Edna Diago Lhuillier vs British Airways

GR 171092
March 15, 2010
FACTS: On February 28, 2005, petitioner Lhuillier took respondent British Airwayss flight 548 from London, United
Kingdom to Rome, Italy. Once on board, she allegedly requested Julian Halliday, one of the respondents flight
attendants, to assist her in placing her hand-carried luggage in the overhead bin. However, Halliday allegedly refused
to help and assist her, and even sarcastically remarked that "If I were to help all 300 passengers in this flight, I would
have a broken back!" Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight
attendant, Nickolas Kerrigan, singled her out from among all the passengers in the business class section to lecture on
plane safety. Allegedly, Kerrigan made her appear to the other passengers to be ignorant, uneducated, stupid, and in
need of lecturing on the safety rules and regulations of the plane.
Upon arrival in Rome, petitioner complained to respondents ground manager and demanded an apology. However, the
latter declared that the flight stewards were "only doing their job; prompting petitioner to file herein complaint for
damages.
On April 28, 2005, petitioner filed a Complaint for damages against respondent before the RTC of Makati City.
Respondent filed a Motion to Dismiss on grounds of lack of jurisdiction over the case and over the person of the
respondent. Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have jurisdiction over
the complaint for damages pursuant to the Warsaw Convention, Article 28(1) of which provides that:
An action for damages must be brought at the option of the plaintiff, either before the court of domicile of the
carrier or his principal place of business, or where he has a place of business through which the contract has
been made, or before the court of the place of destination.
Petitioner argues that her cause of action arose not from the contract of carriage, but from the tortious conduct
committed by airline personnel of respondent in violation of the provisions of the Civil Code on Human Relations. Since
her cause of action was not predicated on the contract of carriage, petitioner asserts that she has the option to pursue
this case in this jurisdiction pursuant to Philippine laws.
In contrast, respondent maintains that petitioners claim for damages fell within the ambit of Article 28(1) of the
Warsaw Convention. As such, the same can only be filed before the courts of London, United Kingdom or Rome, Italy.
The RTC dismissed the case hence this petition.
ISSUE: Whether or not Philippine courts have jurisdiction over a tortious conduct committed against a Filipino citizen
and resident by an airline personnel of a foreign carrier.
HELD: NO. It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos III v. NOA
we held that:
The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to
International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on February 13,
1933. The Convention was concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The
Philippine instrument of accession was signed by President Elpidio Quirino on October 13, 1950, and was
deposited with the Polish government on November 9, 1950. The Convention became applicable to the
Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No.
201, declaring our 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.
The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as such, has the
force and effect of law in this country. The Warsaw Convention applies because the air travel, where the alleged
tortious conduct occurred, was between the United Kingdom and Italy, which are both signatories to the Warsaw
Convention. Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage or goods performed by aircraft for
reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.
2. For the purposes of this Convention the expression "international carriage" means any carriage in which,
according to the contract made by the parties, the place of departure and the place of destination, whether or
not there be a break in the carriage or a transhipment, 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, suzerainty, mandate or authority of another Power, even
though that Power is not a party to this Convention. A carriage without such an agreed stopping place between
territories subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party is
not deemed to be international for the purposes of this Convention. (Emphasis supplied)
Thus, when the place of departure and the place of destination in a contract of carriage are situated within the
territories of two High Contracting Parties, said carriage is deemed an "international carriage". The High Contracting

Parties referred to herein (UK and Italy) were the signatories to the Warsaw Convention and those which subsequently
adhered to it. Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages before
1. the court where the carrier is domiciled;
2. the court where the carrier has its principal place of business;
3. the court where the carrier has an establishment by which the contract has been made; or
4. the court of the place of destination.
In this case, it is not disputed that respondent is a British corporation domiciled in London, United Kingdom with
London as its principal place of business. Hence, under the first and second jurisdictional rules, the petitioner may
bring her case before the courts of London in the United Kingdom. In the passenger ticket and baggage check
presented by both the petitioner and respondent, it appears that the ticket was issued in Rome, Italy. Consequently,
under the third jurisdictional rule, the petitioner has the option to bring her case before the courts of Rome in Italy.
Finally, both the petitioner and respondent aver that the place of destination is Rome, Italy, which is properly
designated given the routing presented in the said passenger ticket and baggage check. Accordingly, petitioner may
bring her action before the courts of Rome, Italy. We thus find that the RTC of Makati correctly ruled that it does not
have jurisdiction over the case filed by the petitioner.

PAL v HON. ADRIANO SAVILLO, Presiding Judge of RTC Branch 30 , Iloilo City, and SIMPLICIO GRIO
GR No. 149547
July 4, 2008

FACTS: Private respondent Simplicio was invited to participate in the 1993 ASEAN Seniors Annual Golf Tournament
held in Jakarta, Indonesia. He and several companions decided to purchase their respective passenger tickets from PAL
with the following points of passage: MANILA-SINGAPORE-JAKARTA-SINGAPORE-MANILA. Private respondent and his
companions were made to understand by PAL that its plane would take them from Manila to Singapore, while
Singapore Airlines would take them from Singapore to Jakarta.

Upon arrival in Singaore, Grio and his companions proceeded to the Singapore Airlines office to check-in for their
flight to Jakarta however Singapore Airlines rejected the tickets because they were not endorsed by PAL. It was
explained that if Singapore Airlines honored the tickets without PALs endorsement, PAL would not pay Singapore
Airlines for their passage. Grio tried to contact PALs office at the airport but it was closed. Eventually, Grio and his
companions were forced to purchase tickets from Garuda Airlines and board its last flight bound for Jakarta and they
had to arrange for their transportation to the hotel at a very late hour.
Upon his return to the Philippines, Grio sent demand letters seeking compensation for moral damages to PAL and to
Singapore Airlines. However, both airlines disowned liability and blamed each other for the fiasco. Later, Grio filed a
Complaint for Damages before the RTC.
PAL filed a Motion to Dismiss arguing that the Warsaw Convention, particularly Article 29 thereof, governed this case,
as it provides that any claim for damages in connection with the international transportation of persons is subject to
the prescription period of two years. Since the Complaint was filed more than three years after PAL received the
demand letter on, it was already barred by prescription.

The RTC denied the Motion to Dismiss and maintained that the provisions of the Civil Code and other pertinent laws of
the Philippines, not the Warsaw Convention, were applicable to the present case. The CA likewise dismissed the
petition filed by PAL and applied Article 1144 of the Civil Code, which allowed for a ten-year prescription period.

ISSUE: Whether or not the provisions of the Warsaw Convention are applicable in this case
RULING: NO. The Warsaw Convention does not "exclusively regulate" the relationship between passenger and carrier
on an international flight. In United Airlines v. Uy,18 this Court distinguished between the (1) damage to the passengers
baggage and (2) humiliation he suffered at the hands of the airlines employees. The first cause of action was covered
by the Warsaw Convention which prescribes in two years, while the second was covered by the provisions of the Civil
Code on torts, which prescribes in four years.
In the case at hand, Singapore Airlines barred private respondent from boarding the Singapore Airlines flight because
PAL allegedly failed to endorse the tickets of private respondent and his companions, despite PALs assurances to
respondent that Singapore Airlines had already confirmed their passage. While this fact still needs to be heard and
established by adequate proof before the RTC, an action based on these allegations will not fall under the Warsaw

Convention, since the purported negligence on the part of PAL did not occur during the performance of the contract of
carriage but days before the scheduled flight. Thus, the present action cannot be dismissed based on the statute of
limitations provided under Article 29 of the Warsaw Convention.

These claims are covered by the Civil Code provisions on tort, and not within the purview of the Warsaw Convention.
Hence, the applicable prescription period is that provided under Article 1146 of the Civil Code:

Art. 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict.

Grios Complaint was filed with the RTC on 15 August 1997, which was less than four years since PAL received his
extrajudicial demand on 25 January 1994. Thus, Grios claims have not yet prescribed and PALs Motion to Dismiss
must be denied.

