G.R. No. 171092.

March 15, 2010.EDNA DIAGO LHUILLIER, petitioner, vs. BRITISH AIRWAYS, respondent.

FACTS: On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint fordamages against

respondent British Airways before the Regional Trial Court (RTC) ofMakati City. The tortuous conduct by

the flight attendants of said Airways, whichprompted petitioner to file a case for damages, allegedly

transpired when petitioner boarded respondent’s flight 548 from London, United Kingdom to Rome,

Italy. On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion

toDismiss on grounds of lack of jurisdiction over the case and over the person of therespondent.

Respondent alleged that only the courts of London, United Kingdom orRome, Italy, have jurisdiction

over the complaint for damages pursuant to the WarsawConvention, Article 28(1) of which provides:“An

action for damages must be brought at the option of the plaintiff, either before thecourt of domicile of

the carrier or his principal place of business, or where he has a placeof business through which the

contract has been made, or before the court of the place of destination.”

ISSUE: Whether or not Philippines, a signatory to the Warsaw Convention, shouldadhere to the

provision of the Warsaw Convention in the determination of its jurisdiction with respect to a case for

damages involving a tortuous conduct committed by an airline personnel while in an international

carrier against a Filipino citizen.

HELD: Yes. It is settled that the Warsaw Convention has the force and effect of law inthis country.In

Santos III v. Northwest Orient Airlines, 210 SCRA 256 (1992), we held that: TheRepublic of the

Philippines is a party to the Convention for the Unification of CertainRules Relating to International

Transportation by Air, otherwise known as the WarsawConvention. It took effect on February 13, 1933.

The Convention was concurred in by theSenate, through its Resolution No. 19, on May 16, 1950. The

Philippine instrument ofaccession was signed by President Elpidio Quirino on October 13, 1950, and

wasdeposited with the Polish government on November 9, 1950. The Convention becameapplicable to

the Philippines on February 9, 1951. On September 23, 1955, PresidentRamon 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

Philippine Airlines v. Savillo

Facts:

Savillo was a judge of the RTC of Iloilo

He was invited to participate in the 1993 ASEAN Seniors Annual Golf Tournament in

Jakarta Indonesia.

So, in order to take part in such event, he purchased a ticket from PAL with the following

itinerary: Manila-Singapore-Jakarta-Singapore-Manila.

PAL would take them from Manila to Signapore, while Singapore Airlines would take

them from Singapore to Jakarta.

When they arrived in Singapore, Singapore Airlines rejected the tickets of Savillo

because they were not endorsed by PAL. It was explained that if Singapore Airlines

honoured the tickets without PALS’ endorsement, PAL would not pay Singapore Airlines

for their passage.

Savillo demanded compensation from both PAL and Singapore Airlines, but his efforts

were futile. He then sued PAL after 3 years, demanding moral damages.

PAL , in its MTD, claimed that the cause of action has already prescribed invoking the

Warsaw Convention (providing for a 2 year prescriptive period). Both RTC and CA ruled

against PAL.

Issues:

What is the applicable law, the Civil Code or the Warsaw Convention? Has the action

prescribed?

Held:

The Civil Code is applicable. Therefore the action has not yet prescribed for the prescription

period is 4 years.

If cause of action claims moral damages, not covered by Warsaw 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 statue of limitations of two years has elapsed.

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 U.S. 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 Mahaney v. Air France (US case), the court therein ruled that if the plaintiff were to claim

damages based solely on the delay she experienced- for instance, the costs of renting a van,

which she had to arrange on her own as a consequence of the delay the complaint would be

barred by the two–year statute of limitations. However, where the plaintiff alleged that the

airlines subjected her to unjust discrimination or undue or unreasonable preference or

disadvantage, an act punishable under the US law, then the plaintiff may claim purely nominal

compensatory damages for humiliation and hurt feelings, which are not provided for by the

Warsaw Convention.

In the Petition at bar, Savillo’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” therefore this case is not covered by the

Warsaw Convention.

When the negligence happened before the performance of the contract of carriage, not

covered by the Warsaw Convention. Also, this case is comparable to Lathigra v. British

Airways. In that 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 Savillo 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 Savillo that Singapore Airlines had already confirmed their

passage. While this fact still needs to heard and established by adequate proof before the RTC,

an action based on these allegations will not fall under the Warsaw Convention, since the

purported negligence on the party 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 Statue of Limitations provided under Article 29 of the Warsaw Convention.

G.R. No. L-40597 June 29, 1979

AGUSTINO B. ONG YIU, petitioner,

vs.

HONORABLE COURT OF APPEALS and PHILIPPINE AIR LINES, INC., respondents.

MELENCIO-HERRERA, J.:

FACTS: On August 26, 1967, petitioner was a fare paying passenger of respondent Philippine Air Lines,

Inc. (PAL) from Mactan Cebu, bound for Butuan City. As a passenger, he checked in one piece of luggage,

a blue "maleta" for which he was issued Claim Check. Upon arrival, petitioner claimed his luggage but it

could not be found. According to petitioner, it was only after reacting indignantly to the loss that the

matter was attended to by the porter clerk, Maximo Gomez, which, however, the latter denies, At about

3:00 o'clock P.M., PAL Butuan, sent a message to PAL, Cebu, inquiring about the missing

luggage,Subsequently, PAL Manila wired PAL Cebu advising that the luggage had been over carried to

Manilaand that it would be forwarded to Cebu on the same day. Instructions were also given that the

luggage be immediately forwarded to Butuan City on the first available flight. Petitioner was worried

about the missing luggage because it contained vital documents needed for trial the next day.

Early in the morning of the next day, August 27, 1967, petitioner went to the Bancasi Airport to inquire

about his luggage. He did not wait, however, for the morning flight which arrived at 10:00 o'clock that

morning. This flight carried the missing luggage. The porter clerk, Maximo Gomez, paged petitioner, but

the latter had already left. A certain Emilio Dagorro a driver of a "colorum" car, who also used to drive

for petitioner, volunteered to take the luggage to petitioner. As Maximo Gomez knew Dagorro to be the

same driver used by petitioner whenever the latter was in Butuan City, Gomez took the luggage and

placed it on the counter. Dagorro examined the lock, pressed it, and it opened. After calling the

attention of Maximo Gomez, the "maleta" was opened, Gomez took a look at its contents, but did not

touch them. Dagorro then delivered the "maleta" to petitioner, with the information that the lock was

open. Upon inspection, petitioner found that a folder containing certain exhibits, transcripts and private

documents in Civil Case and Sp. Procs. were missing, aside from two gift items for his parents-in-law.

Petitioner refused to accept the luggage. Dagorro returned it to the porter clerk, Maximo Gomez, who

sealed it and forwarded the same to PAL Cebu.

On September 13, 1967, petitioner filed a Complaint against PAL for damages for breach of contract of

transportation. After due trial, the lower Court found PAL to have acted in bad faith and with malice and

declared petitioner entitled to moral damages in the sum of P80,000.00, exemplary damages of

P30,000.00, attorney's fees of P5,000.00, and costs.

ISSUE: Whether or not respondent Court committed grave error when it limited PAL's carriage liability

to the amount of P100.00 as stipulated at the back of the ticket.

