1.

SECOND DIVISION

I. GOVERNING LAWS [ G.R. No. L-49407, August 19, 1988 ]

NATIONAL DEVELOPMENT COMPANY, PETITIONER-APPELLANT, VS. THE COURT

OF APPEALS AND DEVELOPMENT INSURANCE & SURETY CORPORATION,
A. Coastwise shipping
RESPONDENTS-APPELLEES.
a. New Civil Code (Articles 1732 to 1766)
b. Code of Commerce
[G.R. NO. L-49469. AUGUST 19, 1988]
B. International shipping (Article 1753)
a. From Foreign ports to Philippines ports
MARITIME COMPANY OF THE PHILIPPINES, PETITIONER-APPELLANT, VS. THE
b. From Philippine ports to Foreign ports
COURT OF APPEALS AND DEVELOPMENT INSURANCE & SURETY CORPORATION,
RESPONDENTS-APPELLEES.
1. National Development Co. vs. CA [G.R. No. L-49407,
Aug. 19, 1988] DECISION

PARAS, J.:
C. Overland Transportation
a. Civil Code
b. Code of Commerce These are appeals by certiorari from the decision* of the Court of Appeals in CA
D. Air Transportation G.R. No. L-46513-R entitled "Development Insurance and Surety Corporation
a. Civil Code plaintiff-appellee vs. Maritime Company of the Philippines and National
b. Code of Commerce Development Company defendant-appellants", affirming in toto the decision** in
c. WARSAW Civil Case No. 60641 of the then Court of First Instance of Manila, Sixth Judicial
District, the dispositive portion of which reads:

2. Mapa vs. CA [G.R. No. 122308, July 8, 1997]
"WHEREFORE, judgment is hereby rendered ordering the defendants National
Development Company and Maritime Company of the Philippines, to pay jointly
and severally, to the plaintiff Development Insurance and Surety Corp., the sum
of THREE HUNDRED SIXTY FOUR THOUSAND AND NINE HUNDRED FIFTEEN PESOS
AND EIGHTY SIX CENTAVOS (P364,915.86) with the legal interest thereon from
the filing of plaintiff's complaint on April 22, 1965 until fully paid, plus TEN
THOUSAND PESOS (P10,000.00) by way of damages as and for attorney's fee.

"On defendant Maritime Company of the Philippines' cross-claim against the

1
defendant National Development Company, judgment is hereby rendered, shipment of Kyokuto, Boekui, Kaisa Ltd., consigned to the order of Manila Banking
ordering the National Development Company to pay the cross-claimant Maritime Corporation, Manila, acting for Guilcon, Manila. The total loss was P19, 938.00
Company of the Philippines the total amount that the Maritime Company of the which the plaintiff as insurer paid to Guilcon as holder of the duly endorsed bill of
Philippines may voluntarily or by compliance to a writ of execution pay to the lading (Exhibits M-1 and S-3). Thus, the plaintiff had paid as insurer the total
plaintiff pursuant to the judgment rendered in this case. amount of P364,915.86 to the consignees or their successors-in-interest, for the
said lost or damaged cargoes. Hence, plaintiff filed this complaint to recover said
"With costs against the defendant Maritime Company of the Philippines." amount from the defendants-NDC and MCP as owner and ship agent respectively,
of the said 'Dona Nati' vessel." (Rollo, L-49469, p. 38)
(pp. 34-35, Rollo, GR No. L-49469)
On April 22, 1965, the Development Insurance and Surety Corporation filed
The facts of these cases as found by the Court of Appeals, are as follows: before the then Court of First Instance of Manila an action for the recovery of the
sum of P364,915.86 plus attorney's fees of P10,000.00 against NDC and MCP
"The evidence before us shows that in accordance with a memorandum
(Record on Appeal, pp. 1-6).
agreement entered into between defendants NDC and MCP on September 13,
1962, defendant NDC as the first preferred mortgagee of three ocean going
Interposing the defense that the complaint states no cause of action and even if it
vessels including one with the name 'Dona Nati' appointed defendant MCP as its
does, the action has prescribed, MCP filed on May 12, 1965 a motion to dismiss
agent to manage and operate said vessel for and in its behalf and account (Exh.
(Record on Appeal, pp. 7-14). DISC filed an Opposition on May 21, 1965 to which
A). Thus, on February 28, 1964 the E. Philipp Corporation of New York loaded on
MCP filed a reply on May 27, 1965 (Record on Appeal, pp. 14-24). On June 29,
board the vessel 'Dona Nati' at San Francisco, California, a total of 1,200 bales of
1965, the trial court deferred the resolution of the motion to dismiss till after the
American raw cotton consigned to the order of Manila Banking Corporation,
trial on the merits (Record on Appeal, p. 32). On June 8, 1965, MCP filed its
Manila and the People's Bank and Trust Company acting for and in behalf of the
answer with counterclaim and cross-claim against NDC.