Agustino B. Ong Yiu vs. Court of Appeals and PAL

G.R. No. L- 40597
June 29, 1979
FACTS: Ong Yiu, a practicing lawyer, the herein petitioner, engaged on the service of PAL as a paying passenger. On
August 26, 1967, Ong Yiu was bound for Butuan City from Cebu City, for a scheduled trial. As a passenger, he checked
in one piece of luggage which he was issued a Claim Check. Upon arrival at Butuan City, he found out that his luggage
was missing. He then approached the porter clerk about the matter. It was then found out that the said luggage was
transported to Manila, instead of doing so to Butuan City. The porter clerk informed Ong Yiu that the said luggage will
be transported from Manila to Cebu to Butuan City on the following day. The next day, Ong Yiu went back to Butuan
City airport to check if the luggage has already arrived. Knowing that the same was not yet delivered at the Butuan
City airport, Ong Yiu left the premises. After few hours, the luggage arrived but since the latter has already left, the
driver who used to drive the petitioner delivered the luggage to the latter with the notification that the luggage has
arrived with its lock opened. Upon inspection, Ong Yiu noticed that a folder containing documents was missing. As a
consequence, Ong Yiu requested for the postponement of the trial he was supposed to attend in Butuan City.
Petitioner asked for the investigation of his missing folder but the PAL failed to trace where the folder is. Petitioner then
demanded for damages for breach of contract of transportation against PAL. The trail court awarded the sum of
P80,000 for moral damages and P30,000 for exemplary damages. Both parties appealed on the CA which the latter, on
its decision,found out that PAL did not act in bad faith, hence, removed the moral and exemplary damages in favor of
Ong Yiu and ordered PAL to pay the latter with P100, in pursuance to the stipulation written on the ticket issued by PAL
to Ong Yiu; thus, this appeal.
ISSUE: Whether or not PAL acted in bad faith and Ong Yiu should be paid for moral and exemplary damages due to
breach of contract of transportation.
RULING: NO. Although PAL is guilty of negligence, the SC found out that the latter is guilty of simple negligence only.
The efforts of PAL on locating the luggage proved that it acted in good faith and with due diligence of duty. Moreover, it
was stated that Ong Yiu should have received and checked his luggage upon the latters arrival on the airport if the
former waited a little longer. Furthermore, petitioner is not entitled of the moral and exemplary damages due to
following findings:
(a) Ong Yiu failed to declare a higher value of the luggage;
(b) Ong Yiu did not pay for any additional transportation charge;
(c) while it may be true that petitioner had not signed the plane ticket, he is bound by the provisions thereof.
The plane ticket is regarded as a contract. Nevertheless, it is a contract of adhesion. A contract of adhesion is that
where one party imposes a ready-made form of contact on the other. It is not entirely prohibited by the law. The one
who adhered to the contract is in reality free to reject it entirely; if he adheres, he gives his consent.

Therefore, the Supreme Court ruled that Ong Yiu cannot claim damages higher than P100 because of his failure to
declare a greater value of the luggage and in accordance with the stipulation of the contract of adhesion, in which he
consented, as in this case, the place ticket which was issued to him.

EVERETT STEAMSHIP CORPORATION v CA and HERNANDEZ TRADING CO. INC.

G.R. No. 122494
October 8, 1998
FACTS: Private respondent Hernandez Trading Co. Inc. imported three crates of bus spare parts from its supplier,
Maruman Trading Company, Ltd. (Maruman Trading), a foreign corporation based in Aichi, Japan. The crates were
shipped from Nagoya, Japan to Manila on board "ADELFAEVERETTE," a vessel owned by petitioner's principal, Everett
Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN.
Upon arrival at the port of Manila, it was discovered that one of the crates was missing. This was confirmed and
admitted by petitioner in its letter of January 13, 1992 addressed to private respondent, which thereafter made a
formal claim upon petitioner for the value of the lost cargo amounting to Y1,552,500.00, the amount shown in an
invoice dated November 14, 1991. However, petitioner offered to pay only Y100,000.00,, the maximum amount
stipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner. Private respondent
rejected the offer and thereafter instituted a suit for collection against petitioner.
ISSUE: Whether or not the limited liability clause in the bill of lading is valid.
RULING: YES. A stipulation in the bill of lading limiting the common carrier's liability for loss or destruction of a cargo
to a certain sum, unless the shipper or owner declares a greater value, is sanctioned by law, particularly Articles 1749
and 1750 of the Civil Code which provide:
Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the
bill of lading, unless the shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been freely and
fairly agreed upon.
The bill of lading subject of the present controversy specifically provides, among others:
Clause 18. All claims for which the carrier may be liable shall be adjusted and settled on the basis of the
shipper's net invoice cost plus freight and insurance premiums, if paid, and in no event shall the carrier be
liable for any loss of possible profits or any consequential loss.
The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an amount
exceeding One Hundred thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in any other
currency per package or customary freight unit (whichever is least) unless the value of the goods higher
than this amount is declared in writing by the shipper before receipt of the goods by the carrier
and inserted in the Bill of Lading and extra freight is paid as required.
The above stipulations are, to our mind, reasonable and just. In the bill of lading, the carrier made it clear that its
liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman Trading,
had the option to declare a higher valuation if the value of its cargo was higher than the limited liability
of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for
not complying with the stipulations.
When private respondent formally claimed reimbursement for the missing goods from petitioner and subsequently
filed a case against the latter based on the very same bill of lading, it (private respondent) accepted the provisions of
the contract and thereby made itself a party thereto, or at least has come to court to enforce it. Thus, private
respondent cannot now reject or disregard the carrier's limited liability stipulation in the bill of lading. In other words,
private respondent is bound by the whole stipulations in the bill of lading and must respect the same.
The bill of lading in question confirms petitioner's contention that it did not know of the contents,
quantity and value of "the shipment which consisted of three pre-packed crates described in the Bill of
Lading merely as 3 CASES SPARE PARTS." To defeat the carrier's limited liability, the aforecited Clause 18 of the
bill of lading requires that the shipper should have declared in writing a higher valuation of its goods
before receipt thereof by the carrier and insert the said declaration in the bill of lading, with extra
freight paid. These requirements in the bill of lading were never complied with by the shipper, hence, the
liability of the carrier under the limited liability clause stands. The commercial invoice does not in itself
sufficiently and convincingly show that petitioner has knowledge of the value of the cargo as contended by private
respondent. No other evidence was proffered by private respondent to support is contention.
DECISION: In fine, the liability of petitioner for the loss of the cargo is limited to One Hundred Thousand
(Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading.

ALITALIA v IAC and FELIPA E. PABLO

GR No. 71929 December 4, 1990
FACTS: Dr. Felipa Pabloan associate professor in the University of the Philippines, and a research grantee of the
Philippine Atomic Energy Agencywas invited to take part at a meeting of the Department of Research and Isotopes of
the United Nations in Ispra, Italy. To fulfill this engagement, Dr. Pablo booked passage on petitioner airline, ALITALIA.
She arrived in Milan on the day before the meeting. She was however told by the ALITALIA personnel there at Milan
that her luggage was "delayed inasmuch as the same . . . (was) in one of the succeeding flights from Rome to Milan."
Her luggage consisted of two (2) suitcases: one contained her clothing and other personal items; the other, her
scientific papers, slides and other research material. But the other flights arriving from Rome did not have her baggage
on board. By then feeling desperate, she went to Rome to try to locate her bags herself. However, her baggage could
not be found. Completely distraught and discouraged, she returned to Manila without attending the meeting in Ispra,
Italy.
Once back in Manila she demanded that ALITALIA make reparation for the damages thus suffered by her. She rejected
Alitalias offer of free airline tickets and commenced an action for damages. As it turned out, the luggage was actually
forwarded to Ispra, but only a day after the scheduled appearance. It was returned to her after 11 months.
The trial court ruled in favor of Dr. Pablo awarding P20,000 as nominal damages, the Appellate Court not only affirmed
the Trial Court's decision but also increased the award of nominal damage spayable by ALITALIA to P40,000.
ISSUE: Whether or not the Warsaw Convention should have been applied to limit ALITALIA'S liability.
RULING: NO. The Warsaw Convention provides that an air carrier is made liable for damages when: (1) the death,
wounding or other bodily injury of a passenger if the accident causing it took place on board the aircraft or in the
course of its operations of embarking or disembarking; (2) the destruction or loss of, or damage to, any registered
luggage or goods, if the occurrence causing it took place during the carriage by air"; and (3) delay in the
transportation by air of passengers, luggage or goods.
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 willful misconduct," or "if the damage is (similarly) caused . .
by any agent of the carrier acting within the scope of his employment.
The Convention's 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 particular or exceptional type of damage. On the other hand,
the Warsaw Convention has invariably been held inapplicable, or as not restrictive of the carrier's liability, where there
was satisfactory evidence of malice or bad faith attributable to its officers and employees.
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of petitioner airline;
and Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but without appreciable damage. The fact
is, nevertheless, that some species of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced her
baggage and failed to deliver it to her at the time appointed- a breach of its contract of carriage. Certainly, the
compensation for the injury suffered by Dr. Pablo cannot under the circumstances be restricted to that prescribed by
the Warsaw Convention for delay in the transport of baggage.