HELD: NO. The respondent Court correctly opined: “As a general proposition, the plaintiff's maleta

having been pilfered while in the custody of the defendant, it is presumed that the defendant had been

negligent. The liability, however, of PAL for the loss, in accordance with the stipulation written on the

back of the ticket, Exhibit 12, is limited to P100.00 per baggage, plaintiff not having declared a greater

value, and not having called the attention of the defendant on its true value and paid the tariff

therefor. The validity of this stipulation is not questioned by the plaintiff. They are printed in

reasonably and fairly big letters, and are easily readable. Moreover, plaintiff had been a frequent

passenger of PAL from Cebu to Butuan City and back, and he, being a lawyer and businessman, must

be fully aware of these conditions. 4

We agree with the foregoing finding. The pertinent Condition of Carriage printed at the back of the

plane ticket reads: “8. BAGGAGE LIABILITY ... The total liability of the Carrier for lost or damaged

baggage of the passenger is LIMITED TO P100.00 for each ticket unless a passenger declares a higher

valuation in excess of P100.00, but not in excess, however, of a total valuation of P1,000.00 and

additional charges are paid pursuant to Carrier's tariffs.”

There is no dispute that petitioner did not declare any higher value for his luggage, much less did he pay

any additional transportation charge. But petitioner argues that there is nothing in the evidence to show

that he had actually entered into a contract with PAL limiting the latter's liability for loss or delay of the

baggage of its passengers, and that Article 1750* of the Civil Code has not been complied with. 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". 5 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. 6 And as held in

Randolph v. American Airlines, 103 Ohio App. 172, 144 N.E. 2d 878; Rosenchein vs. 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.Besides, passengers are advised not to place valuable items

inside their baggage but "to avail of our V-cargo service " (Exh. "1"). I t is likewise to be noted that there

is nothing in the evidence to show the actual value of the goods allegedly lost by petitioner.

Everett Steamship Corporation vs. CA

G.R. No.122494, October 8, 1998

PARTIES:

Everett Steamship Corporation, petitioner

Court of Appeals and Hernandez Trading Co. Inc., respondents

BRIEF STATEMENT OF THE CASE:

Validity of the Bill of lading in a contract of carriage

BRIEF STATEMENT OF THE FACTS:

Private respondent imported 3 crates of bus spare parts marked as MARCO C/No. 12, MARCO C/No. 13

and MARCO C/No. 14, from its supplier, Maruman Trading Company, Ltd. (Maruman Trading), a foreign

corporation based in Inazawa, Aichi, Japan. The crates were shipped from Nagoya, Japan to Manila on

board "ADELFAEVERETTE," a vessel owned by petitioner's principal, Everett Orient Lines. Upon arrival at

the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was missing. Private

respondent claim upon petitioner for the value of the lost cargo amounting to One Million Five Hundred

Fifty Two Thousand Five Hundred (Y1, 552,500.00) Yen, the amount shown in an Invoice No. MTM-941,

dated November 14, 1991. However, petitioner offered to pay only One Hundred Thousand

(Y100,000.00) Yen, the maximum amount stipulated under Clause 18 of the covering bill of lading which

limits the liability of petitioner. Private respondent rejected the offer and thereafter instituted a suit for

collection. The trial court rendered a decision in favour of the private respondents and this was affirmed

by the Court of Appeals. Thus, this instant petition.

ISSUES:

1. Is the petitioner liable for the actual value and not the maximum value recoverable under the

bill of lading?

2. Is private respondent, as consignee, who is not a signatory to the bill of lading bound by the

stipulations thereof?

ARGUMENTS:

1. The Petitioner is only liable for the maximum value recoverable under the bill of lading.

Clause 18 of the covering bill of lading:

18. All claims for which the carrier may be liable shall be adjusted and settled on the basis of the

shipper's net invoice cost plus freight and insurance premiums, if paid, and in no event shall the carrier

be liable for any loss of possible profits or any consequential loss.

The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an

amount exceeding One Hundred thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in

any other currency per package or customary freight unit (whichever is least) unless the value of the

goods higher than this amount is declared in writing by the shipper before receipt of the goods by the

carrier and inserted in the Bill of Lading and extra freight is paid as required. (Emphasis supplied)

Pertinent provisions that is applicable as to this case:

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing

in the bill of lading, unless the shipper or owner declares a greater value, is binding.

Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss,

destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances,

and has been freely and fairly agreed upon.

Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the common

carrier's liability for loss must be "reasonable and just under the circumstances, and has been freely and

fairly agreed upon."

The above stipulations are reasonable and just. In the bill of lading, the carrier made it clear that its

liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman

Trading, had the option to declare a higher valuation if the value of its cargo was higher than the limited

liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to

blame for not complying with the stipulations.

2. Private Respondents are still bound by the stipulations of the bill of lading

In Sea-Land Service, Inc. vs. Intermediate Appellate Court (supra), it was held that even if the consignee

was not a signatory to the contract of carriage between the shipper and the carrier, the consignee can

still be bound by the contract.

RULING:

The decision of the Court of Appeals is hereby REVERSED and SET ASIDE.

In fine, the liability of petitioner for the loss of the cargo is limited to One Hundred Thousand

(Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading..

ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA E. PABLO, Respondents.

[G.R. No. 71929 : December 4, 1990.] 192 SCRA 9

Facts: Dr. Felipa Pablo — an associate professor in the University of the Philippines, and a research

grantee of the Philippine Atomic Energy Agency — was invited to take part at a meeting of the

Department of Research and Isotopes of the United Nations 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. She was however told by the ALITALIA 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 (2) suitcases: one contained her clothing

and other personal items; the other, her scientific papers, slides and other research material. But the

other flights arriving from Rome did not have her baggage on board. By then feeling desperate, she

went to Rome to try to locate her bags herself. However, her baggage could not be found. Completely

distraught and discouraged, she returned to Manila without attending the meeting in Ispra, Italy.

Once back in Manila she demanded that ALITALIA make reparation for the damages thus suffered by

her. She rejected Alitalia’s offer of free airline tickets and commenced an action for damages. As it

turned out, the luggage was actually forwarded to Ispra, but only a day after the scheduled

appearance. It was returned to her after 11 months. The trial court ruled in favor of Dr. Pablo

awarding P20,000 as nominal damages, the Appellate Court not only affirmed the Trial Court's

decision but also increased the award of nominal damages payable by ALITALIA to P40,000.

Issue [1]: Whether or not the Warsaw Convention should have been applied to limit ALITALIA'S

liability.

Held [1]: NO. Under the Warsaw Convention, an air carrier is made liable for damages for:

a. The death, wounding or other bodily injury of a passenger if the accident causing it took place

on board the aircraft or I the course of its operations of embarking or disembarking;

b. The destruction or loss of, or damage to, any registered luggage or goods, if the occurrence

causing it took place during the carriage by air; and

c. Delay in the transportation by air of passengers, luggage or goods.

The Convention also purports to limit the liability of the carriers in the following manner:

1. In the carriage of passengers the liability of the carrier for each passenger is limited to the sum

of 250,000 francs . . . Nevertheless, by special contract, the carrier and the passenger may

agree to a higher limit of liability.

2. (a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a

sum of 250 francs per kilogramme, unless the passenger or consignor has made, at the time

when the package was handed over to the carrier, a special declaration of interest in delivery

at destination 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 sum

is greater than the actual value to the consignor at delivery. (b)In the case of loss, damage or

delay of part of registered baggage or cargo, or of any object contained therein, the weight to

be taken into consideration in determining the amount to which the carrier's liability is limited

shall be only the total weight of the package or packages concerned. Nevertheless, when the

loss, damage or delay of a part of the registered baggage or cargo, or of an object contained

therein, affects the value of other packages covered by the same baggage check or the same

air way bill, the total weight of such package or packages shall also be taken into

consideration in determining the limit of liability.

3. As regards objects of which the passenger takes charge himself the liability of the carrier is

limited to 5000 francs per passenger.

