOP). On December
16, 1995, Philippine Airlines, Inc. (PAL),
the holder of a legislative franchise to
operate air transport services, filed an
Opposition to the application for a
Certificate of Public Convenience and
Necessity on the following grounds: (a)
the CAB has no jurisdiction to hear
GranAir’s application until the latter has
first obtained a franchise to operate from
Congress; (b) GrandAir’s application is
deficient in form and substance; (c)
approval of GrandAir’s application would
violate the equal protection clause of the
constitution; (d) There is no urgent need
and demand for the services applied for;
(e) to grant GrandAir’s application would
only result in ruinous competition
contrary to Section 4(d) of R.A. 776.
PAL raised the issue of lack of
jurisdiction of the CAB to hear the
application because GrandAir did not
possess a legislative franchise. On
December 20, 1994, The Chief Hearing
Officer of CAB issued an Order denying
petitioner’s Opposition. On December 22,
1994, petitioner opposed private
respondent’s application for a temporary
permit. On December 23, 1994, The CAB
promulgated Resolution approving the
issuance of a TOP in favor of GrandAir.
Petitioner moved for the reconsideration
of the issuance of the TOP but the same
was denied.
Hence this petition.
ISSUE:
1. Whether or not the CAB has the
authority to issue a Certificate of Public
Convenience and Necessity, or
Temporary Operating Permit to a
domestic air transport operator, who,
though not possessing a legislative
franchise, meets all the other requirement
prescribed by the law.
HELD:
Yes. Section 10 of R.A. No. 776 reveals
the clear intent of Congress to delegate the
authority to regulate the issuance of a
license to operate domestic air transport
services. It states that:
SECTION 10. Powers and Duties of the
Board- (A) Except as otherwise provided
therein, the Board shall have the power to
regulate the economic aspect of air
transportation, and shall have general
supervision and regulation of, the
jurisdiction and control over air carriers,
general sales agents, cargo sales agents,
and air freight forwarders as well as their
property rights, equipment,
facilities and franchise, insofar as may be
necessary for the purpose of carrying out
the provision of this Act. In support of the
Board’s authority as stated above, it is
given the following specific powers and
duties:
(c) The Board shall have the following
specific powers and duties: (1) In
accordance with the provisions of Chapter
IV of this Act, to issue, deny, amend,
revise, alter, modify, cancel, suspend or
revoke in whole or in part upon petition or
complaint or upon its own initiative any
Temporary Operating Permit or
Certificate of Public Convenience and
Necessity: Provided, however, that in the
case of foreign air carriers, the permit
shall be issued with the approval of the
President of the Republic of the
Philippines.
ACCORDINGLY, in view of the
foregoing considerations, the Court
RESOLVED to DISMISS the instant
petition for lack of merit. The respondent
Civil Aeronautics Board is hereby
DIRECTED to CONTINUE hearing the
application of respondent Grand
International Airways, Inc. for the
issuance of the Certificate of Public
Convenience and Necessity.
MAPA v. CA
G.R. No. 122308;
July 8, 1997
FACTS:
Sps. Mapa entered into contract of air
transportation with TWA as evidenced by
TWA tickets purchased in Bangkok,
Thailand. Said TWA tickets are for Los
Angeles-New York-Boston-St. Louis
Chicago. Domicile of carrier TWA and its
principal place of business is Kansas City,
Missouri, USA. The place of destination
is Chicago, USA. Mrs. Purita Mapa and
Carmina (Sps Mapa’s dughter) left
Manila on board PAL flight No. 104 for
Los Angeles. Carmina was to commence
schooling at Boston University and thus
was accompanied by Purita to assist her in
settling down at the University. They
arrived in Los Angeles on the same date
and stayed there until they left for New
York City. Purita and Carmina arrived at
the John F. Kennedy (JFK) Airport, New
York, on TWA Flight No. 904. They
departed for Boston, taking a connecting
flight on TWAs carrier from JFK Airport,
NY, to Boston Logan Airport, checking in
seven (7) pieces of luggage at the TWA
counter in the JFK Airport. TWA baggage
receipts were issued therefor. After they
had presented their confirmed TWA
tickets (with departure at 3 pm) at TWA’s
ticket counter, they were issued their
boarding passes and were instructed to
proceed to gate 35 for boarding. However,
upon plaintiffs’ inquiry, they were
informed that they were at the wrong gate.
Upon arriving at the proper gate which is
at gate 1, they were told that their flight
had just departed. They were able to board
in the next plane. Upon arriving in
Boston, they proceeded to the carousel to
claim their baggages and found only three
out of the seven they checked in. They
immediately reported the loss of their 4
baggages to TWA. They received a letter
from TWA apologizing for TWAs failure
to locate the missing luggage and
requesting plaintiffs to accomplish a
passenger property questionnaire to
facilitate a further intensive and
computerized search for the lost luggage.