CHINA AIRLINES v DANIEL CHIOK

GR No. 152122
July 30, 2003
FACTS: Daniel Chiok purchased from China Airlines, Ltd. (CAL for brevity) airline passenger ticket for air transportation
covering Manila-Taipei-Hongkong-Manila. Said ticket was exclusively endorseable to Philippine Airlines, Ltd. (PAL for
brevity). "Subsequently Chiok took his trip from Manila to Taipei using ticket. When he arrived in Taipei, he went to the
CAL office and confirmed his Hongkong to Manila trip on board PAL Flight No. PR 311. The CAL office attached a yellow
sticker appropriately indicating that his flight status was OK. When Chiok reached Hongkong, he went to the PAL office
and sought to reconfirm his flight back to Manila. The PAL office confirmed his return trip on board Flight No. PR 311
and attached its own sticker.
On November 24, 1981, Chiok proceeded to Hongkong International Airport for his return trip to Manila. However, upon
reaching the PAL counter, Chiok saw a poster stating that PAL Flight No. PR 311 was cancelled because of a typhoon in
Manila. He was then informed that all the confirmed ticket holders of PAL Flight No. PR 311 were automatically booked
for its next flight, which was to leave the next day. He then informed PAL personnel that, being the founding director of
the Philippine Polysterene Paper Corporation, he ha[d] to reach Manila on November 25, 1981 because of a business
option which he ha[d] to execute on said date.

On November 25, 1981, Chiok went to the airport. Cathay Pacific stewardess Lok ha[d] taken and received Chioks
plane ticket and his luggage. Subsequently, Carmen (PALs terminal supervisor), informed Chiok that his name did not
appear in PALs computer list of passengers and therefore could not be permitted to board PAL Flight No. PR 307.
Meanwhile, Chiok requested Carmen to put into writing the alleged reason why he was not allowed to take his flight.
The latter then wrote the following, to wit: PAL STAFF CARMEN CHAN CHKD WITH R/C KENNY AT 1005H NO SUCH
NAME IN COMPUTER FOR 311/24 NOV AND 307/25 NOV. The latter sought to recover his luggage but found only 2
which were placed at the end of the passengers line. Realizing that his new Samsonite luggage was missing, which
contained cosmetics worth HK$14,128.80, he complained to Carmen.
Thereafter, Chiok confronted PALs reservation officer, Carie Chao who previously confirmed his flight back to Manila.
Chao told Chiok that his name was on the list and pointed to the latter his computer number listed on the PAL
confirmation sticker attached to his plane ticket. Chiok then decided to use another CAL ticket and asked Chao if this
ticket could be used to book him for the said flight. The latter, once again, booked and confirmed the formers trip, this
time on board PAL Flight No. PR 311 scheduled to depart that evening. Later, Chiok went to the PAL checkin counter
and it was Carmen who attended to him. As this juncture, Chiok had already placed his travel documents, including his
clutch bag, on top of the PAL checkin counter.
Thereafter, Carmen directed PAL personnel to transfer counters. In the ensuing commotion, Chiok lost his clutch bag
containing the following, to wit: (a) $2,000.00 (b) HK$2,000.00 (c) Taipei $8,000.00 (d) P2,000.00 (e) a threepiece
set of gold (18 carats) cross pens valued at P3,500 (f) a Cartier watch worth about P7,500.00 (g) a tie clip with a
garnet birthstone and diamond worth P1,800.00 and (h) a [pair of] Christian Dior reading glasses. Subsequently, he
was placed on standby and at around 7:30 p.m., PAL personnel informed him that he could now checkin.
"Consequently, Chiok as plaintiff, filed a Complaint on November 9, 1982 for damages, against PAL and CAL. He
alleged therein that despite several confirmations of his flight, defendant PAL refused to accommodate him in Flight
No. 307, for which reason he lost the business option aforementioned. He also alleged that PALs personnel, specifically
Carmen, ridiculed and humiliated him in the presence of so many people. Further, he alleged that defendants are
solidarily liable for the damages he suffered, since one is the agent of the other."
ISSUE: Whether or not CAL is liable for damages
RULING: Yes. It is significant to note that the contract of air transportation was between CAL and respondent, with the
former endorsing to PAL the Hong Kong to Manila segment of the journey. Such contract of carriage has always been
treated in this jurisdiction as a single operation. This jurisprudential rule is supported by the Warsaw Convention, to
which the Philippines is a party, and by the existing practices of the International Air Transport Association (IATA).
Article 1, Section 3 of the Warsaw Convention states: "Transportation to be performed by several
successive air 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 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."
Article 15 of IATA Recommended Practice similarly provides: "Carriage to be performed by several successive
carriers under one ticket, or under a ticket and any conjunction ticket issued therewith, is regarded as a single
operation."
In American Airlines v. Court of Appeals, we have noted that under a general pool partnership agreement, the Ticket
issuing airline is the principal in a contract of carriage, while the endorsee airline is the agent. "x x x Members of the
IATA are under a general pool partnership agreement wherein they act as agent of each other in the issuance of tickets
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. 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.."
Likewise, as the principal in the contract of carriage, the petitioner in British Airways v. Court of Appeals26 was held
liable, even when the breach of contract had occurred, not on its own flight, but on that of another airline.
The Decision followed our ruling in Lufthansa German Airlines v. Court of Appeals, in which we had held that the
obligation of the ticket issuing airline remained and did not cease, regardless of the fact that another airline had
undertaken to carry the passengers to one of their destinations.
In the instant case, following the jurisprudence cited above, PAL acted as the carrying agent of CAL. In
the same way that we ruled against British Airways and Lufthansa in the aforementioned cases, we also

rule that CAL cannot evade liability to respondent, even though it may have been only a ticket issuer for
the Hong Kong-Manila sector.
Moral and Exemplary Damages Issue
We must determine if CAL or its agent (PAL) is guilty of bad faith that would entitle respondent to moral damages. In
the present case, we stress that respondent had repeatedly secured confirmations of his PR 311 flight initially from
CAL and subsequently from the PAL office in Hong Kong. The status of this flight was marked "OK" on a validating
sticker placed on his ticket. Ms Chan explicitly acknowledged that such entry was a computer reference that meant
that respondents name had been entered in PALs computer.
Since the status of respondent on Flight PR 311 was "OK," as a matter of right testified to by PALs witness, he should
have been automatically transferred to and allowed to board Flight 307 the following day. Clearly resulting from
negligence on the part of PAL was its claim that his name was not included in its list of passengers for the November
24, 1981 PR 311 flight and, consequently, in the list of the replacement flight PR 307. Since he had secured
confirmation of his flight not only once, but twice by personally going to the carriers offices where he was consistently
assured of a seat thereon PALs negligence was so gross and reckless that it amounted to bad faith.
In view of the foregoing, we rule that moral and exemplary damages were properly awarded by the lower courts.

Santos v Northwest Orient Airlines

GR 101538
June 23, 1992

FACTS: The petitioner Augusto Santos III is a minor and a resident of the Philippines. Northwest Orient Airlines (NOA) is
a foreign corporation with principal office in Minnesota, U.S.A. and licensed to do business in the Philippines. Petitioner
purchased from NOA a round-trip ticket in San Francisco for his flight from San Francisco to Manila via Tokyo and back.
The scheduled departure date from Tokyo was December 20, 1986 but no date was specified for his return to San
Francisco.

On December 19, 1986, the petitioner checked in at the NOA counter in the San Francisco airport for his scheduled
departure to Manila. Despite a previous confirmation, he was informed that he had no reservation for his flight from
Tokyo to Manila. He therefore had to be wait-listed.

On March 12, 1987, the petitioner sued NOA for damages in the Regional Trial Court of Makati. NOA moved to dismiss
the complaint on the ground of lack of jurisdiction. NOA contended that the complaint could be instituted only in the
territory of one of the High Contracting Parties based on Article 28(1) of the Warsaw Convention which reads as
follows:

Art. 28. (1) An action for damage 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.

NOA contended that the Philippines was not its domicile nor was this its principal place of business. Neither was the
petitioner's ticket issued in this country nor was his destination Manila but San Francisco in the United States. The
lower court granted the motion and dismissed the case and on appeal, the CA affirmed this decision. Petitioner filed a
petition for review questioning the constitutionality of Article 28(1) and the jurisdiction of Philippine courts over the
case.

