Warsaw Convention
1 Lhuillier v. British Airways,
G.R. No. 171092, 15 March
2010
2 Mapa v. Court of Appeals,
G.R. No. 122308, 8 July 1997
Lost luggage
HELD: Warsaw Convention
will not apply. Tickets here
are not contracts which can
be classified as international
transportation.
Article 28(1) of Warsaw
Convention
Under Art. 28(1) supra, a
FACTS: On April 28, 2005, petitioner Edna Diago Lhuillier filed a
Complaint for damages against respondent British Airways before
the Regional Trial Court (RTC) of Makati City. The tortuous conduct
by the flight attendants of said Airways, which prompted petitioner
to file a case for damages, allegedly transpired when petitioner
boarded respondent’s flight 548 from London, United Kingdom to
Rome, Italy. On May 30, 2005, respondent, by way of special
appearance through counsel, 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:
“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.”
(Trans World Airlines aka TWA lost 4 out of 7 luggage owned by
MAPAs on their flight to Boston. Case filed against TWA.TWA
claims PH courts have no jurisdiction, Lower court and CA
dismissed. SC)
Plaintiffs Mapa (Mother Purita and Daughter Carmina) entered into
contract of air transportation with defendant TWA as evidenced by
TWA ticket Nos. 015:9475:153:304 and 015:9475:153:305,
purchased in Bangkok, Thailand. Said TWA tickets are for Los
Angeles-New York-Boston-St. Louis-Chicago…
Daughter Carmina was to commence schooling and was
accompanied by Purita to assist her in settling down at Boston
ISSUE: Whether or not Philippines, a signatory to the Warsaw
Convention, should adhere to the provision of the Warsaw Convention
in the determination of its jurisdiction with respect to a case for
damages involving a tortuous conduct committed by an airline
personnel while in an international carrier against a Filipino citizen.
HELD:
Yes. It is settled that the Warsaw Convention has the force and effect of
law in this country.
In Santos III v. Northwest Orient Airlines, 210 SCRA 256 (1992), 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.
ISSUE/S:
Is Article 28 of the Warsaw Convention applicable in this case?
(Regarding PH’s jurisdiction)
NO, Article 28 will only be applicable if it concerns contracts which can
be classified as international transportation. In this case, the two tickets
aka contracts cannot be brought under the term international
transportation.
The 2 Tickets cannot be brought within the term INTERNATIONAL
TRANSPORTATION; Warsaw Convention will not apply
The Court held that TWA itself, the trial court, and the Court of Appeals
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 1
complaint for damages
against an air carrier can be
instituted only in any of the
following places/courts:
(1) The court of the domicile
of the carrier;
(2) The court of its principal
place of business;
(3) The court where it has a
place of business through
which the contract had been
made;
(4) The court of the place of
destination.
University.
They departed for Boston, taking a connecting flight on TWAs
carrier, TW 0901, from JFK Airport, New York, to Bostons Logan
Airport, checking in seven (7) pieces of luggage at the TWA
counter in the JFK Airport.
The seven baggages were received by a porter who issued seven
TWA baggage receipts numbered 17-8270, 71, 72, 73, 74, 75, and
76 therefor.
After, they proceeded to the wrong airport gate hence they were left
behind by their original flight. They then got on another flight to
Boston. Upon arrival, they went to the carousel to get their luggage
but they only saw 3 of their 7 luggages.
Plaintiffs immediately reported the loss of their four baggages to the
TWA Baggage Office at Logan Airport. TWAs representative
confidently assured them that their baggages would be located
within 24 hours and not more than 48 hours. (Total value of lost
items amounted to $11,283.79)
They wrote to TWA asking for damages. Subsequently, they
decided to settle and asked for travel credit or cash settlement.
However, TWA was only able to give $2560 as actual cost of the
lost items. TWA refused to pay damages.
Plaintiffs then filed case in Trial court for damages
TWA claimed that PH courts had no jurisdiction pursuant to the
Warsaw Convention.
TC: The trial court agreed with TWA and issued an Order
dismissing the case for lack of jurisdiction in light of Article 28(1) of
the Warsaw Convention. Further stating that: The Philippines not
being one of the places specified in Art. 28(1) above-quoted where
the complaint may be instituted, this Court therefore, does not have
jurisdiction over the present case.
CA: The appellate court affirmed the order of the trial court.
Hence this case.
impliedly admit that if the sole basis were the two TWA tickets for Los
Angeles-New York-Boston-St. Louis-Chicago, the contracts cannot be
brought within the term international transportation, as defined in Article
I(2) of the Warsaw Convention.
International Transportation
As provided therein, a contract is one of international transportation
only if according to the contract made by the parties, the place of
departure and the place of destination, whether or not there be a break
in the transportation or a transshipment, are situated either within the
territories of two High Contracting Parties, or within the territory of a
single High Contracting Party, if there is an agreed stopping place
within a territory subject to the sovereignty, mandate or authority of
another power, even though that power is not a party to this convention.
Two categories of international transportation; Contracts in this
case do not fall under any of the two.
(1) that where the place of departure and the place of destination are
situated within the territories of two High Contracting Parties regardless
of whether or not there be a break in the transportation or a
transshipment; and
(2) that where the place of departure and the place of destination are
within the territory of a single High Contracting Party if there is an
agreed stopping place within a territory subject to the sovereignty,
mandate, or authority of another power, even though the power is not a
party to the Convention.
SC:
The contracts of transportation in this case are evidenced by the two
TWA tickets, both purchased and issued in Bangkok, Thailand.
On the basis alone of the provisions therein, it is obvious that the place
of departure and the place of destination are all in the territory of the
United States, or of a single High Contracting Party.
The contracts, therefore, cannot come within the purview of the
first category of international transportation.
Neither can it be under the second category since there was NO agreed
stopping place within a territory subject to the sovereignty, mandate, or
authority of another power.
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 2

3 Cathay Pacific Airways, Ltd.
V. Court of Appeals, G.R. No.
60501, 5 March 1993
On 19 October 1975, respondent Tomas L. Alcantara was a first-
class passenger of petitioner Cathay Pacific Airways from Manila to
Hongkong and onward from Hongkong to Jakarta. The purpose of
his trip was to attend the following day a conference with the
Director General of Trade of Indonesia. He checked in his luggage
which contained not only his clothing and articles for personal use
but also papers and documents he needed for the conference.
Upon his arrival in Jakarta, respondent discovered that his luggage
was missing. Private respondent was told that his luggage was left
behind in Hongkong. For this, respondent Alcantara was offered
$20.00 as "inconvenience money" to buy his immediate personal
needs until the luggage could be delivered to him. The respondent,
as a result of the incident had to seek postponement of his pre-
arranged conference.
When his luggage finally reached Jakarta more than twenty four
hours later, it was not delivered to him at his hotel but was required
by petitioner to be picked up by an official of the Philippine
Embassy.
Respondent filed a case for damages in the CFI of Lanao del Norte
which ruled in his favour.
Both parties appealed to the Court of Appeals. Court of Appeals
rendered its decision affirming the decision of the CFI but by
modifying its awards by increasing the damages.
RTC directed to proceed with pre-trial.
Issue: Whether or not the Court of Appeals erred in not applying the Warsaw
Convention to limit the liability of the respondent airline.
Held: No. Although the Warsaw Convention has the force and effect of law in
this country, being a treaty commitment assumed by the Philippine
government, said convention does not operate as an exclusive enumeration of
the instances for declaring a carrier liable for breach of contract of carriage or
as an absolute limit of the extent of that liability. The Warsaw Convention
declares the carrier liable for damages in the enumerated cases and under
certain limitations. However, it must not be construed to 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,
which is clearly the case before Us. For, the Warsaw Convention itself
provides in Art. 25 that —
"(1) The carrier shall not be entitled to avail himself of the provisions of this
convention which exclude or limit his liability, if the damage is caused by his
willful misconduct or by such default on his part as, in accordance with the
law of the court to which the case is submitted, is considered to be equivalent
to willful misconduct."
(2) Similarly the carrier shall not be entitled to avail himself of the said
provisions, if the damage is caused under the same circumstances by any
agent of the carrier acting within the scope of his employment."
When petitioner airline misplaced respondent's luggage and failed to deliver it
to its passenger at the appointed place and time, some special species of
injury must have been caused to him. For sure, the latter underwent profound
distress and anxiety, and the fear of losing the opportunity to fulfill the
purpose of his trip. In fact, for want of appropriate clothings for the occasion
brought about by the delay of the arrival of his luggage, to his embarrassment
and consternation respondent Alcantara had to seek postponement of his
pre-arranged conference with the Director General of Trade of the host
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 3

