DOLE PHILIPPINES, INC., plaintiff-appellant, vs. MARITIME COMPANY OF THE PHILIPPINES, defendant-appellee.

This appeal, which was certified to the Court by the Court of Appeals as involving only questions of law, 1 relates to a claim for loss and/or damage to a shipment of machine parts sought to be enforced by the consignee, appellant Dole Philippines, Inc. (hereinafter caged Dole) against the carrier, Maritime Company of the Philippines (hereinafter called Maritime), under the provisions of the Carriage of Goods by Sea Act. 2The basic facts are succinctly stated in the order of the Trial Court 3 dated March 16, 1977, the relevant portion of which reads:Before the plaintiff started presenting evidence at today's trial at the instance of the Court the lawyers entered into the following stipulation of facts: 1. The cargo subject of the instant case was discharged in Dadiangas unto the custody of the consignee on December 18, 1971; 2. The corresponding claim for the damages sustained by the cargo was filed by the plaintiff with the defendant vessel on May 4, 1972; 3. On June 11, 1973 the plaintiff filed a complaint in the Court of First Instance of Manila, docketed therein as Civil Case No. 91043, embodying three (3) causes of action involving three (3) separate and different shipments. The third cause of action therein involved the cargo now subject of this present litigation; 4. On December 11, 1974, Judge Serafin Cuevas issued an Order in Civil Case No. 91043 dismissing the first two causes of action in the aforesaid case with prejudice and without pronouncement as to costs because the parties had settled or compromised the claims involved therein. The third cause of action which covered the cargo subject of this case now was likewise dismissed but without prejudice as it was not covered by the settlement. The dismissal of that complaint containing the three causes of action was upon a joint motion to dismiss filed by the parties; 5. Because of the dismissal of the (complaint in Civil Case No. 91043 with respect to the third cause of action without prejudice, plaintiff instituted this present complaint on January 6, 1975. To the complaint in the subsequent action Maritime filed an answer pleading inter alia the affirmative defense of prescription under the provisions of the Carriage of Goods by Sea Act, 5 and following pretrial, moved for a preliminary hearing on said defense. 6 The Trial Court granted the motion, scheduling the preliminary hearing on April 27, 1977. 7 The record before the Court does not show whether or not that hearing was held, but under date of May 6, 1977, Maritime filed a formal motion to dismiss invoking once more the ground of prescription. 8 The motion was opposed by Dole 9 and the Trial Court, after due consideration, resolved the matter in favor of Maritime and dismissed the complaint 10 Dole sought a reconsideration, which was denied, 11 and thereafter took the present appeal from the order of dismissal. The pivotal issue is whether or not Article 1155 of the Civil Code providing that the prescription of actions is interrupted by the making of an extrajudicial written demand by the creditor is applicable to actions brought under the Carriage of Goods by Sea Act which, in its Section 3, paragraph 6, provides that: *** the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered; Provided, That, if a notice of loss or damage, either apparent or conceded, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered.xxx xxx xxxDole concedes that its action is subject to the one-year period of limitation prescribe in the above-cited provision. 12 The substance of its argument is that since the provisions of the Civil Code are, by express mandate of said Code, suppletory of deficiencies in the Code of Commerce and special laws in matters governed by the latter, 13 and there being "*** a patent deficiency *** with respect to the tolling of the prescriptive period ***" provided for in the Carriage of Goods by Sea Act, 14 prescription under said Act is subject to the provisions of Article 1155 of the Civil Code on tolling and because Dole's claim for loss or damage made on May 4, 1972 amounted to a written extrajudicial demand which would toll or interrupt prescription under Article 1155, it operated to toll prescription also in actions under the Carriage of Goods by Sea Act. To much the same effect is the further argument based on Article 1176 of the Civil Code which provides that the rights and obligations of common carriers shag be governed by the Code of Commerce and by special laws in all matters not regulated by the Civil Code. These arguments might merit weightier consideration were it not for the fact that the question has already received a definitive answer, adverse to the position taken by Dole, in The Yek Tong Lin Fire & Marine Insurance Co., Ltd. vs. American President Lines, Inc. 15 There, in a parallel factual situation, where suit to recover for damage to cargo shipped by vessel from Tokyo to Manila was filed more than two years after the consignee's receipt of the cargo, this Court rejected the contention that an extrajudicial demand toiled the prescriptive period provided for in the Carriage of Goods by Sea Act, viz: In the second assignment of error plaintiff-appellant argues that it was error for the court a quo not to have considered the action of plaintiff-appellant suspended by the extrajudicial demand which took place, according to defendant's own motion to dismiss on August 22, 1952. We notice that while plaintiff avoids stating any date when the goods arrived in Manila, it relies upon the allegation made in the motion to dismiss that a protest was filed on August 22, 1952 - which goes to show that plaintiff-appellant's counsel has not been laying the facts squarely before the court for the consideration of the merits of the case. We have already decided that in a case governed by the Carriage of Goods by Sea Act, the general provisions of the Code of Civil Procedure on prescription should not be made to apply. (Chua Kuy vs. Everett Steamship Corp., G.R. No. L-5554, May 27, 1953.) Similarly, we now hold that in such a case the general provisions of the new Civil Code (Art. 1155) cannot be made to apply, as such application would have the effect of extending the one-year period of prescription fixed in the law. It is desirable that matters affecting transportation of goods by sea be decided in as short a time as possible; the application of the provisions of Article 1155 of the new Civil Code would unnecessarily extend the period and permit delays in the settlement of questions affecting transportation, contrary to the clear intent and purpose of the law. * * *Moreover, no different result would obtain even if the Court were to accept the proposition that a written extrajudicial demand does toll prescription under the Carriage of Goods by Sea Act. The demand in this instance would be the claim for damage-filed by Dole with Maritime on May 4, 1972. The effect of that demand would have been to renew the one- year prescriptive period from the date of its making. Stated otherwise, under Dole's theory, when its claim was received by Maritime, the one-year prescriptive period was interrupted - "tolled" would be the more precise term - and began to run anew from May 4, 1972, affording Dole another period of one (1) year counted from that date within which to institute action on its claim for damage. Unfortunately, Dole let the new period lapse without filing action. It instituted Civil Case No. 91043 only on June 11, 1973, more than one month after that period has expired and its right of action had prescribed. Dole's contention that the prescriptive period "*** remained tolled as of May 4, 1972 *** (and that) in legal contemplation *** (the) case (Civil Case No. 96353) was filed on January 6, 1975 *** well within the one-year prescriptive period in Sec. 3(6) of the Carriage of Goods by Sea Act." 16 equates tolling with indefinite suspension. It is clearly fallacious and merits no consideration. WHEREFORE, the order of dismissal appealed from is affirmed, with costs against the appellant, Dole Philippines, Inc. SO ORDERED. MITSUI O.S.K. LINES LTD., represented by MAGSAYSAY AGENCIES, INC., Petitioner, vs. COURT OF APPEALS and LAVINE LOUNGEWEAR MFG. CORP., Respondents. This is a petition for review on certiorari of the January 25, 1995 decision of the Court of Appeals[1] and its resolution of March 22, 1995 denying petitioners motion for reconsideration. The appellate court upheld orders of Branch 68 (Pasig) of the Regional Trial Court, National Capital Judicial Region, denying petitioners motion to dismiss in the original action filed against petitioner by private respondent. The facts are not in dispute.[2] Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage through Meister Transport, Inc., an international freight forwarder, with private respondent Lavine Loungewear Manufacturing Corporation to transport goods of the latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to France 28 days from initial loading. On July 24, 1991, petitioners vessel loaded private respondents container van for carriage at the said port of origin. However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with the result that the shipment arrived in Le Havre only on November 14, 1991. The consignee allegedly paid only half the value of the said goods on the ground that they did not arrive in France until the off season in that country. The remaining half was allegedly charged to the account of private respondent which in turn demanded payment from petitioner through its agent. As petitioner denied private respondents claim, the latter filed a case in the Regional Trial Court on April 14, 1992. In the original complaint, private respondent impleaded as defendants Meister Transport, Inc. and Magsaysay Agencies, Inc., the latter as agent of petitioner Mitsui O.S.K. Lines Ltd. On May 20, 1993, it amended its complaint by impleading petitioner as defendant in lieu of its agent. The parties to the case thus became private respondent as plaintiff, on one side, and Meister Transport Inc. and petitioner Mitsui O.S.K. Lines Ltd. as represented by Magsaysay Agencies, Inc., as defendants on the other. Petitioner filed a motion to dismiss alleging that the claim against it had prescribed under the Carriage of Goods by Sea Act. The Regional Trial Court, as aforesaid, denied petitioners motion as well as its subsequent motion for reconsideration. On petition for certiorari, the Court of Appeals sustained the trial courts orders. Hence this petition containing one assignment of error: THE RESPONDENT COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN RULING THAT PRIVATE RESPONDENTS AMENDED COMPLAINT IS (sic) NOT PRESCRIBED PURSUANT TO SECTION 3(6) OF THE CARRIAGE OF GOODS BY SEA ACT. The issue raised by the instant petition is whether private respondents action is for loss or damage to goods shipped, within the meaning of 3(6) of the Carriage of Goods by Sea Act (COGSA). Section 3 provides: (6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the delivery. Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection. In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered: Provided, that, if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered. In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. In Ang v. American Steamship Agencies, Inc., the question was whether an action for the value of goods which had been delivered to a party other than the consignee is for loss or damage within the meaning of 3(6) of the COGSA. It was held that there was no loss because the goods had simply been misdelivered. Loss refers to the deterioration or disappearance of goods.[3] As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the Carriage of Goods by Sea Act, loss contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot be recovered.[4] Conformably with this concept of what constitutes loss or damage, this Court held in another case[5] that the deterioration of goods due to delay in their transportation constitutes loss or damage within the meaning of 3(6), so that as suit was not brought within one year the action was barred: Whatever damage or injury is suffered by the goods while in transit would result in loss or damage to either the shipper or the consignee. As long as it is claimed, therefore, as it is done here, that the losses or damages suffered by the shipper or consignee were due to the arrival of the goods in damaged or deteriorated co ndition, the action is still basically one for damage to the goods, and must be filed within the period of one year from delivery or receipt, under the above-quoted provision of the Carriage of Goods by Sea Act.[6] But the Court allowed that There would be some merit in appellants insistence that the damages suffered by him as a result of the delay in the shipment of his cargo are not covered by the prescriptive provision of the Carriage of Goods by Sea Act above referred to, if such damages were due, not to the deterioration and decay of the goods while in transit, but to other causes independent of the condition of the cargo upon arrival, like a drop in their market value. . . .[7] The rationale behind limiting the said definitions to such parameters is not hard to find or fathom. As this Court held in Ang: Said one-year period of limitation is designed to meet the exigencies of maritime hazards. In a case where the goods shipped were neither lost nor damaged in transit buwere, on the contrary, delivered in port to someone who claimed to be entitled thereto, the situation is different, and the special need for the short period of limitation in cases of loss or damage

