KUWAIT AIRWAYS CORPORATION VS. PHILIPPINE AIRLINES, INC.
On 15 May 1995, PAL received a letter from Dawoud, Deputy Marketing & Sales
(Freedoms of the Air p. 345 of the book; Regulatory Perspective in the syllabus)
FACTS: On 21 October 1981, Kuwait Airways and PAL entered into a Commercial
Agreement, with Joint Services Agreement (JSA). The agreement covered a twice-
weekly KA flight on the route Kuwait-Bangkok-Manila and vice versa. It stipulated that
"only 3rd and 4th freedom traffic rights between Kuwait and Manila and vice versa will
be exercised. No 5th freedom traffic rights will be exercised between Manila and
Bangkok."
The "freedom traffic rights" are the so-called "5 freedoms" contained in the International
Air Transport Agreement (IATA) signed in Chicago on 7 December 1944. Under this,
each contracting State agreed to grant to the other contracting states, five "freedoms
of air." Among these freedoms were:
1) "the privilege to put down passengers, mail and cargo taken on in the territory
of the State whose nationality the aircraft possesses" (Third Freedom);
2) "the privilege to take on passengers, mail or cargo destined for the territory of
the State whose nationality the aircraft possesses" (Fourth Freedom);
3) and the right to carry passengers from one's own country to a second
country, and from that country to a third country (Fifth Freedom).
Thus, Kuwait Airways flight was authorized to board passengers in Kuwait and deplane
them in Manila (and vice versa). And with the limitation in the exercise of Fifth Freedom
traffic rights, the flight was barred from boarding passengers in Bangkok and deplaning
them in Manila, or boarding passengers in Manila and deplaning them in Bangkok.
The agreement also adverted to the JSA covering the Kuwait-Manila route, which both
airlines had entered into to reflect friendly relationships between the 2 airlines and to
assist each other to develop traffic on the route. The agreement also stipulated that
before PAL commences its operations to or via Kuwait, Joint Services shall be operated
with the use of Kuwait Airways aircraft and crew. PAL was entitled to seat allocations
on specified Kuwait Airways sectors, special prorates for use by PAL to specified
Kuwait Airways sectors, joint advertising by both and other general advertising, and
mutual assistance to each other with respect to the development of traffic on the route.
Kuwait Airways also obligated itself to share with PAL revenue earned from the uplift of
passengers. The Agreement and the JSA was amended by the parties 6 times between
1981-1994. In 1988, it was amended to authorize PAL to operate provisional services,
referred to as "ad hoc joint services," on the route for the period between April - June
1988. In 1989, an amendment was agreed subjecting the uplift of cargo between Kuwait
and Manila to the same revenue sharing arrangement as the uplift of passengers. Until
1995, there seems to have been no serious disagreements. In April 1995, delegations
from the Philippines and Kuwait met in Kuwait. It culminated in a Confidential
Memorandum of Understanding (CMU) entered into in Kuwait on 12 April 1995.
The present controversy stems from the 4th paragraph of the CMU, which read:
4. The two delegations agreed that the unilateral operation and the exercise of third
and fourth freedom traffic rights shall not be subject to any royalty payment or
commercial arrangements, as from the date of signing of this [CMU]. x x x
Director for International Affairs of KA, addressed to Gonzaga, Director for International
Relations of PAL. The letter stated in part:
Regarding the Commercial Agreement, pursuant to item 4 of the new MOU, we will
advise our Finance Department that the Agreement concerning royalty for 3rd/4th
freedom traffic will be terminated effective April 12, 1995. Although the royalty
agreement will no longer be valid, we are very keen on seeing that PAL continues to
enjoy direct participation in the Kuwait/Philippines market x x x.
Gonzaga replied in a letter which read:
This agreement may be terminated by either party by giving ninety (90) days notice in
writing to the other party. However, any termination date must be the last day of any
traffic period, e.g.[,] 31st March or 31st October. Pursuant to this clause, PAL
acknowledged the 15 May 1995 letter as the requisite notice of termination. However,
it also pointed out that the agreement could only be effectively terminated on 31
October 1995, or the last day of the then current traffic period. Thus, PAL insisted that
the provisions of the Commercial Agreement "shall continue to be enforced until such
date."
Subsequently, PAL insisted that Kuwait Airways pay it the sum of US$1,092,690.00 as
revenue for the uplift of passengers and cargo for the period 13 April 1995 to 28 October
1995.20 When Kuwait Airways refused, PAL filed a Complaint with the RTC of Makati,
seeking the payment of sum with interest, attorney’s fees, and costs of suit. Kuwait
Airways invoked the CMU and argued that its obligations under the Agreement were
terminated as of the effectivity date of the CMU. PAL countered that it was "not privy to
the CMU, though it would eventually concede to its existence.
RTC: ruled in favor of PAL. RTC considered as a corollary issue whether Kuwait
Airways "validly terminated the Commercial Agreement x x x, plaintiff’s contention being
that KA had not complied with the terms of termination provided for in the Commercial
Agreement." RTC held that "[t]he Commercial Agreement and its specific provisions on
revenue sharing having been freely and voluntarily agreed upon by the affected parties
x x x has the force of law between the parties and they are bound to the fulfillment of
what has been expressly stipulated therein." Accordingly, "the provision of the CMU
must be applied in such a manner that it does not impair the vested rights of the parties."
NO CA: Kuwait Airways directly filed with SC the present Petition for Review, raising
pure questions of law.
ISSUE:
1) Whether or not the third Whereas clause of the the Agreement is binding on PAL
2) Whether or not the execution of the CMU between the Philippine and Kuwait
governments could have automatically terminated the Commercial Agreement, as well
as the Joint Services Agreement between PAL and Kuwait Airways
HELD:
1) NO. One argument raised by KA can be dismissed outright—that the third Whereas
clause of the 1981 Commercial Agreement which is argued to evince
acknowledgement that from the beginning PAL had known fully well that its rights under
the Agreement would be limited by whatever agreements the PH and Kuwait
governments may enter into later. In the case of statutes, while a preamble manifests
the reasons for the passage of the statute and aids in the interpretation of any
ambiguities within the statute to which it is prefixed, it nonetheless is not an essential
part of an act, and it neither enlarges nor confers powers. PAL submits that the
same is true as to the preambular whereas clauses.
By the time ownership of PAL was transferred into private hands, the controverted
"Whereas" clause had taken on a different complexion, for it was newly evident that an
act of the Philippine government negating the commercial arrangement between the
two airlines would infringe the vested rights of a private individual. The original intention
of the "Whereas" clause was to reflect what was then a given fact relative to the
nationalized status of PAL. With the change of ownership of PAL, the "Whereas"
clause had ceased to be reflective of the current situation as it now stands as a
seeming invitation to the Philippine government to erode private vested rights.
We would have no problem according the interpretation preferred by Kuwait Airways of
the "Whereas" clause had it been still reflective of the original intent to waive vested
rights of private persons, rather than the rights in favor of the government by a GOCC.
That is not the case, and we are not inclined to give effect to the "Whereas" clause in
a manner that does not reflect the original intention of the contracting parties.
2) NO. The execution of the CMU between the Philippine and Kuwait governments did
not automatically terminate the Commercial Agreement, as well as the Joint Services
Agreement between PAL and Kuwait Airways. CAB may merely compel PAL to
terminate such agreement pursuant to its regulatory authority over airlines.
(Brief history of PAL in case SDC asks) PAL is the grantee of a legislative franchise
authorizing it to provide domestic and international air services. Its initial franchise was
granted in 1935 through Act 4271, amended in 1959 through RA 2360. It was granted
a new franchise in 1979 through PD 1590, wherein statutory recognition was accorded
to PAL as the "national flag carrier." PD 1590 also recognized that the "ownership,
control, and management" of PAL had been reacquired by the Government. Section 19
of PD 1590 authorized PAL to contract loans, credits and indebtedness from foreign
sources, including foreign governments, with the unconditional guarantee of the
Republic of the PH. Section 8 of PD 1590 subjects PAL "to the laws of the PH now
existing or hereafter enacted." Kuwait Airways correlates it to RA 776, or the Civil
Aeronautics Act of the Philippines, which grants the CAB "the power to regulate the
economic aspect of air transportation, its general supervision and regulation of x x x air
carriers as well as their property, property rights, equipment, facilities, and franchise."
RA 776 also mandates that the CAB "shall take into consideration the obligation
assumed by the PH in any treaty, x x x with foreign countries on matters affecting civil
aviation."
PAL forebears under several regulatory perspectives. 1) its authority to operate air
services in the Philippines derives from its legislative franchise and is accordingly
bound by whatever limitations that are presently in place or may be subsequently
incorporated in its franchise. 2) PAL is subject to the other laws of the PH, including RA
776, which grants regulatory power to the CAB over the economic aspect of air
transportation. 3) there is a very significant public interest in state regulation of air travel
in view of considerations of public safety, domestic and international commerce, as well
as the fact that air travel necessitates steady traversal of international boundaries, the
amity between nations.
Since PAL was already under private ownership when CMU was entered into, there’s
no presumption that any commitments made by the government are unilaterally binding
on PAL even if this comes at the expense of diplomatic embarrassment. While prior to
its privatization, government had the authority to bind the airline in its capacity as owner,
after its privatization; however, whatever authority they had to bind PAL is only binding
in their capacity as regulator.
As with all regulatory subjects of the government, infringement of property rights
can only avail with due process of law. Legislative regulation of public utilities must
not have the effect of depriving an owner of his property without due process of law.
CAB has ample power under its organizing charter, to compel PAL to terminate
whatever commercial agreements the carrier may have. Thus, CAB, in the exercise of
its statutory mandate, has the power to compel PAL to immediately terminate its
Commercial Agreement with Kuwait Airways pursuant to the CMU. Considering that
it is the Philippine government that has the sole authority to charter air policy
and negotiate with foreign governments with respect to air traffic rights, the
government through the CAB has the indispensable authority to compel local air
carriers to comply with government determined policies, even at the expense of
economic rights. The airline industry is a sector where government abjuration is
least desired.
However, this is not a case where the CAB had exercised its regulatory authority over
a local airline in order to implement or further government air policy. What happened
instead was an officer of the CAB, acting in behalf not of the Board but of the
government, had committed to a foreign nation the immediate abrogation of PAL’s
commercial agreement with KA. And while we do not question that ability of that
member of CAB to represent the government in signing the CMU, we question whether
he could have bound PAL in a manner that can be accorded legal recognition by the
courts.
Granting that there is basis in Philippine law for the closure of such business, could the
mere declaration of the President have the legal effect of immediately rendering
business operations illegal? We think not. There is nothing to prevent the government
from utilizing all the proper channels under law to enforce such closure, but unless and
until due process is observed, it does not have legal effect in this jurisdiction. Even
granting that the "agreement" between the two governments or their representatives
creates a binding obligation under international law, it remains incumbent for each
contracting party to adhere to its own internal law in the process of complying with its
obligations.
The promises made by a Philippine president or his alter egos to a foreign monarch are
not transubstantiated by divine right so as to ipso facto render legal rights of private
persons obviated. Had PAL remained a GOCC, it would have been bound, as part of
the executive branch, to comply with the dictates of the President or his alter egos since
the President has executive control and supervision over the components of the
executive branch. Yet PAL has become, by this time, a private corporation – one that
may have labored under the conditions of its legislative franchise that allowed it to
conduct air services, but private in character nonetheless. The President or his alter
egos do not have the legal capacity to dictate insuperable commands to private
persons.
Even granting that the police power of the State, as given flesh in the various laws
governing the regulation of the airline industry in the Philippines, may be exercised to
impair the vested rights of privately-owned airlines, the deprivation of property still
requires due process of law. In order to validate petitioner’s position, we will have to
concede that the right to due process may be extinguished by executive command.
While we sympathize with petitioner, who reasonably could rely on the commitment
made to it by the Philippine government, we still have to respect the segregate identity
of the government and that of a private corporation and give due meaning to that
segregation, vital as it is to the very notion of democracy.
PHILIPPINE AIRLINES VS. CA, 14 March 1996
FACTS: On January 27, 1990, plaintiff Gilda Mejia shipped thru defendant PAL, 1 unit
Sharp microwave oven which is slightly used, with a gross weight of 33kg from San
Francisco, USA to Manila, Philippines. When shipped, defendant's office at San
Francisco inspected it. It was in good condition with its front glass intact. When she
arrived in Manila, she gave her sister Concepcion C. Diño authority to claim her
baggage and took a connecting flight for Bacolod City.
When Concepcion Diño claimed the baggage with defendant, then with the Bureau of
Customs, the front glass of the microwave oven was already broken and cannot be
repaired because of the danger of radiation. They demanded from defendant thru Atty.
Paco P30K for the damages although a brand new one costs P40K, but defendant
refused to pay. Demands both oral and written were made by plaintiff against the
defendant for the reimbursement of the value of the damaged microwave oven, and
transportation charges paid by plaintiff to PAL. But these demands fell on deaf ears.
The damaged oven is still with defendant. Plaintiff is engaged in the catering and
restaurant business. Hence, the necessity of the oven. Plaintiff suffered sleepless
nights when defendant refused to pay her (for) the broken oven and claims P10,000.00
moral damages, P20,000.00 exemplary damages, P10,000.00 attorney's fees plus
P300.00 per court appearance and P15,000.00 monthly loss of income in her business
beginning February, 1990.
Defendant PAL thru its employees Rodolfo Pandes and Vicente Villaruz posited that
plaintiff's claim was not investigated until after the filing of the formal claim on August
13, 1990. During the investigations, plaintiff failed to submit positive proof of the value
of the cargo. Hence her claim was denied. On September 25, 1990, plaintiff Gilda Mejia
filed the instant action for damages. PAL alleged that the court has no jurisdiction over
the case; plaintiff has no valid cause of action against defendant since it acted only in
good faith and in compliance with the requirements of the law, regulations, x x x; and
defendant had always exercised the required diligence in the selection, hiring and
supervision of its employees.
Also plaintiff's claim was filed out of time under paragraph 12, a (1) of the Air Waybill
which provides: "(a) the person entitled to delivery must make a complaint to the carrier
in writing in case: (1) of visible damage to the goods, immediately after discovery of the
damage and at the latest within 14 days from the receipt of the goods.
RTC: found PAL liable. The trial court relied on the ruling in the case of Fieldmen's
Insurance vs. Vda. De Songco (see below for summary of case) in finding that the
provisions of the air waybill should be strictly construed against petitioner.
Songco, a man of scant education (first grader), owned a private jeepney. He was
induced by Fieldmen’s agent Benjamin Sambat to apply for a Common Carrier’s
Liability Insurance Policy covering his motor vehicle. As testified by Songco’s son Amor
later, Federico said that his vehicle is an ‘owner’ of private vehicle and not for
passengers, but agent Sambat said that they can insure whatever kind of vehicle
because their company is not owned by the government, so they could do what they
please whenever they believe a vehicle is insurable. Songco paid an annual premium
and he was issued a Common Carriers Accident Insurance Policy. After the policy
expired, he renewed the policy. During the effectivity of the renewed policy, the insured
vehicle while being driven by Rodolfo Songco [duly licensed driver and Federico’s son]
collided with a car. As a result, Federico and Rodolfo died, while Carlos (another son)
and his wife Angelita, and a family friend sustained physical injuries. The lower court
held that Fieldmen’s Insurance cannot escape liability under a common carrier
insurance policy on the pretext that what was insured was a private vehicle and not a
common carrier, the policy being issued upon the agent’s insistence. CA affirmed the
lower court. SC affirmed. Fieldmen’s Insurance is liable. (Ruling will be discussed in
the HELD part)
CA: similarly ruled in favor of respondent by affirming in full the trial court's judgment.
ISSUE:
1) Whether or not the provisions of the air waybill is valid
2) Whether or not PAL’s liability for the damage to private respondent's microwave
oven, if any, should be limited by the provisions of the air waybill
3) Whether or not private respondent complied with the requirement for the immediate
filing of a formal claim for damages as required in the air waybill
HELD:
1) YES. The principles of Fieldmen’s case squarely apply to the present petition. The
parallelism between the said case and this one is readily apparent for, just as in the
instant case, it is the binding effect of the provisions in a contract of adhesion (an
insurance policy in Fieldmen's Insurance) that is put to test. What was pivotal in the
judgment of liability against petitioner, and necessarily interpreting the provisions of the
insurance policy as ineffective, was the finding that the representations made by the
agent of the insurance company rendered it impossible to comply with the conditions
of the contract in question, rather than the mere ambiguity of its terms.
Thus, there can be no further question as to the validity of the terms of the air
waybill, even if the same constitutes a contract of adhesion. Whether or not the
provisions particularly on the limited liability of the carrier are binding on private
respondent in this instance must be determined from the facts and circumstances
involved.
2) NO. Court finds no merit to defendant's contention that under the Warsaw
Convention, its liability if any, cannot exceed $20.00 based on weight as plaintiff did not
declare the contents of her baggage nor pay additional charges before the flight. The
appellate court declared correct the non-application by the trial court of the limited
liability of therein defendant-appellant under the "Conditions of the Contract" contained
in the air waybill, based on the ruling in Cathay Pacific Airways vs. CA., which
substantially enunciates the rule that while the Warsaw Convention has the force and
effect of law in the Philippines, being a treaty commitment by the government and as a
signatory thereto, the same does not operate as an exclusive enumeration of the
instances when a carrier shall be liable for breach of contract or as an absolute limit of
the extent of liability, nor does it preclude the operation of the Civil Code or other
pertinent laws.
The validity of provisions limiting the liability of carriers contained in bills of lading have
been consistently upheld for the following reason: The stipulation in the bill of lading
limiting the common carrier's liability to the value of goods appearing in the bill, unless
the shipper or owner declares a greater value, is valid and binding. The limitation of the
carrier's liability is sanctioned by the freedom of the contracting parties to establish such
stipulations, clauses, terms, or conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs and public policy.
However, Court has likewise cautioned against blind reliance on adhesion contracts
where the facts and circumstances warrant that they should be disregarded. In the case
at bar, it will be noted that private respondent signified an intention to declare the value
of the microwave oven prior to shipment, but was explicitly advised against doing so by
PAL's personnel in San Francisco, U.S.A., as borne out by her testimony in court.
It cannot be denied that the attention of PAL through its personnel in San Francisco
was sufficiently called to the fact that private respondent's cargo was highly susceptible
to breakage as would necessitate the declaration of its actual value. Petitioner had all
the opportunity to check the condition and manner of packing prior to acceptance for
shipment, as well as during the preparation of the air waybill by PAL's Acceptance
Personnel based on information supplied by the shipper, and to reject the cargo if the
contents or the packing did not meet the company's required specifications. Certainly,
PAL could not have been otherwise prevailed upon to merely accept the cargo.
In response to the trial court's questions during the trial, Villaruz, OIC of PAL’s Import
Section, stated that while the passenger's declaration regarding the general/fragile
character of the cargo is somehow determinative of its classification, PAL still has and
exercises discretion as to the manner of handling required by the nature of the cargo it
accepts for carriage. He further opined that the microwave oven was only a general,
not a fragile, cargo which did not require any special handling. There is no absolute
obligation on the part of a carrier to accept a cargo. Where a common carrier accepts
a cargo for shipment for valuable consideration, it takes the risk of delivering it in good
condition as when it was loaded. And if the fact of improper packing is known to the
carrier or its personnel, or apparent upon observation but it accepts the goods
notwithstanding such condition, it is not relieved of liability for loss or injury resulting
therefrom. The acceptance in due course by PAL of private respondent's cargo
as packed and its advice against the need for declaration of its actual value
operated as an assurance to private respondent that in fact there was no need
for such a declaration. Petitioner can hardly be faulted for relying on the
representations of PAL's own personnel.
In other words, private respondent Mejia could and would have with the declaration of
a higher value and payment of additional charges, entitling her to recovery of damages
beyond the limit of US $20 per kg of cargo in the event of loss or damage, had she not
been effectively prevented from doing so upon the advice of PAL's personnel.
3) YES. SC upholds RTC’s finding that respondent complied with the requirement for
the immediate filing of a formal claim for damages as required in the air waybill or, at
least, there was substantial compliance therewith.
Private respondent testified that she authorized her sister to claim her cargo consisting
of a microwave oven since the former had to take a connecting flight to Bacolod City
on the very same afternoon of the day of her arrival. As instructed, Concepcion Diño
promptly proceeded to PAL's Import Section the next day to claim the oven. Upon
discovering that the glass door was broken, she immediately filed a claim by way of the
baggage freight claim. Considering the incidents and respondent Mejia's own zealous
efforts in following up the claim, it was clearly not her fault that the letter of demand for
damages could only be filed, after months of exasperating follow-up of the claim, on
August 13, 1990. If there was any failure at all to file the formal claim within the
prescriptive period contemplated in the air waybill, this was largely because of PAL's
own doing, the consequences of which cannot be attributed to private respondent.