4 Alitalia v. Intermediate
Appellate Court, G.R. No.
 Dr. Felipa Pablo (associate professor in UP and research
71929, 4 December 1990
grantee of the Philippine Atomic Energy Agency) was
invited to take part at a meeting of the Department of
(Scientist invited to a UN Research and Isotopes of the Joint FAO-IAEA Division of
program as second speaker Atomic Energy in Food and Agriculture of the United
but she was not able to Nations in Ispra, Italy.
participate because airline
 She was invited in view of her specialized knowledge in
lost her luggage which
"foreign substances in food and the agriculture
contains her materials for the
environment. She accepted the invitation, and was then
meeting. Entitled to damages
scheduled by the organizers, to read a paper on "The Fate
but not for the loss of the
of Radioactive Fusion Products Contaminating Vegetable
luggage. Airline’s liability not
Crops." The program announced that she would be the
limited by the Warsaw
second speaker on the first day of the meeting.
Convention)
 She booked passage on ALITALIA
 She arrived in Milan on the day before the meeting.
 ALITALIA personnel in Milan told her that her luggage
delayed inasmuch as the same was in one of the
succeeding flights from Rome to Milan. In her luggage
were her scientific papers, slides and other research
material.
 She went to Rome to try to locate her bags herself, to no
avail. She returned to Manila without attending the
meeting in Italy.
 She demanded that ALITALIA make reparation for
damages. ALITALIA offered free airline tickets which she
rejected.
 As it turned out, here suitcases were in fact located and
forwarded to Ispra, Italy, but only on the day after her
country.
In one case, this Court observed that a traveller would naturally suffer mental
anguish, anxiety and shock when he finds that his luggage did not travel with
him and he finds himself in a foreign land without any article of clothing other
than what he has on.
Thus, respondent is entitled to moral and exemplary damages. We however
find the award by the Court of Appeals of P80,000.00 for moral damages
excessive, hence, We reduce the amount to P30,000.00. The exemplary
damages of P20,000.00 being reasonable is maintained, as well as the
attorney's fees of P25,000.00 considering that petitioner's act or omission has
compelled Alcantara to litigate with third persons or to incur expenses to
protect his interest.
SC’s discussion re: Warsaw Convention
 Under the Warsaw Convention, an air carrier is made liable for
damages for… delay in the transportation by air of
passengers, luggage or goods
 It is provided in the Convention that the "action for damages,
however, founded, can only be brought subject to conditions
and limits set out" therein. The Convention also purports to
limit the liability of the carriers in this manner (reproducing this
because it’s necessary to better understand the decision)
The Convention also purports to limit the liability of the carriers in the
following manner:
1. In the carriage of passengers the liability of the carrier for each passenger is limited to the
sum of 250,000 francs . . . Nevertheless, by special contract, the carrier and the passenger
may agree to a higher limit of liability.:
2. a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to
a sum of 250 francs per kilogramme, unless the passenger or consignor has made, at the
time when the package was handed over to the carrier, a special declaration of interest in
delivery at destination and has paid a supplementary sum if the case so requires. In that
case the carrier will be liable to pay a sum not exceeding the declared sum, unless he
proves that sum is greater than the actual value to the consignor at delivery.
b) In the case of loss, damage or delay of part of registered baggage or cargo, or of any
object contained therein, the weight to be taken into consideration in determining the amount
to which the carrier's liability is limited shall be only the total weight of the package or
packages concerned. Nevertheless, when the loss, damage or delay of a part of the
registered baggage or cargo, or of an object contained therein, affects the value of other
packages covered by the same baggage check or the same air way bill, the total weight of
such package or packages shall also be taken into consideration in determining the limit of
liability.
3. As regards objects of which the passenger takes charge himself the liability of the carrier
is limited to 5000 francs per passenger.
4. The limits prescribed . . shall not prevent the court from awarding, in accordance
with its own law, in addition, the whole or part of the court costs and of the other
expenses of litigation incurred by the plaintiff. The foregoing provision shall not apply if
the amount of the damages awarded, excluding court costs and other expenses of the
litigation, does not exceed the sum which the carrier has offered in writing to the plaintiff
within a period of six months from the date of the occurrence causing the damage, or before
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 4
 scheduled participation at the UN meeting.
 Of course Dr. Pablo was no longer there to accept
delivery; she was already on her way home to Manila. And
for some reason or other, the suitcases were not actually
restored to Prof. Pablo by ALITALIA until eleven (11)
months later, and four (4) months after institution of her
action.
 CFI for Dr. Pablo
 P20k nominal damages
 P5k atty’s fee
 Cost of suit
 IAC affirmed and increased award
 P40k nominal damages, considering that P20k is
too little to make up for the plaintiff's frustration
and disappointment in not being able to appear at
said conference; and for the embarrassment and
humiliation she suffered from the academic
community for failure to carry out an official
mission for which she was singled out by the
faculty to represent her institution and the country
 ALITALIA appealed via Certiorari, alleged that
 Warsaw Convention should have been applied to
limit ALITALIA’s liability
 No warrant in fact or in law for the award of
nominal damages and atty’s fees
the commencement of the action, if that is later.
 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 willful 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 does not thus operate as an exclusive
enumeration of the instances of an airline's liability, or as an
absolute limit of the extent of that liability. It should be deemed
a limit of liability only in those cases where the cause of the
death or injury to person, or destruction, loss or damage to
property or delay in its transport is not attributable to or
attended by any wilful misconduct, bad faith, recklessness, or
otherwise improper conduct on the part of any official or
employee for which the carrier is responsible, and there is
otherwise no special or extraordinary form of resulting injury.
Whether there was bad faith on the part of ALITALIA personnel?
NO
 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.
Whether Dr. Pablo is entitled to damages? – YES
The fact is, nevertheless, that some special 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, to be sure — with the result that she was
unable to read the paper and make the scientific presentation
(consisting of slides, autoradiograms or films, tables and tabulations)
that she had painstakingly labored over, at the prestigious international
conference, to attend which she had traveled hundreds of miles, to her
chagrin and embarrassment and the disappointment and annoyance of
the organizers. She felt, not unreasonably, that the invitation for her to
participate at the conference, extended by the Joint FAO/IAEA Division
of Atomic Energy in Food and Agriculture of the United Nations, was a
singular honor not only to herself, but to the University of the Philippines
and the country as well, an opportunity to make some sort of impression
among her colleagues in that field of scientific activity. The opportunity
to claim this honor or distinction was irretrievably lost to her because of
Alitalia's breach of its contract.
Apart from this, there can be no doubt that Dr. Pablo underwent
profound distress and anxiety, which gradually turned to panic and
finally despair, from the time she learned that her suitcases were
missing up to the time when, having gone to Rome, she finally realized
that she would no longer be able to take part in the conference. As she
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 5

5 United Airlines v. Uy, G.R.
No. 127768, 19 November
1999
 On October 13, 1989, respondent, a passenger of United
Airlines, checked in together with his luggage—one piece of
which was found to be overweight at the airline counter. To his
utter humiliation, an employee of petitioner rebuked him saying
that he should have known the maximum weight allowance per
bag and that he should have packed his things accordingly.
Then, in a loud voice in front of the milling crowd, she told
respondent to repack his things and transfer some of them to
the light ones. Respondent acceded but his luggage was still
overweight.
 United Airlines (UA) employee billed him overweight charges
but its employee refused to honor the miscellaneous charges
under MCD which he offered to pay with. Not wanting to leave
without his luggage, he paid with his credit card.
 Upon arrival in Manila, he discovered that one of his bags had
been slashed and its contents stolen.
 In a letter dated October 16, 1989, he notified UA of his loss
and requested reimbursement. UA paid for his loss based on
the maximum liability per pound. Respondent considered the
amount grossly inadequate.
 He sent two more letters to petition but to no avail.
 On June 9, 1992, respondent filed a complaint for damages
against UA.
o UA moved to dismiss the complaint invoking the
provisions of Article 29 of the Warsaw Convention.
Respondent countered that according to par. 2 of
Article 29, “the method of calculating the period of
limitation shall be determined by the law of the court
to which the case is submitted.”
herself put it, she "was really shocked and distraught and confused."
Whether ALITALIA’s liability may be limited by virtue of the
Warsaw Convention – NO
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.
Whether Dr. Pablo should be compensated for the loss of the
luggage? – NO
As already mentioned, her baggage was ultimately delivered to her in
Manila, tardily but safely.
Whether Dr. Pablo is entitled to nominal damages - YES
She is however entitled to nominal damages — which, as the law says,
is adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated and
recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered — and this Court agrees that the respondent Court of
Appeals correctly set the amount thereof at P40,000.00.
1. Does the Warsaw Convention preclude the operation of the Civil
Code and other pertinent laws? NO.
2. Has the respondent’s cause of action prescribed? NO.
1.
Within our jurisdiction we have held that the Warsaw Convention can be
applied, or ignored, depending on the peculiar facts presented by each
case. Convention provisions do not regulate or exclude liabilities 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 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 therefore 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.
2.
While his 2nd cause of action (an action for damages arising from theft
or damage to property or goods) is well within the bounds of the
Warsaw convention, his 1st cause of action (an action for damages
arising from the misconduct of the airline employees and the violation of
respondent’s rights as passengers) clearly is not.
The 2-yr limitation incorporated in Art. 29 of the Warsaw Convention as
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 6

6 Philippine Airlines v. Court of
Appeals, G.R. No. L-44936,
25 September 1992
 Chua Min boarded PAL flight from HK to MNL, checked in
4 pcs of baggage.
 When plane landed in MNL, Chua Min was not able to
locate the two pieces of baggage containing
cinematographic films despite diligent search therefor.
 He made the claim for such loss to PAL which admitted
the loss and offered to compensate him.
 Chua Min rejected offer, filed case to recover value of lost
items est P20k
.
 PAL’s defense: liability limited by the Warsaw
Convention
ARTICLE 3 (1). For the transportation of passengers the
carrier must deliver a passenger ticket which shall contain the
following particulars:
(e) A statement that the transportation is subject to the rules
relating to liability established by this convention."
"ARTICLE 22 (2). In the transportation of checked baggage
and of goods, the liability of the carrier shall be limited to a sum
of 250 francs per kilogram, unless the consignor has made, at
the time when the package was handed over to the carrier, a
special declaration of the value at delivery and has paid a
supplementary sum if the case so requires. In that case the
carrier will be liable to pay a sum not exceeding the declared
an absolute bar to suit and not to be made subject to the various tolling
provisions of the laws of the forum, forecloses the application of our
own rules on interruption of prescriptive periods. (Art. 29, par. 2 was
indented only to let local laws determine whether an action shall be
deemed commenced upon the filing of a complaint.) Since, it is
indisputable that respondent filed the present action beyond the 2-yr
time frame his 2ndcause of action must be barred.
However, it is obvious that respondent was forestalled from immediately
filing an action because petitioner gave him the runaround, answering
his letters but not giving in to his demands. True, respondent should
have already filed an action at the first instance when petitioner denied
his claims but the same could only be due to his desire to make an out-
of-court settlement for which he cannot be faulted. Hence, despite the
express mandate of Article 29 of the Warsaw Convention that an action
for damages should be filed within 2 years from the arrival at the place
of destination, such rule shall not be applied in the instant case because
of the delaying tactics employed by petitioner airlines itself. Thus,
respondent’s 2nd cause of action cannot be considered as time barred.
Article 4, paragraph 1
"For the transportation of baggage, other than small personal objects of
which the passenger takes charge himself, the carrier must deliver a
baggage check."
Article 4, paragraph 4
"The absence, irregularity, or loss of the baggage checks shall not
affect the existence or the validity of the contract of transportation which
shall nonetheless be subject to the rules of this Convention.
Nevertheless, if the carrier accepts baggage without a baggage check
having been delivered, or if the baggage check does not contain the
particulars set out at (d), (f), and (h) above, the carrier shall not be
entitled to avail himself of those provisions of the Convention which
exclude or limit his liability."
It may be recalled that PAL made a categorical distinction between a
passenger ticket and a baggage check when PAL responded to the
complaint for a sum of money. In its MR, PAL had a sudden change of
heart by asserting that the passenger ticket and the baggage check are
one and the same thing. On a later occasion, it stressed that the
‘baggage tags’ were erroneously labeled as ‘baggage checks’. But the
question of semantics on whether the passenger ticket, the baggage
check, and the tag refer to the same object is undoubtedly without legal
significance and will not obliterate the fact that the baggage check was
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 7