Pan Asiatic Commercial Company, Inc., who represents Riverside Mills
Corporation (Exhs. K-2 to K-7-A & L-2 to L-7-A). Also loaded on the same vessel at
NDC, for its part, filed its answer to DISC's complaint on May 27, 1965 (Record on
Tokyo, Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to the
Appeal, pp. 22-24). It also filed an answer to MCP's cross-claim on July 16, 1965
order of Manila Banking Corporation consisting of 200 cartons of sodium lauryl
(Record on Appeal, pp. 39-40). However, on October 16, 1965, NDC's answer to
sulfate and 10 cases of aluminium foil (Exhs. M & M-1). En route to Manila the
DISC's complaint was stricken off from the record for its failure to answer DISC's
vessel Dona Nati figured in a collision at 6:04 a.m. on April 15, 1964 at Ise Bay,
written interrogatories and to comply with the trial court's order dated August
Japan with a Japanese vessel 'SS Yasushima Maru' as a result of which 550 bales
14, 1965 allowing the inspection or photographing of the memorandum of
of aforesaid cargo of American raw cotton were lost and/or destroyed, of which
agreement it executed with MCP. Said order of October 16, 1965 likewise dec-
535 bales as damaged were landed and sold on the authority of the General
lared NDC in default (Record on Appeal, p. 44). On August 31, 1966, NDC filed a
Average Surveyor for Yen 6,045,500 and 15 bales were not landed and deemed
motion to set aside the order of October 16, 1965, but the trial court denied it in
lost (Exh. G). The damaged and lost cargoes was worth P344,977.86 which
its order dated September 21, 1966.
amount, the plaintiff as insurer, paid to the Riverside Mills Corporation as holder
of the negotiable bills of lading duly endorsed (Exhs. L-7-A, K-8-A, K-2-A, K-3-A, K-
On November 12, 1969, after DISC and MCP presented their respective evidence,
4-A, K-5-A, A-2, N-3 and R-3). Also considered totally lost were the aforesaid
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the trial court rendered a decision ordering the defendants MCP and NDC to pay
jointly and solidarily to DISC the sum of P364,915.86 plus the legal rate of interest
to be computed from the filing of the complaint of April 22, 1965, until fully paid
and attorney's fees of P10,000.00. Likewise, in said decision, the trial court
granted MCP's cross-claim against NDC.
MCP interposed its appeal on December 20, 1969, while NDC filed its appeal on
February 17, 1970 after its motion to set aside the decision was denied by the
trial court in its order dated February 13, 1970.
On November 17, 1978, the Court of Appeals promulgated its decision
affirming in toto the decision of the trial court.
Hence these appeals by certiorari.
NDC's appeal was docketed as G.R. No. 49407, while that of MCP was docketed as
G.R. No. 49469. On July 25, 1979, this Court ordered the consolidation of the
above cases (Rollo, p. 103). On August 27, 1979, these consolidated cases were
given due course (Rollo, p. 108) and submitted for decision on February 29, 1980
(Rollo, p. 136).
In its brief, NDC cited the following assignments of error:
I PRIVATE RESPONDENT'S EXHIBIT "H" AND IN FINDING ON THE BASIS THEREOF
THE COURT OF APPEALS ERRED IN APPLYING ARTICLE 827 OF THE CODE OF
COMMERCE AND NOT SECTION 4(2a) OF COMMONWEALTH ACT NO. 65, OTHER-
WISE KNOWN AS THE CARRIAGE OF GOODS BY SEA ACT IN DETERMINING THE
LIABILITY FOR LOSS OF CARGOES RESULTING FROM THE COLLISION OF ITS VESSEL
"DONA NATI" WITH THE "YASUSHIMA MARU" OCCURRED AT ISE BAY, JAPAN OR
OUTSIDE THE TERRITORIAL JURISDICTION OF THE PHILIPPINES.