Even if the claim for damages was conditioned on the timely filing of a formal claim,
under Art. 1186 of the Civil Code that condition was deemed fulfilled, considering that
the collective action of PAL's personnel in tossing around the claim and leaving it
unresolved for an indefinite period of time was tantamount to "voluntarily preventing its
fulfillment." On grounds of equity, the filing of the baggage freight claim, which
sufficiently informed PAL of the damage sustained by private respondent's cargo,
constituted substantial compliance with the requirement.
OTHER ISSUES (optional):
It should be stressed that, indeed, recognition of the Warsaw Convention does not
preclude the operation of the Civil Code and other pertinent laws in the determination
of the extent of liability of the common carrier. The Warsaw Convention, being a treaty
to which the Philippines is a signatory, is as much a part of Philippine law as the Civil
Code, Code of Commerce and other municipal special laws. The provisions therein
contained, specifically on the limitation of carrier's liability, are operative in the
Philippines but only in appropriate situations.
Petitioner ascribes ultimate error in the award of moral and exemplary damages and
attorney's fees in favor of private respondent in that other than the statement of the trial
court that petitioner acted in bad faith in denying private respondent's claim, which was
affirmed by the Court of Appeals, there is no evidence on record that the same is true.
The denial of private respondent's claim was supposedly in the honest belief that the
same had prescribed, there being no timely formal claim filed; and despite having been
given an opportunity to submit positive proof of the value of the damaged microwave
oven, no such proof was submitted. Petitioner insists that its failure to deliver the oven
in the condition in which it was shipped could hardly be considered as amounting to
bad faith.
Private respondent counters that petitioner's failure to deliver the microwave oven in
the condition in which it was received can be described as gross negligence amounting
to bad faith, on the further consideration that it failed to prove that it exercised the
extraordinary diligence required by law, and that no explanation whatsoever was given
as to why the front glass of the oven was broken.
In this case, defendant failed to overcome, not only the presumption but more
importantly, plaintiff's evidence that defendant's negligence was the proximate cause
of the damages of the microwave oven. Further plaintiff has established that defendant
acted in bad faith when it denied the former's claim on the ground that the formal claim
was filed beyond the period as provided.
Respondent appellate court was in full agreement with the trial court's finding of bad
faith on the part of petitioner as a basis for the award of the aforestated damages,
declaring that:

As to the last assigned error, a perusal of the facts and law of the case reveals that the
lower court's award of moral and exemplary damages, attorney's fees and costs of suit
to plaintiff-appellee is in accordance with current laws and jurisprudence on the matter.
It will be noted that petitioner never denied that the damage to the microwave oven was
sustained while the same was in its custody. The possibility that said damage was due
to causes beyond the control of PAL has effectively been ruled out since the entire
process in handling of the cargo — from the unloading thereof from the plane, the
towing and transfer to the PAL warehouse, the transfer to the Customs examination
area, and its release thereafter to the shipper — was done almost exclusively by, and
with the intervention or, at the very least, under the direct supervision of a responsible
PAL personnel.
Moreover, the trial court underscored the fact that petitioner was not able to overcome
the statutory presumption of negligence in Article 1735 which, as a common carrier, it
was laboring under in case of loss, destruction or deterioration of goods, through proper
showing of the exercise of extraordinary diligence. Neither did it prove that the damage
to the microwave oven was because of any of the excepting causes under Article 1734,
all of the same Code. Inasmuch as the subject item was received in apparent good
condition, no contrary notation or exception having been made on the air waybill upon
its acceptance for shipment, the fact that it was delivered with a broken glass door
raises the presumption that PAL's personnel were negligent in the carriage and
handling of the cargo.
Furthermore, there was glaringly no attempt whatsoever on the part of petitioner to
explain the cause of the damage to the oven. The unexplained cause of damage to
private respondent's cargo constitutes gross carelessness or negligence which by itself
justifies the present award of damages. 45 The equally unexplained and inordinate
delay in acting on the claim upon referral thereof to the claims officer, Atty. Paco, and
the noncommittal responses to private respondent's entreaties for settlement of her
claim for damages belies petitioner's pretension that there was no bad faith on its part.
This unprofessional indifference of PAL's personnel despite full and actual knowledge
of the damage to private respondent's cargo, just to be exculpated from liability on pure
technicality and bureaucratic subterfuge, smacks of willful misconduct and insensitivity
to a passenger's plight tantamount to bad faith 46 and renders unquestionable
petitioner's liability for damages. In sum, there is no reason to disturb the findings of the
trial court in this case, especially with its full affirmance by respondent Court of Appeals.
UNITED AIRLINES VS. UY, 19 November 1999
FACTS: On 13 October 1989, respondent Willie Uy, a revenue passenger on United
Airlines Flight 819 for San Francisco-Manila route, checked in together with his luggage
one piece of which was found to be overweight at the airline counter. To his utter
humiliation, an employee of petitioner rebuked him saying that he should have known
the maximum weight allowance to be 70 kgs. per bag and that he should have packed
his things accordingly. Then, in a loud voice in front of the milling crowd, she told
respondent to repack his things and transfer some of them from the overweight luggage
to the lighter ones. Not wishing to create further scene, respondent acceded only to find
his luggage still overweight. The airline then billed him overweight charges, which he
offered to pay with a miscellaneous charge order (MCO) or an airline pre-paid credit.
However, the airline's employee, and later its airport supervisor, adamantly refused to
honor the MCO pointing out that there were conflicting figures listed on it. Despite the
explanation from respondent that the last figure written on the MCO represented his
balance, petitioner's employees did not accommodate him. Faced with the prospect of
leaving without his luggage, respondent paid the overweight charges with his American
Express credit card.
Respondent's troubles did not end there. Upon arrival in Manila, he discovered that one
of his bags had been slashed and its contents stolen. He particularized his losses to be
around US $5,310.00. Respondent wrote a letter to the airline, bewailed the insult,
embarrassment and humiliating treatment he suffered in the hands of United Airlines
employees, notified petitioner of his loss and requested reimbursement thereof.
Petitioner, through Central Baggage Specialist Joan Kroll, did not refute any of
respondent's allegations and mailed a check representing the payment of his loss
based on the maximum liability of US $9.70 per pound. Respondent, thinking the
amount to be grossly inadequate to compensate him for his losses, as well as for the
indignities he was subjected to, sent 2 more letters to petitioner airline demanding an
out-of-court settlement of P1M. Petitioner United Airlines did not accede to his
demands.
Consequently, on 9 June 1992 respondent filed a complaint for damages against United
Airlines alleging that he was a person of good station, sitting in the board of directors
of several top 500 corporations and holding senior executive positions for such similar
firms; that petitioner airline accorded him ill and shabby treatment to his extreme
embarrassment and humiliation; and, as such he should be paid moral damages of at
least P1M, exemplary damages of at least P500K, plus attorney's fees of at least P50K.
Similarly, he alleged that the damage to his luggage and its stolen contents amounted
to around $5,310.00, and requested reimbursement therefor.
United Airlines moved to dismiss the complaint on the ground that respondent's cause
of action had prescribed, invoking Art. 29 of the Warsaw Convention which provides —
Art. 29 (1) The right to damages shall be extinguished if an action is not brought
within two (2) years, reckoned from the date of arrival at the destination, or from the
date on which the aircraft ought to have arrived, or from the date on which the
transportation stopped.
(2) The method of calculating the period of limitation shall be determined by the law of
the court to which the case is submitted.
RTC: dismissed the action holding that the language of Art. 29 is clear that the action
must be brought within two (2) years from the date of arrival at the destination. It held
that although the second paragraph of Art. 29 speaks of deference to the law of the
local court in "calculating the period of limitation," the same does not refer to the local
forum's rules in interrupting the prescriptive period but only to the rules of determining
the time in which the action may be deemed commenced, and within our jurisdiction
the action shall be deemed "brought" or commenced by the filing of a complaint. Hence,
the trial court concluded that Art. 29 excludes the application of our interruption rules.
CA: On the applicability of the Warsaw Convention, CA ruled that the Warsaw
Convention did not preclude the operation of the Civil Code and other pertinent laws.
Respondent's failure to file his complaint within the two (2)-year limitation provided in
the Warsaw Convention did not bar his action since he could still hold petitioner liable
for breach of other provisions of the Civil Code which prescribe a different period or
procedure for instituting an action. Further, under Philippine laws, prescription of
actions is interrupted where, among others, there is a written extrajudicial demand by
the creditors, and since respondent Uy sent several demand letters to petitioner United
Airlines, the running of the two (2)-year prescriptive period was in effect suspended.
Hence, the appellate court ruled that respondent's cause of action had not yet
prescribed and ordered the records remanded to the Quezon City trial court for further
proceedings.
ISSUE: Whether or not PAL may still be held liable despite claims that the period to file
has already prescribed
HELD: YES. Respondent's is suing on two (2) causes of action: (a) 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/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.
FIRST CAUSE OF ACTION: 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.
SECOND CAUSE OF ACTION: As for respondent's second cause of action, the
Warsaw Convention reveal that the delegates 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 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. (hindi pa barred ha)
In this regard, PAL vs. CA is instructive (see earlier case). In the same vein must we
rule upon the circumstances brought before us. 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.
BRITISH AIRWAYS VS. CA, 29 January 1998
FACTS: On April 16, 1989, Mahtani decided to visit his relatives in Bombay, India. In
anticipation of his visit, he obtained the services of a certain Mr. Gumar to prepare his
travel plans. The latter purchased a ticket from BA. Since BA had no direct flights from
Manila to Bombay, Mahtani had to take a flight to HK via PAL, and upon arrival in HK
he had to take a connecting flight to Bombay on board BA.
Prior to his departure, Mahtani checked in at the PAL counter in Manila his 2 pieces of
luggage containing his clothings and personal effects, confident that upon reaching HK,
the same would be transferred to the BA flight bound for Bombay.
Unfortunately, when Mahtani arrived in Bombay he discovered that his luggage was
missing and that upon inquiry from the BA representatives, he was told that the same
might have been diverted to London. After patiently waiting for his luggage for 1 week,
BA finally advised him to file a claim by accomplishing the "Property Irregularity Report."
Back in the Philippines, specifically on June 11, 1990, Mahtani filed his complaint for
damages and attorney's fees against BA and Mr. Gumar before the RTC. On
September 4, 1990, BA filed its answer with counter claim to the complaint arguing that
Mahtani did not have a cause of action against it. Likewise, on November 9, 1990, BA
filed a third-party complaint against PAL alleging that the reason for the non-transfer
of the luggage was due to the latter's late arrival in HK, thus leaving hardly any time for
the proper transfer of Mahtani's luggage to the BA aircraft bound for Bombay.
On February 25, 1991, PAL filed its answer to the third-party complaint, wherein it
disclaimed any liability, arguing that there was, in fact, adequate time to transfer the
luggage to BA facilities in HK. Furthermore, the transfer of the luggage to Hongkong
authorities should be considered as transfer to BA.
RTC: rendered judgment in favor of plaintiff and against the defendant for which
defendant is ordered to pay plaintiff the sum of P7K for the value of the 2 suit cases;
$400.00 representing the value of the contents of plaintiff's luggage; P50K for moral
and actual damages and 20% of total amount imposed for attorney's fees and costs of
this action. Third-Party Complaint against third-party defendant Philippine Airlines is
DISMISSED for lack of cause of action.
CA: affirmed findings of RTC.
BA’S ASSERTION: BA asserts that the award of compensatory damages in the
separate sum of P7K for the loss of Mahtani's 2 pieces of luggage was without basis
since Mahtani in his complaint stated the following as the value of his personal
belongings:
On the said travel, plaintiff took with him the following items and its corresponding value,
to wit:
1. personal belonging P10,000.00
2. gifts for his parents and relatives $5,000.00
Moreover, he failed to declare a higher valuation with respect to his luggage, a condition
provided for in the ticket, which reads: Liability for loss, delay, or damage to baggage
is limited unless a higher value is declared in advance and additional charges are paid:
1. For most international travel (including domestic corporations of international
journeys) the liability limit is approximately U.S. $9.07 per pound (U.S. $20.000) per
kilo for checked baggage and U.S. $400 per passenger for unchecked baggage.
ISSUES:
1) Whether or not BA’s liability is limited to the amount stated in ticket
2) Whether or not BA waived the defense of limited liability when it allowed Mahtani to
testify as to the actual damages
3) Whether or not the third-party complaint against PAL is properly dismissed
HELD:
1) NO. In the instant case, it is apparent that the contract of carriage was between
Mahtani and BA. Moreover, it is indubitable that his luggage never arrived in Bombay
on time. Therefore, as in a number of cases we have assessed the airlines' culpability
in the form of damages for breach of contract involving misplaced luggage. In
determining the amount of compensatory damages in this kind of cases, it is vital that
the claimant satisfactorily prove during the trial the existence of the factual basis of the
damages and its causal connection to defendant's acts.
However, as earlier stated, it is the position of BA that there should have been no
separate award for the luggage and the contents thereof since Mahtani failed to declare
a separate higher valuation for the luggage, and therefore, its liability is limited, at most,
only to the amount stated in the ticket. Considering the facts of the case, we cannot
assent to such specious argument.
Admittedly, in a contract of air carriage a declaration by the passenger of a higher value
is needed to recover a greater amount. Article 22(1) of the Warsaw Convention,19
provides as follows:
(2) In the transportation of checked baggage and goods, the liability of the carrier shall
be limited to a sum of 250 francs per kilogram, unless the consignor has made, at time
the package was handed over to the carrier, a special declaration of the value at
delivery and has paid a supplementary sum if the case so requires. In that case the
carrier will be liable to pay a sum not exceeding the declared sum, unless he proves
that the sum is greater than the actual value to the consignor at delivery.
American jurisprudence provides that an air carrier is not liable for the loss of baggage
in an amount in excess of the limits specified in the tariff which was filed with the proper
authorities, such tariff being binding, on the passenger regardless of the passenger's
lack of knowledge thereof or assent thereto. This doctrine is recognized in this
jurisdiction.
2) YES. Notwithstanding the foregoing, we have, nevertheless, ruled against
blind reliance on adhesion contracts where the facts and circumstances justify
that they should be disregarded. In addition, we have held that benefits of limited
liability are subject to waiver such as when the air carrier failed to raise timely objections
during the trial when questions and answers regarding the actual claims and damages
sustained by the passenger were asked.
Given the foregoing postulates, the inescapable conclusion is that BA had waived the
defense of limited liability when it allowed Mahtani to testify as to the actual damages
he incurred due to the misplacement of his luggage, without any objection.
Indeed, it is a well-settled doctrine that where the proponent offers evidence deemed
by counsel of the adverse party to be inadmissible for any reason, the latter has the
right to object. However, such right is a mere privilege which can be waived.
Necessarily, the objection must be made at the earliest opportunity, lest silence
when there is opportunity to speak may operate as a waiver of objections.25 BA
has precisely failed in this regard. To compound matters for BA, its counsel failed,
not only to interpose a timely objection, but even conducted his own cross-examination
as well.
3) NO. The contract of air transportation in this case pursuant to the ticket issued by
appellant to plaintiff-appellee was exclusively between the plaintiff Mahtani and
defendant-appellant BA. When plaintiff boarded PAL from Manila to HK, PAL was
merely acting as a subcontractor or agent of BA. This is shown by the fact that in the
ticket issued by appellant to plaintiff-appellee, it is specifically provided on the
"Conditions of Contract," paragraph 4 thereof that:
4. . . carriage to be performed hereunder by several successive carriers is regarded as
a single operation.
The rule that carriage by plane although performed by successive carriers is
regarded as a single operation and that the carrier issuing the passenger's ticket
is considered the principal party and the other carrier merely subcontractors or
agent, is a settled issue.
Thus, Court cannot agree with the dismissal of the third-party complaint. Undeniably,
for the loss of his luggage, Mahtani is entitled to damages from BA, in view of their
contract of carriage. Yet, BA adamantly disclaimed its liability and instead imputed it to
PAL which the latter naturally denies. In other words, BA and PAL are blaming each
other for the incident. However, it is undisputed that PAL, in transporting Mahtani
from Manila to Hongkong acted as the agent of BA.
Parenthetically, CA should have been cognizant of the well-settled rule that an agent is
also responsible for any negligence in the performance of its function and is liable for
damages which the principal may suffer by reason of its negligent act. Hence, the Court
of Appeals erred when it opined that BA, being the principal, had no cause of action
against PAL, its agent or sub-contractor.
Also, it is worth mentioning that both BA and PAL are members of the IATA, wherein
member airlines are regarded as agents of each other in the issuance of the tickets and
other matters. Therefore, the contractual relationship between BA and PAL is one of
agency, BA being the principal, since it was the one which issued the ticket, and the
latter the agent.
Since the instant petition was based on breach of contract of carriage, Mahtani
can only sue BA alone, and not PAL, since the latter was not a party to the
contract. However, this is not to say that PAL is relieved from any liability due to
any of its negligent acts. Accordingly, to deny BA the procedural remedy of filing a
third-party complaint against PAL for the purpose of ultimately determining who was
primarily at fault as between them, is without legal basis. After all, such proceeding is
in accord with the doctrine against multiplicity of cases, which would entail receiving
the same or similar evidence for both cases and enforcing separate judgments therefor.
It must be borne in mind that the purpose of a third-party complaint is precisely to avoid
delay and circuitry of action and to enable the controversy to be disposed of in one suit.
It is but logical, fair and equitable to allow BA to sue PAL for indemnification, if it is
proven that the latter's negligence was the proximate cause of Mahtani's unfortunate
experience, instead of totally absolving PAL from any liability.
WHEREFORE, in view of the foregoing, the decision of the CA is hereby MODIFIED,
reinstating the third-party complaint filed by British Airways dated November 9, 1990
against Philippine Airlines. No costs.
PHILIPPINE AIRLINES VS. CA, 17 May 1996
FACTS: In May 1988, Dr. Josefino Miranda and his wife, Luisa, who were residents of
Surigao, went to USA on a regular flight of PAL. On June 19, 1988, after a stay of over
a month there, they obtained confirmed bookings from PAL.
Accordingly, on June 21, 1988, respondents boarded PAL Flight PR 101 in San
Francisco with 5 pieces of baggage. After a stopover at Honolulu, and upon arrival in
Manila on June 23, 1988, they were told by the PAL personnel that their baggage
consisting of 2 balikbayan boxes, 2 pieces of luggage and 1 fishing rod case were off-
loaded at Honolulu, Hawaii due to weight limitations. Consequently, private
respondents missed their connecting flight from Manila to Cebu, as originally
scheduled, since they had to wait for their baggage which arrived the following day,
after their pre-scheduled connecting flight had left. They also missed their other
scheduled connecting flight from Cebu to Surigao.
On June 25, 1988, they departed for Cebu and they had to transfer to PAL Flight 471
for Surigao. On the way, the pilot announced that they had to return to Mactan Airport
due to mechanical problem. While at Mactan, passengers were provided by PAL with
lunch and were booked for the afternoon flight to Surigao. However, said flight was also
canceled.
Since there were no more flights for Surigao that day, they asked to be billeted at the
Cebu Plaza Hotel where they usually stay whenever they happen to be in Cebu. They
were, however, told by the PAL employees that they could not be accommodated at
said hotel supposedly because it was fully booked. Contrarily, when Dr. Miranda called
the hotel, he was informed that he and his wife could be accommodated there. Although
reluctant at first, PAL eventually agreed to private respondents' overnight stay at said
hotel. Oscar Jereza, PAL duty manager, approved the corresponding hotel authority
with standard meals. It was only after private respondents' insistence that their meals
be ordered a la carte that they were allowed to do so by PAL provided that they sign
for their orders.
Since the shuttle bus already left the time respondents were ready to go to the hotel,
PAL offered them P150.00 to include the fare for the return trip to the airport. Dr.
Miranda asked for P150.00 more as he and his wife, along with all of their baggage,
could not be accommodated in just 1 taxi, aside from the need for tipping money for
hotel boys. Upon refusal of this simple request, Dr. Miranda then declared that he would
forego the amenities offered by PAL. Thus, the voucher for P150.00 and the authority
for the hotel accommodations prepared by PAL were voided due to private
respondents' decision not to avail themselves thereof.
To aggravate the muddled situation, when private respondents tried to retrieve their
baggage, they were told this time that the same were loaded on another earlier PAL
flight to Surigao. Thus, respondents proceeded to the hotel sans their baggage and of
which they were deprived for the remainder of their trip. They were finally able to leave
on board the first PAL flight to Surigao only on June 26, 1988. Thereafter, they instituted
an action for damages.
RTC & CA: ruled in respondent’s favor applying Articles 2220, 2232 and 2208 of the
Civil Code.