7 Philippine Airlines, Inc. v.
Hon. Savillo, G.R. No.
149547, 4 July 2008
sum, unless he proves that the sum is greater than the actual
value to the consignor at delivery."
RTC
 since PAL did not introduce a single piece of document
and merely adopted private respondent’s exhibits, it may
not invoke the limitation of its liability with respect to
‘checked baggage’ under the provisions of the Warsaw
Convention.
PAL’s allegation in MR (which was denied)
 The ticket under which private respondent was a
passenger on PAL plane was a passenger ticket and
baggage check at the same time.
 This tactic was resorted to in order to establish
the conclusion that petitioner could not have
produced the same since the ticket is usually
retained by the passenger. Petitioner continued
to asseverate that Article 4 paragraph 4 of the
Warsaw Convention which reads:
 "(4) The absence, irregularity, or
loss of the baggage checks shall not
affect the existence or the validity of the
contract of transportation which shall
nonetheless be subject to the rules of
this convention. Nevertheless, if the
carrier accepts baggage without a
baggage check having been delivered,
or if the baggage check does not
contain the particulars set out at (d), (f),
and (h) above, the carrier shall not be
entitled to avail himself of those
provisions of the convention which
exclude or limit his liability."
 upon which provision the trial court allegedly
relied in rejecting petitioner’s contention, is in fact
applicable judging from what is explicitly stated
under the first sentence of the proviso.
CA affirmed
Simplicio Grino was invited to participate in the 1993 ASEAN
Seniors Annual Golf Tournament in Jakarta Indonesia.
He and several companions bought tickets from PAL:
MANILA-SINGAPORE-JAKARTA-SINGAPORE-MANILA
not presented by petitioner in the trial court inasmuch as it merely relied
on, and adopted private respondent’s exhibits, none of which was
offered for the purpose of proving the missing link, so to speak. To
rectify these lapses, PAL argued that it is not in a position to introduce
the baggage check in evidence since Chua Min as passenger, is the
one who retains possession thereof. Yet, such pretense does not sit
well with what is expected of PAL as an air carrier under Article 4 (2),
Section II of the Warsaw Convention that:
"The baggage check shall be made out in duplicate, one part for the
passenger and the other part for the carrier."
Consequently, PAL cannot capitalize on the limited liability clause
under Article 22 (2) of the Warsaw Convention because of the
unequivocal condition set forth under the second sentence of
Article 4, paragraph 4 that:
". . . if the carrier accepts baggage without a baggage check
having been delivered, as if the baggage check does not contain
the particulars set out at (d), (f), and (h) above, the carrier shall not
be entitled to avail himself of those provisions of the Convention
which exclude or limit his liability."cralaw virtua1aw library
PAL contends that it is covered by the first and not by the second
sentence of Article 4, paragraph 4. But the argument as proferred,
requires the SC to read something which is not so stated between the
lines for the first sentence speaks only of the "existence" or the "validity"
of the contract of transportation while the query on "liability" is
particularly and directly resolved by the second sentence. To be sure,
and even assuming that an inconsistency exists, the first sentence must
be construed as the general proposition governing the existence or
validity of the contract of transportation which must yield to the
particular rule under the second sentence regarding liability.
Furthermore, even if We consider the two sentences as particular in
nature, the rule has been laid down that the clause which comes later
shall be given effect upon the presumption that it expresses the
dominant purpose of the instrument.
W/N THE PROVISIONS OF THE WARSAW CONVENTION APPLY
GIVEN THE FACT THAT GRIÑO’S CAUSE OF ACTION AROSE
FROM A BREACH OF CONTRACT FOR INTERNATIONAL AIR
TRANSPORT- NO
W/N THE COMPLAINT FILED BY GRIÑO BEYOND THE TWO (2)-
YEAR PERIOD PROVIDED UNDER THE WARSAW CONVENTION IS
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 8
On October 3 1993, upon arrival in Singapore, they proceeded to
Singapore Airlines office to check-in their luggage for their flight to
Jakarta at 8pm.
Singapore Airlines rejected their tickets because they were not
endorsed by PAL
- It was explained to private respondent and his group that if
Singapore Airlines honored the tickets without PAL’s endorsement,
PAL would not pay Singapore Airlines for their passage.
They were forced to buy tickets from Garuda Airlines and board its
last flight to Jakarta and had to arrange transportation to the hotel.
When he returned to PH, he brought the matter to PAL office but
PAL and Singapore Airlines disowned liability and blamed each
other.
On August 15, 1997, he filed a complaint for damages before the
RTC.
PAL argued 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 on 15 August 1997, more than three years after
PAL received the demand letter on 25 January 1994, it was already
barred by prescription.
ALREADY BARRED BY PRESCRIPTION- NO
The Warsaw Convention applies to "all international transportation of
persons, baggage or goods performed by any aircraft for hire." It seeks
to accommodate or balance the interests of passengers seeking
recovery for personal injuries and the interests of air carriers seeking to
limit potential liability. It employs a scheme of strict liability favoring
passengers and imposing damage caps to benefit air carriers. The
cardinal purpose of the Warsaw Convention is to provide uniformity of
rules governing claims arising from international air travel; thus, it
precludes a passenger from maintaining an action for personal injury
damages under local law when his or her claim does not satisfy the
conditions of liability under the Convention.
Article 19 of the Warsaw Convention provides for liability on the part of
a carrier for "damages occasioned by delay in the transportation by air
of passengers, baggage or goods." Article 24 excludes other remedies
by further providing that "(1) in the cases covered by articles 18 and 19,
any action for damages, however founded, can only be brought subject
to the conditions and limits set out in this convention." Therefore, a
claim covered by the Warsaw Convention can no longer be recovered
under local law, if the statute of limitations of two years has already
lapsed.
Nevertheless, this Court notes that jurisprudence in the Philippines and
the United States also recognizes that the Warsaw Convention does not
"exclusively regulate" the relationship between passenger and carrier
on an international flight. This Court finds that the present case is
substantially similar to cases in which the damages sought were
considered to be outside the coverage of the Warsaw Convention.
In United Airlines v. Uy, this Court distinguished between the (1)
damage to the passenger’s baggage and (2) humiliation he
suffered at the hands of the airline’s 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
PAL’s 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
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 9

8 Federal Express v. American
Home Assurance, G.R. No.
150094, 18 August 2004
FACTS: Shipper SMITHKLINE USA delivered to carrier Burlington
Air Express (BURLINGTON), an agent of [Petitioner] Federal
Express Corporation, a shipment of 109 cartons of veterinary
biologicals for delivery to consignee SMITHKLINE and French
Overseas Company in Makati City. The shipment was covered by
Burlington Airway Bill No. 11263825 with the words,
‘REFRIGERATE WHEN NOT IN TRANSIT’ and ‘PERISHABLE’
stamp marked on its face. That same day, Burlington insured the
cargoes with American Home Assurance Company (AHAC). The
following day, Burlington turned over the custody of said cargoes to
FEDEX which transported the same to Manila.
The shipments arrived in Manila and was immediately stored at
[Cargohaus Inc.’s] warehouse. Prior to the arrival of the cargoes,
FEDEX informed GETC Cargo International Corporation, the
customs broker hired by the consignee to facilitate the release of its
cargoes from the Bureau of Customs, of the impending arrival of its
client’s cargoes.
12 days after the cargoes arrived in Manila, DIONEDA, a non-
licensed custom’s broker who was assigned by GETC, found out,
Convention.
Had the present case merely consisted of claims incidental to the
airlines’ delay in transporting their passengers, the private respondent’s
Complaint would have been time-barred under Article 29 of the Warsaw
Convention. However, the present case involves a special species of
injury resulting from the failure of PAL and/or Singapore Airlines to
transport private respondent from Singapore to Jakarta – the profound
distress, fear, anxiety and humiliation that private respondent
experienced when, despite PAL’s earlier assurance that Singapore
Airlines confirmed his passage, he was prevented from boarding the
plane and he faced the daunting possibility that he would be stranded in
Singapore Airport because the PAL office was already closed.
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.
Private respondent’s 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, private respondent’s
claims have not yet prescribed and PAL’s Motion to Dismiss must be
denied.
ISSUE: Is FEDEX liable for damage to or loss of the insured goods
HELD:
Petition granted. Assailed decision reversed insofar as it pertains to
FEDEX Prescription of Claim from the initial proceedings in the trial
court up to the present, petitioner has tirelessly pointed out that
respondents’ claim and right of action are already barred. Indeed, this
fact has never been denied by respondents and is plainly evident from
the records.
Airway Bill No. 11263825, issued by Burlington as agent of petitioner,
states:
“6. No action shall be maintained in the case of damage to or partial
loss of the shipment unless a written notice, sufficiently describing the
goods concerned, the approximate date of the damage or loss, and the
details of the claim, is presented by shipper or consignee to an office of
Burlington within (14) days from the date the goods are placed at the
disposal of the person entitled to delivery, or in the case of total loss
(including non-delivery) unless presented within (120) days from the
date of issue of the [Airway Bill]. xxx
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 10

9 Philippine Airlines, Inc. v.
Court of Appeals and Mejia,
G.R. No. 119706, 14 March
1996
while he was about to cause the release of the said cargoes, that
the same [were] stored only in a room with 2 air conditioners
running, to cool the place instead of a refrigerator. DIONEDA, upon
instructions from GETC, did not proceed with the withdrawal of the
vaccines and instead, samples of the same were taken and brought
to the Bureau of Animal Industry of the Department of Agriculture in
the Philippines by SMITHKLINE for examination wherein it was
discovered that the ‘ELISA reading of vaccinates sera are below
the positive reference serum.’
As a consequence of the foregoing result of the veterinary biologics
test, SMITHKLINE abandoned the shipment and, declaring ‘total
loss’ for the unusable shipment, filed a claim with AHAC through its
representative in the Philippines, the Philam Insurance Co., Inc.
(PHILAM) which recompensed SMITHKLINE for the whole insured
amount. Thereafter, PHILAM filed an action for damages against
the FEDEX imputing negligence on either or both of them in the
handling of the cargo.
Trial ensued and ultimately concluded with the FEDEX being held
solidarily liable for the loss. Aggrieved, petitioner appealed to the
CA. The appellate court ruled in favor of PHILAM and held that the
shipping Receipts were a prima facie proof that the goods had
indeed been delivered to the carrier in good condition.
Plaintiff, Gilda C. Mejia, shipped thru defendant, Philippine Airlines,
one (1) unit SHARP microwave oven, from San Francisco, U.S.A.
to Manila, Philippines.
Relevantly, petitioner’s airway bill states:
“12./12.1 The person entitled to delivery must make a complaint to the
carrier in writing in the case:
12.1.1 of visible damage to the goods, immediately after discovery of
the damage and at the latest within fourteen (14) days from receipt of
the goods; xxx
Article 26 of the Warsaw Convention, on the other hand, provides:
(2) In case of damage, the person entitled to delivery must complain
to the carrier forthwith after the discovery of the damage, and, at the
latest, within 3 days from the date of receipt in the case of baggage and
7 days from the date of receipt in the case of goods. xx
(3) Every complaint must be made in writing upon the document of
transportation or by separate notice in writing dispatched within the
times aforesaid.
(4) Failing complaint within the times aforesaid, no action shall lie
against the carrier, save in the case of fraud on his part.” xxx
Condition Precedent
In this jurisdiction, the filing of a claim with the carrier within the time
limitation therefor actually constitutes a condition precedent to the
accrual of a right of action against a carrier for loss of or damage to the
goods. The shipper or consignee must allege and prove the fulfillment
of the condition. If it fails to do so, no right of action against the carrier
can accrue in favor of the former. The aforementioned requirement is a
reasonable condition precedent; it does not constitute a limitation of
action.
The requirement of giving notice of loss of or injury to the goods is not
an empty formalism. The fundamental reasons for such a stipulation
are (1) to inform the carrier that the cargo has been damaged, and that
it is being charged with liability therefore; and (2) to give it an
opportunity to examine the nature and extent of the injury. “This
protects the carrier by affording it an opportunity to make an
investigation of a claim while the matter is fresh and easily investigated
so as to safeguard itself from false and fraudulent claims.
ISSUE:
1. WON the air waybill should be strictly construed against petitioner.
2. WON PAL acted in bad faith justifying the grant for damages.
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 11
 Upon arrival of said article in Manila, Philippines, plaintiff
SC: PAL liable discovered that its front glass door was broken and the damage
rendered it unserviceable.
Demands, were made by plaintiff against the defendant for the
reimbursement of the value of the damaged microwave oven, and
transportation charges paid by plaintiff to defendant company.
Gilda filed an action for damages against defendant in the lower
court.
PAL alleged inter alia, by way of special and affirmative defenses,
that the court has no jurisdiction over the case; that plaintiff has no
valid cause of action against defendant since it acted only in good
faith and incompliance with the requirements of the law,
regulations, conventions and contractual commitments; and that
defendant had always exercised the required diligence in the
selection, hiring and supervision of its employees.
The trial court justified its award of actual, moral and exemplary
damages, and attorney’s fees in favor of private respondent that
since the plaintiff’s baggage destination was the Philippines,
Philippine law governs the liability of the defendant for damages for
the microwave oven.
And that, plaintiff has established that defendant acted in bad faith
when it denied the former’s claim on the ground that the formal
claim was filed beyond the period as provided in the Air Waybill
when actually, Concepcion Diño filed such upon discovery of
damage.
The court finds that the petitioner acted in bad faith in denying
private respondent’s claim, which was affirmed by the Court of
Appeals.
Hence this appeal for Certiorari.
3. Was PAL correct in stating that its liability if any, cannot exceed
U.S. $20.00 based on weight as plaintiff did not declare the
contents of her baggage nor pay additional charges before
the flight? (Accdg to Warsaw Convention – limited liability)
RULING:
1. NO. SC held that there can be no further question as to the
validity of the terms of the air waybill, even if the same
constitutes a contract of adhesion. Whether or not the
provisions thereof particularly on thelimited liability of the
carrier are binding on private respondent in this instance must
be determined from the facts and circumstances involved vis-
a-vis the nature of the provisions sought to be enforced, taking
care that equity and fair play should characterize the
transaction under review.
However, it should be borne in mind that a contract of
adhesion may be struck down as void and unenforceable, for
being subversive of public policy, only when the weaker party
is imposed upon in dealing with the dominant bargaining party
and is reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal
footing. Just because we have said that Condition No. 5 of the
airway bill is binding upon the parties to and fully operative in
this transaction, it does not mean, and let this serve as fair
warning to respondent carriers, that they can at all times
whimsically seek refuge from liability in the exculpatory
sanctuary of said Condition No. 5. We find nothing
objectionable about the lower court’s reliance upon the
Fieldmen’s Insurance case, the principles wherein squarely
apply to the present petition. The parallelism between the
aforementioned case and this one is readily apparent for, just
as in the instant case, it is the binding effect of the provisions
in a contract of adhesion (an insurance policy in Fieldmen’s
Insurance) that is put to test.
2. YES .It will be noted that petitioner never denied that the
damage to the microwave oven was sustained while the same
was in its custody. The possibility that said damage was due to
causes beyond the control of PAL has effectively been ruled
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 12
 out since the entire process in handling of the cargo was done
almost exclusively by, and with the intervention or, at the very
least, under the direct supervision of a responsible PAL
personnel. The acceptance in due course by PAL of private
respondent’s cargo as packed and its advice against the need
for declaration of its actual value operated as an assurance to
private respondent that in fact there was no need for such a
declaration.