caused by maritime perils does not obtain.[8] In the case at bar, there is neither deterioration nor disappearance nor destruction of goods caused by the carriers breach of contract. Whatever reduction there may have been in the value of the goods is not due to their deterioration or disappearance because they had been damaged in transit. Petitioner contends: Although we agree that there are places in the section (Article III) in which the phrase need have no broader meaning than loss or physical damage to the goods, we disagree with the conclusion that it must so be limited wherever it is used. We take it that the phrase has a uniform meaning, not merely in Section 3, but throughout the Act; and there are a number of places in which the restricted interpretation suggested would be inappropriate. For example Section 4(2) [Article IV(2) (sic) exempts exempts (sic) the carrier, the ship (sic), from liability loss or damage (sic) resulting from certain courses beyond their control.[9] Indeed, what is in issue in this petition is not the liability of petitioner for its handling of goods as provided by 3(6) of the COGSA, but its liability under its contract of carriage with private respondent as covered by laws of more general application. Precisely, the question before the trial court is not the particular sense of damages as it refers to the physical loss or damage of a shippers goods as specifically covered by 3(6) of COGSA but petitioners potential liability for the damages it has caused in the general sense and, as such, the matter is governed by the Civil Code, the Code of Commerce and COGSA, for the breach of its contract of carriage with private respondent. We conclude by holding that as the suit below is not for loss or damage to goods contemplated in 3(6), the question of prescription of action is governed not by the COGSA but by Art. 1144 of the Civil Code which provides for a prescriptive period of ten years. WHEREFORE, the decision of the Court of Appeals is AFFIRMED.

PURITA S. MAPA, CARMINA S. MAPA and CORNELIO P. MAPA, Petitioners, vs. COURT OF APPEALS and TRANS-WORLD AIRLINES INC., Respondents. 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 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. TWAs 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 TWAs carrier, TW 0901, from JFK Airport, New York, to Bostons 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 TWAs 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. TWAs 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 TWAs 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, 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 TWAs 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]cPurita 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 TransWorld 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.[8]cOn 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 that 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, TWAs 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 attorneys fees because it did not act in a wanton, fraudulent, reckless, oppressive, or malevolent manner.[9]On 7 February 1992, the petitioners filed their second Amended Complaint[10] to 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 their lost luggage; and US$4,500 representing the travel expenses, hotel, lodging, 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 lost luggage.After the filing of TWAs Answer to the second Amended Complaint,[11] and 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 incident would be deemed submitted for resolution.[12] However, after TWA filed its Memorandum,[13] the trial court gave the petitioners five days within which to file a reply memorandum; and TWA, two days from receipt of the latter to file its comment thereon.[14] The petitioners then filed their Opposition (by way of Reply Memorandum)[15] to which TWA filed a Reply.[16] Thereafter, the petitioners submitted a Rejoinder[17]; TWA, a Surrejoinder.[18]On 24 July 1992, the trial court issued an Order[19] dismissing the case for lack of jurisdiction in light of Article 28(1) of the Warsaw Convention. Thus:It is plaintiffs' theory that the Warsaw Convention does not apply to the instant case because plaintiffs' contract of transportation does not constitute "international transportation" as defined in said convention. This however is belied by the Passenger Property Questionnaire which is Annex C of plaintiffs' amended complaint. Page two of said questionnaire accomplished by plaintiffs under the heading "Your Complete Itinerary" shows that the TWA tickets issued to the plaintiffs form part of the contract of transportation to be performed from Manila to the United States. Since the Philippines and the United States are parties to the convention, plaintiffs' contracts of transportation come within the meaning of International Transportation.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 breach of contract of carriage under the New Civil Code.The next question to be resolved is whether or not the Court has jurisdiction to try the present case in the light of the provision of Art. 28(1) above-quoted.Under Art. 28(1) supra, a complaint for damages against an air carrier can be instituted only in any of the following places/courts:

(1) The court of the domicile of the carrier(2) The court of its principal place of business;(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 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 carriers 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.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 INTL TKT #079-4402956821-2 and INTL TKT #0794402956819. 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 ifaccording 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.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., INTL TKT # 079-4402956821-2 and INTL 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 TWAs 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]chanroblesvirtuallawlibraryThe 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-BostonSt. 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: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. AMERICAN AIRLINES petitioner,vs.COURT OF APPEALS, HON. BERNARDO LL. SALAS and DEMOCRITO MENDOZA, respondents. Before us is a petition for review of the decision dated December 24, 1993 rendered by the Court of Appeals in the consolidated cases docketed as CA-G.R. SP nos. 30946 and 31452 entitled American Airlines vs. The Presiding Judge Branch 8 of the Regional Trial Court of Cebu and Democrito Mendoza, petitions for certiorari and prohibition. In SP no. 30946, the petitioner assails the trial court's order denying the petitioner's motion to dismiss the action for damages filed by the private respondent for lack of jurisdiction under section 28 (1) of the Warsaw Convention; and in SP No. 31452 the petitioner challenges the validity of the trial court's order striking off the record the deposition of the petitioner's security officer taken in Geneva, Switzerland for failure of the said security officer to answer the cross interrogatories propounded by the private respondent.The sole issue raised in SP No. 30946 is the questioned jurisdiction of the Regional Trial Court of Cebu to take cognizance of the action for damages filed by the private respondent against herein petitioner in view of Art 28 (1) of the Warsaw Convention. 1 It is undisputed that the private respondent purchased from Singapore Airlines in Manila conjunction tickets for Manila-Singapore-Athens-Larnaca-Rome-Turin-Zurich-GenevaCopenhagen-New York. The petitioner was not a participating airline in any of the segments in the itinerary under the said conjunction tickets. In Geneva the petitioner decided to forego his trip to Copenhagen and to go straight to New York and in the absence of a direct flight under his conjunction tickets from Geneva to New York, the private respondent on June 7, 1989 exchanged the unused portion of the conjunction ticket for a one-way ticket from Geneva to New York from the petitioner airline. Petitioner issued its own ticket to the private respondent in Geneva and claimed the value of the unused portion of the conjunction ticket from the IATA 2 clearing house in Geneva.In September 1989, private respondent filed an action for damages before the regional trial court of Cebu for the alleged embarrassment and mental anguish he suffered at the Geneva Airport when the petitioner's security officers prevented him from boarding the plane, detained him for about an hour and allowed him to board the plane only after all the other passengers have boarded. The petitioner filed a motion to dismiss for lack of jurisdiction of Philippine courts to entertain the said proceedings under Art. 28(1) of the Warsaw Convention. The trial court denied the motion. The order of denial was elevated to the Court of Appeals which affirmed the ruling of the trial court. Both the trial and the appellate courts held that the suit may be brought in the Philippines under the pool partnership agreement among the IATA members, which include Singapore Airlines and American Airlines, wherein the members act as agents of each other in the issuance of tickets to those who may need their services. The contract of carriage perfected in Manila between the private respondent and Singapore Airlines binds the petitioner as an agent of Singapore Airlines and considering that the petitioner has a place of business in Manila, the third option of the plaintiff under the Warsaw Convention i.e. the action may be brought in the place where the contract was perfected and where the airline has a place of business, is applicable. Hence this petition assailing the order upholding the jurisdiction of Philippine courts over the instant action.Both parties filed simultaneous memoranda pursuant to the resolution of this Court giving due course to the petition.The petitioner's theory is as follows: Under Art 28 (1) of the Warsaw convention an action for damages must be brought at the option of the plaintiff either before the court of the 1) domicile of the carrier; 2) the carrier's principal place of business; 3) the place where the carrier has a place of business through which the contract was made; 4) the place of destination. The petitioner asserts that the Philippines is neither the domicile nor the principal place of business of the defendant airline; nor is it the place of destination. As regards the third option of the plaintiff, the petitioner contends that since the Philippines is not the place where the contract of carriage was made between the parties herein, Philippine courts do not have jurisdiction over this action for damages. The issuance of petitioner's own ticket in Geneva in exchange for the conjunction ticket issued by Singapore Airlines for the final leg of the private respondent's trip gave rise to a separate and distinct contract of carriage from that entered into by the private respondent with Singapore Airlines in Manila. Petitioner lays stress on the fact that the plane ticket for a direct flight from Geneva to New York was purchased by the private respondent from the petitioner by "exchange and cash" which signifies that the contract of carriage with Singapore Airlines was terminated and a second contract was perfected. Moreover, the second contract of carriage cannot be deemed to have been an extension of the first as the petitioner airline is not a participating airline in any of the destinations under the first contract. The petitioner claims that the private respondent's argument that the petitioner is bound under the IATA Rules as agent of the principal airline is irrelevant and the alleged bad faith of the airline does not remove the case from the applicability of the Warsaw Convention. Further the IATA Rule cited by the private respondent which is admittedly printed on the ticket issued by the petitioner to him which states, "An air carrier issuing a ticket for carriage over the lines of another carrier does so only as its agent" does not apply herein, as neither Singapore Airlines nor the petitioner issued a ticket to the private respondent covering the route of the other. Since the conjunction tickets issued by Singapore Airlines do not include the route covered by the ticket issued by the petitioner, the petitioner airline submits that it did not act as an agent of Singapore Airlines.Private respondent controverts the applicability of the Warsaw Convention in this case. He posits that under Article 17 of the Warsaw Convention 3 a carrier may be held liable for damages if the "accident" occurred on board the airline or in the course of "embarking or disembarking" from the carrier and that under Article 25 (1) 4 thereof the provisions of the convention will not apply if the damage is caused by the "willful misconduct" of the carrier. He argues that his cause of action is based on the incident at the pre-departure area of the Geneva airport and not during the process of embarking nor disembarking from the carrier and that security officers of the petitioner airline acted in bad faith. Accordingly, this case is released from the terms of the Convention. Private respondent argues that assuming that the Convention applies, his trip to nine cities in different countries performed by different carriers under the conjunction tickets issued in Manila by Singapore Airlines is regarded as a single transaction; as such the final leg of his trip from Geneva to New York with the petitioner airline is part and parcel of the original contract of carriage perfected in Manila. Thus, the third option of the plaintiff under Art. 28 (1) e.g., where the carrier has a place of business through which the contract of carriage was made, applies herein and the case was properly filed in the Philippines. The private respondent seeks affirmance of the ruling of the lower courts that the petitioner acted as an agent of Singapore Airlines under the IATA Rules and as an agent of the principal carrier the petitioner may be held liable under the contract of carriage perfected in Manila, citing the judicial admission made by the petitioner that it claimed the value of the unused portion of the private respondent's conjunction tickets from the IATA Clearing House in Geneva where the accounts of both airlines are respectively credited and debited. Accordingly, the petitioner cannot now deny the contract of agency with Singapore Airlines after it honored the conjunction tickets issued by the latter.The petition is without merit.The Warsaw Convention to which the Republic of the Philippines is a party and which has the force and effect of law in this country applies to all international transportation of persons, baggage or goods performed by an aircraft gratuitously or for hire. 5 As enumerated in the Preamble of the Convention, one of the objectives is "to regulate in a uniform manner the conditions of international transportation by air". 6 The contract of carriage entered into by the private respondent with Singapore Airlines, and subsequently with the petitioner, to transport him to nine cities in different countries with New York as the final destination is a contract of international transportation and the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of the airline and its passengers. 7 This includes section 28 (1) which enumerates the four places where an action for damages may be brought.The threshold issue of jurisdiction of Philippine courts under Art 28 (1) must first be resolved before any pronouncements may be made on the liability of the carrier thereunder. 8 The objections raised by the private respondent that this case is released from the terms of the Convention because the incident on which this action is predicated did not occur in the process of embarking and disembarking from the carrier under Art 17 9 and that the employees of the petitioner airline acted with malice and bad faith under Art 25 (1) 10 pertain to the merits of the case which may be examined only if the action has first been properly commenced under the rules on jurisdiction set forth in Art. 28 (1).Art 28 (1) of the Warsaw Convention states:Art 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.There is no dispute that petitioner issued the ticket in Geneva which was neither the domicile nor the principal place of business of petitioner nor the respondent's place of destination.The question is whether the contract of transportation between the petitioner and the private respondent would be considered as a single operation and part of the contract of transportation entered into by the latter with Singapore Airlines in Manila.Petitioner disputes the ruling of the lower court that it is. Petitioner's main argument is that the issuance of a new ticket in Geneva created a