4. The limits prescribed . . shall not prevent the court from awarding, in accordance with its own

law, in addition, the whole or part of the court costs and of the other expenses of litigation

incurred by the plaintiff. The foregoing provision shall not apply if the amount of the damages

awarded, excluding court costs and other expenses of the litigation, does not exceed the sum

which the carrier has offered in writing to the plaintiff within a period of six months from the

date of the occurrence causing the damage, or before the commencement of the action, if

that is later.

The Warsaw Convention however denies to the carrier availment "of the provisions which exclude or

limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in

accordance with the law of the court seized of the case, is considered to be equivalent to wilful

misconduct," or "if the damage is (similarly) caused . . by any agent of the carrier acting within the

scope of his employment."

The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline

took all necessary steps to avoid the damage, it could exculpate itself completely, and declaring the

stated limits of liability not applicable "if it is proved that the damage resulted from an act or

omission of the carrier, its servants or agents, done with intent to cause damage or recklessly and

with knowledge that damage would probably result." The same deletion was effected by the

Montreal Agreement of 1966, with the result that a passenger could recover unlimited damages upon

proof of wilful misconduct.

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. On the other hand, the Warsaw Convention has invariably been held

inapplicable, or as not restrictive of the carrier's liability, where there was satisfactory evidence of

malice or bad faith attributable to its officers and employees.

In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of

petitioner airline; and Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but

without appreciable damage. The fact is, nevertheless, that some species of injury was caused to Dr.

Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time

appointed - a breach of its contract of carriage. Certainly, the compensation for the injury suffered by

Dr. Pablo cannot under the circumstances be restricted to that prescribed by the Warsaw Convention

for delay in the transport of baggage.

Issue [2]: Whether or not Dr. Pablo is entitled to nominal damages.

Held [2]: YES. The opportunity to claim this honor or distinction was irretrievably lost to Dr. Pablo

because of Alitalia's breach of its contract.

Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and anxiety, which

gradually turned to panic and finally despair, from the time she learned that her suitcases were

missing up to the time when, having gone to Rome, she finally realized that she would no longer be

able to take part in the conference. As she herself put it, she "was really shocked and distraught and

confused."

Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the circumstances be

restricted to that prescribed by the Warsaw Convention for delay in the transport of baggage.

CHINA AIRLINES, petitioner v DANIEL CHIOK, respondent

G.R. No. 152122 July 30, 2003

Facts:

On September 18, 1981, Daniel Chiok purchased from China Airlines, Ltd. (CAL for brevity) a passenger

ticket for air transportation covering Manila-Taipei-Hongkong-Manila. Said ticket was exclusively

endorsable to Philippine Airlines, Ltd. (PAL for brevity)

Subsequently, on November 21, 1981, Chiok took his trip from Manila to Taipei using the CAL

ticket. Before he left for said trip, the trips covered by the ticket were pre-scheduled and confirmed by

the former. When he arrived in Taipei, he went to the CAL office and confirmed his Hongkong to Manila

trip on board PAL Flight No. PR 311. The CAL office attached a yellow sticker indicating that his flight

status was OK.

When Chiok reached Hongkong, he went to the PAL office and sought to reconfirm his flight back to

Manila. The PAL office also confirmed his return trip on board Flight No. PR 311 and attached its own

sticker.

On November 24, 1981, Chiok proceeded to Hongkong International Airport for his return trip to

Manila. However, upon reaching the PAL counter, Chiok saw a poster stating that PAL Flight No. PR 311

was cancelled due to typhoon in Manila. He was then informed that all the confirmed ticket holders of

PAL Flight No. PR 311 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

Consequently, Chiok as plaintiff, filed a Complaint on November 9, 1982 for damages, against PAL and

CAL, as defendants, docketed as Civil Case No. 82-13690, with Branch 31, Regional Trial Court, National

Capital Judicial Region, Manila.

RTC: held CAL and PAL jointly and severally liable to respondent but didn’t rule on respective cross-

claims

CA: affirmed RTC’s decision and debunked petitioner’s claim that it had merely acted as an issuing agent

for the ticket covering HK-Manila leg; Cited the decision in KLM Royal Dutch Airlines v CA:

“Article 30 of the Warsaw providing that in case of transportation to be performed by various successive

carriers, the passenger can take action only against the carrier who performed the transportation during

which the accident or the delay occurred presupposes the occurrence of either an accident or delay in the

course of the air trip, and does not apply if the damage is caused by the willful misconduct on the part of

the carrier’s employee or agent acting within the scope of his employment.”

On PAL’s appeal, CA ruled that the airline’s negligence was the proximate cause of the incident since in

spite of the confirmations he had secured, his name didn’t appear in the list of passengers

Issues:

(1) W/N CA committed judicial misconduct in finding liability against CAL on the basis of

misquotation from KLM Royal Dutch v CA and in magnifying its misconduct by denying CAL’s

motion for reconsideration on a mere syllabus, unofficial at that;

(2) W/N CAL is liable for damages;

Ruling:

(1) Yes, CA committed a lapse when it relied merely on the unofficial syllabus of our ruling in KLM v.

C.A Indeed, lawyers and litigants are mandated to quote decisions of this Court accurately.

However, since this case is not administrative in nature, we cannot rule on the CA justices’

administrative liability, if any, for this lapse. In the case at bar, we can only determine whether

the error in quotation would be sufficient to reverse or modify the CA Decision.

In the instant case, the CA ruled that under the contract of transportation, petitioner -- as the ticket-

issuing carrier (like KLM) -- was liable regardless of the fact that PAL was to perform or had performed

the actual carriage. It elucidated on this point as follows:

“By the very nature of their contract, defendant-appellant CAL is clearly liable under the contract of

carriage with [respondent] and remains to be so, regardless of those instances when actual carriage was

to be performed by another carrier. The issuance of a confirmed CAL ticket in favor of [respondent]

covering his entire trip abroad concretely attests to this. This also serves as proof that defendant-

appellant CAL, in effect guaranteed that the carrier, such as defendant-appellant PAL would honor his

ticket, assure him of a space therein and transport him on a particular segment of his trip.”

Notwithstanding the errant quotation, we have found after careful deliberation that the assailed

Decision is supported in substance by KLM v. CA. The misquotation by the CA cannot serve as basis for

the reversal of its ruling.

(2) Yes, CAL is liable for damages;

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. 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.

G.R. No. 101538 June 23, 1992

AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, Augusto Benedicto

Santos, petitioner,

vs.

NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, respondents.

FACTS:

Petitioner is a minor and a resident of the Philippines. Private respondent Nortwest 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 NOA a round-trip ticket in San

Francisco, U.S.A. In December 19, 1986, the petitioner checked in the at the NOA counter in the 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 NOA for damages in RTC Makati. NOA moved to dismiss

the complaint on the ground of lack of jurisdiction.

ISSUE:

Whether or not Article 28 (1) of the Warsaw Convention is in accordance with the constitution

so as to deprive the Philippine Courts jurisdiction over the case

HELD:

Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the territory of one of

the High Contracting Parties, either before the court of the domicile of the carrier or of his principal

place of business, or where he has a place of business through which the contract has been made, or

before the court at the place of destination.

Constitutionality of the Warsaw Convention

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.

Does the Warsaw Convention apply in this case?

By its own terms, the Convention applies to all international transportation of persons performed by

aircraft for hire.

International transportation is defined in paragraph (2) of Article 1 as follows:

(2) For the purposes of this convention, the expression "international transportation" shall mean any

transportation 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 transportation or a transshipment, are

situated [either] within the territories of two High Contracting Parties . . .

Whether the transportation is "international" is determined by the contract of the parties, which in the

case of passengers is the ticket. When the contract of carriage provides for the transportation of the

passenger between certain designated terminals "within the territories of two High Contracting Parties,"

the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of

the airline and its passenger.