II
THE COURT OF APPEALS ERRED IN NOT DISMISSING THE COMPLAINT FOR
3
REIMBURSEMENT FILED BY THE INSURER, HEREIN PRIVATE RESPONDENT-
APPELLEE, AGAINST THE CARRIER, HEREIN PETITIONER-APPELLANT. (pp. 1-2, Brief
for Petitioner-Appellant National Development Company; p. 96, Rollo)
On its part, MCP assigned the following alleged errors:
I
THE RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING THAT
RESPONDENT DEVELOPMENT INSURANCE AND SURETY CORPORATION HAS NO
CAUSE OF ACTION AS AGAINST PETITIONER MARITIME COMPANY OF THE
PHILIPPINES AND IN NOT DISMISSING THE COMPLAINT.
II
THE RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CAUSE
OF ACTION OF RESPONDENT DEVELOPMENT INSURANCE AND SURETY CORPORA-
TION IF ANY EXISTS AS AGAINST HEREIN PETITIONER MARITIME COMPANY OF
THE PHILIPPINES IS BARRED BY THE STATUTE OF LIMITATION AND HAS ALREADY
PRESCRIBED.
III
THE RESPONDENT COURT OF APPEALS ERRED IN ADMITTING IN EVIDENCE
THAT THE COLLISION OF THE SS DONA NATI AND THE YASUSHIMA MARU WAS
DUE TO THE FAULT OF BOTH VESSELS INSTEAD OF FINDING THAT THE COLLISION
WAS CAUSED BY THE FAULT, NEGLIGENCE AND LACK OF SKILL OF THE
COMPLEMENTS OF THE YASUSHIMA MARU WITHOUT THE FAULT OR
NEGLIGENCE OF THE COMPLEMENT OF THE SS DONA NATI.
IV
THE RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT UNDER THE
CODE OF COMMERCE PETITIONER APPELLANT MARITIME COMPANY OF THE
PHILIPPINES IS A SHIP AGENT OR NAVIERO OF SS DONA NATI OWNED BY CO-
PETITIONER APPELLANT NATIONAL DEVELOPMENT COMPANY AND THAT SAID
PETITIONER-APPELLANT IS SOLIDARILY LIABLE WITH SAID CO-PETITIONER FOR
LOSS OF OR DAMAGES TO CARGO RESULTING IN COLLISION OF SAID VESSEL,
WITH THE JAPANESE YASUSHIMA MARU.
V
THE RESPONDENT COURT OF APPEALS ERRED IN FINDING THAT THE LOSS OF OR
DAMAGES TO THE CARGO OF 550 BALES OF AMERICAN RAW COTTON, DAMAGES
WERE CAUSED IN THE AMOUNT OF P344,977.86 INSTEAD OF ONLY P110,000 AT
P200.00 PER BALE AS ESTABLISHED IN THE BILLS OF LADING AND ALSO IN HOLD-
ING THAT PARAGRAPH 10 OF THE BILLS OF LADING HAS NO APPLICATION IN THE
INSTANT CASE THERE BEING NO GENERAL AVERAGE TO SPEAK OF.
VI
THE RESPONDENT COURT OF APPEALS ERRED IN HOLDING THE PETITIONERS
NATIONAL DEVELOPMENT COMPANY AND MARITIME COMPANY OF THE
PHILIPPINES TO PAY JOINTLY AND SEVERALLY TO HEREIN RESPONDENT
DEVELOPMENT INSURANCE AND SURETY CORPORATION THE SUM OF
P364,915.86 WITH LEGAL INTEREST FROM THE FILING OF THE COMPLAINT UNTIL
FULLY PAID PLUS P10,000.00 AS AND FOR ATTORNEY'S FEES INSTEAD OF
SENTENCING SAID PRIVATE RESPONDENT TO PAY HEREIN PETITIONERS ITS
COUNTERCLAIM IN THE AMOUNT OF P10,000.00 BY WAY OF ATTORNEY'S FEES
AND THE COSTS.
(pp. 1-4, Brief for the Maritime Company of the Philippines; p. 121, Rollo)
The pivotal issue in these consolidated cases is the determination of which laws
govern loss or destruction of goods due to collision of vessels outside Philippine
waters, and the extent of liability as well as the rules of prescription provided
thereunder.
4
The main thrust of NDC's argument is to the effect that the Carriage of Goods by
Sea Act should apply to the case at bar and not the Civil Code or the Code of
Commerce. Under Section 4 (2) of said Act, the carrier is not responsible for the
loss or damage resulting from the "act, neglect or default of the master, mariner,
pilot or the servants of the carrier in the navigation or in the management of the
ship." Thus, NDC insists that based on the findings of the trial court which were
adopted by the Court of Appeals, both pilots of the colliding vessels were at fault
and negligent, NDC would have been relieved of liability under the Carriage of
Goods by Sea Act. Instead, Article 827 of the Code of Commerce was applied and
both NDC and MCP were ordered to reimburse the insurance company for the
amount the latter paid to the consignee as earlier stated.