contract of carriage separate and distinct from that entered by the private respondent in Manila.We find the petitioner's argument without merit.Art 1(3) of the Warsaw Convention which states:Transportation to be performed by several successive carriers shall be deemed, for the purposes of this convention, to be one undivided transportation, if it has been regarded by the parties as a single operation, whether it has been agreed upon under the form of a single contract or a series of contracts, and it shall not lose its international character merely because one contract or series of contracts is to be performed entirely within the territory subject of the sovereignty, suzerainty, mandate or authority of the same High Contracting Party.The contract of carriage between the private respondent and Singapore Airlines although performed by different carriers under a series of airline tickets, including that issued by the petitioner, constitutes a single operation. Members of the IATA are under a general pool partnership agreement wherein they act as agent of each other in the issuance of tickets 11 to contracted passengers to boost ticket sales worldwide and at the same time provide passengers easy access to airlines which are otherwise inaccessible in some parts of the world. Booking and reservation among airline members are allowed even by telephone and it has become an accepted practice among them. 12 A member airline which enters into a contract of carriage consisting of a series of trips to be performed by different carriers is authorized to receive the fare for the whole trip and through the required process of interline settlement of accounts by way of the IATA clearing house an airline is duly compensated for the segment of the trip serviced. 13 Thus, when the petitioner accepted the unused portion of the conjunction tickets, entered it in the IATA clearing house and undertook to transport the private respondent over the route covered by the unused portion of the conjunction tickets, i.e., Geneva to New York, the petitioner tacitly recognized its commitment under the IATA pool arrangement to act as agent of the principal contracting airline, Singapore Airlines, as to the segment of the trip the petitioner agreed to undertake. As such, the petitioner thereby assumed the obligation to take the place of the carrier originally designated in the original conjunction ticket. The petitioner's argument that it is not a designated carrier in the original conjunction tickets and that it issued its own ticket is not decisive of its liability. The new ticket was simply a replacement for the unused portion of the conjunction ticket, both tickets being for the same amount of US$2,760 and having the same points of departure and destination. 14 By constituting itself as an agent of the principal carrier the petitioner's undertaking should be taken as part of a single operation under the contract of carriage executed by the private respondent and Singapore Airlines in Manila.The quoted provision of the Warsaw Convention Art. 1(3) clearly states that a contract of air transportation is taken as a single operation whether it is founded on a single contract or a series of contracts. The number of tickets issued does not detract from the oneness of the contract of carriage as long as the parties regard the contract as a single operation. The evident purpose underlying this Article is to promote international air travel by facilitating the procurement of a series of contracts for air transportation through a single principal and obligating different airlines to be bound by one contract of transportation. Petitioner's acquiescence to take the place of the original designated carrier binds it under the contract of carriage entered into by the private respondent and Singapore Airlines in Manila.The third option of the plaintiff under Art 28 (1) of the Warsaw Convention e.g., to sue in the place of business of the carrier wherein the contract was made, is therefore, Manila, and Philippine courts are clothed with jurisdiction over this case. We note that while this case was filed in Cebu and not in Manila the issue of venue is no longer an issue as the petitioner is deemed to have waived it when it presented evidence before the trial court.The issue raised in SP No. 31452 which is whether or not the trial court committed grave abuse of discretion in ordering the deposition of the petitioner's security officer taken in Geneva to be stricken off the record for failure of the said security officer to appear before the Philippine consul in Geneva to answer the cross-interrogatories filed by the private respondent does not have to be resolved. The subsequent appearance of the said security officer before the Philippine consul in Geneva on September 19, 1994 and the answer to the cross-interrogatories propounded by the private respondent was transmitted to the trial court by the Philippine consul in Geneva on September 23, 1994 15 should be deemed as full compliance with the requisites of the right of the private respondent to cross-examine the petitioner's witness. The deposition filed by the petitioner should be reinstated as part of the evidence and considered together with the answer to the crossinterrogatories.WHEREFORE, the judgment of the appellate court in CA-G.R. SP No. 30946 is affirmed. The case is ordered remanded to the court of origin for further proceedings. The decision of the appellate court in CA-G.R. SP. No. 31452 is set aside. The deposition of the petitioner's security officer is reinstated as part of the evidence.SO ORDERED._____________________________________________________________________________________________________________ PHILIPPINE AIRLINES, INC., Petitioner, vs. COURT OF APPEALS and GILDA C. MEJIA, respondents. This is definitely not a case of first impression. The incident which eventuated in the present controversy is a drama of common contentious occurrence between passengers and carriers whenever loss is sustained by the former. Withal, the exposition of the factual ambience and the legal precepts in this adjudication may hopefully channel the assertiveness of passengers and the intransigence of carriers into the realization that at times a bad extrajudicial compromise could be better than a good judicial victory.Assailed in this petition for review is the decision of respondent Court of Appeals in CA-G.R. CV No. 42744[1] which affirmed the decision of the lower court[2] finding petitioner Philippine Air Lines, Inc. (PAL) liable as follows:"ACCORDINGLY, judgment is hereby rendered ordering defendant Philippine Air Lines, Inc., to pay plaintiff Gilda C. Mejia:(1) P30,000.00 by way of actual damages of the microwave oven;(2) P10,000.00 by way of moral damages;(3) P20,000.00 by way of exemplary damages;(4) P10,000.00 as attorneys fee;all in addition to the costs of the suit.Defendants counterclaim is hereby dismissed for lack of merit."[3]The facts as found by respondent Court of Appeals are as follows:"On January 27, 1990, plaintiff Gilda C. Mejia shipped thru defendant, Philippine Airlines, one (1) unit microwave oven, with a gross weight of 33 kilograms from San Francisco, U.S.A. to Manila, Philippines. Upon arrival, however, of said article in Manila, Philippines, plaintiff discovered that its front glass door was broken and the damage rendered it unserviceable. 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 defendant company. But these demands fell on deaf ears."On September 25, 1990, plaintiff Gilda C. Mejia filed the instant action for damages against defendant in the lower court."In its answer, defendant Airlines alleged inter alia, by way of special and affirmative defenses, that the court has no jurisdiction over the case; that 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, conventions and contractual commitments; and that defendant had always exercised the required diligence in the selection, hiring and supervision of its employees."[4]What had theretofore transpired at the trial in the court a quo is narrated as follows:"Plaintiff Gilda Mejia testified that sometime on January 27, 1990, she took defendants plane from San Francisco, U.S.A. for Manila, Philippines (Exh. F). Amongst her baggages (sic) was a slightly used microwave oven with the brand name Sharp under PAL Air Waybill No. 0-79-1013008-3 (Exh. A). When shipped, defendants office at San Francisco inspected it. It was in good condition with its front glass intact. She did not declare its value upon the advice of defendants personnel at San Francisco."When she arrived in Manila, she gave her sister Concepcion C. Dio authority to claim her baggag(e) (Exh. G) and took a connecting flight for Bacolod City."When Concepcion C. Dino claimed the baggag(e) (Exh. B) 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 P30,000.00 for the damages although a brand new one costs P40,000.00, but defendant refused to pay."Hence, plaintiff engaged the services of counsel. Despite demand (Exh. E) by counsel, defendant still refused to pay."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 P 10,000.00 moral damages, P20,000.00 exemplary damages, P10,000.00 attorneys fees plus P300.00 per court appearance and P15,000.00 monthly loss of income in her business beginning February, 1990."Defendant Philippine Airlines thru its employees Rodolfo Pandes and Vicente Villaruz posited that plaintiffs claim was not investigated until after the filing of the formal claim on August 13, 1990 (Exh. 6 also Exh. E). During the investigations, plaintiff failed to submit positive proof of the value of the cargo. Hence her claim was denied."Also plaintiffs claim was filed out of time under paragraph 12, a(1) of the Air Waybill (Exh. A, also Exh. 1) 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."[5]As stated at the outset, respondent Court of Appeals similarly ruled in favor of private respondent by affirming in full the trial courts judgment in Civil Case No. 6210, with costs against petitioner.[6] Consequently, petitioner now impugns respondent appellate courts ruling insofar as it agrees with (1) the conclusions of the trial court that since the air waybill is a contract of adhesion, its provisions should be strictly construed against herein petitioner; (2) the finding of the trial court that herein petitioners liability is not limited by the provisions of the air waybill; and (3) the award by the trial court to private respondent of moral and exemplary damages, attorneys fees and litigation expenses.The trial court relied on the ruling in the case of Fieldmens Insurance Co., Inc. vs. Vda. De Songco, et al.[7] in finding that the provisions of the air waybill should be strictly construed against petitioner. More particularly, the court below stated its findings thus:"In this case, it is seriously doubted whether plaintiff had read the printed conditions at the back of the Air Waybill (Exh. 1), or even if she had, if she was given a chance to negotiate on the conditions for loading her microwave oven. Instead she was advised by defendants employee at San Francisco, U.S.A., that there is no need to declare the value of her oven since it is not brand new. Further, plaintiff testified that she immediately submitted a formal claim for P30,000.00 with defendant. But their claim was referred from one employee to another th(e)n told to come back the next day, and the next day, until she was referred to a certain Atty. Paco. When they got tired and frustrated of coming without a settlement of their claim in sight, they consulted a lawyer who demanded from defendant on August 13, 1990 (Exh. E, an[d] Exh. 6)."The conclusion that inescapably emerges from the above findings of fact is to concede it with credence. x x x."[8]Respondent appellate court approved said findings of the trial court in this manner:"We cannot agree with defendant-appellants above contention. Under our jurisprudence, the Air Waybill is a contract of adhesion considering that all the provisions thereof are prepared and drafted only by the carrier (Sweet Lines v. Teves, 83 SCRA 361). The only participation left of the other party is to affix his signature thereto (BPI Credit Corporation vs. Court of Appeals, 204 SCRA 601; Saludo, Jr. vs. C.A., 207 SCRA 498; Maersk vs. Court of Appeals, 222 SCRA 108, among the recent cases). In the earlier case of Angeles v. Calasanz, 135 SCRA 323, the Supreme Court ruled that the terms of a contract (of adhesion) must be interpreted against the party who drafted the same. x x x."[9]Petitioner airlines argues that the legal principle enunciated in Fieldmens Insurance does not apply to the present case because the provisions of the contract involved here are neither ambiguous nor obscure. The front portion of the air waybill contains a simple warning that the shipment is subject to the conditions of the contract on the dorsal portion thereof regarding the limited liability of the carrier unless a higher valuation is declared, as well as the reglementary period within which to