Since the flight involved in the case at bar is international, the same being from the United States to the

Philippines and back to the United States, it is subject to the provisions of the Warsaw Convention,

including Article 28(1), which enumerates the four places where an action for damages may be brought.

Does Article 28(1) refer to Jurisdiction or Venue?

...where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual concept.

Jurisdiction in the international sense must be established in accordance with Article 28(1) of the

Warsaw Convention, following which the jurisdiction of a particular court must be established pursuant

to the applicable domestic law. Only after the question of which court has jurisdiction is determined will

the issue of venue be taken up. This second question shall be governed by the law of the court to which

the case is submitted.

Was the case properly filed in the Philippines, since the plaintiff’s destination was Manila?

The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of

the contract of carriage or, specifically in this case, the ticket between the passenger and the carrier.

Examination of the petitioner's ticket shows that his ultimate destination is San Francisco. Although the

date of the return flight was left open, the contract of carriage between the parties indicates that NOA

was bound to transport the petitioner to San Francisco from Manila. Manila should therefore be

considered merely an agreed stopping place and not the destination.

Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place." It is the

"destination" and not an "agreed stopping place" that controls for purposes of ascertaining jurisdiction

under the Convention.

The contract is a single undivided operation, beginning with the place of departure and ending with the

ultimate destination. The use of the singular in this expression indicates the understanding of the parties

to the Convention that every contract of carriage has one place of departure and one place of

destination. An intermediate place where the carriage may be broken is not regarded as a "place of

destination."

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

United Airlines vs Uy

G.R. No. 127768, Nov. 19, 1999

INTERNATIONAL LAW: Applicability of the Warsaw Convention: the Convention's provisions 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. 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. Likewise, we have held that the

Convention does not 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 willful misconduct on the part of the carrier's

employees is found or established

FACTS:

October 13, 1989 – Respondent Willie Uy is a passenger of petitioner United Airlines, bound from

San Francisco to Manila. While in San Francisco, it was found that one piece of his luggage was over the

maximum weight allowance of 70 kg. per bag. A United Airlines employee rebuked him and in a loud

voice, in front of the milling crowd, ordered him to repack his things accordingly. Wishing not to create a

scene, Willie did as asked. Unfortunately, his luggage was still overweight so the airline billed him

overweight charges. Willie offered to pay the charges with a Miscellaneous Charge Order (MCO) or an

airline pre-paid credit but the same employee, and an airline supervisor, refused to honor it, contending

that there were discrepancies in the figures. Thus, Willie was forced to pay the charges with

his American Express credit card. Upon arrival in Manila, Willie discovered that one of his bags had been

slashed and its contents, amounting to US$5,310.00, stolen.

October 16, 1989 – he sent his first letter of demand to United Airlines. The airline did not refute Willie’s

allegations and mailed a check representing payment of his loss based on the maximum liability of

US$9.70 per pound. Willie, thinking the amount to be grossly inadequate to compensate him for his

losses as well as for the indignities he was subjected to, sent two more letters to petitioner airline, one

dated January 4, 1990 and the other dated October 28, 1991, demanding out-of-court settlement of

P1,000,000.00.

June 9, 1992 – Willie filed a complaint for damages before the Philippine courts. He had two causes of

action: (1) the shabby and humiliating treatment he received from petitioner’s employees at the

San Francisco Airport which caused him extreme embarrassment and social humiliation; and (2) the

slashing of his luggage and the loss of personal effects amounting to US$5,310.00.

For its part, United Airlines moved to dismiss the complaint on the ground that it was filed out of time.

Under Art. 29 of the Warsaw Convention, the right to damages shall be extinguished if an action is not

brought within 2 years. However, the second paragraph of the said provision stated that the method of

calculating the period of limitation shall be determined by the law of the court to which the case is

submitted. It is Willie’s position that our rules on interruption of prescriptive period should apply. When

he sent his letters of demand, the 2-year period was tolled, giving him ample time to file his complaint.

The trial court ordered the dismissal of the case, holding that Art. 29(2) refers not to the local forum’s

rules in interrupting the prescriptive period but only to the rules of determining the time in which the

action was deemed commenced (meaning “filed”). Willie filed his motion for reconsideration of the

order of dismissal only on the 14th day. The trial court denied his motion and 2 days later Willie filed his

notice of appeal. United Airlines this time contended that the notice of appeal was filed beyond the 15-

day reglementary period and should therefore be dismissed. The CA, however, took cognizance of the

case in the interest of justice and ruled in favour of respondent. Hence, this petition for certiorari.

ISSUE: Whether or not the action for damages is barred by the lapse of the 2-year prescriptive period

under Art. 29 of the Warsaw Convention

HELD:

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 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.

Applicability of the Warsaw Convention: Courts have discretion whether to apply them or not

Within our jurisdiction we have held that the Warsaw Convention can be applied, or ignored, depending

on the peculiar facts presented by each case. Thus, we have ruled that the Convention's provisions 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. 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. Likewise, we have held that the

Convention does not 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 willful misconduct on the part of the carrier's

employees is found or established.

Respondent's complaint reveals that he is suing on two (2) causes of action: (a) the shabby and

humiliating treatment he received from petitioner's employees at the San Francisco Airport which

caused him extreme embarrassment and social humiliation; and, (b) the slashing of his luggage and the

loss of his personal effects amounting to US $5,310.00.

While his second 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 first cause of action -an action for

damages arising from the misconduct of the airline employees and the violation of respondent's rights

as passenger - clearly is not.

Action for damages arising from the misconduct of the airline employees and the violation of the

respondent’s rights as passengers is covered under the Civil Code

Consequently, insofar as the first cause of action is concerned, respondent's failure to file his complaint

within the two (2)-year limitation of the Warsaw Convention does not bar his action since petitioner

airline may still be held liable for breach of other provisions of the Civil Code which prescribe a different

period or procedure for instituting the action, specifically, Art. 1146 thereof which prescribes four (4)

years for filing an action based on torts.

Exception to the Application of the 2-year prescriptive period: When airline employed delaying tactics

As for respondent's second cause of action, indeed the travaux preparatories of the Warsaw Convention

reveal that the delegates thereto intended the two (2)-year limitation incorporated in Art. 29 as an

absolute bar to suit and not to be made subject to the various tolling provisions of the laws of the

forum. This therefore forecloses the application of our own rules on interruption of prescriptive

periods. Article 29, par. (2), was intended only to let local laws determine whether an action had been

commenced within the two (2)-year period, and within our jurisdiction an action shall be deemed

commenced upon the filing of a complaint. Since it is indisputable that respondent filed the present

action beyond the two (2)-year time frame his second cause of action must be barred. Nonetheless, it

cannot be doubted that respondent exerted efforts to immediately convey his loss to petitioner, even

employed the services of two (2) lawyers to follow up his claims, and that the filing of the action itself

was delayed because of petitioner's evasion.

Verily, respondent filed his complaint more than two (2) years later, beyond the period of limitation

prescribed by 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

runaround, 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 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 that an action for

damages should be filed within two (2) years from the arrival at the place of destination, 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 as time-barred under

Art. 29 of the Warsaw Convention.

WHEREFORE, the assailed Decision of the Court of Appeals reversing and setting aside the appealed

order of the trial court granting the motion to dismiss the complaint, as well as its Resolution denying

reconsideration, is AFFIRMED. Let the records of the case be remanded to the court of origin for further

proceedings taking its bearings from this disquisition.

SO ORDERED.