Petitioner can hardly be faulted for relying on the

representations of PAL’s own personnel. There was glaringly
no attempt what so ever on the part of petitioner to explain the
cause of the damage to the oven which constitutes gross
carelessness or negligence which by itself justifies the present
award of damages.

3. No. CA was correct in ruling that the provision on limited

liability is not applicable in this case.

The appellate court declared correct the non-application by the

trial court of the limited liability of therein defendant-appellant
under the Conditions of the Contract contained in the air
waybill , based on the ruling in Cathay Pacific Airways, Ltd. vs.
Court of Appeals, et al., which substantially enunciates the rule
that while the Warsaw Convention has the force and effect of
law in the Philippines, being a treaty commitment by the
government and as a signatory thereto, the same does not
operate as an exclusive enumeration of the instances when a
carrier shall be liable for breach of contract or as an absolute
limit of the extent of liability, nor does it preclude the operation
of the Civil Code or other pertinent laws.

Further, the reason for the absence of a declaration of a higher

value was precisely because PAL’s personnel in San
Francisco, advised her not to declare the value of her cargo.
This being so, petitioner is estopped from faulting private
respondent for her failure to declare the value of the
microwave oven.

SC: PAL Liable. CA Decision affirmed.

10 Lufthansa German Airlines v. Tirso V. Antiporda, Sr. was, contracted by SGV & Co. to be the ISSUE: Was there a breach of obligation by the defendant in failing to
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 13
Court of Appeals, G.R. No. institutional financial specialist for the agricultural credit institution
83612, 24 November 1994 project of the Investment and Development Bank of Malawi in
Africa. For the engagement, Antiporda would be provided one
round-trip economy ticket from Manila to Blantyre and back with a
maximum travel time of four days per round-trip. On September 17,
1984, Lufthansa, through SGV, issued the ticket for Antiporda's
confirmed flights to Malawi, Africa. The ticket particularized his
itinerary: Manila -Bombay- Nairobi- Lilongwe
Blantyre.
Thus, on September 25, 1984, Antiporda took the Lufthansa flight
to Singapore from where he proceeded to Bombay on board the
same airline. He arrived in Bombay as scheduled and waited at the
transit area of the airport for his connecting flight to Nairobi which
was, per schedule given him by Lufthansa, to leave Bombay.
Lufthansa, informed Antiporda that his seat in Air Kenya Flight 203
to Nairobi had been given to a very important person of Bombay
who was attending a religious function in Nairobi. Antiporda
protested but Air Kenya Flight 203 left for Nairobi without him on
board. Stranded in Bombay, Antiporda was booked for Nairobi via
Addis Ababa only on September 27, 1984. He finally arrived in
Blantyre at 9:00 o'clock in the evening of September 28, 1984,
more than a couple of days late for his appointment with people
from the institution he was to work with in Malawi.
Consequently, Antiporda’s counsel wrote the general manager of
Lufthansa in Manila demanding P1,000,000 in damages for the
airline's "malicious, wanton, disregard of the contract of carriage."
Apparently getting no positive action from Lufthansa, on January
21, 1985, Antiporda filed with the RTC of Quezon City a complaint
against Lufthansa.
Lufthansa argued that it cannot be held liable for the acts
committed by Air Kenya on the basis of the following:
(a) it merely acted as a ticket-issuing agent in behalf of Air Kenya;
consequently the contract of carriage entered into is between
respondent Antiporda and Air Kenya, to the exclusion of petitioner
Lufthansa;
(b) under sections (1) and (2) Article 30 of the Warsaw Convention,
an airline carrier is liable only to untoward occurrences on its own
line;
(c) the award of moral and exemplary damages in addition to
attorney's fees by the trial court is without basis in fact and in law.
transport the plaintiff from Manila to Blantyre, Malawi, Africa?
HELD:
This case is one of a contract of carriage. And the ticket issued by the
defendant to the plaintiff is the written agreement between the parties
herein. From the ticket, therefore, it is indubitably clear that it was the
duty and responsibility of the defendant Lufthansa to transport the
- plaintiff from Manila to Blantyre, on a trip of five legs.
SC rejected Lufthansa's theory that from the time another carrier was
engaged to transport Antiporda on another segment of his trip, it merely
acted as a ticket-issuing agent in behalf of said carrier. In the very
nature of their contract, Lufthansa is clearly the principal in the contract
of carriage with Antiporda and remains to be so, regardless of those
instances when actual carriage was to be performed by various carriers.
The issuance of a confirmed Lufthansa ticket in favor of Antiporda
covering his entire five-leg trip aboard successive carriers concretely
attests to this. By issuing a confirmed ticket, Lufthansa in effect
guaranteed Antiporda a sure seat with Air Kenya. Private respondent
Antiporda, maintained that the Court of Appeals, had the right to expect
that his ticket would be honored by Air Kenya which, in the legal sense,
Lufthansa had endorsed and, in effect, guaranteed the performance of
its principal engagement to carry out his five-leg trip. Lufthansa cannot
claim that its liability thereon ceased at Bombay Airport and thence,
shifted to the various carriers that assumed the actual task of
transporting said private respondent.
The appellate court also ruled that Lufthansa cannot rely on Sections
(1) and (2), Article 30 of the Warsaw Convention because the
provisions thereof are not applicable under the circumstances of the
case.
Sections (1) and (2), Article 30 of the Warsaw Convention provide:
(1) In the case of transportation to be performed by various successive
carriers and falling within the definition set out in the third paragraph of
Article I, each carrier who accepts passengers, baggage, or goods shall
be subject to the rules set out in the convention, and shall be deemed to
be one of the contracting parties to the contract of transportation insofar
as the contract deals with that part of the transportation which is
performed under his supervision.
(2) In the case of transportation of this nature, the passenger or his
representative can take action only against the carrier who performed
the transportation during which the accident or the delay occurred, save
in the case where, by express agreement, the first carrier has assumed
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 14

11 Philippine Airlines v. Court of
Appeals, G.R. No. L-44936,
25 September 1992
Facts: Apr. 4, 1972: private respondent boarded herein petitioner’s
Flight PR 301 from Hongkong to Manila and checked in four (4)
pieces of baggage. When the plane landed in Manila, private
respondent was not able to locate the 2 pieces of baggage
containing cinematographic films despite diligent search.
Private respondent made the claim for such loss to petitioner, which
admitted the loss and offered to compensate private respondent.
Instead of accepting the offer, private respondent opted to file the
case to recover the value of the lost items which he estimated to be
worth P20,000.00
Petitioner responded by asserting that:
 Plaintiff has no cause of action against defendant.
 Plaintiff checked-in 4 pieces of baggage (20 kgs) inclusive
of their contents such that it would be physically
impossible for the 2 alleged lost pieces, to have in
themselves an aggregate weight of 25 kilos.
 As such passenger the contractual relationship between
plaintiff and defendant is wholly governed by the terms,
conditions and stipulations which are clearly printed on
plaintiff’s passenger’s ticket which includes a provision
granting plaintiff a free baggage allowance of 20 kilos.
liability for the whole journey.
Antiporda's cause of action is not premised on the occurrence of an
accident or delay as contemplated under Section 2 of said Article but on
Air Kenya's refusal to transport him in order to accommodate another.
The provision does not contemplate the instance of "bumping-off" but
merely of simple delay,it cannot provide a handy excuse for Lufthansa
as to exculpate it from any liability to Antiporda.
In justifying its award of moral and exemplary damages, the lower court
emphasized that the breach of contract was "aggravated by the
discourteous and highly arbitrary conduct of an official of petitioner
Lufthansa in Bombay."
. . . . Bumped off from his connecting flight to Nairobi and stranded in
the Bombay Airport for 32 hours, not even Lufthansa office in Bombay,
after learning plaintiff's being stranded in Bombay and his
accommodation problem, provided any relief to plaintiff's sordid
situation. It was a pathetic sight that he, tasked to perform consultancy
work in a World Bank found himself stranded in a foreign land where
nobody was expected to help him in his predicament except the
defendant, who displayed utter lack of concern of its obligation to the
plaintiff and left plaintiff alone in his misery at the Bombay airport.
ISSUE: Whether or not the Petitioner can avail of the limitations on
liability under the Warsaw Convention
HELD: NO
Article 4, paragraph 1, Warsaw Convention:
"For the transportation of baggage, other than small personal
objects of which the passenger takes charge himself, the
carrier must deliver a baggage check."
Article 4, paragraph 4:
"The absence, irregularity, or loss of the baggage checks shall
not affect the existence or the validity of the contract of
transportation which shall nonetheless be subject to the rules
of this Convention. Nevertheless, if the carrier accepts
baggage without a baggage check having been delivered, or if
the baggage check does not contain the particulars set out at
(d), (f), and (h) above, the carrier shall not be entitled to avail
himself of those provisions of the Convention which exclude or
limit his liability."
Petitioner made a categorical distinction between a passenger ticket
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 15
  In accordance with and in pursuant of this free baggage
allowance, plaintiff checked-in his 4 pcs of baggage for
which he was issued corresponding baggage checks
covering plaintiff’s two alleged lost pieces of baggage.
 Under the passenger’s ticket, which is the contract of
carriage between plaintiff and defendant, it is an express
condition of the contract that the same shall be ‘subject to
the rules and limitations relating to liability
established by the Warsaw Convention.’
 Under the Warsaw Convention on International Carriage
by Air (as amended by the Hague Protocol of 1955),
defendant’s liability for plaintiff’s 2 alleged lost pieces of
baggage is limited to a maximum of US$6.50 per
kilogram.
 The total weight of plaintiff’s 4 pieces of checked-in
baggage, inclusive of their contents, was only 20 kgs,
such that each baggage would have an average weight of
5 kilos, and the 2 alleged lost pieces, an average total
weight of only 10 kilograms. Accordingly, defendant’s
maximum liability to plaintiff is US$165.00, or its
equivalent in Philippine currency.
Petitioner tried to call the attention of the trial judge to the herein
below quoted provisions of the Warsaw Convention which limit the
liability of petitioner as an air carrier to 250 francs per kilogram,
thus:
"ARTICLE 3 (1). For the transportation of passengers the
carrier must deliver a passenger ticket, which shall contain
the following particulars:
(e) A statement that the transportation is subject to the rules
relating to liability established by this convention."
"ARTICLE 22 (2). In the transportation of checked baggage
and of goods, the liability of the carrier shall be limited to a
sum of 250 francs per kilogram, unless the consignor has
made, at the time when the package was handed over to the
carrier, a special declaration of the value at delivery and has
paid a supplementary sum if the case so requires. In that
case the carrier will be liable to pay a sum not exceeding the
declared sum, unless he proves that the sum is greater than
the actual value to the consignor at delivery."
TC: Since petitioner did not introduce a single piece of document
and merely adopted private respondent’s exhibits, it may not invoke
the limitation of its liability with respect to ‘checked baggage’ under
the provisions of the Warsaw Convention.
and a baggage check when petitioner responded to the complaint for a
sum of money. In its motion for reconsideration, petitioner had a sudden
change of heart by asserting that the passenger ticket and the baggage
check are one and the same thing. On a later occasion, it stressed that
the ‘baggage tags’ were erroneously labeled as ‘baggage checks’.
But the question of semantics on whether the passenger ticket, the
baggage check, and the tag refer to the same object is undoubtedly
without legal significance and will not obliterate the fact that the
baggage check was not presented by petitioner in the trial court
inasmuch as it merely relied on, and adopted private respondent’s
exhibits, none of which was offered for the purpose of proving the
missing link.
Petitioner argued that it is not in a position to introduce the baggage
check in evidence since private respondent as passenger, is the one
who retains possession thereof. Yet, such pretense does not sit well
with what is expected of petitioner as an air carrier under Article 4 (2),
Section II of the Warsaw Convention that:
"The baggage check shall be made out in duplicate, one part
for the passenger and the other part for the carrier."
Consequently, petitioner can not capitalize on the limited liability clause
under Article 22 (2) of the Warsaw Convention because of the
unequivocal condition set forth under the second sentence of Article 4,
paragraph 4 that:
". . . if the carrier accepts baggage without a baggage check
having been delivered, a if the baggage check does not
contain the particulars set out at (d), (f), and (h) above, the
carrier shall not be entitled to avail himself of those
provisions of the Convention which exclude or limit his
liability."
Petitioner contends that it is covered by the first and not by the second
sentence of Article 4, paragraph 4.
But the argument as proferred, requires the Court to read something
which is not so stated between the lines for the first sentence speaks
only of the "existence" or the "validity" of the contract of transportation
while the query on "liability" is particularly and directly resolved by the
second sentence.
Even assuming in gratia argumenti that an inconsistency exists, the first
sentence must be construed as the general proposition governing the
existence or validity of the contract of transportation which must yield to
the particular rule under the second sentence regarding liability.
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 16