This issue has already been laid to rest by this Court in Eastern Shipping Lines Inc.
v. IAC (150 SCRA 469-470 [1987]) where it was held under similar circumstances
that "the law of the country to which the goods are to be transported governs the
liability of the common carrier in case of their loss, destruction or deterioration"
(Article 1753, Civil Code). Thus, the rule was specifically laid down that for cargoes
transported from Japan to the Philippines, the liability of the carrier is governed
primarily by the Civil Code and in all matters not regulated by said Code, the
rights and obligations of common carrier shall be governed by the Code of Com-
merce and by special laws (Article 1766, Civil Code). Hence, the Carriage of Goods
by Sea Act, a special law, is merely suppletory to the provisions of the Civil Code.
In the case at bar, it has been established that the goods in question are
transported from San Francisco, California and Tokyo, Japan to the Philippines
and that they were lost or damaged due to a collision which was found to have
been caused by the negligence or fault of both captains of the colliding vessels.
Under the above ruling, it is evident that the laws of the Philippines will apply,
and it is immaterial that the collision actually occurred in foreign waters, such as
Ise Bay, Japan.
Under Article 1733 of the Civil Code, common carriers from the nature of their
business and for reasons of public policy are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers
transported by them according to all circumstances of each case. Accordingly,
under Article 1735 of the same Code, in all cases other than those mentioned in
Article 1734 thereof, the common carrier shall be presumed to have been at fault
or to have acted negligently, unless it proves that it has observed the
extraordinary diligence required by law.
It appears, however, that collision falls among matters not specifically regulated
by the Civil Code, so that no reversible error can be found in respondent court's
application to the case at bar of Articles 826 to 839, Book Three of the Code of
Commerce, which deal exclusively with collision of vessels.
More specifically, Article 826 of the Code of Commerce provides that where
collision is imputable to the personnel of a vessel, the owner of the vessel at fault,
shall indemnify the losses and damages incurred after an expert appraisal. But
more in point to the instant case is Article 827 of the same Code, which provides
that if the collision is imputable to both vessels, each one shall suffer its own
damages and both shall be solidarily responsible for the losses and damages
suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce, particularly Articles
826 to 839, the shipowner or carrier, is not exempt from liability for damages aris-
ing from collision due to the fault or negligence of the captain. Primary liability is
imposed on the shipowner or carrier in recognition of the universally accepted
doctrine that the shipmaster or captain is merely the representative of the owner
who has the actual or constructive control over the conduct of the voyage (Yueng
Sheng Exchange and Trading Co. v. Urrutia & Co., 12 Phil. 751 [1909]).
There is, therefore, no room for NDC's interpretation that the Code of Commerce
should apply only to domestic trade and not to foreign trade. Aside from the fact
that the Carriage of Goods by Sea Act (Com. Act No. 65) does not specifically
provide for the subject of collision, said Act in no uncertain terms, restricts its
application "to all contracts for the carriage of goods by sea to and from
Philippine ports in foreign trade." Under Section 1 thereof, it is explicitly provided
that "nothing in this Act shall be construed as repealing any existing provision of
5
the Code of Commerce which is now in force, or as limiting its application." By
such incorporation, it is obvious that said law not only recognizes the existence of
the Code of Commerce, but more importantly does not repeal nor limit its
application.
On the other hand, Maritime Company of the Philippines claims that
Development Insurance and Surety Corporation, has no cause of action against it
because the latter did not prove that its alleged subrogers have either the
ownership or special property right or beneficial interest in the cargo in question;
neither was it proved that the bills of lading were transferred or assigned to the
alleged subrogers; thus, they could not possibly have transferred any right of
action to said plaintiff-appellee in this case. (Brief for the Maritime Company of
the Philippines, p. 16).
The records show that the Riverside Mills Corporation and Guilcon, Manila are
the holders of the duly endorsed bills of lading covering the shipments in question
and an examination of the invoices in particular, shows that the actual consignees
of the said goods are the aforementioned companies. Moreover, no less than
MCP itself issued a certification attesting to this fact. Accordingly, as it is
undisputed that the insurer, plaintiff-appellee paid the total amount of
P364,915.86 to said consignees for the loss or damage of the insured cargo, it is
evident that said plaintiff-appellee has a cause of action to recover (what it has
paid) from defendant-appellant MCP (Decision, CA-G.R. No. 46513-R, p. 10; Rollo,
p. 43).