Keng Hua Paper Products vs. CA (GR 116863, 12 February 1998)

First Division, Panganiban (J): 4 concur

Facts: Sea-Land Service, a shipping company, is a foreign corporation licensed to do business in the

Philippines. On 29 June 1982, SeaLand received at its Hong Kong terminal a sealed container, Container

SEAU 67523, containing 76 bales of “unsorted waste paper” for shipment to Keng Hua Paper Products,

Co. in Manila. A bill of lading to cover the shipment was issued by Sea-Land. On 9 July 1982,

the shipment was discharged at the Manila International Container Port. Notices of arrival were

transmitted to Keng Hua but the latter failed to discharge the shipment from the container during the

“free time” period or grace period. The said shipment remained inside the Sea-Land’s container from

the moment the free time period expired on 29 July 1982 until the time when the shipment was

unloaded from the container on 22 November 1983, or a total of 481 days. During the 481-day period,

demurrage charges accrued. Within the same period, letters demanding payment were sent by Sea-Land

to Keng Hua who, however, refused to settle its obligation which eventually amounted to P67,340.00.

Numerous demands were made on Keng Hua but the obligation remained unpaid.

Sea Land thereafter commenced the civil action for collection and damages. The RTC found Keng Hua

liable for demurrage, attorney’s fees and expenses of litigation.

Keng Hua appealed to the Court of Appeals, which denied the appeal and affirmed the lower court’s

decision in toto. In a subsequent resolution, it also denied Keng Hua’s motion for

reconsideration. Hence, the petition for review.

The Supreme Court affirmed the assailed Decision with the modification that the legal interest of 6% per

annum shall be computed from 28 September 1990 until its full payment before finality of judgment.

The rate of interest shall be adjusted to 12% per annum, computed from the time said judgment

became final and executory until full satisfaction. The award of attorney’s fees is deleted.

1. Nature of bill of lading

A bill of lading serves two functions. First, it is a receipt for the goods shipped. Second, it is a contract by

which three parties, namely, the shipper, the carrier, and the consignee undertake specific

responsibilities and assume stipulated obligations. A “bill of lading delivered and accepted constitutes

the contract of carriage even though not signed,” because the “(a)cceptance of a paper containing the

terms of a proposed contract generally constitutes an acceptance of the contract and of all of its terms

and conditions of which the acceptor has actual or constructive notice.” In a nutshell, the acceptance of

a bill of lading by the shipper and the consignee, with full knowledge of its contents, gives rise to the

presumption that the same was a perfected and binding contract.

2. Shipper and consignee were liable for payment of demurrer charges; Section 17 of the bill of

lading

Section 17 of the bill of lading provided that the shipper and the consignee were liable for the payment

of demurrage charges for the failure to discharge the containerized shipment beyond the grace period

allowed by tariff rules. Section 17 of the bill of lading provided “Cooperage Fines. The shipper and

consignee shall be liable for, indemnify the carrier and ship and hold them harmless against, and the

carrier shall have a lien on the goods for, all expenses and charges for mending cooperage, baling,

repairing or reconditioning the goods, or the van, trailers or containers, and all expenses incurred in

protecting, caring for or otherwise made for the benefit of the goods, whether the goods be damaged or

not, and for any payment, expense, penalty fine, dues, duty, tax or impost, loss, damage, detention,

demurrage, or liability of whatsoever nature, sustained or incurred by or levied upon the carrier or the

ship in connection with the goods or by reason of the goods being or having been on board, or because

of shipper’s failure to procure consular or other proper permits, certificates or any papers that may be

required at any port or place or shipper’s failure to supply information or otherwise to comply with all

laws, regulations and requirements of law in connection with the goods of from any other act or

omission of the shipper or consignee.” Keng Hua’s prolonged failure to receive and discharge the cargo

from the Sea-Land’s vessel constitutes a violation of the terms of the bill of lading. It should thus be

liable for demurrage to the former.

3. Keng Hua’s letter proved refusal to pick up cargo and not rejection of bill of lading; Implied

acceptance

Keng Hua “received the bill of lading immediately after the arrival of the shipment” on 8 July 1982.

Having been afforded an opportunity to examine the said document, it did not immediately object to or

dissent from any term or stipulation therein. It was only six months later, on 24 January 1983, that it

sent a letter to private respondent saying that it could not accept the shipment. Its inaction for such a

long period conveys the clear inference that it accepted the terms and conditions of the bill of lading.

Moreover, said letter spoke only of petitioner’s inability to use the delivery permit, i.e. to pick up the

cargo, due to the shipper’s failure to comply with the terms and conditions of the letter of credit, for

which reason the bill of lading and other shipping documents were returned by the “banks” to the

shipper. The letter merely proved its refusal to pick up the cargo, not its rejection of the bill of lading.

4. Apprehension of violating laws cannot defeat contractual obligation and liability

Keng Hua’s attempt to evade its obligation to receive the shipment on the pretext that this may cause it

to violate customs, tariff and central bank laws must fail. Mere apprehension of violating said laws,

without a clear demonstration that taking delivery of the shipment has become legally impossible,

cannot defeat the petitioner’s contractual obligation and liability under the bill of lading.

5. Issue raised for first time on appeal cannot be entertained

An issue raised for the first time on appeal and not raised timely in the proceedings in the lower court is

barred by estoppel. Questions raised on appeal must be within the issues framed by the parties and,

consequently, issues not raised in the trial court cannot be raised for the first time on appeal. Herein,

the issue of whether or not Keng Hua accepted the bill of lading was raised for the first time only in its

memorandum before the Supreme Court.

6. Nature of demurrage

Demurrage is merely an allowance or compensation for the delay or detention of a vessel. It is often a

matter of contract, but not necessarily so. The very circumstance that in ordinary commercial voyages, a

particular sum is deemed by the parties a fair compensation for delays, is the very reason why it is, and

ought to be, adopted as a measure of compensation, in cases ex delicto. What fairer rule can be

adopted than that which founds itself upon mercantile usage as to indemnity, and fixes a recompense

upon the deliberate consideration of all the circumstances attending the usual earnings and

expenditures in common voyages? It appears to us that an allowance, by way of demurrage, is the true

measure of damages in all cases of mere detention, for that allowance has reference to the ship’s

expenses, wear and tear, and common employment.

7. Amount of Demurrage Charges supported by extant evidence

The amount of demurrage charges in the sum of P67,340 is a factual conclusion of the trial court that

was affirmed by the Court of Appeals and, thus, binding on the Supreme Court. Besides, such factual

finding is supported by the extant evidence. The apparent discrepancy was a result of the variance of

the dates when the two demands were made. Necessarily, the longer the cargo remained unclaimed,

the higher the demurrage. Thus, while in his letter dated 24 April 1983, Sea-Land’s counsel demanded

payment of only P37,800, the additional demurrage incurred by Keng Hua due to its continued refusal to

receive delivery of the cargo ballooned to P67,340 by 22 November 1983.

8. Three contracts in a letter of credit

In a letter of credit, there are three distinct and independent contracts: (1) the contract of sale between

the buyer and the seller, (2) the contract of the buyer with the issuing bank, and (3) the letter of credit

proper in which the bank promises to pay the seller pursuant to the terms and conditions stated therein.

“Few things are more clearly settled in law than that the three contracts which make up the letter of

credit arrangement are to be maintained in a state of perpetual separation.” A transaction involving the

purchase of goods may also require, apart from a letter of credit, a contract of transportation specially

when the seller and the buyer are not in the same locale or country, and the goods purchased have to

be transported to the latter.