submit a written claim to the carrier in case of damage or loss to the cargo. Granting that the air waybill is a contract of adhesion, it has been ruled by the Court that such contracts are not entirely prohibited and are in fact binding regardless of whether or not respondent herein read the provisions thereof. Having contracted the services of petitioner carrier instead of other airlines, private respondent in effect negotiated the terms of the contract and thus became bound thereby.[10]Counsel for private respondent refutes these arguments by saying that due to her eagerness to ship the microwave oven to Manila, private respondent assented to the terms and conditions of the contract without any opportunity to question or change its terms which are practically on a "take-it-or-leave-it" basis, her only participation therein being the affixation of her signature. Further, reliance on the Fieldmens insurance case is misplaced since it is not the ambiguity or obscurity of the stipulation that renders necessary the strict interpretation of a contract of adhesion against the drafter, but the peculiarity of the transaction wherein one party, normally a corporation, drafts all the provisions of the contract without any participation whatsoever on the part of the other party other than affixment of signature.[11]A review of jurisprudence on the matter reveals the consistent holding of the Court that contracts of adhesion are not invalid per se and that it has on numerous occasions upheld the binding effect thereof.[12] As explained in Ong Yiu vs. Court of Appeals, et al., supra:"x x x. Such provisions have been held to be a part of the contract of carriage, and valid and binding upon the passenger regardless of the latters lack of knowledge or assent to the regulation. It is what is known as a contract of adhesion, in regards which it has been said that contracts of adhesion wherein one party imposes a ready-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. x x x, a contract limiting liability upon an agreed valuation does not offend against the policy of the law forbidding one from contracting against his own negligence."As rationalized in Saludo, Jr. vs. Court of Appeals, et al., supra:"x x x, it should be borne in mind that a contract of adhesion may be struck down as void and unenforceable, for being subversive of public policy, only when the weaker party is imposed upon in dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it, completely deprived of the opportunity to bargain on equal footing. x x x."but subject to the caveat that"x x x. Just because we have said that Condition No. 5 of the airway bill is binding upon the parties to and fully operative in this transaction, it does not mean, and let this serve as fair warning to respondent carriers, that they can at all times whimsically seek refuge from liability in the exculpatory sanctuary of said Condition No. 5 x x x."The peculiar nature of such contracts behooves the Court to closely scrutinize the factual milieu to which the provisions are intended to apply. Thus, just as consistently and unhesitatingly, but without categorically invalidating such contracts, the Court has construed obscurities and ambiguities in the restrictive provisions of contracts of adhesion strictly albeit not unreasonably against the drafter thereof when justified in light of the operative facts and surrounding circumstances.[13]We find nothing objectionable about the lower courts reliance upon the Fieldmens Insurance case, the principles wherein squarely apply to the present petition. The parallelism between the aforementioned 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 Fieldmens Insurance) that is put to test.A judicious reading of the case reveals that what was pivotal in the judgment of liability against petitioner insurance company therein, 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. The extended pronouncements regarding strict construction of ambiguous provisions in an adhesion contract against its drafter, which although made by the Court as an aside but has perforce evolved into a judicial tenet over time, was actually an incidental statement intended to emphasize the duty of the court to protect the weaker, as against the more dominant, party to a contract, as well as to prevent the iniquitous situation wherein the will of one party is imposed upon the other in the course of negotiation.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 thereof 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 vis-a-vis the nature of the provisions sought to be enforced, taking care that equity and fair play should characterize the transaction under review.On petitioners insistence that its liability for the damage to private respondents microwave oven, if any, should be limited by the provisions of the air waybill, the lower court had this to say:"By and large, defendants evidence is anchored principally on plaintiffs alleged failure to comply with paragraph 12, a(1) (Exh. 1-C-2) of the Air waybill (Exh. A, also Exh. 1), by filing a formal claim immediately after discovery of the damage. Plaintiff filed her formal claim only on August 13, 1990 (Exh. 6, also Exh. E). And, failed to present positive proof on the value of the damaged microwave oven. Hence, the denial of her claim."This Court has misgivings about these pretensions of defendant."Finally, the Court finds no merit to defendants contention that under the Warsaw Convention, its liability if any, cannot exceed U.S. $20.00 based on weight as plaintiff did not declare the contents of her baggage nor pay additional charges before the flight."[14]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, Ltd. vs. Court of Appeals, et al.,[15] 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.Petitioner insists that both respondent court and the trial court erred in finding that petitioners liability, if any, is not limited by the provisions of the air waybill, for, as evidence of the contract of carriage between petitioner and private respondent, it substantially states that the shipper certifies to the correctness of the entries contained therein and accepts that the carriers liability is limited to US$20 per kilogram of goods lost, damaged or destroyed unless a value is declared and a supplementary charge paid. Inasmuch as no such declaration was made by private respondent, as she admitted during cross-examination, the liability of petitioner, if any, should be limited to 28 kilograms multiplied by US$20, or $560. Moreover, the validity of these conditions has been upheld in the leading case of Ong Yiu vs. Court of Appeals, et al., supra, and subsequent cases, for being a mere reiteration of the limitation of liability under the. Warsaw Convention, which treaty has the force and effect of law.[16]It is additionally averred that since private respondent was merely advised, not ordered, that she need not declare a higher value for her cargo, the final decision of refraining from making such a declaration fell on private respondent and should not put the petitioner in estoppel from invoking its limited liability.[17]In refutation, private respondent explains that the reason for the absence of a declaration of a higher value was precisely because petitioners personnel in San Francisco, U.S.A. advised her not to declare the value of her cargo, which testimony has not at all been rebutted by petitioner. This being so, petitioner is estopped from faulting private respondent for her failure to declare the value of the microwave oven.[18]The validity of provisions limiting the liability of carriers contained in bills of lading have been consistently upheld for the following reason:"x x x. The stipulation in the bill of lading limiting the common carriers 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 carriers 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. x x x."[19]However, the Court has likewise cautioned against blind reliance on adhesion contracts where the facts and circumstances warrant that they should be disregarded.[20]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 PALs personnel in San Francisco, U.S.A., as borne out by her testimony in court:"Q Did you declare the value of the shipment?A No. I was advised not to.Q Who advised you?A At the PAL Air Cargo."[21]It cannot be denied that the attention of PAL through its personnel in San Francisco was sufficiently called to the fact that private respondents 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,[22] as well as during the preparation of the air waybill by PALs Acceptance Personnel based on information supplied by the shipper,[23] and to reject the cargo if the contents or the packing did not meet the companys required specifications. Certainly, PAL could not have been otherwise prevailed upon to merely accept the cargo.While Vicente Villaruz, officer-in-charge of the PAL Import Section at the time of incident, posited that there may have been inadequate and improper packing of the cargo,[24] which by itself could be a ground for refusing carriage of the goods presented for shipment, he nonetheless admitted on cross-examination that private respondents cargo was accepted by PAL in its San Francisco office:"ATTY. VINCOSo that, be that as it may, my particular concern is that, it is the PAL personnel that accepts the baggage?WITNESSYes, sir.ATTY. VINCOAlso, if he comes from abroad like in this particular case, it is the PAL personnel who accepts the baggage?WITNESSYes, sir.ATTY. VINCOAnd the PAL personnel may or may not accept the baggage?WITNESSYes, sir.ATTY. VINCOAccording to what is stated as in the acceptance of the cargo, it is to the best interest of the airlines, that is, he want(s) also that the airlines would be free from any liability. Could that be one of the grounds for not admitting a baggage?WITNESSSafety is number one (I)ATTY. VINCOSo, this baggage was accepted and admitted in San Francisco?WITNESSYes, sir.ATTY. VINCOAnd you could not show any document to the Court that would suggest that this baggage was denied admittance by your office at San Francisco?WITNESSNo, I cannot show.ATTY. VINCONow, can you show any document that would suggest that there was insufficient pac(k)aging on this particular baggage from abroad?WITNESSNo, sir."[25]In response to the trial courts questions during the trial, he also stated that while the passengers declaration regarding the general or fragile character of the cargo is to a certain extent determinative of its classification, PAL nevertheless 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.[26]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.[27]The acceptance in due course by PAL of private respondents 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 PALs own personnel.In other words, private respondent Mejia 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, entitling her to recovery of damages beyond the stipulated limit of US$20 per kilogram of cargo in the event of loss or damage, had she not been effectively prevented from doing so upon the advice of PALs personnel for reasons best known to themselves.As pointed out by private respondent, the aforestated facts were not denied by PAL in any of its pleadings nor rebutted by way of evidence presented in the course of the trial, and thus in effect it judicially admitted that such an advice was given by its personnel in San Francisco, U.S.A. Petitioner, therefore, is estopped from blaming private respondent for not declaring the value of the cargo shipped and which would have otherwise entitled her to recover