ISSUE: Whether or not Philippine courts have jurisdiction over the case

RULING: NO. The Warsaw Convention is a treaty commitment voluntarily assumed by the Philippine government and,
as such, has the force and effect of law in this country. By its own terms, it applies to all international transportation of
persons performed by aircraft for hire. Since the flight involved in this case is international, it is subject to the
provisions of the Warsaw Convention, including Article 28(1), which enumerates the four places where an action for
damages may be bought.
The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of the contract or
carriage or, specifically in this case, the ticket. Examination of petitioners ticket shows that his ultimate destination is
San Francisco. Although the date of the return flight was left open, the contract of carriage between the parties
indicates that NOA was bound to transport petitioner from Manila to San Francisco. Manila should therefore be
considered merely an agreed stopping place and not the destination.
A number of countries have signified their concern over the problem of citizens being denied access to their own
courts because of the restrictive provision of Article 28(1) of the Warsaw Convention. Among these is the United
States, which has proposed an amendment that would enable the passenger to sue in his own domicile if the carrier
does business in that jurisdiction. However, it is still ineffective because the required minimum number of contracting
parties has not yet ratified it. Pending such ratification, the petitioner will still have to file his complaint only in any of
the four places designated by Article 28(1) of the Warsaw Convention.
United Airlines v Willie J. Uy
GR No. 127768
Nov. 19, 1999
FACTS: October 13, 1989 Respondent Willie Uy is a passenger of petitioner United Airlines, bound from San Francisco
to Manila. While in San Francisco, it was found that one piece of his luggage was over the maximum weight allowance
of 70 kg. per bag. A United Airlines employee rebuked him and in a loud voice, in front of the milling crowd, ordered
him to repack his things accordingly. Wishing not to create a scene, Willie did as asked. Unfortunately, his luggage was
still overweight so the airline billed him overweight charges. Willie offered to pay the charges with a Miscellaneous
Charge Order (MCO) or an airline pre-paid credit but the same employee, and an airline supervisor, refused to honor it,
contending that there were discrepancies in the figures. Thus, Willie was forced to pay the charges with his American
Express credit card. Upon arrival in Manila, Willie discovered that one of his bags had been slashed and its contents,
amounting to US$5,310.00, stolen.
October 16, 1989 he sent his first letter of demand to United Airlines. The airline did not refute Willies allegations
and mailed a check representing payment of his loss based on the maximum liability of US$9.70 per pound. Willie,
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 more letters to petitioner airline, one dated January 4, 1990 and the other dated October 28,
1991, demanding out-of-court settlement of P1,000,000.00.
June 9, 1992 Willie filed a complaint for damages before the Philippine courts. He had two causes of action: (1) the
shabby and humiliating treatment he received from petitioners employees at the San Francisco Airport which caused
him extreme embarrassment and social humiliation; and (2) the slashing of his luggage and the loss of personal effects
amounting to US$5,310.00.
For its part, United Airlines moved to dismiss the complaint on the ground that it was filed out of time. Under Art. 29 of
the Warsaw Convention, the right to damages shall be extinguished if an action is not brought within 2 years.
However, the second paragraph of the said provision stated that the method of calculating the period of limitation
shall be determined by the law of the court to which the case is submitted. It is Willies position that our rules on
interruption of prescriptive period should apply. When he sent his letters of demand, the 2-year period was tolled,
giving him ampletime to file his complaint.
The trial court ordered the dismissal of the case, holding that Art. 29(2) refers not to the local forums rules in
interrupting the prescriptive period but only to the rules of determining the time in which the action was deemed
commenced (meaning filed). Willie filed his motion for reconsideration of the order of dismissal only on the 14th day.
The trial court denied his motion and 2 days later Willie filed his notice of appeal. United Airlines this time contended
that the notice of appeal was filed beyond the 15-day reglementary period and should therefore be dismissed. The CA,
however, took cognizance of the case in the interest of justice and ruled in favour of respondent. Hence, this petition
for certiorari.
ISSUE: Whether or not the action for damages is barred by the lapse of the 2-year prescriptive period under Art. 29 of
the Warsaw Convention
HELD: Supreme Court held that although the 2-year prescriptive period under the Warsaw Convention has lapsed, it
did not preclude the application of other pertinent 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. Thus, the action for damages could still be filed.

As for the action pertaining to the loss of the contents of the luggage, while it was well within the bounds of the
Warsaw Convention, the Supreme Court found that there was an exception to the applicability of the 2-year
prescriptive period that is when the airline employed delaying tactics and gave the passenger the run-around. 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.
The Warsaws 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. 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. Likewise, we have held that the Convention does
not preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the
carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if
willful misconduct on the part of the carrier's employees is found or established.

Keng Hua Paper Products v CA

GR No. 116863
February 12, 1998
FACTS: Sea-Land Service, a shipping company, is a foreign corporation licensed to do business in the Philippines. On
29 June 1982, SeaLand received at its Hong Kong terminal a sealed container, Container SEAU 67523, containing 76
bales of unsorted waste paper for shipment to Keng Hua Paper Products, Co. in Manila. A bill of lading to cover the
shipment was issued by Sea-Land. On 9 July 1982, the shipment was discharged at the Manila International Container
Port. Notices of arrival were transmitted to Keng Hua but the latter failed to discharge the shipment from the container
during the free time period or grace period. The said shipment remained inside the Sea-Lands container from the
moment the free time period expired on 29 July 1982 until the time when the shipment was unloaded from the
container on 22 November 1983, or a total of 481 days. During the 481-day period, demurrage charges accrued.
Within the same period, letters demanding payment were sent by Sea-Land to Keng Hua who, however, refused to
settle its obligation which eventually amounted to P67,340.00. Numerous demands were made on Keng Hua but the
obligation remained unpaid; prompting Sea Land to commence herein civil action for collection and damages.
ISSUE: Whether or not petitioner Keng Hua was bound by the bill of lading.
RULING: YES. A bill of lading serves two functions. First, it is a receipt for the goods shipped. Second, it is a contract
by which three parties, namely, the shipper, the carrier, and the consignee undertake specific responsibilities and
assume stipulated obligations. A bill of lading delivered and accepted constitutes the contract of carriage even
though not signed, because the acceptance of a paper containing the terms of a proposed contract generally
constitutes an acceptance of the contract and of all of its terms and conditions of which the acceptor has actual or
constructive notice. In a nutshell, the acceptance of a bill of lading by the shipper and the consignee, with full
knowledge of its contents, gives rise to the presumption that the same was a perfected and binding contract. Section
17 of the bill of lading provided that the shipper and the consignee were liable for the payment of demurrage charges
for the failure to discharge the containerized shipment beyond the grace period allowed by the tariff rules.
Keng Huas prolonged failure to receive and discharge the cargo from the Sea-Lands vessel constitutes a violation of
the terms of the bill of lading. It should thus be liable for demurrage to the former. Keng Hua received the bill of lading
immediately after the arrival of the shipment on 8 July 1982. Having been afforded an opportunity to examine the
said document, it did not immediately object to or dissent from any term or stipulation therein. It was only six months
later, on 24 January 1983, that it sent a lletter to private respondent saying that it could not accept the shipment. Its
inaction for such a long period conveys the clear inference that it accepted the terms and conditions of the bill of
lading. Moreover, said letter spoke only of petitioners inability to use the delivery permit, i.e. to pick up the cargo, due
to the shippers failure to comply with the terms and conditions of the letter of credit, for which reason the bill of lading
and other shipping documents were returned by the banks to the shipper. The letter merely proved its refusal
to pick up the cargo, not its rejection of the bill of lading.

SEA LAND SERVICE INC v IAC and PAULINO CUE (SEN HIAP HING)
GR No. 75118 August 31, 1987
FACTS: Sea-Land, a foreign shipping and forwarding company licensed to do business in the Philippines, received
from Sea-borne Trading Company in California, a shipment consigned to Sen Hiap Hing, the business name used by
Cue. The shipper not having declared the value of the shipment , no value was indicated in the bill of lading. The
shipment was discharged in Manila, and while awaiting transshipment to Cebu, the cargo was stolen and never
recovered.
The trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine currency value of the lost cargo,
P55, 814 for unrealized profit and P25,000 for attorneys fees. CA affirmed the trial courts decision.

ISSUE: Whether or not the consignee of seaborne freight is bound by stipulations in the covering bill of lading limiting
to a fixed amount the liability of the carrier for loss or damage to the cargo where its value is not declared in the bill.
RULING: There is no question of the right of a consignee in a bill of lading to recover from the carrier or shipper for
loss of, or damage to, goods being transported under said bill, although that document may have been drawn up only
by the consignor and the carrier without the intervention of the consignee.
Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage is
governed by the laws of the country of destination and the goods in question were shipped from the United States to
the Philippines, the liability of Sea-Land has Cue is governed primarily by the Civil Code, and as ordained by the said
Code, supplementary, in all matters not cluttered thereby, by the Code of Commerce and special laws. One of these
supplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the
carriage by sea to and from the Philippines Ports in Foreign Trade by Comm. Act. 65.
Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability limitation clause in the bill of
lading here are fully substantial on the basis alone of Article 1749 and 1750 of the Civil Code. The justices of such
stipulation is implicit in its giving the owner or shipper the option of avoiding accrual of liability limitation by the simple
expedient of declaring the value of the shipment in the bill of lading.
The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the shipment covered by
said rule to US$500 per package unless the shipper declares the value of the shipment and pays additional charges is
valid and binding on Cue.