ISSUE:
1) WON petitioner is liable although there was no bad faith on its part for while there
was admittedly a delay in fulfilling its obligation under the contract of carriage with
respect to the transport of passengers and the delivery of their baggage
2) WON express provisions on respondents' tickets stipulating that liability for delay in
delivery of baggage shall be limited to US$20.00 per kilo of baggage delayed is
applicable in the case at bar
HELD:
1) YES. PAL reiterated its position that the off-loading of private respondents' baggage
was due to "weight limitations," as lengthily explained by petitioner from an
aeronautically technical viewpoint, taking into consideration such variable factors as
flight distance, weather, air resistance, runway condition and fuel requirement. Given
the variable weather conditions, it claimed that the weight limitation for each flight can
only be ascertained shortly before take-off. While admittedly there would be a resulting
inconvenience in the accommodations of the passengers and the handling of their
cargo, the same is outweighed by the paramount concern for the safety of the flight.
Petitioner claims that these incidents are indicative of its good faith in dealing with
respondents: (1) Cancellation due to mechanical/engine trouble was to ensure the
safety of passengers and cargo; (2) PAL offered to shoulder respondents' preferred
accommodations, meals and transportation with more than the usual amenities given
in cases of flight disruption, and gave them priority in the following day's flight to
Surigao; (3) PAL employees did not act rudely towards respondents; (4) It was
reasonable for PAL to limit the transportation expense to P150.00, considering that the
fare between the airport and the hotel was only P75.00; and (5) Inadvertent loading of
baggage on the replacement flight to Surigao was excusable negligence due to the
numerous flight disruptions and large number of baggage.
Petitioner insists that its employees did not lie to respondents regarding the want of
accommodations at the latter's hotel of preference. The only reason why Cebu Plaza
Hotel was not initially offered to them by PAL was because of the earlier advice of the
hotel personnel that not all the stranded PAL passengers could be accommodated
therein. Crucial to the determination of the propriety of the award of damages in this
case is the lower court's findings on the matter of bad faith, which deserves to be quoted
at length:
These claims were reasonable and appeared to be supported by the evidence. Thus it
cannot be denied that plaintiffs had to undergo some personal inconveniences in Manila
for lack of their baggage. It is also highly probable that plaintiffs' scheduled return to
Surigao City was upset because of their having to wait for one day for their missing
things. Consequently, it was quite evident that the off-loading of plaintiffs' baggage in
Honolulu was the proximate cause of plaintiffs subsequent inconveniences for which
they claimed to have suffered social humiliation, wounded feelings, frustration and
mental anguish.
In the present case there was a breach of contract committed in bad faith by the
defendant airlines. As previously noted, plaintiffs had a confirmed booking on
PAL Flight PR 101 from San Francisco to Manila. Therefore plaintiffs were entitled
to an assured passage not only for themselves but for their baggage as well.
They had a legal right to rely on this.
The evidence showed that plaintiffs' baggage were properly loaded and stowed in the
plane when it left San Francisco for Honolulu. The off-loading or bumping off by
defendant airlines of plaintiffs' baggage to give way to other passengers or cargo was
an arbitrary and oppressive act which clearly amounted to a breach of contract
committed in bad faith and with malice. In the aforecited case, the Supreme Court
defined bad faith as a breach of a known duty through some motive of interest or ill will.
Self-enrichment or fraternal interest, and not personal ill will, may have been the motive,
but it is malice nevertheless.
As correctly pointed out in the Memorandum for Plaintiffs, an excerpt from the testimony
of Edgar Mondejar clearly demonstrated the act of discrimination perpetrated by
defendant on the plaintiffs. The testimony constituted a clear admission in defendant's
evidence of facts amounting to a breach of contract in bad faith. This being so,
defendant must be held liable in damages for the consequences of its action.
The trial court further found that the situation was aggravated by the following incidents:
the poor treatment of the Mirandas by the PAL employees during the stopover at
Mactan Airport in Cebu; the cavalier and dubious response of petitioner's personnel to
the Miranda spouses' request to be billeted at the Cebu Plaza Hotel by denying the
same allegedly because it was fully booked; and, the PAL employees' negligent, almost
malicious, act of sending off the baggage of private respondents to Surigao, while they
were still in Cebu, without any explanation for this gross oversight.
While we recognize an airline's prerogative to off-load baggag(e) to conform with
weight limitations for the purpose of ensuring the safety of passengers, We,
however, cannot sanction the motion (sic) and manner it was carried out in this
case. It is uncontroverted that appellees' baggage were properly weighed and loaded
in the plane when it left San Francisco for Honolulu. When they reached Honolulu, they
were not informed that their baggage would be off-loaded. Ironically, if the purpose of
the off-loading was to conform with the weight limitations, why were other containers
loaded in Honolulu? As earlier noted, the off-loading of appellees' baggag(e) was done
in bad faith because it was not really for the purpose of complying with weight limitations
but to give undue preference to newly-loaded baggag(e) in Honolulu. This was followed
by another mishandling of said baggag(e) in the twice-cancelled connecting flight from
Cebu to Surigao. Appellees' sad experience was further aggravated by the misconduct
of appellant's personnel in Cebu, who lied to appellees in denying their request to be
billeted at Cebu Plaza Hotel.
The Court has time and again ruled, and it cannot be over-emphasized, that a
contract of air carriage generates a relation attended with a public duty and any
discourteous conduct on the part of a carrier's employee toward a passenger
gives the latter an action for damages and, more so, where there is bad faith.
It is now firmly settled that moral damages are recoverable in suits predicated on breach
of a contract of carriage where it is proved that the carrier was guilty of fraud or bad
faith. Inattention to and lack of care for the interests of its passengers amount to bad
faith which entitles the passenger to an award of moral damages. Its unilateral and
voluntary act of providing cash assistance is deemed part of its obligation as an air
carrier. Likewise, arrangements for and verification of requested hotel accommodations
for private respondents should have been done by PAL, and not by Dr. Miranda. While
it no direct evidence on record of blatant rudeness on the part of PAL employees
towards the Mirandas, the fact that private respondents were compelled to haggle for
accommodations, a situation unbefitting persons of their stature, is rather demeaning
and it partakes of discourtesy magnified by PAL's condescending attitude. Moreover, it
cannot be denied that the PAL employees concerned were less than candid, to put it
mildly, when they withheld information from private respondents that they could actually
be accommodated in a hotel of their choice.
PAL was obviously and unduly scrimping even on the small amount to be given to the
Mirandas. PAL failed to consider that they were making arrangements for 2 paying
round-trip passengers, not penny-ante freeloaders, who had been inconvenienced by
the numerous delays in flight services and careless handling of their belongings by
PAL. The niggardly attitude of its personnel in this unfortunate incident, as well as their
hair-splitting attempts at justification, is a disservice to the image which our national
airline seeks to project in its costly advertisements. We agree with the findings of the
lower court that the request of private respondents for monetary assistance of P300.00
for taxi fare was indeed justified, considering that there were two of them and they had
several pieces of luggage which had to be ferried between the airport and the hotel.
Also, the request for a small additional sum for tips is equally reasonable since tipping,
especially in a first-rate hotel, is an accepted practice, of which the Court can take
judicial notice.
2) On its second issue, petitioner avers that the express provisions on private
respondents' tickets stipulating that liability for delay in delivery of baggage shall be
limited to US$20 per kilo of baggage delayed, unless the passenger declares a higher
valuation, constitutes the contract of carriage between PAL and private respondents. It
further contends that these express provisions are in compliance with the provisions of
the Warsaw Convention for the Unification of Rules Relating to International Carrier by
Air, to which the Philippines is a signatory. Thereunder, it is asserted that PAL flight PR
101 from San Francisco, USA to Manila is an "international transportation" well within
the coverage of the Warsaw Convention.
The court a quo debunked petitioner's arguments by this holding:
The defense raised by defendant airlines that it can be held liable only under the terms
of the Warsaw Convention is of no moment. For it has also been held that Articles 17,
18 and 19 of the Warsaw Convention of 1929 merely declare the air carriers liable for
damages in the cases enumerated therein, if the conditions specified are present.
Neither the provisions of said articles nor others regulate or exclude liability for other
breaches of contract by air carriers.
This ruling of the trial court was affirmed by respondent CA, thus:
We are not persuaded. Appellees do not seek payment for loss of any baggage. They
are claiming damages arising from the discriminatory off-loading of their baggag(e).
That cannot be limited by the printed conditions in the tickets and baggage checks.
Neither can the Warsaw Convention exclude nor regulate the liability for other breaches
of contract by air carriers. A recognition of the Warsaw Convention does not preclude
the operation of our Civil Code and related laws in determining the extent of liability of
common carriers in breach of contract of carriage, particularly for willful misconduct of
their employees.24
The congruent finding of both the trial court and respondent court that there was
discriminatory off-loading being a factual question is, as stated earlier, binding
upon and can no longer be passed upon by this Court, especially in view of and
in deference to the affirmance of the same by respondent appellate court. Thus,
there was no error on the part of the Court of Appeals when it refused to apply the
provisions of the Warsaw Convention.
CATHAY PACIFIC AIRWAYS VS. VASQUEZ, 14 March 2003
FACTS: Cathay is a common carrier engaged in the business of transporting
passengers and goods by air. Among the many routes it services is the Manila-
Hongkong-Manila course. As part of its marketing strategy, Cathay accords its frequent
flyers membership in its Marco Polo Club. The members enjoy several privileges, such
as priority for upgrading of booking without any extra charge whenever an opportunity
arises. Thus, a frequent flyer booked in the Business Class has priority for upgrading
to First Class if the Business Class Section is fully booked.
Respondents-spouses Dr. Daniel Vazquez and Maria Vazquez are frequent flyers of
Cathay and are Gold Card members of its Marco Polo Club. On 24 September 1996,
the Vazquezes, together with their maid and 2 friends Pacita Cruz and Josefina Vergel
de Dios, went to HK for pleasure and business.
For their return flight to Manila, they were booked on Cathay’s Flight CX-905, with
departure time at 9:20PM. 2 hours before their departure, the Vazquezes and their
companions checked in their luggage at Cathay’s check-in counter at Kai Tak Airport
and were given their respective boarding passes, Business Class boarding passes for
the Vazquezes and their 2 friends, and Economy Class for their maid. They then
proceeded to the Business Class passenger lounge.
During boarding time, Vazquezes and their friends went to Departure Gate. Dr.
Vazquez presented his boarding pass to the stewardess, who inserted it into an
electronic machine reader or computer at the gate. The ground stewardess was
assisted by a ground attendant by the name of Clara Chiu. When Ms. Chiu glanced at
the computer monitor, she saw a message that there was a "seat change" from
Business Class to First Class for the Vazquezes.
Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes’ accommodations
were upgraded to First Class. Dr. Vazquez refused the upgrade, reasoning that it would
not look nice for them as hosts to travel in First Class and their guests, in the Business
Class; and moreover, they were going to discuss business matters during the flight. He
also told Ms. Chiu that she could have other passengers instead transferred to the First
Class Section. Taken aback by the refusal for upgrading, Ms. Chiu consulted her
supervisor, who told her to handle the situation and convince the Vazquezes to accept
the upgrading. Ms. Chiu informed the latter that the Business Class was fully booked,
and that since they were Marco Polo Club members they had the priority to be upgraded
to the First Class. Dr. Vazquez continued to refuse, so Ms. Chiu told them that if they
would not avail themselves of the privilege, they would not be allowed to take the flight.
Eventually, after talking to his two friends, Dr. Vazquez gave in. He and Mrs. Vazquez
then proceeded to the First Class Cabin.
Upon their return, they demanded to be indemnified in the amount of P1M for the
"humiliation and embarrassment" caused by its employees. They also demanded a
written apology from the management of Cathay, preferably a responsible person with
a rank of no less than the Country Manager, as well as apology from Ms. Chiu" within
15 days from receipt of the letter. In reply, Larry Yuen, the assistant to Cathay’s Country
Manager Argus Robson, informed the Vazquezes that Cathay would investigate the
incident and get back to them within a week’s time.
On 8 November 1996, after Cathay’s failure to give them any feedback within its self-
imposed deadline, the Vazquezes instituted before the RTC of Makati an action for
damages against Cathay, praying for the payment to each of them the amounts of
P250K as temperate damages; P500K as moral damages; P500K as exemplary
damages; and P250K as attorney’s fees.
In the complaint, the Vazquezes alleged that when they informed Ms. Chiu that they
preferred to stay in Business Class, Ms. Chiu "obstinately, uncompromisingly and in a
loud, discourteous and harsh voice threatened" that they could not board and leave
with the flight unless they go to First Class, since the Business Class was overbooked.
This caused embarrassment to them as all the other passengers waiting for boarding
witnessed it. They also claimed that they were unjustifiably delayed to board the plane.
A flight stewardess instructed Dr. Vazquez to put his roll-on luggage in the overhead
storage compartment. Because he was not assisted by any of the crew in putting up
his luggage, his bilateral carpal tunnel syndrome was aggravated, causing him extreme
pain on his arm and wrist. The Vazquezes also averred that they "belong to the
uppermost and absolutely top elite of both Philippine Society and the Philippine
financial community, and that they were among the wealthiest persons in the
Philippine[s]."
In its answer, Cathay alleged that it is a practice among commercial airlines to upgrade
passengers to the next better class of accommodation, whenever an opportunity arises,
such as when a certain section is fully booked. Priority in upgrading is given to its
frequent flyers, who are considered favored passengers like the Vazquezes. Cathay
also asserted that its employees at the HK airport acted in good faith in dealing with the
Vazquezes; none of them shouted, humiliated, embarrassed, or committed any act of
disrespect against them (the Vazquezes). Assuming that there was indeed a breach of
contractual obligation, Cathay acted in good faith, which negates any basis for their
claim for temperate, moral, and exemplary damages and attorney’s fees. Hence, it
prayed for the dismissal of the complaint and for payment of P100,000 for exemplary
damages and P300,000 as attorney’s fees and litigation expenses.
RTC: found preponderance of evidence to sustain the instant complaint, judgment is
hereby rendered in favor of plaintiffs Vazquez spouses and against defendant Cathay
Pacific. According to the trial court, Cathay offers various classes of seats from which
passengers are allowed to choose regardless of their reasons or motives, whether it be
due to budgetary constraints or whim. The choice imposes a clear obligation on Cathay
to transport the passengers in the class chosen by them. The carrier cannot, without
exposing itself to liability, force a passenger to involuntarily change his choice. The
upgrading of the Vazquezes’ accommodation over and above their vehement
objections was due to the overbooking of the Business Class. It was a pretext to pack
as many passengers as possible into the plane to maximize Cathay’s revenues.
Cathay’s actuations in this case displayed deceit, gross negligence, and bad faith,
which entitled the Vazquezes to awards for damages.
CA: affirmed RTC but deleted the award for exemplary damages; and it reduced the
awards for moral and nominal damages for each of the Vazquezes to P250,000 and
P50,000, respectively, and the attorney’s fees and litigation expenses to P50,000 for
both of them. CA ratiocinated that by upgrading the Vazquezes to First Class, Cathay
novated the contract of carriage without the former’s consent. There was a breach of
contract not because Cathay overbooked the Business Class Section of Flight CX-905
but because the latter pushed through with the upgrading despite the objections of the
Vazquezes.
However, CA was not convinced that Ms. Chiu shouted at, or meant to be discourteous
to, Dr. Vazquez, although it might seemed that way to the latter, who was a member of
the elite in Philippine society and was not therefore used to being harangued by
anybody. Ms. Chiu was a HK Chinese whose fractured Chinese was difficult to
understand and whose manner of speaking might sound harsh or shrill to Filipinos
because of cultural differences.
ISSUE: Is an involuntary upgrading of an airline passenger’s accommodation from one
class to a more superior class at no extra cost a breach of contract of carriage that
would entitle the passenger to an award of damages?
HELD: YES. There is breach of contract – but only nominal damages can be claimed.
Breach of contract is defined as the "failure without legal reason to comply with the
terms of a contract." It is also defined as the "failure, without legal excuse, to perform
any promise which forms the whole or part of the contract."
In previous cases, the breach of contract of carriage consisted in either the bumping
off of a passenger with confirmed reservation or the downgrading of a passenger’s seat
accommodation from one class to a lower class. In this case, what happened was the
reverse. The contract between the parties was for Cathay to transport the Vazquezes
to Manila on a Business Class accommodation in Flight CX-905. After checking-in their
luggage at the Kai Tak Airport in Hong Kong, the Vazquezes were given boarding cards
indicating their seat assignments in the Business Class Section. However, during the
boarding time, when the Vazquezes presented their boarding passes, they were
informed that they had a seat change from Business Class to First Class. It turned out
that the Business Class was overbooked in that there were more passengers than the
number of seats. Thus, the seat assignments of the Vazquezes were given to waitlisted
passengers, and the Vazquezes, being members of the Marco Polo Club, were
upgraded from Business Class to First Class.
We note that in all their pleadings, the Vazquezes never denied that they were
members of Cathay’s Marco Polo Club. They knew that as members of the Club, they
had priority for upgrading of their seat accommodation at no extra cost when an
opportunity arises. But, just like other privileges, such priority could be waived. The
Vazquezes should have been consulted first whether they wanted to avail themselves
of the privilege or would consent to a change of seat accommodation before their seat
assignments were given to other passengers. Normally, one would appreciate and
accept an upgrading, for it would mean a better accommodation. But, whatever their
reason was and however odd it might be, the Vazquezes had every right to decline the
upgrade and insist on the Business Class accommodation they had booked for and
which was designated in their boarding passes. They clearly waived their priority or
preference when they asked that other passengers be given the upgrade. It should not
have been imposed on them over their vehement objection. By insisting on the
upgrade, Cathay breached its contract of carriage with the Vazquezes.
We are not, however, convinced that the upgrading or the breach of contract was
attended by fraud or bad faith. Thus, we resolve the second issue in the negative.
Bad faith and fraud are allegations of fact that demand clear and convincing proof. They
are serious accusations that can be so conveniently and casually invoked, and that is
why they are never presumed. They amount to mere slogans or mudslinging unless
convincingly substantiated by whoever is alleging them. Fraud has been defined to
include an inducement through insidious machination. Insidious machination refers to
a deceitful scheme or plot with an evil or devious purpose. Deceit exists where the
party, with intent to deceive, conceals or omits to state material facts and, by reason of
such omission or concealment, the other party was induced to give consent that would
not otherwise have been given. Bad faith does not simply connote bad judgment or
negligence; it imports a dishonest purpose or some moral obliquity and conscious doing
of a wrong, a breach of a known duty through some motive or interest or ill will that
partakes of the nature of fraud.
We find no persuasive proof of fraud or bad faith in this case. The Vazquezes were not
induced to agree to the upgrading through insidious words or deceitful machination or
through willful concealment of material facts. Upon boarding, Ms. Chiu told the
Vazquezes that their accommodations were upgraded to First Class in view of their
being Gold Card members of Cathay’s Marco Polo Club. She was honest in telling them
that their seats were already given to other passengers and the Business Class Section
was fully booked.
Neither was the transfer of the Vazquezes effected for some evil or devious purpose.
As testified to by Mr. Robson, the First Class Section is better than the Business Class
Section in terms of comfort, quality of food, and service from the cabin crew; thus, the
difference in fare between the First Class and Business Class at that time was $250.
Needless to state, an upgrading is for the better condition and, definitely, for the benefit
of the passenger.
We are not persuaded by the Vazquezes’ argument that the overbooking of the
Business Class Section constituted bad faith on the part of Cathay. Section 3 of the
Economic Regulation No. 7 of the Civil Aeronautics Board, as amended, provides:
Sec 3. Scope. – This regulation shall apply to every Philippine and foreign air carrier
with respect to its operation of flights or portions of flights originating from or terminating
at, or serving a point within the territory of the Republic of the Philippines insofar as it
denies boarding to a passenger on a flight, or portion of a flight inside or outside the
Philippines, for which he holds confirmed reserved space. Furthermore, this Regulation
is designed to cover only honest mistakes on the part of the carriers and excludes
deliberate and willful acts of non-accommodation. Provided, however, that overbooking
not exceeding 10% of the seating capacity of the aircraft shall not be considered as a
deliberate and willful act of non-accommodation.

It is clear from this section that an overbooking that does not exceed 10% is not
considered deliberate and therefore does not amount to bad faith.
Article 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are justly
due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith.
Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury. Although incapable of pecuniary computation, moral damages may be recovered
if they are the proximate result of the defendant’s wrongful act or omission. Moral
damages predicated upon a breach of contract of carriage may only be recoverable in
instances where the carrier is guilty of fraud or bad faith or where the mishap resulted
in the death of a passenger. In this case, we have ruled that the breach of contract
of carriage, which consisted in the involuntary upgrading of the Vazquezes’ seat
accommodation, was not attended by fraud or bad faith. The Court of Appeals’
award of moral damages has, therefore, no leg to stand on.
The deletion of the award for exemplary damages by the Court of Appeals is correct. It
is a requisite in the grant of exemplary damages that the act of the offender must be
accompanied by bad faith or done in wanton, fraudulent or malevolent manner.
