TRANSPO CASE DIGESTS 2019

Case 1

Case no. 2

G.R. No. 156087 May 8, 2009

KUWAIT AIRWAYS, CORPORATION, Petitioner,

vs.

PHILIPPINE AIRLINES, INC., Respondent.

1. On 21 October 1981, Kuwait Airways and Philippine Airlines entered into a Commercial
Agreement, WHICH 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.”

2. The "freedom traffic rights[1]" 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. 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, or boarding passengers in Manila and deplaning them in
Bangkok;

4. 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 Head of the Delegation and Executive Director
of the CAB, signed the CMU in behalf of the Government of the Republic of the Philippines.

5. The present controversy stems from the fourth paragraph of the CMU, which read:

“The two delegations agreed that the unilateral operation and the exercise of third and fourth
freedom traffic rights shall not be subject to any royalty payment or commercial arrangements,
as from the date of signing of this [CMU].”

6. The petitioner sent a letter to PAL saying that the Agreement concerning royalty for 3rd/4th
freedom traffic will be terminated effective April 12, 1995;
 7. To this Philippine Airlines acknowledged the 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 1995.20 When Kuwait Airways refused to pay,
Philippine Airlines filed a Complaint21 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.

8. Rtc:in favor of PAL

9. CA: AFFIRMED RTC

ISSUE:

1. whether the enforcement of the CMU Can effectively impair the rights of PAL;

ruling:

NO. the enforcement of the CMU Cannot effectively impair the rights of PAL;

As with all regulatory subjects of the government, infringement of property rights can only avail
with due process of law. Legislative regulation of public utilities must not have the effect of
depriving an owner of his property without due process of law, nor of confiscating or appropriating
private property without due process of law, nor of confiscating or appropriating private property
without just compensation, nor of limiting or prescribing irrevocably vested rights or privileges
lawfully acquired under a charter or franchise. The power to regulate is subject to these
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constitutional limits.

We can deem that the CAB has ample power under its organizing charter, to compel Philippine
Airlines to terminate whatever commercial agreements the carrier may have. After all, Section 10
of R.A. No. 776 grants to the CAB the "general supervision and regulation of, and jurisdiction and
control over, air carriers as well as their property, property rights, equipment, facilities and
franchise," and this power correlates to Section 4(c) of the same law, which mandates that the
Board consider in the exercise of its functions "the regulation of air transportation in such manner
as to recognize and preserve the inherent advantages of, assure the highest degree of safety in,
and foster sound economic condition in, such transportation, and to improve the relations between,
and coordinate transportation by air carriers."

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. The airline industry
is a sector where government abjuration is least desired.

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’s commercial
agreement with Kuwait Airways. And while we do not question that ability of that member of the
CAB to represent the Philippine government in signing the CMU, we do question whether such
member could have bound Philippine Airlines in a manner that can be accorded legal recognition
by our courts.

Imagine if the President of the Philippines, or one of his alter egos, acceded to the demands of a
foreign counterpart and agreed to shut down a particular Filipino business or enterprise, going as
far as to co-sign a document averring that the business "will be shut down immediately." Granting
that there is basis in Philippine law for the closure of such business, could the mere declaration of
the President have the legal effect of immediately rendering business operations illegal? We, as
magistrates in a functioning democratic State with a fully fleshed Bill of Rights and a Constitution
that emphatically rejects "l’etat cest moi" as the governing philosophy, think not. There is nothing
to prevent the Philippine government from utilizing all the proper channels under law to enforce
such closure, but unless and until due process is observed, it does not have legal effect in this
jurisdiction. Even granting that the "agreement" between the two governments or their
representatives creates a binding obligation under international law, it remains incumbent for each
contracting party to adhere to its own internal law in the process of complying with its obligations.

The promises made by a Philippine president or his alter egos to a foreign monarch are not
transubstantiated by divine right so as to ipso facto render legal rights of private persons obviated.
Had Philippine Airlines remained a government-owned or controlled corporation, it would have
been bound, as part of the executive branch, to comply with the dictates of the President or his
alter egos since the President has executive control and supervision over the components of the
executive branch. Yet Philippine Airlines has become, by this time, a private corporation – one that
may have labored under the conditions of its legislative franchise that allowed it to conduct air
services, but private in character nonetheless. The President or his alter egos do not have the
legal capacity to dictate insuperable commands to private persons. And that undesirable trait
would be refuted on the President had petitioner’s position prevailed, since it is imbued with the
presumption that the commitment made to a foreign government becomes operative without
complying with the internal processes for the divestiture of private rights.

Herein, we do not see why the Philippine government could not have observed due process of
law, should it have desired to see the Commercial Agreement immediately terminated in order to
adhere to its apparent commitment to the Kuwait government. The CAB, with its ample regulatory
power over the economic affairs of local airliners, could have been called upon to exercise its
jurisdiction to make it so. A remedy even exists in civil law–the judicial annulment or reformation
 of contracts–which could have been availed of to effect the immediate termination of the
Commercial Agreement. No such remedy was attempted by the government.

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
35
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.

Even granting that the police power of the State, as given flesh in the various laws governing the
regulation of the airline industry in the Philippines, may be exercised to impair the vested rights of
privately-owned airlines, the deprivation of property still requires due process of law. In order to
validate petitioner’s position, we will have to concede that the right to due process may be
extinguished by executive command. While we sympathize with petitioner, who reasonably could
rely on the commitment made to it by the Philippine government, we still have to respect the
segregate identity of the government and that of a private corporation and give due meaning to
that segregation, vital as it is to the very notion of democracy.

1. [1] To fly across its territory without landing.

2. To land for nontraffic purposes.

3. To put down passengers, mail, and cargo taken on in the territory of the country whose nationality the
aircraft possesses.

4. To take on passengers, mail, and cargo destined for the territory of the country whose nationality the
aircraft possesses.

5. To take on passengers, mail, and cargo destined for the territory of another agreeing nation and to put
down passengers, mail, and cargo coming from any such territory.

Case No. 3

AMERICAN AIRLINES VS. COURT OF APPEALS

G.R. No. 116044-45, March 9, 2000

Case Digest by: Jose G. Banaybanay

DOCTRINE: “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.”

THE FACTS:

Private respondent Democrito Mendoza 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 had boarded. The petitioner filed a motion to dismiss for lack of jurisdiction of Philippine courts to entertain
the said proceedings under Article 28 (1) of the Warsaw Convention.

THE RULING OF THE TRIAL COURT:

The RTC denied the motion to dismiss. Hence, petitioner filed an appeal before the Court of Appeals.

THE RULING OF THE COURT OF APPEALS:

The CA affirmed the ruling of the trial court. Hence, the case was elevated to the Supreme Court.

THE RULING OF THE SUPREME COURT:

The SC affirmed the ruling of the appellate court. It ordered that the case be remanded to the court of origin for further
proceedings.

THE ISSUES:

1) Whether or not the contract of transportation between the petitioner and the private respondent would be
considered as a single operation and part of the contract of transportation entered into by the latter with
Singapore Airlines in Manila.

2) Whether or not the issuance of a new ticket in Geneva created a contract of carriage separate and distinct
from that entered by the private respondent in Manila.

HELD:

REGARDING THE FIRST ISSUE: Yes. The contract of transportation between the petitioner and the private
respondent would be considered as a single operation and part of the contract of transportation entered into by the
latter with Singapore Airlines in Manila
REASONS:

1) 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 contract 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.

2) When the petitioner accepted the unused portion of the conjunction tickets, entered in the IATA clearing house
and undertook to transport the private respondent over the route covered by the unused portion of the
conjunction tickets, the petitioner tacitly recognized its commitment under the IATA pool arrangement to act
as an agent of the principal contracting airline, Singapore Airlines, as to the segment of the trip the petitioner
agreed to undertake.

REGARDING THE SECOND ISSUE: No. The issuance of a new ticket in Geneva did not create a contract of carriage
separate and distinct from that entered by the private respondent in Manila.

REASONS:

1) The quoted provision of the Warsaw Convention Article 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.

2) 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.

Case no. 6

Pan American World Airways, Inc. vs. IAC, Sotang Bastos

G.R. No. 70462, August 11, 1988

FACTS:
On April 25, 1978, plaintiff Rene V. Pangan, president and general manager of the plaintiffs Sotang Bastos
and Archer Productions, while in San Francisco, California and Primo Quesada of Prime Films, San Francisco,
California, entered into an agreement (Exh. A) whereby the former, for and in consideration of the amount of
US $2,500.00 per picture, bound himself to supply the latter with three films, 'Ang Mabait, Masungit at ang
Pangit', 'Big Happening with Chikiting and Iking', and 'Kambal Dragon' for exhibition in the United States. It
was also their agreement that plaintiffs would provide the necessary promotional and advertising materials for
said films on or before May 30, 1978.

On his way home to the Philippines, plaintiff Pangan visited Guam where he contacted Leo Slutchnick of the
Hafa Adai Organization. Plaintiff Pangan likewise entered into a verbal agreement with Slutchnick for the
exhibition of two of the films above-mentioned at the Hafa Adai Theater in Guam on May 30, 1978 for the
consideration of P7,000.00 per picture. Plaintiff Pangan undertook to provide the necessary promotional and
advertising materials for said films on or before the exhibition date on May 30, 1978.

By virtue of the above agreements, plaintiff Pangan caused the preparation of the requisite promotional
handbills and still pictures for which he paid the total sum of P12,900.00. Likewise in preparation for his trip
abroad to comply with his contracts, plaintiff Pangan purchased fourteen clutch bags, four capiz lamps and
four barong tagalog, with a total value of P4,400.00.

On May 18, 1978, plaintiff Pangan obtained from defendant Pan Am's Manila Office through the Your Travel
Guide, an economy class airplane ticket with No. 0269207406324 for passage from Manila to Guam on
defendant's Flight No. 842 of May 27, 1978, upon payment by said plaintiff of the regular fare. The Your Travel
Guide is a tour and travel office owned and managed by plaintiff's witness Mila de la Rama.

On May 27, 1978, two hours before departure time, plaintiff Pangan was at the defendant's ticket counter at
the Manila International Airport and presented his ticket and checked in his two luggages, for which he was
given baggage claim tickets Nos. 963633 and 963649 . The two luggages contained the promotional and
advertising materials, the clutch bags, barong tagalog and his personal belongings. Subsequently, Pangan
was informed that his name was not in the manifest and so he could not take Flight No. 842 in the economy
class. Since there was no space in the economy class, plaintiff Pangan took the first class because he wanted
to be on time in Guam to comply with his commitment, paying an additional sum of $112.00.

When plaintiff Pangan arrived in Guam on the date of May 27, 1978, his two luggages did not arrive with his
flight, as a consequence of which his agreements with Slutchnick and Quesada for the exhibition of the films
in Guam and in the United States were cancelled. Thereafter, he filed a written claim for his missing luggages.

ISSUE:

Whether or not the respondent court erred as a matter of law in affirming the trial court's award of actual
damages beyond the limitation of liability set forth in the Warsaw Convention and the contract of carriage

HELD:
Yes, the petitioners liability for the lost of baggage is limited only to $20.00 or $600.00 as stipulated at the
back of the ticket.

The airline ticket contains the following conditions:

NOTICE

If the passenger's journey involves an ultimate destination or stop in a country other than the country of
departure the Warsaw Convention may be applicable and the Convention governs and in most cases limits
the liability of carriers for death or personal injury and in respect of loss of or damage to baggage. See also
notice headed "Advice to International Passengers on Limitation of Liability."
 CONDITIONS OF CONTRACT

As used in this contract "ticket" means this passenger ticket and baggage check, of which these conditions
and the notices form part, "carriage" is equivalent to "transportation", "carrier" means all air carriers that carry
or undertake to carry the passenger or his baggage hereunder or perform any other service incidental to such
air carriage. "WARSAW CONVENTION" means the Convention for the Unification of Certain Rules Relating
to International Carriage by Air signed at Warsaw, 12th October 1929, or that Convention as amended at The
Hague, 28th September 1955, whichever may be applicable.

Carriage hereunder is subject to the rules and limitations relating to liability established by the Warsaw
Convention unless such carriage is not "international carriage" as defined by that Convention.
To the extent not in conflict with the foregoing carriage and other services performed by each carrier are
subject to: (i) provisions contained in this ticket, (ii) applicable tariffs, (iii) carrier's conditions of carriage and
related regulations which are made part hereof (and are available on application at the offices of carrier),
except in transportation between a place in the United States or Canada and any place outside thereof to
which tariffs in force in those countries apply.
***
NOTICE OF BAGGAGE LIABILITY LIMITATIONS
Liability for loss, delay, or damage to baggage is limited as follows unless a higher value is declared in advance
and additional charges are paid: (1) for most international travel (including domestic portions of international
journeys) to approximately $9.07 per pound ($20.00 per kilo) for checked baggage and $400 per passenger
for unchecked baggage; (2) for travel wholly between U.S. points, to $750 per passenger on most carriers (a
few have lower limits). Excess valuation may not be declared on certain types of valuable articles. Carriers
assume no liability for fragile or perishable articles. Further information may be obtained from the carrier.
[Emphasis supplied.)

While it may be true that petitioner had not signed the plane ticket he is nevertheless bound by the provisions
thereof. "Such provisions have been held to be a part of the contract of carriage, and valid and binding upon
the passenger regardless of the latter's lack of knowledge or assent to the regulation. It is what is known as a
contract of "adhesion", in regards which it has been said that contracts of adhesion wherein one party imposes
a ready-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely
prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his
consent, a contract limiting liability upon an agreed valuation does not offend against the policy of the law
forbidding one from contracting against his own negligence."

CASE 7
G.R. No. 71929. December 4, 1990. *

ALITALIA, petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA E.

PABLO, respondents.
FACTS:
Dr. Felipa Pablo, an associate professor in UP, was invited to a meeting of the Department of
Research and Isotopes of the Joint FAO-IAEA Division of Atomic Energy in Food and Agriculture
of UN in Ispra, Italy. To fulfill this engagement, Dr. Pablo booked passage on petitioner airline,
ALITALIA. She arrived in Milan on the day before the meeting in accordance with the itinerary
and time table set for her by ALITALIA. She was however told by the petitioner’s personnel there
at Milan that her luggage was delayed
inasmuch as the same was in one of the succeeding flights from Rome to Milan. Her luggage
consisted of two suitcases. But the other flights arriving from Rome did not have her baggage on
board. The suitcases were not actually restored to Prof. Pablo by petitioner until eleven months
and four months after the institution of her action.

ISSUE:
Whether or not the Warsaw Convention operates as an absolute limit of the extent of an airline's
liability; it does not regulate or exclude liability for other breaches of contract by the carrier, or
misconduct of its employees, or for some particular or exceptional type of damage.
NO

RULING:
The Convention does not thus operate as an exclusive enumeration of the instances of an airline's
liability, or as an absolute limit of the extent of that liability. Such a proposition is not borne out by
the language of the Convention, as this Court has now, and at an earlier time, pointed out.
Moreover, slight reflection readily leads to the conclusion that it should be deemed a limit of liability
only in those cases where the cause of the death or injury to person, or destruction, loss or
damage to property or delay in its transport is not attributable to or attended by any wilful
misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official or
employee for which the carrier is responsible, and there is otherwise no special or extraordinary
form of resulting injury. The Convention's provisions, in short, do not "regulate or exclude liability
for other breaches of contract by the carrier" or misconduct of its officers and employees, or for
some particular or exceptional type of damage. Otherwise, "an air carrier would be exempt from
any liability for damages in the event of its absolute refusal, in bad faith, to comply with a contract
of carriage, which is absurd." Nor may it for a moment be supposed that if a member of the aircraft
complement should inflict some physical injury on a passenger, or maliciously destroy or damage
the latter's property, the Convention might successfully be pleaded as the sole gauge to determine
the carrier's liability to the passenger. Neither may the Convention be invoked to justify the
disregard of some extraordinary sort of damage resulting to a passenger and preclude recovery
therefor beyond the limits set by said Convention. It is in this sense that the Convention has been
applied, or ignored, depending on the peculiar facts presented by each case.

#case 10
G.R. No. 70481 December 11, 1992
PHILIPPINE AIRLINES, INC., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, GEORGE LORENZANA and VERONICA G. LORENZANA,
respondents.

Common CarriersBreach of Contract of Carriage; Liability for delay or non-delivery of baggage: Limited
liability under WARSAW convention not applicable. - To bring the case within the ambit of the limited liability
clause for loss, damage, or delay under Article 22 in conjunction with the second paragraph of Article 26 of
the Warsaw Convention, petitioner is inclined to construe its accountability by arguing that the missing bag
was merely delayed. Petitioner is categorical in its disputation that since the bag was neither lost nor
damaged, the baggage was merely delayed, hence the caveat must perforce apply. (Page 10,
Memorandum; Page 133 Rollo). This process of exclusion typifies the classic fallacy of non-sequitur
because the fact of the matter is that the missing luggage was not turned over by the employees of petitioner
to the Pan Am Office in Tokyo and was returned to Manila on September 16, 1974 (page 3, Decision in
Civil Case No. 103684; Page 38, Record on Appeal). Still worse, the luggage was not forthwith delivered
to private respondents who returned from their trip to the U.S. and Canada on September 24, 1974. It was
not until more than a year thereafter, or on December 5, 1975, when the luggage was finally delivered to
private respondents. There is thus no occasion to speak of delay since the baggage was not delivered at
all to the passenger for purposes of the trip in contravention of a common carrier's undertaking to transport
the goods from the place of embarkation to the ultimate point of destination

Facts:
Spouses Lorenzana were going to Honolulu via Tokyo boarding PAL. They checked in two pieces of
baggage for which they were given baggage claim tickets. On Tokyo-honolulu, they changed planes from
PAL to Pan Am. When they arrived in Honolulu, only the luggage containing George's personal effects was
located. Efforts exerted to report and claim the missing bag were futile and instead, private respondents
were requested to follow-up the matter during their stay in Honolulu.
It was sometime in April, 1975 when the couple was informed that the luggage was located and on
December 5, 1975, the luggage was finally delivered to them. It turned out that the missing luggage was
not turned over by the employees of the Philippines Airlines to the Pan Am Office in Tokyo and that the
baggage was returned to Manila on September 16, 1974

Issues Raised and Ruling:

Petitioner begins with the hypothesis that it is private respondents who should be faulted for the alleged
"delay in delivery" because an appreciable length of time elapsed from the moment they were informed of
the whereabouts of the bag until an effort was exerted to retrieve it.
However, an argument of this nature, which springs from petitioner's incongruous interpretation of "delay",
is far from persuasive, since it is designed to toss the onus probandi on the admitted fact of non-delivery
by the carrier to the passenger's shoulders. To be sure, it was ingeniously crafted for the purpose of
extricating petitioner from the fatal aftermath of its admission in judicio for it was explicitly stated in its
Answer that petitioner failed to deliver the baggage to private respondents during the entire length of the
trip (paragraph 6, Answer; Article 1431, new Civil Code; Section 4, Rule 129; Section 2(a). Rule 131,
Revised Rules on Evidence). Indeed, petitioner is quite candid in conceding at this stage that "the baggage
was meant to travel with respondents Lorenzanas all the way until their return to Manila" (Page 12, petition;
Page 23, Rollo) which stance is enough to negate petitioner's concept of delay. By parity of reasoning:
"Delay", as used in a contract exempting a telegraph company from all liability for any
delay, error, or remissness in sending a message, implies that the message was or would
be sent at some time, but not sent or delivered promptly, and the company is not exempt
from liability for a total failure to send and deliver a message. (Balduin vs. U.S., Tel. Co.,
N.Y., 54 Barb. 505, 512, 6 Abb. Prac. N.S., 405, 423; 11-A Words and Phrases, Permanent
Edition, 1971, page 414).
To bring the case within the ambit of the limited liability clause for loss, damage, or delay under Article 22
in conjunction with the second paragraph of Article 26 of the Warsaw Convention, petitioner is inclined to
construe its accountability by arguing that the missing bag was merely delayed. Petitioner is categorical in
its disputation that since the bag was neither lost nor damaged, the baggage was merely delayed, hence
the caveat must perforce apply. (Page 10, Memorandum; Page 133 Rollo). This process of exclusion
typifies the classic fallacy of non-sequitur because the fact of the matter is that the missing luggage was
not turned over by the employees of petitioner to the Pan Am Office in Tokyo and was returned to Manila
on September 16, 1974 (page 3, Decision in Civil Case No. 103684; Page 38, Record on Appeal). Still
worse, the luggage was not forthwith delivered to private respondents who returned from their trip to the
U.S. and Canada on September 24, 1974. It was not until more than a year thereafter, or on December 5,
1975, when the luggage was finally delivered to private respondents. There is thus no occasion to speak
of delay since the baggage was not delivered at all to the passenger for purposes of the trip in contravention
of a common carrier's undertaking to transport the goods from the place of embarkation to the ultimate point
of destination. In point of law, petitioner cannot therefore ascribe an alleged reversible error on the part of
respondent court for adhering to the pronouncement of this Court in Northwest Airlines, Inc. vs. Cuenca (14
SCRA 1063 [1965]) when the exculpatory clauses raised by the common carrier therein, predicated on the
limited liability provisions under the Warsaw Pact, were brushed aside in this manner:
Petitioner argues that pursuant to those provisions, an air "carrier is liable only" in the event
of death of a passenger or injury suffered by him, or of destruction or loss of, or damage to
any checked baggage or any goods, or of delay in the transportation by air of passengers,
baggage or goods. This pretense is not borne out by the language of said Articles. The
same merely declare the carrier liable for damages in the enumerated cases, if conditions
therein specified are present. Neither said provisions nor others in the aforementioned
Convention regulate or exclude liability for other breaches of contract by the carrier. Under
petitioner's theory, an air carrier would be exempt from any liability for damages in the
event of its absolute refusal, in bad faith, to comply with a contract of carriage, which is
absurd. (at p. 1065).
Petitioner argues next that the award of damages is bereft of factual foundation. But the record in the court
of origin, as synthesized by respondent court, reflects the bases for entitlement thereto:
Plaintiffs' stand on actual damages is sustained by the law and the evidence. Because of
the non-delivery of the luggage during the entire length of plaintiffs' stay abroad, the entire
purpose of their trip was frustrated. This conclusion is borne by the testimonies of plaintiffs
who declared without contradiction that plaintiff Veronica G. Lorenzana was not able to
promote the sale of her ready made dresses through outlets in the United States and
Canada to whom plaintiffs have been supplying Philippine food products (pp. 19-20, tsn.,
Feb. 16, 1977; pp. 4 and 11, tsn., March 4, 1977), resulting in loss to plaintiff of an expected
profit estimated at US $14,000.00 (p. 26, tsn., Dec. 10, 1976). It has been proven, too, by
the declaration of plaintiff George Lorenzana that they spent US $5,000.00 for their round
trip tickets and other travelling expenses (p. 26, Id.). Computed at the exchange rate of
P7.43 to US $1.00, which appears to be accepted by the parties as the prevailing rate when
the loss of business income occurred, the actual damages sustained by plaintiffs would
amount to P141,170.00 in Philippine Currency. (Page 9, Decision; Page 48, Rollo)
The belated notion advanced by petitioner relative to the absence of credibility on the part of private
respondents along this line is also devoid of substance because the conclusion drawn by the trial court as
a result of assigning values to narrations at the witness stand command great respect (2 Regalado,
Remedial Law Compendium, Sixth Revised Edition, 1989, Page 553). It has been repeatedly emphasized
in adjective law that a factual query similar to the challenge posed by petitioner is proscribed by and is
anathema to the second paragraph of Section 2, Rule 45 of the Revised Rules of Court, absent any
convincing demonstration from petitioner of an exceptional circumstance that could have justified deviation
from the rule (1 Regalado, Remedial Law Compendium, Fifth Revised Edition, 1988, page 53; Universal
Motors Corporation vs. Court of Appeals (205 SCRA 448; 455 [1992]). And because of these precepts,
petitioners may not likewise assail the award of attorney's fees which respondent court deemed appropriate
to uphold.
Lastly, contrary to the opinion expressed by petitioner concerning the pronouncement made by respondent
court in requiring petitioner to pay damages in the sum of $5,000.00, We believe and so hold that there was
no transgression of the Uniform Currency Act since, assuming that Republic Act No. 529, as amended,
applies, the obligation itself is still valid to be discharged by payment in legal tender (Vitug, Pandect of
Commercial Law and Jurisprudence, Revised Edition, 1990, page 72) which was what respondent court
did in requiring petitioner to pay the $5,000.00 or its equivalent in Philippine Currency.