PHILAMGEN and TPI v Sweet Lines, Inc., Davao Veterans Arrastre Port Services, Inc. (DVAPSI) and CA
G.R. No. 87434
August 5, 1992
FACTS: SS VISHVA YASH, a foreign common carried took on board cargoes consisting of 600 bags of Low Density
Polyethylene 631 and 6,400 bags of Low Density Polyethylene 647, for transshipment from Manila to Davao with arrival
notice to Tagum Plastics Inc. (TPI) which the latter insured the said cargoes to Philamgen. As the cargoes arrived in
Manila, M/V Sweet Love, owned and operated by Sweet Lines Inc. transported the cargoes from Manila to Davao. A
survey was conducted over the cargoes which then reveals that only a total of 5,820 bags were deleivered to the
consignee (instead of 7,000 bags). Herein petitioners asked the herein respondents to answer the loss incurred by the
former. The trial court ordered SLI to pay the sum of P34,902 with legal interest in favor of Philamgen.
SLI appealed to the CA in which the appellate court reversed the decision of the trial court due to prescription. Herein
petitioners went before the SC by review on certiorari faulting the CA in upholding, without proof, the existence of the
so-called prescriptive period .
ISSUE: Whether or not the Court of Appeals erred on ruling that the case at hand has already prescribed.
HELD: No. the Court of Appeals ruling is right and justifiable. First, we must distinguish the difference between right of
action and cause of action. Right of action is the right to presently enforce a cause of action, while a cause of action
consists of the operative facts which give rise to such right of action.
Going now the merits of the case, it was found out that the Bill of Lading issued by the private respondents embody
the stipulation that the filing of the claim with the carrier of loss or damage to the cargo (cause of action) will prescribe
in 30 days and the accrual of the right of action will prescribe in 60 days. Herein petitioners alleged that such
stipulation limits their right of recovery and thus unreasonable. Nevertheless, the SC ruled that such stipulation of the
Bill of Lading is valid as the law allows the contracting parties to do so. In fact, the 30-day prescriptive period of the
cause of action, as stipulated on the Bill of Lading, extends the prescription laid down under Article 366 of the Code of
Commerce. As with the stipulated prescription of right of action, the same is valid as being just and reasonable and as
being, in fact, recognized to be a valid business practice in the shipping industry.
More particularly, where the contract of shipment contains a reasonable requirement of giving notice of loss to the
goods, the giving of such notice is a condition precedent to the action for loss or to enforce the carriers liability. The
reason is to inform the carrier that the shipment has been damaged and that it is charged with liability thereof, and to
give it an opportunity to examine the nature and extent of the injury. Failure to comply with the stipulated requirement
of notice bars the recovery for the loss or damage suffered.
It was found out that the goods were delivered to the petitioners on May 15, 1977 but the claim was filed only on April
28, 1978. The failure to timely act brings the Court to no interference other than the fact that petitioners slept on their
rights and they must now face the consequences of such inaction.

DOLE PHILIPPINES, INC. v MARITIME COMPANY OF THE PHILIPPINES

G.R. No. L-61352
February 27, 1987

FACTS: Appellant Dole Philippines, Inc. (Dole), as consignee, seeks to claim for loss and/or damage to a shipment of
machine parts against the carrier, Maritime Company of the Philippines (Maritime), under the provisions of the
Carriage of Goods by Sea Act. The subject cargo was discharged in Dadiangas unto the custody of the consignee on
December 18, 1971. The plaintiff filed the corresponding claim for the damages sustained by the cargo with the
defendant vessel on May 4, 1972. On June 11, 1973, the plaintiff filed a complaint in the CFI of Manila, embodying
three causes of action involving three separate and different shipments. On December 11, 1974, Judge Serafin Cuevas
dismissed the first two causes of action 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 parties upon a
joint motion to dismiss filed the dismissal of that complaint containing the three causes of action.
Hence, this appeal. Maritime filed an answer pleading inter alia the affirmative defense of prescription under the
provisions of the Carriage of Goods by Sea Act.
ISSUE: 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 (Sec 3(6)).
HELD: NO. 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.
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 the case 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 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." equates tolling with indefinite suspension. It is clearly fallacious and merits no consideration.

AIR FRANCE v GILLEGO

G.R. No. 165266: December 15, 2010
FACTS: Bonifacio Gillego, then incumbent Congressman and Chairman of the House of Representatives Committee on
Civil, Political and Human Rights, was invited to participate as one of the keynote speakers at the 89th InterParliamentary Conference Symposium on Parliament Guardian of Human Rights to be held in Budapest, Hungary and
Tokyo, Japan.
On May 16, 1993, Gillego left Manila on board Air Frances aircraft bound for Paris, France. While waiting at the Airport
for his connecting flight to Budapest scheduled a few hours after his arrival learned that Air France had another aircraft
bound for Budapest with an earlier departure time than his scheduled flight. He then made arrangements for the
change in his booking. He was given a corresponding ticket and boarding pass and also a new baggage claim stub for
his checked-in luggage. However, his baggage despite numerous follow-up was never delivered to him prompting
Gillego to purchase new set of clothes and other personal effects.
Gillego filed a complaint for damages against the Air France alleging that by reason of its negligence and breach of
obligation to transport and deliver his luggage, Gillego suffered inconvenience, serious anxiety, physical suffering and
sleepless nights. It was further alleged that due to the physical, mental and emotional strain resulting from the loss of
his luggage, aggravated by the fact that he failed to take his regular medication, Gillego had to be taken to a medical
clinic in Tokyo, Japan for emergency treatment.
The RTC found there was gross negligence on the part of Air France. It likewise found Air France guilty of willful
misconduct as it persistently disregarded the rights of Gillego. As to the applicability of the limited liability for lost
baggage under the Warsaw Convention, the trial court rejected the argument of Air France. The CA affirmed the trial
courts decision.
ISSUES:

I. Whether or not there is legal and factual basis that Air Frances actions were attended by gross negligence, bad faith
and willful misconduct and that it acted in a wanton, fraudulent, reckless, oppressive or malevolent manner to justify
award of moral and exemplary damages.
II. Whether or not the amount of damages awarded by the RTC and affirmed by the CA as moral and exemplary
damages are excessive, unconscionable and unreasonable.
RULING: Petition is DENIED.
CIVIL LAW; CONTRACT OF CARRIAGE
First issue: In an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the
common carrier was at fault or was negligent. All that he has to prove is the existence of the contract and the fact of
its non-performance by the carrier.
The action filed by the respondent is founded on such breach of the contract of carriage with petitioner who offered no
satisfactory explanation for the unreasonable delay in the delivery of respondents baggage. The presumption of
negligence was not overcome by the petitioner and hence its liability for the delay was sufficiently established.
The Court held that the trial and appellate courts did not err in finding that petitioner acted in bad faith in repeatedly
ignoring respondents follow-up calls. Clearly, Air France did not give the attention and care due to its passenger whose
baggage was not transported and delivered to him at his travel destination and scheduled time; inattention to and lack
of care for the interest of its passengers who are entitled to its utmost consideration, particularly as to their
convenience, amount to bad faith which entitles the passenger to an award of moral damages.
CIVIL LAW; DAMAGES
Second issue: The amount of damages must be fair, reasonable and proportionate to the injury suffered. The purpose
of awarding moral damages is to enable the injured party to obtain means, diversion or amusement that will serve to
alleviate the moral suffering he has undergone by reason of defendant's culpable action. On the other hand, the aim of
awarding exemplary damages is to deter serious wrongdoings. Hence, the Court held that the sum of P1,000,000.00
awarded by the trial court is excessive and not proportionate to the loss or suffering inflicted on the passenger under
the circumstances.
The Decision of the CA is hereby AFFIRMED with MODIFICATION.

SABENA BELGIAN WORLD AIRLINES v CA and MA. PAULA SAN AGUSTIN

GR No. 104685
March 14, 1996
FACTS: On August 21, 1987, plaintiff (MA. PAULA SAN AGUSTIN) was a passenger on board Flight SN 284 of defendant
(Sabena Airlines) airlines originating from Casablanca to Brussels, Belgium on her way back to Manila. Plaintiff checked
in her luggage which contained her valuables. She stayed overnight in Brussels and her luggage was left on board
Flight SN 284. Plaintiff arrived at Manila International Airport on September 2, 1987 and immediately submitted her
Tag No. 71423 to facilitate the release of her luggage but the luggage was missing. She was advised to accomplish and
submit a property Irregularity Report which she submitted and filed on the same day. She followed up her claim but the
luggage remained to be missing.
On September 30, 1987, she was furnished copies of defendant's telexes with an information that the Burssel's Office
of defendant found the luggage and that they have broken the locks for identification. Plaintiff was informed that the
luggage will be shipped to Manila. But unfortunately plaintiff was informed that the luggage was lost for the second
time. At the time of the filing of the complaint, the luggage with its content has not been found.
Plaintiff demanded from the defendant the money value of the luggage and its contents amounting to $4,265.00 or its
exchange value, but defendant refused to settle the claim. Defendant asserts in its Answer and its evidence tend to
show that the loss of the luggage was due to plaintiff's sole if not contributory negligence. Defendant cites Section
5(c), Article IX, of the General Conditions of Carriage, signed at Warsaw, Poland, on 02 October 1929, as amended by
the Hague Protocol of 1955, generally observed by International carriers, stating, among other things, that:
Passengers shall not include in his checked baggage, and the carrier may refuse to carry as checked baggage, fragile
or perishable articles, money, jewelry, precious metals, negotiable papers, securities
or other valuable.
ISSUE: Whether or not SABENA BELGIAN WORLD AIRLINES should be held liable.
RULING: Yes. 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 nonfulfillment of the prestation gives rise to the presumption
of fault on the part of the obligor. This rule is no different in the case of common carriers in the carriage of goods

which, indeed, are bound to observe not just the due diligence of a good father of a family but that of "extraordinary"
care in the vigilance over the goods. Thus, Article 1734 still apllies.
The above-stated facts, 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).
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 willful misconduct, or if the damage is (similarly) caused . . .
by any agent of the carrier acting within the scope of his employment.
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 nonperformance of the obligation, including moral and exemplary damages.