The most that can be adjudged in favor of the Vazquezes for Cathay’s breach of
contract is an award for nominal damages under Article 2221 of the Civil Code,
which reads as follows:
Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
As far as the award of nominal damages is concerned, petitioner respectfully defers to
the CA’s discretion. Aware as it is that somehow, due to the resistance of respondents-
spouses to the normally-appreciated gesture of petitioner to upgrade their
accommodations, petitioner may have disturbed the respondents-spouses’ wish to be
with their companions (who traveled to Hong Kong with them) at the Business Class on
their flight to Manila. Petitioner regrets that in its desire to provide the respondents-
spouses with additional amenities for the one and one-half (1 1/2) hour flight to Manila,
unintended tension ensued. Nonetheless, considering that the breach was intended to
give more benefit and advantage to the Vazquezes by upgrading their Business Class
accommodation to First Class because of their valued status as Marco Polo members,
we reduce the award for nominal damages to P5,000.
(placing it here kasi super funny HAHA) We are not amused but alarmed at the lower
court’s unbelievable alacrity, bordering on the scandalous, to award excessive amounts
as damages. In their complaint, appellees asked for P1 million as moral damages but
the lower court awarded P4 million; they asked for P500,000.00 as exemplary damages
but the lower court cavalierly awarded a whooping P10 million; they asked for
P250,000.00 as attorney’s fees but were awarded P2 million; they did not ask for
nominal damages but were awarded P200,000.00. It is as if the lower court went on a
rampage, and why it acted that way is beyond all tests of reason. In fact the
excessiveness of the total award invites the suspicion that it was the result of "prejudice
or corruption on the part of the trial court."
WHEREFORE, the instant petition is hereby partly GRANTED. The Decision of the
Court of Appeals of 24 July 2001 in CA-G.R. CV No. 63339 is hereby MODIFIED, and
as modified, the awards for moral damages and attorney’s fees are set aside and
deleted, and the award for nominal damages is reduced to P5,000.
NORTHWEST AIRLINES VS. CATAPANG
FACTS: Delfin S. Catapang (respondent), a lawyer and, at the time material to the case
at bar, Assistant Vice President and Head of the Special Projects Department,
Corporate Services Division of the United Coconut Planters Bank (UCPB), was directed
by UCPB to go to Paris on a business trip. As he intended to proceed, after his trip to
Paris, to the United States to visit his siblings, he requested First United Travel, Inc.
(FUT) to issue him a ticket that would allow rebooking or rerouting of flights within the
United States.
Complying with respondent's requirement, FUT informed him, via telephone, that
Northwest Airlines, Inc. (petitioner) was willing to accommodate his request provided
he would pay an additional US$50 for every rebooking or rerouting of flight. Respondent
agreed with the condition, hence, FUT, as petitioner's authorized agent, issued
respondent a ticket covering the New York to Los Angeles via Detroit and the Los
Angeles to Manila segments of his travel.
The rebooking/rerouting scheme was annotated on the restriction portion of the ticket
issued to respondent.
On respondent's arrival in New York, he called up by telephone petitioner's office which
informed him that his ticket was not "rebookable or reroutable." He was, nevertheless,
advised to go to petitioner's nearest branch office.
Respondent thus proceeded on March 10, 1992 to petitioner's ticket office at the World
Trade Center where he was treated in a rude manner by an employee who informed
him that his ticket was not rebookable or reroutable since it was of a "restricted type,"
and that unless he upgraded it by paying US$644.00, he could not rebook. Left with no
choice, respondent paid that amount for rebooking.
Upon his return to the Philippines, respondent, by letter of March 24, 1992, wrote
petitioner:
“Considering that my ticket was cleared with you prior to its issuance and that FUT is
your duly accredited agent, you are bound by the terms of the ticket issued by FUT in
your behalf. You have no right to unilaterally change the tenor of your contract during
its effectivity without my consent.
Your airline's willful breach of the terms and conditions of my ticket and the shabby
treatment that I received from your personnel hurt my feeling, humiliated and
embarrassed me in the presence of my brother-in-law and other people nearby who
witnessed the incident. The fact that your employee did that to a bank officer and a
lawyer like me only shows that your airline can also do the same to others, not to
mention the poor and hapless persons.
Because I could not bear my wounded feeling, the shabby treatment, the humiliation
and the embarrassment that I received from your employee, I asked for the cancellation
and refund of my ticket covering my trip from Los Angeles to the Philippines for which
I was given a refund application slip no. 012 0230189256 3 by your ticket counter at
the Los Angeles airport on March 12, 1992.
To compensate me for the expenses that I incurred, and the wounded feeling,
humiliation and embarrassment that were caused by your airline's willful breach of
contract with me, I demand that you pay me damages in the amount of P1,000,000.00
within a period of five (5) days from your receipt hereof. Otherwise, I shall have no
alternative but to seek redress from our court of justice and to hold you liable for all
other expenses attendant thereto. Respondent's letter of demand remained
unanswered, unheeded, drawing him to file with the RTC of Makati a complaint for
damages against petitioner.
RTC: In favor of respondent.
CA: Affirmed.
ISSUE: Whether or not there was a breach of contract of carriage.
HELD: YES. When respondent inquired from petitioner's agent FUT if he would be
allowed to rebook/reroute his flight, FUT advised him that he could, on the condition
that he would pay $50 for every rebooking. He was not told by FUT and the ticket did
not reflect it that the ticket being issued to him was a "restricted type" to call for its
upgrading before a rebooking/rerouting.
Petitioner's reservation supervisor, Amelia Merris, in fact admitted that, as the above-
quoted entry on the restriction portion of the ticket reads, the only restriction on
respondent's ticket pertains only to non-endorsement.
Petitioner's breach in this case was aggravated by the undenied treatment received by
respondent when he tried to rebook his ticket. Instead of civilly informing respondent
that his ticket could not be rebooked, petitioner's agent in New York exhibited rudeness
in the presence of respondent's brother-in-law and other customers, insulting
respondent by telling him that he could not understand English.
Passengers have the right to be treated by a carrier's employees with kindness,
respect, courtesy and due consideration. They are entitled to be protected against
personal misconduct, injurious language, indignities and abuses from such employees.
So it is that any discourteous conduct on the part of these employees toward a
passenger gives the latter an action for damages against the carrier.
The award of moral and exemplary damages to respondent is thus justified.
The inclusion of filing fees as part of the actual damages is superfluous, if not
erroneous, the same being chargeable to the "cost of suit" awarded by the trial court
and affirmed by the appellate court.
NORTHWEST AIRLINES V. HESHAN
FACTS: In July 1998, Edward Heshan (Edward) purchased three (3) roundtrip tickets
from Northwest Airlines, Inc. (petitioner) for him, his wife Nelia Heshan (Nelia) and
daughter Dara Ganessa Heshan (Dara) for their trip from Manila to St. Louis, Missouri,
USA and back to attend an ice skating competition where then seven year old Dara
was to participate.
When Dara's participation in the ice skating event ended on August 7, 1998, the
Heshans proceeded to the airport to take the connecting flight from St. Louis to
Memphis on their way to Los Angeles. At the airport, the Heshans first checked-in their
luggage at the airport's "curbside check-in" near the entrance. Since they arrived three
hours early for their 6:05 p.m. flight, the Heshans whiled away the time at a nearby
coffee shop. At 5:15 p.m. when the check-in counter opened, Edward took to the line
where he was second in the queue. When his turn came and presented the tickets to
petitioner's customer service agent Ken Carns (Carns) to get the boarding passes, he
was asked to step aside and wait to be called again.
After all the other departing passengers were given their boarding passes, the Heshans
were told to board the plane without any boarding pass given to them and to just occupy
open seats therein. Inside the plane, the Heshans noticed that only one vacant
passenger seat was available, which was offered to Dara, while Edward and Nelia were
directed to occupy two "folding seats" located at the rear portion of the plane. To
respondents, the two folding seats were crew seats intended for the stewardesses.
Upset that there were not enough passenger seats for them, the Heshans complained
to the cabin crew about the matter but were told that if they did not like to occupy the
seats, they were free to disembark from the plane. And disembark they did, complaining
thereafter to Carns about their situation. Petitioner's plane then departed for Memphis
without respondents on board.
The Heshans were later endorsed to and carried by Trans World Airways to Los
Angeles. Respondents arrived in Los Angeles at 10:30 p.m. of the same day but had
to wait for three hours at the airport to retrieve their luggage from petitioner's Flight No.
972M. Respondents stayed for five days more in the U.S. before going back home to
Manila.
On September 24, 1998, respondents sent a letter to petitioner to demand
indemnification for the breach of contract of carriage. Petitioner replied that
respondents were prohibited to board Flight No. 972M for "verbally abusing the flight
crew. As their demand remained unheeded, respondents filed a complaint for breach
of contract with damages at the RTC of Quezon City.
From the depositions of petitioner's employees Carns, Mylan Brown (Brown) and
Melissa Seipel (Seipel), the following version is gathered:
The Heshans did not have reservations for particular seats on the flight. When they
requested that they be seated together, Carns denied the request and explained that
other passengers had pre-selected seats and that the computerized seating system did
not reflect that the request could be accommodated at the time. Carns nonetheless
assured the Heshans that they would be able to board the plane and be seated
accordingly, as he in fact instructed them ten minutes before the plane's departure, to
board the plane even without boarding passes and to occupy "open seats" therein.
By Seipel's claim, as the Heshans were upset upon learning that they were not seated
together on the plane, she told them that she would request other passengers to switch
places to accommodate their demand; that she never had a chance to try to carry out
their demand, however, as she first had to find space for their bags in the overhead
compartment; and that the Heshans cursed her which compelled her to seek assistance
from Brown in dealing with them.
Brown averred that she went to the back portion of the plane to help out but she was
brushed aside by Nelia who was cursing them as she stormed out of the plane followed
by Edward and Dara.
Petitioner denied that the Heshans (hereafter respondents) were told to occupy "folding
seats" or crew seats since "[Federal Aviation Authority] regulations say no passengers
are to sit there." As for respondents not having been given boarding passes, petitioner
asserted that that does not in itself mean that the flight was overbooked, for [t]his is
done on last minute boarding when flights are full and in order to get passengers on
their way and to get the plane out on time. This is acceptable procedure.
RTC: in favor of respondents. They had arrived at the airport early to make sure of their
seating together, and, in fact, Edward was second in the queue for boarding passes.
Yet, Edward was unceremoniously sidelined and curtly told to wait without any
explanations why. His concerned seeking for explanations was repeatedly rebuffed by
the airline employees. When, at last, they were told to board the aircraft although they
had not yet been issued boarding passes, which they thought to be highly unusual, they
soon discovered, to their dismay, that the plane was fully booked, with only one seat
left for the 3 of them. Edward and Nelia rejected the offer [to take] the crew seats.
[Respondents] were thus forced to disembark.
CA: affirmed but reduced the award of moral and exemplary damages to 2M and 300k.
ISSUE: Whether or not respondents are entitled to the award of damages.
HELD: YES. Petitioner failed to satisfactorily explain why it did not issue boarding
passes to respondents who were confirmed passengers, even after they had checked-
in their luggage three hours earlier. That respondents did not reserve seats prior to
checking-in did not excuse the non-issuance of boarding passes.
It is gathered that respondents were made to wait for last-minute cancellations before
they were accommodated onto the plane. This, coupled with petitioner's failure to issue
respondents their boarding passes and the eleventh-hour directive for them to embark,
reinforces the impression that the flight was overbooked.
Petitioner's assertion that respondents disembarked from the plane when their request
to be seated together was ignored does not impress. The observation of the appellate
court, viz:
x x x x [T]he fact that the Appellees still boarded the plane ten (10) minutes prior to the
departure time, despite knowing that they would be seated apart, is a clear
manifestation of the Appellees' willingness to abandon their request and just board the
plane in order to catch their flight. But as it turns out, there were not enough seats for
the three of them as aptly found by the Court a quo. Nonetheless, the petition is in part
meritorious. There is a need to substantially reduce the moral damages awarded by
the appellate court. While courts are given discretion to determine the amount of
damages to be awarded, it is limited by the principle that the amount awarded should
not be palpably and scandalously excessive.
Moral damages are neither intended to impose a penalty to the wrongdoer, nor to enrich
the claimant. Taking into consideration the facts and circumstances attendant to the
case, an award to respondents of P500,000, instead of P2,000,000, as moral damages
is to the Court reasonable.
SAVELLANO V. NORTHWEST AIRLINES
FACTS: Petitioner Victorino Savellano (Savellano) was a Cabugao, Ilocos Sur mayor
for many terms, former Chairman of the Commission on Elections and Regional Trial
Court (RTC) judge. His wife, [Petitioner] Virginia is a businesswoman and operates
several rural banks in Ilocos Sur. The couple's son [Petitioner] Deogracias was, at the
time of the incident subject of the case, the Vice-Governor of Ilocos Sur.
"On October 27, 1991, at around 1:45 p.m., [petitioners] departed from San Francisco,
USA on board Northwest Airlines (NW) bound for Manila, Philippines using the NW
round-trip tickets which were issued at [respondent's] Manila ticketing office.
"[Petitioners] were expected to arrive at the Ninoy Aquino International Airport (NAIA),
Manila on October 29, 1991 (Manila time) or after twelve (12) hours of travel.
"After being airborne for approximately two and one-half (2½) hours or at about 4:15
p.m. of the same day, October 27, 1991 (Seattle, USA time), NW Flight 27's pilot made
an emergency landing in Seattle after announcing that a fire had started in one of the
plane's engines.
"[Petitioners] and the other passengers proceeded to Gate 8 of the Seattle Airport
where they were instructed to go home to Manila the next day, `using the same
boarding passes with the same seating arrangements'
"[Respondent's] shuttle bus thereafter brought all passengers to the Seattle Red Lion
Hotel where they were billeted by, and at the expense of [respondent].
"[Petitioners] who were traveling as a family were assigned one room at the hotel. At
around 12:00 midnight, they were awakened by a phone call from [respondent's]
personnel who advised them to be at the Seattle Airport by 7:00 a.m. (Seattle time) the
following day, October 28, 1991, for departure. To reach the airport on time, the NW
shuttle bus fetched them early, making them skip the 6:30 a.m. hotel breakfast.
"Prior to leaving the hotel, however, [petitioners] met at the lobby Col. Roberto Delfin,
a Filipino co-passenger who was also traveling Business Class, who informed them
that he and some passengers were leaving the next day, October 29, 1991, on board
the same plane with the same itinerary.
"On account of the `engine failure' of the plane, [petitioner] Virginia developed
nervousness. On getting wind of information that they were `bumped off', she took
`valium' to calm her nerves and `cough syrup' for the fever and colds she had developed
during the trip.
"When [petitioners] reached the Seattle Airport, [respondent's] ground stewardess
belatedly advised them that instead of flying to Manila they would have to board NW
Flight 94, a DC-10 plane, bound for a 3-hour flight to Los Angeles for a connecting flight
to Manila. When [Petitioner] Savellano insisted theirs was a direct flight to Manila, the
female ground stewardess just told them to hurry up as they were the last passengers
to board.
"In Los Angeles, [petitioners] and the other passengers became confused for while
`there was a sort of a board' which announced a Seoul-Bangkok flight, none was posted
for a Manila flight. It was only after they complained to the NW personnel that the latter
`finally changed the board to include Manila.
"Before boarding NW Flight 23 for Manila via Seoul, [petitioners] encountered another
problem. Their three small handcarried items which were not padlocked as they were
merely closed by zippers were `not allowed' to be placed inside the passengers'
baggage compartments of the plane by an arrogant NW ground stewardess.
"On [petitioners'] arrival at the NAIA, Manila where they saw Col. Delfin and his wife as
well as the other passengers of the distressed flight who unlike them [petitioners] who
left Seattle on October 28, 1991, left Seattle on October 29, 1991, they were teased for
taking the longer and tiresome route to the Philippines.
"When [petitioners] claimed their luggage at the baggage carousel, they discovered that
the would-have-been handcarried items which were not allowed to be placed inside the
passengers' baggage compartment had been ransacked and the contents thereof
stolen. Virginia was later to claim having lost her diamond earrings costing
P300,000.00, two (2) Perry Gan shoes worth US$ 250.00, four (4) watches costing US$
40.00 each, two (2) pieces of Tag Heuer watch and three (3) boxes of Elizabeth Arden
[perfumes]. Deogracias, on the other hand, claimed to have lost two (2) pairs of Cole
Haan shoes which he bought for his wife, and the clothes, camera, personal computer,
and jeans he bought for his children.
Petitioners through counsel demanded from [respondent] the amount of P3,000,000.00
as damages for what they claimed to be the humiliation and inconvenience they
suffered in the hands of its personnel. [Respondent] did not accede to the demand,
however, impelling [petitioners] to file a case for damages at the RTC of Cabugao,
Ilocos Sur - subject of the present appeal.
Their only complaint is that they suffered inconvenience, embarrassment, and
humiliation for taking a longer route.
RTC: in favor of petitioners.
CA: reversed. Petitioners failed to show respondent’s bad faith, negligence or malice
in transporting them via the Seattle-Los Angeles-Seoul-Manila route. Hence, it held that
there was no basis for the RTC's award of moral and exemplary damages. Neither did
it find any reason to grant attorney's fees.
ISSUE: Whether or not there was a breach of contract of carriage
HELD: Petitioners' contract of carriage with Northwest was for the San Francisco-
Tokyo(Narita)-Manila flights scheduled for October 27, 1991. This itinerary was not
followed when the aircraft used for the first segment of the journey developed engine
trouble. Petitioners stress that they are questioning, not the cancellation of the original
itinerary, but its substitution, which they allegedly had not contracted for or agreed to.
They insist that, like the other passengers of the distressed flight, they had the right to
be placed on Flight 27, which had a connecting flight from Japan to Manila. They add
that in being treated differently and shabbily, they were being discriminated against.
A contract is the law between the parties. Thus, in determining whether petitioners'
rights were violated, we must look into its provisions, which are printed on the airline
ticket. Condition 9 in the agreement states that a "x x x [c]arrier may without notice
substitute alternate carriers or aircraft, and may alter or omit stopping places shown on
the ticket in case of necessity.
The basis of the Complaint was the way respondent allegedly treated petitioners like
puppets that could be shuttled to Manila via Los Angeles and Seoul without their
consent. Undeniably, it did not take the time to explain how it would be meeting its
contractual obligation to transport them to their final destination. Its employees merely
hustled the confused petitioners into boarding one plane after another without giving
the latter a choice from other courses of action that were available. It unilaterally
decided on the most expedient way for them to reach their final destination.
Passengers' Consent
After an examination of the conditions printed on the airline ticket, we find nothing there
authorizing Northwest to decide unilaterally, after the distressed flight landed in Seattle,
what other stopping places petitioners should take and when they should fly. True,
Condition 9 on the ticket allowed respondent to substitute alternate carriers or aircraft
without notice. However, nothing there permits shuttling passengers -- without so much
as a by your-leave -- to stopping places that they have not been previously notified of,
much less agreed to or been prepared for. Substituting aircrafts or carriers without
notice is entirely different from changing stopping places or connecting cities without
notice.
The ambiguities in the contract, being one of adhesion, should be construed against
the party that caused its preparation -- in this case, respondent.[13] Since the
conditions enumerated on the ticket do not specifically allow it to change stopping
places or to fly the passengers to alternate connecting cities without consulting them,
then it must be construed to mean that such unilateral change was not permitted.
Proof of Necessity of Alteration
Furthermore, the change in petitioners' flight itinerary does not fall under the situation
covered by the phrase "may alter or omit stopping places shown on the ticket in case
of necessity."[14] A case of necessity must first be proven. The burden of proving it
necessarily fell on respondent. This responsibility it failed to discharge.
Petitioners do not question the stop in Seattle, so we will not delve into this matter. The
airplane engine trouble that developed during the flight bound for Tokyo from San
Francisco definitely merited the "necessity" of landing the plane at some place for repair
-- in this case, Seattle -- but not that of shuttling petitioners to other connecting points
thereafter without their consent.
Northwest failed to show a "case of necessity" for changing the stopping place from
Tokyo to Los Angeles and Seoul. It is a fact that some of the passengers on the
distressed flight continued on to the Tokyo (Narita) connecting place. No explanation
whatsoever was given to petitioners as to why they were not similarly allowed to do so.
It may be that the Northwest connecting flight from Seattle to Tokyo to Manila could no
longer accommodate them. Yet it may also be that there were other carriers that could
have accommodated them for these sectors of their journey, and whose route they
might have preferred to the more circuitous one unilaterally chosen for them by
respondent.
In the absence of evidence as to the actual situation, the Court is hard pressed to
determine if there was a "case of necessity" sanctioning the alteration of the Tokyo
stopping place in the case of petitioners. Thus, we hold that in the absence of a
demonstrated necessity thereof and their rerouting to Los Angeles and Seoul as
stopping places without their consent, respondent committed a breach of the contract
of carriage.