Public Service Regulations
1 Luzon Stevedoring v. Public
Service Commission, G.R.
No. L-5458, 16 September
1953
2 San Pablo v. Pantranco, G.R.
No. L-61461, 21 August 1987
CA: TC decision affirmed except that the sum of $4,000.00 was
directed to be paid by petitioner in Philippine Currency, at the
exchange rate obtaining on the date the amount is actually paid to
herein private respondent
 Petitioners are engaged in the stevedoring or lighterage and
harbor towage business. They are also engaged in interisland
service which consist of hauling cargoes such as sugar, oil,
fertilizer and other commercial commodities. There is no fixed
route in the transportation of these cargoes, the same being
left at the indication of the owner or shipper of the goods.
Petitioners, in their hauling business, serve only a limited
portion of the public.
 The Philippine Shipowners’ Association complained to the
Public Service Commission that petitioners were engaged in
the transportation of cargo in the Philippines for hire or
compensation without authority or approval of the Commission.
The rates petitioners charged resulted in ruinous competition.
 The Public Service Commission restrained petitioners from
further operating their watercraft to transport goods for hire or
compensation between points in the Philippines until the
commission approves the rates they propose to charge.
Facts: PANTRANCO is a domestic corporation engaged in the land
transportation business. It has certificates for public conveniences
(CPC) to operate passenger buses from Metro Manila to Bicol
Even if the Court consider the two sentences as particular in nature, the
rule has been laid down that the clause which comes later shall be
given effect upon the presumption that it expresses the dominant
purpose of the instrument (Graham Paper Co. v. National Newspapers
Asso. (Mo. App.) 193 S.W. 1003; Barnett v. Merchants’ L. Ins. Co., 87
Okl. 42).
Petition dismissed.
Whether the petitioners fall under the definition in Sec. 13 (b) of the
Public Service Law? YES.
 It is not necessary under said definition that one holds himself out
as serving or willing to serve the public in order to be considered
public service. It is not necessary, in order to be a public service,
that an organization be dedicated to public use, i.e., ready and
willing to serve the public as a class. It is only necessary that it
must in some way be impressed with a public interest; and whether
the operation of a business is a public utility depends upon whether
or not the service rendered by it is of a public character and of
public consequence and concern.
 It can scarcely be denied that the contracts between the owners of
the barges and the owners of the cargo at bar were ordinary
contracts of transportation and not of lease. Petitioners’ watercraft
was manned entirely by crews in their employ and payroll, and the
operation of the said craft was under their direction and control, the
customers assuming no responsibility for the goods handled on the
barges.
 C.A. No. 146 clearly declares that an enterprise of any of the kinds
therein enumerated is a public service if conducted for hire or
compensation even if the operator deals only with a portion of the
public or limited clientele. Public utility, even where the term is not
defined by statute, is not determined by the number of people
actually served.
 The Public Service Law was enacted not only to protect the public
against unreasonable charges and poor, inefficient service, but
also to prevent ruinous competition.
 Just as the legislature may not declare a company or enterprise to
be a public utility when it is not inherently such, a public utility may
not evade control and supervision of its operation by the
government by selecting its customers under the guise of private
transactions.
ISSUES:
1. Whether the sea can be considered as a continuation of the
highway?
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 17

Doctrine : While a ferry boat
service has been considered
as a continuation of the
highway when crossing rivers
or even lakes, which are
small body of waters -
separating the land, however,
when as in this case the two
terminals, Matnog and Allen
are separated by an open sea
it cannot be considered as a
continuation of the highway.
Therefore, to operate a route
on it, the carrier must obtain a
separate CPC.
Region and Eastern Samar.
PANTRANCO through its counsel wrote to Maritime Industry
Authority (MARINA) requesting authority to lease/purchase a vessel
named MN "Black Double" to be used for its project to operate a
ferryboat service from Matnog, Sorsogon and Allen, Samar that will
provide service to company buses and freight trucks that have to
cross San Bernardo Strait.
MARINA said that it cannot give due course to the request,
because there was already an inter-island shipping company
operating their desired route.
 MARINA policies on interisland shipping restrict
the entry of new operators which are…
adequately serviced by existing/authorized
operators.
 Market conditions in the proposed route cannot
support the entry of additional tonnage
PANTRANCO nevertheless acquired the vessel MN "Black
Double" .
It wrote the Chairman of the Board of Transportation (BOT) through
its counsel,
 that it proposes to operate a ferry service to carry
its passenger buses and freight trucks between
Allen and Matnog in connection with its trips to
Tacloban City.
PANTRANCO claims that it can operate a ferry service in
connection with its franchise for bus operation in the highway from
Pasay City to Tacloban City "for the purpose of continuing the
highway, which is interrupted by a small body of water, the said
proposed ferry operation is merely a necessary and incidental
service to its main service and obligation of transporting its
passengers from Pasay City to Tacloban City. Such being the case
there is no need to obtain a separate certificate for public
convenience to operate a ferry service between Allen and Matnog
to cater exclusively to its passenger buses and freight trucks.
Without awaiting action on its request PANTRANCO started to
operate said ferry service.
2. Is PANTRANCO a private carrier?
3. Whether a land transportation company can be authorized to
operate a ferry service or coastwise or interisland shipping
service along its authorized route as an incident to its franchise
without the need of filing a separate application for the same.
Held:
Open sea, not a continuation of highway.
Under no circumstance can the sea between Matnog and Allen be
considered a continuation of the highway. While a ferryboat service has
been considered as a continuation of the highway when crossing rivers
or even lakes, which are small body of waters separating the land,
however, when as in this case the two terminals, Matnog and Allen are
separated by an open sea it can not be considered as a continuation of
the highway.
The contention of private respondent PANTRANCO that its ferry service
operation is as a private carrier, not as a common carrier for its
exclusive use in the ferrying of its passenger buses and cargo trucks is
absurd. PANTRANCO does not deny that it charges its passengers
separately from the charges for the bus trips and issues separate
tickets whenever they board the MN "Black Double" that crosses
Matnog to Allen. Nevertheless, considering that the authority granted to
PANTRANCO is to operate a private ferry, it can still assert that it
cannot be held to account as a common carrier towards its passengers
and cargo. Such an anomalous situation that will jeopardize the safety
and interests of its passengers and the cargo owners cannot be
allowed.
Ferry service distinguished from interisland service.
Thus the Court holds that the water transport service between Matnog
and Allen is not a ferryboat service but a coastwise or interisland
shipping service.
In Javellana case (98 Phil. 964) We made clear distinction between a
ferry service and coastwise or interisland service by holding that:" . . .
We are inclined to believe that the Legislature intended ferry to mean
the service either by barges or rafts, even by motor or steam vessels,
between the banks of a river or stream to continue the highway which is
interrupted by the body of water, or in some cases, to connect two
points on opposite shores of an arm of the sea such as bay or lake
which does not involve too great a distance or too long a time to
navigate. But where the line or service involves crossing the open sea
like the body of water between the province of Batangas and the island
of Mindoro which the oppositors describe thus "the intervening waters
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 18

3 Manzanal v. Ausejo, G.R. No.
L-31056, 4 August 1988
Ausejo submitted an affidavit with the Complaint, Investigation and
Enforcement Office (CIEO) of the Public Service Commission
narrating a hold up incident on March 13, 1966.
In this affidavit, he implicated a taxicab unit whose plate number
was said to be "6100" and which was allegedly boarded by 3
robbers as they escaped from Roxas Boulevard in front of the L & S
Building at about 6:00 a.m. after affiant and a companion, Mr. Jose
Caballes were accosted and held-up.
On the basis of this affidavit, PSC ordered Manzanal, operator, to
show cause why her certificate of public convenience should not be
cancelled for not rendering safe, adequate, and proper service by
employing a driver.
PSC conducted a trial.
Public Service Commissioner Medina issued an order deploring the
fact that the respondent did not file a formal answer or explanation.
The Commission found that (a) there was no motive on the part of
the said witnesses for the complainant to testify against the
operator or against the driver of taxi with Plate No. 61 00; (b) the
attention of the witnesses was concentrated on the number of the
registration plate and it is understandable that they paid little or no
attention at all to the colors; and (c) the conduct of the operator
gave the impression that instead of applying a strong arm against
the erring driver, she has tried to protect and shield him.
between Calapan and Batangas are wide and dangerous with big
waves where small boat, barge or raft are not adapted to the service,'
then it is more reasonable to regard said line or service as more
properly belonging to interisland or coastwise trade." . . .
Separate certificate of public convenience must be secured
Respondent PANTRANCO should secure a separate CPC for the
operation of an interisland or coastwise shipping service in accordance
with the provisions of law. Its CPC as a bus transportation cannot be
merely amended to include this water service under the guise that it is a
mere private ferry service. Thus the Court holds that the water transport
service between Matnog and Allen is not a ferryboat service but a
coastwise or interisland shipping service.
Before private respondent may be issued a franchise or CPC for the
operation of the said service as a common carrier, it must comply with
the usual requirements of filing an application, payment of the fees,
publication, adducing evidence at a hearing and affording the
oppositors the opportunity to be heard, among others, as provided by
law.
W/N the Commission erred in cancelling and revoking the certificate of
petitioner Manzanal on charges of failure to render safe, proper and
adequate service under Section. 19 (a) of the Public Service Act as
amended and for employing a driver with criminal record under Sec. 47
of the Revised Order No. 1, as there was absolutely no evidence
whatever presented to prove such charges
YES
The respondent Public Service Commission anchors the charges
against petitioner on the following provisions, to wit:
Section 19. Unlawful acts. — It shall be unlawful for any public service:
(a) to provide or maintain any service that is unsafe, improper, or
inadequate, or withhold or refine any service which can reasonably be
demanded and furnished, as found and determined by the Commission
in a final order which shall be conclusive and shall take effect in
accordance with this Act upon appeal or otherwise. (The Public Service
Act, as amended)
Section 47. Courtesy, character, record, etc. Each operator shag
employ only such chauffeurs, conductors, agents, inspectors, auditors,
and other employees who are courteous and of good moral character,
and in no case shall he employ any person who has been convicted by
competent court of homicide and/or serious physical injuries, theft,
estafa, robbery, and crimes against chastity. Operators are prohibited
from employing as chauffeurs persons who do not have professional
drivers" license. (Revised Order No. 1)
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 19