CHAPTER 4
H.E. Heacock Company v Macondray
GR L-16598
October 3, 1921

FACTS: Plaintiff H.E. Heacock Company caused to be delivered on board of steamship Bolton Castle, from New York to
Manila, four cases of merchandise one of which contained twelve (12) 8-day Edmond clocks. When said steamship
arrived in Manila, neither the master of said vessel nor Macondray Company Inc., as its agent, delivered to the plaintiff
the aforesaid clocks, although demand was made upon them for their delivery. The invoice value of the said Edmond
clocks in the city of New York was P22 and the market value of the same in the City of Manila at the time when they
should have been delivered to the plaintiff was P420. The bill of lading issued and delivered to the plaintiff by the
master of the said steamship Bolton Castle contained, among others, the following clauses:

1. It is mutually agreed that the value of the goods receipted for above does not exceed $500 per freight ton,
or, in proportion for any part of a ton, unless the value be expressly stated herein and ad valorem freight paid
thereon.

9. Also, that in the event of claims for short delivery of, or damage to, cargo being made, the carrier shall not
be liable for more than the net invoice price plus freight and insurance less all charges saved, and any loss or
damage for which the carrier may be liable shall be adjusted pro rata on the said basis.

H.E. Heacock insists that it is entitled to recover from the defendant the market value of the clocks in question, to
wit: the sum of P420. Macondray, on the other hand, contends that, in accordance with clause 1 of the
bill of lading, the plaintiff is entitled to recover only the sum of P76.36, the proportionate freight ton value of
the said clocks. The claim of the plaintiff is based upon the argument that the two clause in the bill of lading above
quoted, limiting the liability of the carrier, are contrary to public order and, therefore, null and void. The defendant,
on the other hand, contends that both of said clauses are valid.

ISSUE: Whether or not a common carrier, by stipulations inserted in the bill of lading, limit its liability for the loss of or
damage to the cargo to an agreed valuation
RULING: YES. Three kinds of stipulations have often been made in a bill of lading. The first is one exempting the
carrier from any and all liability for loss or damage occasioned by its own negligence. The second is one providing for
an unqualified limitation of such liability to an agreed valuation. And the third is one limiting the liability of the carrier
to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight. According to an

almost uniform weight of authority, the first and second kinds of stipulations are invalid as being contrary to public
policy, but the third is valid and enforceable.
A reading of clauses 1 and 9 of the bill of lading here in question, however, clearly shows that the present case falls
within the third stipulation, to wit: That a clause in a bill of lading limiting the liability of the carrier to a certain amount
unless the shipper declares a higher value and pays a higher rate of freight, is valid and enforceable.
It seems clear from the foregoing authorities that the clauses (1 and 9) of the bill of lading here in question are not
contrary to public order. Article 1255 of the Civil Code provides that "the contracting parties may establish any
agreements, terms and conditions they may deem advisable, provided they are not contrary to law, morals or public
order." Said clauses of the bill of lading are, therefore, valid and binding upon the parties thereto.

Citadel Lines v. CA
G.R. No. 88092

April 25, 1990

FACTS: Manila Wine Merchants (consignee) is the importer of Dunhill Cigarettes from England. Petitioner Citadel Lines
(carrier) is the general agent of the vessel Cardigan Bay/Strait Enterprise.
On or about March 17, 1979, the vessel "Cardigan Bay/Strait Enterprise" loaded on board at Southampton, England, for
carriage to Manila, 180 Filbrite cartons of mixed British manufactured cigarettes called "Dunhill International Filter" and
"Dunhill International Menthol. The shipment arrived at the Port of Manila Pier 13, on April 18, 1979. Due to lack of
space at the Special Cargo Coral, the aforesaid cigarettes were placed in two containers with two pallets in the original
container, and four pallets in the other container, with both containers duly padlocked and sealed by the
representative of the CARRIER.
In the morning of May 1, 1979, the CARRIER'S headchecker discovered that one of the container vans had a different
padlock and the seal was tampered with. The matter was reported to Jose G. Sibucao, Pier Superintendent, Pier 13, and
upon verification, it was found that 90 cases of imported British manufactured cigarettes were missing. Per
investigation conducted by the ARRASTRE, it was revealed that the cargo in question was not formally turned over to it
by the CARRIER but was kept the inside container van which was padlocked and sealed by the representatives of the
CARRIER without any participation of the ARRASTRE.
When the CONSIGNEE learned that 90 cases were missing, it filed a formal claim with the CARRIER, demanding the
payment of P315,000.00 representing the market value of the missing cargoes.
The CARRIER, in its reply
letter. admitted the loss but alleged that the same occurred at Pier 13, an area absolutely under the control of the
ARRASTRE. In view thereof, the CONSIGNEE filed a formal claim with the ARRASTRE, demanding payment of the value
of the goods but said claim was denied.
After trial, the lower court rendered a decision exonerating the ARRASTRE of any liability on the ground that the
subject container van was not formally turned over to its custody.
ISSUES:
1. Whether the loss occurred while the cargo in question was in the custody of E. Razon, Inc. or of Citadel Lines, Inc;
and
2. Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on the consignee.
HELD: The first issue is factual in nature. On the basis of the evidence presented, the subject cargo which was placed
in a container van, padlocked and sealed by the representative of the CARRIER was still in its possession and control
when the loss occurred, there having been no formal turnover of the cargo to the ARRASTRE.
Common carriers, from the nature of their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them,
according to all the circumstances of each case. 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 observed extra ordinary
diligence as required in Article 1733 of the Civil Code. The duty of the consignee is to prove merely that the goods
were lost. Thereafter, the burden is shifted to the carrier to prove that it has exercised the extraordinary diligence
required by law. And, its extraordinary responsibility lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by
the carrier to the consignee or to the person who has the right to receive them.
Considering, therefore, that the subject shipment was lost while it was still in the custody of the CARRIER, and
considering further that it failed to prove that the loss was occasioned by an excepted cause, the inescapable
conclusion is that the CARRIER was negligent and should be held liable.
The CONSIGNEE itself admits in its memorandum that the value of the goods shipped does not appear in the bills of
lading. 16 Hence, the stipulation on the carrier's limited liability applies. There is no question that the stipulation is just
and reasonable under the circumstances and have been fairly and freely agreed upon.

The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per carton. Since 90 cartons were lost and
the weight of said cartons is 2,233.80 kilos, at $2.00 per kilo the CARRIER's liability amounts to only US$4,467.60.

INTERNATIONAL AIR TRANSPORTATION

Northwest Airlines, Inc. v Nicolas Cuenca
GR L-22425
August 31, 1965
FACTS: When his contract of carriage was violated by the petitioner, respondent held the office of Commissioner of
Public Highways of the Republic of the Philippines. Having boarded petitioner's plane in Manila with a first class ticket
to Tokyo, he was, upon arrival at Okinawa, transferred to the tourist class compartment. Although he revealed that he
was traveling in his official capacity as official delegate of the Republic to a conference in Tokyo, an agent of petitioner
rudely compelled him in the presence of other passengers to move, over his objection, to the tourist class, under
threat of otherwise leaving him in Okinawa. In order to reach the conference on time, respondent had no choice but to
obey.
ISSUE/HELD:
Warsaw Convention
ART. 17. The carrier shall be liable for damages sustained in the event of the death or wounding of a passenger
or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took
place on board the aircraft or in the course of any of the operations of embarking or disembarking.
ART. 18. (1) The carrier shall be liable for damage sustained in the event of the destruction or loss of, or of
damage to, any checked baggage, or any goods, if the occurrence which caused the damage so sustained took
place during the transportation by air.
(2) The transportation by air within the meaning of the preceding paragraph shall comprise the period
during which the baggage or goods are in charge of the carrier, whether in an airport or on board an
aircraft, or, in the case of a landing outside an airport, in any place whatsoever.
(3) The period of the transportation by air shall not extend to any transportation by land, by sea, or by
river performed outside an airport. If, however, such transportation takes place in the performance of a
contract for transportation by air, for the purpose of loading, delivery, or transhipment, any damage is
presumed, subject to proof to the contrary, to have been the result of an event which took place during
the transportation by air.
ART. 19. The carrier shall be liable for damage occasioned by delay in the transportation by air of passengers,
baggage, or goods.
Petitioner argues that pursuant to those provisions, an air "carrier is liable only" in the event of death of a passenger or
injury suffered by him, or of destruction or loss of, or damage to any checked baggage or any goods, or of delay in the
transportation by air of passengers, baggage or goods. This pretense is not borne out by the language of said Articles.
The same merely declare the carrier liable for damages in the enumerated cases, if the conditions therein specified are
present. Neither said provisions nor others in the aforementioned Convention regulate or exclude liability for other
breaches of contract by the carrier. Under petitioner's theory, an air carrier would be exempt from any liability for
damages in the event of its absolute refusal, in bad faith, to comply with a contract of carriage, which is absurd.
It is true that said ticket was marked "W/L," but respondent's attention was not called thereto. Much less was he
advised that "W/L" meant "wait listed." Upon the other hand, having paid the first class fare in full and having been
given first class accommodation as he took petitioner's plane in Manila, respondent was entitled to believe that this
was a confirmation of his first class reservation and that he would keep the same until his ultimate destination, Tokyo.
Then, too, petitioner has not tried to explain or even alleged that the person to whom respondent's first class seat was
given had a better right thereto. In other words, since the offense had been committed with full knowledge of the fact
that respondent was an official representative of the Republic of the Philippines, the sum of P20,000 awarded as
damages may well be considered as merely nominal. At any rate, considering that petitioner's agent had acted in a
wanton, reckless and oppressive manner, said award may also be considered as one for exemplary damages.