MCP next contends that it can not be liable solidarily with NDC because it is
merely the manager and operator of the vessel Dona Nati, not a ship agent. As
the general managing agent, according to MCP, it can only be liable if it acted in
excess of its authority.
As found by the trial court and by the Court of Appeals, the Memorandum
Agreement of September 13, 1962 (Exhibit 6, Maritime) shows that NDC
appointed MCP as Agent, a term broad enough to include the concept of Ship-
agent in Maritime Law. In fact, MCP was even conferred all the powers of the
owner of the vessel, including the power to contract in the name of the NDC
(Decision, CA G.R. No. 46513, p. 12; Rollo, p. 40). Consequently, under the
circumstances, MCP cannot escape liability.
It is well settled that both the owner and agent of the offending vessel are liable
for the damage done where both are impleaded (Philippine Shipping Co. v. Garcia
Vergara, 96 Phil. 281 [1906]); that in case of collision, both the owner and the
agent are civilly responsible for the acts of the captain (Yueng Sheng Exchange
and Trading Co. v. Urrutia & Co., supra citing Article 586 of the Code of
Commerce; Standard Oil Co. of New YOrk v. Lopez Castelo, 42 Phil. 256, 262
[1921]); that while it is true that the liability of the naviero in the sense of
charterer or agent, is not expressly provided in Article 826 of the Code of
Commerce, it is clearly deducible from the general doctrine of jurisprudence
under the Civil Code but more specially as regards contractual obligations in
Article 586 of the Code of Commerce. Moreover, the Court held that both the
owner and agent (Naviero) should be declared jointly and severally liable, since
the obligation which is the subject of the action had its origin in a tortious act and
did not arise from contract (Verzosa and Ruiz, Rementeria y Cia v. Lim, 45 Phil.
423 [1923]). Consequently, the agent, even though he may not be the owner of
the vessel, is liable to the shippers and owners of the cargo transported by it, for
losses and damages occasioned to such cargo, without prejudice, however, to his
rights against the owner of the ship, to the extent of the value of the vessel, its
equipment, and the freight (Behn, Meyer Y Co. v. McMicking et al. 11 Phil. 276
[1908]).
As to the extent of their liability, MCP insists that their liability should be limited
to P200.00 per package or per bale of raw cotton as stated in paragraph 17 of the
bills of lading. Also the MCP argues that the law on averages should be applied in
determining their liability.
MCP's contention is devoid of merit. The declared value of the goods was stated
in the bills of lading and corroborated no less by invoices offered as evidence dur-
ing the trial. Besides, common carriers, in the language of the court in Juan
Ysmael & Co., Inc. v. Barretto et al., (51 Phil. 90 [1927]) "cannot limit its liability
6
for injury to a loss of goods where such injury or loss was caused by its own
negligence." Negligence of the captains of the colliding vessel being the cause of
the collision, and the cargoes not being jettisoned to save some of the cargoes
and the vessel, the trial court and the Court of Appeals acted correctly in not
applying the law on averages (Articles 806 to 818, Code of Commerce).
MCP's claim that the fault or negligence can only be attributed to the pilot of the
vessel SS Yasushima Maru and not to the Japanese Coast pilot navigating the
vessel Dona Nati, need not be discussed lengthily as said claim is not only at
variance with NDC's posture, but also contrary to the factual findings of the trial
court affirmed no less by the Court of Appeals, that both pilots were at fault for
not changing their excessive speed despite the thick fog obstructing their
visibility.
Finally on the issue of prescription, the trial court correctly found that the bills of
lading issued allow trans-shipment of the cargo, which simply means that the
date of arrival of the ship Dona Nati on April 18, 1964 was merely tentative to
give allowances for such contingencies that said vessel might not arrive on
schedule at Manila and therefore, would necessitate the trans-shipment of cargo,
resulting in consequent delay of their arrival. In fact, because of the collision, the
cargo which was supposed to arrive in Manila on April 18, 1964 arrived only on
June 12, 13, 18, 20 and July 10, 13 and 15, 1964. Hence, had the cargoes in
question been saved, they could have arrived in Manila on the above-mentioned
dates. Accordingly, the complaint in the instant case was filed on April 22, 1965,
that is, long before the lapse of one (1) year from the date the lost or damaged
cargo "should have been delivered" in the light of Section 3, sub-paragraph (6) of
the Carriage of Goods by Sea Act.
PREMISES CONSIDERED, the subject petitions are DENIED for lack of merit and
the assailed decision of the respondent Appellate Court is AFFIRMED.
SO ORDERED.