In the present case, we must consider that petitioners suffered the inconveniences of
having to wake up early after a bad night and having to miss breakfast; as well as the
fact that they were business class passengers. They paid more for better service; thus,
rushing them and making them miss their small comforts was not a trivial thing. We
also consider their social and official status. Victorino Savellano was a former mayor,
regional trial court judge and chairman of the Commission on Elections. Virginia B.
Savellano was the president of five rural banks, and Deogracias Savellano was then
the incumbent vice governor of Ilocos Sur. Hence, it will be proper to grant one hundred
fifty thousand pesos (P150,000) as nominal damages[28] to each of them, in order to
vindicate and recognize their right to be notified and consulted before their contracted
stopping place was changed.
PAL V. CA
FACTS: Sometime before 2 May 1980, private respondents spouses Manuel S. Buncio
and Aurora R. Buncio purchased from petitioner Philippine Airlines, Incorporated, two
plane tickets for their two minor children, Deanna R. Buncio (Deanna), then 9 years of
age, and Nikolai R. Buncio (Nikolai), then 8 years old. Since Deanna and Nikolai will
travel as unaccompanied minors, petitioner required private respondents to
accomplish, sign and submit to it an indemnity bond. Private respondents complied with
this requirement. For the purchase of the said two plane tickets, petitioner agreed to
transport Deanna and Nikolai on 2 May 1980 from Manila to San Francisco, California,
United States of America (USA), through one of its planes, Flight 106. Petitioner also
agreed that upon the arrival of Deanna and Nikolai in San Francisco Airport on 3 May
1980, it would again transport the two on that same day through a connecting flight
from San Francisco, California, USA, to Los Angeles, California, USA, via another
airline, United Airways 996. Deanna and Nikolai then will be met by their grandmother,
Mrs. Josefa Regalado (Mrs. Regalado), at the Los Angeles Airport on their scheduled
arrival on 3 May 1980.
On 2 May 1980, Deanna and Nikolai boarded Flight 106 in Manila.
On 3 May 1980, Deanna and Nikolai arrived at the San Francisco Airport. However, the
staff of United Airways 996 refused to take aboard Deanna and Nikolai for their
connecting flight to Los Angeles because petitioner's personnel in San Francisco could
not produce the indemnity bond accomplished and submitted by private respondents.
The said indemnity bond was lost by petitioner's personnel during the previous stop-
over of Flight 106 in Honolulu, Hawaii. Deanna and Nikolai were then left stranded at
the San Francisco Airport. Subsequently, Mr. Edwin Strigl (Strigl), then the Lead Traffic
Agent of petitioner in San Francisco, California, USA, took Deanna and Nikolai to his
residence in San Francisco where they stayed overnight.
Meanwhile, Mrs. Regalado and several relatives waited for the arrival of Deanna and
Nikolai at the Los Angeles Airport. When United Airways 996 landed at the Los Angeles
Airport and its passengers disembarked, Mrs. Regalado sought Deanna and Nikolai
but she failed to find them. Mrs. Regalado asked a stewardess of the United Airways
996 if Deanna and Nikolai were on board but the stewardess told her that they had no
minor passengers. Mrs. Regalado called private respondents and informed them that
Deanna and Nikolai did not arrive at the Los Angeles Airport. Private respondents
inquired about the location of Deanna and Nikolai from petitioner's personnel, but the
latter replied that they were still verifying their whereabouts.
On the morning of 4 May 1980, Strigl took Deanna and Nikolai to San Francisco Airport
where the two boarded a Western Airlines plane bound for Los Angeles. Later that day,
Deanna and Nikolai arrived at the Los Angeles Airport where they were met by Mrs.
Regalado. Petitioner's personnel had previously informed Mrs. Regalado of the late
arrival of Deanna and Nikolai on 4 May 1980.
On 17 July 1980, private respondents, through their lawyer, sent a letter to petitioner
demanding payment of 1 million pesos as damages for the gross negligence and
inefficiency of its employees in transporting Deanna and Nikolai. Petitioner did not heed
the demand.
RTC: petitioner should pay damages.
CA: affirmed.
ISSUE: Whether or not there was a breach of contract of carriage
HELD: YES.
In breach of contract of air carriage, moral damages may be recovered where (1) the
mishap results in the death of a passenger; or (2) where the carrier is guilty of fraud or
bad faith; or (3) where the negligence of the carrier is so gross and reckless as to
virtually amount to bad faith.[15]
Gross negligence implies a want or absence of or failure to exercise even slight care
or diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.
It was established in the instant case that since Deanna and Nikolai would travel as
unaccompanied minors, petitioner required private respondents to accomplish, sign
and submit to it an indemnity bond. Private respondents complied with this requirement.
Petitioner gave a copy of the indemnity bond to one of its personnel on Flight 106, since
it was required for the San Francisco-Los Angeles connecting flight of Deanna and
Nikolai. Petitioner's personnel lost the indemnity bond during the stop-over of Flight 106
in Honolulu, Hawaii. Thus, Deanna and Nikolai were not allowed to take their
connecting flight.
Evidently, petitioner was fully aware that Deanna and Nikolai would travel as
unaccompanied minors and, therefore, should be specially taken care of considering
their tender age and delicate situation. Petitioner also knew well that the indemnity bond
was required for Deanna and Nikolai to make a connecting flight from San Francisco to
Los Angeles, and that it was its duty to produce the indemnity bond to the staff of United
Airways 996 so that Deanna and Nikolai could board the connecting flight. Yet, despite
knowledge of the foregoing, it did not exercise utmost care in handling the indemnity
bond resulting in its loss in Honolulu, Hawaii. This was the proximate cause why
Deanna and Nikolai were not allowed to take the connecting flight and were thus
stranded overnight in San Francisco. Further, petitioner discovered that the indemnity
bond was lost only when Flight 106 had already landed in San Francisco Airport and
when the staff of United Airways 996 demanded the indemnity bond. This only
manifests that petitioner did not check or verify if the indemnity bond was in its custody
before leaving Honolulu, Hawaii for San Francisco.
The foregoing circumstances reflect petitioner's utter lack of care for and inattention to
the welfare of Deanna and Nikolai as unaccompanied minor passengers. They also
indicate petitioner's failure to exercise even slight care and diligence in handling the
indemnity bond. Clearly, the negligence of petitioner was so gross and reckless that it
amounted to bad faith.
It is worth emphasizing that petitioner, as a common carrier, is bound by law to exercise
extraordinary diligence and utmost care in ensuring for the safety and welfare of its
passengers with due regard for all the circumstances. The negligent acts of petitioner
signified more than inadvertence or inattention and thus constituted a radical departure
from the extraordinary standard of care required of common carriers.
Article 2232 of the Civil Code provides that exemplary damages may be awarded in a
breach of contract if the defendant acted in a wanton, fraudulent, reckless, oppressive
or malevolent manner. In addition, Article 2234 thereof states that the plaintiff must
show that he is entitled to moral damages before he can be awarded exemplary
damages.
As we have earlier found, petitioner breached its contract of carriage with private
respondents, and it acted recklessly and malevolently in transporting Deanna and
Nikolai as unaccompanied minors and in handling their indemnity bond. We have also
ascertained that private respondents are entitled to moral damages because they have
sufficiently established petitioner's gross negligence which amounted to bad faith. This
being the case, the award of exemplary damages is warranted.
Current jurisprudence[24] instructs that in awarding attorney's fees, the trial court must
state the factual, legal, or equitable justification for awarding the same, bearing in mind
that the award of attorney's fees is the exception, not the general rule, and it is not
sound public policy to place a penalty on the right to litigate; nor should attorney's fees
be awarded every time a party wins a lawsuit. The matter of attorney's fees cannot be
dealt with only in the dispositive portion of the decision. The text of the decision must
state the reason behind the award of attorney's fees. Otherwise, its award is totally
unjustified.[25]
In the instant case, the award of attorney's fees was merely cited in the dispositive
portion of the RTC decision without the RTC stating any legal or factual basis for said
award. Hence, the Court of Appeals erred in sustaining the RTC's award of attorney's
fees.
Since we have already resolved that the RTC and Court of Appeals were correct in
awarding moral and exemplary damages, we shall now determine whether their
corresponding amounts were proper.
The purpose of awarding moral damages is to enable the injured party to obtain means,
diversion or amusement that will serve to alleviate the moral suffering he has
undergone by reason of defendant's culpable action.[26] On the other hand, the aim of
awarding exemplary damages is to deter serious wrongdoings.
Article 2216 of the Civil Code provides that assessment of damages is left to the
discretion of the court according to the circumstances of each case. This discretion is
limited by the principle that the amount awarded should not be palpably excessive as
to indicate that it was the result of prejudice or corruption on the part of the trial
court.[28]Simply put, the amount of damages must be fair, reasonable and
proportionate to the injury suffered.
The RTC and the Court of Appeals ordered petitioner to pay Deanna and Nikolai
P50,000.00 each as moral damages. This amount is reasonable considering the
harrowing experience they underwent at their tender age and the danger they were
exposed to when they were stranded in San Francisco. Both of them testified that they
were afraid and were not able to eat and sleep during the time they were stranded in
San Francisco.[29] Likewise, the award of P25,000.00 each to Deanna and Nikolai as
exemplary damages is fair so as to deter petitioner and other common carriers from
committing similar or other serious wrongdoings.
Both courts also directed petitioner to pay private respondent Aurora R. Buncio
P75,000.00 as moral damages. This is equitable and proportionate considering the
serious anxiety and mental anguish she experienced as a mother when Deanna and
Nikolai were not allowed to take the connecting flight as scheduled and the fact that
they were stranded in a foreign country and in the company of strangers. Private
respondent Aurora R. Buncio testified that she was very fearful for the lives of Deanna
and Nikolai when they were stranded in San Francisco, and that by reason thereof she
suffered emotional stress and experienced upset stomach.[30] Also, the award of
P30,000.00 as moral damages to Mrs. Regalado is appropriate because of the serious
anxiety and wounded feelings she felt as a grandmother when Deanna and Nikolai,
whom she was to meet for the first time, did not arrive at the Los Angeles Airport. Mrs.
Regalado testified that she was seriously worried when Deanna and Nikolai did not
arrive in Los Angeles on 3 May 1980, and she was hurt when she saw the two crying
upon arriving in Los Angeles on 4 May 1980.[31] The omission of award of damages to
private respondent Manuel S. Buncio was proper for lack of basis. His court testimony
was rightly disregarded by the RTC because he failed to appear in his scheduled cross-
examination.
On another point, we held in Eastern Shipping Lines, Inc. v. Court of Appeals,[33] that
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 rate of 6% per
annum. We further declared that when the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal interest, whether it is a
loan/forbearance of money or not, shall be 12% per annum from such finality until its
satisfaction, this interim period being deemed to be then equivalent to a forbearance of
credit.
In the instant case, petitioner's obligation arose from a contract of carriage and not from
a loan or forbearance of money. Thus, an interest of 6% per annum should be imposed
on the damages awarded, to be computed from the time of the extra-judicial demand
on 17 July 1980 up to the finality of this Decision. In addition, the interest shall become
12% per annum from the finality of this Decision up to its satisfaction.

Finally, the records[34] show that Mrs. Regalado died on 1 March 1995 at the age of
74, while Deanna passed away on 8 December 2003 at the age of 32. This being the
case, the foregoing award of damages plus interests in their favor should be given to
their respective heirs.
UNITED AIRLINES V. CA
FACTS: On March 1, 1989, private respondent Aniceto Fontanilla purchased from
petitioner United Airlines, through the Philippine Travel Bureau in Manila, three (3) "Visit
the U.S.A." tickets for himself, his wife and his minor son Mychal for the following routes:
SF to Washington to Chicago to LA to SF
All flights had been confirmed previously by United Airlines. The Fontanillas proceeded
to the United States as planned, where they used the first coupon from San Francisco
to Washington. On April 24, 1989, Aniceto Fontanilla bought two (2) additional coupons
each for himself, his wife and his son from petitioner at its office in Washington Dulles
Airport. After paying the penalty for rewriting their tickets, the Fontanillas were issued
tickets with corresponding boarding passes with the words "CHECK-IN REQUIRED,"
for United Airlines Flight No. 1108, set to leave from Los Angeles to San Francisco at
10:30 a.m. on May 5, 1989.[3] The cause of the non-boarding of the Fontanillas on
United Airlines Flight No. 1108 makes up the bone of contention of this controversy.
Private respondents' version is as follows:
Aniceto Fontanilla and his son Mychal claim that on May 5, 1989, upon their arrival at
the Los Angeles Airport for their flight, they proceeded to United Airlines counter where
they were attended by an employee wearing a nameplate bearing the name "LINDA."
Linda examined their tickets, punched something into her computer and then told them
that boarding would be in fifteen minutes. When the flight was called, the Fontanillas
proceeded to the plane. To their surprise, the stewardess at the gate did not allow
them to board the plane, as they had no assigned seat numbers. They were then
directed to go back to the "check-in" counter where Linda subsequently informed them
that the flight had been overbooked and asked them to wait.[5] The Fontanillas tried to
explain to Linda the special circumstances of their visit. However, Linda told them in
arrogant manner, "So what, I can not do anything about it."[6] Subsequently, three other
passengers with Caucasian features were graciously allowed to board, after the
Fontanillas were told that the flight had been overbooked.[7] The plane then took off
with the Fontanillas' baggage in tow, leaving them behind.[8] The Fontanillas then
complained to Linda, who in turn gave them an ugly stare and rudely uttered, "It's not
my fault. It's the fault of the company. Just sit down and wait."[9] When Mr. Fontanilla
reminded Linda of the inconvenience being caused to them, she bluntly retorted, "Who
do you think you are? You lousy Flips are good for nothing beggars. You always ask
for American aid." After which she remarked "Don't worry about your baggage. Anyway
there is nothing in there. What are you doing here anyway? I will report you to
immigration. You Filipinos should go home."[10] Such rude statements were made in
front of other people in the airport causing the Fontanillas to suffer shame, humiliation
and embarrassment. The chastening situation even caused the younger Fontanilla to
break into tears.[11] After some time, Linda, without any explanation, offered the
Fontanillas $50.00 each. She simply said "Take it or leave it." This, the Fontanillas
declined.[12] The Fontanillas then proceeded to the United Airlines customer service
counter to plead their case. The male employee at the counter reacted by shouting
that he was ready for it and left without saying anything.[13] The Fontanillas were not
booked on the next flight, which departed for San Francisco at 11:00 a.m. It was only
at 12:00 noon that they were able to leave Los Angeles on United Airlines Flight No.
803.
Petitioner United Airlines has a different version of what occurred at the Los Angeles
Airport on May 5, 1989.
According to United Airlines, the Fontanillas did not initially go to the check-in counter
to get their seat assignments for UA Flight 1108. They instead proceeded to join the
queue boarding the aircraft without first securing their seat assignments as required in
their ticket and boarding passes. Having no seat assignments, the stewardess at the
door of the plane instructed them to go to the check-in counter. When the Fontanillas
proceeded to the check-in counter, Linda Allen, the United Airlines Customer
Representative at the counter informed them that the flight was overbooked. She
booked them on the next available flight and offered them denied boarding
compensation. Allen vehemently denies uttering the derogatory and racist words
attributed to her by the Fontanillas.
RTC: against Fontanillas.
CA: reversed. In favor of the Fontanillas.
ISSUE: Whether or not the Fontanillas are entitled to damages.
HELD: NO. Decision of CA reversed.
Plaintiffs fail to realize that their failure to check in, as expressly required in their
boarding passes, is the very reason why they were not given their respective seat
numbers, which resulted in their being denied boarding.
Neither do we agree with the conclusion reached by the appellate court that private
respondents' failure to comply with the check-in requirement will not defeat his claim as
the denied boarding rules were not complied with. Notably, the appellate court relied
on the Code of Federal Regulation Part on Oversales, which states:
250.6 Exceptions to eligibility for denied boarding compensation.
A passenger denied board involuntarily from an oversold flight shall not be eligible for
denied board compensation if:
(a) The passenger does not comply with the carrier's contract of carriage or tariff
provisions regarding ticketing, reconfirmation, check-in, and acceptability for
transformation.
The appellate court, however, erred in applying the laws of the United States as, in the
case at bar, Philippine law is the applicable law. Although, the contract of carriage was
to be performed in the United States, the tickets were purchased through petitioner's
agent in Manila. It is true that the tickets were "rewritten" in Washington, D.C. However,
such fact did not change the nature of the original contract of carriage entered into by
the parties in Manila.
The law of the forum on the subject matter is Economic Regulations No. 7 as amended
by Boarding Priority and Denied Boarding Compensation of the Civil Aeronautics
Board, which provides that the check-in requirement be complied with before a
passenger may claim against a carrier for being denied boarding:
SEC. 5. Amount of Denied Boarding Compensation - Subject to the exceptions
provided hereinafter under Section 6, carriers shall pay to passengers holding
confirmed reserved space and who have presented themselves at the proper place and
time and fully complied with the carrier's check-in and reconfirmation procedures and
who are acceptable for carriage under the Carrier's tariffs but who have been denied
boarding for lack of space, a compensation at the rate of:
Private respondents' narration that they were subjected to harsh and derogatory
remarks seems incredulous. However, this Court will not attempt to surmise what really
happened. Suffice to say, private respondent was not able to prove his cause of action,
for as the trial court correctly observed:
xxx plaintiffs claim to have been discriminated against and insulted in the presence of
several people. Unfortunately, plaintiffs limited their evidence to the testimony [of]
Aniceto Fontanilla, without any corroboration by the people who saw or heard the
discriminatory remarks and insults; while such limited testimony could possibly be true,
it does not enable the Court to reach the conclusion that plaintiffs have, by a
preponderance of evidence, proven that they are entitled to P1,650,000.00 damages
from defendant.
What this Court considers as bad faith is the willful and deliberate overbooking on the
part of the airline carrier. The above-mentioned law clearly states that when the
overbooking does not exceed ten percent (10%), it is not considered as deliberate and
therefore does not amount to bad faith. While there may have been overbooking in this
case, private respondents were not able to prove that the overbooking on United
Airlines Flight 1108 exceeded ten percent.
As earlier stated, the Court is of the opinion that the private respondents were not able
to prove that they were subjected to coarse and harsh treatment by the ground crew of
United Airlines. Neither were they able to show that there was bad faith on part of the
carrier airline. Hence, the award of moral and exemplary damages by the Court of
Appeals is improper. Corollarily, the award of attorney's fees is, likewise, denied for
lack of any legal and factual basis.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-
G.R. CV No. 37044 is hereby REVERSED and SET ASIDE. The decision of the
Regional Trial Court of Makati City in Civil Case No. 89-4268 dated April 8, 1991 is
hereby REINSTATED.
PAL V. SAVILLO
FACTS: Private respondent was invited to participate in the 1993 ASEAN Seniors
Annual Golf Tournament held in Jakarta, Indonesia. He and several companions
decided to purchase their respective passenger tickets from PAL with the following
points of passage: MANILA-SINGAPORE-JAKARTA-SINGAPORE-MANILA. Private
respondent and his companions were made to understand by PAL that its plane would
take them from Manila to Singapore, while Singapore Airlines would take them from
Singapore to Jakarta.
On 3 October 1993, private respondent and his companions took the PAL flight to
Singapore and arrived at about 6:00 o'clock in the evening. Upon their arrival, they
proceeded to the Singapore Airlines office to check-in for their flight to Jakarta
scheduled at 8:00 o'clock in the same evening. Singapore Airlines rejected the tickets
of private respondent and his group because they were not endorsed by PAL. It was
explained to private respondent and his group that if Singapore Airlines honored the
tickets without PAL's endorsement, PAL would not pay Singapore Airlines for their
passage. Private respondent tried to contact PAL's office at the airport, only to find out
that it was closed.
Stranded at the airport in Singapore and left with no recourse, private respondent was
in panic and at a loss where to go; and was subjected to humiliation, embarrassment,
mental anguish, serious anxiety, fear and distress. Eventually, private respondent and
his companions were forced to purchase tickets from Garuda Airlines and board its last
flight bound for Jakarta. When they arrived in Jakarta at about 12:00 o'clock midnight,
the party who was supposed to fetch them from the airport had already left and they
had to arrange for their transportation to the hotel at a very late hour. After the series
of nerve-wracking experiences, private respondent became ill and was unable to
participate in the tournament.
Upon his return to the Philippines, private respondent brought the matter to the attention
of PAL. He sent a demand letter to PAL on 20 December 1993 and another to
Singapore Airlines on 21 March 1994. However, both airlines disowned liability and
blamed each other for the fiasco. On 15 August 1997, private respondent filed a
Complaint for Damages before the RTC docketed as Civil Case No. 23773, seeking
compensation for moral damages in the amount of P1,000,000.00 and attorney's fees.