Monico G. Roldan v Lim Ponzo & Co.

G.R. No. L-11325
December 7, 1917
FACTS: Plaintiff Roldan executed a case against the Defendant Lim Ponzo &Co., to recover damages in the sum of
P3,780 for the alleged failure of the defendant company to live up to its contract for the transportation of 2,244

packages of sugar to Roldans hacienda in Iloilo. Out of the 2,244 packages of sugar, only 1,022 were saved in a more
or less damaged condition.
Nevertheless, at the trial, after the plaintiff offered his pieces of evidence, the trial court judge dismissed the case due
to the alleged failure of the plaintiff to comply with the provisions laid down under Article 366 of the Code of
Commerce thus, bars the plaintiff on making his claim against the respondents. Art. 366 provides that:
Article 366: Within the twenty-four hours following the receipt of the merchandise, a claim may be made
against the carrier on account of damages or average found therein on opening the packages, provided that
the indication of the damage or average giving rise the claim cannot be ascertained from the exterior of said
packages, in which case said claim would only be admitted on the receipt of the packages.
After the periods mentione have elapsed, or after the transportation charges have been paid, no claim
whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported
were delivered.
ISSUE: Whether or not the trial court judge erred on dismissing the case on the ground that the plaintiff failed to
comply on the stipulations under Article 366 of the Code of Commerce.
HELD: NO. Article 366 of the Code of Commerce is limited on cases of claims for damaged goods actually turned over
by the carrier and received by the consignee, whether those damages be apparent from the examination of the
packages in which the goods are delivered, or of such a character that the nature and extent of the dame is not
apparent until the packages are opened and the contents are examined. Clearly, it has no application on the case at
hand because the lost goods to be delivered are, actually, not damaged, but the same were not delivered at all.
On the other hand, with regard to the saved 1,022 packages, the provision of Article 366 of the code will apply only if
the defendant delivered the goods to the plaintiff. However, it appeared that the saved goods were recovered due to
the plaintiffs effort of doing so; hence, requisite that the carrier should deliver the goods to the consignee is missing.

INTERNATIONAL CARRIAGE OF GOODS BY SEA

MARITIME AGENCIES & SERVICES, INC. v CA and UNION INSURANCE SOCIETY OF CANTON, LTD.
G.R. No. 77638
July 12, 1990
FACTS: Transcontinental Fertilizer Company of London chartered from Hongkong Island Shipping Company of
Hongkong the motor vessel named "Hongkong Island" for the shipment of 8073.35 MT (gross) bagged urea from
Novorossisk, Odessa, USSR to the Philippines. Of the total shipment, 5,400.04 MT was for the account of Atlas Fertilizer
Company as consignee, 3,400.04 to be discharged in Manila and the remaining 2,000 MT in Cebu. The goods were
insured by the consignee with the Union Insurance Society of Canton, Ltd. for P6,779,214.00 against all risks. Maritime
Agencies & Services, Inc. was appointed as the charterer's agent and Macondray Company, Inc. as the owner's agent.
The vessel arrived in Manila on October 3, 1979, and unloaded part of the consignee's goods, then proceeded to Cebu
on October 19, 1979, to discharge the rest of the cargo.
On October 31, 1979, the consignee filed a formal claim against Maritime, copy furnished Macondray, for the amount
of P87,163.54, representing C & F value of the 1,383 shortlanded bags. On January 12, 1980, the consignee filed
another formal claim, this time against Viva Customs Brokerage, for the amount of P36,030.23, representing the value
of 574 bags of net unrecovered spillage. These claims having been rejected, the consignee then went to Union, which
on demand paid the total indemnity of P113,123.86 pursuant to the insurance contract. As subrogee of the consignee,
Union then filed on September 19, 1980, a complaint for reimbursement of this amount, with legal interest and
attorney's fees, against Hongkong Island Company, Ltd., Maritime Agencies & Services, Inc. and/or Viva Customs
Brokerage. On April 20, 1981, the complaint was amended to drop Viva and implead Macondray Company, Inc. as a
new defendant.
The trial court rendered judgment holding the defendants liable to Union Insurance. The Court of Appeals modified the
decision finding the charterer Transcontinental Fertilizer Co., Ltd. represented by its agent Maritime Agencies &
Services, Inc. liable for the amount of P87,163.54 plus interest at 12% plus attorney's fees of P1,000.00. Defendant
Hongkong Island Co., Ltd. represented by Macondray Co., Inc. were rendered exempted from any liability. Hence, this
appeal. Maritime pleads non-liability on the ground that it was only the charterer's agent and should not answer for
whatever responsibility might have attached to the principal. It also argues that the respondent court erred in applying
Articles 1734 and 1735 of the Civil Code in determining the charterer's liability.
ISSUE: Whether or not Maritime Agencies, as the charterers agent, may be held liable for the short landed goods.
RULING: No. In the cases at bar, the trial court found that 1,383 bags were shortlanded, which could only mean that
they were damaged or lost on board the vessel before unloading of the shipment. It is not denied that the entire cargo
shipped by the charterer in Odessa was covered by a clean bill of lading. As the bags were in good order when
received in the vessel, the presumption is that they were damaged or lost during the voyage as a result of their

negligent improper stowage. For this the ship owner should be held liable. But we do agree that the period for filing the
claim is one year, in accordance with the Carriage of Goods by Sea Act. This was adopted and embodied by our
legislature in Com. Act No. 65 which, as a special law, prevails over the general provisions of the Civil Code on
prescription of actions.
The one-year period in the cases at bar should commence on October 20, 1979, when the last item was delivered to
the consignee. Union's complaint was filed against Hongkong on September 19, 1980, but tardily against Macondray
on April 20, 1981. The consequence is that the action is considered prescribed as far as Macondray is concerned but
not against its principal, which is what matters anyway.
As regards the goods damaged or lost during unloading, the charterer is liable therefor, having assumed this activity
under the charter party "free of expense to the vessel." The difficulty is that Transcontinental has not been impleaded
in these cases and so is beyond our jurisdiction. The liability imposable upon it cannot be borne by Maritime which, as
a mere agent, is not answerable for injury caused by its principal. It is a well-settled principle that the agent shall be
liable for the act or omission of the principal only if the latter is undisclosed. The charterer did not represent itself as a
carrier and indeed assumed responsibility ability only for the unloading of the cargo, i.e, after the goods were already
outside the custody of the vessel. In supervising the unloading of the cargo and issuing Daily Operations Report and
Statement of Facts indicating and describing the day-to-day discharge of the cargo, Maritime acted in representation of
the charterer and not of the vessel. It thus cannot be considered a ship agent. As a mere charterer's agent, it cannot
be held solidarily liable with Transcontinental for the losses/damages to the cargo outside the custody of the vessel. On
the basis of the evidence, there is nothing found to disprove the finding of the marine and cargo surveyors that of the
66,390 bags of urea fertilizer, 65,547 bags were "discharged ex-vessel" and there were "shortlanded" 1,383 bags,
valued at P87,163.54. This sum should be the principal and primary liability and responsibility of the carrying vessel.
Under the contract for the transportation of goods, the vessel's responsibility commence upon the actual delivery to,
and receipt by the carrier or its authorized agent, until its final discharge at the port of Manila. Defendant Hongkong
Island Co., Ltd., as "shipowner" and represented by the defendant Macondray & Co., Inc., as its local agent in the
Philippines, should be responsible for the value of the bags of urea fertilizer which were shortlanded. The remainder of
the claim in the amount of P36,030.23, representing the value of the 574 bags of unrecovered spillages having
occurred after the shipment was discharged from the vessel unto the ex-lighters as well as during the discharge from
the lighters to the truck which transported the shipment to the consignee's warehouses should be for the account of
the defendant Maritime Agencies & Services, Inc. However, the liability of Macondray can no longer be enforced
because the claim against it has prescribed; and as for Maritime, it cannot be held liable for the acts of its known
principal resulting in injury to Union.