CASE NO. 12

G.R. No. 121824 January 29, 1998

BRITISH AIRWAYS, Petitioner, vs. COURT OF APPEALS, GOP MAHTANI, and PHILIPPINE
AIRLINES, Respondents.

FACTS:

• Mahtani decided to visit his relatives in Bombay, India. He obtained services of Mr. Gumar to prepare his travel
plans. The latter purchased a ticket from British Airways (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 HK he had to take a connecting flight to Bombay on board BA.

• Mahtani checked in at the PAL counter in Manila his 2 pieces of luggage containing his clothing and personal
effects, confident that upon reaching HK, the same would be transferred to the BA flight bound for Bombay.

• When 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 be diverted to London. After one week, BA finally advised
him to file a claim by accomplishing the Property Irregularity Report.

• Back in the Philippines, Mahtani filed his claim for damages against BA and Mr. Gumar. BA contended that
Mahtani did not have cause of action against it. BA also 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 HK, thus leaving hardly any
time for the proper transfer of Mahtani’s luggage to the BA aircraft bound for Bombay.

• PAL disclaimed liability arguing that there was adequate time to transfer the luggage to BA facilities in HK.

• Trial court rendered its decision in favor of Mahtani. The third party complaint against PAL was dismissed for
lack of cause of action. CA affirmed in toto.

ISSUES:
 BA assails the award of compensatory damages and attorney's fees, as well as the dismissal of its third-party
complaint against PAL.

RULING:

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. 14 Neglect or malfeasance by the carrier's employees could predictably furnish
bases for an action for damages. 15

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. 17

Since plaintiff did not declare the value of the contents in his luggage and even failed to show receipts of the alleged
gifts for the members of his family in Bombay, the most that can be expected for compensation of his lost luggage (2
suit cases) is Twenty U.S. Dollars ($20.00) per kilo, or combined value of Four Hundred ($400.00) U.S. Dollars for
Twenty kilos representing the contents plus Seven Thousand (P7,000.00) Pesos representing the purchase price of the
two (2) suit cases.

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, 19 provides as follows:

xxx xxx xxx

(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.

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. 20 This doctrine is recognized in this
jurisdiction. 21

Notwithstanding the foregoing, we have, nevertheless, ruled against blind reliance on adhesion contracts where the
facts and circumstances justify that they should be disregarded. 22

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. 23

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.

Well-settled doctrine that where the proponent offers evidence deemed by counsel of the adverse party to be
inadmissible for any reason, the latter has the right to object. However, such right is a mere privilege which can be
waived. Necessarily, the objection must be made at the earliest opportunity, lest silence when there is opportunity to
speak may operate as a waiver of objections. 25 BA has precisely failed in this regard.

we sustain the trial court's ruling dismissing appellant's third-party complaint against PAL.

The contract of air transportation in this case pursuant to the ticket issued by appellant to plaintiff-appellee was
exclusively between the plaintiff Mahtani and defendant-appellant BA. When plaintiff boarded the PAL plane from
Manila to Hongkong, PAL was merely acting as a subcontractor or agent of BA. This is shown by the fact that in the
ticket issued by appellant to plaintiff-appellee, it is specifically provided on the "Conditions of Contract," paragraph
4 thereof that:

4. . . . carriage to be performed hereunder by several successive carriers is regarded as a single operation.

The rule that carriage by plane although performed by successive carriers is regarded as a single operation and that
the carrier issuing the passenger's ticket is considered the principal party and the other carrier merely subcontractors
or agent, is a settled issue.

Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view of their contract of carriage.
Yet, BA adamantly disclaimed its liability and instead imputed it to PAL which the latter naturally denies. In other
words, BA and PAL are blaming each other for the incident.

well-settled rule that an agent is also responsible for any negligence in the performance of its function. 33 and is liable
for damages which the principal may suffer by reason of its negligent act. 34 Hence, the Court of Appeals erred when
it opined that BA, being the principal, had no cause of action against PAL, its agent or sub-contractor.

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. 35 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.

Since the instant petition was based on breach of contract of carriage, Mahtani can only sue BA alone, and not PAL,
since the latter was not a party to the contract. However, this is not to say that PAL is relieved from any liability due
to any of its negligent acts. In China Air Lines, Ltd. v. Court of Appeals, 37 while not exactly in point, the case, however,
illustrates the principle which governs this particular situation. In that case, we recognized that a carrier (PAL), acting
as an agent of another carrier, is also liable for its own negligent acts or omission in the performance of its duties.

CASE # 14

China Airlines vs. Chiok

G.R. No. 152122 July 30, 2003

A common carrier has a peculiar relationship with and an exacting responsibility to its passengers. For reasons of public
interest and policy, the ticket-issuing airline acts as principal in a contract of carriage and is thus liable for the acts and
the omissions of any errant carrier to which it may have endorsed any sector of the entire, continuous trip.

FACTS:
Daniel Chiok purchased from China Airlines a passenger ticket for air transportation covering Manila-Taipei-Hong Kong-
Manila. The said ticket was exclusively endorsable to PAL.
Before Chiok his trip, the trips covered by the ticket were pre-scheduled and confirmed by the former. When petitioner
arrived in Taipei, he went to CAL to confirm his Hong Kong- Manila trip on board PAL. The CAL office attached a yellow
sticker indicating the status was OK.

When Chiok reached Hong Kong, he then went to PAL office to confirm his flight back to Manila. The PAL also confirmed
the status of his ticket and attached a ticket indicating a status OK. Chiok proceeded to Hong Kong airport for his trip
to Manila. However, upon reaching the PAL counter, he was told that the flight to Manila was cancelled due to typhoon.
He was informed that all confirmed flight ticket holders of PAL were automatically booked for the next flight the following
day.
.
On November 25, 1981, Chiok was not able to board the plane because his name did not appear in PAL’s computer
list of passengers. Chiok then sought to recover his luggage but found only two and realized that his new Samsonite
luggage was missing which contained cosmetics worth HK$14,128.80

He then proceeded to PAL and confronted the reservation officer who previously confirmed his flight back to Manila.
However, the reservation officer showed him that his name was on the list.
Chiok then decided to use his CAL ticket and asked PAL’s reservation officer if he could use the ticket to book him for
the said flight; The latter, once again, booked and confirmed the former’s trip on a flight scheduled to depart that evening

Later, Chiok went to the PAL check-in counter and it was Carmen Chan, PAL’s terminal supervisor who attended to
him. As this juncture, Chiok had already placed his travel documents, including his clutch bag, on top of the PAL check-
in counter.Thereafter, Carmen directed PAL personnel to transfer counters. In the ensuing commotion, Chiok lost his
clutch bag containing the following, to wit: (a) $2,000.00; (b) HK$2,000.00; (c) Taipei $8,000.00; (d) P2,000.00; (e)
a three-piece set of gold (18 carats) cross pens valued atP3,500; (f) a Cartier watch worth about P7,500.00; (g) a tie
clip with a garnet birthstone and diamond worth P1,800.00; and (h) a [pair of] Christian Dior reading glasses.
Subsequently, he was placed on stand-by and at around 7:30 p.m., PAL personnel informed him that he could now
check-in.

ISSUE: Whether CAL is liable for damages? YES.

HELD: CAL is liable even if PAL was the one that would perform/had performed the contract of carriage. The issuance
of a confirmed CAL ticket in favor of CHIOK guaranteed that the carrier (PAL) would honor his ticket, assure him of
space and transport him. It is significant to note that the contract of air transportation was between petitioner and
respondent, with the former endorsing to PAL the Hong Kong-to-Manila segment of the journey. Such contract of
carriage has always been treated in this jurisdiction as a single operation. In the instant case, PAL as the carrying agent
of CAL, the latter cannot evade liability to respondent, Chiok, even though it may have been only a ticket issuer for
Hong Kong- Manila sector.

This jurisprudential rule is supported by the Warsaw Convention, to which the Philippines is a party, and by the existing
practices of the International Air Transport Association (IATA). Article 1, Section 3 of the Warsaw Convention states:
“Transportation to be performed by several successive air 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 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.”

Article 15 of IATA-Recommended Practice similarly provides: “Carriage to be performed by several successive

carriers under one ticket, or under a ticket and any conjunction ticket issued therewith, is regarded as a single
operation.”

In American Airlines v. Court of Appeals, we have noted that under a general pool partnership agreement, the ticket-
issuing airline is the principal in a contract of carriage, while the endorsee-airline is the agent. Likewise, as the principal
in the contract of carriage, the petitioner in British Airways v. Court of Appeals was held liable, even when the breach
of contract had occurred, not on its own flight, but on that of another airline. The Decision followed our ruling in
Lufthansa German Airlines v. Court of Appeals, in which we had held that the obligation of the ticket-issuing airline
remained and did not cease, regardless of the fact that another airline had undertaken to carry the passengers to one
of their destinations.
In the instant case, following the jurisprudence cited above, PAL acted as the carrying agent of CAL. In the same way
that we ruled against British Airways and Lufthansa in the aforementioned cases, we also rule that CAL cannot evade
liability to respondent, even though it may have been only a ticket issuer for the Hong Kong-Manila sector.

The employees of PAL were utterly insensitive to his need to be in Manila on November 25, 1981, and to the likelihood
that his business affairs in the city would be jeopardized because of a mistake on their part.

It was that mistake that had caused the omission of his name from the passenger list despite his confirmed flight ticket.
By merely looking at his ticket and validation sticker, it is evident that the glitch was the airline‘s fault. However, no
serious attempt was made by PAL to secure the all-important transportation of respondent to Manila on the following
day. To make matters worse, PAL allowed a group of non-revenue passengers, who had no confirmed tickets or
reservations, to board the re-booked flight.

Since the status of CHIOK in the 1st flight was "OK," as a matter of right testified to by PAL‘s witness, he should have
been automatically transferred to and allowed to board Flight 307 the following day. Clearly resulting from negligence
on the part of PAL was its claim that his name was not included in its list of passengers for the first flight and,
consequently, in the list of the replacement flight P. Since he had secured confirmation of his flight -- not only once, but
twice -- by personally going to the carrier’s offices where he was consistently assured of a seat thereon -- PAL’s
negligence was so gross and reckless that it amounted to bad faith.

Moral and exemplary damages should be awarded (note: only CAL held liable, as PAL was not impleaded)

Case no.15:

LUFTHANSA VS CA

G.R. NO. 152122 July 10, 2009

FACTS: Lufthansa German Airlines issued a confirmed Lufthansa ticket to private respondent Antiporda covering a
five-leg trip abroad different airlines. Antiporda was bumped off by Air Kenya, one of the airline contracted to carry him
to a particular destination of the five-leg trip. Antiporda filed a complaint against Lufthansa.

Private respondent Antiporda insists that he entered with Lufthansa an exclusive contract of carriage, the
nature of which is a continuous carriage by air from Manila to Blantyre Malawi; that it did not enter into a series of
independent contracts with the carriers that transported him for the remaining leg of his trip.

Lufthansa argues that it cannot be held liable because under sections (1) and (2) Article 30 of the Warsaw
Convention, an airline carrier is liable only to untoward occurrences on its own line. Lufthansa prays to the Supreme
Court to take heed of jurisprudence in the United States where the term "delay" was interpreted to include "bumping-
off" or failure to carry a passenger with a confirmed reservation.

ISSUE: Whether or not the Warsaw convention is applicable.

RULING: No. Sections (1) and (2), Article 30 of the Warsaw Convention provide:

(1). In the case of transportation to be performed by various successive carriers and falling within the
definition set out in the third paragraph of Article I, each carrier who accepts passengers, baggage, or goods
shall be subject to the rules set out in the convention, and shall be deemed to be one of the contracting parties
 to the contract of transportation insofar as the contract deals with that part of the transportation which is
performed under his supervision.

(2) In the case of transportation of this nature, the passenger or his representative can take action
only against the carrier who performed the transportation during which the accident or the delay occurred,
save in the case where, by express agreement, the first carrier has assumed liability for the whole journey.

The applicability 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 Supreme Court refused to interpret “delay” to include “bumping off” of a passenger.
Consequently, Section 2, Article 30 of the Warsaw Convention which does not contemplate the instance of "bumping-
off" but merely of simple delay, cannot provide a handy excuse for Lufthansa as to exculpate it from any liability to
Antiporda. The payment of damages is, thus, deemed warranted.

In fine, Lufthansa was held liable to Antiporda.

Luna v. CA, 1992

Gist: airline's delay in the delivery of the luggage of its passengers at their destination
Issue: whether the application of the Warsaw Convention operates to exclude the application of the
provisions of the New Civil Code and the other statutes.
Facts: The passengers checked in one (1) piece of luggage each. After boarding, however, due to engine
trouble, they were asked to disembark and transfer to a Korean Airlines plane scheduled to depart four (4)
hours later. They were assured that their baggage would be with them in the same flight. Their baggage
arrived four (4) days later.

Ruling: NOT EXCLUDED. We are also aware of jurisprudence that the Warsaw Convention does not
operate as an exclusive enumeration of the instances for declaring an airline liable for breach of contract
of carriage or as an absolute limit of the extent of that liability. The Convention merely declares the carrier
liable for damages in the enumerated cases, if the conditions therein specified are present. For sure, it does
not regulate the liability, much less exempt, the carrier for violating the rights of others which must simply
be respected in accordance with their contracts of carriage. The application of the Convention must not
therefore be construed to preclude the operation of the Civil Code and other pertinent laws.

We are unable to agree however with petitioners that Art. 25 of the Convention operations to exclude the
other provisions of the Convention if damage is caused by the common carrier's willful misconduct. As
correctly pointed out by private respondent, Art. 25 refers only to the monetary ceiling on damages found
in Art. 22 should damage be caused by the carrier's willful misconduct. Hence, only the provisions of Art.
22 limiting the carrier's liability and imposing a monetary ceiling in case of willful misconduct on its part that
the carrier cannot invoke. 19 This issue however has become academic in the light of our ruling that the
trial courts erred in dismissing petitioners' respective complaints.

We are not prepared to subscribed to petitioners' argument that the failure of private respondent to deliver
their luggage at the designated time and place amounted ipso facto to willful misconduct. For willful
misconduct to exist, there must be a showing that the acts complained of were impelled by an intention to
violate the law, or were in persistent disregard of one's rights. It must be evidenced by a flagrantly or
shamefully wrong or improper conduct.
 Case #19

Lhuiller v. British Airways

G.R. No. 171092. March 15, 2010

Civil Law; Common Carriers; Warsaw Convention; Damages; It is settled that the Warsaw Convention has the force
and effect of law in this country.—It is settled that the Warsaw Convention has the force and effect of law in this country.

Same; Same; Same; Same; Meaning of “International Carriage.”—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.

Same; Same; Same; Same; Place where plaintiff may bring the action for damages.—Under Article 28(1) of the Warsaw
Convention, the plaintiff may bring the action for damages before—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.

Same; Same; Same; Jurisdiction; Article 28(1) of the Warsaw Convention is jurisdictional in character.—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 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.

Facts:

Petitioner Edna Diago Lhuillier filed a Complaint for damages against respondent British Airways. She alleged that she
took respondent’s flight 548 from London, United Kingdom to Rome, Italy. Once on board, she allegedly requested
Julian Halliday, one of the respondent’s flight attendants, to assist her in placing her hand-carried 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!" Petitioner further alleged that when the
plane was about to land in Rome, Italy, another flight attendant, Nickolas Kerrigan, singled her out from among all the
passengers in the business class section to lecture on plane safety. Allegedly, Kerrigan 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 plane’s 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 don’t like your attitude." Upon arrival in Rome, petitioner complained to respondent’s ground manager
and demanded an apology. However, the latter declared that the flight stewards were "only doing their job." Thus,
petitioner filed the complaint for damages, praying that respondent be ordered to pay ₱5 million as moral damages, ₱2
million as nominal damages, ₱1 million as exemplary damages, ₱300,000.00 as attorney’s fees, ₱200,000.00 as
litigation expenses, and cost of the suit.

Petitioner argues that her cause of action arose not from the contract of carriage, but from the tortious conduct
committed by airline personnel of respondent in violation of the provisions of the Civil Code on Human Relations. Since
her cause of action was not predicated on the contract of carriage, petitioner asserts that she has the option to pursue
this case in this jurisdiction pursuant to Philippine laws. In contrast, respondent maintains that petitioner’s claim for
damages fell within the ambit of Article 28(1) of the Warsaw Convention. As such, the same can only be filed before
the courts of London, United Kingdom or Rome, Italy.

Issue:

Whether or not Warsaw Convention has the force and effect of law in this country.

Ruling:

YES. Warsaw Convention has the force and effect of law in this country.

It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos III v. Northwest Orient
Airlines, we held that:

The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to International
Transportation by Air, otherwise known as 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.

The Warsaw Convention applies because the air travel, where the alleged tortious conduct occurred, was between the
United Kingdom and Italy, which are both signatories to the Warsaw Convention. Thus, when the place of departure
and the place of destination in a contract of carriage are situated within the territories of two High Contracting Parties,
said carriage is deemed an "international carriage". The High Contracting Parties referred to herein were the signatories
to the Warsaw Convention and those which subsequently adhered to it. In the case at bench, petitioner’s place of
departure was London, United Kingdom while her place of destination was Rome, Italy. Both the United Kingdom and
Italy signed and ratified the Warsaw Convention. As such, the transport of the petitioner is deemed to be an
"international carriage" within the contemplation of the Warsaw Convention. Since the Warsaw Convention applies in
the instant case, then the jurisdiction over the subject matter of the action is governed by the provisions of the Warsaw
Convention.

Case #20.
PHILIPPINE AIRLINES, INC. vs. HON. ADRIANO SAVILLO, Presiding Judge of RTC Branch 30, Iloilo City, and
SIMPLICIO GRIÑO, G.R. No. 149547, July 4, 2008

SYLLABUS

Civil Law; Common Carriers; Damages; 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.—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.
 Same; Same; Same; 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.—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.

Same; Same; Same; 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 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.

Same; Same; Same; Distinction between damages to the passenger’s baggage and humiliation he suffered
at the hands of the airline’s employees.—In United Airlines v. Uy, 318 SCRA 576 (1999), this Court distinguished
between the (1) damage to the passenger’s baggage and (2) humiliation he suffered at the hands of the airline’s
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.

Facts:

Griño 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: MANILA-SINGAPORE-JAKARTA-SINGAPORE-MANILA. Griño 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.

Griño and his companions took the PAL flight to Singapore and arrived there but upon checking-in for their flight to
Jakarta, Singapore Airlines rejected their tickets because they were not endorsed by PAL. Griño tried to contact PAL’s
office at the airport, only to find out that it was closed.

Stranded at the airport in Singapore and left with no recourse, Griño was in panic and at a loss where to go; and was
subjected to humiliation, embarrassment, mental anguish, serious anxiety, fear and distress. Eventually, they were
forced to purchase tickets from Garuda Airlines and board its last flight bound for Jakarta. When they arrived in Jakarta,
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, Griño became ill and was
unable to participate in the tournament.