9. Contract of carriage in bill of lading to be treated independently of contract of sale and the

contract for the issuance of credit

The contract of carriage, as stipulated in the bill of lading in the present case, must be treated

independently of the contract of sale between the seller and the buyer, and the contract for the

issuance of a letter of credit between the buyer and the issuing bank. Any discrepancy between the

amount of the goods described in the commercial invoice in the contract of sale and the amount

allowed in the letter of credit will not affect the validity and enforceability of the contract of carriage as

embodied in the bill of lading. As the bank cannot be expected to look beyond the documents presented

to it by the seller pursuant to the letter of credit, neither can the carrier be expected to go beyond the

representations of the shipper in the bill of lading and to verify their accuracy vis-a-vis the commercial

invoice and the letter of credit. Thus, the discrepancy between the amount of goods indicated in the

invoice and the amount in the bill of lading cannot negate Keng Hua’s obligation to private respondent

arising from the contract of transportation.

10. Remedy of alleged overshipment lies against the shipper and not against the carrier

The contract of carriage was under the arrangement known as “Shipper’s Load And Count,” and the

shipper was solely responsible for the loading of the container while the carrier was oblivious to the

contents of the shipment. Keng Hua’s remedy in case of overshipment lies against the seller/shipper, not

against the carrier.

11. Computation of legal interest

a. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the

amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per

annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until

the demand can be established with reasonable certainty. Accordingly, where the demand is established

with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or

extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the

time the demand is made, the interest shall begin to run only from the date the judgment of the court is

made (at which time the quantification of damages may be deemed to have been reasonably

ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount

finally adjudged.

b. When the judgment of the court awarding a sum of money becomes final and executory, the rate of

legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum

from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a

forbearance of credit.

12. Obligation one not arising from loan or forbearance of money; Legal interest in the present case

The case involves an obligation not arising from a loan or forbearance of money; thus, pursuant to

Article 2209 of the Civil Code, the applicable interest rate is 6% per annum. Since the bill of lading did

not specify the amount of demurrage, and the sum claimed by Sea-Land increased as the days went by,

the total amount demanded cannot be deemed to have been established with reasonable certainty until

the trial court rendered its judgment. Indeed, “unliquidated damages or claims, it is said, are those

which are not or cannot be known until definitely ascertained, assessed and determined by the courts

after presentation of proof.” Consequently, the legal interest rate is 6%, to be computed from 28

September 1990, the date of the trial court’s decision. And in accordance with the cases of PNB and

Eastern Shipping, the rate of 12% per annum shall be charged on the total then outstanding, from the

time the judgment becomes final and executory until its satisfaction.

13. Attorney’s fees denied due to lack of justification

The matter of attorney’s fees was taken up only in the dispositive portion of the trial court’s decision.

This falls short of the settled requirement that the text of the decision should state the reason for the

award of attorney’s fees, for without such justification, its award would be a “conclusion without a

premise, its basis being improperly left to speculation and conjecture.”

SEA-LAND SERVICE, INC. vs. IAC

Facts: Sea-land, a foreign shipping and forwarding company licensed to do business in the Philippines,

received from Seaborne Trading Company in California a shipment consigned to Sen Hiap Hing. The

shipper not having declared the value of the shipment, no value was indicated in the BOL. The shipment

was discharged in Manila, and while awaiting transshipment to Cebu the cargo was stolen and never

recovered. The lower court sentences Sea-land to pay Cue the value of the lost cargo, the unrealized

profit and attorneys fees. The CA affirmed the decision, hence the petition.

Issue: Whether or not the consignee of seaborne freight is bound by stipulations in the covering bill of

lading limiting to a fixed amount the liability of the carrier for loss or damage to the cargo where its

value is not declared in the bill.

Held: Yes. There is no question of the right of a consignee in a bill of lading to recover from the carrier or

shipper for loss of, or damage to, goods being transported under said bill, although that document may

have been drawn up only by the consignor and the carrier without the intervention of the consignee.

Since the liability of a common carrier for loss of or damage to goods transported by it under a contract

of carriage so governed by the laws of the country of destination and the goods in question were

shipped from the United States to the Philippines, the liability of Sea-Land has Cue is governed primarily

by the Civil Code, and as ordained by the said Code, supplementary, in all matters not cluttered thereby,

by the Code of Commerce and special laws. One of these supplementary special laws is the Carriage of

goods by Sea Act (COGSA), made applicable to all contracts for the carriage by sea to and from the

Philippines Ports in Foreign Trade by Comm. Act. 65.

Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability limitation clause in

the bill of lading here are fully substantial on the basis alone of Article 1749 and 1750 of the Civil Code.

The justices of such stipulation is implicit in its giving the owner or shipper the option of avoiding accrual

of liability limitation by the simple expedient of declaring the value of the shipment in the bill of lading.

The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the shipment

covered by said rule to US$500 per package unless the shipper declares the value of the shipment and

pays additional charges is valid and binding on Cue.

PHILAMGEN vs. SWEET LINES

FACTS

A total 7,000 bags of low density polyethylene (600 bags of polyethylene 641 and 6,400 bags of

polyethylene 647) were shipped from Baton Rouge, LA to Manila on board SS Vishva Yash, a vessel

belonging to the Shipping Corporation of India (SCI). From Manila, the cargoes were shipped to Davao

on board MV Sweet Love, a vessel owned by Sweet Lines. The consignee was Far East Bank with arrival

notice to Tagum Plastics, Inc., Tagum, Davao City. The cargoes were insured by Far East Bank with the

Philippine American General Insurance Co (Philamgen) and were covered by bills of lading which

contained the following stipulation in paragraph 5:

Claims for shortage, damage, must be made at the time of delivery to consignee or agent, if container

shows exterior signs of damage or shortage. Claims for non-delivery, misdelivery, loss or damage must

be filed within 30 days from accrual. Suits arising from shortage, damage or loss, non-delivery or

misdelivery shall be instituted within 60 days from date of accrual of right of action. Failure to file

claims or institute judicial proceedings as herein provided constitutes waiver of claim or right of action.

In no case shall carrier be liable for any delay, non-delivery, misdelivery, loss of damage to cargo while

cargo is not in actual custody of carrier.

On May 15, 1977, the shipment(s) were discharged from the interisland carrier into the custody of the

consignee. A survey conducted on July 8, 1977 showed that of the shipment totalling 7,000 bags,

originally contained in 175 pallets, only a total of 5,820 bags were delivered to the consignee in good

order condition, leaving a balance of 1,080 bags. Some of the 1,080 bags were either MISSING OR

DAMAGED beyond the point of being useful for the intended purpose.

FEBTC and Tagum Plastics sued the international carrier, SCI, the inter-island carriers, Sweet Lines, the

arrastre company, Davao Arrastre and FE Zuellig (which I assume is the shipper). Before trial, a

compromise agreement was entered into between the complainants and SCI and F.E. Zuellig, thus, only

Sweet Lines and Davao Arrastre remained as defendants.

The trial court ruled in favour of Philamgen and Tagum Plastics. The CA reversed on the ground of

prescription and denied the motion for reconsideration.

ISSUES

(1) Was there a prescriptive period?

(2) If yes, was the prescriptive period valid and legal?

(3) If it was valid and legal, did Philamgen act within the prescriptive period?