Instead of filing an answer to private respondent's Complaint, PAL filed a Motion to
Dismiss[8] dated 18 September 1998 on the ground that the said complaint was barred
on the ground of prescription under Section 1(f) of Rule 16 of the Rules of Court. PAL
argued that the Warsaw Convention, particularly Article 29 thereof, governed this case,
as it provides that any claim for damages in connection with the international
transportation of persons is subject to the prescription period of two years. Since the
Complaint was filed on 15 August 1997, more than three years after PAL received the
demand letter on 25 January 1994, it was already barred by prescription.
RTC: denied motion to dismiss.
CA: affirmed. The Complaint filed by private respondent should not be dismissed.[14]
ISSUE: Whether or not CA erred in their decision.
HELD: NO. In determining whether PAL's Motion to Dismiss should have been granted
by the trial court, it must be ascertained if all the claims made by the private respondent
in his Complaint are covered by the Warsaw Convention, which effectively bars all
claims made outside the two-year prescription period provided under Article 29 thereof.
If the Warsaw Convention covers all of private respondent's claims, then Civil Case No.
23773 has already prescribed and should therefore be dismissed. On the other hand,
if some, if not all, of respondent's claims are outside the coverage of the Warsaw
Convention, the RTC may still proceed to hear the case.
The Warsaw Convention applies to "all international transportation of persons, baggage
or goods performed by any aircraft for hire." It seeks to accommodate or balance the
interests of passengers seeking recovery for personal injuries and the interests of air
carriers seeking to limit potential liability. It employs a scheme of strict liability favoring
passengers and imposing damage caps to benefit air carriers.[16] The cardinal purpose
of the Warsaw Convention is to provide uniformity of rules governing claims arising
from international air travel; thus, it precludes a passenger from maintaining an action
for personal injury damages under local law when his or her claim does not satisfy the
conditions of liability under the Convention.
Article 19 of the Warsaw Convention provides for liability on the part of a carrier for
"damages occasioned by delay in the transportation by air of passengers, baggage or
goods." Article 24 excludes other remedies by further providing that "(1) in the cases
covered by articles 18 and 19, any action for damages, however founded, can only be
brought subject to the conditions and limits set out in this convention." Therefore, a
claim covered by the Warsaw Convention can no longer be recovered under local law,
if the statute of limitations of two years has already lapsed.
Nevertheless, this Court notes that jurisprudence in the Philippines and the United
States also recognizes that the Warsaw Convention does not "exclusively regulate" the
relationship between passenger and carrier on an international flight. This Court finds
that the present case is substantially similar to cases in which the damages sought
were considered to be outside the coverage of the Warsaw Convention.
In United Airlines v. Uy,[18] 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.
Similar distinctions were made in American jurisprudence. In Mahaney v. Air France, a
passenger was denied access to an airline flight between New York and Mexico,
despite the fact that she held a confirmed reservation. 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 United States laws, then the plaintiff may claim purely nominal compensatory
damages for humiliation and hurt feelings, which are not provided for by the Warsaw
Convention. In another case, Wolgel v. Mexicana Airlines, the court pronounced that
actions for damages for the "bumping off" itself, rather than the incidental damages due
to the delay, fall outside the Warsaw Convention and do not prescribe in two years.
In the Petition at bar, private respondent's Complaint alleged that both PAL and
Singapore Airlines were guilty of gross negligence, which resulted in his being
subjected to "humiliation, embarrassment, mental anguish, serious anxiety, fear and
distress." The emotional harm suffered by the private respondent as a result of having
been unreasonably and unjustly prevented from boarding the plane should be
distinguished from the actual damages which resulted from the same incident. Under
the Civil Code provisions on tort, such emotional harm gives rise to compensation
where gross negligence or malice is proven.
The instant case is comparable to the case of Lathigra v. British Airways.
In Lathigra, it was held that the airlines' negligent act of reconfirming the passenger's
reservation days before departure and failing to inform the latter that the flight had
already been discontinued is not among the acts covered by the Warsaw Convention,
since the alleged negligence did not occur during the performance of the contract of
carriage but, rather, days before the scheduled flight.
In the case at hand, Singapore Airlines barred private respondent from boarding the
Singapore Airlines flight because PAL allegedly failed to endorse the tickets of private
respondent and his companions, despite PAL's assurances to respondent that
Singapore Airlines had already confirmed their passage. While this fact still needs to
be 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 part of PAL did not occur during the performance of the contract of carriage but
days before the scheduled flight. Thus, the present action cannot be dismissed based
on the statute of limitations provided under Article 29 of the Warsaw Convention.
Had the present case merely consisted of claims incidental to the airlines' delay in
transporting their passengers, the private respondent's Complaint would have been
time-barred under Article 29 of the Warsaw Convention. However, the present case
involves a special species of injury resulting from the failure of PAL and/or Singapore
Airlines to transport private respondent from Singapore to Jakarta - the profound
distress, fear, anxiety and humiliation that private respondent experienced when,
despite PAL's earlier assurance that Singapore Airlines confirmed his passage, he was
prevented from boarding the plane and he faced the daunting possibility that he would
be stranded in Singapore Airport because the PAL office was already closed.
These claims are covered by the Civil Code provisions on tort, and not within the
purview of the Warsaw Convention. Hence, the applicable prescription period is that
provided under Article 1146 of the Civil Code:
Art. 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict.
Private respondent's Complaint was filed with the RTC on 15 August 1997, which was
less than four years since PAL received his extrajudicial demand on 25 January 1994.
Thus, private respondent's claims have not yet prescribed and PAL's Motion to Dismiss
must be denied.
Moreover, should there be any doubt as to the prescription of private respondent's
Complaint, the more prudent action is for the RTC to continue hearing the same and
deny the Motion to Dismiss. Where it cannot be determined with certainty whether the
action has already prescribed or not, the defense of prescription cannot be sustained
on a mere motion to dismiss based on what appears to be on the face of the
complaint.[24] And where the ground on which prescription is based does not appear
to be indubitable, the court may do well to defer action on the motion to dismiss until
after trial on the merits. Petition is DENIED. The assailed Decision of the Court of
Appeals.
 PURITA S. MAPA, V. CA AND TWA
FACTS: On August 10, 1990, plaintiffs Carmina (Daughter) and Purita left Manila on
board PAL flight No. 104 for Los Angeles. They arrived Los Angeles on the same date
and stayed there until August 14, 1990 when they left for New York City. On August 14,
1990, plaintiffs Purita and Carmina S. Mapa arrived at the John F. Kennedy (JFK)
Airport, New York, on TWA Flight No. 904. On August 27, 1990, plaintiffs Purita and
Carmina S. Mapa departed for Boston, taking a connecting flight on TWA's carrier, TW
0901, from JFK Airport, New York, to Boston's Logan Airport, checking in seven (7)
pieces of luggage at the TWA counter in the JFK Airport.
From the entrance gate of the terminal building, plaintiffs Purita and Carmina proceeded
to TWA's ticket counter and presented their confirmed TWA tickets numbered with a
3:00 p.m. departure time. They were issued their boarding passes and were instructed
to proceed to gate 35 for boarding. At about 2:40 p.m., plaintiffs noticed that there was
still no instruction to board the aircraft so they made inquiries. The TWA ground
stewardess informed plaintiffs that they were at the wrong gate because their flight was
boarding at gate 1. Upon hearing this, plaintiffs rushed to gate 1 which was in another
building terminal. At gate 1, they were told by a TWA ground stewardess that flight 901
had just departed. However, they were consoled that another TWA flight was leaving
for Boston after 30 minutes and plaintiffs could use the same boarding pass for the next
flight. At around 3:15 p.m., plaintiffs Purita and Carmina were able to board the next
flight. However, the plane was not immediately cleared for take off on account of a
thunderstorm. The passengers were instructed to stay inside the aircraft until 6:00 p.m.
when the plane finally left for Boston.
Upon arriving in Boston, plaintiffs Purita and Carmina proceeded to the carousel to
claim their baggages and found only three out of the seven they checked in, Plaintiffs
immediately reported the loss of their four baggages to the TWA Baggage Office at
Logan Airport. Plaintiffs received a letter from TWA, signed by Mr. J.A. Butler, Customer
Relations-Baggage Service, apologizing for TWA's failure to locate the missing luggage
and requesting plaintiffs to accomplish a passenger property questionnaire to facilitate
a further intensive and computerized search for the lost luggage. Plaintiffs duly
accomplished the passenger property questionnaire, taking pains to write down in detail
the contents of each missing baggage. The total value of the lost items amounted to
$11,283.79.
On September 20, 1990, plaintiff's counsel wrote TWA thru its General Sales Manager
in the Philippines, Daniel Tuason, with office address at Ground Floor, Saville Building,
Sen. Gil. J. Puyat Avenue corner Paseo de Roxas, Makati, Metro Manila demanding
indemnification for the grave damage and injury suffered by the plaintiffs. TWA again
assured plaintiffs that intensive search was being conducted.
On October 8, 1990, TWA offered to amicably settle the case by giving plaintiffs-
appellants two options: Plaintiffs-appellant opted for transportation credit for future
TWA travel. TWA disregarded plaintiffs' option and unilaterally declared the payment
of $2,560.00 as constituting full satisfaction of the plaintiffs' claim. On July 19, 1991,
plaintiffs accepted the check for $2,560.00, as partial payment for the actual cost of
their lost baggages and their contents. Despite demands by plaintiffs, TWA failed and
refused without just cause to indemnify and redress plaintiffs for the grave injury and
damages they have suffered.
RTC: They prayed that after due trial private respondent Trans-World Airlines, Inc.
(hereafter, TWA), be ordered to pay them the following amounts: (1) US$8,723.79, or
its equivalent in Philippine currency, representing the cost of the lost luggage and its
contents; (2) US$2,949.50, or its equivalent in Philippine currency, representing the
cost of hotel, board and lodging, and communication expenses; (3) P1 million, by way
of moral damages; (4) P1 million, by way of exemplary damages, with legal interest on
said amounts from the date of extrajudicial demand thereof; and (5) P500,000.00 as
attorney's fees, costs of the suit, and other expenses of litigation.
On 26 February 1992, TWA filed its Answer to the Amended Complaint raising, as
special and affirmative defense, lack of jurisdiction of Philippine courts over the action
for damages in the pursuant to Article 28(1) of the Warsaw Convention, the action could
only be brought either in Bangkok where the contract was entered into, or in Boston
which was the place of destination, or in Kansas City which is the carrier's domicile and
principal place of business.
TWA further alleged that pursuant to the Warsaw Convention and the Notice of
Baggage Limitations at the back of the tickets, its liability to the petitioners is limited to
US$9.07 per pound, or US$20.00 per kilo, which is in lieu of actual and compensatory
damages. Even assuming that petitioners' bag weighed the maximum acceptable
weight of 70 pounds, TWA's maximum liability is $640.00 per bag or $2,560.00 for the
four pieces of baggage, which the petitioners have been offered and have accepted.
TWA also submitted that it could not be liable for moral and exemplary damages and
attorney's fees because it did not act in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.
The trial court issued an Order dismissing the case for lack of jurisdiction in light
of Article 28(1) of the Warsaw Convention.
ISSUE: WON CA erred when it affirmed the RTC that (1) it has no jurisdiction over
the instant case and (2) the Warsaw Convention is applicable in the instant case
CA: The Warsaw Convention is the law which governs the dispute between the
petitioners and TWA because what is involved is international transportation defined by
said Convention in Article I(2). This holding is founded on its determination that the two
TWA tickets for Los Angeles-New York-Boston-St. Louis-Chicago purchased in
Bangkok, Thailand, were issued in conjunction with, and therefore formed part of, the
contract of transportation performed from Manila, Philippines, to the United States.
The respondent court further held that the cause of action of the petitioners arose from
the loss of the four checked pieces of baggage, which then falls under Article 18(1),
Chapter III (Liability of the Carrier) of the Warsaw Conventions.21 Pursuant to Article
24(1) of the Convention, all actions for damages, whether based on tort, code law or
common law, arising from loss of baggage under Article 18 of the Warsaw Convention,
can only be brought subject to the conditions and limits set forth in the Warsaw
Convention. Article 28(1) thereof sets forth conditions and limits in that the action for
damages may be instituted only in the territory of one of the High Contracting Parties,
before the court of (1) the domicile of the carrier, (2) the carrier's principal place of
business, (3) the place of business through which the contract has been made, or (4)
the place of destination. Since the Philippines is not one of these places, a Philippine
Court, like the RTC, has no jurisdiction over the complaint for damages.
Petitioners could not claim application of Articles 1733, 1734, 1735, 1755, and 1756 of
the New Civil Code on common carriers without taking into consideration Article 1753
of the same Code, which provides that the law of the country to which the goods are to
be transported shall govern the liability of the common carrier for their loss, destruction,
or deterioration. Since the country of ultimate destination is Chicago, the law of Chicago
shall govern the liability of TWA for the loss of the four pieces of baggage. Neither is
Article 2176 of the New Civil Code on torts or quasi-delicts applicable in view of the
private international law principle of lex loci delicti commissi. In addition, comformably
with Santos III v. Northwest Orient Airlines, mere allegation of willful misconduct
resulting in a tort is insufficient to exclude the case from the comprehension of the
Warsaw Convention.
Failing in their bid to reconsider the decision, the petitioners filed this petition. They aver
that respondent Court of Appeals gravely erred (1) in holding that the Warsaw
Convention is applicable to this case and (2) in applying Article 1753 of the Civil Code
and the principle of lex loci delicti commissi.
The pitch issue to be resolved under the petitioner's first assigned error is whether the
contracts of transportation between Purita and Carmina Mapa, on the one hand, and
TWA, on the other, were contracts of "international transportation" under the Warsaw
Convention. If they were, then we should sustain the trial court and the Court of Appeals
in light of our ruling in Santos v. Northwest Orient Airlines.25 It appears clear to us that
TWA itself, the trial court, and the Court of Appeals impliedly admit that if the sole basis
were the two TWA tickets for Los Angeles-New York-Boston-St. Louis-Chicago, the
contracts cannot be brought within the term "international transportation," as defined in
Article I(2) of the Warsaw Convention. As provided therein, a contract is one of
international transportation only if
according to the contract made by the parties, the place of departure and
the place of destination, whether or not there be a break in the
transportation or a transshipment, are situated either within the
territories of two High Contracting Parties, or within the territory of a
single High Contracting Party, if there is an agreed stopping place within
a territory subject to the sovereignty, mandate or authority of another
power, even though that power is not a party to this convention.
There are then two categories of international transportation, viz., (1)
that where the place of departure and the place of destination are
situated within the territories of two High Contracting Parties regardless
of whether or not there be a break in the transportation or a
transshipment; and (2) that where the place of departure and the place
of destination are within the territory of a single High Contracting Party
if there is an agreed stopping place within a territory subject to the
sovereignty, mandate, or authority of another power, even though the
power is not a party of the Convention. The High Contracting Parties
referred to in the Convention are the signatories thereto and those which
subsequently adhered to it.
The contracts of transportation in this case are evidenced by the two TWA tickets, No.
015:9475:153:304 and No. 015:9475:153:305, both purchased and issued in Bangkok,
Thailand. On the basis alone of the provisions therein, it is obvious that the place of
departure and the place of destination are all in the territory of the United States, or of
a single High Contracting Party. The contracts, therefore, cannot come within the
purview of the first category of international transportation. Neither can it be under the
second category since there was NO agreed stopping place within a territory subject to
the sovereignty, mandate, or authority of another power.
The only way to bring the contracts between Purita and Carmina Mapa, on the one
hand, and TWA, on the other, within the first category of "international transportation"
is to link them with, or to make them an integral part of, the Manila-Los Angeles travel
of Purita and Carmina through PAL aircraft. The "linkages" which have been pointed
out by the TWA, the trial court, and the Court of Appeals are (1) the handwritten
notations, viz., INT'L TKT # 079-4402956821-2 and INT'L TKT # 079-4402956819, on
the two TWA tickets; and (2) the entries made by petitioners Purita and Carmina Mapa
in column YOUR COMPLETE ITINERARY in TWA's Passenger Property
Questionnaire, wherein they mentioned their travel from Manila to Los Angeles in flight
PR 102.
The alleged "international tickets" mentioned in the notations in conjunction with which
the two TWA tickets were issued were not presented. Clearly then, there is at all no
factual basis of the finding that the TWA tickets were issued in conjunction with the
international tickets, which are even, at least as of now, non-existent.
As regards the petitioner's entry in YOUR COMPLETE ITINERARY column of the
Passenger Property Questionnaire wherein they included the Manila-Los Angeles
travel, it must be pointed out that this was made on 4 September 199027 by petitioners
Purita and Carmina Mapa, and only in connection with their claim for their lost pieces
of baggage. The loss occurred much earlier, or on 27 August 1990. The entry can by
no means be considered as a part of, or supplement to, their contracts of transportation
evidenced by the TWA tickets which covered transportation within the United States
only.
It must be underscored that the first category of international transportation under the
Warsaw Convention is based on "the contract made by the parties." TWA does not
claim that the Manila-Los Angeles contracts of transportation which brought Purita and
Carmina to Los Angeles were also its contracts. It does not deny the assertion of the
petitioners that those contracts were independent of the TWA tickets issued in
Bangkok, Thailand. No evidence was offered that TWA and PAL had an agreement
concerning transportation of passengers from points of departures not served with
aircrafts of one or the other. There could have been no difficulty for such agreement,
since TWA admitted without qualification in paragraph 1 of its Answer28 to the second
Amended Complaint the allegation in paragraph 1.1 of the latter29 that TWA "is a
foreign corporation licensed to do business in the Philippines with office address at
Ground Floor, Saville Building, Sen. Gil. J. Puyat Avenue, corner Paseo de Roxas,
Makati, Metro Manila."
TWA relies on Article I(3) of the Convention, which provides as follows:
3. A carriage to be performed by several successive air carriers is deemed,
for the purposes of this Convention, to be one undivided carriage, if it has
been regarded by the parties as a single operation, whether it had been
agreed upon under the form of a single contract or of a series of contracts,
and it shall not lose its international character merely because one contract or
a series of contracts is to be performed entirely within a territory subject to the
 sovereignty, suzerainty, mandate, or authority of the same High Contracting
Party.
The flaw of respondent's position is the presumption that the parties have "regarded"
as an "undivided carriage" or as a "single operation" the carriage from Manila to Los
Angeles through PAL then to New York-Boston-St. Louis-Chicago through TWA. The
dismissal then of the second Amended Complaint by the trial court and the Court of
Appeals' affirmance of the dismissal were not based on indubitable facts or grounds,
but no inferences without established factual basis.
WHEREFORE, the instant petition is GRANTED and the challenged decision of 31 May
1995 of respondent Court of Appeals in CA-G.R. CV No. 39896, as well as the Order
of 24 July 1992 of the Regional Trial Court of Quezon City, Branch 102, in Civil Case
No. Q-91-9620, is REVERSED and SET ASIDE.
The Regional Trial Court of Quezon City, Branch 102, is hereby DIRECTED to proceed
with the pre-trial, if it has not been terminated, and with the trial on the merits of the
case and then to render judgment thereon, taking into account the foregoing
observations on the issue of jurisdiction.
ALITALIA V. IAC and FELIPA E. PABLO
FACTS: Dr. Felipa Pablo was invited to take part at a meeting IN 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 in accordance with the
itinerary and time table set for her by ALITALIA. 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." 5 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. There, she inquired about her suitcases in the domestic
and international airports, and filled out the forms prescribed by ALITALIA for people in
her predicament. 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. ALITALIA offered her "free airline tickets to compensate her for any
alleged damages. . . ." She rejected the offer, and forthwith commenced the action 6
which has given rise to the present appellate proceedings. As it turned out, Prof. Pablo's
suitcases were in fact located and forwarded to Ispra, 7 Italy, but only on the day after
her scheduled appearance and participation at the U.N. meeting there. 8 Of course Dr.
Pablo was no longer there to accept delivery; she was already on her way home to
Manila. And for some reason or other, the suitcases were not actually restored to Prof.
Pablo by ALITALIA until eleven (11) months later, and four (4) months after institution
of her action
RTC: In favor of Dr. Pablo
IAC: Affirmed RTC increased nominal damages
ISSUE: WON IAC erred in affirming RTC that there was a limit of liability on Alitalia’s
part. (LIMIT OF LIABILITY)
HELD: ALITALIA postulates that it was error for the Intermediate Appellate Court to
have refused to pass on all the assigned errors and in not stating the facts and the law
on which its decision is based.
Under the Warsaw Convention, 16 an air carrier is made liable for damages for:
1) the death, wounding or other bodily injury of a passenger if the accident causing it
took place on board the aircraft or in the course of its operations of embarking or
disembarking; 17
2) 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
3) delay in the transportation by air of passengers, luggage or goods.
In these cases, it is provided in the Convention that the "action for damages, however,
founded, can only be brought subject to conditions and limits set out" therein.