Accordingly, respondent Commission considered the charges
proven since the hold-up incident was duly established and ordered
the certificate of public convenience issued in Case No. 62-4503,
for five units revoked and cancelled.
Section 19 (a) of the Public Service Act contemplates of failure to
provide a service that is safe, proper or adequate and refusal to render
any service which can reasonably be demanded and furnished. It refers
specifically to the operator's inability to provide reliable vehicles to
transport the riding public to their places of destination and to the failure
to provide an adequate number of units authorized under his franchise
at all times to secure the public of sustained service.
While the words "unsafe, inadequate and improper" may be broad
enough to cover a lot of things, they must be interpreted in consonance
with the purpose of the Public Service Law, which was specifically
enacted, among other things, to protect the public against unreasonable
charges and poor inefficient service and to secure adequate sustained
service for the public at the least possible costs.
The facts of the case are bereft and wanting of any evidence to the
effect that petitioner rendered a service that is unsafe, inadequate and
improper. There was no testimony whatsoever that her vehicles are of
such kind which may endanger the lives of the passengers or are not
suitable for the peculiar characteristics of the area serviced. There is no
proof that petitioner is not in a position to cope with the obligations and
responsibilities of the service and to maintain a complete number of
units as authorized. While we agree with respondent Commission that
said provision does not necessarily require a "passenger-operator"
relationship, we disagree that a single hold-up incident which does not
clearly link petition's taxicab can be comprehended within its meaning.
Section 47 of the Revised Order No. 1, on the other hand, refers to the
kind of persons an operator must keep under his employ, namely:
courteous, of good moral character and no record of criminal conviction.
Contrary to the claim of petitioner, this restriction equally applies to
those who are already employed as well as those merely seeking
admission to the service. The reason behind this requirement of
courtesy and good moral character cannot be assailed and is
understandable. A public service operator deals directly with the
patronizing community and the nature of such undertaking necessarily
demands of the company the maintenance of a personnel with
unquestionable record of good moral character for the public entrust
their lives, properties and interests in said services and deserve utmost
courtesy, efficiency and safety in return.
But nowhere in the presentation of the facts of the case was there any
proof that petitioner violated this provision. There is no proof that she
has hired a driver with criminal record or bad moral character or has
kept under her employ, such driver despite knowledge about his moral
behavior, discourteous conduct or criminal record. Besides, the show
cause order merely speaks of employing a driver with "criminal
tendencies" while Section 47 is couched in unmistakable mandatory
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 20
terms; it forbids the employment of persons "convicted" of offenses
enumerated therein.

All that was proved during the investigation was the hold-up incident of
March 13, 1966. But proof of the hold-up incident is not proof of the
charges under Section 19 (a) of the Public Service Law and Sec. 47 of
the Revised Order No. 17.

Most importantly, even the precise identity of the taxicab boarded

by the hold-uppers as they escaped had not been established. The
only testimony linking the taxicab of petitioner was that of the
companion of private respondent Ausejo that he saw the malefactors
scamper away and seize a taxi whose plate number was "6100". With
respect to the description of the alleged taxi, he said that the taxi was
red in the entire body while private respondent Ausejo said that the taxi
was red and it had parts painted blue. Both confirmed each other that
the plate color was orange.

We find that petitioner has successfully refuted the alleged participation

of her taxi. The decision dated December 28, 1965 of respondent
Commission granting her petition for approval of her color scheme
which authorized all her five (5) units to be painted with emerald green;
the certification of Mr. Pedro Morales of the Land Transportation
Commission, Chief of the Plate Section, to the effect that the plates for
taxis for 1965 have a maroon background; and the certification of Mr.
Marcelo Vasquez of the Vasquez Bros. & Co., Inc., the makers of
vehicle plates for the Land Transportation Commission that the orange
colored plates are given to privately owned vehicles and that No. 6100
has been given to both taxis and privately owned vehicles all cast a
cloud of doubt on the real Identity of the vehicle used by the
malefactors.

Even on the assumption that it was petitioner's taxicab that was

used by the escaping hold-uppers, there is no evidence that the
driver is a co-conspirator in the commission of the offense of
robbery. Conspiracy must be proved by clear and convincing
evidence. The mere claim that the taxicab was there and probably
waiting is not proof of conspiracy in this case as it should be recalled
that there were about twelve vehicles that stopped to view the
spectacle.
Further, it is possible that the driver did not act voluntarily as no person
in his right senses would defy the wishes of armed passengers. Even
on the assumption that the driver had participated voluntarily in the
incident, his culpability should not be made a ground for the
cancellation of the certificate of petitioner.

While an employer may be subsidiarily liable for the employee's civil

liability in a criminal action, subsidiary liability presupposes that there
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 21

4 Cogeo-Cubao Operator’s and
Driver’s Association v. CA,
G.R. No. 100727, 18 March
1992
Facts: A certificate of public convenience to operate a jeepney
service was ordered to be issued in favor of Lungsod Silangan to
ply the Cogeo-Cubao route. The petitioner Association was
registered as a non-stock, non-profit organization with the main
purpose of representing the Lungsond Corp. for whatever contract
and/or agreement it will have regarding the ownership of units, and
the like, of the members of the Association. Lungsod Corp issued a
resolution adopting a Bandera' System under which a member of
was a criminal action. Besides, in order that an employer may be
subsidiarily liable, it should be shown that the employee committed the
offense in the discharge of his duties. While it is true also that an
employer may be primarily liable under Article 2180 of the Civil
Code for the acts or omissions of persons for whom one is
responsible, this liability extends only to damages caused by his
employees acting within the scope of their assigned tasks. Clearly,
the act in question is totally alien to the business of petitioner as an
operator and hence, the driver's illicit act is not within the scope of the
functions entrusted to him. Moreover, the action before respondent
Commission is neither a criminal prosecution nor an action for quasi-
delict. Hence, there is absolutely no ground to hold petitioner liable for
the driver's act.
Finally, under Section 16 (n) of the Public Service Act, the power of the
Commission to suspend or revoke any certificate received under the
provisions of the Act may only be exercised whenever the holder
thereof has violated or willfully and contumaciously refused to comply
with any order, rule or regulation of the Commission or any provision of
the Act. In the absence of showing that there is willful and
contumacious violation on the part of petitioner, no certificate of
public convenience may be validly revoked.
The following are some instances where the cancellation of a certificate
of public convenience where held valid: (1) where the holder is a mere
dummy; (2) where the operator ceased operation and placed his buses
on; and (3) where the operator abandons, totally the service. None of
the willful acts in patent violation of the Public Service Law can be
attributed to petitioner herein.
In the case at bar, it has been duly established that the driver of the
taxicab, Felicisimo M. Valdez, was always present during the initial
hearings of this case before his death on September 18, 1966. This fact
is indicative of his willingness to take the witness stand but death
sealed his lips. For her part, petitioner explained that she did not testify
because she was candid enough not to pretend to know the exact
whereabouts of her taxi at the fateful time. Hence, the conclusion of
respondent Commission that she tried to protect or shield her driver by
her refusal to refute or deny the claim of respondent Ausejo and Mr.
Caballes is not warranted by the facts of the case.
Issue:
Whether or not the petitioner usurped the property right of the
respondent
Ruling:
Yes. Under the Public Service Law, a certificate of public convenience
is an authorization issued by the Public Service Commission for the
operation of public services for which no franchise is required by law. In
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 22