RULING

(1) Yes. There was a prescriptive period. When the complaint was filed, prescription as an affirmative

defense was seasonably raised by Sweet Lines in its answer. Though the bills of lading were not

presented in evidence, the SC said that: “As petitioners are suing upon SLI's contractual obligation under

the contract of carriage as contained in the bills of lading, such bills of lading can be categorized as

actionable documents which under the Rules must be properly pleaded either as causes of action or

defenses, and the genuineness and due execution of which are deemed admitted unless specifically

denied under oath by the adverse party. The rules on actionable documents cover and apply to both a

cause of action or defense based on said documents.” In their answer, Sweet Lines included the

prescriptive period under paragraph 5 of the bills of lading. Philamgen did not deny the existence of the

bill of lading under oath. Instead, in its reply to the answer, Philamgen asserted that the bills of lading

were contracts of adhesion and that such provisions were “contrary to law and public policy” and thus,

Sweet Lines cannot avail of such prescriptive period as a valid defense. The SC said that Philamgen’s

failure to deny under oath the existence of the bills of lading was tantamount to an admission of its

existence, together with paragraph 5 containing the prescriptive period. Thus, the existence of the

prescriptive period was duly proved even if the bills of lading were not presented in court.

(2) Yes. The prescriptive periods were valid and legal. Philamgen insists that the bills of lading were

contracts of adhesion and that the prescriptive periods stated therein were void for being contrary to

law and public policy. The SC, citing Ong Yu vs CA, said “that contracts of adhesion are 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.” Philamgen, thus, gave its consent to the contracts – the bills of lading – including

consent to the prescriptive periods therein. The SC also agreed with the CA that parties can stipulate a

shorter prescriptive period for the filing of suits. The SC quoted the CA, “It must be noted, at this

juncture, that the aforestated time limitation (paragraph 5) in the presentation of claim for loss or

damage, is but a restatement of the rule prescribed under Art. 366 of the Code of Commerce... ” The

SC said that, “... the validity of a contractual limitation of time for filing the suit itself against a carrier

shorter than the statutory period therefor has generally been upheld as such stipulation merely

affects the shipper's remedy and does not affect the liability of the carrier. In the absence of any

statutory limitation and subject only to the requirement on the reasonableness of the stipulated

limitation period, the parties to a contract of carriage may fix by agreement a shorter time for the

bringing of suit on a claim for the loss of or damage to the shipment than that provided by the statute of

limitations. Such limitation is not contrary to public policy for it does not in any way defeat the complete

vestiture of the right to recover, but merely requires the assertion of that right by action at an earlier

period than would be necessary to defeat it through the operation of the ordinary statute of

limitations.” The SC also said that, “..., the shortened period for filing suit is not unreasonable and has in

fact been generally recognized to be a valid business practice in the shipping industry.” This is in

recognition of the inherent dangers of carriage by sea.

(3) No. Philamgen did not act within the prescriptive period. The shipment was discharged into the

custody of the consignee on May 15, 1977, and it was from this date that petitioners' cause of action

accrued, with thirty (30) days therefrom within which to file a claim with the carrier for any loss or

damage which may have been suffered by the cargo and thereby perfect their right of action. Claim was

filed only on April 28, 1978, way beyond the period provided in the bills of lading and violative of the

contractual provision, the inevitable consequence of which is the loss of petitioners' remedy or right to

sue. The SC said, “Even the filing of the complaint on May 12, 1978 is of no remedial or practical

consequence, since the time limits for the filing thereof, whether viewed as a condition precedent or as

a prescriptive period, would in this case be productive of the same result, that is, that petitioners had no

right of action to begin with or, at any rate, their claim was time-barred.”

Other things discussed by the SC:

1. “...where the contract of shipment contains a reasonable requirement of giving notice of loss of or

injury to the goods, the giving of such notice is a condition precedent to the action for loss or injury or

the right to enforce the carrier's liability. Such requirement is not an empty formalism. The

fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but

reasonably to inform it that the shipment has been damaged and that it is charged with liability

therefor, and 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.”

2. Philamgen also asserted that since the purpose of the notice of claim or loss was to charge Sweet

Lines with actual knowledge of the loss and damage involved, then the issuance of Sweet Lines of a

“Report on Losses and Damage” dated May 15, 1977, “would obviate the need for or render superfluous

the filing of a claim within the stipulated period.” The SC said, “The report on losses and damages is not

the claim referred to and required by the bills of lading for it does not fix responsibility for the loss or

damage, but merely states the condition of the goods shipped. The claim contemplated herein, in

whatever form, must be something more than a notice that the goods have been lost or damaged; it

must contain a claim for compensation or indicate an intent to claim.” Furthermore, the report bears

an annotation at its lower part that says “this Copy should be submitted together with your claim

invoice or receipt within 30 days from date of issue otherwise your claim will not be honored."

3. The claim against the carrier, Sweet Lines, has prescribed but what about the claim against Davao

Arrastre. The SC said that there was not enough proof to pinpoint the party responsible for the lost and

damaged bags. (What I found surprising was that the SC also said, “Unlike a common carrier, an

arrastre operator does not labor under a presumption of negligence in case of loss, destruction or

deterioration of goods discharged into its custody. In other words, to hold an arrastre operator liable for

loss of and/or damage to goods entrusted to it there must be preponderant evidence that it did not

exercise due diligence in the handling and care of the goods.”

DOLE PHILIPPINES, INC. v MARITIME COMPANY OF THE PHILIPPINES

Facts:

The cargo subject of the instant case was discharged in Dadiangas unto the custody of the consignee,

Dole Philippines. The corresponding claim for the damages sustained by the cargo was filed by the

plaintiff with the defendant, Maritime Company on May 4, 1972.

On June 11, 1973 the plaintiff filed a complaint in the CFI Manila embodying 3 causes of action involving

3 separate and different shipments. The third cause of action therein involved the cargo now subject of

this present litigation.

On December 11, 1974, Judge Serafin Cuevas issued an Order dismissing the first two causes of action.

The third cause of action which covered the cargo subject of this case now was likewise dismissed but

without prejudice as it was not covered by the settlement. Because of the dismissal of the complaint

with respect to the third cause of action, DOLE instituted this present complaint on January 6, 1975.

Maritime filed an answer pleading inter alia the affirmative defense of prescription under the provisions

of the Carriage of Goods by Sea Act. The Trial Court granted the motion, scheduling the preliminary

hearing on April 27, 1977. The record before the Court does not show whether or not that hearing was

held, but under date of May 6, 1977, Maritime filed a formal motion to dismiss invoking once more the

ground of prescription.

The Trial Court, after due consideration, resolved the matter in favor of Maritime and dismissed the

complaint.

Issue:

Whether or not Article 1155 of the Civil Code applies in lieu of the COGSA.

Held:

No. Article 1155 of the Civil Code provides that the prescription of actions is interrupted by the making

of an extrajudicial written demand by the creditor

Section 3, paragraph 6 of the COGSA provides that:

the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is

brought within one year after delivery of the goods or the date when the goods should have been

delivered; Provided, That, if a notice of loss or damage, either apparent or conceded, is not given as

provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit

within one year after the delivery of the goods or the date when.the goods should have been delivered.

1. Dole argues that since the provisions of the Civil Code are, by express mandate of said Code,

suppletory of deficiencies in the Code of Commerce and special laws in matters governed by the latter

and there being a patent deficiency with respect to the tolling of the prescriptive period provided for in

the Carriage of Goods by Sea Act, prescription under said Act is subject to the provisions of Article 1155

of the Civil Code on tolling. Since Dole's claim for loss or damage was filed on May 4, 1972 amounted to

a written extrajudicial demand which would toll or interrupt prescription under Article 1155, it operated

to toll prescription also in actions under the Carriage of Goods by Sea Act.

These arguments might merit weightier consideration were it not for the fact that the question has

already received a definitive answer, adverse to the position taken by Dole, in The Yek Tong Lin Fire &

Marine Insurance Co., Ltd. vs. American President Lines, Inc.

2. Dole argues that it was error for the court not to have considered the action of plaintiff-appellant

suspended by the extrajudicial demand which took place, according to defendant's own motion to

dismiss on August 22, 1952.