2. THIRD DIVISION
[ G.R. No. 122308, July 08, 1997 ]
PURITA S. MAPA, CARMINA S. MAPA AND CORNELIO P. MAPA, PETITIONERS,
VS. COURT OF APPEALS AND TRANS-WORLD AIRLINES INC., RESPONDENTS.
DECISION
DAVIDE, JR., J.:
The main issue in this petition for review under Rule 45 of the Rules of Court is
the applicability of Article 28(1) of the Warsaw Convention, [1] which provides as
follows:
ARTICLE 28. (1) An action for damages must be brought, at the option of the
plaintiff, in the territory of one of the High Contracting Parties, either before the
court of the domicile of the carrier or of his principal place of business, or where
he has a place of business through which the contract has been made, or before
the court at the place of destination.
We are urged by the petitioners to reverse the 31 May 1995 Decision of the Court
of Appeals in CA-G.R. CV No. 39896[2] affirming the 24 July 1992 Order of the
Regional Trial Court of Quezon City, Branch 102, which dismissed Civil Case No. Q-
91-9620[3] on the ground of lack of jurisdiction in view of the aforementioned
Article 28(1) of the Warsaw Convention.
The antecedent facts, as summarized by the Court of Appeals, are as follows:
Plaintiffs Cornelio P. Mapa and Purita S. Mapa are respectable members of the
society. Mr. Mapa is an established businessman and currently the Regional
General Manager of Akerlund and Rausing, a multinational packaging material
7
manufacturer based in Manila. He was previously the Senior Vice President of
Phimco Industries, an affiliate company of Swedish Match Company. Mrs. Mapa is
a successful businesswoman engaged in the commercial transactions of high
value antique and oriental arts decor items originating from Asian countries.
Carmina S. Mapa is the daughter of plaintiffs Purita and Cornelio and is a graduate
of the International School in Bangkok, Thailand, now presently enrolled at the
Boston University where she is majoring in communication.
Plaintiffs Mapa entered into contract of air transportation with defendant TWA as
evidenced by TWA ticket Nos. 015:9475:153:304 and 015:9475:153:305,
purchased in Bangkok, Thailand. Said TWA tickets are for Los Angeles-New York-
Boston-St. Louis-Chicago ....
Domicile of carrier TWA is Kansas City, Missouri, USA. Its principal place of
business is Kansas City, Missouri, USA. TWA’s place of business through which the
contracts were made is Bangkok, Thailand. The place of destination is Chicago,
USA.
On August 10, 1990, plaintiffs Carmina and Purita left Manila on board PAL flight
No. 104 for Los Angeles. Carmina was to commence schooling and thus was
accompanied by Purita to assist her in settling down at the University.
They arrived in 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. The seven baggages were received by a porter who
issued seven TWA baggage receipts numbered 17-8270, 71, 72, 73, 74, 75, and 76
therefor.
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 015:9475:153:304 and 015:9475:153:305 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, to
wit: one Samsonite on the carousel, another Samsonite lying on the floor near the
carousel and a third baggage, an American Tourister, inside the unclaimed
baggage office. Plaintiffs immediately reported the loss of their four baggages to
the TWA Baggage Office at Logan Airport. TWA’s representative confidently
assured them that their baggages would be located within 24 hours and not more
than 48 hours.
On September 2, 1990, 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.
8
On September 20, 1990, plaintiffs’ 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: (a) transportation credit for future TWA travel or (b) cash
settlement. Five months lapsed without any result on TWA’s intensive search.
On January 3, 1991, plaintiffs-appellants opted for transportation credit for future
TWA travel.
On January 11, 1991, 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.[4]
Purita S. Mapa, Carmina S. Mapa, and Cornelio P. Mapa (herein petitioners) then
filed with the trial court on 1 August 1991 a complaint [5] for damages,[6] which was
docketed as Civil Case No. Q-91-9620. Before a responsive pleading was filed, the
petitioners filed an Amended Complaint.[7] 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; its Memorandum,[13] the trial court gave the petitioners five days within which to
(4) P1 million, by way of exemplary damages, with legal interest on said amounts file a reply memorandum; and TWA, two days from receipt of the latter to file its
from the date of extrajudicial demand thereof; and (5) P500,000.00 as attorney's comment thereon.[14] The petitioners then filed their Opposition (by way of Reply
fees, costs of the suit, and other expenses of litigation. [8] Memorandum)[15] to which TWA filed a Reply.[16] Thereafter, the petitioners
submitted a Rejoinder[17]; TWA, a Surrejoinder.[18]
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 On 24 July 1992, the trial court issued an Order [19] dismissing the case for lack of
action for damages in that pursuant to Article 28(1) of the Warsaw Convention, jurisdiction in light of Article 28(1) of the Warsaw Convention. Thus:
the action could only be brought either in Bangkok where the contract was
It is plaintiffs' theory that the Warsaw Convention does not apply to the instant
entered into, or in Boston which was the place of destination, or in Kansas City
case because plaintiffs' contract of transportation does not constitute
which is the carrier's domicile and principal place of business.