Upon his return to the Philippines, Griño 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. On
15 August 1997, private respondent filed a Complaint for Damages before the RTC, seeking compensation for moral
damages in the amount of P1,000,000.00 and attorney’s fees.

PAL filed a Motion to Dismiss on the ground that the said complaint was barred on the ground of prescription. 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 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: 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.
CA: 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:

Is the Warsaw Convention not applicable despite the fact that Griño’s cause of action arose from a breach of contract
for international air transport?

Ruling:

The provisions of the Warsaw Convention are not applicable. The Warsaw Convention does not “exclusively regulate”
the relationship between passenger and carrier on an international flight.

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.

Nevertheless, this 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.

In United Airlines v. Uy, this Court distinguished between the (1) damage to the passenger’s baggage and (2)
humiliation he suffered at the hands of the airline’s 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.

In the Petition at bar, private respondent’s Complaint alleged that both PAL and Singapore Airlines were guilty of gross
negligence, which resulted in his being subjected to "humiliation, embarrassment, mental anguish, serious anxiety, fear
and distress." The emotional harm suffered by the private respondent as a result of having been unreasonably and
unjustly prevented from boarding the plane should be distinguished from the actual damages which resulted from the
same incident. Under the Civil Code provisions on tort, such emotional harm gives rise to compensation where gross
negligence or malice is proven.

In one case, it was held that the airlines’ negligent act of reconfirming the passenger’s reservation days before departure
and failing to inform the latter that the flight had already been discontinued is not among the acts covered by the Warsaw
Convention, since the alleged negligence did not occur during the performance of the contract of carriage but, rather,
days before the scheduled flight.

In the case at hand, Singapore Airlines barred private respondent from boarding the Singapore Airlines flight because
PAL allegedly failed to endorse the tickets of private respondent and his companions, despite PAL’s assurances to
respondent that Singapore Airlines had already confirmed their passage. An action based on these allegations will not
fall under the Warsaw Convention, since the purported negligence on the part of PAL did not occur during the
performance of the contract of carriage but days before the scheduled flight. Thus, the present action cannot be
dismissed based on the statute of limitations provided under Article 29 of the Warsaw Convention.
Had the present case merely consisted of claims incidental to the airlines’ delay in transporting their passengers, the
private respondent’s Complaint would have been time-barred under Article 29 of the Warsaw Convention. However,
the present case involves a special species of injury resulting from the failure of PAL and/or Singapore Airlines to
transport private respondent from Singapore to Jakarta – the profound distress, fear, anxiety and humiliation that private
respondent experienced when, despite PAL’s earlier assurance that Singapore Airlines confirmed his passage, he was
prevented from boarding the plane and he faced the daunting possibility that he would be stranded in Singapore Airport
because the PAL office was already closed.

These claims are covered by the Civil Code provisions on tort, and not within the purview of the Warsaw Convention.
Hence, the applicable prescription period is that provided under Article 1146 of the Civil Code:

Art. 1146. The following actions must be instituted within four years:

(1) Upon an injury to the rights of the plaintiff;

(2) Upon a quasi-delict.

Private respondent’s Complaint was filed with the RTC on 15 August 1997, which was less than four years since PAL
received his extrajudicial demand on 25 January 1994. Thus, private respondent’s claims have not yet prescribed.

Related rulings:

Where the plaintiff alleged that the airlines subjected her to unjust discrimination or undue or unreasonable
preference or disadvantage, xxx, then the plaintiff may claim purely nominal compensatory damages for humiliation
and hurt feelings, which are not provided for by the Warsaw Convention.

Actions for damages for the "bumping off" itself, rather than the incidental damages due to the delay, fall outside the
Warsaw Convention and do not prescribe in two years.

Case No. 21

United Airlines vs. Willie Uy

G.R. No. 127768 November 19, 1999

FACTS: On October 13, 1989, respondent, a passenger of United Airlines checked in together with his luggage one
piece of which was found to be overweight at the airline counter. To his utter humiliation, an employee of petitioner
rebuked him saying that he should have known his things accordingly. Then, in a loud voice in front of the milling crowd,
she told respondent to repair his things and transfer some of them to the light ones.

Respondent acceded but his luggage was still overweight. Petitioner billed him overweight charges but its
employee refused to honor the miscellaneous charges under MCO which he offered to pay with. Not wanting to leave
without his luggage, he paid with his credit card. Upon arrival In Manila, he discovered that one of his bags had been
slashed and its contents stolen.

In a letter dated October 16, 1989, respondent notified petitioner of his loss and requested reimbursement.
Petitioner paid for his loss based on the maximum liability per pound. Respondent considered the amount grossly
inadequate. He sent two more letters to petitioner but to no avail.
 On June 9, 1992, respondent filed a complaint for damages against petitioner Airline. Petitioner moved to
dismiss the complaint invoking the provision of Article 29 of the Warsaw Convention. Respondent countered that
according to paragraph 2 of Article 29, “the method of calculating the period of limitation shall be determined by the law
of the court to which the case is submitted.”

ISSUE: Whether the action for damages is barred by the lapse of the 2-year prescriptive period under Art. 29 of the
Warsaw Convention.

HELD: NO. While respondent’s 2nd cause of action (an action for damages arising from theft or damage to property
or goods) is well within the bounds of the Warsaw Convention, his 1st cause of action (an action for damages arising
from the misconduct of the airline employees and the violation of respondent’s rights as passengers) is clearly not.

The Supreme Court held that although the 2-year prescriptive period under the Warsaw Convention has
lapsed, it did not preclude the application of other pertinent provisions of the Civil Code. Thus, the action for damages
could still be filed based on tort which can be filed within 4 years from the time the cause of action accrued. As for the
action pertaining to the loss of the contents of the luggage, while it was well within the bounds of the Warsaw
Convention, the Supreme Court found that there was an exception to the applicability of the 2-year prescriptive period
that is when the airline employed delaying tactics and gave the passenger the run-around.

Verily, respondent filed his complaint more than 2 years which is beyond the prescriptive period under the
Warsaw Convention for filing a claim for damages. However, it is obvious that respondent was forestalled from
immediately filing an action because petitioner airline gave him the run-around, answering his letters but not giving in
to his demands. True, respondent should have already filed an action at the first instance when his claims were denied
by the petitioner but the same could only be due to his desire to make an out-of-court settlement for which he cannot
be faulted. Hence, despite the express mandate of Art. 29 of the Warsaw Convention, such rule shall not be applied in
the instant case because of the delaying tactics employed by petitioner airline itself. Thus, private respondent’s second
cause of action cannot be considered time-barred under Art. 29 of the Warsaw Convention.

#22

G.R. No. 60501. March 5, 1993.

CATHAY PACIFIC AIRWAYS, LTD, petitioner, vs. COURT OF APPEALS and TOMAS L. ALCANTARA,
respondents.
SYLLABUS
1. CIVIL LAW; CONTRACT OF CARRIAGE; BREACH THEREOF; PETITIONER BREACHED ITS
CONTRACT OF CARRIAGE WITH PRIVATE RESPONDENT WHEN IT FAILED TO DELIVER HIS
LUGGAGE AT THE DESIGNATED PLACE AND TIME. — Petitioner breached its contract of carriage with
private respondent when it failed to deliver his luggage at the designated place and time, it being the obligation
of a common carrier to carry its passengers and their luggage safely to their destination, which includes the
duty not to delay their transportation, and the evidence shows that petitioner acted fraudulently or in bad faith.
2. DAMAGES; MORAL AND EXEMPLARY DAMAGES PREDICATED UPON A BREACH OF
CONTRACT OF CARRIAGE; RECOVERABLE ONLY IN INSTANCES WHERE THE MISHAP RESULTS IN
DEATH OF A PASSENGER, OR WHERE THE CARRIER IS GUILTY OF FRAUD OR BAD FAITH; THE
CONDUCT OF PETITIONER'S REPRESENTATIVE TOWARDS RESPONDENT JUSTIFIES THE GRANT
OF MORAL AND EXEMPLARY DAMAGES IN CASE AT BAR. — Moral damages predicated upon a breach
of contract of carriage may only be recoverable in instances where the mishap results in death of a passenger,
or where the carrier is guilty of fraud or bad faith. The language and conduct of petitioner's representative
towards respondent Alcantara was discourteous or arbitrary to justify the grant of moral damages. The
CATHAY representative was not only indifferent and impatient; he was also rude and insulting. He simply
advised Alcantara to buy anything he wanted. But even that was not sincere because the representative knew
that the passenger was limited only to $20.00 which, certainly, was not enough to purchase comfortable
clothings appropriate for an executive conference. Considering that Alcantara was not only a revenue
passenger but even paid for a first class airline accommodation and accompanied at the time by the
Commercial Attache of the Philippine Embassy who was assisting him in his problem, petitioner or its agents
should have been more courteous and accommodating to private respondent, instead of giving him a curt
reply, "What can we do, the baggage is missing. I cannot do anything . . . Anyhow, you can buy anything you
need, charged to Cathay Pacific." Where in breaching the contract of carriage the defendant airline is not
shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable
consequences of the breach of obligation which the parties had foreseen or could have reasonably foreseen.
In that case, such liability does not include moral and exemplary damages. Conversely, if the defendant airline
is shown to have acted fraudulently or in bad faith, the award of moral and exemplary damages is proper.
3. TEMPERATE DAMAGES; RECOVERABLE ONLY UPON PROOF THAT THE CLAIMANT
SUSTAINED SOME PECUNIARY LOSS. — However, respondent Alcantara is not entitled to temperate
damages, contrary to the ruling of the court a quo, in the absence of any showing that he sustained some
pecuniary loss. It cannot be gainsaid that respondent's luggage was ultimately delivered to him without serious
or appreciable damage.
4. WARSAW CONVENTION; DOES NOT OPERATE AS AN EXCLUSIVE ENUMERATION OF THE
INSTANCES FOR DECLARING A CARRIER LIABLE FOR BREACH OF CONTRACT OF CARRIAGE OR AS
AN ABSOLUTE LIMIT OF THE EXTENT OF THAT LIABILITY; DOES NOT PRECLUDE THE OPERATION
OF THE CIVIL CODE AND OTHER PERTINENT LAWS. — As We have repeatedly held, although the
Warsaw Convention has the force and effect of law in this country, being a treaty commitment assumed by
the Philippine government, said convention does not operate as an exclusive enumeration of the instances
for declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability.
The Warsaw Convention declares the carrier liable for damages in the enumerated cases and under certain
limitations. However, it must not be construed to preclude the operation of the Civil Code and other pertinent
laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its
passengers under the contract of carriage, especially if wilfull misconduct on the part of the carrier's employees
is found or established, which is clearly the case before Us.

FACTS: Mr. Tomas Alcantara was a first class passenger of the petitioner airline on Oct. 19, 1975 on flight
No. CX-900 from Manila to Hongkong and onward from Hongkong to Jakarta on Flight No. CX-711. The
purpose of Mr. Alcantara’s trip was due for a conference with the director General of Trade of Indonesia on
Oct. 20, 1975. His checked in luggage contained not only his clothing and articles for personal use but also
papers and document he needed for the conference.

Upon arrival in Jakarta, Alcantara discovered that his luggage was missing and when he inquired regarding
this, the representative of Cathay told him that his luggae was left in Hongkong. Alcantara was offered $20.00
as inconvenience money to buy his immediate personal needs until the delivery of the luggage. It was only
after more than 24 hours after his arrival when his luggage reached Jakarta but was only to be picked up by
an official of the Philippine Embassy.

The respondent filed his complaint against the petitioner airline with the CFI of Lanao del Norte praying for
temperate, moral and exemplary damages, plus attorney’s fees. The trial court rendered a decision ordering
Cathay to pay Alcantara P20,000 for moral damages, P5,000 for temperate damages, P10,000.00 for
exemplary damages, and P25,000.00 for attorney's fees, and the costs.

Both parties appealed to the Court of Appeals. CATHAY assailed the conclusion of the trial court that it was
accountable for breach of contract and questioned the non-application by the court of the Warsaw Convention
as well as the excessive damages awarded on the basis of its finding that respondent Alcantara was rudely
treated by petitioner's employees during the time that his luggage could not be found. For his part, respondent
Alcantara assigned as error the failure of the trial court to grant the full amount of damages sought in his
complaint.

The Court of Appeals affirmed the findings of fact of the trial court but modifying its award by increasing the
moral damages to P80,000.00, exemplary damages to P20,000.00 and temperate or moderate damages to
P10,000.00. The award of P25,000.00 for attorney's fees was maintained.

ISSUE: WON, the CA erred in failing to apply the Warsaw Convention on the liability of a carrier to its
passengers?

RULING: The CA did not err in not applying the Warsaw Convention in this case.

The Court held that, although the Warsaw Convention has the force and effect of law in this country, being a
treaty commitment assumed by the Philippine government, said convention does not operate as an exclusive
enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute
limit of the extent of that liability. The Warsaw Convention declares the carrier liable for damages in the
enumerated cases and under certain limitations. However, it must not be construed to preclude the operation
of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for
damages for violating the rights of its passengers under the contract of carriage, especially if wilfull misconduct
on the part of the carrier's employees is found or established, which is clearly present in this case. For, the
Warsaw Convention itself provides in Art. 25 that —

"(1) The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit
his liability, if the damage is caused by his wilfull misconduct or by such default on his part as, in accordance
with the law of the court to which the case is submitted, is considered to be equivalent to wilfull misconduct."

(2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused
under the same circumstances by any agent of the carrier acting within the scope of his employment."

When petitioner airline misplaced respondent's luggage and failed to deliver it to its passenger at the appointed
place and time, some special species of injury must have been caused to him. For sure, the latter underwent
profound distress and anxiety, and the fear of losing the opportunity to fulfill the purpose of his trip. In fact, for
want of appropriate clothings for the occasion brought about by the delay of the arrival of his luggage, to his
embarrassment and consternation respondent Alcantara had to seek postponement of his pre-arranged
conference with the Director General of Trade of the host country.

In one case, the Court observed that a traveller would naturally suffer mental anguish, anxiety and shock when
he finds that his luggage did not travel with him and he finds himself in a foreign land without any article of
clothing other than what he has on.

Thus, respondent is entitled to moral and exemplary damages however the award of P80,000.00 for moral
damages is excessive, The Court reduced the amount to P30,000.00. The exemplary damages of P20,000.00
being reasonable is maintained, as well as the attorney's fees of P25,000.00 considering that petitioner's act
or omission has compelled Alcantara to litigate with third persons or to incur expenses to protect his interest.
CASE #23
G.R. Nos. 100374-75 November 27, 1992
LUNA VS CA.

FACTS:

Petitioners Rufino Luna, Rodolfo Alonso and Porfirio Rodriguez boarded Flight 020 of private respondent Northwest
Airlines bound for Seoul, South Korea, to attend the four-day Rotary International Convention. They checked in one (1)
piece of luggage each. After boarding, however, due to engine trouble, they were asked to disembark and transfer to
a Korean Airlines plane scheduled to depart four (4) hours later. They were assured that their baggage would be with
them in the same flight.

When petitioners arrived in Seoul, they discovered that their personal belongings were nowhere to be found instead,
they were allegedly flown to Seattle, U.S.A. It was not until four (4) days later, and only after repeated representations
with Northwest Airlines personnel at the airport in Korea were petitioners able to retrieve their luggage. By then the
Convention, which they were hardly able to attend, was almost over.

Petitioners Rufino Y. Luna and Rodolfo J. Alfonso assert that on 6 June 1989, or thirteen (13) days after they recovered
their luggage, they sent a written claim to private respondent's office However, private respondent, is a letter of 21 June
1989, disowned any liability for the delay and averred that it exerted "its best efforts to carry the passenger and baggage
with reasonable dispatch."

Thus, petitioners Luna and Alonso jointly filed a complaint for breach of contract with damages before the RTC Manila.
However, upon motion of private respondent, both complaints were dismissed 4 for lack of cause of action due to
petitioners' failure to state in their respective complaints that they filed a prior claim with private respondent within the
prescribed period.

Petitioners Luna and Alonso then filed a petition for certiorari before the Court of Appeals to set aside the order of
respondent Judge Cristina M. Estrada granting private respondent's motion to dismiss, while petitioner Rodriquez
proceeded directly to this Court on certiorari for the same purpose. However, in Our resolution of 26 February 1990,
We referred his petition to the Court of Appeals.

The Third Division of respondent Court of Appeals, applying the provisions of the Warsaw Convention and ruling that
certiorari was not a substitute for a lost appeal, dismissed the petition of Luna and Alonso. The petition of Rodriguez
was similarly rejected as well. Hence, this appeal.

ISSUES:
1. WON the Convention does not thus operate as an exclusive enumeration of the instances of an airline's
liability, or as an absolute limit of the extent of that liability;

2. WON that Art. 26 of the Warsaw Convention which prescribes the reglementary period within which to file
a claim cannot be invoked if damage is caused by the carrier's willful misconduct, as provided by Art. 25
of the same Warsaw Convention.

RULING:
1. Warsaw Convention does not operate as an exclusive enumeration of the instances for declaring an
airline liable for breach of contract of carriage or as an absolute limit of the extent of that liability.The
Convention merely declares the carrier liable for damages in the enumerated cases, if the conditions
therein specified are present. For sure, it does not regulate the liability, much less exempt, the carrier for
violating the rights of others which must simply be respected in accordance with their contracts of carriage.
The application of the Convention must not therefore be construed to preclude the operation of the Civil
Code and other pertinent laws.

Hence, petitioners' alleged failure to file a claim with the common carrier as mandated by the provisions of the
Warsaw Convention should not be a ground for the summary dismissal of their complaints since private
respondent may still be held liable for breach of other relevant laws which may provide a different period or
procedure for filing a claim.
2. We are unable to agree however with petitioners that Art. 25 of the Convention operations to exclude the
other provisions of the Convention if damage is caused by the common carrier's willful misconduct. As
correctly pointed out by private respondent, Art. 25 refers only to the monetary ceiling on damages found
in Art. 22 should damage be caused by the carrier's willful misconduct. Hence, only the provisions of Art.
22 limiting the carrier's liability and imposing a monetary ceiling in case of willful misconduct on its part
that the carrier cannot invoke. 19 This issue however has become academic in the light of our ruling that
the trial courts erred in dismissing petitioners' respective complaints.

The Court cannot agree with the private respondent that failure to deliver their luggage at the designated time
and place amounted ipso facto to willful misconduct. For willful misconduct to exist, there must be a showing
that the acts complained of were impelled by an intention to violate the law, or were in persistent disregard of
one's rights. It must be evidenced by a flagrantly or shamefully wrong or improper conduct.
#24. [G.R. No. 60673. May 19, 1992.]

PAN AMERICAN WORLD AIRWAYS, INC., Petitioner, v. JOSE K. RAPADAS and THE COURT OF
APPEALS, Respondents.

1. COMMERCIAL LAW; COMMON CARRIER; WARSAW CONVENTION; INTERNATIONAL

CARRIAGE; DEFINED. — The Warsaw Convention, as amended, specifically provides that it is applicable to
international carriage which it defines in Article 1, par. 2 as follows:" (2) For the purposes of this Convention,
the expression ‘international carriage’ means any carriage in which, according to the agreement between the
parties, the place of departure and the place of destination, whether or not there be a breach 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 the territory of another State,
even if that State is not a High Contracting Party. Carriage between two points within the territory of a single
High Contracting Party without an agreed stopping place within the territory of another State is not international
carriage for the purposes of this Convention." ("High Contracting Party" refers to a state which has ratified or
adhered to the Convention, or which has not effectively denounced the Convention [Article 40A(1)]).

2. ID.; ID.; ID.; ID.; PLANE TICKETS; BEING A CONTRACT OF ADHESION THOUGH NOT ENTIRELY
PROHIBITED; BLIND RELIANCE THEREON, NOT ENCOURAGED. — The Convention governs the
availment of the liability limitations where the baggage check is combined with or incorporated in the
passenger ticket which complies with the provisions of Article 3, Par. 1 (c). (Article 4, Par. 2) In the case at
bar, the baggage check is combined with the passenger ticket in one document of carriage. We have held in
the case of Ong Yiu v. Court of Appeals, supra, and reiterated in a similar case where herein petitioner was
also sued for damages, Pan American World Airways v. Intermediate Appellate Court (164 SCRA 268 [1988])
that: "It (plane ticket) is what is known as a contract of ‘adhesion’, in regards which it has been said that
contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the plane
ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality
free to reject it entirely; if he adheres, he gives his consent. (Tolentino, Civil Code, Vol. IV, 1962 ed., p. 462,
citing Mr. Justice J.B.L. Reyes, Lawyer’s Journal, January 31, 1951, p. 49) And as held in Randolph v.
American Airlines, 103 Ohio App. 172, 144 N.E. 2d 878; Rosenchein v. Trans World Airlines, Inc., 349 S.W.
2d 483, ‘a contract limiting liability upon an agreed valuation does not offend against the policy of the law
forbidding one from contracting against his own negligence.’ "Considering, therefore, that petitioner had failed
to declare a higher value for his baggage, he cannot be permitted a recovery in excess of P100.00 . . ." (91
SCRA 223 at page 231)" We hasten to add that while contracts of adhesion are not entirely prohibited, neither
is a blind reliance on them encouraged. In the face of facts and circumstances showing they should be ignored
because of their basically one sided nature, the Court does not hesitate to rule out blind adherence to their
terms. (See Sweet Lines, Inc. v. Teves, 83 SCRA 361, 368-369 [1978])

3. ID.; ID.; ID.; ID.; ID.; RECEIPT THEREOF BY PASSENGER WILL BIND HIM FROM STIPULATIONS
THEREIN; CASE AT BAR. — The arguments of the petitioner do not belie the fact that it was indeed
accountable for the loss of the attache case. What the petitioner is concerned about is whether or not the
notice, which it did not fail to state in the plane ticket and which it deemed to have been read and accepted by
the private respondent will be considered by this Court as adequate under the circumstances of this case. As
earlier stated, the Court finds the provisions in the plane ticket sufficient to govern the limitations of liabilities
of the airline for loss of luggage. The passenger, upon contracting with the airline and receiving the plane
ticket, was expected to be vigilant insofar as his luggage is concerned. If the passenger fails to adduce
evidence to overcome the stipulations, he cannot avoid the application of the liability limitations.