a higher amount of damages. The Courts bidding in the Fieldmens Insurance case once again rings true:"x x x. As estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to apply it in this case would result in gross travesty of justice."We likewise uphold the lower courts finding that private respondent complied with the requirement for the immediate filing of a formal claim for damages as required in the air waybill or, at least, we find that there was substantial compliance therewith.Private respondent testified that she authorized her sister, Concepcion Dio, 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.[28] As instructed, Concepcion Dio promptly proceeded to PALs 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[29] on which was duly annotated the damage sustained by the oven.[30]Her testimony relates what took place thereafter:"ATTY. VINCOSo, after that inspection, what did you do?WITNESSAfter that annotation placed by Mr. Villaruz, I went home and I followed it up the next day with the Clerk of PAL cargo office.ATTY. VINCOWhat did the clerk tell you?WITNESSShe told me that the claim was being processed and I made several phone calls after that. I started my follow-ups February up to June 1990.ATTY. VINCOAnd what results did those follow-ups produce?WITNESSAll they said (was) that the document was being processed, that they were waiting for Atty. Paco to report to the office and they could refer the matter to Atty. Paco.ATTY. VINCOWho is this Atty. Paco?WITNESSHe was the one incharge of approving our claim.ATTY. VINCOWere you able to see Atty. Paco?WITNESSYes, sir. I personally visited Atty. Paco together with my auntie who was a former PAL employee.ATTY. VINCOSo, what did you do, did you make a report or did you tell Atty. Paco of your scouting around for a possible replacement?WITNESSI did call him back at his office. I made a telephone call.ATTY. VINCOAnd what answer did Atty. Paco make after you have reported back to him?WITNESSThey told me that they were going to process the claim based on the price that I gave them but there was no definite result.ATTY. VINCOHow many times did you go and see Atty. Paco regarding the claim of your sister?WITNESSI made one personal visit and several follow-up calls. With Atty. Paco, I made one phone call but I made several phone calls with his secretary or the clerk at PAL cargo office and I was trying to locate him but unfortunately, he was always out of his office."[31]PAL claims processor, Rodolfo Pandes,* confirmed having received the baggage freight claim on January 30, 1990[32] and the referral to and extended pendency of the private respondents claim with the office of Atty. Paco, to wit:"ATTY. VINCO:Q And you did instruct the claimant to see the Claim Officer of the company, right?WITNESS:A Yes, sir.ATTY. VINCO:Q And the Claim Officer happened to be Atty. Paco?WITNESS:A Yes, sir.ATTY. VINCO:Q And you know that the plaintiff thru her authorized representative Concepcion Dio, who is her sister had many times gone to Atty. Paco, in connection with this claim of her sister?WITNESS:A Yes, sir.ATTY. VINCO:Q As a matter of fact even when the complaint was already filed here in Court the claimant had continued to call about the settlement of her claim with Atty. Paco, is that correct?WITNESS:A Yes, sir.ATTY. VINCO.Q You know this fact because a personnel saw you in one of the pre-trial here when this case was heard before the sala of Judge Moscardon, is that correct?WITNESS:A Yes.ATTY. VINCO:Q In other words, the plaintiff rather had never stop(ped) in her desire for your company to settle this claim, rightWITNESSA Yes, sir."[33]Considering the abovementioned incidents and private respondent Mejias own zealous efforts in following up the claim,[34] 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.[35] 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 PALs own doing, the consequences of which cannot, in all fairness, be attributed to private respondent.Even if the claim for damages was conditioned on the timely filing of a formal claim, under Article 1186 of the Civil Code that condition was deemed fulfilled, considering that the collective action of PALs 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 respondents cargo, constituted substantial compliance with the requirement in the contract for the filing of a formal claim.All told, therefore, respondent appellate court did not err in ruling that the provision on limited liability is not applicable in this case. We, however, note in passing 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, 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.[36]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.[37] The provisions therein contained, specifically on the limitation of carriers liability, are operative in the Philippines but only in appropriate situations.Petitioner ascribes ultimate error in the award of moral exemplary damages and attorneys 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 respondents claim, which was affirmed by the Court of Appeals, there is no evidence on record that the same is true. The denial of private respondents 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.[38]Private respondent counters that petitioners failure to deliver the microwave oven in the condition in which it was received can be describe 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.[39]The trial court justified its award of actual, moral and exemplary damages, and attorneys fees in favor of private respondent in this wise:"Since the plaintiffs baggage destination was the Philippines, Philippine law governs the liability of the defendant for damages for the microwave oven."The provisions of the New Civil Code on common carriers are Article(s) 1733, 1735 and 1753 x x x."In this case, defendant failed to overcome, not only the presumption but more importantly, plaintiffs evidence that defendants 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 formers claim on the ground that the formal claim was filed beyond the period as provided in paragraph 12 (a-1) (Exh. 1-C-2) of the Air Waybill (Exh. 1, also Exh A), when actually, Concepcion Dio, sister of plaintiff has immediately filed the formal claim upon discovery of the damage."[40]Respondent appellate court was in full agreement with the trial courts 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 courts award of moral and exemplary damages, attorneys fees and costs of suit to plaintiff-appellee is in accordance with current laws and jurisprudence on the matter. Indeed, aside from the fact that defendant-appellant acted in bad faith in breaching the contract and in denying plaintiffs valid claim for damages, plaintiff-appellee underwent profound distress, sleepless nights, and anxiety upon knowledge of her damaged microwave oven in possession of defendantappellant, entitling her to the award of moral and exemplary damages (Cathay Pacific Airways, Ltd. vs. C.A., supra; Arts. 2219 & 2221, New Civil Code), and certainly plaintiff-appellants unjust refusal to comply with her valid demand for payment, thereby also entitling her to reasonable attorneys fees [Art. 2208 (2) and (11), id.]."[41]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.[42]The very admissions of PAL, through Vicente Villaruz of its Import Section, as follows:"ATTY. VINCOSo that, you now claim, Mr. Witness, that from the time the cargo was unloaded from the plane until the time it reaches the Customs counter where it was inspected, all the way, it was the PAL personnel who did all these things?WITNESSYes, however, there is also what we call the Customs storekeeper and the Customs guard along with the cargo.ATTY. VINCOYou made mention about a locator?WITNESSYes, sir.ATTY. VINCOThis locator, is he an employee of the PAL or the Customs?WITNESSHe is a PAL employee."[43]lead to the inevitable conclusion that whatever damage may have been sustained by the cargo is due to causes attributable to PALs personnel or, at all events, under their responsibility.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 PALs personnel were negligent in the carriage and handling of the cargo.[44]Furthermore, there was glaringly no attempt what so ever on the part of petitioner to explain the cause of the damage to the oven. The unexplained cause of damage to private respondents 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 respondents entreaties for settlement of her claim for damages belies petitioners pretension that there was no bad faith on its part. This unprofessional indifference of PALs personnel despite full and actual knowledge of the damage to private respondents cargo, just to be exculpated from liability on pure technicality and bureaucratic subterfuge, smacks of willful misconduct and insensitivity to a passengers plight tantamount to bad faith[46] and renders unquestionable petitioners 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.On this note, the case at bar goes into the annals of our jurisprudence after six years and recedes into the memories of our legal experience as just another inexplicable inevitability. We will never know exactly how many man-hours went into the preparation, litigation and adjudication of this simple dispute over an oven, which the parties will no doubt insist they contested as a matter of principle. One thing, however, is certain. As long as the first letter in "principle" is somehow outplaced by the peso sign, the courts will always have to resolve similar controversies although mutual goodwill could have dispensed with judicial recourse.IN VIEW OF ALL OF THE FOREGOING, the assailed judgment of respondent Court of Appeals is AFFIRMED in toto.SO ORDERED._________________________________________________________________________________________________________

UNITED AIRLINES, petitioner, vs. WILLIE J. UY, respondent. UNITED AIRLINES assails in this petition for review on certiorari under Rule 45 the 29 August 1995 Decision of the Court of Appeals in CA-G.R. CV No. 39761 which reversed the 7 August 1992 order issued by the trial court in Civil Case No. Q-92-12410[1] granting petitioner's motion to dismiss based on prescription of cause of action. The issues sought to be resolved are whether the notice of appeal to the appellate court was timely filed, and whether Art. 29 of the Warsaw Convention[2] should apply to the case at bar.On 13 October 1989 respondent Willie J. Uy, a revenue passenger on United Airlines Flight No. 819 for the 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 airlines 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, petitioners 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.Respondents 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. In a letter dated 16 October 1989 respondent 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 United Airlines, through Central Baggage Specialist Joan Kroll, did not refute a ny of respondents 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 two (2) more letters to petitioner airline, one dated 4 January 1990 through a certain Atty. Pesigan, and another dated 28 October 1991 through Atty. Ramon U. Ampil demanding an out-of-court settlement of P1,000,000.00. 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;[3] 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 P1,000,000.00, exemplary damages of at least P500,000.00, plus attorney's fees of at least P50,000.00. 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 respondents 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.Respondent countered that par. (1) of Art. 29 of the Warsaw Convention must be reconciled with par. (2) thereof which states that "the method of calculating the period of limitation shall be determined by the law of the court to which the case is submitted." Interpreting thus, respondent noted that according to Philippine laws the prescription of actions is interrupted "when they are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor."[4] Since he made several demands upon United Airlines: first, through his personal letter dated 16 October 1989; second, through a letter dated 4 January 1990 from Atty. Pesigan; and, finally, through a letter dated 28 October 1991 written for him by Atty. Ampil, the two (2)-year period of limitation had not yet been exhausted.On 2 August 1992 the trial court ordered the dismissal of 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 forums 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.Respondent received a copy of the dismissal order on 17 August 1992. On 31 August 1992, or fourteen (14) days later, he moved for the reconsideration of the trial courts order. The trial court denied the motion and respondent received copy of the denial order on 28 September 1992. Two (2) days later, on 1 October 1992 respondent filed his notice of appeal.United Airlines once again moved for the dismissal of the case this time pointing out that respondents fifteen (15) -day period to appeal had already elapsed. Petitioner argued that having used fourteen (14) days of the reglementary period for appeal, respondent Uy had only one (1) day remaining to perfect his appeal, and since he filed his notice of appeal two (2) days later, he failed to meet the deadline.In its questioned Decision dated 29 August 1995[5] the appellate court gave due course to the appeal holding that respondents delay of two (2) days in filing his notice of appeal did not hinder it from reviewing the appea led order of dismissal since jurisprudence dictates that an appeal may be entertained despite procedural lapses anchored on equity and justice.On the applicability of the Warsaw Convention, the appellate court ruled that the Warsaw Convention did not preclude the operation of the Civil Code and other pertinent laws. Respondents 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 respondents cause of action had not yet prescribed and ordered the records remanded to the Quezon City trial court for further proceedings.Petitioner now contends that the appellate court erred in assuming jurisdiction over respondent's appeal since it is clear that the notice of appeal was filed out of time. It argues that the courts relax the stringent rule on perfection of appeals only when there are extraordinary circumstances, e.g., when the Republic stands to lose hundreds of hectares of land already titled and used for educational purposes; when the counsel of record was already dead; and wherein appellant was the owner of the trademark for more than thirty (30) years, and the circumstances of the present case do not compare to the above exceptional cases.[6]Section 1 of Rule 45 of the 1997 Rules of Civil Procedure provides that "a party may appeal by certiorari, from a judgment of the Court of Appeals, by filing with the Supreme Court a petition for certiorari, within fifteen (15) days from notice of judgment or of the denial of his motion for reconsideration filed in due time x x x x" This Rule however should not be interpreted as "to sacrifice the substantial right of the appellant in the sophisticated altar of technicalities with impairment of the sacred principles of justice."[7] It should be borne in mind that the real purpose behind the limitation of the period of appeal is to forestall or avoid an unreasonable delay in the administration of justice. Thus, we have ruled that delay in the filing of a notice of appeal does not justify the dismissal of the appeal where the circumstances of the case show that there is no intent to delay the administration of justice on the part of appellant's counsel,[8] or when there are no substantial rights affected,[9] or when appellant's counsel committed a mistake in the computation of the period of appeal, an error not attributable to negligence or bad faith.[10]In the instant case, respondent filed his notice of appeal two (2) days later than the prescribed period. Although his counsel failed to give the reason for the delay, we are inclined to give due course to his appeal due to the unique and peculiar facts of the case and the serious question of law it poses. In the now almost trite but still good principle, technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration.[11] Petitioner likewise contends that the appellate court erred in ruling that respondent's cause of action has not prescribed since delegates to the Warsaw Convention clearly 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. Petitioner argues that in construing the second paragraph of Art. 29 private respondent cannot read into it Philippine rules on interruption of prescriptive periods and state that his extrajudicial demand has interrupted the period of prescription.[12] American jurisprudence has declared that "Art. 29 (2) was not intended to permit forums to consider local limitation tolling provisions but only to let local law determine whether an action had been commenced within the two-year period, since the method of commencing a suit varies from country to country."[13]Within our jurisdiction we have held that the Warsaw Convention can be applied, or ignored, depending on the peculiar facts presented by each case.[14] Thus, we have ruled that the Convention's provisions do not regulate or exclude liability for other breaches of contract by the carrier or misconduct of its officers and employees, or for some particular or exceptional type of damage.[15] 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.[16] Likewise, we have held that the Convention does not preclude the operation of the Civil Code and other pertinent laws.[17] It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if willful misconduct on the part of the carrier's employees is found or established.[18]Respondent's complaint reveals that he is suing on two (2) causes of action: (a) the shabby and humiliating treatment he received from petitioner's employees at the San Francisco Airport which caused him extreme embarrassment and social humiliation; and, (b) the slashing of his luggage and the loss of his personal effects amounting to US $5,310.00.While his second cause of action - an action for damages arising from theft or damage to property or goods - is well within the bounds of the Warsaw Convention, his first cause of action -an action for damages arising from the misconduct of the airline employees and the violation of respondent's rights as passenger - clearly is not.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.As for respondent's second cause of action, indeed the travaux preparatories of the Warsaw Convention reveal that the delegates thereto intended the two (2)-year limitation incorporated in Art. 29 as an absolute bar to suit and not to be made subject to the various tolling provisions of the laws of the forum. This therefore forecloses the application of our own rules on interruption of prescriptive periods. Article 29, par. (2), was intended only to let local laws determine whether an action had been commenced within the two (2)-year period, and within our jurisdiction an action shall be deemed commenced upon the filing of a complaint. Since it is indisputable that respondent filed

