Philippine Airlines v.

Court of Appeals
G.R. 119706 – March 14, 1996
J. Regalado

Topic: Agreement limiting liability – As to delay in delivery

Doctrine: Court has cautioned against such blind reliance on adhesion contracts (such as with limited liability) where the
facts and circumstances warrant that they should be disregarded

Petitioner: Philippine Airlines, Inc.

Respondents: Court of Appeals and Gilda Mejia

Case Summary: Gilda Mejia had a microwave unit sent from San Francisco to Manila via PAL cargo. Upon reaching
Manila, the microwave unit was damaged and could not be used anymore. Gilda tried and tried to claim from PAL, yet her
demands were not given and she was made to wait for such long periods of time before getting any response from PAL. She
then filed a suit against the airline for damages, to which the SC affirmed the lower court rulings in finding that PAL was
not absolved of the damages Gilda was claiming for despite the “limited liability” clause of $28 per kg on the contract that
Gilda signed. Gilda wanted to add to it, however, the PAL personnel in SF advised her not to do so. In addition, there was
bad faith on the part of PAL in the inordinate delay in responding to the claims of Gilda.

Facts:

 January 27, 1990: Gilda Mejia shipped a microwave oven unit through Philippine Airlines
o Upon arrival in the Philippines, the plaintiff discovered that the front glass door of the unit was broken and
the damage rendered it unserviceable
o Claimed damages from PAL
o PAL claims that their liability is limited due to the fact that Gilda signed the contract which limited the
liability of PAL to a certain amount only
 Gilda claims that she assented to the terms and conditions of the contract because they were
practically on a “take-it-or-leave-it” basis
 Lower Courts: Both ruled in favor of Gilda Mejia

Issues + Held:
1. W/N PAL’s liability is limited to that of what is stated in the contract – NO
 PAL insists that their liability for the damage to the microwave, if any, should be limited to the provisions of the air
waybill
o For as evidenced by the contract of carriage between Gilda and PAL, it substantially states that the shipper
certifies to the correctness of the entries contained therein and accepts that the carrier’s liability is limited
to $20 per kilogram of goods lost, damage or destroyed unless a value is declared and a supplementary
charge paid
 Gilda did not declare anything, so PAL claims that the liability should be limited to the 28
kilograms multiplied by $20 ($560)
 Gilda claims that the reason why she did not declare a higher value was because she was specifically told by the
PAL personnel in San Francisco that she did not have to declare the value of her cargo  testimony of which was
never rebutted by PAL
o This being so, PAL is estopped from faulting Gilda for her failure to declare the value of the microwave
o The validity of provisions limiting 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 the 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, the Court has cautioned against such blind reliance on adhesion contracts where
the facts and circumstances warrant that they should be disregarded
o In the case at bar, it must be noted that Gilda signified an intention to declare the value of the microwave
prior to its shipment, but was explicitly advised against doing so by PAL employees in San Francisco
  It cannot be denied that the attention of PAL through its personnel in San Francisco was
sufficiently called to the fact that Gilda’s cargo was highly susceptible to breakage as would
necessitate the declaration of its actual value
 PAL had all the opportunity to check the condition and manner of packing prior to acceptance of
shipment, as well as during the preparation of the air waybill  they could have rejected the cargo
if the contents or the packing did not meet the company’s required specifications
o The officer-in-charge of PAL Import Section posited that there may have been inadequate and improper
packing of the cargo  this by itself could be a ground for refusing carriage of the goods presented for
shipment; nonetheless, he admitted on cross-examination that Gilda’s cargo was accepted by PAL
 There is no obligation on the part of a carrier to accept a cargo  where common carrier accepts
cargo for shipment for valuable consideration, it takes the risk of delivering it in good condition as
when it is loaded
 If improper packing known to carrier or personnel, or if apparent upon observation but accepts
goods anyway, it is not relieved of liability for loss or injury resulting therefrom
 The SC declared that Gilda could and would have complied with the conditions stated in the air waybill, i.e.,
declaration of a higher value and payment of supplemental transportation charges which would have entitled her to
recovery of damages beyond the stipulated limit of $20 per kg in the event of loss/damage had she not been
prevented from doing so upon the advice of PAL’s personnel for reasons best known to themselves
o PAL is estopped from blaming Gilda for not declaring the value of the cargo shipped

2. W/N Gilda complied with the requirement for immediate filing of a formal claim for damages – YES
 Testimony provided wherein PAL employee stated that Gilda had followed up for months regarding the claim; that
even upon filing a case, she continued to ask for follow ups on her claim for reimbursement for what had happened
to the microwave
o Considering this, Gilda’s zealous efforts cannot be denied  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
o If there was any failure at all to file the formal claim within the prescriptive period contemplated in the air
waybill, this was because of PAL’s own doing  the consequences of which cannot be attributed to private
respondent
 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 in the contract for
the filing of a formal claim

Additional:
 The Lower Court did not err in ruling that the provision on limited liability is not applicable in this case  we note,
however, that while the facts and circumstances of this case do not call for the direct application of the provisions of
the Warsaw Convention, it should be stressed that recognition of such convention does not preclude the operation of
the Civil Code and other laws in the determination of the extent of liability of the common carrier
o The Warsaw Convention, being a treaty to which the PH is a signatory, is as much part of PH law as the
NCC, CoComm, and other municipal special laws
 On moral and exemplary damages  both lower courts alleged bad faith on the part of PAL as to the delay in
responding to the claims of Gilda
o There was no attempt on the part of PAL to explain the cause of the damage to the oven  this
unexplained cause of damage to the microwave constitutes gross carelessness or negligence which by itself
justifies the award of damages
o The equally unexplained and inordinate delay in acting on the claim upon referral to the claims officer and
the noncommittal responses to Gilda’s entreaties for settlement of her claim for damages belies petitioner’s
pretension that there was no bad faith on its part

Ruling: IN VIEW OF ALL OF THE FOREGOING, the assailed judgment of respondent Court of Appeals if AFFIRMED.