4. ID.; ID.; ID.; ID.; ID.; STIPULATION ON LIABILITY LIMITATION; APPLICATION. — We are not by
any means suggesting that passengers are always bound to the stipulated amounts printed on a ticket, found
in a contract of adhesion, or printed elsewhere but referred to in handouts or forms. We simply recognize that
the reasons behind stipulations on liability limitations arise from the difficulty, if not impossibility, of establishing
with a clear preponderance of evidence the contents of a lost valise or suitcase. Unless the contents are
declared, it will always be the word of a passenger against that of the airline. If the loss of life or property is
caused by the gross negligence or arbitrary acts of the airline or the contents of the lost luggage are proved
by satisfactory evidence other than the self-serving declarations of one party, the Court will not hesitate to
disregard the fine print in a contract of adhesion. (See Sweet Lines Inc. v. Teves, supra) Otherwise, we are
constrained to rule that we have to enforce the contract as it is the only reasonable basis to arrive at a just
award.

5. ID.; ID.; ID.; ID.; LIABILITY ON LOST UNCHECKED LUGGAGE; RULE; CASE AT BAR. — The
attache case was originally handcarried does not beg the conclusion that the amount of $4,750.00 in cash
could have been placed inside. It may be noted that out of a claim for US$42,403.90 as the amount lost, the
trial court found for only US$5,228.90 and 100 paengs. The court had doubts as to the total claim. The lost
luggage was declared as weighing around 18 pounds or approximately 8 kilograms. At $20.00 per kilogram,
the petitioner offered to pay $160.00 as a higher value was not declared in advance and additional charges
were not paid. We note, however, that an amount of $400.00 per passenger is allowed for unchecked luggage.
Since the checking-in was against the will of the respondent, we treat the lost bag as partaking of involuntarily
and hurriedly checked-in luggage and continuing its earlier status as unchecked luggage. The fair liability
under the petitioner’s own printed terms is $400.00. Since the trial court ruled out discriminatory acts or bad
faith on the part of Pan Am or other reasons warranting damages, there is no factual basis for the grant of
P20,000.00 damages.

6. ID.; ID.; ID.; AWARD OF ATTORNEY’S FEES; NOT PRECLUDED THEREFROM. — As to the
question of whether or not private respondent should be paid attorney’s fees, the Court sustains the finding of
the trial court and the respondent appellate court that it is just and equitable for the private respondent to
recover expenses for litigation in the amount of P5,000.00. Article 22(4) of the Warsaw Convention, as
amended does not preclude an award of attorney’s fees. That provision states that the limits of liability
prescribed in the instrument "shall not prevent the court from awarding, in accordance with its own law, in
addition, the whole or part of the court costs and other expenses of litigation incurred by the plaintiff." We,
however, raise the award to P10,000.00 considering the resort to the Court of Appeals and this Court.

7. ID.; ID.; CANNOT BE HELD LIABLE IN THE ABSENCE OF ARBITRARINESS, DISCRIMINATION

OR MISTREATMENT ON THE PART OF ITS PERSONNEL. — Passengers are also allowed one handcarried
bag each provided it conforms to certain prescribed dimensions. If Mr. Rapadas was not allowed to handcarry
the lost attache case, it can only mean that he was carrying more than the allowable weight for all his luggages
or more than the allowable number of handcarried items or more than the prescribed dimensions for the bag
or valise. The evidence on any arbitrary behavior of a Pan Am employee or inexcusable negligence on the
part of the carrier is not clear from the petition. Absent such proof, we cannot hold the carrier liable because
of arbitrariness, discrimination, or mistreatment.

FACTS

On January 16, 1975, private respondent Jose K. Rapadas held Passenger Ticket and Baggage Claim Check
No. 026-394830084-5 for petitioner’s Flight No. 841 with the route from Guam to Manila. While standing in
line to board the flight at the Guam airport, Rapadas was ordered by petitioner’s handcarry control agent to
check-in his Samsonite attache case. Rapadas protested pointing to the fact that other co-passengers were
permitted to handcarry bulkier baggages. He stepped out of the line only to go back again at the end of it to
try if he can get through without having to register his attache case. However, the same man in charge of
handcarry control did not fail to notice him and ordered him again to register his baggage. For fear that he
would miss the plane if he insisted and argued on personally taking the valise with him, he acceded to checking
it in.

Upon arriving in Manila on the same date, January 16, 1975, Rapadas claimed and was given all his checked-
in baggages except the attache case

On January 30, 1975, the petitioner required the private respondent to put the request in writing. The
respondent filled in a Baggage Claim Blank Form.
Rapadas received a letter from the petitioner’s counsel dated August 2, 1975 offering to settle the claim for
the sum of one hundred sixty dollars ($160.00) representing the petitioner’s alleged limit of liability for loss or
damage to a passenger’s personal property under the contract of carriage between Rapadas and PANAM.
Refusing to accept this kind of settlement, Rapadas filed the instant action for damages on October 1, 1975.

RAPADAS:

PAN AM neglected its duty in the handling and safekeeping of his attache case from the point of embarkation
in Guam to his destination in Manila. He placed the value of the lost attache case and its contents at
US$42,403.90. According to him, the loss resulted in his failure to pay certain monetary obligations, failure to
remit money sent through him to relatives, inability to enjoy the fruits of his retirement and vacation pay earned
from working in Tonga Construction Company (he retired in August 1974) and inability to return to Tonga to
comply with then existing contracts.

PAN AM:

PAN AM acknowledged responsibility for the loss of the attache case but asserted that the claim was subject
to the "Notice of Baggage Liability Limitations" allegedly attached to and forming part of the passenger ticket.
The petitioner argued that the same notice was also conspicuously posted in its offices for the guidance of the
passengers.

Mantains that its liability for the lost baggage of respondent Rapadas was limited to $160.00 since the latter
did not declare a higher value for his baggage and did not pay the corresponding additional charges.

ISSUE

whether or not a passenger is bound by the terms of a passenger ticket declaring that the limitations of liability
set forth in the Warsaw Convention as amended by the Hague shall apply in case of loss, damage or
destruction to a registered luggage of a passenger?

RULING

There is no dispute, and the courts below admit, that there was such a Notice appearing on page two (2) of
the airline ticket stating that the Warsaw Convention governs in case of death or injury to a passenger or of
loss, damage or destruction to a passenger’s luggage.

The Notice states:

"If the passenger’s journey involves an ultimate destination or stop in a country other than the country of
departure the Warsaw Convention may be applicable and the Convention governs and in most cases limits
the liability of carriers for death or personal injury and in respect of loss of or damage to baggage. See also
notice headed "Advice to International Passengers on Limitation of Liability."

the Notice and paragraph 2 of the "Conditions of Contract" should be sufficient notice showing the applicability
of the Warsaw limitations.

The Warsaw Convention, as amended, specifically provides that it is applicable to international carriage which
it defines in Article 1, par. 2 as follows:

"(2) For the purposes of this Convention, the expression ‘international carriage’ means any carriage in
which, according to the agreement between the parties, the place of departure and the place of destination,
whether or not there be a breach in the carriage or a transshipment, 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 the territory of another State, even if that State is not a High Contracting Party. Carriage
between two points within the territory of a single High Contracting Party without an agreed stopping place
within the territory of another State is not international carriage for the purposes of this Convention." ("High
Contracting Party" refers to a state which has ratified or adhered to the Convention, or which has not effectively
denounced the Convention [Article 40A (1)])
Nowhere in the Warsaw Convention, as amended, is such a detailed notice of baggage liability limitations
required. Nevertheless, it should become a common, safe and practical custom among air carriers to indicate
beforehand the precise sums equivalent to those fixed by Article 22 (2) of the Convention.

the Court finds the provisions in the plane ticket sufficient to govern the limitations of liabilities of the airline for
loss of luggage. The passenger, upon contracting with the airline and receiving the plane ticket, was expected
to be vigilant insofar as his luggage is concerned. If the passenger fails to adduce evidence to overcome the
stipulations, he cannot avoid the application of the liability limitations.

FULL RULING:

After a review of the various arguments of the opposing parties as well as the records of the case, the Court
finds sufficient basis under the particular facts of this case for the availment of the liability limitations under the
Warsaw Convention.

There is no dispute, and the courts below admit, that there was such a Notice appearing on page two (2) of
the airline ticket stating that the Warsaw Convention governs in case of death or injury to a passenger or of
loss, damage or destruction to a passenger’s luggage.

The Notice states:

"If the passenger’s journey involves an ultimate destination or stop in a country other than the country of
departure the Warsaw Convention may be applicable and the Convention governs and in most cases limits
the liability of carriers for death or personal injury and in respect of loss of or damage to baggage. See also
notice headed "Advice to International Passengers on Limitation of Liability." (The latter notice refers to limited
liability for death or personal injury to passengers with proven damages not exceeding US $75,000 per
passenger; Exhibit "K" for plaintiff respondent, Table of Exhibits, p. 19)

Furthermore, paragraph 2 of the "Conditions of Contracts" also appearing on page 2 of the ticket states:

"2. Carriage hereunder is subject to the rules and limitations relating to liability established by the
Warsaw Convention unless such carriage is not ‘international carriage’ as defined by that Convention." (Exhibit
"K", supra)

We note that plaintiff-respondent Rapadas presented as proof of the Passenger Ticket and Baggage Check.
No. 026-394830084-5 a xerox copy of its page 2 which contains the Notice and Conditions of Contract, and
also page 3 which recites the Advice to International Passengers on Limitation of Liability. He also presented
two xerox copies of Flight Coupon No. 3 of the same passenger ticket showing the fares paid for the trips
Honolulu to Guam, Guam to Manila, and Manila to Honolulu to prove his obligations which remained unpaid
because of the unexpected loss of money allegedly placed inside the missing attache case. Rapadas
explained during the trial that the same passenger ticket was returned by him to one Mr. S. L. Faupula of the
Union Steam Ship Company of New Zealand, Ltd., Tonga who demanded the payment of the fares or
otherwise, the return of the unused plane tickets (including the subject Passenger Ticket & Baggage Check
No. 026-394830084-5). The issuance of these tickets was facilitated by Mr. Faupula on credit.

Meanwhile, the petitioner offered as evidence Exhibit "1" also showing page 2 of the passenger ticket to prove
the notice and the conditions of the contract of carriage. It likewise offered Exhibit "1-A", a xerox copy of a
"Notice of Baggage Liability Limitations" which the trial court disregarded and held to be non-existent. The
same Exhibit "1-A" contained the following stipulations:jgc:chanrobles.com.ph

"NOTICE OF BAGGAGE LIABILITY LIMITATIONS — Liability for loss, delay, or damage to baggage is limited
as follows unless a higher value is declared in advance and additional charges are paid: (1) for most
international travel (including domestic portions of international journeys) to approximately $8.16 per pound
($18.00 per kilo; now $20.00 per Exhibit "13") for checked baggage and $360 (now $400 per Exhibit "13") per
passenger for unchecked baggage; (2) for travel wholly between U.S. points, to $500 per passenger on most
carriers (a few have lower limits). Excess valuation may not be declared on certain types of valuable articles.
Carriers assume no liability for fragile or perishable articles. Further information may be obtained from the
carrier." (Table of Exhibits, p. 45)
The original of the Passenger Ticket and Baggage Check No. 026-394830084-5 itself was not presented as
evidence as it was among those returned to Mr. Faupula. Thus, apart from the evidence offered by the
defendant airline, the lower court had no other basis for determining whether or not there was actually a
stipulation on the specific amounts the petitioner had expressed itself to be liable for loss of baggage.

Although the trial court rejected the evidence of the defendant-petitioner of a stipulation particularly specifying
what amounts it had bound itself to pay for loss of luggage, the Notice and paragraph 2 of the "Conditions of
Contract" should be sufficient notice showing the applicability of the Warsaw limitations.

The Warsaw Convention, as amended, specifically provides that it is applicable to international carriage which
it defines in Article 1, par. 2 as follows:

"(2) For the purposes of this Convention, the expression ‘international carriage’ means any carriage in
which, according to the agreement between the parties, the place of departure and the place of destination,
whether or not there be a breach in the carriage or a transshipment, 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 the territory of another State, even if that State is not a High Contracting Party. Carriage
between two points within the territory of a single High Contracting Party without an agreed stopping place
within the territory of another State is not international carriage for the purposes of this Convention." ("High
Contracting Party" refers to a state which has ratified or adhered to the Convention, or which has not effectively
denounced the Convention [Article 40A (1)])

Nowhere in the Warsaw Convention, as amended, is such a detailed notice of baggage liability limitations
required. Nevertheless, it should become a common, safe and practical custom among air carriers to indicate
beforehand the precise sums equivalent to those fixed by Article 22 (2) of the Convention.

The Convention governs the availment of the liability limitations where the baggage check is combined with
or incorporated in the passenger ticket which complies with the provisions of Article 3, par. 1(c). (Article 4, par.
2) In the case at bar, the baggage check is combined with the passenger ticket in one document of carriage.
The passenger ticket complies with Article 3, par. 1(c) which provides:jgc:chanrobles.com.ph

"(1) In respect of the carriage of passengers a ticket shall be delivered containing:chanrob1es virtual 1aw
library

(a) ...

(b) ...

(c) a notice to the effect that, if the passenger’s journey involves an ultimate destination or stop in a
country other than the country of departure, the Warsaw Convention may be applicable and that the
Convention governs and in most cases limits the liability of carriers for death or personal injury and in respect
of loss of or damage to baggage."

We have held in the case of Ong Yiu v. Court of Appeals, supra, and reiterated in a similar case where herein
petitioner was also sued for damages, Pan American World Airways v. Intermediate Appellate Court (164
SCRA 268 [1988]) that:

"It (plane ticket) is what is known as a contract of ‘adhesion’, in regards which it has been said that contracts
of adhesion wherein one party imposes a ready made form of contract on the other, as the plane ticket in the
case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject
it entirely; if he adheres, he gives his consent. (Tolentino, Civil Code, Vol. IV, 1962 ed., p. 462, citing Mr.
Justice J.B.L. Reyes, Lawyer’s Journal, January 31, 1951, p. 49) And as held in Randolph v. American Airlines,
103 Ohio App. 172, 144 N.E. 2d 878; Rosenchein v. Trans World Airlines, Inc., 349 S.W. 2d 483, ‘a contract
limiting liability upon an agreed valuation does not offend against the policy of the law forbidding one from
contracting against his own negligence.’

"Considering, therefore, that petitioner had failed to declare a higher value for his baggage, he cannot be
permitted a recovery in excess of P100.00 . . ." (91 SCRA 223 at page 231)"

We hasten to add that while contracts of adhesion are not entirely prohibited, neither is a blind reliance on
them encouraged. In the face of facts and circumstances showing they should be ignored because of their
basically one sided nature, the Court does not hesitate to rule out blind adherence to their terms. (See Sweet
Lines, Inc. v. Teves, 83 SCRA 361, 368-369 [1978])

The arguments of the petitioner do not belie the fact that it was indeed accountable for the loss of the attache
case. What the petitioner is concerned about is whether or not the notice, which it did not fail to state in the
plane ticket and which it deemed to have read and accepted by the private respondent will be considered by
this Court as adequate under the circumstances of this case. As earlier stated, the Court finds the provisions
in the plane ticket sufficient to govern the limitations of liabilities of the airline for loss of luggage. The
passenger, upon contracting with the airline and receiving the plane ticket, was expected to be vigilant insofar
as his luggage is concerned. If the passenger fails to adduce evidence to overcome the stipulations, he cannot
avoid the application of the liability limitations.

The facts show that the private respondent actually refused to register the attache case and chose to take it
with him despite having been ordered by the PANAM agent to check it in. In attempting to avoid registering
the luggage by going back to the line, private respondent manifested a disregard of airline rules on allowable
handcarried baggages. Prudence of a reasonably careful person also dictates that cash and jewelry should
be removed from checked-in-luggage and placed in one’s pockets or in a handcarried Manila-paper or plastic
envelope.

The alleged lack of enough time for him to make a declaration of a higher value and to pay the corresponding
supplementary charges cannot justify his failure to comply with the requirement that will exclude the application
of limited liability. Had he not wavered in his decision to register his luggage, he could have had enough time
to disclose the true worth of the articles in it and to pay the extra charges or remove them from the checked-
in-luggage. Moreover, an airplane will not depart meantime that its own employee is asking a passenger to
comply with a safety regulation.chanrobles lawlibrary : rednad

Passengers are also allowed one handcarried bag each provided it conforms to certain prescribed dimensions.
If Mr. Rapadas was not allowed to handcarry the lost attache case, it can only mean that he was carrying more
than the allowable weight for all his luggages or more than the allowable number of handcarried items or more
than the prescribed dimensions for the bag or valise. The evidence on any arbitrary behavior of a Pan Am
employee or inexcusable negligence on the part of the carrier is not clear from the petition. Absent such proof,
we cannot hold the carrier liable because of arbitrariness, discrimination, or mistreatment.

We are not by any means suggesting that passengers are always bound to the stipulated amounts printed on
a ticket, found in a contract of adhesion, or printed elsewhere but referred to in handouts or forms. We simply
recognize that the reasons behind stipulations on liability limitations arise from the difficulty, if not impossibility,
of establishing with a clear preponderance of evidence the contents of a lost valise or suitcase. Unless the
contents are declared, it will always be the word of a passenger against that of the airline. If the loss of life or
property is caused by the gross negligence or arbitrary acts of the airline or the contents of the lost luggage
are proved by satisfactory evidence other than the self-serving declarations of one party, the Court will not
hesitate to disregard the fine print in a contract of adhesion. (See Sweet Lines Inc. v. Teves, supra) Otherwise,
we are constrained to rule that we have to enforce the contract as it is the only reasonable basis to arrive at a
just award.

We note that the finding on the amount lost is more of a probability than a proved conclusion.

The trial court stated:

x x x

"We come now to the actual loss of $4,750.00 which the plaintiff claims was the amount of his retirement
award and vacation pay. According to the plaintiff, this was in cash of $100 denominations and was placed in
 an envelope separate from the other money he was carrying. Plaintiff presented the memorandum award,
Exhibit T-1 and the vouchers of payment, Exhibits T-2 and T-3. Under the circumstances, recited by the plaintiff
in which the loss occurred, the Court believes that plaintiff could really have placed this amount in the attache
case considering that he was originally handcarrying said attache case and the same was locked, and he did
not expect that he would be required to check it in. . . ." (Amended Record on Appeal, p. 75; Emphasis ours).

The above conclusion of the trial court does not arise from the facts. That the attache case was originally
handcarried does not beg the conclusion that the amount of $4,750.00 in cash could have been placed inside.
It may be noted that out of a claim for US$42,403.90 as the amount lost, the trial court found for only
US$5,228.90 and 100 paengs. The court had doubts as to the total claim.

The lost luggage was declared as weighing around 18 pounds or approximately 8 kilograms. At $20.00 per
kilogram, the petitioner offered to pay $160.00 as a higher value was not declared in advance and additional
charges were not paid. We note, however, that an amount of $400.00 per passenger is allowed for unchecked
luggage. Since the checking-in was against the will of the respondent, we treat the lost bag as partaking of
involuntarily and hurriedly checked-in luggage and continuing its earlier status as unchecked luggage. The
fair liability under the petitioner’s own printed terms is $400.00. Since the trial court ruled out discriminatory
acts or bad faith on the part of Pan Am or other reasons warranting damages, there is no factual basis for the
grant of P20,000.00 damages.

As to the question of whether or not private respondent should be paid attorney’s fees, the Court sustains the
finding of the trial court and the respondent appellate court that it is just and equitable for the private
respondent to recover expenses for litigation in the amount of P5,000.00. Article 22 (4) of the Warsaw
Convention, as amended does not precluded an award of attorney’s fees. That provision states that the limits
of liability prescribed in the instrument "shall not prevent the court from awarding, in accordance with its own
law, in addition, the whole or part of the court costs and other expenses of litigation incurred by the plaintiff."
We, however, raise the award to P10,000.00 considering the resort to the Court of Appeals and this Court.

WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of Appeals is
REVERSED and SET ASIDE. The petitioner is ordered to pay the private respondent damages in the amount
of US$400.00 or its equivalent in Philippine Currency at the time of actual payment, P10,000.00 in attorney’s
fees, and costs of the suit.

SO ORDERED.

Case #25

[G.R. No. 71238. March 19, 1992.] LUFTHANSA GERMAN AIRLINES, Petitioner, v. INTERMEDIATE APPELLATE
COURT and SPOUSES HENRY H. ALCANTARA and TERESITA ALCANTARA, Respondents

WARSAW CONVENTION; WAIVER OF APPLICABILITY THEREOF ON CARRIER’S LIABILITY; WHEN AVAILABLE; CASE
AT BAR. — The respondent court found that petitioner waived the applicability of the Warsaw Convention to the case at bar
when it offered private respondent a higher amount than that which is provided in the said law and failed to raise timely
objections during the trial when questions and answers were brought out regarding the actual claims and damages sustained
by Alcantara which were even subjected to lengthy cross examination by Lufthansa’s counsel.

