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PAN AMERICAN WORLD AIRWAYS, INC. v.

Intermediate Appellate Court


G.r. No. 70462
August 11, 1988

Doctrine:
Provisions of the Warsaw Convention limiting the carrier’s liability is valid. It is not against public
policy.

Facts:
Plaintiff Renee V. Pangan, plaintiff and general manager Sotang Bastos and Archer production,
while in San Francisco, California, entered into an agreement to supply Primo Quesada of Prime
Films three films for and in consideration of $2,500 per picture.

On his way to the Philippines, plaintiff visited Guam and entered into a verbal agreement with
Leo Slutchnick of Hafa Adai Organization to exhibit two films at Hafa Adai Theater for the
consideration of P7,000 per picture.

In preparation of said transactions, plaintiff made preparation of the requisite promotional


handbills and still picutres amounting to P12,900. He also bought fourteen clutch bags, four capiz
lamps and four barong tagalog with a total value P4,400.

For said events, plaintiff bought from defendant Pan American an economy class ticket for flight
from Philippines to Guam. On departure date, plaintiff learned that he was not part of the
manifest in the economy class prompting him to transfer to fist class and paying additional cost.

Upon arrival in Guam, his two luggages containing the promotional and advertising materials and
his purchases and some personal belongings did not arrive with his flight. As a consequence, the
agreements entered into by him in both Guam and in the US were cancelled. He was informed
later on, upon arrival in the Philippines that the two luggages were lost.

A case was filed before the CFI which grantedP83,000 for actual damages in favor of plaintiff
Pangan.

On appeal, the IAC affirmed the trial court decision.

Hence, this petition.

Petitioner contends that on the basis of the stipulations printed at the back of the ticket, its
liability is limited only to $600 ($20 x 30 kilos) as plaintiff-respondent did not declare a higher
value for his baggage and pay the additional charge in pursuant to the Warsaw Convention
limiting the carrier’s liability.

ISSUE:
Whether or not the CA erred in affirming the trial court’s award beyond the limitation set forth
in the Warsaw Convention and the contract of carriage.

Ruling:
No, the CA erred in affirming the ruling of the trial court. Citing the cases of Ong Yiu v CA and
Shewaram v Philippine Air Lines, Inc., it is clear that the SC NEVER did, rule against the validity of
the provisions of the WASAW Convention. Such provisions of the Warsaw Convention limitng a
carrier’s liability are not against public policy.

The Government of the Philippine Islands v George I. Frank


G.R. No. 2935
March 23, 1909

Doctrine:
1) Government contract entered into by virtue of a law is not prejudiced by subsequent
amendment of the law.
2) Execution, interpretation and validity of a contract are determined by the law of the place
where the contract is made.

Facts:
On April 17, 1903, Respondent George Frank, a citizen of the State of Illinois, entered into
contract for a period of two years with the Philippine Government. By virtue of the contract, the
following, among others, were enforced and stipulated:
1) That George Frank will receive $1,200.00 per year as stenographer plus travel expenses
from Chicago to Manila;
2) That in case of violation of its terms, he should become liable to the Philippine
Government for the amount expended by way of expenses incurred in traveling from
Chicago to Manila and the ½ salary paid during such period; and
3) Laws No. 80 and No. 224 in the Philippines constitute as part of the contract.

On February 11, 1904, respondent Frank left the service of the plaintiff and refused to make
further compliance with the terms of the contract. Such prompted the plaintiff to file an action
for recovery of a sum of money against respondent before the CFI of Manila.

The CFI ruled against respondent George Frank and ordered him to pay plaintiff the sum of 265.90
dollars.

Hence, this case.

Respondent George Frank as a defense contended that Laws no. 80 and No. 224 had materially
altered contract and that he was a minor at the time he entered the contract.
Issue:
Whether or not the contract is valid and enforceable.

Ruling:
Yes. The mere fact that the legislative department of the Government of the Philippine Islands
had amended Laws no. 80 and 224 did not have the effect of changing the terms of the contract
made between the plaintiff and the respondent. The legislative department of the Government
is expressly prohibited by section 5 of the Act of the Congress. And defendant’s claim is a minor
in the Philippines under the Philippine Laws is not tenable for at the time and place of the making
of the contract he had full capacity to make the same. No rule is better settled in law that that
matters bearing upon the execution, interpretation and validity of a contract are determined by
the law of the place where the contract is made.