"international transportation" as defined in said convention. This however is
belied by the Passenger Property Questionnaire which is Annex C of plaintiffs'
TWA further alleged that pursuant to the Warsaw Convention and the Notice of
amended complaint. Page two of said questionnaire accomplished by plaintiffs
Baggage Limitations at the back of the tickets, its liability to the petitioners is
under the heading "Your Complete Itinerary" shows that the TWA tickets issued
limited to US$9.07 per pound, or US$20.00 per kilo, which is in lieu of actual and
to the plaintiffs form part of the contract of transportation to be performed from
compensatory damages. Even assuming that petitioners’ bag weighed the
Manila to the United States. Since the Philippines and the United States are
maximum acceptable weight of 70 pounds, TWA’s maximum liability is $640.00
parties to the convention, plaintiffs' contracts of transportation come within the
per bag or $2,560.00 for the four pieces of baggage, which the petitioners have
meaning of International Transportation.
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. [9]
On the basis of the foregoing, the Court holds that the Warsaw Convention is
applicable to the case at bar, even if the basis of plaintiffs' present action is
On 7 February 1992, the petitioners filed their second Amended Complaint [10] to
breach of contract of carriage under the New Civil Code.
include a claim of US$2,500, or its equivalent in Philippine Currency, representing
the additional replacement cost of the items and personal effects contained in
The next question to be resolved is whether or not the Court has jurisdiction to
their lost luggage; and US$4,500 representing the travel expenses, hotel, lodging,
try the present case in the light of the provision of Art. 28(1) above-quoted.
food and other expenses of petitioner Cornelio Mapa, who was constrained to
join his family in Boston to extend the necessary assistance in connection with the
Under Art. 28(1) supra, a complaint for damages against an air carrier can be
lost luggage.
instituted only in any of the following places/courts:
After the filing of TWA’s Answer to the second Amended Complaint, [11] and (1) The court of the domicile of the carrier;
petitioners’ Reply thereto, the trial court gave TWA ten days within which to
submit a memorandum in support of its affirmative defenses; after which the (2) The court of its principal place of business;
incident would be deemed submitted for resolution. [12] However, after TWA filed
9
(3) The court where it has a place of business through which the contract had
been made;
(4) The court of the place of destination.
In interpreting the provision of Art. 28(1) of the Warsaw Convention, the
Supreme Court in the same case of Augusto Benedicto Santos vs. Northwest
Airlines held:
"Whether Article 28(1) refers to jurisdiction or only to venue is a question over
which authorities are sharply divided. While the petitioner cites several cases
holding that Article 28(1) refers to venue rather that jurisdiction, there are later
cases cited by the private respondent supporting the conclusion that the
provision is jurisdictional.
Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be
conferred by consent or waiver upon a court which otherwise would have no
jurisdiction over the subject-matter of an action; but the venue of an action as
fixed by statute may be changed by the consent of the parties and an objection
that the plaintiff brought his suit in the wrong country may be waived by the
failure of the defendant to make a timely objection. In either case, the court may
render a valid judgment. Rules as to jurisdiction can never be left to the consent
or agreement of the parties, whether or not a prohibition exists against their
alteration.
A number of reasons tends to support the characterization of Article 28(1) as a
jurisdiction and not a venue provision. First, the wording of Article 32, which
indicates the places where the action for damages "must" be brought,
underscores the mandatory nature of Article 28(1). Second, this characterization
is consistent with one of the objectives of the Convention, which is to "regulate in
a uniform manner the conditions of international transportation by air." Third,
the Convention does not contain any provision prescribing rules of jurisdiction
other than Article 28(1), which means that the phrase "rules as to jurisdiction"
used in Article 32 must refer only to Article 28(1). In fact, the last sentence of
10
Article 32 specifically deals with the exclusive enumeration in Article 28(1) as
"jurisdictions," which, as such, cannot be left to the will of the parties regardless
of the time when the damage occurred.”
  ...
It has been shown by the defendant that the domicile of the defendant Trans
World Airlines, Inc. is Kansas City, Missouri, its principal place of business is also in
Kansas City, Missouri, the carrier's place of business through which the contracts
were made is Bangkok (Annexes A and A-1, Amended Complaint), and the place
of destination was Boston.