Plaintiffs duly accomplished the
passenger property questionnaire. TWA
was still unable to locate the missing
baggages. Despite demands by Sps.
Mapa, TWA failed and refused to
indemnify and redress plaintiffs for the
grave injury and damages they have
suffered. Sps Mapa and their daughter
then filed with RTC-QC, a complaint for
damages. TWA filed its Answer raising,
as special and affirmative defense, lack of
jurisdiction of Philippine courts over the
action for damages in that pursuant to
Article 28(1) of the Warsaw Convention,
the action could only be brought either in
Bangkok where the contract was entered
into, or in Boston which was the place of
destination, or in Kansas City which is the
carrier's domicile and principal place of
business. Trial Court issued an Order
dismissing the case for lack of jurisdiction
in light of Article 28(1) of the Warsaw
Convention. Trial Court held that page 2
of Passenger Property Questionnaire
accomplished by plaintiffs under the
heading "Your Complete Itinerary" shows
that the TWA tickets issued to the
plaintiffs form part of the contract of
transportation to be performed from
Manila to the United States. Since the
Philippines and the United States are
parties to the convention, plaintiffs'
contracts of transportation come within
the meaning of International
Transportation. Sps. Mapa appealed to
CA, contending that the RTC erred in not
holding that it has jurisdiction over the
instant case and that the Warsaw
Convention is inapplicable because the
contracts they had with TWA did not
involve an international transportation;
and their cause of action could be based
on breach of contract of air carriage
founded on Arts. 1733-1735, 1755, and
1756 of the New Civil Code governing
common carriers or Art. 2176 of the same
code governing torts/quasi-delict. CA
affirmed RTC.
ISSUE: 1.
Whether the contracts of transportation
between Purita and Carmina Mapa and
TWA were contracts of international
transportation under the Warsaw
Convention.
HELD:
Contracts of transportation between
Purita and Carmina, and TWA were not
contracts of international transportation
under Warsaw Convention. Hence, the
Philippine Court has jurisdiction to hear
the case. As provided in Article I(2) of the
Warsaw Convention, a contract is one of
international transportation only if
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 transportation or a
transshipment, are situated either within
the territories of two High Contracting
Parties (signatories to the Convention and
those w/c subsequently adhered thereto),
or within the territory of a single High
Contracting Party, if there is an agreed
stopping place within a territory subject to
the sovereignty, mandate or authority of
another power, even though that power is
not a party to this convention. Two
categories of international transportation:
(1) where the place of departure and the
place of destination are situated within the
territories of two High Contracting Parties
regardless of whether or not there be a
break in the transportation or a
transshipment; and (2) where the place of
departure and the place of destination are
within the territory of a single High
Contracting Party if there is an agreed
stopping place within a territory subject to
the sovereignty, mandate, or authority of
another power, even though the power is
not a party to the Convention. The
contracts of transportation in this case are
evidenced by the two TWA tickets both
purchased and issued in Bangkok,
Thailand. On the basis alone of the
provisions therein, it is obvious that the
place of departure and the place of
destination are all in the territory of the
United States, or of a single High
Contracting Party. The contracts,
therefore, cannot come within the
purview of the first category of
international transportation. Neither can it
be under the second category since there
was NO agreed stopping place within a
territory subject to the sovereignty,
mandate, or authority of another power.
The only way to bring the contracts
between Purita and Carmina Mapa and
TWA, within the first category of
international transportation is to link them
with, or to make them an integral part of,
the Manila-Los Angeles travel of Purita
and Carmina through PAL aircraft. The
alleged linkages are: (1) the handwritten
notations on the two TWA tickets; and (2)
the entries made by petitioners Purita and
Carmina Mapa in column YOUR
COMPLETE ITINERARY in TWAs
Passenger Property Questionnaire,
wherein they mentioned their travel from
Manila to Los Angeles. NO LINKAGE
WERE ESTABLISHED: (1) The
international tickets mentioned in the
notations in conjunction with which the
two TWA tickets were issued were not
presented. Hence, no factual basis of the
finding that the TWA tickets were issued
in conjunction with the international
tickets, which are even, at least as of now,
non-existent. (2) As regards the
petitioners entry in YOUR COMPLETE
ITINERARY column of the Passenger
Property Questionnaire wherein they
included the Manila-Los Angeles travel, it
must be pointed out that this was made by
Purita and Carmina Mapa only in
connection with their claim for their lost
pieces of baggage. The loss occurred
much earlier.. The entry can by no means
be considered as a part of, or supplement
to, their contracts of transportation
evidenced by the TWA tickets which
covered transportation within the United
States only. It must be underscored that
the first category of international
transportation under the Warsaw
Convention is based on the contract made
by the parties. TWA does not claim that
the ManilaLos Angeles contracts of
transportation which brought Purita and
Carmina to Los Angeles were also its
contracts. TWA does not deny the