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 willful 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 willful misconduct," or "if the damage is
(similarly) caused . . by any agent of the carrier acting within the scope of his
employment." 22 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 does not thus operate as an exclusive enumeration of the instances of
an airline's liability, or as an absolute limit of the extent of that liability. Such a
proposition is not borne out by the language of the Convention, as this Court has now,
and at an earlier time, pointed out. 25 Moreover, slight reflection readily leads to the
conclusion that it should be deemed a limit of liability only in those cases where the
cause of the death or injury to person, or destruction, loss or damage to property or
delay in its transport is not attributable to or attended by any wilful misconduct, bad
faith, recklessness, or otherwise improper conduct on the part of any official or
employee for which the carrier is responsible, and there is otherwise no special or
extraordinary form of resulting injury. The Convention's provisions, in short, do not
"regulate or exclude liability for other breaches of contract by the carrier" 26 or
misconduct of its officers and employees, or for some particular or exceptional type of
damage. Otherwise, "an air carrier would be exempt from any liability for damages in
the event of its absolute refusal, in bad faith, to comply with a contract of carriage, which
is absurd." 27 Nor may it for a moment be supposed that if a member of the aircraft
complement should inflict some physical injury on a passenger, or maliciously destroy
or damage the latter's property, the Convention might successfully be pleaded as the
sole gauge to determine the carrier's liability to the passenger. Neither may the
Convention be invoked to justify the disregard of some extraordinary sort of damage
resulting to a passenger and preclude recovery therefor beyond the limits set by said
Convention. It is in this sense that the Convention has been applied, or ignored,
depending on the peculiar facts presented by each case.
In Pan American World Airways, Inc. v. I.A.C., for example, the Warsaw Convention
was applied as regards the limitation on the carrier's liability, there being a simple loss
of baggage without any otherwise improper conduct on the part of the officials or
employees of the airline or other special injury sustained by the passenger.
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. Thus, an air carrier was
sentenced to pay not only compensatory but also moral and exemplary damages, and
attorney's fees, for instance, where its employees rudely put a passenger holding a
first-class ticket in the tourist or economy section, 30 or ousted a brown Asiatic from
the plane to give his seat to a white man, or gave the seat of a passenger with a
confirmed reservation to another, or subjected a passenger to extremely rude, even
barbaric treatment, as by calling him a "monkey."
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 special 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, to be sure — with the result that she was unable to read the
paper and make the scientific presentation (consisting of slides, autoradiograms or
films, tables and tabulations) that she had painstakingly labored over, at the prestigious
international conference, to attend which she had traveled hundreds of miles, to her
chagrin and embarrassment and the disappointment and annoyance of the organizers.
She felt, not unreasonably, that the invitation for her to participate at the conference,
extended by the Joint FAO/IAEA Division of Atomic Energy in Food and Agriculture of
the United Nations, was a singular honor not only to herself, but to the University of the
Philippines and the country as well, an opportunity to make some sort of impression
among her colleagues in that field of scientific activity. The opportunity to claim this
honor or distinction was irretrievably lost to her because of Alitalia's breach of its
contract.
She is not, of course, entitled to be compensated for loss or damage to her luggage.
As already mentioned, her baggage was ultimately delivered to her in Manila, tardily
but safely. She is however entitled to nominal damages — which, as the law says, is
adjudicated in order that a right of the plaintiff, which has been violated or invaded by
the defendant, may be vindicated and recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered — and this Court agrees that the
respondent Court of Appeals correctly set the amount thereof at P40,000.00.
WHEREFORE, no error being perceived in the challenged decision of the Court of
Appeals, it appearing on the contrary to be entirely in accord with the facts and the law,
said decision is hereby AFFIRMED, with costs against the petitioner.
CATHAY PACIFIC AIRWAYS, LTD V. CA AND TOMAS L. ALCANTARA
FACTS: On 19 October 1975, respondent Tomas L. Alcantara was a first class
passenger of petitioner Cathay Pacific Airways, Ltd. (CATHAY for brevity) on its Flight
No. CX-900 from Manila to Hongkong and onward from Hongkong to Jakarta on Flight
No. CX-711. The purpose of his trip was to attend the following day, 20 October 1975,
a conference with the Director General of Trade of Indonesia, Alcantara being the
Executive Vice-President and General Manager of Iligan Cement Corporation,
Chairman of the Export Committee of the Philippine Cement Corporation, and
representative of the Cement Industry Authority and the Philippine Cement
Corporation. He checked in his luggage which contained not only his clothing and
articles for personal use but also papers and documents he needed for the conference.
Upon his arrival in Jakarta, respondent discovered that his luggage was missing. When
he inquired about his luggage from CATHAY's representative in Jakarta, private
respondent was told that his luggage was left behind in Hongkong. For this, respondent
Alcantara was offered $20.00 as "inconvenience money" to buy his immediate personal
needs until the luggage could be delivered to him. His luggage finally reached Jakarta
more than twenty four (24) hours after his arrival. However, it was not delivered to him
at his hotel but was required by petitioner to be picked up by an official of the Philippine
Embassy.
CFI: CATHAY to pay Plaintiff moral, temperate, exemplary damages and atty fees
CA: Affirmed CFI
ISSUE: WON CA erred in not applying Warsaw convention on respondents appeal
HELD: Petitioner breached its contract of carriage with private respondent when it failed
to deliver his luggage at the designated place and time, it being the obligation of a
common carrier to carry its passengers and their luggage safely to their destination,
which includes the duty not to delay their transportation, 3 and the evidence shows that
petitioner acted fraudulently or in bad faith. both the trial court and the appellate court
found that CATHAY was grossly negligent and reckless when it failed to deliver the
luggage of petitioner at the appointed place and time. We agree. CATHAY alleges that
as a result of mechanical trouble, all pieces of luggage on board the first aircraft bound
for Jakarta were unloaded and transferred to the second aircraft which departed an
hour and a half later. Yet, as the Court of Appeals noted, petitioner was not even aware
that it left behind private respondent's luggage until its attention was called by the
Hongkong Customs authorities. More, bad faith or otherwise improper conduct may be
attributed to the employees of petitioner. While the mere failure of CATHAY to deliver
respondent's luggage at the agreed place and time did not ipso facto amount to willful
misconduct since the luggage was eventually delivered to private respondent, albeit
belatedly, 6 We are persuaded that the employees of CATHAY acted in bad faith. We
refer to the deposition of Romulo Palma, Commercial Attache of the Philippine
Embassy at Jakarta, who was with respondent Alcantara when the latter sought
assistance from the employees of CATHAY. This deposition was the basis of the
findings of the lower courts when both awarded moral damages to private respondent.
CATHAY representative was not only indifferent and impatient; he was also rude and
insulting. He simply advised Alcantara to buy anything he wanted. But even that was
not sincere because the representative knew that the passenger was limited only to
$20.00 which, certainly, was not enough to purchase comfortable clothings appropriate
for an executive conference. Considering that Alcantara was not only a revenue
passenger but even paid for a first class airline accommodation and accompanied at
the time by the Commercial Attache of the Philippine Embassy who was assisting him
in his problem, petitioner or its agents should have been more courteous and
accommodating to private respondent, instead of giving him a curt reply, "What can we
do, the baggage is missing. I cannot do anything . . . Anyhow, you can buy anything
you need, charged to Cathay Pacific." CATHAY's employees should have been more
solicitous to a passenger in distress and assuaged his anxieties and apprehensions.
To compound matters, CATHAY refused to have the luggage of Alcantara delivered to
him at his hotel; instead, he was required to pick it up himself and an official of the
Philippine Embassy. Under the circumstances, it is evident that petitioner was remiss
in its duty to provide proper and adequate assistance to a paying passenger, more so
one with first class accommodation. Where in breaching the contract of carriage the
defendant airline is not shown to have acted fraudulently or in bad faith, liability for
damages is limited to the natural and probable consequences of the breach of
obligation which the parties had foreseen or could have reasonably foreseen. In that
case, such liability does not include moral and exemplary damages. 8 Conversely, if
the defendant airline is shown to have acted fraudulently or in bad faith, the award of
moral and exemplary damages is proper. However, respondent Alcantara is not entitled
to temperate damages, contrary to the ruling of the court a quo, in the absence of any
showing that he sustained some pecuniary loss.
As regards its second assigned error, petitioner airline contends that the extent of its
liability for breach of contract should be limited absolutely to that set forth in the Warsaw
Convention. We do not agree. As We have repeatedly held, although the Warsaw
Convention has the force and effect of law in this country, being a treaty commitment
assumed by the Philippine government, said convention does not operate as an
exclusive enumeration of the instances for declaring a carrier liable for breach of
contract of carriage or as an absolute limit of the extent of that liability. 10 The Warsaw
Convention declares the carrier liable for damages in the enumerated cases and under
certain limitations. 11 However, it must not be construed to preclude the operation of
the Civil Code and other pertinent laws. It does not regulate, much less exempt, the
carrier from liability for damages for violating the rights of its passengers under the
contract of carriage, 12 especially if wilfull misconduct on the part of the carrier's
employees is found or established, which is clearly the case before Us. For, the Warsaw
Convention itself provides in Art. 25 that —
"(1) The carrier shall not be entitled to avail himself of the provisions of this convention
which exclude or limit his liability, if the damage is caused by his wilfull misconduct or
by such default on his part as, in accordance with the law of the court to which the case
is submitted, is considered to be equivalent to wilfull misconduct."
(2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if the
damage is caused under the same circumstances by any agent of the carrier acting
within the scope of his employment."
When petitioner airline misplaced respondent's luggage and failed to deliver it to its
passenger at the appointed place and time, some special species of injury must have
been caused to him. For sure, the latter underwent profound distress and anxiety, and
the fear of losing the opportunity to fulfill the purpose of his trip. In fact, for want of
appropriate clothings for the occasion brought about by the delay of the arrival of his
luggage, to his embarrassment and consternation respondent Alcantara had to seek
postponement of his pre-arranged conference with the Director General of Trade of the
host country.
WHEREFORE Decision of CA is AFFIRMED. Tempetrate deleted. Moral damages
reduced to 30K, exemplary 20K and atty fees 25K maintained.
SABENA BELGIAN WORLD AIRLINES V. CA and MA. PAULA SAN AGUSTIN
FACTS: On August 21, 1987, plaintiff was a passenger on board Flight SN 284 of
defendant airline originating from Casablanca to Brussels, Belgium on her way back to
Manila. Plaintiff checked in her luggage which contained her valuables, namely:
jewelries valued at $2,350.00; clothes $1,500.00 shoes/bag $150; accessories $75;
luggage itself $10.00; or a total of $4,265.00, for which she was issued Tag No. 71423.
She stayed overnight in Brussels and her luggage was left on board Flight SN 284.
Plaintiff arrived at Manila International Airport on September 2, 1987 and immediately
submitted her Tag No. 71423 to facilitate the release of her luggage but the luggage
was missing. She was advised to accomplish and submit a property Irregularity Report
which she submitted and filed on the same day. She followed up her claim on
September 14, 1987 but the luggage remained to be missing. On September 15, 1987,
she filed her formal complaint with the office of Ferge Massed, defendant's Local
Manager, demanding immediate attention.
On September 30, 1987, on the occasion of plaintiffs following up of her luggage claim,
she was furnished copies of defendant's telexes with an information that the Burssel's
Office of defendant found the luggage and that they have broken the locks for
identification (Exhibit "B"). Plaintiff was assured by the defendant that it has notified its
Manila Office that the luggage will be shipped to Manila on October 27, 1987. But
unfortunately plaintiff was informed that the luggage was lost for the second time. At
the time of the filing of the complaint, the luggage with its content has not been found.
Plaintiff demanded from the defendant the money value of the luggage and its contents
amounting to $4,265.00 or its exchange value, but defendant refused to settle the claim.
Defendant asserts in its Answer and its evidence tend to show that while it admits that
the plaintiff was a passenger on board Flight No. SN 284 with a piece of checked in
luggage bearing Tag No. 71423, the loss of the luggage was due to plaintiff's sole if not
contributory negligence; that she did not declare the valuable items in her checked in
luggage at the flight counter when she checked in for her flight from Casablanca to
Brussels so that either the representative of the defendant at the counter would have
advised her to secure an insurance on the alleged valuable items and required her to
pay additional charges, or would have refused acceptance of her baggage as required
by the generally accepted practices of international carriers; that Section 9(a), Article
IX of General Conditions of carriage requiring passengers to collect their checked
baggage at the place of stop over, plaintiff neglected to claim her baggage at the
Brussels Airport; that plaintiff should have retrieved her undeclared valuables from her
baggage at the Brussels Airport since her flight from Brussels to Manila will still have to
visit for confirmation inasmuch as only her flight from Casablanca to Brussels was
confirmed; that defendant incorporated in all Sabena Plane Tickets, including Sabena
Ticket No. 082422-72502241 issued to plaintiff in Manila on August 21, 1987, a warning
that "Items of value should be carried on your person" and that some carriers assume
no liability for fragile, valuable or perishable articles and that further information may be
obtained from the carrier for guidance;' that granting without conceding that defendant
is liable, its liability is limited only to US $20.00 per kilo due to plaintiffs failure to declare
a higher value on the contents of her checked in luggage and pay additional charges
thereon.
RTC: Sabena to pay Ma. Paula Agustin
CA: Affirmed RTC
ISSUE: WON CA erred in affirming the decision of RTC in toto (Limitation of liability
under Warsaw Convention)
HELD: Petitioner airline company, in contending that the alleged negligence of private
respondent should be considered the primary cause for the loss of her luggage, avers
that, despite her awareness that the flight ticket had been confirmed only for
Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be
confirmed, she did not retrieve the luggage upon arrival in Brussels. Petitioner insists
that private respondent, being a seasoned international traveler, must have likewise
been familiar with the standard provisions contained in her flight ticket that items of
value are required to be hand-carried by the passenger and that the liability of the airline
for loss, delay or damage to baggage would be limited, in any event, to only US $20.00
per kilo unless a higher value is declared in advance and corresponding additional
charges are paid thereon. At the Casablanca International Airport, private respondent,
in checking in her luggage, evidently did not declare its contents or value. Petitioner
cites Section 5(c), Article IX, of the General Conditions of Carriage, signed at Warsaw,
Poland, on 02 October 1929, as amended by the Hague Protocol of 1955, generally
observed by International carriers, stating, among other things, that:
Passengers shall not include in his checked baggage, and the carrier may
refuse to carry as checked baggage, fragile or perishable articles, money,
jewelry, precious metals, negotiable papers, securities or other valuable.
Fault or negligence consists in the omission of that diligence which is demanded by the
nature of an obligation and corresponds with the circumstances of the person, of the
time, and of the place. When the source of an obligation is derived from a contract, the
mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on
the part of the obligor. This rule is no different in the case of common carriers in the
carriage of goods which, indeed, are bound to observe not just the due diligence of 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. It was supposed to arrive on the same flight that private
respondent took in returning to Manila on 02 September 1987. When she discovered
that the luggage was missing, she promptly accomplished and filed a Property
Irregularity Report. She followed up her claim on 14 September 1987, and filed, on the
following day, a formal letter-complaint with petitioner. She felt relieved when, on 23
October 1987, she was advised that her luggage had finally been found, with its
contents intact when examined, and that she could expect it to arrive on 27 October
1987. She then waited anxiously only to be told later that her luggage had been lost for
the second time. Thus, the appellate court, given all the facts before it, sustained the
trial court in finding petitioner ultimately guilty of "gross negligence" in the handling of
private respondent's luggage. The "loss of said baggage not only once but twice, said
the appellate court, "underscores the wanton negligence and lack of care" on the part
of the carrier. The above findings, which certainly cannot be said to be without basis,
foreclose whatever rights petitioner might have had to the possible limitation of liabilities
enjoyed by international air carriers under the Warsaw Convention.
See Alitalia vs. Intermediate Appellate Court decision. Same as in the denial of
argument of carrier
WHEREFORE, the decision appealed from is AFFIRMED. Costs against petitioner.
PHILIPPINE AIRLINES, INC V. CA and CHUA MIN
FACTS: On April 4, 1972, private respondent boarded herein petitioner’s Flight PR 301
from Hongkong to Manila and checked in four (4) pieces of baggage. When the plane
landed in Manila, private respondent was not able to locate the two pieces of baggage
containing cinematographic films despite diligent search therefor. Private respondent
made the claim for such loss to petitioner which admitted the loss and offered to
compensate private respondent. Instead of accepting the offer, private respondent
opted to file the case below to principally recover the value of the lost items which he
estimated to be worth P20,000.00.
Petitioner responded by asserting that:
(4) Plaintiff has no cause of action against defendant.
(5) On 4 April 1972, plaintiff was a passenger, economy class on defendant’s Flight No.
PR 301/4 April 1972, from Hongkong to Manila, under Passenger Ticket No. 2974-
231418. As such passenger, plaintiff checked-in four (4) pieces of baggage, with a total
weight of only twenty (20) kilos, inclusive of their contents such that it would be
physically impossible for the two alleged lost pieces, to have in themselves an
aggregate weight of twenty-five (25) kilos.
(6) As such passenger the contractual relationship between plaintiff and defendant is
wholly governed by the terms, conditions and stipulations which are clearly printed on
plaintiff’s Passenger Ticket No. 2974-231418. Among the stipulations embodied in said
ticket is a provision granting plaintiff a free baggage allowance of twenty (20) kilos.
(7) In accordance with and in pursuant of this free baggage allowance Annex "1")
plaintiff checked-in his four (4) pieces of baggage on Flight No. PR301/4 April 1972, for
which he was issued corresponding baggage checks among them baggage checks
Nos. PR 24-89-61 and PR 24-89-76, covering plaintiff’s two alleged lost pieces of
baggage.
(8) Under Passenger Ticket No. 2974-231-418, which is the contract of carriage
between plaintiff and defendant, it is an express condition of the contract that the same
shall be ‘subject to the rules and limitations relating to liability established by the
Warsaw Convention.’ A xerox copy of page 2 of plaintiff’s Passenger Ticket No. 2974-
231418 which contains the aforesaid condition is hereto attached as Annex "2" and
made part hereof.
(9) Under applicable rules and regulations of the Warsaw Convention on International
Carriage by Air (as amended by the Hague Protocol of 1955), which is the convention
referred to in Annex "2" hereof, defendant’s liability for plaintiff’s two (2) alleged lost
pieces of baggage is limited to a maximum of US$6.50 per kilogram.
(10) The total weight of plaintiff’s four (4) pieces of checked-in baggage, inclusive of
their contents, was only twenty (20) kilograms, such that each baggage would have an
average weight of five (5) kilograms, and the two alleged lost pieces, an average total
weight of only ten (10) kilograms. Accordingly, defendant’s maximum liability to plaintiff
is US$165.00, or its equivalent in Philippine currency." (pp. 6-8, Record on Appeal)
After issues were joined, then plaintiff, now private respondent Chua Min testified and
presented four documents while petitioner did not call any witness and merely adopted
three exhibits of herein private respondent (p. 58, Record on Appeal).chanrobles.com
: virtual law library
Petitioner attempted to challenge private respondent’s personality to file the suit on the
ground that the film rolls belonged to the Hongkong firm of "Loong Kee Pen Co., Film
Exchange Dept.", apart from the vacillating testimony spewed by Chua Min on the
witness stand which supposedly suggests that he has no right to seek restitution for the
lost films, including the damages resulting therefrom. On the merits of private
respondent’s plea for relief, petitioner tried to call the attention of the trial judge to the
herein below quoted provisions of the Warsaw Convention which limit the liability of
petitioner as an air carrier to 250 francs per kilogram, thus:
"ARTICLE 3 (1). For the transportation of passengers the carrier must deliver a
passenger ticket which shall contain the following particulars
(e) A statement that the transportation is subject to the rules relating to liability
established by this convention."
"ARTICLE 22 (2). In the transportation of checked baggage and of goods, the liability
of the carrier shall be limited to a sum of 250 francs per kilogram, unless the consignor
has made, at the time when the package was handed over to the carrier, a special
declaration of the value at delivery and has paid a supplementary sum if the case so
requires. In that case the carrier will be liable to pay a sum not exceeding the declared
sum, unless he proves that the sum is greater than the actual value to the consignor at
delivery."