The Philippines not being one of the places specified in Art. 28(1) above-quoted
where the complaint may be instituted, this Court therefore, does not have
jurisdiction over the present case.
Evidently discontented with the trial court's order, the petitioners appealed to
the Court of Appeals, contending that the lower court erred in not holding that
(1) it has jurisdiction over the instant case and (2) the Warsaw Convention is
inapplicable in the instant case because the subject matter of the case is not
included within the coverage of the said convention. [20] They claimed that their
cause of action could be based on breach of contract of air carriage founded on
Articles 1733, 1734, 1735, 1755, and 1756 of the New Civil Code governing
common carriers or Article 2176 of the same Code governing tort or quasi-delict.
The appellate court disagreed with the petitioners and affirmed the order of the
trial court. It held that 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 Convention.
[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.
Respondent Court of Appeals likewise held that the 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.[22] In addition, comformably with Santos III v. Northwest Orient Airlines,
[23]
 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. [24]
We resolved to give due course to the petition after the filing by TWA of its
Comment on the petition and noted without action for the reasons stated in the
resolution of 25 September 1996 petitioners’ Reply and Rejoinder. We then
required the parties to submit their respective memoranda. They did in due time.
11
The petitioners insist that the Warsaw Convention is not applicable to their case
because the contracts they had with TWA did not involve an international
transportation. Whether the contracts were of international transportation is to
be solely determined from the TWA tickets issued to them in Bangkok, Thailand,
which showed that their itinerary was Los Angeles-New York-Boston-St. Louis-
Chicago. Accordingly, since the place of departure (Los Angeles) and the place of
destination (Chicago) are both within the territory of one High Contracting Party,
with no agreed stopping place in a territory subject to the sovereignty, mandate,
suzerainty or authority of another Power, the contracts did not constitute
‘international transportation’ as defined by the convention. They also claim to be
without legal basis the contention of TWA that their transportation contracts
were of international character because of the handwritten notations in the
tickets re “INT’L TKT #079-4402956821-2” and “INT’L TKT #079-4402956819.”
Notwithstanding such notations, the TWA tickets, viz., (a) No. 015.9475:153:304
and (b) No. 015:9475:153:305 did not cease to be for the itinerary therein
designated. Besides, it is a fact that petitioners Purita and Carmina Mapa traveled
from Manila to Los Angeles via Philippine Airlines (PAL) by virtue of PAL tickets
issued independently of the TWA tickets.
The pith issue to be resolved under the petitioners’ 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 to the Convention.
The High Contracting Parties referred to in the Convention are the signatories
thereto and those which subsequently adhered to it. In the case of the
Philippines, the Convention was concurred in by the Senate, through Resolution
No. 19, on 16 May 1950. The Philippine instrument of accession was signed by
President Elpidio Quirino on 13 October 1950 and was deposited with the Polish
Government on 9 November 1950. The Convention became applicable to the
Philippines on 9 February 1951. Then, on 23 September 1955, President Ramon
Magsaysay issued Proclamation No. 201, declaring the Philippines’ formal
adherence thereto, “to the end that the same and every article and clause
thereof may be observed and fulfilled in good faith by the Republic of the
Philippines and the citizens thereof. [26]
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.
12
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 petitioners’ 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 1990 [27] 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 Answer[28] to the second Amended Complaint
the allegation in paragraph 1.1 of the latter [29] 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.
It also points to Article 15 of the IATA Recommend Practice 1724, which provides:
Carriage to be performed by several successive carriers under one ticket, or under
a ticket and any conjunction ticket issued in connection therewith, is regarded as
a single operation.”[30]
The flaw of respondents’ 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 on inferences without established factual basis.
TWA should have offered evidence for its affirmative defenses at the preliminary
hearing therefor. Section 5 of Rule 16 of the Rules of Court expressly provides:
13
 SEC. 5. Pleading grounds as affirmative defenses.  -- Any of the grounds for
dismissal provided for in this rule, except improper venue, may be pleaded as an
affirmative defense, and a preliminary hearing may be had thereon as if a motion
to dismiss had been filed.
Without any further evidence as earlier discussed, the trial court should have
denied the affirmative defense of lack of jurisdiction because it did not appear to
be indubitable. Section 3 of Rule 16 of the Rules of Court provides:
SEC. 3.  Hearing and order. -- After hearing the court may deny or grant the
motion or allow amendment of pleading, or may defer the hearing and
determination of the motion until the trial if the ground alleged therein does not
appear to be indubitable.
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.
SO ORDERED.