5 Kilusang Mayo Uno Labor
Center v. Garcia, G.R. No.
115381, 23 December 1994
SC: Petition by KMU Granted.
the cooperative is permitted to queue for passenger at the disputed
pathway in exchange for the ticket worth P20, the proceeds of
which shall be utilized for Christmas programs of the drivers and
other benefits, and on the strength of defendants' registration as a
collective body with the SEC. Not happy about the resolution, the
Association decided to form a human barricade and assumed the
dispatching of passenger jeepneys.
A suit for damages was then files against the Association. Its
answer contained vehement denials to the insinuation of take over
and at the same time raised as a defense the circumstance that the
organization was formed not to compete with respondents. It,
however, admitted that it is not authorized to transport passengers.
The trial court rendered a decision in favor of respondent Lungsod
Corp. The CA affirmed the decision of the trial court with
modification to the amount of damages.
(Summary: LTFRB granted authority to provincial bus operators to
set a fare range over and above the authorized existing fare – KMU
filed a petition before them opposing the increased bus fares –
LTFRB denied – hence this case)
In 1990, DOTC Sec. Oscar Orbos issued Memo Circular to LTFRB
Chair Remedios Fernando to allow provincial bus to change
passenger rates w/in a fare range of 15% above or below the
LTFRB official rate for a 1yr. period. This is in line with the
liberalization of regulation in the transport sector which the
government intends to implement and to make progress towards
greater reliance on free market forces.
Fernando called attention of DOTC Sec. that the Public Service Act
requires publication and notice to concerned parties and public
the instant case, a certificate of public convenience was issued to
respondent corporation on January 24, 1983 to operate a public utility
jeepney service on the Cogeo-Cubao route. As found by the trial court,
the certificate was issued pursuant to a decision passed by the Board of
Transportation in BOT Case No. 82-565.
A certification of public convenience is included in the term "property" in
the broad sense of the term. Under the Public Service Law, a certificate
of public convenience can be sold by the holder thereof because it has
considerable material value and is considered as valuable asset
(Raymundo v. Luneta Motor Co., et al., 58 Phil. 889). Although there is
no doubt that it is private property, it is affected with a public interest
and must be submitted to the control of the government for the common
good (Pangasinan Transportation Co. v. PSC, 70 Phil 221). Hence,
insofar as the interest of the State is involved, a certificate of public
convenience does not confer upon the holder any proprietary right or
interest or franchise in the route covered thereby and in the public
highways (Lugue v. Villegas, L-22545, Nov . 28, 1969, 30 SCRA 409).
However, with respect to other persons and other public utilities, a
certificate of public convenience as property, which represents the right
and authority to operate its facilities for public service, cannot be taken
or interfered with without due process of law. Appropriate actions may
be maintained in courts by the holder of the certificate against those
who have not been authorized to operate in competition with the former
and those who invade the rights which the former has pursuant to the
authority granted by the Public Service Commission (A.L. Ammen
Transportation Co. v. Golingco. 43 Phil. 280).
In the case at bar, the trial court found that petitioner association
forcibly took over the operation of the jeepney service in the Cogeo-
Cubao route without any authorization from the Public Service
Commission and in violation of the right of respondent corporation to
operate its services in the said route under its certificate.
ISSUE/S:
1. Is the authority granted by LTFB to provincial buses to set a fare
range above existing authorized fare range unconstitutional and invalid?
2. Is the establishment of a presumption of public need in favor of an
applicant for a proposed transport service without having to prove public
necessity, is illegal for being violative of the Public Service Act and the
Rules of Court?
HELD:
1. Unconstitutional. The grant of power by LTFRB of its
delegated authority is unconstitutional. The authority given by
the LTFRB to the provincial bus operators to set a fare range
over and above the authorized existing fare, is illegal and
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 23
hearing.
In Dec. 1990, Provincial Bus Operators Assoc. of the Phils.
(PBOAP) filed an application for across the board fare rate
increase, which was granted by LTFRB.
In 1992, then DOTC Sec. Garcia issued a memo to LTFRB
suggesting a swift action on adoption of procedures to implement
the Department Order & to lay down deregulation policies.
Pursuant to LTFRB Guideline, PBOAP, w/o benefit of public
hearing announced a 20% fare rate increase.
Petitioner Kilusang Mayo Uno (KMU) opposed the move and filed a
petition before LTFRB w/c was denied.
Here, KMU Petitioner assails the constitutionality and validity of
certain memoranda, circulars and/or orders of the Department of
Transportation and Communications (DOTC) and the Land
Transportation Franchising and Regulatory Board LTFRB.
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 24
invalid as it is tantamount to an undue delegation of legislative
authority.
The doctrine of Potestas delegate non delegari (what has
been delegated cannot be delegated) is applicable because a
delegated power constitutes not only a right but a duty to be
performed by the delegate thru instrumentality of his own
judgment. To delegate this power is a negation of the duty in
violation of the trust reposed in the delegate mandated to
discharge such duty.
Also, to give provincial buses the power to charge their fare
rates will result to a chaotic state of affairs ad this would leave
the riding public at the mercy of transport operators who can
increase their rates arbitrarily whenever it pleases or when
they deem it necessary.
2. YES. The presumption of public need mentioned in the
questioned circular is incompatible with the Public Service Act
which requires notice and hearing to determine that operation
of the public service proposed will PROMOTE PUBLIC
INTEREST.
RATIO:
A certificate of public convenience (CPC) is an authorization
granted by the LTFRB for the operation of land transportation
services for public use as required by law. There are requisites
for the issuance of such – one of these is that there must be a
public need.
However, one LTFRB memo circular in question provides for
yet incongruous and contradictory policy guideline on the
issuance of a CPC. The guidelines states:
The issuance of a Certificate of Public Convenience
is determined by public need. The presumption of
public need for a service shall be deemed in favor of
the applicant, while the burden of proving that there is
no need for the proposed service shall be the
oppositor's. (Emphasis ours).
The above-quoted provision is entirely incompatible and
inconsistent with Section 16(c)(iii) of the Public Service Act
which requires that before a CPC will be issued, the applicant

6 Tatad v. Garcia, G.R. No.
114222, 6 April 1995
In 1989, the government planned to build a railway transit line along
EDSA. No bidding was made but certain corporations were invited
to prequalify. The only corporation to qualify was the EDSA LRT
Consortium which was obviously formed for this particular
undertaking. An agreement was then made between the
government, through the Department of Transportation and
Communication (DOTC), and EDSA LRT Consortium. The
agreement was based on the Build-Operate-Transfer scheme
provided for by law (RA 6957, amended by RA 7718). Under the
agreement, EDSA LRT Consortium shall build the facilities, i.e.,
railways, and shall supply the train cabs. Every phase that is
completed shall be turned over to the DOTC and the latter shall pay
rent for the same for 25 years. By the end of 25 years, it was
projected that the government shall have fully paid EDSA LRT
Consortium. Thereafter, EDSA LRT Consortium shall sell the
facilities to the government for $1.00.
However, Senators Francisco Tatad, John Osmeña, and Rodolfo
Biazon opposed the implementation of said agreement as they
averred that EDSA LRT Consortium is a foreign corporation as it
was organized under Hongkong laws; that as such, it cannot own a
public utility such as the EDSA railway transit because this falls
under the nationalized areas of activities. The petition was filed
must prove by proper notice and hearing that the operation
of the public service proposed will promote public interest in a
proper and suitable manner. On the contrary, the policy
guideline states that the presumption of public need for a
public service shall be deemed in favor of the applicant. In
case of conflict between a statute and an administrative order,
the former must prevail.
Otherwise stated, the establishment of public need in favor of
an applicant reverses well-settled and institutionalized judicial,
quasi-judicial and administrative procedures.
It allows the party who initiates the proceedings to prove,
by mere application, his affirmative allegations.
SC: KMU Petition granted. Challenged administrative issuances and
orders
 are hereby DECLARED contrary to law and invalid insofar as
they affect provisions therein 1. delegating fare increase/decrease to
bus and jeepney operators, and 2. creating a presumption of public
need for a service in favor of the applicant for a certificate of public
convenience and placing the burden of proving that there is no need for
the proposed service to the oppositor.
ISSUE: Whether or not the limit imposed by the Constitution on foreign
equity applies to EDSA LRT Consortium.
HELD: No. The Supreme Court made a clarification. The SC ruled that
EDSA LRT Consortium, under the agreement, does not and will not
become the owner of a public utility hence, the question of its nationality
is misplaced. It is true that a foreign corporation cannot own a public
utility but in this case what EDSA LRT Consortium will be owning are
the facilities that it will be building for the EDSA railway project. There is
no prohibition against a foreign corporation to own facilities used for a
public utility. Further, it cannot be said that EDSA LRT Consortium will
be the one operating the public utility for it will be DOTC that will
operate the railway transit. DOTC will be the one exacting fees from the
people for the use of the railway and from the proceeds, it shall be
paying the rent due to EDSA LRT Consortium. All that EDSA LRT
Consortium has to do is to build the facilities and receive rent from the
use thereof by the government for 25 years – it will not operate the
railway transit.
TIME WHEN OWNERSHIP MUST COMMENCE
Although EDSA LRT Consortium is a corporation formed for the
purpose of building a public utility it does not automatically mean that it
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 25

7 Philippine Airlines v. Civil
Aeronautics Board, G.R. No.
119528, 26 March 1997
against Jesus Garcia, Jr. in his capacity as DOTC Secretary.
Grand Air applied for a Certificate of Public Convenience and
Necessity with the Civil Aeronautics Board (CAB). The Chief
Hearing Officer issued a notice of hearing directing Grand Air to
serve a copy of the application and notice to all scheduled
Philippine Domestic operators. Grand Air filed its compliance and
requested for a Temporary Operating Permit (TOP). PAL filed an
opposition to the application on the ground that the CAB had no
jurisdiction to hear the application until Grand Air first obtains a
franchise to operate from Congress. The Chief Hearing Officer
denied the opposition and the CAB approved the issuance of the
TOP for a period of 3 months. The opposition for the TOP was
likewise denied. The CAB justified its assumption of jurisdiction
over Grand Air’s application on the basis of Republic Act 776 which
gives it the specific power to issue any TOP or Certificate of Public
Convenience and Necessity.
Petitioner argues that since R.A. 776 gives the Board the authority
to issue "Certificates of Public Convenience and Necessity", this,
according to petitioner, means that a legislative franchise is an
absolute requirement. It cites a number of authorities supporting the
view that a Certificate of Public Convenience and Necessity is
issued to a public service for which a franchise is required by law,
as distinguished from a "Certificate of Public Convenience" which is
an authorization issued for the operation of public services for
which no franchise, either municipal or legislative, is required by
law.
is operating a public utility. The moment for determining the requisite
Filipino nationality is when the entity applies for a franchise, certificate
or any other form of authorization for that purpose.
Issue: WON the authority to issue a certificate of public convenience
and necessity is a regulatory measure separate and distinct from the
authority to grant a franchise for the operation of the public utility
subject of this particular case, which is exclusively lodged by petitioner
in Congress.
Held: NO. Many and varied are the definitions of certificates of public
convenience which courts and legal writers have drafted. Some statutes
use the terms "convenience and necessity" while others use only the
words "public convenience." The terms "convenience and necessity", if
used together in a statute, are usually held not to be separable, but are
construed together. The use of the word "necessity", in conjunction with
"public convenience" in a certificate of authorization to a public service
entity to operate, does not in any way modify the nature of such
certification, or the requirements for the issuance of the same. It is the
law which determines the requisites for the issuance of such
certification, and not the title indicating the certificate.
The power to authorize and control the operation of a public utility is
admittedly a prerogative of the legislature, since Congress is that
branch of government vested with plenary powers of legislation. The
franchise is a legislative grant, whether made directly by the legislature
itself, or by any one of its properly constituted instrumentalities.
As mentioned by the CAB, it is duly authorized to do so under Republic
Act 776 and a legislative franchise is not necessary before it may do so,
since Congress has delegated the authority to authorize the operation
of domestic air transport services to the CAB, an administrative agency.
The delegation of such authority is not without limits since Congress
had set specific standard and limitations on how such authority should
be exercised.
Public convenience and necessity exists when the proposed facility will
meet a reasonable want of the public and supply a need which the
existing facilities do not adequately afford.
Thus, the Board should be allowed to continue hearing the application,
since it has jurisdiction over it provided that the applicant meets all the
requirements of the law.
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 26
8 Villamaria v. CA, G.R. No.
165881, 19 April 2006
9 Teja Marketing v. IAC, G.R.
No. L-65510, 9 March 1987
 Villamaria was the owner of Villamaria Motors, a sole
proprietorship engaged in assembling passenger jeepneys with
a public utility franchise to operate along the Baclaran-Sucat
route. By 1995, Villamaria stopped assembling jeepneys and
retained only nine, four of which operated by employing drivers
on a “boundary basis.” One of those drivers was respondent
Bustamante.
 Bustamante remitted Php450 a day to Villamaria as boundary
and kept the residue of his daily earnings as compensation for
driving the vehicle.
 August 1997: Villamaria verbally agreed to sell the jeepney to
Bustamante under a “boundary-hulog scheme,” where
Bustamante would remit to Villamaria Php550 a day for a
period of 4 years; Bustamante would then become the owner
of the vehicle and continue to drive the same under
Villamaria’s franchise, but with Php 100,000 downpayment.
 August 7, 1997: Villamaria executed a contract entitled
“Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng
Boundary Hulog”. The parties agreed that if Bustamante failed
to pay the boundary- hulog for 3 days, Villamaria Motors would
hold on to the vehicle until Bustamante paid his arrears,
including a penalty of 50 a day; in case Bustamante failed to
remit the daily boundary-hulog for a period of one week, the
Kasunduan would cease to have the legal effect and
Bustamante would have to return the vehicle to Villamaria
motors.
 1999: Bustamante and other drivers who also had the same
arrangement failed to pay their respective boundary-hulog.
This prompted Villamaria to serve a “Paalala”.
 July 24, 2000: Villamaria took back the jeepney driven by
Bustamante and barred the latter from driving the vehicle.
 Bustamante filed a complaint for Illegal Dismissal.
Facts: Nale bought from Teja Marketing a motorcycle. A
downpayment was given and a chattel mortgage was executed to
secure the payment of the balance (It was made to appear that the
motorcycle sold to Nale was first mortgaged to Teja so that Nale
can attach the unit to the Teja’s MCH Line since he had no
franchise of his own  Kabit System)
One of their agreements is that Teja would undertake the yearly
registration of the motorcycle with the Land Transportation
Commission (LTC). Nale claimed that this was the main reason why
he was induced to but the vehice from Teja.
What is the nature of the juridical relationship between Bustamante and
Villamaria?
 Employer-employee. The jeepney owner/operator-driver
relationship under the boundary system is that of employer-
employee and not lessor-lessee. This doctrine was analogously
applied to govern the relationships between auto-calesa
owner/operator and driver, bus owner/operator and conductor, and
taxi owner/operator and driver.
 The boundary system is a scheme by an owner/operator engaged
in transporting passengers as a common carrier to primarily govern
the compensation of the driver, that is, the latter’s daily earnings
are remitted to the owner/operator less the excess of the boundary
which represents the driver’s compensation. Under this system, the
owner/operator exercises control and supervision over the driver.
 The management of the business is still in the hands of the
owner/operator, who, being the holder of the certificate of
public convenience, must see to it that the driver follows the
route prescribed by the franchising and regulatory authority,
and the rules promulgated with regard to the business
operations. The fact that the driver does not receive fixed wages
but only the excess of the “boundary” given to the owner/operator
is not sufficient to change the relationship between them.
Indubitably, the driver performs activities which are usually
necessary or desirable in the usual business or trade of the
owner/operator.
 Villamaria, as the owner of the vehicle and the holder of the
franchise, is entitled to exercise supervision and control over
the respondent, by seeing to it that the route provided in his
franchise, and the rules and regulations of the Land
Transportation Regulatory Board are duly complied with.
ISSUE: WON the IAC erred in applying the doctrine of pari delicto
DECISION: NO
 CPC is a special privilege conferred by the government. As
such it should not be abused.
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 27
However, despite Nale’s payment to Teja of the mortgage and
registration fee, the latter still failed to register the said motorcycle.
As a result, Nale suffered damages when he failed to claim any
insurance indemnity aside from the loss of his daily income when
the motorcycle was impounded by the LTC for not being registered.
Eventually, Nale failed to pay Teja and so the latter filed an action
for a sum of money. Teja claimed that Nale was hiding the vehicle
from it that’s why it was not able to register the vehicle.
However, Nale filed a counterclaim blaming Teja for the non-
registration of the motorcycle.
The City Court, which was affirmed by the CFI, ruled in favor of
Teja.
The IAC held that since the purchase of the motorcycle was done
pursuant to the “kabit system”, which is an illegal transaction, the
parties are in pari delicto. Thus, neither of them may bring an action
against the other to enforce their illegal contract.
The Supreme Court dismissed the petition for lack of merit; and
affirmed the assailed decision of the Intermediate Appellate Court
(now the Court of Appeals); without costs.
 In this case, by operating under the kabit system, the parties
abused such privilege
1. Nature of the kabit system
Herein, the parties operated under an arrangement, commonly known
as the “kabit system” whereby a person who has been granted a
certificate of public convenience allows another person who owns motor
vehicles to operate under such franchise for a fee. A certificate of public
convenience is a special privilege conferred by the government. Abuse
of this privilege by the grantees thereof cannot be countenanced. The
“kabit system” has been identified as one of the root causes of the
prevalence of graft and corruption in the government transportation
offices.
2. Kabit system, although not penalized as a criminal offense, is
contrary to public policy
Although not outrightly penalized as a criminal offense, the kabit system
is invariably recognized as being contrary to public policy and,
therefore, void and inexistent under Article 1409 of the Civil Code.
3. Article 1412 NCC
It is a fundamental principle that the court will not aid either party to
enforce an illegal contract, but will leave both where it finds them. Upon
this premise it would be error to accord the parties relief from their
predicament. Article 1412 of the Civil Code denies them such aid. It
provides that “If the act in which the unlawful or forbidden cause
consists does not constitute a criminal offense, the following rules shall
be observed: (1) When the fault is on the part of both contracting
parties, neither may recover that he has given by virtue of the contract,
or demand, the performance of the other’s undertaking.”
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 28