RTC: Rejected petitioners’ contention. the trial court opined that since petitioner did not
introduce a single piece of document and merely adopted private respondent’s exhibits,
it may not invoke the limitation of its liability with respect to ‘checked baggage’ under
the provisions of the Warsaw Convention. The apathy of petitioner seems to have
extended its impact on the outcome of the case when the trial court ruled that the films
were worth $4,000.00 based on private respondent’s Exhibit "A" which, as aforesaid,
was nonchalantly adopted by petitioner as its Exhibit "1"
Realizing the vacuum insofar as the evidence is concerned, petitioner tried to fill the
hiatus by starting with the proposition in its motion for reconsideration that the ticket
under which private respondent was a passenger on petitioner’s plane was a passenger
ticket and baggage check at the same time. This tactic was resorted to in order to
establish the conclusion that petitioner could not have produced the same since the
ticket is usually retained by the passenger. Petitioner continued to asseverate that
Article 4 paragraph 4 of the Warsaw Convention which reads:
"(4) The absence, irregularity, or loss of the baggage checks shall not affect the
existence or the validity of the contract of transportation which shall nonetheless be
subject to the rules of this convention. Nevertheless, if the carrier accepts baggage
without a baggage check having been delivered, or if the baggage check does not
contain the particulars set out at (d), (f), and (h) above, the carrier shall not be entitled
to avail himself of those provisions of the convention which exclude or limit his liability."
upon which provision the trial court allegedly relied in rejecting petitioner’s contention,
is in fact applicable judging from what is explicitly stated under the first sentence of the
proviso. These ideas, however, did not persuade the trial judge to reconsider his
findings of accountability on the part of petitioner.
CA: Affirmed RTC
ISSUE: WON petitioner can avail of the limitations on liability under the warsaw
convention. – NO
HELD: We have to consider other salient features thereof such as Article 4, paragraph
1 that reads:
"For the transportation of baggage, other than small personal objects of which the
passenger takes charge himself, the carrier must deliver a baggage check."
and the explicit wordings of Article 4, paragraph 4 of the same Convention that:
"The absence, irregularity, or loss of the baggage checks shall not affect the existence
or the validity of the contract of transportation which shall nonetheless be subject to the
rules of this Convention. Nevertheless, if the carrier accepts baggage without a FACTS: Tirso V. Antiporda, Sr. was an associate director of the Central Bank of the
baggage check having been delivered, or if the baggage check does not contain the Philippines and a registered consultant of the Asian Development Bank, the World Bank
particulars set out at (d), (f), and (h) above, the carrier shall not be entitled to avail and the UNDP. He was, contracted by Sycip, Gorres, Velayo & Co. (SGV) to be the
himself of those provisions of the Convention which exclude or limit his liability." institutional financial specialist for the agricultural credit institution project of the
Investment and Development Bank of Malawi in Africa. According to the letter of August
Because these axioms will spell the difference between success and failure of the 30, 1984 addressed to Antiporda from J.F. Singson of SGV, he would render his
petition at bar. It may be recalled that petitioner made a categorical distinction between services to the Malawi bank as an independent contractor for which he would be paid
a passenger ticket and a baggage check when petitioner responded to the complaint US$9,167 for a 50-day period commencing sometime in September 1984. For the
for a sum of money (paragraphs 7 and 8, Answers; pp. 6-8, Record on Appeal; p. 2, engagement, Antiporda would be provided one round-trip economy ticket from Manila
supra). In its motion for reconsideration before the court a quo, petitioner had a sudden to Blantyre and back with a maximum travel time of four days per round-trip and, in
change of heart by asserting that the passenger ticket and the baggage check are one addition, a travel allowance of $50 per day, a travel insurance coverage of P100,000
and the same thing (p. 81, Record on appeal). On a later occasion, it stressed that the and major hospitalization with AFIA and an accident insurance coverage of P150,000.1
‘baggage tags’ were erroneously labeled as ‘baggage checks’ under paragraph 7 of its On September 17, 1984, Lufthansa, through SGV, issued ticket No. 3477712678 for
Answer to the Complaint (p. 3, Reply Brief for the Petitioner; p. 97, Rollo). But the Antiporda's confirmed flights to Malawi, Africa. The ticket particularized his itinerary as
question of semantics on whether the passenger ticket, the baggage check, and the follows:
tag refer to the same object is undoubtedly without legal significance and will not
obliterate the fact that the baggage check was not presented by petitioner in the trial Carrier Flight Date Time Status
court inasmuch as it merely relied on, and adopted private respondent’s exhibits, none
of which was offered for the purpose of proving the missing link, so to speak (pp. 57- Manila to SQ 081 25-9-84 1530 OK
Singapore
58, Record on Appeal). To rectify these lapses, petitioner argued that it is not in a
position to introduce the baggage check in evidence since private respondent as Singapore to LH 695 25-9-84 2200 OK
passenger, is the one who retains possession thereof. Yet, such pretense does not sit Bombay
well with what is expected of petitioner as an air carrier under Article 4 (2), Section II of
the Warsaw Convention that: Bombay to KQ 203 26-9-84 0215 OK
Nairobi
"The baggage check shall be made out in duplicate, one part for the passenger and the
other part for the carrier." Nairobi to QM 335 26-9-84 1395 OK
Lilongwe
Consequently, petitioner cannot capitalize on the limited liability clause under Article 22 Lilongwe to QM 031 26-9-84 1600 OK
(2) of the Warsaw Convention because of the unequivocal condition set forth under the Blantyre
second sentence of Article 4, paragraph 4 that:
Thus, on September 25, 1984, Antiporda took the Lufthansa flight to Singapore from
“if the carrier accepts baggage without a baggage check having been delivered, a if the where he proceeded to Bombay on board the same airline. He arrived in Bombay as
baggage check does not contain the particulars set out at (d), (f), and (h) above, the scheduled and waited at the transit area of the airport for his connecting flight to Nairobi
carrier shall not be entitled to avail himself of those provisions of the Convention which which was, per schedule given him by Lufthansa, to leave Bombay in the morning of
exclude or limit his liability." September 26, 1984. Finding no representative of Lufthansa waiting for him at the gate,
Antiporda asked the duty officer of Air India how he could get in touch with Lufthansa.
Petitioner contends that it is covered by the first and not by the second sentence of He was told to call up Lufthansa which informed him that somebody would attend to
Article 4, paragraph 4 (page 8, supra). But the argument as proferred, requires Us to him shortly. Ten minutes later, Gerard Matias, Lufthansa's traffic officer, arrived, asked
read something which is not so stated between the lines for the first sentence speaks for Antiporda's ticket and told him to just sit down and wait. Matias returned with one
only of the "existence" or the "validity" of the contract of transportation while the query Leslie Benent, duty officer of Lufthansa, who informed Antiporda that his seat in Air
on "liability" is particularly and directly resolved by the second sentence. To be sure, Kenya Flight 203 to Nairobi had been given to a very important person of Bombay who
and even assuming in gratia argumenti that an inconsistency exists, the first sentence was attending a religious function in Nairobi. Antiporda protested, stressing that he had
must be construed as the general proposition governing the existence or validity of the an important professional engagement in Blantyre, Malawi in the afternoon of
contract of transportation which must yield to the particular rule under the second September 26, 1984. He requested that the situation be remedied but Air Kenya Flight
sentence regarding liability. Furthermore, even if We consider the two sentences as 203 left for Nairobi without him on board. Stranded in Bombay, Antiporda was booked
particular in nature, the rule has been laid down that the clause which comes later shall for Nairobi via Addis Ababa only on September 27, 1984. He finally arrived in Blantyre
be given effect upon the presumption that it expresses the dominant purpose of the at 9:00 o'clock in the evening of September 28, 1984, more than a couple of days late
instrument WHEREFORE, the petition for review is hereby DISMISSED for lack of for his appointment with people from the institution he was to work with in Malawi.
merit.

LUFTHANSA GERMAN AIRLINES V. CA AND TIRSO V. ANTIPORDA, SR.

Consequently, on January 8, 1985, Antiporda's counsel wrote the general manager of
Lufthansa in Manila demanding P1,000,000 in damages for the airline's "malicious,
wanton, disregard of the contract of carriage." In reply, Lufthansa general manager
Hagen Keilich assured Antiporda that the matter would be investigated.
RTC: Lufthansa breached the contract to transport Antiporda from Manila to Blantyre
on a trip of five legs. Lufthansa cannot limit its liability as a mere ticket issuing agent for
other airlines and only to untoward occurrences on its own line.
The lower court added that under the pool arrangement of the International Air
Transport Association (IATA), of which Lufthansa and Air Kenya are members, member
airlines are agents of each other in the issuance of tickets and, therefore, in accordance
with Ortigas v. Lufthansa, an airline company is considered bound by the mistakes
committed by another member of IATA which, in behalf of the former, had confirmed a
passenger's reservation for accommodation.
Air France v. Carrascoso, the lower court ruled that passengers have a right to be treated with
kindness, respect, courtesy and consideration by the carrier's employees apart from their right to
be protected against personal misconduct, injurious language, indignities and abuses from such
employees.
Lufthansa elevated the case to the Court of Appeals arguing that it cannot be held liable
for the acts committed by Air Kenya on the basis of the following:
(a) it merely acted as a ticket-issuing agent in behalf of Air Kenya; consequently the contract of
carriage entered into is between respondent Antiporda and Air Kenya, to the exclusion of petitioner
Lufthansa;
(b) under sections (1) and (2) Article 30 of the Warsaw Convention, an airline carrier is liable only
to untoward occurrences on its own line;
(c) the award of moral and exemplary damages in addition to attorney's fees by the trial court is
without basis in fact and in law.
CA: Affirmed RTC. Explained the Court of Appeals: although the contract of carriage
was to be performed by several air carriers, the same is to be treated as a single
operation conducted by Lufthansa because Antiporda dealt exclusively with it which
issued him a Lufthansa ticket for the entire trip. By issuing a confirmed ticket, Lufthansa
in effect guaranteed Antiporda a sure seat with Air Kenya. Private respondent
Antiporda, maintained the Court of Appeals, had the right to expect that his ticket would
be honored by Air Kenya which, in the legal sense, Lufthansa had endorsed and, in
effect, guaranteed the performance of its principal engagement to carry out his five-leg
trip.
The appellate court also ruled that Lufthansa cannot rely on Sections (1) and (2), Article
30 of the Warsaw Convention 7 because the provisions thereof are not applicable under
the circumstances of the case.
Sections (1) and (2), Article 30 of the Warsaw Convention provide:
Art. 30 (1). In the case of transportation to be performed by various successive carriers and falling
within the definition set out in the third paragraph of Article I, each carrier who accepts passengers,
baggage, or goods shall be subject to the rules set out in the convention, and shall be deemed to
be one of the contracting parties to the contract of transportation insofar as the contract deals with
that part of the transportation which is performed under his supervision.
(2) In the case of transportation of this nature, the passenger or his representative can take action
only against the carrier who performed the transportation during which the accident or the delay
occurred, save in the case where, by express agreement, the first carrier has assumed liability for
the whole journey. (Emphasis supplied).
According to the Court of Appeals, Antiporda's cause of action is not premised on the
occurrence of an accident or delay as contemplated under Section 2 of said Article but
on Air Kenya's refusal to transport him in order to accommodate another. To support
this ruling, the Court of Appeals cited the Supreme Court ruling in KLM Royal Dutch
Airlines v. Court of Appeals, 8 which held, inter alia, that:
1. The applicability insisted upon by the KLM of Article 30 of the Warsaw Convention
cannot be sustained. That article presupposes the occurrence of either an accident or
a delay, neither of which took place at the Barcelona airport; what is here manifest,
instead, is that the Aer Lingus, through its manager there, refused to transport the
respondents to their planned and contracted destination.
The Court of Appeals concluded that Lufthansa cannot, thus, invoke Sections (1) and
(2), Article 30 of the Warsaw Convention to evade liability.
Failing to obtain a favorable decision, Lufthansa filed this petition for review on certiorari
anchored on the following arguments:
1. The respondent court erred as a matter of law in refusing to apply the Warsaw Convention to
the instant case.
2. Respondent court's ruling that Lufthansa had deceived private respondent has no factual or
legal basis.
3. The respondent court erred as a matter of law in affirming the trial court's award of moral
damages in the face of this Court's rulings concerning moral damages in cases of breach of
contract.
4. The respondent court erred as a matter of law in affirming the trial court's award of exemplary
damages for lack of legal or factual basis therefor.
The arguments propounded by petitioner Lufthansa cannot suffice to reverse the
appellate court's decision as prayed for.
Lufthansa maintains that its liability to any passenger is limited to occurrences in its
own line, and, thus, in the case at bench, its liability to Antiporda is limited to the extent
that it had transported him from Manila to Singapore and from Singapore to Bombay;
that therefrom, responsibility for the performance of the contract of carriage is assumed
by the succeeding carriers tasked to transport him for the remaining leg of his trip
because at that stage, its contract of carriage with Antiporda ceases, with Lufthansa
acting, no longer as the principal in the contract of carriage, but merely as a ticket-
issuing agent for the other carriers.
In further advancing this line of defense, Lufthansa invoked Section 2, Article 30 of the
Warsaw Convention9 which expressly stipulates that in cases where the transportation
of passengers or goods is performed by various successive carriers, the passenger can
take action only against the carrier which performed the transportation, during which
the accident or delay occurred. Lufthansa further advanced the theory that this
provision of the Warsaw Convention is applicable to the present case, contrary to the
decision of the Court of Appeals which relied on the Supreme Court ruling in KLM Royal
Dutch Lines. 10 For Lufthansa, "bumping-off" is considered delay since delay would
inevitably result therefrom. It implored this Court to re-examine our ruling in KLM and
take heed of jurisprudence 11 in the U.S. where "delay," unlike in our ruling in KLM,
contemplates the instance of "bumping-off." In KLM, we held that the term "delay" does
not encompass the instance of "bumping-off," the latter having been defined as refusal
to carry or transport a passenger.
On his part, private respondent Antiporda insists that he entered with Lufthansa an
exclusive contract of carriage, the nature of which is a continuous carriage by air from
Manila to Blantyre Malawi; that it did not enter into a series of independent contracts
with the carriers that transported him for the remaining leg of his trip.
The basis for such claim is well-founded. As ruled by the trial court, with the Court of
Appeals concurring favorably, Antiporda was issued a confirmed Lufthansa ticket all
throughout the five-leg trip. The fourth paragraph of the "Conditions of Contract"
stipulated in the ticket indubitably showed that the contract of carriage was considered
as one of continuous air transportation from Manila to Blantyre, Malawi, thus:
4. carriage to be performed hereunder by several successive carriers is regarded
as a single operation.
ISSUE: WON CA is correct in denying the petition of Lufthansa banking on the provision
of Warsaw Convention on successive carriers
HELD: In light of the stipulations expressly specified in the ticket defining the true nature
of its contract of carriage with Antiporda, Lufthansa cannot claim that its liability thereon
ceased at Bombay Airport and thence, shifted to the various carriers that assumed the
actual task of transporting said private respondent.
We, therefore, reject Lufthansa's theory that from the time another carrier was engaged
to transport Antiporda on another segment of his trip, it merely acted as a ticket-issuing
agent in behalf of said carrier. In the very nature of their contract, Lufthansa is clearly
the principal in the contract of carriage with Antiporda and remains to be so, regardless
of those instances when actual carriage was to be performed by various carriers. The
issuance of a confirmed Lufthansa ticket in favor of Antiporda covering his entire five-
leg trip abroad successive carriers concretely attests to this. This also serves as proof
that Lufthansa, in effect guaranteed that the successive carriers, such as Air Kenya
would honor his ticket; assure him of a space therein and transport him on a particular
segment of his trip. This ruling finds corroboration in the Supreme Court decision in
KLM , where the same issues were confronted, thus:
The passage tickets of the respondents provide that the carriage to be performed
thereunder by several successive carriers "is to be regarded as a single operation,"
which is diametrically incompatible with the theory of the KLM that the respondents
entered into a series of independent contracts with the carriers which took them on the
various segments of their trip. This position of KLM we reject. The respondents dealt
exclusively with the KLM which issued them tickets for their entire trip and which in
effect guaranteed to them that they would have sure space in Aer Lingus flight 861.
The respondents, under that assurance of the internationally prestigious KLM, naturally
had the right to expect that their tickets would be honored by Aer Lingus to which, in
the legal sense, the KLM had indorsed and in effect guaranteed the performance of its
principal engagement to carry out the respondents' scheduled itinerary previously and
mutually agreed upon between the parties.
On the issue of whether the Warsaw Convention, particularly Section 2, Article 30
thereof is applicable herein, we agree with the Court of Appeals in ruling in the negative.
We reiterate what has been settled in KLM:
1. The applicability insisted upon by the KLM of Article 30 of the Warsaw Convention
cannot be sustained. That article presupposes the occurrence of either an accident or
a delay, neither of which took place at the Barcelona airport; what is here manifest,
instead, is that the Aer Lingus, through its manager there, refused to transport the
respondents to their planned and contracted destination. . . .
Lufthansa prays this court to take heed of jurisprudence in the United States where the
term "delay" was interpreted to include "bumping-off" or failure to carry a passenger
with a confirmed reservation. These decisions in the United States are not controlling
in this jurisdiction. We are not prepared, absent reasons of compelling nature, to
entertain an extended meaning of the term "delay," which in KLM was given its ordinary
signification. "Construction and interpretation come only after it has been demonstrated
that application is impossible or inadequate without them. The ordinary language of a
statute must be given its ordinary meaning and limited to a reasonable interpretation."
13 In its ordinary sense, "delay" means to prolong the time of or before; to stop, detain
or hinder for a time, or cause someone or something to be behind in schedule or usual
rate of movement in progress. 14 "Bumping-off," which is the refusal to transport
passengers with confirmed reservation to their planned and contracted destinations,
totally forecloses said passengers' right to be transported, whereas delay merely
postpones for a time being the enforcement of such right.
Consequently, Section 2, Article 30 of the Warsaw Convention which does not
contemplate the instance of "bumping-off" but merely of simple delay, cannot provide
a handy excuse for Lufthansa as to exculpate it from any liability to Antiporda. The
payment of damages is, thus, deemed warranted by this Court. We find no reversible
error in the lower court's award of moral and exemplary damages, including attorney's
fees in favor of Antiporda.
NOT MATERIAL TO SUCCESIVE CARRIERS – ISSUE: BUMPING OFF
Observed the Court of Appeals: If there was really no seat available because of over-booking, why
did Lufthansa confirm the ticket of the plaintiff-appellee? It has to be pointed out that the confirmed
ticket is up to Blantyre, Malawi, not only to Bombay. If the plaintiff-appellee was not in the list of
passengers of Kenya Airways (the connecting flight) then Lufthansa must have deceived him in
Manila because according to Gerard Matias, the passengers booked by Kenya Airways for Boeing
707 were 190 passengers when the plane could accommodate only 144 passengers considering
that the name of plaintiff-appellee was not in the list. If that was the situation, Lufthansa by the
issuance of its ticket should have not assured the plaintiff-appellee that he could get the connecting
flights as scheduled. Surely, Lufthansa before confirming the ticket of the plaintiff-appellee must
have confirmed the flight with Kenya Airways. If it was impossible to get a seat upon its own
investigation in Bombay, then it should have not confirmed the ticket of the plaintiff-appellee. It is
the defendant-appellant who was negligent in the performance of its duties, and plaintiff-appellee
was just plainly deceived.
Since the ticket was marked O.K., meaning confirmed, therefore plaintiff-appellee must have a
definite seat with Kenya Airways but it was lost or given to another person. It is not true therefore,
that plaintiff-appellee's name was not in the list of Kenya Airways. Besides, why should Lufthansa
allow a passenger to depart from the Philippines with a confirmed ticket, without instructing its
Bombay office to reserve a seat with Kenya Airways for its connecting flight? In spite of the
confirmation, Nelda Aquino testified that plaintiff-appellee was stranded in Bombay because he
did not get a seat with Kenya Airways, and his name did not appear in the list of passengers. Then
contrary to the testimonies of Berndt Loewe and Gerard Matias that the obligation of the
defendant-appellant is only up to Bombay and the reason why plaintiff-appellee was not in the list
of passengers is because of overbooking. Nelda Aquino contrary to the testimonies of the two,
testified that the reason for the bumping-off is that the seat was given to another passenger.

If Nelda Aquino knew that the reason for the bumping-off is that the seat was given to another,
how come Berndt Loewe, passenger Sales Manager of defendant, Gerard Matias, an employee
of defendant-appellant in Bombay did not know the said reason why the name of plaintiff-appellee
did not appear in the list of passengers? It is either they knew the truth but because they wanted
to escape liability they pretended not to know the truth.

Clearly, bad faith attended the performance of the contract of carriage, for even while Antiporda
was in Bombay, representatives of Lufthansa already tried to evade liability first, by claiming that
the contract of carriage between Lufthansa and Antiporda ceased at Bombay airport, in disregard
of the fact that Antiporda was holding a Lufthansa ticket for the entire five-leg trip; second, despite
Berndt Loewe's knowledge that Antiporda's seat was allowed to be given to another passenger,
the same suppressed the information and feigned ignorance of the matter, presenting altogether
another reason why Antiporda was not listed in the manifest, i.e. that Air Kenya Boeing 707 was
overbooked, notwithstanding clear proof that Lufthansa in Manila confirmed his reservation for
said flight.

There is every indication that Lufthansa, through its representatives in Bombay, acted in a reckless
and malevolent manner in dealing with Antiporda.

WHEREFORE, the petition for review is hereby DENIED and the decision of the Court
of Appeals AFFIRMED.