Facts

On January 21, 1979, respondent Henry H. Alcantara shipped thirteen (13) pieces of luggage through petitioner Lufthansa
from Teheran to Manila as evidenced by Lufthansa Air Waybill No. 220-9776-2733. The Air Waybill discloses that the actual
gross weight of the thirteen (13) pieces of luggage is 180 kilograms. Respondent Henry H. Alcantara did not declare an
inventory of the contents or the value of the luggages when he delivered them to Lufthansa.

On March 3, 1979, the thirteen (13) pieces of luggage were boarded in one of Lufthansa’s flights which arrived in
Manila on the same date. After the luggages arrived in Manila, the consignee, respondent Teresita Alcantara, was able to
claim from the cargo broker Philippine Skylanders, Inc. on March 6, 1979 only twelve (12) out of the thirteen (13) pieces of
luggage with a total weight of 174 kilograms.

The private respondents advised Lufthansa of the loss of one of the luggages and of the contents thereof. Petitioner
Lufthansa sent telex tracing messages to different stations and to the Philippine Airlines which actually carried the cargo. But
all efforts in tracing the missing luggage were fruitless.

RESPONDENTS ACTION/CONTENTION

On September 24, 1979, the private respondents wrote the petitioner demanding the production of the missing
luggage within ten (10) days from receipt. Since the petitioner did not comply with said demand, the private respondent filed
a complaint dated May 7, 1980, for breach of contract with damages against the petitioner before the Court of First Instance
of Manila.

The private respondents maintain that the petitioner, as found by the trial and appellate courts, waived the benefits
of the Warsaw Convention when it offered a settlement in the amount of $200.00 which is much higher than what the
Convention prescribes and never raised timely objections during the trial to the introduction of evidence regarding the actual
claims and damages sustained by respondent Alcantara.

PETITIONER’S ANSWER

The petitioner filed its answer to the complaint alleging that the Warsaw Convention limits the liability of the carrier,
if any, with respect to cargo to a sum of 250 francs per kilo ($20.00 per kilo or $9.07 per pound), unless a higher value is
declared in advance and additional charges are paid by the passenger and the conditions of the contract as set forth in the air
waybill expressly subject the contract of carriage of cargo to the Warsaw Convention. The petitioner also alleged that it never
acted fraudulently or in bad faith so as to entitle respondent spouses to moral damages and attorney’s fees, nor did it act in a
wanton, fraudulent, reckless, oppressive or malevolent manner as to entitle spouses to exemplary damages.

The petitioner contends also that the Republic of the Philippines is a party to the "Convention for the Unification of
Certain Rules Relating to International Transportation by Air", otherwise known as the Warsaw Convention.

RTC DECISION

WHEREFORE, judgment is hereby rendered in favor of plaintiffs, spouses Henry H. Alcantara and Teresita
Alcantara, and against Lufthansa German Airlines.(1) Ordering defendant to pay plaintiffs the sum of P200,000.00 for actual
damages, with interest thereon at the legal rate from the date of the filing of the complaint until the principal sum is fully paid;
"(2) Ordering defendant to pay plaintiffs the sum of P20,000.00 as attorney’s fees; and "(3) Ordering defendant to pay the
costs of suit.

IAC DECISION

WHEREFORE, PREMISES CONSIDERED, the decision appealed from is hereby AFFIRMED with the modification
that the amount of P20,000.00 awarded as attorney’s fees shall be deleted, the costs to be borne by the respective parties.

ISSUE

Whether or not the private respondents are entitled to an award of damages beyond the liability set forth in the
Warsaw Convention and in the Airwaybill of Lading.

HELD

The petition is without merit.

The loss of one luggage belonging to the private respondents while the same was in the custody of the petitioner is
not disputed. The contract of air carriage generates a relation attended with a public duty. Neglect or malfeasance of the
carrier’s employees could give grounds for an action for damages. Common carriers are liable for the missing goods for failure
to comply with its duty.
 The Convention does not thus operate as an exclusive enumeration of the instances of an airline’s liability, or as an
absolute limit of the extent of that liability. Such a proposition is not borne out by the language of the Convention, as this Court
has now, and at an earlier time, pointed out. Moreover, slight reflection readily leads to the conclusion that it should be deemed
a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property
or delay in its transport is not attributable to or attended by any willful misconduct, bad faith, recklessness, or otherwise
improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise no special
or extraordinary form of resulting injury. The Convention’s provisions, in short, do not `regulate or exclude liability for other
breaches of contract by the carrier’ or misconduct of its officers and employees, or for some particular or exceptional type of
damage. Otherwise, `an air carrier would be exempt from any liability for damages in the event of its absolute refusal, in bad
faith, to comply with a contract of carriage, which is absurd.’ Nor may it for a moment be supposed that if a member of the
aircraft complement should inflict some physical injury on a passenger, or maliciously destroy or damage the latter’s property,
the Convention might successfully be pleaded as the sole gauge to determine the carrier’s liability to the passenger. Neither
may the Convention be invoked to justify the disregard of some extraordinary sort of damage resulting to a passenger and
preclude recovery therefore beyond the limits set by said Convention. It is in this sense that the Convention has been applied,
or ignored, depending on the peculiar facts presented by each case.

Furthermore, the respondent court found that petitioner waived the applicability of the Warsaw Convention to the case at
bar when it offered private respondent a higher amount than that which is provided in the said law and failed to raise timely
objections during the trial when questions and answers were brought out regarding the actual claims and damages sustained
by Alcantara which were even subjected to lengthy cross examination by Lufthansa’s counsel.

Case #26

G.R. No. 106664 March 8, 1995

PHILIPPINE AIR LINES, petitioner,

vs.

FLORANTE A. MIANO, respondent.

PUNO, J.:

SYLLABUS

Civil Law; Damages; In breach of contract of carriage by air, moral damages are awarded only if the
defendant acted fraudulently or in bad faith.—In breach of contract of carriage by air, moral damages are
awarded only if the defendant acted fraudulently or in bad faith. Bad faith means a breach of a known duty
through some motive of interest or ill will.

Same; Same; Trial court erred in awarding moral damages to private respondent.—The trial court erred
in awarding moral damages to private respondent. The established facts evince that petitioner’s late delivery
of the baggage for eleven (11) days was not motivated by ill will or bad faith. In fact, it immediately coordinated
with its Central Baggage Services to trace private respondent’s suitcase and succeeded in finding it.

Same; Same; Trial court made an unequivocal conclusion that petitioner did not act in bad faith or
with malice.—Worthy to stress, the trial court made an unequivocal conclusion that petitioner did not act in
bad faith or with malice, viz: x x x x x x x x x “The mere fact that defendant (petitioner) exerted effort to assist
plaintiff (private respondent) in his predicament as shown in defendant’s (petitioner’s) letter to plaintiff (private
respondent) (Exh. “E”) and likewise the letter from Mr. Miguel Ebio, Manager-Airport Services Administration
of defendant (petitioner) PAL to its Senior Counsel-Litigation, Atty. Marceliano Calica (Exh. “3”) which reveals
the fact that an investigation was conducted as to mishandled baggage, coupled with the fact that said
information were then relayed to plaintiff (private respondent) as evidenced by a letter of defendant (petitioner)
to plaintiff (private respondent) (Exh. “4”) does not warrant a showing of malice on the part of defendant
(petitioner).”

Same; Same; Bad faith must be substantiated by evidence.—Bad faith must be substantiated by evidence.
In LBC vs. Court of Appeals, we ruled: “Bad faith under the law cannot be presumed; it must be established
by clear and convincing evidence. Again, the unbroken jurisprudence is that in breach of contract cases where
the defendant is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the
natural and probable consequences of the breach of the obligation which the parties had foreseen or could
reasonably have foreseen. The damages, however, will not include liability for moral damages.”

Same; Same; The prerequisite for the award of exemplary damages in cases of contract or quasi-
contract is that defendant acted in wanton, fraudulent, reckless, oppressive or malevolent manner.—
We can neither sustain the award of exemplary damages. The prerequisite for the award of exemplary
damages in cases of contract or quasi-contract is that the defendant acted in wanton, fraudulent, reckless,
oppressive, or malevolent manner. The undisputed facts do not so warrant the characterization of the action
of petitioner.

Same; Same; Attorney’s Fees; Attorney’s fees cannot be recovered as part of damages because of
the policy that no premium should be placed on the right to litigate; Award of attorney’s fees must be
deleted where the award of moral and exemplary damages are eliminated.—The award of attorney’s fees
must also be disallowed for lack of legal leg to stand on. The fact that private respondent was compelled to
litigate and incur expenses to protect and enforce his claim did not justify the award of attorney’s fees. The
general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no
premium should be placed on the right to litigate. Petitioner is willing to pay the just claim of $200.00 as a
result of the delay in the transportation of the luggage in accord with the Warsaw Convention. Needless to
say, the award of attorney’s fees must be deleted where the award of moral and exemplary damages are
eliminated.

FULL TEXT RULING

In breach of contract of carriage by air, moral damages are awarded only if the defendant acted fraudulently
or in bad faith.6 Bad faith means a breach of a known duty through same motive of interest or ill will. 7

The trial court erred in awarding moral damages to private respondent. The established facts evince that
petitioner's late delivery of the baggage for eleven (11) days was not motivated by ill will or bad faith. In fact,
it immediately coordinated with its Central Baggage Services to trace private respondent's suitcase and
succeeded in finding it. At the hearing, petitioner's Manager for Administration of Airport Services Department
Miguel Ebio testified that their records disclosed that Manila, the originating station, did not receive any tracer
telex.8 A tracer telex, an airline lingo, is an action of any station that the airlines operate from whom a
passenger may complain or have not received his baggage upon his arrival. 9 It was reasonable to presume
that the handling of the baggage was normal and regular. Upon inquiry from their Frankfurt Station, it was
however discovered that the interline tag of private respondent's baggage was accidentally taken off.
According to Mr. Ebio, it was customary for destination stations to hold a tagless baggage until properly
identified. The tracer telex, which contained information on the baggage, is matched with the tagless luggage
for identification. Without the tracer telex, the color and the type of baggage are used as basis for the matching.
Thus, the delay.

Worthy to stress, the trial court made an unequivocal conclusion that petitioner did not act in bad faith or with
malice, viz.:

xxx xxx xxx

Absent a finding as to the bad intention of defendant (petitioner) PAL, this court finds it appropriate to apply
the Warsaw Convention with respect to the liability of Air Carriers.10

xxx xxx xxx

The mere fact that defendant (petitioner) exerted effort to assist plaintiff (private respondent) in his
predicament as shown in defendant's (petitioner's) letter to plaintiff (private respondent) (Exh. "E") and likewise
the letter from Mr. Miguel Ebio, Manager-Airport Services Administration of defendant (petitioner) PAL to its
Senior Counsel-Litigation, Atty. Marceliano Calica (Exh. "3") which reveals the fact that an investigation was
conducted as to mishandled baggage, coupled with the fact that said information were then relayed to plaintiff
(private respondent) as evidenced by a letter of defendant (petitioner) to plaintiff (private respondent) (Exh.
"4") does not warrant a showing of malice on the part of defendant
( petitioner). 11

xxx xxx xxx

Under the circumstances obtaining, considering that defendant's (petitioner's) actuation was not attendant
with bad faith, the award of moral damages in the amount of P40,000.00 is but just and fair. 12

Bad faith must be substantiated by evidence. In LBC vs. Court of

Appeals,13 we ruled:

Bad faith under the law cannot be presumed; it must be established by clear and convincing evidence. Again,
the unbroken jurisprudence is that in breach of contract cases where the defendant is not shown to have acted
fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the
breach of the obligation which the parties had foreseen or could reasonably have foreseen. The damages,
however, will not include liability far moral damages. (Citations omitted)

We can neither sustain the award of exemplary damages. The prerequisite for the award of exemplary
damages in cases of contract or quasi-contract14 is that the defendant acted in wanton, fraudulent, reckless,
oppressive, or malevolent manner. 15 The undisputed facts do not so warrant the characterization of the action
of petitioner.

The award of attorney's fees must also be disallowed for lack of legal leg to stand on. The fact that private
respondent was compelled to litigate and incur expenses to protect and enforce his claim did not justify the
award of attorney's fees. The general rule is that attorney's fees cannot be recovered as part of damages
because of the policy that no premium should be placed on the right to litigate.16 Petitioner is willing to pay the
just claim of $200.00 as a result of the delay in the transportation of the luggage in accord with the Warsaw
Convention. Needless to say, the award of attorney's fees must be deleted where the award of moral and
exemplary damages are eliminated.

IN VIEW WHEREOF, the assailed Decision of July 29, 1992 is MODIFIED deleting the award of moral and
exemplary damages and attorney's fees. No costs.

SO ORDERED.

FACTS

Private respondent took petitioner's flight bound for Frankfurt, Germany. He had an immediate onward
connecting flight to Vienna, Austria. At NAIA, he checked-in one brown suitcase weighing twenty (20)
kilograms2 but did not declare a higher valuation. He claimed that his suitcase contained money, documents,
one Nikkon camera with zoom lens, suits, sweaters, shirts, pants, shoes, and other accessories.3

Upon private respondent's arrival at Vienna, his checked-in baggage was missing. He reported the matter to
the Lufthansa authorities. After three (3) hours of waiting in vain, he proceeded to Piestany, Czechoslovakia.
Eleven (11) days after, his suitcase was delivered to him in his hotel in Piestany, Czechoslovakia. He claimed
that because of the delay in the delivery of his suitcase, he was forced to borrow money to buy some clothes,
to pay $200.00 for the transportation of his baggage from Vienna to Piestany, and lost his Nikkon camera. 4

Private respondent wrote to petitioner a letter demanding: (1) P10,000.00 cost of allegedly lost Nikkon camera;
(2) $200.00 for alleged cost of transporting luggage from Vienna to Piestany; and (3) P100,000.00 as
damages. In its reply, petitioner informed private respondent that his letter was forwarded to its legal
department for investigation. Private respondent felt his demand letter was left unheeded and instituted an
action for Damages docketed before RTC Makati.

Petitioner contested the complaint. It disclaimed any liability on the ground that there was neither a report of
mishandled baggage on flight nor a tracer telex received from its Vienna Station. It, however, contended that
if at all liable its obligation is limited by the Warsaw Convention rate.

RTC: observed that petitioner's actuation was not attended by bad faith. Nevertheless, it awarded private
respondent damages and attorney's fees. Hence, the recourse.
#27
G.R. No. 165266 December 15, 2010
AIR FRANCE, Petitioner,
vs.
BONIFACIO H. GILLEGO, substituted by his surviving heirs represented by Dolores P. Gillego,
Respondent.
Civil Law; Common Carriers; Article 1735 of the Civil Code provides that in case of lost or damaged goods,
common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as required by Article 1733.-
—A business intended to serve the travelling public primarily, a contract of carriage is imbued with public
interest. The law governing common carriers consequently imposes an exacting standard. Article 1735 of the
Civil Code provides that in case of lost or damaged goods, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required by
Article 1733. Thus, in an action based on a breach of contract of carriage, the aggrieved party does not have
to prove that the common carrier was at fault or was negligent. All that he has to prove is the existence of the
contract and the fact of its non-performance by the carrier.
2. Same; Same; Same; Article 2216 of the Civil Code provides that assessment of damages is left to the
discretion of the court according to the circumstances of each case. This discretion is limited by the principle
that the amount awarded should not be palpably excessive as to indicate that it was the result of prejudice or
corruption on the part of the trial court. Simply put, the amount of damages must be fair, reasonable and
proportionate to the injury suffered.-
—The purpose of awarding moral damages is to enable the injured party to obtain means, diversion or
amusement that will serve to alleviate the moral suffering he has undergone by reason of defendant's culpable
action. On the other hand, the aim of awarding exemplary damages is to deter serious wrongdoings. Article
2216 of the Civil Code provides that assessment of damages is left to the discretion of the court according to
the circumstances of each case. This discretion is limited by the principle that the amount awarded should not
be palpably excessive as to indicate that it was the result of prejudice or corruption on the part of the trial
court. Simply put, the amount of damages must be fair, reasonable and proportionate to the injury suffered.
3. Same; Same; Same; Same; In repeatedly ignoring respondent’s inquiries, petitioner’s employees exhibited
an indifferent attitude without due regard for the inconvenience and anxiety he experienced after realizing that
his luggage was missing. Petitioner was thus guilty of bad faith in breaching its contract of carriage with the
respondent, which entitles the latter to the award of moral damages.-
—While respondent failed to cite any act of discourtesy, discrimination or rudeness by petitioner’s employees,
this did not make his loss and moral suffering insignificant and less deserving of compensation. In repeatedly
ignoring respondent’s inquiries, petitioner’s employees exhibited an indifferent attitude without due regard for
the inconvenience and anxiety he experienced after realizing that his luggage was missing. Petitioner was
thus guilty of bad faith in breaching its contract of carriage with the respondent, which entitles the latter to the
award of moral damages.
4. Same; Same; Same; Same; Inattention to and lack of care for the interest of its passengers who are entitled
to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the
passenger to an award of moral damages. What the law considers as bad faith which may furnish the ground
for an award of moral damages would be bad faith in securing the contract and in the execution thereof, as
well as in the enforcement of its terms, or any other kind of deceit.-
—The alleged copy of the PIR confirmed that the only action taken by the petitioner to locate respondent’s
luggage were telex searches allegedly made on May 17, 21 and 23, 1993. There was not even any attempt
to explain the reason for the loss of respondent’s luggage. Clearly, petitioner did not give the attention and
care due to its passenger whose baggage was not transported and delivered to him at his travel destination
and scheduled time. Inattention to and lack of care for the interest of its passengers who are entitled to its
utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to
an award of moral damages. What the law considers as bad faith which may furnish the ground for an award
of moral damages would be bad faith in securing the contract and in the execution thereof, as well as in the
enforcement of its terms, or any other kind of deceit.
5. Same; Same; Same; Bad Faith; Bad faith should be established by clear and convincing evidence. The
settled rule is that the law always presumes good faith such that any person who seeks to be awarded
damages due to the acts of another has the burden of proving that the latter acted in bad faith or with ill
motive.-
—Bad faith should be established by clear and convincing evidence. The settled rule is that the law always
presumes good faith such that any person who seeks to be awarded damages due to the acts of another has
the burden of proving that the latter acted in bad faith or with ill motive. In the case of Tan v. Northwest Airlines,
Inc., 327 SCRA 263 (2000), we sustained the CA’s deletion of moral and exemplary damages awarded to a
passenger whose baggage were loaded to another plane with the same expected date and time of arrival but
nevertheless not delivered to her on time. We found that respondent carrier was not motivated by malice or
bad faith in doing so due to weight and balance restrictions as a safety measure. In another case involving
the off-loading of private respondents’ baggage to another destination, taken together with petitioner airline’s
neglect in providing the necessary accommodations and assistance to its stranded passengers, aggravated
by the discourteous acts of its employees, we upheld the CA in sustaining the trial court’s decision awarding
moral and exemplary damages and attorney’s fees. We pointed out that it is PAL’s duty to provide assistance
to private respondents and to any other passenger similarly inconvenienced due to delay in the completion of
the transport and the receipt of their baggage.

6. Sane; Same; Damages; In awarding moral damages for breach of contract of carriage, the breach must
be wanton and deliberately injurious or the one responsible acted fraudulently or with malice or bad faith. Not
every case of mental aguish, fright or serious anxiety calls for the award of moral damages.-
—In awarding moral damages for breach of contract of carriage, the breach must be wanton and deliberately
injurious or the one responsible acted fraudulently or with malice or bad faith. Not every case of mental
anguish, fright or serious anxiety calls for the award of moral damages. Where in breaching the contract of
carriage the airline is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the
natural and probable consequences of the breach of the obligation which the parties had foreseen or could
have reasonably foreseen. In such a case the liability does not include moral and exemplary damages.

Facts:

in 1993, Congressman Gillego was the keynote speaker at the 89th Inter-Parliamentary Conference
Symposium on “Parliament: Guardian of Human Rights”. The Congressman left for Paris and was to take a
connecting flight to Budapest. He learned of an earlier flight to Budapest and made arrangements for the
same. He was given a ticket and a boarding pass for this new flight as well as a new baggage claim stub for
his checked-in luggage.

Upon arrival at Budapest, his luggage was not at the claims section. He sought assistance and was advised
to wait at the hotel. His luggage was never delivered despite inquiries.

Upon his return home, his lawyer wrote Air France complaining about the loss and the damages he suffered
while in Budapest arising from his loss of personal effects, medicines and even the speeches he had prepared,
among others. He only had his travel documents, pocket money and the clothes on his back. He was
constrained to shop for personal items including clothes and medicines which amounted to $1,000. He even
had to make another speech which was made more difficult due to the lack of data and information that was
in his luggage. He asked for P1,000,000.00 from the petitioner as compensation. Air France ignored his
repeated follow-ups on his lost luggage. He thereafter filed a complaint for damages against Air France.

The trial court awarded P1,000,000.00 as moral damages; P500,000.00 as exemplary damages and
P50,000.00 as attorney’s fees to the plaintiff. This was affirmed by the Court of Appeals.

Air France sought relief before the Supreme Court, arguing that the award of “extravagant sums to respondent
that already tend to punish the petitioner and enrich the respondent, which is not the function at all of moral
damages” and that “the damages awarded are definitely not proportionate or commensurate to the wrong or
injury supposedly inflicted.” The plaintiff was after all an expert in the field of human rights who could have
delivered his speech even without his notes.
Issue:WON Air France is liable for breach of contract and for the lost luggage

Ruling:

The petition is partly meritorious.