10 BA Finance Corporation v. On 6 March 1983, an accident occurred involving BA Finance
CA, G.R. No. 98275, 13 Corp.’s Isuzu ten-wheeler truck then driven by an employee of Lino
November 1992 Castro, Rogelio Villar y Amera, resulting in triple homicide with
multiple physical injuries with damage to property. Neither Lino
Castro nor the driver was connected with BA Finance Corp., as the
truck was leased by BA Finance to Rock Component Philippines
Inc.
A criminal suit was filed against Villar. The trial court of Bulacan
(Branch 6., RTC Malolos Bulacan) found Villar guilty beyond
reasonable doubt of reckless imprudence resulting in triple
homicide with multiple physical injuries with damage to property on
16 February 1984.
A suit for damages was filed by Carlos Ocampo, et.al., the injured
in the accident against driver Villar and BA Finance, inasmuch as
the truck was registered in the name of the latter.
On 13 October 1988, the trial court rendered a decision (1) ordering
Rock Component Philippines Inc., BA Finance and Rogelio Villar y
Amare jointly and severally to pay (a) Carlos Ocampo P121,650.00,
(b) Moises Ocampo P298,500.00, (c) Nicolas Cruz P154,740.00,
and (d) Inocencio Turla, Sr..48,000.00; (2) dismissing the case
against Lino Castro; (3) dismissing the third-party complaint against
Stronghold; (4) dismissing all the counterclaims of Villar and BA
Finance and Stronghold; and (5) ordering Rock to reimburse BA
Finance the total amount of P622,890.00 which the latter is
4. Inexistent contract cannot be cured by ratification nor by
prescription
The defect of inexistence of a contract is permanent and cannot be
cured by ratification or by prescription. The mere lapse of time cannot
give efficacy to contracts that are null and void.
5. Ex pacto illicito non oritur action
“‘Ex pacto illicito’ non oritur actio’ (No action arises out of illicit bargain)
is the time-honored maxim that must be applied to the parties in the
present case. Having entered into an illegal contract, neither can seek
relief from the courts, and each must bear the consequences of his
acts.” (Lita Enterprises vs. IAC, 129 SCRA 81.)
Issue: Whether petitioner can be held responsible to the victim albeit
the truck was leased to Rock Component Philippines when the incident
occurred.
YES. The registered owner of a certificate of public convenience is
liable to the public for the injuries or damages suffered by passengers
or third persons caused by the operation of said vehicle, even though
the same had been transferred to a third person. The principle upon
which this doctrine is based is that in dealing with vehicles registered
under the Public Service Law, the public has the right to assume or
presume that the registered owner is the actual owner thereof, for it
would be difficult for the public to enforce the actions that they may
have for injuries caused to them by the vehicles being negligently
operated if the public should be required to prove who the actual owner
is.
By the doctrine, however, it is not implied that the registered owner may
not recover whatever amount he had paid by virtue of his liability to third
persons from the person to whom he had actually sold, assigned or
conveyed the vehicle.
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 29
adjudged to pay to Ocampo, et. al.
The Court of Appeals affirmed the appealed disposition in toto
through Justice Rasul, with Justices De Pano, Jr. and Imperial
concurring, on practically the same grounds arrived at by the court
a quo. Efforts exerted towards re-evaluation of the adverse
judgment were futile.
Hence, the petition for review on certiorari.
Under the same principle the registered owner of any vehicle, even if
not used for a public service, should primarily be responsible to the
public or to third persons for injuries caused the latter while the vehicle
is being driven on the highways or streets. There is a presumption that
the owner of the guilty vehicle as he is the registered owner in the Motor
Vehicles Office.
The Revised Motor Vehicles Law (Act 3992, as amended) provides that
no vehicle may be used or operated upon any public highway unless
the same is properly registered. Not only are vehicles to be registered
and that no motor vehicles are to be used or operated without being
properly registered for the current year, but that dealers in motor
vehicles shall furnish the Motor Vehicles Office a report showing the
name and address of each purchaser of motor vehicle during the
previous month and the manufacturer’s serial number and motor
number.
Registration is required not to make said registration the operative act
by which ownership in vehicles is transferred, as in land registration
cases, because the administrative proceeding of registration does not
bear any essential relation to the contract of sale between the parties
but to permit the use and operation of the vehicle upon any public
highway.
The main aim of motor vehicle registration is to identify the owner so
that if any accident happens, or that any damage or injury is caused by
the vehicle on the public highways, responsibility therefor can be fixed
on a definite individual, the registered owner. Instances are numerous
where vehicles running on public highways caused accidents or injuries
to pedestrians or other vehicles without positive identification of the
owner or drivers, or with very scant means of identification. It is to
forestall these circumstances, so inconvenient or prejudicial to the
public, that the motor vehicle registration is primarily ordained, in the
interest of the determination of persons responsible for damages or
injuries caused on public highways.
The rulings in Duavit vs. Court of Appeals and in Duquillo vs. Bayot is
legally unpalatable for the purpose of the present discourse. The
Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 30
 vehicles adverted to in the two cases shared a common thread, in that
the jeep and the truck were driven in reckless fashion without the
consent or knowledge of the respective owners. In the case of Duavit
vs. CA, the Court was cognizant of the inculpatory testimony spewed by
Sabiniano when he admitted that he took the jeep from the garage of
Duavit without the consent or authority of the latter. In the Duquillo
case, the defendant therein cannot be held liable for anything because
of circumstances which indicated that the truck was driven without the
consent or knowledge of the owner thereof.

11 Duavit v. CA, G.R. No. 82318, Facts: The jeep being driven by defendant Sabiniano collided with ISSUE:
18 May 1989 another jeep, which had then 2 passengers on it. As a result of the
collision the passengers of the other jeep suffered injury and the Won the owner of a private vehicle which figured in an accident can be
automobile itself had to be repaired because of the extensive held liable under Article2180 of the CC when the said vehicle was
damage. neither driven by an employee of the owner nor taken with the consent
of the latter.
A case was filed against Sabiniano as driver and against Duavit as
owner of the jeep. Duavit admitted ownership of the jeep but denied
that Sabiniano was his employee. Sabiniano himself admitted that
he took Duavit’s jeep from the garage without consent or authority HELD:
of the owner. He testified further that Duavit even filed charges
against him for theft of the jeep, but which Duavit did not push NO
through as the parents of Sabiniano apologized to Duavit on his
behalf.
In Duquillo v Bayot (1939), SC ruled that an owner of a vehicle cannot
Trial Court found Sabiniano negligent in driving the vehicle but be held liable for an accident involving a vehicle if the same was driven
absolved Duavit on the ground that there was no employer-
without his consent or knowledge and by a person not employed by
employee relationship between them, and that former took the
vehicle without consent or authority of the latter. him. This ruling is still relevant and applicable, and hence, must be
upheld.
CA held the two of them jointly and severally liable.

CA’s reliance on the cases of Erezo v Jepte and Vargas v Langcay is

misplaced and cannot be sustained. In Erezo v Jepte case, defendant
Jepte was held liable for the death of Erezo even if he was not really the
owner of the truck that killed the latter because he represented himself
as its owner to the Motor Vehicles Office and had it registered under his
name; he was thus estopped from later on denying such representation.
In Vargas, Vargas sold her jeepney to a 3rd person, but she did not
surrender to the Motor VehiclesOffice the corresponding AC plates. So
when the jeepney later on figured in an accident, she was held liable by
the court. Holding that the operator of record continues to be the
operator of vehicle incontemplation of law, as regards the public and
3rd persons.

Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 31

The circumstances of the above cases are entirely different from those
in the present case. Hereinpetitioner does not deny ownership of
vehicle but denies having employed or authorized the driver Sabiniano.
The jeep was virtually stolen from the petitioner’s garage.

Decision and resolution annulled and set aside.

Vol. 6 : May 3 Transportation Digests – Atty. Germaine Chua 32