the present action beyond the two (2)-year time frame his second cause of action must be barred. Nonetheless, it cannot be doubted that respondent exerted efforts to immediately convey his loss to petitioner, even employed the services of two (2) lawyers to follow up his claims, and that the filing of the action itself was delayed because of petitioner's evasion.In this regard, Philippine Airlines, Inc. v. Court of Appeals[19] is instructive. In this case of PAL, private respondent filed an action for damages against petitioner airline for the breakage of the front glass of the microwave oven which she shipped under PAL Air Waybill No. 0-79-1013008-3. Petitioner averred that, the action having been filed seven (7) months after her arrival at her port of destination, she failed to comply with par. 12, subpar. (a) (1), of the Air Waybill which expressly provided that the person entitled to delivery must make a complaint to the carrier in writing in case of visible damage to the goods, immediately after discovery of the damage and at the latest within 14 days from receipt of the goods. Despite non-compliance therewith the Court held that by private respondent's immediate submission of a formal claim to petitioner, which however was not immediately entertained as it was referred from one employee to another, she was deemed to have substantially complied with the requirement. The Court noted that with private respondent's own zealous efforts in pursuing her 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 13 August 1990, and that 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 the carrier's own doing, the consequences of which could not in all fairness be attributed to private respondent.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.SO ORDERED._______________________________________________________________________________________________________________ BRITISH AIRWAYS, petitioner, vs. COURT OF APPEALS, GOP MAHTANI, and PHILIPPINE AIRLINES, respondents. In this appeal by certiorari, petitioner British Airways (BA) seeks to set aside the decision of respondent Court of Appeals[1] promulgated on September 7, 1995, which affirmed the award of damages and attorneys fees made by the Regiona l Trial Court of Cebu, 7th Judicial Region, Branch 17, in favor of private respondent GOP Mahtani as well as the dismissal of its thirdparty complaint against Philippine Airlines (PAL).[2]The material and relevant facts are as follows: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, in turn, purchased a ticket from BA where the following itinerary was indicated:[3] CARRIER FLIGHT DATE TIME STATUS

MANILA

MNL

PR 310Y

16 APR

1730

OK

HONGKONG

HKG

BA 20 M

16 APR

2100

OK

BOMBAY

BOM

BA 19 M

23 APR

0840

OK

MANILA

MNL"

Since BA had no direct flights from Manila to Bombay, Mahtani had to take a flight to Hongkong via PAL, and upon arrival in Hongkong 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 two pieces of luggage containing his clothings and personal effects, confident that upon reaching Hongkong, 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 one week, BA finally advised him to file a claim by accomplishing the Property Irregularity Report.[4]Back in the Philippines, specifically on June 11, 1990, Mahtani filed his complaint for damages and attorneys fees[5] agains t BA and Mr. Gumar before the trial court, docketed as Civil Case No. CEB-9076.On September 4, 1990, BA filed its answer with counter claim[6] to the complaint raising, as special and affirmative defenses, that Mahtani did not have a cause of action against it. Likewise, on November 9, 1990, BA filed a third-party complaint[7] against PAL alleging that the reason for the non-transfer of the luggage was due to the latters late arrival in Hongkong, thus leaving hardly any time for the proper transfer of Mahtanis 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 Hongkong. Furthermore, the transfer of the luggage to Hongkong authorities should be considered as transfer to BA.[8]After appropriate proceedings and trial, on March 4, 1993, the trial court rendered its decision in favor of Mahtani,[9] the dispositive portion of which reads as follows:WHEREFORE, premises considered, judgment is rendered for the plaintiff and against the defendant for which defendant is ordered to pay plaintiff the sum of Seven Thousand (P7,000.00) Pesos for the value of the two (2) suit cases; Four Hundred U.S. ($400.00) Dollars representing the value of the contents of plaintiffs luggage; Fifty T housand (P50,000.00) Pesos for moral and actual damages and twenty percent (20%) of the total amount imposed against the defendant for attorneys fees and costs of this action.The Third-Party Complaint against third-party defendant Philippine Airlines is DISMISSED for lack of cause of action.SO ORDERED.Dissatisfied, BA appealed to the Court of Appeals, which however, affirmed the trial courts findings. Thus:WHEREFORE, in view of all the foregoing considerations, finding the Decision appealed from to be in accordance with law and evidence, the same is hereby AFFIRMED in toto, with costs against defendant-appellant.SO ORDERED.[10]BA is now before us seeking the reversal of the Court of Appeals decision.In essence, BA assails the award of compensatory dam ages and attorneys fees, as well as the dismissal of its third -party complaint against PAL.[11]Regarding the first assigned issue, BA asserts that the award of compensatory damages in the separate sum of P7,000.00 for th e loss of Mahtanis two pieces of luggage was without basis since Mahtani in his complaint[12] stated the following as the value of his personal belongings:8. On said travel, plaintiff took with him the following items and its corresponding value, to wit:1. personal belonging - - - - - - - - - - - - - - P10,000.002. gifts for his parents and relatives - - - - - $5,000.00Moreover, he failed to declare a higher valuation with respect to his luggage, a condition provided for in the ticket, which reads:[13]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. $20.00) per kilo for checked baggage and U.S. $400 per pa ssenger for unchecked baggage.Before we resolve the issues raised by BA, it is needful to state that the nature of an airlines contract of carriage partakes of two typ es, namely: a contract to deliver a cargo or merchandise to its destination and a contract to transport passengers to their destination. A business intended to serve the travelling public primarily, it is imbued with public interest, hence, the law governing common carriers imposes an exacting standard.[14] Neglect or malfeasance by the carriers employees could predictably furnish bases for an action for damages.[15]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[16] 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 conn ection to defendants acts.[17]In this regard, the trial court granted the following award as compensatory damages:Since plaintiff did not declare the value of the contents in his luggage and even failed to show receipts of the alleged gif ts for the members of his family in Bombay, the most that can be expected for compensation of his lost luggage (2 suit cases) is Twenty U.S. Dollars ($20.00) per kilo, or a combined value of Four Hundred ($400.00) U.S. Dollars for Twenty kilos representing the contents plus Seven Thousand (P7,000.00) Pesos representing the purchase price of the two (2) suit cases.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,[18] 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 the 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 passengers lack of knowledge thereof or assent thereto.[20] This doctrine is recog nized in this jurisdiction.[21]Notwithstanding the foregoing, we have, nevertheless, ruled against blind reliance on adhesion contracts where the facts and circumstances justify that they should be disregarded.[22]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.[23]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. In this regard, we quote the pertinent transcript o f stenographic notes of Mahtanis direct testimony:[24]Q How much are you going to ask from this court?A P100,000.00.Q What else?A Exemplary damages.Q How much?A P100,000.00.Q What else?A The things I lost, $5,000.00 for the gifts I lost and my personal belongings, P10,000.00.Q What about the filing of this case?A The court expenses and attorneys fees is 30%.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.[26] In the early case of Abrenica v. Gonda,[27] we ruled that:x x x (I)t has been repeatedly laid down as a rule of evidence that a protest or objection against the admission of any evidence must be made at the proper time, and that if not so made it will be understood to have been waived. The proper time to make a protest or objection is when, from the question addressed to the witness, or from the answer thereto, or from the presentation of proof, the inadmissibility of evidence is, or may be inferred. Needless to say, factual findings of the trial court, as affirmed by the Court of Appeals, are entitled to great respect.[28] Since the actual value of the luggage involved appreciation of evidence, a task within the competence of the Court of Appeals, its ruling regarding the amount is assuredly a question of fact, thus, a finding not reviewable by this Court.[29]As to the issue of the dismissal of BAs third -party complaint against PAL, the Court of Appeals justified its ruling in this wise, and we quote:[30]Lastly, we sustain the trial courts ruling dismissing appellants third-party complaint against PAL.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 the PAL plane from Manila to Hongkong, 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. x x x 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 passengers tick et is considered the principal party and the other carrier merely subcontractors or agent, is a settled issue.We cannot agree with the dismissal of the third-complaint.In Firestone Tire and Rubber Company of the Philippines v. Tempengko,[31] we expounded on the nature of a third-party complaint thus:The third-party complaint is, therefore, a procedural device whereby a third party who is neither a party nor privy to the act or deed complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who acts as third-party plaintiff to enforce against such third-party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the plaintiffs claim. The third -party complaint is actually independent of and separate and distinct from the plaintiffs complaint. Were it not for this provision of the Rules of Court, it would have to be filed independently and separately from the original complaint by the defendant against the third-party. But the Rules permit defendant to bring in a third-party defendant or so to speak, to litigate his separate cause of action in respect of plaintiffs claim against a third -party in the original and principal case with the object of avoiding circuitry of action and unnecessary proliferation of law suits and of disposing expeditiously in one litigation the entire subject matter arising from one particular set of facts.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.In resolving this issue, it is worth observing that the contract of air transportation was exclusively between Mahtani and BA, the latter merely endorsing the Manila to Hongkong leg of the formers journey to PAL, as its subcontractor or agent. In fact, the fourth paragraph of the Conditions of Contracts of the ticket[32] issued by BA to Mah tani confirms that the contract was one of continuous air transportation from Manila to Bombay.4. x x x carriage to be performed hereunder by several successive carriers is regarded as a single operation.Prescinding from the above discussion, it is undisputed that PAL, in transporting Mahtani from Manila to Hongkong acted as the agent of BA.Parenthetically, the Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible for any negligence in the performance of its function[33] and is liable for damages which the principal may suffer by reason of its negligent act.[34] 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 International Air Transport Association (IATA), wherein member airlines are regarded as agents of each other in the issuance of the tickets and other matters pertaining to their relationship.[35] Therefore, in the instant case, the contractual relationship between BA and PAL is one of agency, the former being the principal, since it was the one which issued the confirmed ticket, and the latter the agent.Our pronouncement that BA is the principal is consistent with our ruling in Lufthansa German Airlines v. Court of Appeals.[36] In that case, Lufthansa issued a confirmed ticket to Tirso Antiporda covering five-leg trip aboard different airlines. Unfortunately, Air Kenya, one of the airlines which was to carry Antiporda to a specific destination bumped him off.An action for damages was filed against Lufthansa which, however, denied any liability, contending that its responsibility towards its passenger is limited to the occurrence of a mishap on its own line. Consequently, when Antiporda transferred to Air Kenya, its obligation as a principal in the contract of carriage ceased; from there on, it merely acted as a ticketing agent for Air Kenya.In rejecting Lufthansas argument, we ruled: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 confirmed Lufthansa ticket in favor of Antiporda covering his entire five-leg trip aboard successive carriers concretely attest to this.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. In China Air Lines, Ltd. v. Court of Appeals,[37] while not exactly in point, the case, however, illustrates the principle which governs this particular situation. In that case, we recognized that a carrier (PAL), acting as an agent of another carrier, is also liable for its own negligent acts or omission in the performance of its duties.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 circuity of action and to enable the controversy to be disposed of in one suit.[38] It is but logical, fair and equitable to allow BA to sue PAL for indemnification, if it is proven that the l atters negligence was the proximate cause of Mahtanis unfortunate experience, instead of totally absolving PAL from any liability.WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-G.R. CV No. 43309 dated September 7, 1995 is hereby MODIFIED, reinstating the third-party complaint filed by British Airways dated November 9, 1990 against Philippine Airlines. No costs.SO ORDERED._____________________________________________________________________________________________ NORTHWEST AIRLINES, INC. petitioner, vs. COURT OF APPEALS and ROLANDO I. TORRES respondents. Unable to accept the decision of the Court of Appeals in CA-G.R. CV No. 24068,[1] petitioner Northwest Airlines, Inc., (hereafter NORTHWEST) and petitioner Rolando I. Torres (hereafter TORRES) filed separate petitions for review under Rule 45 of the Rules of Court, which were docketed as G.R. No. 120334 and G.R. No. 120337 and thereafter consolidated.The antecedents of these cases were summarized by the Court of Appeals as follows:[2]The plaintiff, [Torres], allegedly on a special mission to purchase firearms for the Philippine Senate, purchased a round trip ticket from defendant [Northwest] for his travel to Chicago and back to Manila. Via defendants flight, pl aintiff left for United States.After purchasing firearms and on the way back to Manila, plaintiff checked-in and presented before defendants representative his two identical baggage, one of which contained firearms. Defendants representative required the baggage to be opened and the supporting evidence to be presented. Plaintiff showed them his authorization from the Philippine government and the purchase receipts. Plaintiff thereafter sealed the baggage and defendants representative placed a red tag on the baggage with firearms with t he marking "CONTAINS FIREARMS".Upon arrival in Manila on June 22, 1988 plaintiff was not able to claim one of his baggages. Plaintiff was informed by defendants representative that his baggage containing firearms was rec alled back to Chicago by defendant for US Customs verification. A telex to this effect was shown to plaintiff.On June 28, 1988, after being advised of the arrival of his other baggage, plaintiff claimed and opened the baggage in the presence of defendants representative and found out that the firearms were missing. A Personal Property Missing Damage Report was issued by defendant to plaintiff.On account of the continuous refusal of defendant to settle amicably, plaintiff then prayed before the trial court that defendant be ordered to pay actual damages, moral damages, temperate damages, exemplary damages and attorney's fees (pp. 1-6, Complaint; p. 1, Record).In its answer, defendant pleaded: a) that it was the agents from the US Customs who