A business intended to serve the travelling public primarily, a contract of carriage is imbued with public interest. 22The
law governing common carriers consequently imposes an exacting standard. Article 1735 of the Civil Codeprovides that
in case of lost or damaged goods, common carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as required by Article 1733. Thus, in an action based on a breach
of contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or was negligent.
All that he has to prove is the existence of the contract and the fact of its non-performance by the carrier.23

That respondent’s checked-in luggage was not found upon arrival at his destination and was not returned to him until
about two years later24 is not disputed. The action filed by the respondent is founded on such breach of the contract of
carriage with petitioner who offered no satisfactory explanation for the unreasonable delay in the delivery of respondent’s
baggage. The presumption of negligence was not overcome by the petitioner and hence its liability for the delay was
sufficiently established. However, upon receipt of the said luggage during the pendency of the case in the trial court,
respondent did not anymore press on his claim for actual or compensatory damages and neither did he adduce evidence
of the actual amount of loss and damage incurred by such delayed delivery of his luggage. Consequently, the trial court
proceeded to determine only the propriety of his claim for moral and exemplary damages, and attorney’s fees.

In awarding moral damages for breach of contract of carriage, the breach must be wanton and deliberately injurious or
the one responsible acted fraudulently or with malice or bad faith. 25 Not every case of mental anguish, fright or serious
anxiety calls for the award of moral damages.26 Where in breaching the contract of carriage the airline is not shown to
have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the
breach of the obligation which the parties had foreseen or could have reasonably foreseen. In such a case the liability
does not include moral and exemplary damages.27

Bad faith should be established by clear and convincing evidence. The settled rule is that the law always presumes good
faith such that any person who seeks to be awarded damages due to the acts of another has the burden of proving that the
latter acted in bad faith or with ill motive.28

In the case of Tan v. Northwest Airlines, Inc.,29 we sustained the CA’s deletion of moral and exemplary damages awarded
to a passenger whose baggage were loaded to another plane with the same expected date and time of arrival but
nevertheless not delivered to her on time. We found that respondent carrier was not motivated by malice or bad faith in
doing so due to weight and balance restrictions as a safety measure. In another case involving the off-loading of private
respondents’ baggage to another destination, taken together with petitioner airline’s neglect in providing the necessary
accommodations and assistance to its stranded passengers, aggravated by the discourteous acts of its employees, we
upheld the CA in sustaining the trial court’s decision awarding moral and exemplary damages and attorney’s fees. We
pointed out that it is PAL’s duty to provide assistance to private respondents and to any other passenger similarly
inconvenienced due to delay in the completion of the transport and the receipt of their baggage. 30

After a careful review, we find that petitioner is liable for moral damages.

Petitioner’s station manager, Ma. Lourdes Reyes, testified that upon receiving the letter-complaint of respondent’s
counsel, she immediately began working on the PIR from their computerized data. Based on her testimony, a PIR is
issued at the airline station upon complaint by a passenger concerning missing baggage. From the information obtained
in the computer-printout, it appears that a PIR31 was initiated at petitioner’s Budapest counter. A search telex for the
missing luggage was sent out on the following dates: May 17, May 21 and May 23, 1993. As shown in the PIR printout,
the information respondent supposedly furnished to petitioner was only his Philippine address and telephone number,
and not the address and contact number of the hotel where he was billeted at Budapest. According to the witness, PIR
usually is printed in two originals, one is kept by the station manager and the other copy given to the passenger. The
witness further claimed that there was no record or entry in the PIR of any follow-up call made by the respondent while
in Budapest.32 Respondent, on the other hand, claimed that he was not given a copy of this PIR and that his repeated
telephone calls to inquire about his lost luggage were ignored.

We hold that the trial and appellate courts did not err in finding that petitioner acted in bad faith in repeatedly ignoring
respondent’s follow-up calls. The alleged entries in the PIR deserve scant consideration, as these have not been properly
identified or authenticated by the airline station representative in Budapest who initiated and inputed the said entries.
Furthermore, this Court cannot accept the convenient excuse given by petitioner that respondent should be faulted in
allegedly not giving his hotel address and telephone number. It is difficult to believe that respondent, who had just lost
his single luggage containing all his necessities for his stay in a foreign land and his reference materials for a speaking
engagement, would not give an information so vital such as his hotel address and contact number to the airline counter
where he had promptly and frantically filed his complaint. And even assuming arguendo that his Philippine address and
contact number were the only details respondent had provided for the PIR, still there was no explanation as to why
petitioner never communicated with respondents concerning his lost baggage long after respondent had already returned
to the Philippines. While the missing luggage was eventually recovered, it was returned to respondent only after the trial
of this case.

Furthermore, the alleged copy of the PIR confirmed that the only action taken by the petitioner to locate respondent’s
luggage were telex searches allegedly made on May 17, 21 and 23, 1993. There was not even any attempt to explain the
reason for the loss of respondent’s luggage. Clearly, petitioner did not give the attention and care due to its passenger
whose baggage was not transported and delivered to him at his travel destination and scheduled time. Inattention to and
lack of care for the interest of its passengers who are entitled to its utmost consideration, particularly as to their
convenience, amount to bad faith which entitles the passenger to an award of moral damages. 33 What the law considers
as bad faith which may furnish the ground for an award of moral damages would be bad faith in securing the contract
and in the execution thereof, as well as in the enforcement of its terms, or any other kind of deceit.34

While respondent failed to cite any act of discourtesy, discrimination or rudeness by petitioner’s employees, this did not
make his loss and moral suffering insignificant and less deserving of compensation. In repeatedly ignoring respondent’s
inquiries, petitioner’s employees exhibited an indifferent attitude without due regard for the inconvenience and anxiety
he experienced after realizing that his luggage was missing. Petitioner was thus guilty of bad faith in breaching its contract
of carriage with the respondent, which entitles the latter to the award of moral damages.1awphi1

However, we agree with petitioner that the sum of ₱1,000,000.00 awarded by the trial court is excessive and not
proportionate to the loss or suffering inflicted on the passenger under the circumstances. As in Trans World Airlines v.
Court of Appeals35 where this Court after considering the social standing of the aggrieved passenger who is a lawyer and
director of several companies, the amount of ₱500,000.00 awarded by the trial court as moral damages was still reduced
to ₱300,000.00, the moral damages granted to herein respondent should likewise be adjusted.

The purpose of awarding moral damages is to enable the injured party to obtain means, diversion or amusement that will
serve to alleviate the moral suffering he has undergone by reason of defendant's culpable action. On the other hand, the
aim of awarding exemplary damages is to deter serious wrongdoings. 36 Article 2216 of the Civil Code provides that
assessment of damages is left to the discretion of the court according to the circumstances of each case. This discretion
is limited by the principle that the amount awarded should not be palpably excessive as to indicate that it was the result
of prejudice or corruption on the part of the trial court. Simply put, the amount of damages must be fair, reasonable and
proportionate to the injury suffered.37

Where as in this case the air carrier failed to act timely on the passenger’s predicament caused by its employees’ mistake
and more than ordinary inadvertence or inattention, and the passenger failed to show any act of arrogance, discourtesy or
rudeness committed by the air carrier’s employees, the amounts of ₱200,000.00, ₱50,000.00 and ₱30,000.00 as moral
damages, exemplary damages and attorney’s fees would be sufficient and justified. 38

WHEREFORE, the petition is DENIED. The Decision dated June 30, 2004 of the Court of Appeals in CA-G.R. CV No.
56587 is hereby AFFIRMED with MODIFICATION in that the award of moral damages, exemplary damages and
attorney’s fees are hereby reduced to ₱200,000.00, ₱50,000.00 and ₱30,000.00, respectively.

With costs against the petitioner.

SO ORDERED.

Case no. 33

Zulueta v. Pan American World Airways, Inc.

G.R. No. L-28589, February 29, 1972

FACTS:

Spouses Rafael Zulueta and Telly Albert Zulueta, with their daughter, boarded a Pan American plane from
Honolulu to Manila, the first leg of which was Wake Island. While on the stopover, Mr. Zulueta found the need
to relieve himself and after finding the terminal’s comfort rooms full, he walked down the beach to do his
business. Meanwhile, the flight was called and Mr. Zulueta’s absence was noticed. Heading towards the ram,
plaintiff remarked, “You people almost made me miss your flight. You have a defective announcing system
and I was not paged.”Instead of allowing plaintiff to board the plane, however, the airport manager stopped
plaintiff and asked him to surrender his baggage for inspection. Refusing to comply with the order, plaintiff
was not allowed to board the plane. His wife and daughter were able to proceed but were instructed to leave
their baggage behind.

Plaintiff instituted the present petition for recovery of damages against respondents for breach of contract. The
defendants, however, maintain that plaintiff’s reason for going to the beach was not to relieve himself but
because he had a quarrel with his wife.

ISSUE:

Whether or not the plaintiff is entitled to damages for breach of contract.

HELD:

YES, the plaintiff is entitled to damages. Firstly, plaintiff’s testimony about what he did upon reaching the
beach is uncontradicted. Furthermore, there is absolutely no direct evidence about said alleged quarrel. If
such was true, surely, plaintiff would not have walked back from the beach to the terminal before the plane
had resumed its flight to Manila, thereby exposing his presence to the full view of those who were looking for
him.

Anent the request of the common carrier to inspect the bags of plaintiff, it appears that Captain Zentner
received information that one of the passengers expressed a fear of a bomb on board the plane. As a result,
he asked for the plaintiff’s bags to verify the bomb. Nevertheless, this claim is unfounded. The Captain failed
to explain why he seemingly assumed that the alleged apprehension of his information was justified. Plaintiff
himself intimated to them that he was well known to the US State Department and that the Captain was not
even aware of the informant’s name or any circumstances which may substantiate the latter’s fear of a certain
bomb.

Defendants further argue that plaintiff was also guilty of contributory negligence for failure to reboard the plane
within the 30 minutes announced before the passengers debarked therefrom. This may have justified a
reduction of the damages had plaintiff been unwittingly left by the plane, owing to the negligence of PANAM
personnel, or even, wittingly, if he could not be found before the plane’s departure. It does not, and cannot
have such justification in the case at bar, plaintiff having shown up before the plane had taken off and he
having been off-loaded intentionally and with malice.
CASE 34
G.R. No. 88561. April 20, 1990.*
DR. HERMAN ARMOVIT, DORA ARMOVIT AND JACQUELINE ARMOVIT, petitioners, vs.
COURT OF APPEALS, AND NORTHWEST AIRLINES, INC., respondents.

FACTS:
This is a case which involves a Filipino physician and his family residing in the United States who
came home to the Philippines on a Christmas visit. They were bumped off at the Manila
International Airport on their return flight to the U.S. because of an erroneous entry in their plane
tickets relating to their time of departure.
In October 1981, the petitioners decided to spend their Christmas holidays with relatives and
friends in the Philippines, so they purchased from private respondent, (Northwest Airlines, Inc.)
three (3) round trip airline tickets from the U.S. to Manila and back, plus three (3) tickets for the
rest of the children, though not involved in the suit. Each ticket of the petitioners which was in the
handwriting of private respondent's tickets sales agent contains the following entry on the Manila
to Tokyo portion of the return flight:
from Manila to Tokyo, NW flight 002, date 17 January, time 10:30 A.M. Status, OK. 1
On their return trip from Manila to the U.S. scheduled on January 17, 1982, petitioner arrived at
the check-in counter of private respondent at the Manila International Airport at 9:15 in the
morning, which is a good one (1) hour and fifteen (15) minutes ahead of the 10:30 A.M. scheduled
flight time recited in their tickets. Petitioners were rudely informed that they cannot be
accommodated inasmuch as Flight 002 scheduled at 9:15 a.m. was already taking off and the
10:30 A.M. flight time entered in their plane tickets was erroneous.
Previous to the said date of departure petitioners re-confirmed their reservations through their
representative Ernesto Madriaga who personally presented the three (3) tickets at the private
respondent's Roxas Boulevard office. 2 The departure time in the three (3) tickets of petitioners
was not changed when re-confirmed. The names of petitioners appeared in the passenger
manifest and confirmed as Passenger Nos. 306, 307, and 308, Flight 002. 3
Herein petitioner Dr. Armovit protested in extreme agitation that because of the bump-off he will
not be able to keep his appointments with his patients in the U.S. Petitioners suffered anguish,
wounded feelings, and serious anxiety day and night of January 17th until the morning of January
18th when they were finally informed that seats will be available for them on the flight that day.
Because of the refusal of the private respondent to heed the repeated demands of the petitioners
for compensatory damages arising from the aforesaid breach of their air-transport contracts, 4
petitioners were compelled to file an action for damages in the Regional Trial Court of Manila.

ISSUE:
Whether or not the negligence committed by the private respondent constitutes bad faith and
establish a breach of contract.

RULING:
The gross negligence committed by private respondent in the issuance of the tickets with entries
as to the time of the flight, the failure to correct such erroneous entries and the manner by which
petitioners were rudely informed that they were bumped off are clear indicia of such malice and
bad faith and establish that private respondent committed a breach of contract which entitles
petitioners to moral damages.

The appellate court observed that the petitioners failed to take the witness stand and testify on
the matter. It overlooked however, that the failure of the petitioner to appear in court to testify was
explained by them.

By the same token to provide an example for the public good, an award of exemplary damages
is also proper. The award of the appellate court is adequate. Nevertheless, the deletion of the
nominal damages by the appellate court is well-taken since there is an award of actual damages.
Nominal damages cannot co-exist with actual or compensatory damages.

Case #37
VICTORINO SAVELLANO, VIRGINIA B. SAVELLANO and DEOGRACIAS B. SAVELLANO, Petitioners,
vs. NORTHWEST AIRLINES, Respondent.
10
Civil Law; Contracts; Contract of Carriage;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. Condition 9 in the agreement states that a " x x x [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. x x x .

Same;Same;Sam; Damages;Moral Damages;In the absence of bad faith, ill will, malice or wanton conduct,
22
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
23
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

Same;Same;Same: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
25
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. The unexpected and sudden requirement of having to
arrange the connecting flights of every single person in the distressed plane in just a few hours, in addition
to the Northwest employees' normal workload, was difficult to satisfy perfectly. We cannot find respondent
liable for exemplary damages for its imperfection of neglecting to consult with the passengers beforehand.

Same;Same;Same:Nominal damages are recoverable if no actual, substantial or specific damages were

26
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.

Facts
Savellano family departed from San Francisco USA on oct 27 1991 on board REspondents flight, business
class bound for Manila. They were expected to arrive at NAIA on Oct 29, 1991. However , due to engine
malfunction, the pilot had the emergency landing at Seattle, USA. The next day, petitioners were advised
to take the new and longer route (Seattle - Los Angeles - Seoul - Manila).
When [petitioners] claimed their luggage at the baggage carousel, 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. Virginia was later to claim having lost her diamond
earrings costing P300,000.00, two (2) Perry Gan shoes worth US$250.00, four (4) watches costing
US$40.00 each, two (2) pieces of Tag Heuer watch and three (3) boxes of Elizabeth Arden [perfumes].

Issues:
"[W]hether or not petitioners' discriminatory bump-off from NW Flight No. 0027 on 28 October 1991 (not the
diversion of the distressed plane to Seattle the day before, i.e. NW Flight 27 on 27 October 1991) constitutes
breach by respondent airline of its air-carriage contract?
"And if so, whether or not petitioners are entitled to actual, moral and exemplary damages including
9
attorney's fees as a consequence?"

The Court's Ruling

The Petition is partly meritorious.
First Issue:
Breach of Contract
Petitioners' contract of carriage with Northwest was for the San Francisco-Tokyo (Narita)-Manila flights
scheduled for October 27, 1991. This itinerary was not followed when the aircraft used for the first segment
of the journey developed engine trouble. Petitioners stress that they are questioning, not the cancellation
of the original itinerary, but its substitution, which they allegedly had not contracted for or agreed to. They
insist that, like the other passengers of the distressed flight, they had the right to be placed on Flight 27,
which had a connecting flight from Japan to Manila. They add that in being treated differently and shabbily,
they were being discriminated against.
10
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. Condition 9 in the agreement states
that a " x x x [c]arrier may without notice substitute alternate carriers or aircraft, and may alter or omit
11
stopping places shown on the ticket in case of necessity. x x x ."
The basis of the Complaint was the way respondent allegedly treated petitioners like puppets that could be
12
shuttled to Manila via Los Angeles and Seoul without their consent. Undeniably, it did not take the time
to explain how it would be meeting its contractual obligation to transport them to their final destination. Its
employees merely hustled the confused petitioners into boarding one plane after another without giving the
latter a choice from other courses of action that were available. It unilaterally decided on the most expedient
way for them to reach their final destination.
Passengers' Consent
After an examination of the conditions printed on the airline ticket, we find nothing there authorizing
Northwest to decide unilaterally, after the distressed flight landed in Seattle, what other stopping places
petitioners should take and when they should fly. True, Condition 9 on the ticket allowed respondent to
substitute alternate carriers or aircraft without notice. However, nothing there permits shuttling passengers
without so much as a by your-leave to stopping places that they have not been previously notified of, much
less agreed to or been prepared for. Substituting aircrafts or carriers without notice is entirely different from
changing stopping places or connecting cities without notice.
The ambiguities in the contract, being one of adhesion, should be construed against the party that caused
13
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.
Proof of Necessity of Alteration
Furthermore, the change in petitioners' flight itinerary does not fall under the situation covered by the phrase
14
"may alter or omit stopping places shown on the ticket in case of necessity." A case of necessity must
first be proven. The burden of proving it necessarily fell on respondent. This responsibility it failed to
discharge.
Petitioners do not question the stop in Seattle, so we will not delve into this matter. The airplane engine
trouble that developed during the flight bound for Tokyo from San Francisco definitely merited the
"necessity" of landing the plane at some place for repair in this case, Seattle but not that of shuttling
petitioners to other connecting points thereafter without their consent.
Northwest failed to show a "case of necessity" for changing the stopping place from Tokyo to Los Angeles
and Seoul. It is a fact that some of the passengers on the distressed flight continued on to the Tokyo (Narita)
connecting place. No explanation whatsoever was given to petitioners as to why they were not similarly
allowed to do so. It may be that the Northwest connecting flight from Seattle to Tokyo to Manila could no
longer accommodate them. Yet it may also be that there were other carriers that could have accommodated
them for these sectors of their journey, and whose route they might have preferred to the more circuitous
one unilaterally chosen for them by respondent.
In the absence of evidence as to the actual situation, the Court is hard pressed to determine if there was a
"case of necessity" sanctioning the alteration of the Tokyo stopping place in the case of petitioners. Thus,
we hold that in the absence of a demonstrated necessity thereof and their rerouting to Los Angeles and
Seoul as stopping places without their consent, respondent committed a breach of the contract of carriage.
Second Issue:
Damages
Being guilty of a breach of their contract, respondent may be held liable for damages suffered by petitioners
in accordance with Articles 1170 and 2201 of the Civil Code, which state:
"Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay and
those who in any manner contravene the tenor thereof are liable for damages." (Emphasis supplied)
"Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is
liable shall be those that are the natural and probable consequences of the breach of the obligation, and
which the parties have foreseen or could have reasonably foreseen at the time the obligation was
constituted."
"In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which
may be reasonably attributed to the non-performance of the obligation."
As a general rule, the factual findings of the CA when supported by substantial evidence on record are final
15
and conclusive and may not be reviewed on appeal. An exception to this rule is when the lower court
16
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.
Petitioners impute oppression, discrimination, recklessness and malevolence to respondent. We are not
convinced. There is no persuasive evidence that they were maliciously singled out to fly the Seattle-Los
Angeles-Seoul-Manila route. It appears that the passengers of the distressed flight were randomly divided
into two groups. One group was made to take the Tokyo-Manila flight; and the other, the Los Angeles-
Seoul-Manila flight. The selection of who was to take which flight was handled via the computer reservation
17
system, which took into account only the passengers' final destination.
The records show that respondent was impelled by sincere motives to get petitioners to their final
destination by whatever was the most expeditious course in its judgment, if not in theirs. Though they claim
that they were not accommodated on Flight 27 from Seattle to Tokyo because respondent had taken on
Japanese passengers, petitioners failed to present convincing evidence to back this allegation. In the
absence of convincing evidence, we cannot find respondent guilty of bad faith.

CASE no. 39

G.R. No. 118664 August 7, 1998

JAPAN AIRLINES, Petitioner, vs. THE COURT OF APPEALS, ENRIQUE AGANA., MARIA
ANGELA NINA AGANA, ADALIA B. FRANCISCO and JOSE MIRANDA, Respondents.

Facts: Private respondents boarded a JAL flight in San Francisco, California bound for Manila. It included an overnight stopover
at Narita, Japan at JAL’s expense. Due to the Mt. Pinatubo eruption, private respondents’ trip to Manila was cancelled. JAL
rebooked all the Manila-bound passengers and paid for the hotel expenses of their unexpected overnight stay. The flight of private
respondents was again cancelled due to NAIA’s indefinite closure. JAL informed the respondents that it would no longer defray
their hotel and accommodation expense during their stay in Narita. The respondents were forced to pay for their accommodations
and meal expenses for 5 days.

Issue:

1. whether JAL, as a common carrier has the obligation to shoulder the hotel and
meal expenses of its stranded passengers until they have reached their final destination,
even if the delay was caused by "force majeure."

2. Whether or not award of nominal damages was proper

Ruling:

1. We are not unmindful of the fact that in a plethora of cases we have consistently ruled
that a contract to transport passengers is quite different in kind, and degree from any other
contractual relation. It is safe to conclude that it is a relationship imbued with public
interest. Failure on the part of the common carrier to live up to the exacting standards of
care and diligence renders it liable for any damages that may be sustained by its
passengers. However, this is not to say that common carriers are absolutely responsible
for all injuries or damages even if the same were caused by a fortuitous event. To rule
otherwise would render the defense of "force majeure," as an exception from any liability,
illusory and ineffective.

