British Airways vs CA

FACTS:

Mahtani through Mr. Gumar purchased an airline ticket from British Airlines (BA), who had no direct
flights from Manila to Bombay. Mahtani had to take a flight to from MLA to HK via PAL, then HK to
Bombay on board BA. A breach of contract involving misplaced luggage occurred when Mahtanis
luggage failed to arrive at Bombay. He filed a complaint for damages against BA and Mr. Gumar. BA
filed a third party complaint against PAL alleging that it is PALs late arrival at HK that caused the
failure to properly transfer the package from HK to BA aircraft. Trial court and CA rendered decision
in favor of Mahtani awarding damages. The third party complaint against PAL was dismissed on the
ground that the contract of carriage is between BA and Mahtani only, When Mahtani boarded the PAL
plane from Manila to Hongkong, PAL was merely acting as a subcontractor or agent of BA as stated in
their conditions of contract--carriage to be performed hereunder by several successive carriers is
regarded as a single operation, hence PAL is not liable. BA is now seeking reversal of CA decision of
his liability for damages and the dismissal of the third party complaint against PAL.

ISSUE:

1.WON PAL is an agent of BA
2. WON PAL is liable for damages

HELD:
1. Yes. The contractual relationship between BA and PAL is one of agency, the former being the
principal, since it was the one which issued the confirmed ticket, and the latter the agent.

2. Yes. Since the instant petition was based on breach of contract of carriage, Mahtani can only sue BA
alone, and not PAL, since the latter was not a party to the contract. However, this is not to say that PAL
is relieved from any liability due to any of its negligent acts.

It is a well-settled rule that an agent is also responsible for any negligence in the performance of its
function and is liable for damages which the principal may suffer by reason of its negligent act. Hence,
the CA erred when it opined that BA, being the principal, had no cause of action against PAL, its agent
or sub-contractor. It is but logical, fair and equitable to allow BA to sue PAL for indemnification, if it
is proven that the latter's negligence was the proximate cause of Mahtani's unfortunate experience,
instead of totally absolving PAL from any liability.