Court noticed that while plaintiff avoids stating any date when the goods arrived in Manila, it relies upon

the allegation made in the motion to dismiss that a protest was filed on August 22, 1952 — which goes

to show that plaintiff-appellant's counsel has not been laying the facts squarely before the court for the

consideration of the merits of the case. We have already decided that in a case governed by the Carriage

of Goods by Sea Act, the general provisions of the Code of Civil Procedure on prescription should not be

made to apply. (Chua Kuy vs. Everett Steamship Corp., G.R. No. L-5554, May 27, 1953.) We hold that in

such a case the general provisions of the new Civil Code (Art. 1155) cannot be made to apply, as such

application would have the effect of extending the one-year period of prescription fixed in the law. It is

desirable that matters affecting transportation of goods by sea be decided in as short a time as possible;

the application of the provisions of Article 1155 of the new Civil Code would unnecessarily extend the

period and permit delays in the settlement of questions affecting transportation, contrary to the clear

intent and purpose of the law.

Under Dole's theory, when its claim was received by Maritime, the one-year prescriptive period was

interrupted and began to run anew from May 4, 1972, affording Dole another period of one year

counted from that date within which to institute action on its claim for damage. Unfortunately, Dole let

the new period lapse without filing action. It instituted Civil Case No. 91043 only on June 11, 1973, more

than one month after that period has expired and its right of action had prescribed.

AIR FRANCE V. GILLEGO

In Air France vs. Gillego, G.R. No 165266, December 15, 2010, the Supreme Court discussed the

liability that airlines have for lost luggage, particularly in terms of moral d amages due to a

passenger. Unfortunately for the airline, this was no ordinary passenger but a Congressman on his

way to deliver a speech.

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.

The petition was found to be partly meritorious. The Supreme Court held that being a “business

intended to serve the travelling public primarily, a contract of carriage is imbued with public

interest.” “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 t hat

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 contr act and

the fact of its non-performance by the carrier.” [emphasis supplied]

There is no dispute that the checked-in luggage was not found upon arrival at plaintiff’s destination

and was only returned two years later. The action is founded on the breach of the contract of

carriage with Air France unable to offer any satisfactory explanation for the unreasonable delay in

the delivery of the baggage. Since the presumption of negligence was not overcome, liability for the

delay was established. Upon recovery of the baggage during trial, the plaintiff no longer pressed his

claim for actual or compensatory damages.

For moral damages to be awarded in the 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 there is no showing of fraud or 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.”

Air France was found liable for moral damages. Petitioner’s station manager testified that upon

receiving the letter-complaint, she immediately began working on the Property Irregularity Report

(PIR). This is issued at the airline station upon complaint by a passeng er on missing baggage. From

the computer-printout, a PIR was initiated at the Budapest counter. A search telex was sent out on

three subsequent dates. Based on the PIR printout, the plaintiff only gave his Philippine address

and telephone number, and not the address and contact number of his Budapest hotel. The PIR

usually is printed in two originals, one for the station manager and the other copy is for the

passenger. There was no record or entry in the PIR of any follow-up call made by the plaintiff in

Budapest. Plaintiff claimed that he was not given a copy of this PIR and that his repeated telephone

calls were ignored.

It was found that Air France “acted in bad faith in repeatedly ignoring respondent’s follow -up

calls.” The alleged entries in the PIR were not to be considered since these were not authenticated

by the airline station representative in Budapest. The Court did not accept as justification that

plaintiff should be faulted in allegedly not giving his hotel address and phone number. It found

unbelievable that the plaintiff would not give his hotel and other information after he had promptly

filed a complaint. And even assuming that only the Philippine details were given, this does not

explain why Air France never communicated with plaintiff concerning the lost baggage long after he

had returned to the Philippines. The missing luggage was returned only after the trial.

In addition, the PIR only establishes that telex searches were made but there is no attempt to

explain the loss of the luggage. Air France “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.” Bad faith may be “in securing the contract

and in the execution thereof, as well as in the enforcement of its terms, or any other kind of

deceit.” [emphasis supplied]

The failure to cite any act of discourtesy or rudeness does not make plaintiff’s “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 exp erienced 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.” [emphasis supplied]

However, the sum of P1,000,000.00 is “excessive and not proportionate to the loss or suffering

inflicted on the passenger under the circumstances.” The Court cited Trans World Airlines v. Court

of Appeals where it considered the social standing of the aggrieved passenger who was a lawyer

and director of several companies but nonetheless reduced the award of moral damages.

Moral damages are awarded “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.” Exemplary damages are to “deter serious wrongdoings.” Under Article 2216 of the Civil

Code, the assessment of damages is left to the discretion of the court according to the

circumstances of each case. This 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.”

Since Air France “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

P200,000.00, P50,000.00 and P30,000.00 as moral damages, exemplary damages and attorney’s

fees would be sufficient and justified."

It is ironic that the award of damages, just like the luggage, comes too late since the plaintiff has

already passed away. Justice, just like baggage, can be just as delayed

SABENA BELGIAN WORLD AIRLINES

,

petitioner,vs.

HON. COURT OF APPEALS and MA. PAULA SAN AGUSTIN

,

respondents.

[G.R. No. 104685. March 14, 1996]

Facts:

On August 21, 1987, plaintiff (MA. PAULA SAN AGUSTIN) was a passenger on defendant airline

(SABENABELGIAN WORLD AIRLINES) from Casablanca to Brussels, Belgium on her way back to

Manila. Herluggage with valuables was left on board Flight SN 284. Upon arrival she submitted

documents to supporther baggage claim but luggage remained to be missing. A formal complaint

was filed by the plaintiff withthe manger of the airline.Plaintiff was furnished copies of telexes with an

information that the Brussel’s Office of defendant foundthe luggage and that they have broken the

locks

for identification (Exhibit ‘B’). Plaintiff was assured bythe defendant that it has notified its Manila Office

that the luggage will be shipped to Manila on October27, 1987. But unfortunately plaintiff was informed

that the luggage was lost for the second time. At thetime of fiing of complaint the luggage is still

missing.Plaintiff demanded from the defendant the money value of the luggage and its contents or its

exchangevalue, but defendant refused to settle the claim, asserting that the loss of the luggage was due

toplaintiff’s sole if not contributory negligence; non-declaration of valuable items in her checked-in

luggageat the flight counter when she checked in.Trial court favored the plaintiff and ordered the

Sabena Belgian World Airlines to pay private respondentMa. Paula San Agustin. Hence this appeal.

Issue:

WON the private respondent is at fault on the loss of the luggage by negligence.

Ruling:

Fault or negligence consists in the omission of that diligence which is demanded by the nature of

anobligation and corresponds with the circumstances of the person, of the time, and of the place. When

thesource of an obligation is derived from a contract, the mere breach or non-fulfillment of the

prestationgives rise to the presumption of fault on the part of the obligor. This rule is not different in the

case of common carriers in the carriage of goods which, indeed, are bound to observe not just the due

diligenceof a good father of a family but that of “extraordinary” care in the vigilance over the goods.It

remained undisputed that private respondent’s luggage was lost while it was in the

custody of petitioner. When it was found missing the respondent, promptly processed all the necessary

documentbut to no avail. The “loss of said baggage not only once by twice,” said the appellate court,

“underscoresthe wanton negligence and lack of care” on the part of the carrier.Under domestic law and

jurisprudence (the Philippines being the country of destination), the attendanceof gross negligence

(given the equivalent of fraud or bad faith) holds the common carrier liable for alldamages which can be

reasonably attributed, although unforeseen, to the non-performance of theobligation, including moral

and exemplary damages.

WHEREFORE

, the decision appealed from is AFFIRMED