Accordingly, there is no question that when a party is unable to fulfill his obligation because
of "force majeure," the general rule is that he cannot be held liable for damages for non-
performance.
Indeed, to hold JAL, in the absence of bad faith or negligence, liable for the amenities of
its stranded passengers by reason of a fortuitous event is too much of a burden to assume.

In this regard, adverse weather conditions or extreme climatic changes are some of the
perils involved in air travel, the consequences of which the passenger must assume or
expect. After all, common carriers are not the insurer of all risks. 8

The factual background of the PAL v. Court of Appeals case is different from the instant
petition. In that case there was indeed a fortuitous event resulting in the diversion of the
PAL flight. However, the unforeseen diversion was worsened when "private respondents
(passenger) was left at the airport and could not even hitch a ride in a Ford Fiera loaded
with PAL personnel," 10 not to mention the apparent apathy of the PAL station manager
as to the predicament of the stranded passengers. 11 In light of these circumstances, we
held that if the fortuitous event was accompanied by neglect and malfeasance by the
carrier's employees, an action for damages against the carrier is permissible.
Unfortunately, for private respondents, none of these conditions are present in the instant
petition.

While JAL was no longer required to defray private respondents' living expenses during
their stay in Narita on account of the fortuitous event, JAL had the duty to make the
necessary arrangements to transport private respondents on the first available connecting
flight to Manila. Petitioner JAL reneged on its obligation to look after the comfort and
convenience of its passengers when it declassified private respondents from "transit
passengers" to "new passengers" as a result of which private respondents were obliged
to make the necessary arrangements themselves for the next flight to Manila. Private
respondents were placed on the waiting list from June 20 to June 24. To assure
themselves of a seat on an available flight, they were compelled to stay in the airport the
whole day of June 22, 1991 and it was only at 8:00 p.m. of the aforesaid date that they
were advised that they could be accommodated in said flight which flew at about 9:00 a.m.
the next day.

Nevertheless, this does not excuse JAL from its obligation to make the necessary
arrangements to transport private respondents on its first available flight to Manila. After
all, it had a contract to transport private respondents from the United States to Manila as
their final destination.

2. Consequently, the award of nominal damages is in order. Nominal damages are

adjudicated in order that a right of a plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized and not for the purpose of indemnifying any
loss suffered by him. 12 The court may award nominal damages in every obligation arising
from any source enumerated in article 1157, or in every case where any property right has
been invaded.
 CASE # 41

NORTHWEST AIRLINES v. DELFIN S. CATAPANG

594 SCRA 401 (2009)

Any discourteous conduct on the part of the carrier’s employees toward a passenger gives the latter an action for
damages against the carrier.

FACTS: Delfin S. Catapang requested First United Travel, Inc. (FUT) to issue in his favor a ticket that would allow
rebooking or rerouting of flights within the United States. FUT informed him that Northwest Airlines, Inc. (Northwest)
was willing to accommodate his request provided that he will pay an additional US$50 for every rebooking or
rerouting of flight. Catapang agreed with the condition.

Upon Catapang‘s arrival in New York, he called up Northwest‘s office, which informed him that his ticket was not
―rebookable or reroutable. He thus proceeded to Northwest‘s nearest ticketing office where he was treated in a
rude manner by an employee who informed him that his ticket was not rebookable or reroutable. He was further
informed that his ticket was of a ―restricted type, and he could not rebook unless he pays US644.00. Catapang paid
that amount for rebooking.

Catapang, upon his return, filed with RTC of Makati a complaint for damages against Northwest. The RTC ruled that
Northwest was liable for breach of contract of carriage. On appeal, the Court of Appeals, affirmed the trial court‘s
Decision.

ISSUES: Whether or not Northwest was right to assail the award to Catapang of moral and exemplary damages by
virtue of breach of contract?

HELD: No. Northwest should be held liable.. When Catapang inquired from Northwest‘s agent FUT if he would be
allowed to rebook/reroute his flight, FUT advised him that he could, on the condition that he would pay $50 for every
rebooking. He was not told by FUT and the ticket did not reflect it that the ticket being issued to him was a “restricted
type” to call for its upgrading before a rebooking/rerouting

Northwest‘s breach in this case was aggravated by the undenied treatment received by Catapang when he tried to
rebook his ticket. Instead of civilly informing Catapang that his ticket could not be rebooked, Northwst‘s agent in New
York exhibited rudeness in the presence of Catapang‘s brother-in-law and other customers, insulting Catapang by
telling him that he could not understand English.

Passengers have the right to be treated by a carrier‘s employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and
abuses from such employees. So it is that any discourteous conduct on the part of these employees toward a
passenger gives the latter an action for damages against the carrier. The award of moral and exemplary damages to
respondent is thus justified.

CASE NO: 42

AIR FRANCE VS JOHN DE CAMILLIS

G.R. No. 188961 October 13, 2009

FACTS: John Anthony de Camilis filed a case for breach of contract of carriage, damages and attorney's
fees against petitioner Air France Philippines/KLM Air France.
De Camilis alleged that he went on a pilgrimage with a group of Filipinos to selected countries in Europe.
According to respondent: (1) AF’s agent in Paris failed to inform him of the need to secure a transit visa for
Moscow, as a result of which he was denied entry to Moscow and was subjected to humiliating interrogation
by the police; (2) another AF agent (a certain Ms. Soeyesol) rudely denied his request to contact his travel
companions to inform them that he was being sent back to Paris from Moscow with a police escort; Ms.
Soeyesol even reported him as a security threat which resulted in his being subjected to further interrogation
by the police in Paris and Rome, and worse, also lifted his flight coupons for the rest of his trip; (3) AF
agents in Rome refused to honor his confirmed flight to Paris; (4) upon reaching Paris for his connecting
flight to Manila, he found out that the AF agents did not check in his baggage and since he had to retrieve
his bags at the baggage area, he missed his connecting flight; (5) he had to shoulder his extended stay in
Paris for AF’s failure to make good its representation that he would be given a complimentary motel pass
and (6) he was given a computer print-out of his flight reservation for Manila but when he went to the airport,
he was told that the flight was overbooked. It was only when he made a scene that the AF agent boarded
him on an AF flight to Hongkong and placed him on a connecting Philippine Airlines flight to Manila.

ISSUE: Whether or not Air France was liable to John De Camillis.

RULING: Yes, because Air France breached its contract of carriage. Although, it was respondent (as
passenger), and not AF, who was responsible for having the correct travel documents. However, this fact
did not absolve AF from liability for damages. AF’s agents and representatives repeatedly subjected
respondent to very poor service, verbal abuse and abject lack of respect and consideration. As such, AF
was guilty of bad faith for which respondent ought to be compensated.

CASE #45

NORTHWEST AIRLINES V. CHIONG, 2008

Gist: "man in barong"

Issue: Whether or not they are liable for breach of a contract of carriage?

Ruling: YES

Northwest breached its contract of carriage with Chiong.

Time and again, we have declared that a contract of carriage, in this case, air transport, is primarily
intended to serve the traveling public and thus, imbued with public interest. The law governing common
carriers consequently imposes an exacting standard of conduct. As the aggrieved party, Chiong only had
to prove the existence of the contract and the fact of its non-performance by Northwest, as carrier, in
order to be awarded compensatory and actual damages.

Case #46
United Airlines v. CA
G.R. No. 124110. April 20, 2001

Same; Damages; For the plaintiff to be entitled to an award of moral damages arising from a breach of contract of
carriage, the carrier must have acted with fraud or bad faith.—As to the award of moral and exemplary damages, we
find error in the award of such by the Court of Appeals. For the plaintiff to be entitled to an award of moral damages
arising from a breach of contract of carriage, the carrier must have acted with fraud or bad faith.
Civil Procedure; Evidence; The general rule in civil cases is that the party having the burden of proof of an essential
fact must produce a preponderance of evidence thereon; Although plaintiffs evidence is stronger than that presented
by the defendant a judgment cannot be entered in favor of the former if his evidence is not sufficient to sustain his
cause of action.—It must be remembered that the general rule in civil cases is that the party having the burden of proof
of an essential fact must produce a preponderance of evidence thereon. Although the evidence adduced by the plaintiff
is stronger than that presented by the defendant, a judgment cannot be entered in favor of the former, if his evidence
is not sufficient to sustain his cause of action. The plaintiff must rely on the strength of his own evidence and not upon
the weakness of the defendant’s.

Civil Law; Private International Law; Doctrine of lex loci contractus; According to the doctrine, as a general rule, the law
of the place where a contract is made or entered into governs with respect to its nature and validity, obligation and
interpretation.—In the case of Zalamea vs. Court of Appeals, this Court applied the doctrine of lex loci contractus.
According to the doctrine, as a general rule, the law of the place where a contract is made or entered into governs with
respect to its nature and validity, obligation and interpretation. This has been said to be the rule even though the place
where the contract was made is different from the place where it is to be performed, and particularly so, if the place of
the making and the place of performance are the same. Hence, the court should apply the law of the place where the
airline ticket was issued, when the passengers are residents and nationals of the forum and the ticket is issued in such
State by the defendant airline.

Facts:

Private respondent Aniceto Fontanilla purchased from petitioner United Airlines, through the Philippine Travel Bureau
in Manila three (3) "Visit the U.S.A." tickets for himself, his wife and his minor son Mychal. All flights had been confirmed
previously by United Airlines. The Fontanillas proceeded to the United States as planned, where they used the first
coupon from San Francisco to Washington. On April 24, 1989, Aniceto Fontanilla bought two (2) additional coupons
each for himself, his wife and his son from petitioner at its office in Washington Dulles Airport. After paying the penalty
for rewriting their tickets, the Fontanillas were issued tickets with corresponding boarding passes with the words
"CHECK-IN REQUIRED," for United Airlines Flight No. 1108, set to leave from Los Angeles to San Francisco at 10:30
a.m. on May 5, 1989. Aniceto Fontanilla and his son Mychal claim that on May 5, 1989, upon their arrival at the los
Angeles Airport for their flight, they proceeded to united Airlines counter where they were attended by an employee
wearing a nameplate bearing the name "LINDA." Linda examined their tickets, punched something into her computer
and then told them that boarding would be in fifteen minutes.When the flight was called, the Fontanillas proceeded to
the plane. To their surprise, the stewardess at the gate did not allow them to board the plane, as they had no assigned
seat numbers. They were then directed to go back to the "check-in" counter where Linda subsequently informed them
that the flight had been overbooked and asked them to wait. The Fontanillas tried to explain to Linda the special
circumstances of their visit. However, Linda told them in arrogant manner, "So what, I can not do anything about it."
The plane then took off with the Fontanillas’ baggage in tow, leaving them behind. The Fontanillas then complained to
Linda, who in turn gave them an ugly stare and rudely uttered, "it’s not my fault. It’s the fault of the company. Just sit
down and wait." When Mr. Fontanilla reminded Linda of the inconvenience being caused to them, she bluntly retorted,
"Who do you think you are? You lousy Flips are good for nothing beggars. You always ask for American aid." After
which she remarked "Don’t worry about your baggage. Anyway there is nothing in there. What are you doing here
anyway? I will report you to immigration. You Filipinos should go home." Such rude statements were made in front of
other people in the airport causing the Fontanillas to suffer shame, humiliation and embarrassment. The chastening
situation even caused the younger Fontanilla to break into tears. The Fontanillas were not booked on the next flight,
which departed for San Francisco at 11:00 a.m. It was only at 12:00 noon that they were able to leave Los Angeles on
United Airlines Flight No. 803.

Petitioner United Airlines has a different version of what occurred at the Los Angeles Airport on May 5, 1989. According
to United Airlines, the Fontanillas did not initially go to the check-in counter to get their seat assignments for UA Flight
1108. They instead proceeded to join the queue boarding the aircraft without first securing their seat assignments as
required in their ticket and boarding passes. Having no seat assignments, the stewardess at the door of the plane
instructed them to go to the check-in counter. When the Fontanillas proceeded to the check-in counter, Linda Allen, the
United Airlines Customer Representative at the counter informed them that the flight was overbooked. She booked
them on the next available flight and offered them denied boarding compensation. Allen vehemently denies uttering the
derogatory and racist words attributed to her by the Fontanillas.

The incident prompted the Fontanillas to file for damages.

Issue:

Whether or not Fontanilla was able to prove with adequate evidence his allegations of breach of contract in bad faith.

Ruling:

NO.

Aniceto Fontanilla’s assertion that upon arrival at the airport at 9:45 a.m., he immediately proceeded to the check-in
counter, and that Linda Allen punched in something into the computer is specious and not supported by the evidence
on record. In support of their allegations, private respondents submitted a copy of the boarding pass. Explicitly printed
on the boarding pass are the words "Check-In Required." Curiously, the said pass did not indicate any seat number. If
indeed the Fontanillas checked in at the designated time as they claimed, why then were they not assigned seat
numbers? Absent any showing that Linda was so motivated, we do not buy into private respondents’ claim that Linda
intentionally deceived him, and made him the laughing stock among the passengers. Neither do we agree with the
conclusion reached by the appellate court that private respondents’ failure to comply with the check-in requirement will
not defeat his claim as the denied boarding rules were not complied with.

The appellate court, however, erred in applying the laws of the United States as, in the case at bar, Philippine law is
the applicable law. Although, the contract of carriage was to be performed in the United States, the tickets were
purchased through petitioner’s agent in Manila. It is true that the tickets were "rewritten" in Washington, D.C. however,
such fact did not change the nature of the original contract of carriage entered into by the parties in Manila.

As to the award of moral and exemplary damages, we find error in the award of such by the Court of Appeals. For the
plaintiff to be entitled to an award of moral damages arising from a breach of contract of carriage, the carrier must have
acted with fraud or bad faith.

Case #47.
NORTHWEST AIRLINES vs. DR. JAIME F. LAYA, G.R. No. 145956, May 29, 2002

SYLLABUS

Common Carriers; Air Transportation; The tragic event that unfolded on September 11, 2001 underscored,
more than ever, that airport and airline personnel could not afford any lapse in the implementation of security measures
meant to ensure the safety of airplane crew and passengers.- The tragic event that unfolded on September 11, 2001
underscored, more than ever, that airport and airline personnel could not afford any lapse in the implementation of
security measures meant to ensure the safety of airplane crew and passengers. Airline carriers hold the lives of
passengers in their hands and they must at all times be vigilant on matters affecting their safety.

Common Carriers; Air Transportation; Human Relations; Damages; While the protection of passengers must
take precedence over convenience, the implementation of security measures must be attended by basic courtesies.-
While the protection of passengers must take precedence over convenience, the implementation of security measures
must be attended by basic courtesies. The Court is inclined to believe the testimony of Dr. Laya that the personnel who
examined his attaché case were rude, brusque, arrogant and domineering and that the manager who attended to him
answered his queries in a reprehensible manner, thus causing him humiliation as the other passengers were already
looking at him.
 Common Carriers; Air Transportation; Human Relations; Damages; Damages are not intended to enrich a
plaintiff at the expense of the defendant.- Still, the Court wishes to reiterate that damages are not intended to enrich a
plaintiff at the expense of the defendant. Hence, we are further reducing the award of moral damages from P500,000.00
to P100,000.00 and the amount of exemplary damages is reduced from P250,000.00 to P50,000.00. The Court,
likewise, awards the attorney’s fees in the amount of P25,000.00.

Facts:

Respondent, Dr. Laya, a medical practitioner, was bound for San Francisco with 1 st class tickets with petitioner
Northwest Airlines (NWA).

After being issued a boarding pass, he was on his way to the first class waiting lounge when Dr. Laya was approached
by NWA personnel requesting him to line up with several passengers carrying Samsonite hand-carried attaché cases
for further inspection.

Dr. Laya accepted however he argues that he noticed that his attaché case was treated differently.

1. While the other passengers were eventually allowed to carry their cases on board the plane, Dr. Laya was
asked to place his attaché case in a black garbage bag and
2. He was given two (2) paper envelopes where he could put its contents.
3. Laya felt that he was singled out for this extraordinary treatment so he requested that he be allowed to talk
with the manager but while explaining his situation the assistant manager, Evangelista, told him that "even if
you are the President of the Philippines or the President of the United States we are going to do the same."
4. In addition, the two (2) paper envelopes were eventually torn. And instead for a replacement a used Duty-
Free bag was used to carry his personal items.

Upon sending a letter complaining about the treatment, the NWA Customer Relations Office sent Dr. Laya a letter with
a transportation credit voucher worth US$100.00 but Dr Laya refused and filed a complaint for Damages against NWA

RTC: for Dr. Laya moral damages in the sum of P1M; exemplary damages of P500K.

CA: for Dr. Laya but modified damages to moral damages to P500K0 and exemplary damages to P250K.

Issues:

Is respondent entitled to the award of damages? (YES)

Is the United States Federal Aviation Administration ("FAA") Security Directive No. 91-11 unreasonable (NO) and did
not coincide with the carrier's promise of polite and gracious service (But, on this, YES).

Ruling:

Airline carriers hold the lives of passengers in their hands and they must at all times be vigilant on matters affecting
their safety.

The Court finds that the security procedures adopted by NWA was only the result of a directive issued by the Federal
Aviation Administration (FAA) of which NWA, being a U.S. carrier, is subject to. FAA Security Directive No. 91-11 states:

… that FAA has received information stating that two-man terrorist teams have been trained in the
use of briefcase bombs. The bombs are concealed in brown Samsonite briefcases…

All black, brown, or burgundy Samsonite Briefcases shall only be transported as checked baggage.

The air carrier shall deny the passenger any access to the briefcase after it has been tendered until
the briefcase is claimed by the passenger upon arrival at destination. Following the application of the
 procedures above, the briefcase shall be transported as checked baggage. However, the contents of the
briefcase may be returned to the passenger for personal use aboard the flight.

It may be true that Dr. Laya was greatly inconvenienced by the act of NWA when his attaché case was subjected to
further inspection and he was not allowed to bring it on board the plane. However, it does not appear that he was
singled out and discriminated by the employees of NWA. Other Caucasians and Asian passengers carrying attaché
case similar to his were also required to undergo further inspection.

Nevertheless, while the protection of passengers must take precedence over convenience, the implementation of
security measures must be attended by basic courtesies. The Court is inclined to believe the testimony of Dr. Laya that
the personnel who examined his attaché case were rude, brusque, arrogant and domineering and that the manager
who attended to him answered his queries in a reprehensible manner:

1. Dr Laya requested that his personal effects to be placed in the briefcase after thorough examination,
but they said in a loud voice No and everything he say or explain they say no.
2. … a loud voice attracting other passengers while others were looking at them with dismay ...
3. When requesting for the manager, instead it was the assistant managers by the name of Barreto and
Evangelista one after the other in that order.
4. Assistant Evangelista talked in a loud voice with unwarranted pride. It's a reprehensible way of
talking.
5. Evangelista, told him that "even if you are the President of the Philippines or the President of the
United States we are going to do the same.

Any security measure must coincide with the passenger's right to be treated by the carrier with kindness, respect and
utmost consideration in all matters relative to their trip. The Court is satisfied that Dr. Laya suffered mental anguish and
serious anxiety because of his experience with NWA personnel for which he should be awarded moral damages. Dr.
Laya is also entitled to exemplary damages by way of correction to the NWA for the public good and in view of the
malevolent manner by which the NWA personnel treated Dr. Laya.

Still, the Court wishes to reiterate that damages are not intended to enrich a plaintiff at the expense of the defendant.
Hence, we are further reducing the award of moral damages from P500K to P100K and the amount of exemplary
damages is reduced from P250K to P50K.

Case No. 48

Santos III vs. Northwest Orient

G.R. No. 101538 June 23, 1992

FACTS: Petitioner Augusto Benedicto Santos III is a minor and a resident of the Philippines. Private respondent
Northwest Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A. and licensed to do
business and maintain a branch office in the Philippines.

The petitioner purchased from Northwest Orient a round-trip ticket in San Francisco, U.S.A. On December 19,
1986, the petitioner checked in at the Northwest Orient counter in San Francisco airport for his departure to Manila.
Despite a previous confirmation and re-confirmation, he was informed that he had no reservation for his flight for Tokyo
to Manila. He therefore had to be wait-listed.

On March 12, 1987, the petitioner sued Northwest Orient for damages in Regional Trial Court of Makati.
Northwest Orient moved to dismiss the complaint on the ground of lack of jurisdiction.

ISSUE: Whether or not Philippine Courts have jurisdiction over the case.
HELD: None. The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating
to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on February 13, 1933.
The Convention was concurred in by the Senate, through its Resolution, 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 on good faith by
the Republic of the Philippines and the citizens thereof.”

The Convention is this a treaty commitment voluntarily assumed by the Philippine government and, as such,
has the force and effect of law in this country. The treaty has not been rejected by the Philippine government. The
doctrine of rebus sic stantibus does not operate automatically to render the treaty inoperative. There is a necessity for
a formal act of rejection, usually made by the head of State, with a statement of reasons why compliance with the treaty
is no longer required.

Obviously, the Constitutional guaranty to access to courts refers only to courts with appropriate jurisdiction as
defined by law. It does not mean that a person can go to any court for redress of his grievances regardless of the nature
or value of his claim. If the petitioner is barred from filing his complaint before the courts, it is because they are not
vested with the appropriate jurisdiction under the Warsaw Convention, which is part of the law of our land.

By its own terms, the Convention applies to international transportation of persons performed by aircraft for
hire.

#49

G.R. No. L-44936. September 25, 1992.