ordered for the return of the weapons which plaintiff checked-in; b) that when opened in the presence of US Customs agents the box contained no firearms; and c) that since the baggage which was returned back to Chicago did not contain any firearms, then the baggage which plaintiff received upon arrival in Manila must have contained the firearms (pp. 3-5, Answer; pp. 32-34, Record).After plaintiff had presented its evidence, defendant filed a "Motion to Dismiss (By Way of Demurrer to the Evidence with Motion for Summary Judgment)" dated April 24, 1989.In said motion, defendant moved for the dismissal of the complaint in so far as it prays for moral, exemplary and temperate damages and attorney's fees and further moved for "Summary Judgment to be rendered awarding the plaintiff $640.00 as actual damages." (Motion to Dismiss By Way of Demurrer to Evidence with Motion for Summary Judgment; p. 115, Records).Plaintiff on the other hand, offered no objection to the submission of the case for decision but insisted that he is entitled to damages as prayed for (p. 1, Comment on Defendant's Motion to Dismiss by Way of Demurrer to Evidence with Summary Judgment; pp. 136-169, Records).We add to this summary the following relevant matters:NORTHWEST argued in its motion for summary judgment that the Warsaw Convention and the contract of carriage limited its liability to US$640 and that the evidence presented by TORRES did not entitle him to moral, exemplary, and temperate damages and attorneys fees.[3]Instead of just ruling on NORTHWESTs Motion to Dismiss (By Way of Demurrer to Evidence) with Motion for Summary Judgment, which it considered submitted for resolution in the order of 14 June 1989,[4] the trial court rendered on 13 September 1989 a full-blown decision[5] ordering NORTHWEST to pay TORRES the following amounts:1. The amount of $9,009.32, with legal interest thereon from the date of the filing of the complaint, in its peso equivalent at the official rate of exchange at the time payment is made, representing the value of the goods lost by the plaintiff;2. The amount of P100,000.00 by way of attorney's fees;3. The amount of P5,181.09 as filing fees paid by the plaintiff and the amount of P20,000.00 for expenses of litigation, representing travel expenses and hotel accommodations of plaintiff's counsels; and4. The amount of P50,000.00 as moral damages.The award of US$9,009.32, representing the value of the lost firearms, was grounded on the trial courts finding that the act of [NORTHWESTs] personnel in Tokyo or Narita Airport in just guessing which baggage contained the firearms was careless and imprudent, amounting to careless disregard for the safety of the luggage of the passenger. According to the trial court, such act constituted willful misconduct which brought the case beyond the applicat ion of Section 22(2) of the Warsaw Convention, thereby depriving NORTHWEST of the limitation of the liability provided for in said section.The awards of attorneys fees and expenses of litigation were premised on NORTHWESTs having ignored the demands of TORRES forcing the latter to litigate in order to assert his right. TORRES was also awarded moral dama ges because of the inconvenience, anxiety and worry he suffered by reason of NORTHWESTs unjustifiab le refusal to settle his claim.Both TORRES and NORTHWEST appealed from the decision to the Court of Appeals, which docketed the case as CA-G.R. CV No. 24068. Torres assailed the failure of the trial court to award the actual, moral, and exemplary damages prayed for by him.[6] Northwest, on the other hand, alleged that in prematurely resolving the case on the merits the court prevented it from presenting evidence, thereby denying it due process; and that even assuming that the trial court could resolve the entire case on the merits, it erred in awarding damages, attorneys fees, and expenses of litigation. [7]In its Decision[8] of 14 September 1994, the Court of Appeals sustained the trial courts judgment that TORRES was entitled to actual damages, since NORTHWEST had, in effect, admitted the loss of the firear ms when it insisted that its liability was limited to $9.07 per pound or $20 per kilo. The appellate court then concluded that NORTHWESTs guessing of which luggage contained the firearms amounted to willful misconduct unde r Section 25(1) of the Warsaw Convention which entitled TORRES to claim actual damages in excess of the limitation provided for under Section 22(2) of said Convention.Nevertheless, the Court of Appeals held that while the trial court properly ruled on the right of TORRES to actual damages, it erred in determining by way of summary judgment the amount of damages; for under Section 3 of Rule 34 of the Rules of Court, a summary judgment may be rendered upon proper motion except as to the amount of damages.As to the trial courts act of disposing of the entire case by way of summary judgment, the Court of Appeals noted that NORTHWEST categorically moved for summary judgment only on the issue of actual damages, but not on the claims for moral damages and attorneys fees. NORTHWEST moved for the dismissal of the latter claims by way of demurrer to evidence. That be ing so, the trial court could not, by way of summary judgment, dispose of the case on its entirety. Section 2 of Rule 34 of the Rules of Court required that summary judgment should be issued only after the motion therefor has been heard. Since there was no such motion as to the claims for moral damages and attorneys fees, no summary judgment thereon could be made.Anent the demurrer to evidence, the Court of Appeals held that the trial court had to either grant or deny it. If granted, no award therefor could have been validly made. If denied, then under Section 1 of Rule 35 of the Rules of Court, NORTHWEST should have been allowed to present its evidence, as it was not deemed to have waived that right. This section provided:SECTION 1. Effect of judgment on demurrer to evidence. -- After the plaintiff has completed the presentation of his evidence, the defendant without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon facts and the law the plaintiff has shown no right to relief. However, if the motion is granted and order of dismissal is reversed on appeal, the movant loses his right to present evidence in his behalf.[9]The Court of Appeals then held that since the demurrer was impliedly denied by the trial court, NORTHWEST should have been allowed to present its evidence in accordance with the above rule. Accordingly, the Court of Appeals affirmed the trial courts finding as to the right of TORRES to actual damages but set aside the rest of the appealed decision. It then remanded the case to the court a quo for further proceedings. On 23 May 1995, the Court of Appeals denied[10] NORTHWESTs motion for a partial reconsideration of the decision.Hence, the present petitions.NORTHWEST contests the right of TORRES to actual damages on the following grounds: (1) the loss of firearms was disputed; (2) the finding of willful misconduct was arbitrary; and (3) TORRES failed to produce a United States license for the shipment of the firearms; hence, the importation was illegal and no damages could arise therefrom.TORRES, on the other hand, claims that the Court of Appeals erred (1) in setting aside the appealed decision of the court a quo as to the awards of damages, attorneys fees, and cost of suit; (2) in remanding the case to the court a quo for further proceedings; and (3) in failing to award other damages for breach of contract and willful misconduct committed by Northwest for mishandling the cargo.NORTHWESTs Motion to Dismiss (By Way of Demurrer to Ev idence) with Motion for Summary Judgment involved two distinct and separate processes, viz: (1) demurrer to evidence, which was then governed by Rule 35, now by Rule 33; and (2) motion for summary judgment, which was then governed by Rule 34, now Rule 35, of the Rules of Court. The subject of the demurrer were the claims for moral, exemplary, and temperate damages and attorney s fees; while the target of the motion for summary judgment was the claim for actual damages.We agree with the Court of Appeals in its holding that the trial court erred in deciding the entire case on its merits. Indeed, as to the demurrer to evidence, the trial court should have been solely guided by the procedure laid down in the abovementioned rule on demurrer to evidence. It had no choice other than to grant or to deny the demurrer. It could not, without committing grave abuse of discretion amounting to excess of jurisdictio n, deny the motion and then forthwith grant TORRES claims on a finding that TORRES has established a preponderance of evidence in support of such claims. In the instant case, the trial court did just that insofar as moral damages , attorneys fees, and expenses of litigation were concerned. What it should have done was to merely deny the demurrer and set a date for the reception of NORTHWESTs evidence in chief.As to the motion for summary judgment, both the trial court and the Court of Appeals were in error . Summary judgments were formerly governed by Rule 34 of the Rules of Court. The rule is now Rule 35 of the 1987 Rules of Civil Procedure with the amendments allowing the parties to submit not only affidavits but also depositions or admissions in support of their respective contentions.[11] Motions for summary judgment may be filed by the claimant or by the defending party. Sections 1, 2, and 3 of the old Rule 34, the governing law in this case, provided as follows:SECTION 1. Summary judgment for claimant. -- A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto has been served, move with supporting affidavits for a summary judgment in his favor upon all or any part thereof.SEC. 2. Summary judgment for defending party. -- A party against whom a claim, counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any time, move with supporting affidavits for a summary judgment in his favor as to all or any part thereof.SEC. 3. Motion and proceedings thereon. -- The motion shall be served at least ten (10) days before the time specified for the hearing. The adverse party prior to the day of hearing may serve opposing affidavits. After the hearing, the judgment sought shall be rendered forthwith if the pleadings, depositions, and admissions on file together with the affidavits, show that, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.NORTHWEST, the defending party, moved for summary judgment on the claim for actual damages after TORRES had presented his evidence in chief. This was allowed by Section 2 where the motion may be filed at any time, as distinguished from section 1 where the claimant, like TORRES, may file the motion at any time after the answer is filed.Summary judgment is allowed if, except as to the amount of damages, there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. In this case, NORTHWEST denied in its Answer the material allegations in the complaint and asserted, in fact, that it was not liable for actual damages because the box containing the alleged lost firearms was the one received by TORRES when he arrived in Manila. It likewise contended that, even granting that the firearms were lost, its liability was limited by the Warsaw Convention and the contract of transportation to $9.07 per pound, or a total of $640 as the box weighed 70 pounds.[12] It also denied having acted fraudulently or in bad faith.[13]In thus submitting for summary judgment the matter of its liability only to the maximum allowed in Section 22(2) of the Warsaw Convention, NORTHWEST was deemed to have hypothetically admitted arguendo that the firearms were lost. It did not waive the presentation of evidence that it was not in fact liable for the alleged loss of firearms. And even if it were so liable, NORTHWEST could still prove at the appropriate time that it was not liable beyond the maximum provided in said Section 22(2). Notably, TORRES prayed for actual damages in the amounts of (1) $9,009.32 representing the value of the lost firearms; and (2) P39,065[14] representing the cost of his plane tickets.Concretely then, there remained a genuine issue on the fact and amount of actual damages. The motion for summary judgment was not therefore in order. NORTHWEST must have resorted to it, in like manner as it did in filing the demurrer, to delay the progress of the trial of the case. Verily, it was grave abuse of discretion on the part of the trial court to grant such motion and award TORRES actual damages commensurate to the value of the firearms and based on his evidence alone.We, however, agree with both the trial court and the Court of Appeals that NORTHWESTs liability for actual damages may not be limited to that prescribed in Section 22(2) of the Warsaw Convention. In Alitalia v. Intermediate Appellate Court,[15] we held:The [Warsaw] Convention does not operate as an exclusive enumeration of the instances of an airlines 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. 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 willful 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