assertion of the petitioners that those
contracts were independent of the TWA
tickets issued in Bangkok, Thailand. No
evidence was offered that TWA and PAL
had an agreement concerning
transportation of passengers from points
of departures not served with aircrafts of
one or the other. TWA relies on Article
I(3) of the Convention: A carriage to be
performed by several successive air
carriers is deemed, for the purposes of this
Convention, to be one undivided carriage,
if it has been regarded by the parties as a
single operation, whether it had been
agreed upon under the form of a single
contract or of a series of contracts, and it
shall not lose its international character
merely because one contract or a series of
contracts is to be performed entirely
within a territory subject to the
sovereignty, suzerainty, mandate, or
authority of the same High Contracting
Party. TWA also points to Article 15 of
the IATA Recommend Practice 1724,
which provides: Carriage to be performed
by several successive carriers under one
ticket, or under a ticket and any
conjunction ticket issued in connection
therewith, is regarded as a single
operation. The flaw of TWA’s position is
their presumption that the parties have
regarded as an undivided carriage or as a
single operation the carriage from Manila
to Los Angeles through PAL then to New
York-Boston- St. Louis-Chicago through
TWA. TWA should have offered
evidence for its affirmative defenses at the
preliminary hearing therefor. Without any
further evidence as earlier discussed, the
trial court should have denied the
affirmative defense of lack of jurisdiction
because it did not appear to be
indubitable.
AMERICAN AIRLINES v. CA, HON.
BERNARDO LL. SALAS and
DEMOCRITO MENDOZA,
G.R. No. 116044-45.
March 9, 2000
FACTS:
Mendoza purchased from Singapore
Airlines (SAL) in Manila conjunction
tickets for Manila - Singapore - Athens -
Larnaca - Rome - Turin - Zurich - Geneva
- Copenhagen - New York. • Petitioner
was not a participating airline in any of
the segments in the itinerary under the
conjunction tickets. In Geneva, Mendoza
decided to forego his trip to Copenhagen
and to go straight to NY. He exchanged
the unused portion of the conjunction
ticket for a one-way ticket from Geneva to
NY from petitioner. Petitioner issued its
own ticket to Mendoza in Geneva and
claimed the value of the unused portion of
the ticket from the IATA clearing house
in Geneva. Mendoza filed an action for
damages before RTC 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. Petitioner filed
MTD for lack of jurisdiction of Philippine
courts to entertain the said proceedings
under Art. 28 (1) of the Warsaw
Convention. Both the RTC and CA 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; that the contract of carriage
perfected in Manila between Mendoza
and SAL binds petitioner as an agent of
SAL and considering that 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:
Whether or not Philippine courts has
jurisdiction in the action for damages filed
by Mendoza in view of Art 28 (1) of the
Warsaw Convention
HELD
YES. The Warsaw Convention to which
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. The
contract of carriage entered into by
Mendoza with SAL, and subsequently
with the petitioner, to transport him to
nine cities in different countries with NY
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. o Art (28) (1): “An action for
damages must be brought at the option of
the plaintiff, in the territory of one of the
High Contracting Parties, either before
the court of the domicile of the carrier or
of his principal place of business or where
he has a place of business through which
the contract has been made, or before the
court at the place of destination.” It is
undisputed that petitioner issued the ticket
in Geneva which was neither the domicile
nor the principal place of business of
petitioner nor the respondents place of
destination. The question is whether the
contract of transportation between the
petitioner and Mendoza is a single
operation and part of the contract of
transportation entered into by the latter
with SAL in Manila. o Art 1(3) of the
Warsaw Convention: "Transportation to
be performed by several successive
carriers shall be deemed, for the purposes
of this convention, to be one undivided
transportation, if it has been regarded by
the parties as a single operation, whether
it has been agreed upon under the form of
a single contract or a series of contracts,
and it shall not lose its international
character merely because one contract or
series of contracts is to be performed
entirely within the territory subject of the
sovereignty, suzerainty, mandate or
authority of the same High contracting
Party." • The contract of carriage between
Mendoza and SAL although performed
by different carriers under a series of
airline tickets, including that issued by
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. 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. o When
petitioner accepted the unused portion of
the conjunction tickets, entered it in the
IATA clearing house and undertook to
transport Mendoza over the route covered
by the unused portion of the conjunction
tickets, petitioner tacitly recognized its
commitment under the IATA pool
arrangement to act as agent SAL as to the
segment the petitioner agreed to
undertake. As such, petitioner assumed
the obligation to take the place of the
carrier originally designated in the
original conjunction ticket. • 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. o
Petitioners acquiescence to take the place
of the original designated carrier binds it
under the contract of carriage entered into
by Mendoza and SAL 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.