PHILIPPINE AIRLINES, INC., Petitioner, v. THE COURT OF APPEALS and CHUA MIN, Respondents.

Civil Procedure; Parties; Private respondent has personality to seek redress for loss of films regardless of its
ownership.—Before discussing the intrinsic worth of petitioner’s discourse, We shall address the issue of
private respondent’s personality to seek redress for the loss of the films. We believe, and so hold, that Chua
Min is no stranger to the cause of action instituted at the court of origin in spite of the message conveyed by
him when he sat on the witness stand which seems to lead to the opposite conclusion xxx since what is
important, per his narration, is that he assumes the loss while these films are in his custody and that he is
accountable either to Loong Kee Pen Company or to the De Mil Theatrical Corporation should he fail to
produce the films upon demand. On the hypothetical scenario, had the judgment of the trial court been
adverse, in the sense that the complaint was ordered dismissed, the pecuniary burden for the loss will certainly
fall on private respondent’s shoulders, which obligation, it is needless to stress, will constitute a material and
substantial injury to him.

Transportation Laws; Common Carriers; Liability for loss of baggage; Warsaw Convention.—Now, as to
whether petitioner may utilize the provision under Article 22(2) of the Warsaw Convention which limits the
liability of a common carrier for loss of baggage, We have to consider other salient features thereof such as
Article 4, paragraph 1 that reads: “For the transportation of baggage, other than small personal objects of
which the passenger takes charge himself, the carrier must deliver a baggage check.” and the explicit wordings
of Article 4, paragraph 4 of the same Convention that: “The absence, irregularity, or loss of the baggage
checks shall not affect the existence or the validity of the contract of transportation which shall nonetheless
be subject to the rules of this Convention. Nevertheless, if the carrier accepts baggage without a baggage
check having been delivered, or if the baggage check does not contain the particulars set out at (d), (f), and
(h) above, the carrier shall not be entitled to avail himself of those provisions of the Convention which exclude
or limit his liability.” because these axioms will spell the difference between success and failure of the petition
at bar. It may be recalled that petitioner made a categorical distinction between a passenger ticket and a
baggage check when petitioner responded to the complaint for a sum of money (paragraphs 7 and 8, Answer;
pp. 6-8, Record on Appeal; p. 2, supra). In its motion for reconsideration before the court a quo, petitioner had
a sudden change of heart by asserting that the passenger ticket and the baggage check are one and the same
thing (p. 81, Record on appeal). On a later occasion, it stressed that the ‘baggage tags’ were erroneously
labeled as ‘baggage checks’ under paragraph 7 of its Answer to the Complaint (p. 3, Reply Brief for the
Petitioner; p. 97, Rollo). But the question of semantics on whether the passenger ticket, the baggage check,
and the tag refer to the same object is undoubtedly without legal significance and will not obliterate the fact
that the baggage check was not presented by petitioner in the trial court inasmuch as it merely relied on, and
adopted private respondent’s exhibits, none of which was offered for the purpose of proving the missing link,
so to speak (pp. 57-58, Record on Appeal). To rectify these lapses, petitioner argued that it is not in a position
to introduce the baggage check in evidence since private respondent as passenger, is the one who retains
possession thereof. Yet, such pretense does not sit well with what is expected of petitioner as an air carrier
under Article 4(2), Section II of the Warsaw Convention that: “The baggage check shall be made out in
duplicate, one part for the passenger and the other part of the carrier.” Consequently, petitioner can not
capitalize on the limited liability clause under Article 22 (2) of the Warsaw Convention because of the
unequivocal condition set forth under the second sentence of Article 4, paragraph 4 that: “. . . if the carrier
accepts baggage without a baggage check having been delivered, or if the baggage check does not contain
the particulars set out at (d), (f), and (h) above, the carrier shall not be entitled to avail himself of those
provisions of the Convention which exclude or limit his liability.”

FACTS: On April 4, 1972, private respondent boarded herein petitioner’s Flight PR 301 from Hongkong to
Manila and checked in four (4) pieces of baggage. When the plane landed in Manila, private respondent was
not able to locate the two pieces of baggage containing cinematographic films despite diligent search therefor.
Private respondent made the claim for such loss to petitioner which admitted the loss and offered to
compensate private respondent

Instead of accepting the offer, private respondent opted to file the case below to principally recover the value
of the lost items which he estimated to be worth P20,000.00. Herein petitioner responded by asserting that:
Plaintiff has no cause of action against defendant. Under Passenger Ticket No. 2974-231-418, which is the
contract of carriage between plaintiff and defendant, it is an express condition of the contract that the same
shall be subject to the rules and limitations relating to liability established by the Warsaw Convention. Under
applicable rules and regulations of the Warsaw Convention on International Carriage by Air (as amended by
the Hague Protocol of 1955), defendant’s liability for plaintiff’s two (2) alleged lost pieces of baggage is limited
to a maximum of US$6.50 per kilogram. The total weight of plaintiff’s four (4) pieces of checked-in baggage,
inclusive of their contents, was only twenty (20) kilograms, such that each baggage would have an average
weight of five (5) kilograms, and the two alleged lost pieces, an average total weight of only ten (10) kilograms.
Accordingly, defendant’s maximum liability to plaintiff is US$165.00, or its equivalent in Philippine currency.

ISSUE: WON, petitioner can avail of the limitations under the Warsaw Convention

RULING: No. The court considered other salient features of the Warsaw Convention in deciding this case.
The Warsaw Convention limits the liability of a common carrier for loss of baggage. Article 4, paragraph 1of
Warsaw Convention reads: "For the transportation of baggage, other than small personal objects of
which the passenger takes charge himself, the carrier must deliver a baggage check." and the explicit
wordings of Article 4, paragraph 4 of the same Convention states that:j "The absence, irregularity, or loss
of the baggage checks shall not affect the existence or the validity of the contract of transportation
which shall nonetheless be subject to the rules of this Convention. Nevertheless, if the carrier accepts
baggage without a baggage check having been delivered, or if the baggage check does not contain
the particulars set out at (d), (f), and (h) above, the carrier shall not be entitled to avail himself of those
provisions of the Convention which exclude or limit his liability."

The court held that these axioms will spell the difference between success and failure of the petition at bar.
In this case, petitioner made a categorical distinction between a passenger ticket and baggage check when
petitioner responded to the complaint for a sum of money. In its motion for reconsideration before the lower
court, petitioner had a sudden change of heart by asserting that the passenger ticket and the baggage check
are one and the same thing. On a later occasion, it stressed that the ‘baggage tags’ were erroneously labeled
as ‘baggage checks’ under paragraph 7 of its Answer to the Complaint. But the question of semantics on
whether the passenger ticket, the baggage check, and the tag refer to the same object is undoubtedly without
legal significance and will not obliterate the fact that the baggage check was not presented by petitioner in the
trial court inasmuch as it merely relied on, and adopted private respondent’s exhibits, none of which was
offered for the purpose of proving the missing link, so to speak. To rectify these lapses, petitioner argued that
it is not in a position to introduce the baggage check in evidence since private respondent as passenger, is
the one who retains possession thereof. Yet, such pretense does not sit well with what is expected of petitioner
as an air carrier under Article 4 (2), Section II of the Warsaw Convention that:"The baggage check shall be
made out in duplicate, one part for the passenger and the other part for the carrier."

Consequently, petitioner cannot capitalize on the limited liability clause under Article 22 (2) of the Warsaw
Convention because of the unequivocal condition set forth under the second sentence of Article 4, paragraph
4 that:

". . . if the carrier accepts baggage without a baggage check having been delivered, a if the baggage
check does not contain the particulars set out at (d), (f), and (h) above, the carrier shall not be entitled
to avail himself of those provisions of the Convention which exclude or limit his liability."
Petitioner contends that it is covered by the first and not by the second sentence of Article 4, paragraph 4.
The first sentence speaks only of the "existence" or the "validity" of the contract of transportation while the
query on "liability" is particularly and directly resolved by the second sentence. To be sure, and even assuming
for the sake of argument that an inconsistency exists, the first sentence must be construed as the general
proposition governing the existence or validity of the contract of transportation which must yield to the
particular rule under the second sentence regarding liability. Furthermore, even if the Court consider the two
sentences as particular in nature, the rule has been laid down that the clause which comes later shall be given
effect upon the presumption that it expresses the dominant purpose of the instrument.

The court DISMISSED the petition for review for lack of merit.
CASE NO. 50

EDNA DIAGO LHUILLIER v. BRITISH AIRWAYS, GR No. 171092, 2010-03-15

Facts:

Petitioner alleged that on February 28, 2005, she took respondent's flight 548 from London,... United Kingdom to Rome,
Italy.

Once on board, she allegedly requested Julian Halliday (Halliday), one of the respondent's flight attendants, to assist
her in placing her hand-carried 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!" Also, another flight attendant singled out her amongst all the passengers and lectured her about flight safety
precautions which made her look ignorant and uneducated.

Upon arrival in Rome, petitioner complained to respondent's ground manager and demanded an apology. However,
the latter declared that the flight stewards were "only doing their job."

Thus, petitioner filed the complaint for damages against respondent in our Court and by way of special appearance
through counsel, filed a Motion to Dismiss[4] 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,[5] Article 28(1)

Thus, since a) respondent is domiciled in London; b) respondent's principal place of business is in London; c) petitioner
bought her ticket in Italy (through Jeepney Travel S.A.S, in Rome);[6] and d) Rome, Italy is petitioner's 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 the RTC of Makati City, Branch 132, issued an Order[10] granting respondent's Motion to Dismiss

Issues:

WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS CONDUCT COMMITTED

AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE PERSONNEL OF A FOREIGN CARRIER TRAVELLING
BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE
WARSAW

CONVENTION.

WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION TO DISMISS BASED
ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE AND OVER ITS PERSON MAY BE
DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED ITSELF TO THE JURISDICTION OF THE LOWER
COURT,... ESPECIALLY SO, WHEN THE VERY LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT
OF THE CARRIER.

Ruling:

The petition is without merit.

It is settled that the Warsaw Convention has the force and effect of law in this country.

The Warsaw Convention applies... because the air travel, where the... alleged tortious conduct occurred,... was
between the United Kingdom... and Italy, which are both signatories... to the Warsaw Convention.

Thus, when the place of departure and the place of destination in a contract of carriage are situated within the territories
of two High Contracting Parties, said carriage is deemed an "international carriage".

In the case at bench, petitioner's place of departure was London, United Kingdom while her place of destination was
Rome, Italy.[15] Both the United Kingdom[16] and Italy[17] signed and ratified the Warsaw
Convention. As such, the transport of the petitioner is deemed to be an "international carriage" within the contemplation
of the Warsaw Convention.

Since the Warsaw Convention applies... in the instant case, then the jurisdiction... over the subject matter of the action...
is governed by the provisions of the

Warsaw Convention.

We thus find that the RTC of Makati correctly ruled that it does not have jurisdiction over the case filed by the petitioner.

e held that the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the realm of the
Warsaw Convention.

Principles:

Article 1 of the Warsaw Convention provides:

This Convention applies to all international carriage of persons, luggage or goods performed by aircraft for reward. It
applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.

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. (Emphasis supplied)

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

#51.

[G.R. NO. 150094 : August 18, 2004]

FEDERAL EXPRESS CORPORATION, Petitioner, v. AMERICAN HOME ASSURANCE COMPANY and

PHILAM INSURANCE COMPANY, INC., Respondents.

FACTS

SMITHKLINE (for brevity) of Nebraska, USA delivered to Burlington Air Express (BURLINGTON), an agent of
[Petitioner] Federal Express Corporation, a shipment of 109 cartons of veterinary biologicals for delivery to
consignee SMITHKLINE and French Overseas Company in Makati City, Metro Manila. The shipment was
covered by Burlington Airway Bill No. 11263825 with the words, 'REFRIGERATE WHEN NOT IN TRANSIT'
and 'PERISHABLE' stamp marked on its face.

On February 10, 1994, DARIO C. DIONEDA ('DIONEDA'), twelve (12) days after the cargoes arrived in Manila,
a non-licensed custom's broker who was assigned by GETC to facilitate the release of the subject cargoes,
found out, while he was about to cause the release of the said cargoes, that the same [were] stored only in a
room with two (2) air conditioners running, to cool the place instead of a refrigerator. When he asked an
employee of Cargohaus why the cargoes were stored in the 'cool room' only, the latter told him that the cartons
where the vaccines were contained specifically indicated therein that it should not be subjected to hot or cold
temperature. Thereafter, DIONEDA, upon instructions from GETC, did not proceed with the withdrawal of the
vaccines and instead, samples of the same were taken and brought to the Bureau of Animal Industry of the
Department of Agriculture in the Philippines by SMITHKLINE for examination wherein it was discovered that
the 'ELISA reading of vaccinates sera are below the positive reference serum.'
SMITHKLINE abandoned the shipment and, declaring 'total loss' for the unusable shipment, filed a claim with
AHAC through its representative in the Philippines, the Philam Insurance Co., Inc. ('PHILAM') which
recompensed SMITHKLINE for the whole insured amount for $39,339.00. Thereafter, [respondents] filed an
action for damages against the [petitioner] imputing negligence on either or both of them in the handling of the
cargo.

ISSUE:

Whether or not Federal Express liable for damage to or loss of the insured goods?

RULING:

No. In this jurisdiction, the filing of a claim with the carrier within the time limitation therefor actually constitutes
a condition precedent to the accrual of a right of action against a carrier for loss of or damage to the goods.
The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of
action against the carrier can accrue in favor of the former. The aforementioned requirement is a reasonable
condition precedent; it does not constitute a limitation of action.

The requirement of giving notice of loss of or injury to the goods is not an empty formalism. The fundamental
reasons for such a stipulation are (1) to inform the carrier that the cargo has been damaged, and that it is
being charged with liability therefor; and (2) to give it an opportunity to examine the nature and extent of the
injury. "This protects the carrier by affording it an opportunity to make an investigation of a claim while the
matter is fresh and easily investigated so as to safeguard itself from false and fraudulent claims."

When an airway bill - - or any contract of carriage for that matter - - has a stipulation that requires a notice of
claim for loss of or damage to goods shipped and the stipulation is not complied with, its enforcement can be
prevented and the liability cannot be imposed on the carrier. To stress, notice is a condition precedent, and
the carrier is not liable if notice is not given in accordance with the stipulation. Failure to comply with such a
stipulation bars recovery for the loss or damage suffered.

Being a condition precedent, the notice must precede a suit for enforcement. In the present case, there is
neither an allegation nor a showing of respondents' compliance with this requirement within the prescribed
period. While respondents may have had a cause of action then, they cannot now enforce it for their failure to
comply with the aforesaid condition precedent.

In view of the foregoing, we find no more necessity to pass upon the other issues raised by petitioner

FULL RULING:

Preliminary Issue:

Propriety of Review

The correctness of legal conclusions drawn by the Court of Appeals from undisputed facts is a question of law
cognizable by the Supreme Court.

In the present case, the facts are undisputed. As will be shown shortly, petitioner is questioning the conclusions
drawn from such facts. Hence, this case is a proper subject for review by this Court.

Main Issue:

Liability for Damages

Petitioner contends that respondents have no personality to sue - - thus, no cause of action against it - -
because the payment made to Smithkline was erroneous.
Pertinent to this issue is the Certificate of Insurance ("Certificate") that both opposing parties cite in support of
their respective positions. They differ only in their interpretation of what their rights are under its terms. The
determination of those rights involves a question of law, not a question of fact. "As distinguished from a
question of law which exists 'when the doubt or difference arises as to what the law is on a certain state of
facts' - - 'there is a question of fact when the doubt or difference arises as to the truth or the falsehood of
alleged facts'; or when the 'query necessarily invites calibration of the whole evidence considering mainly the
credibility of witnesses, existence and relevancy of specific surrounding circumstance, their relation to each
other and to the whole and the probabilities of the situation.'"

Proper Payee

The Certificate specifies that loss of or damage to the insured cargo is "payable to order x x x upon surrender
of this Certificate." Such wording conveys the right of collecting on any such damage or loss, as fully as if the
property were covered by a special policy in the name of the holder itself. At the back of the Certificate appears
the signature of the representative of Burlington. This document has thus been duly indorsed in blank and is
deemed a bearer instrument.

Since the Certificate was in the possession of Smithkline, the latter had the right of collecting or of being
indemnified for loss of or damage to the insured shipment, as fully as if the property were covered by a special
policy in the name of the holder. Hence, being the holder of the Certificate and having an insurable interest in
the goods, Smithkline was the proper payee of the insurance proceeds.

Subrogation

Upon receipt of the insurance proceeds, the consignee (Smithkline) executed a subrogation Receipt in favor
of respondents. The latter were thus authorized "to file claims and begin suit against any such carrier, vessel,
person, corporation or government." Undeniably, the consignee had a legal right to receive the goods in the
same condition it was delivered for transport to petitioner. If that right was violated, the consignee would have
a cause of action against the person responsible therefor.

Upon payment to the consignee of an indemnity for the loss of or damage to the insured goods, the insurer's
entitlement to subrogation pro tanto - - being of the highest equity - - equips it with a cause of action in case
of a contractual breach or negligence."Further, the insurer's subrogatory right to sue for recovery under the
bill of lading in case of loss of or damage to the cargo is jurisprudentially upheld."

In the exercise of its subrogatory right, an insurer may proceed against an erring carrier. To all intents and
purposes, it stands in the place and in substitution of the consignee. A fortiori, both the insurer and the
consignee are bound by the contractual stipulations under the bill of lading.

Prescription of Claim

From the initial proceedings in the trial court up to the present, petitioner has tirelessly pointed out that
respondents' claim and right of action are already barred. The latter, and even the consignee, never filed with
the carrier any written notice or complaint regarding its claim for damage of or loss to the subject cargo within
the period required by the Warsaw Convention and/or in the airway bill. Indeed, this fact has never been
denied by respondents and is plainly evident from the records.

Airway Bill No. 11263825, issued by Burlington as agent of petitioner, states:

"6. No action shall be maintained in the case of damage to or partial loss of the shipment unless a written
notice, sufficiently describing the goods concerned, the approximate date of the damage or loss, and the
details of the claim, is presented by shipper or consignee to an office of Burlington within (14) days from the
date the goods are placed at the disposal of the person entitled to delivery, or in the case of total loss (including
non-delivery) unless presented within (120) days from the date of issue of the [Airway Bill]."
Relevantly, petitioner's airway bill states:

"12./12.1 The person entitled to delivery must make a complaint to the carrier in writing in the case:

12.1.1 of visible damage to the goods, immediately after discovery of the damage and at the latest within
fourteen (14) days from receipt of the goods;

12.1.2 of other damage to the goods, within fourteen (14) days from the date of receipt of the goods;

12.1.3 delay, within twenty-one (21) days of the date the goods are placed at his disposal; and

12.1.4 of non-delivery of the goods, within one hundred and twenty (120) days from the date of the issue of
the air waybill.

12.2 For the purpose of 12.1 complaint in writing may be made to the carrier whose air waybill was used, or
to the first carrier or to the last carrier or to the carrier who performed the transportation during which the loss,
damage or delay took place."17

Article 26 of the Warsaw Convention, on the other hand, provides:

"ART. 26. (1) Receipt by the person entitled to the delivery of baggage or goods without complaint shall be
prima facie evidence that the same have been delivered in good condition and in accordance with the
document of transportation.

(2) In case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery
of the damage, and, at the latest, within 3 days from the date of receipt in the case of baggage and 7 days
from the date of receipt in the case of goods. In case of delay the complaint must be made at the latest within
14 days from the date on which the baggage or goods have been placed at his disposal.

(3) Every complaint must be made in writing upon the document of transportation or by separate notice in
writing dispatched within the times aforesaid.

(4) Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of fraud
on his part."

Condition Precedent

In this jurisdiction, the filing of a claim with the carrier within the time limitation therefor actually constitutes a
condition precedent to the accrual of a right of action against a carrier for loss of or damage to the goods. The
shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action
against the carrier can accrue in favor of the former. The aforementioned requirement is a reasonable
condition precedent; it does not constitute a limitation of action

The requirement of giving notice of loss of or injury to the goods is not an empty formalism. The fundamental
reasons for such a stipulation are (1) to inform the carrier that the cargo has been damaged, and that it is
being charged with liability therefor; and (2) to give it an opportunity to examine the nature and extent of the
injury. "This protects the carrier by affording it an opportunity to make an investigation of a claim while the
matter is fresh and easily investigated so as to safeguard itself from false and fraudulent claims.”

When an airway bill - - or any contract of carriage for that matter - - has a stipulation that requires a notice of
claim for loss of or damage to goods shipped and the stipulation is not complied with, its enforcement can be
prevented and the liability cannot be imposed on the carrier. To stress, notice is a condition precedent, and
the carrier is not liable if notice is not given in accordance with the stipulation. Failure to comply with such a
stipulation bars recovery for the loss or damage suffered.

Being a condition precedent, the notice must precede a suit for enforcement. In the present case, there is
neither an allegation nor a showing of respondents' compliance with this requirement within the prescribed
period. While respondents may have had a cause of action then, they cannot now enforce it for their failure to
comply with the aforesaid condition precedent.

In view of the foregoing, we find no more necessity to pass upon the other issues raised by petitioner.

We note that respondents are not without recourse. Cargohaus, Inc. - - petitioner's co-defendant in
respondents' Complaint below - - has been adjudged by the trial court as liable for, inter alia, "actual damages
in the amount of the peso equivalent of US $39,339." This judgment was affirmed by the Court of Appeals and
is already final and executory.

WHEREFORE, the Petition is GRANTED, and the assailed Decision REVERSED insofar as it pertains to
Petitioner Federal Express Corporation. No pronouncement as to costs.

SO ORDERED.