Conventions provisions, in short, do not regulate or exclude liability for other breaches of contract by the carrier or misconduct of its officers and emp loyees, or for some particular or exceptional type of damage.IN VIEW WHEREOF, judgment is hereby rendered (1) PARTLY GRANTING the petition in G.R. No. 120334 by setting aside that portion of the challenged decision of the Court of Appeals in CA-G.R. CV No. 24068 affirming the summary judgment as to the right of respondent ROLANDO I. TORRES to actual damages; (2) DENYING for want of merit the petition in G.R. No. 120337; and (3) REMANDING this case to the trial court for the reception of the evidence for Northwest Airlines, Inc. in Civil Case No. 88-46117 and, thereafter, for the rendition of the judgment therein on the merits.No pronouncement as to costs.SO ORDERED._______________________________________________________________________________________________________ SABENA BELGIAN WORLD AIRLINES, petitioner, vs. HON. COURT OF APPEALS and MA. PAULA SAN AGUSTIN, respondents. The appeal before the Court involves the issue of an airlines liability for lost luggage. The petition for review assails the decision of the Court Appeals,[1] dated 27 February 1992, affirming an award of damages made by the trial court in a complaint filed by private respondent against petitioner.The factual background of the case, narrated by the trial court and reproduced at length by the appellate court, is hereunder quoted:On August 21, 1987, plaintiff was a passenger on board Flight SN 284 of defendant airlin e 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 hut 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, defendants Local Manager, demanding immediate attention (Exh. A).On September 30, 1987, on the occasion of plaintiffs following up of her luggage claim, she was furnished copies of defendants telexes with an information that the Brussels Office of defendant found the luggage and that they have broken the locks for identification (Exhibit B). Plaintiff was assured by t he 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 (Exhibits C and C-1).At the time of the filling 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 plaintiffs so le 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 stopover, 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 an d that some carriers assume no liability for fragile, valuable or perishable articles and that further information may he 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.[2]The trial court rendered judgment ordering petitioner Sabena Belgian World Airlines to pay private respondent Ma. Paula San Agustin (a) x x x US$4,265.00 or its legal exchange in Philippine pesos; (b) x x x P30,000.00 as moral damages;(c) x x x P10,000.00 as exemplary damages; (d) x x x P10,000.00 attorneys fees; and(e) (t)he costs of the suit.[3]Sabena appealed the decision of the Regional Trial Court to the Court of Appeals. The appellate court, in its decision of 27 February 1992, affirmed in toto the trial courts judgment.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 or 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 valuables.[4]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 not 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. The appe llate court has aptly observed:x x x Art. 1733 of the [Civil] Code provides that from the very nature of their business and by reasons of public policy, common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. This extraordinary responsibility, according to Art. 1736, lasts from the time the goods are unconditionally placed in the possession of and received by the carrier until they are delivered actually or constructively to the consignee or person who has the right to receive them. Art. 1737 states that the common carriers duty to observe extraordin ary diligence in the vigilance over the goods transported by them remains in full force and effect even when they are temporarily unloaded or stored in transit. And Art. 1735 establish es the presumption that if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they had observed extraordinary diligence as required in Article 1733.The only exceptions to the foregoing extraordinary responsibility of the common carrier is when the lo ss, destruction, or deterioration of the goods is due to any of the following causes:(1) Flood, storm, earthquake, lightning, or othe r natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil;(3) Act or omission of the shipper or owner of the goods;(4) The character of the goods or defects in the packing or in the containers;(5) Order or act of competent public authority.Not one of the above excepted c auses obtains in this case.[5]The above rules remain basically unchanged even when the contract is breached by tort[6] although noncontradictory principles on quasi-delict may then be assimilated as also forming part of the governing law. Petitioner is not thus entirely off track when it has likewise raised in its defense the tort doctrine of proximate cause. Unfortunately for petitioner, however, the doctrine cannot, in this particular instance, support its case. Proximate cause is that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury and without which the result would not have occurred. The exemplification by the Court in one case[7] is simple and explicit; viz:(T)he proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and Continuous chain of events, each having a close causal Connection with its immediate predecessor, the final event in the chain immediately affecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinarily prudent, and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom.It remained undisputed that private respondents 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 respondents luggage. The loss of said baggage not only once by 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 (Convention for the Unification of Certain Rules Relating to International Carriage by Air, as amended by the Hague Protocol of 1955, the Montreal Agreement of 1966, the Guatemala Protocol of 1971 and the Montreal Protocols of 1975). In Alitalia vs. Intermediate Appellate Court,[8] now Chief Justice Andres R. Narvasa, speaking for the Court, has explained it well; he said:The Warsaw Convention however denies to the carrier availment of the provisions which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to wilful misconduct, or if the damage is (similarly) caused x x x by any agent of the carrier acting within the scope of his employment. The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself completely, and declaring the stated limits of liability not applicable if it is proved that the damage resulted from an act or omission of the carrier, its serva nts 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 passe nger could recover unlimited damages upon proof of wilful misconduct.The Convention does not thus operate as an exclusive enumeration of the instances of an airlines liability, or as an absolu te 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. 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 Contentions provisions, in short, do not regulate or exclude liability for other breaches of contract by the carrier or misconduct of its officers and employees, or for some par ticular or exceptional type of damage. Otherwise, an air carrier would be exempt from any liability for damages in the even t of its absolute refusal, in bad faith, to comply with a contract of carriage, which is absurd. Nor may it for a moment be suppo sed that if a member of the aircraft complement should inflict some physical injury on a passenger, or maliciously destroy or damage the latters property, the Convention might successfully be pleaded as the sole gauge to determine the carriers 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.The Court thus sees no error in the preponderant application to the instant case by the appellate court, as well as by the trial court, of the usual rules on the extent of recoverable damages beyond the Warsaw limitations. Under domestic law and jurisprudence (the Philippines being the country of destination), the attendance of gross negligence (given the equivalent of fraud or bad faith) holds the common carrier liable for all damages which can be reasonably attributed, although unforeseen, to the non-performance of the obligation,[9] including moral and exemplary damages.[10]WHEREFORE, the decision appealed from is AFFIRMED. Costs against petitioner.SO ORDERED. ___________________________________________________________________________________________________