DAMAGES

Rafael Zulueta v Pan American World Airways

GR No. L-28589

January 8, 1973

FACTS: Plaintiff Zulueta, his wife and daughter were passengers aboard defendants plane from Honolulu to Manila.
Upon reaching Wake Island the passengers were advised that they could disembark for a stopover for about 30
minutes. Plaintiff went to the toilet at the terminal building but finding it full walked 200 yards away. Upon returning he
told an employee of the defendant that they almost made him miss the flight because of a defective announcing
system. He had a discussion with either the plan captain or the terminal manager. He was told that they would open
his bags which he refused and he warned them of the consequences. Just the same they opened his bags and found
nothing prohibited. They forced him to go out of the plane and left him at Wake Island. His wife had to send him money
and he was able to leave Wake Island and return to Manila thru Honolulu and Tokyo after two days.

In other words, Mr. Zulueta was off-loaded, not to protect the safety of the aircraft and its passengers, but to retaliate
and punish him for the embarrassment and loss of face thus suffered by defendant's agent. This vindictive motive is
made more manifest by the note delivered to Mr. Zulueta by defendant's airport manager at Wake Island, Mr. Sitton,
stating that the former's stay therein would be "for a minimum of one week," during which he would be charged
$13.30 per day. This reference to a "minimum of one week" revealed the intention to keep him there stranded that
long, for no other plane, headed for Manila, was expected within said period of time, although Mr. Zulueta managed to
board, days later, a plane that brought him to Hawaii, whence he flew back to the Philippines, via Japan.
This action was to recover damages from the defendant.

ISSUE: WON moral damages may be recovered.

RULING: It is urged by the defendant that exemplary damages are not recoverable in quasi-delicts, pursuant to
Article 2231 of our Civil Code, except when the defendant has acted with "gross negligence," and that there is no
specific finding that it had so acted. It is obvious, however, that in off-loading plaintiff at Wake Island, under the
circumstances heretofore adverted to, defendant's agents had acted with malice aforethought and evident bad faith. If
"gross negligence" warrants the award of exemplary damages, with more reason is its imposition justified when the act
performed is deliberate, malicious and tainted with bad faith
It is urged by the defendant that exemplary damages are not recoverable in quasi-delicts, pursuant to Article 2231 of
our Civil Code, except when the defendant has acted with "gross negligence," and that there is no specific finding that
it had so acted. It is obvious, however, that in off-loading plaintiff at Wake Island, under the circumstances heretofore
adverted to, defendant's agents had acted with malice aforethought and evident bad faith. If "gross negligence"
warrants the award of exemplary damages, with more reason is its imposition justified when the act performed is
deliberate, malicious and tainted with bad faith.
The records amply establish plaintiffs right to recover both moral and exemplary damages. Indeed, the rude and
rough reception plaintiff received at the hands of Sitton or Captain Zentner when the latter met him at the ramp
(What in the hell do you think you are? Get on that plane); the menacing attitude of Zentner or Sitton and the
supercilious manner in which he had asked plaintiff to open his bags (open your bag, and when told that a fourth bag
was missing, I dont give a damn); the abusive language and highly scornful reference to plaintiffs as monkeys by one
of PAN AMs employees (who turning to Mrs. Zulueta remarked, will you pull these three monkeys out of here?); the
unfriendly attitude, the ugly stares and unkind remarks to which plaintiffs were subjected, and their being cordoned by
men in uniform as if they were criminals, while plaintiff was arguing with Sitton; the airline officials refusal to allow
plaintiff to board the plane on the pretext that he was hiding a bomb in his luggage and their arbitrary and highhanded decision to leave him in Wake; Mrs. Zuluetas having suffered a nervous breakdown for which she was
hospitalized as a result of the embarrassment, insults and humiliations to which plaintiffs were exposed by the conduct
of PAN AMs employees; Mrs. Zulueta having suffered shame, humiliation and embarrassment for the treatment
received by her parents at the airport all these justify an award for moral damages resulting from mental anguish,
serious anxiety, wounded feelings, moral shock, and social humiliation thereby suffered by plaintiffs. Plaintiffs were
awarded Pesos 500,000.00 and moral damages, Pesos 200,000.00 exemplary damages, Pesos 75,000.00attorneys
fees and Pesos 5,502.85 actual damages.
Thus, the motion for reconsideration was denied.

TRANS WORLD AIRLINES v CA and ROGELIO A. VINLUAN

GR No. 78656
August 30, 1988
FACTS: Rogelio A. Vinluan is a practicing lawyer who had to travel in April, 1979 to several cities in Europe and the
U.S. to attend to some matters involving several clients. He entered into a contract for air carriage for valuable
consideration with Japan Airlines first class from Manila to Tokyo, Moscow, Paris, Hamburg, Zurich, New York, Los
Angeles, Honolulu and back to Manila thru the same airline and other airlines it represents for which he was issued the
corresponding first class tickets for the entire trip.
Private respondent had a first class ticket for Flight No. 41 of petitioner from New York to San Francisco on April 20,
1979. It was twice confirmed and yet respondent unceremoniously told him that there was no first class seat available
for him and that he had to be downgraded to the economy class. As he protested, he was arrogantly threatened by
one Mr. Braam. Worst still, while he was waiting for the flight, he saw that several Caucasians who arrived much later
were accommodated in first class seats when the other passengers did not show up.
On February 15, 1980, Vinluan filed an action for damages against the TWA in the Court of First Instance of Rizal
alleging breach of contract and bad faith. After trial on the merits, the RTC ruled in favor of Vinluan and this decision
was confirmed by the CA.
Petitioner posits that because of maintenance problems of the aircraft on the day of the flight, passengers who had
first class reservations on Flight No. 41 had to be accommodated on Flight No. 6041 on a first-come, first-served basis.
An announcement was allegedly made to all passengers in the entire terminal. It denied declining to give any
explanation for the downgrading of private respondent as well as the discourteous attitude of Mr. Braam.
ISSUE: Whether or not petitioner is liable to private respondent

RULING: YES. Petitioner sacrificed the comfort of its first class passengers including private respondent Vinluan for the
sake of econonmy. Such inattention and lack of care for the interest of its passengers who are entitled to its utmost
consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to the award of
moral damages. 5 More so in this case where instead of courteously informing private respondent of his being
downgraded under the circumstances, he was angrily rebuffed by an employee of petitioner.
At the time of this unfortunate incident, the private respondent was a practicing lawyer, a senior partner of a big law
firm in Manila. He was a director of several companies and was active in civic and social organizations in the
Philippines. Considering the circumstances of this case and the social standing of private respondent in the
community, he is entitled to the award of moral and exemplary damages. However, the moral damages should be
reduced to P300,000.00, and the exemplary damages should be reduced to P200,000.00. This award should be
reasonably sufficient to indemnify private respondent for the humiliation and embarrassment that he suffered and to
serve as an example to discourage the repetition of similar oppressive and discriminatory acts.

DR. ARMOVIT v. COURT OF APPEALS

GR. No.88561 April 20, 1990
FACTS: Dr. Armovit, a Filipino physician and his family residing in the United States came home to the Philippines on a
Christmas visit. They were bumped off at the Manila International Airport on their return flight to the U.S. because of
an erroneous entry in their plane tickets relating to their time of departure. The petitioners tickets state that their
scheduled flight was 10:30 AM so they arrived at the check-in counter of private respondent at the Manila International
Airport at 9:15 in the morning. Petitioners were rudely informed that they cannot be accommodated inasmuch as Flight
002 scheduled at 9:15 a.m. was already taking off and the 10:30 A.M. flight time entered in their plane tickets was
erroneous. Petitioners filed an action for damages.
ISSUE: Whether or not the airline company should be liable for damages.
HELD: As held in the case if Air France, a contract to transport passengers is quite different in kind and degree from
any other contractual relation. And this, because of the relation which an air carrier sustains with the public. Its
business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The
contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the
carrier's employees, naturally, could give ground for an action for damages.
Passengers do not contract merely for transportation. They have the right to be treated by the carrier's employees
with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct,
injurious language, indignities and abuses from such employees. So it is, that any rude or discourteous conduct on the
part of employees towards a passenger gives the latter an action for damages against the carrier
The gross negligence committed by private respondent in the issuance of the tickets with entries as to
the time of the flight, the failure to correct such erroneous entries and the manner by which petitioners
were rudely informed that they were bumped off are clear indicia of such malice and bad faith and
establish that private respondent committed a breach of contract which entitles petitioners to moral
damages.
By the same token to provide an example for the public good, an award of exemplary damages is also proper.
Nevertheless, the deletion of the nominal damages by the appellate court is well-taken since there is an award of
actual damages. Nominal damages cannot co-exist with actual or compensatory damages.