GR No.

71929, Dec 04, 1990

ALITALIA v. IAC

270 Phil. 108

Narvasa, J.

Facts:

Dr. Felipa Pablo, an associate professor in the University of the Philippines and a research grantee
of the Philippine Atomic Energy Agency, was invited to take part at a meeting of the Department
of Research and Isotopes in Italy in view of her specialized knowledge in “foreign substances in
food and the agriculture environment”. She would be the second speaker on the first day of the
meeting. Dr. Pablo booked passage on petitioner Alitalia. She arrived in Milan on the day before
the meeting, but was told that her luggage was delayed and was in a succeeding flight from
Rome to Milan. The luggage included her materials for the presentation. The succeeding flights
did not carry her luggage. Desperate, she went to Rome to try to locate the luggage herself, but
to no avail. She returned to Manila without attending the meeting. She demanded reparation for
the damages. She rejected Alitalia’s offer of free airline tickets and commenced an action for
damages. As it turned out, the luggage was actually forwarded to Ispra, but only a day after the
scheduled appearance. It was returned to her after 11 months. The trial court ruled in favor of
Dr. Pablo, and this was affirmed by the Court of Appeals.

Issue:

Whether or not the Warsaw Convention operates as an absolute limit of the extent of an airline’s
liability.

Ruling:

No.

The Warsaw Convention does not operate as an absolute limit of the extent of an airline's liability;
it does not regulate or exclude liability for other breaches of contract by the carrier, or misconduct
of its employees, or for some particular or exceptional type of damage.

The Convention's provisions, in short, do not "regulate or exclude liability for other breaches of
contract by the carrier" or misconduct of its officers and employees, or for some particular or
exceptional type of damage. Otherwise, "an air carrier would be exempt from any liability for
damages in the event of its absolute refusal, in bad faith, to comply with a contract of carriage,
which is absurd." Nor may it for a moment be supposed that if a member of the aircraft
complement should inflict some physical injury on a passenger, or maliciously destroy or damage
the latter's property, the Convention might successfully be pleaded as the sole gauge to determine
the carrier's liability to the passenger. Neither may the Convention be invoked to justify the
disregard of some extraordinary sort of damage resulting to a passenger and preclude recovery
therefor beyond the limits set by said Convention. It is in this sense that the Convention has been
applied, or ignored, depending on the peculiar facts presented by each case.
 G.R. No. 94149 May 5, 1992

AMERICAN HOME ASSURANCE, COMPANY, petitioner,

vs.

THE COURT OF APPEALS and NATIONAL MARINE CORPORATION and/or NATIONAL

MARINE CORPORATION (Manila), respondents.

Paras, J.

Facts:

Mayleen Paper, Inc. contracted the services of the National Marine Corporation (NMC) to transport
5,000 bales of paper from Taiwan to the Philippines. Upon arrival in Manila, it was discovered
that 122 bales were lost. Mayleen demanded payment of losses from NMC but NMC did not
respond. As the papers were insured by the American Home Assurance Company (AHAC),
Mayleen recovered insurance from AHAC which AHAC promptly paid. AHAC then filed suit for
recovery against NMC. NMC filed a motion to dismiss claiming lack of cause of action on the part
of AHAC. NMC argued that under the Code of Commerce, claims for general averages cannot be
granted if the claim does not exceed 5% of the total value of the cargo. Accordingly, 122 bales
is just amounting to 0.18% worth of damage. AHAC argued that the Code of Commerce is not
applicable but rather it is the Civil Code.

Issue:

Whether or not the Code of Commerce in the case at hand applies.

Ruling:

No.

In the Philippines, the liability of the carrier is governed primarily by the Civil Code and in all
matters not regulated by said Code, the rights and obligations of common carrier shall be
governed by the Code of Commerce and by special laws. Liability here is present due to NMC’s
negligence which it hypothetically admitted when it filed a Motion to Dismiss due to lack of cause
action before the lower court. Thus, American Home Assurance Company is entitled to
reimbursement of what it paid to Mayleen Paper, Inc. as insurer.

Also, as provided under the case of National Development Co. v. C.A. (164 SCRA 593 [1988];
citing Eastern Shipping Lines, Inc. v. I.A.C., 150 SCRA 469, 470 [1987] where it was held that
"the law of the country to which the goods are to be transported persons the liability of the
common carrier in case of their loss, destruction or deterioration." (Article 1753, Civil Code). Thus,
for cargoes transported to the Philippines as in the case at bar, the liability of the carrier is
governed primarily by the Civil Code and in all matters not regulated by said Code, the rights and
obligations of common carrier shall be governed by the Code of Commerce and by special laws
(Article 1766, Civil Code).
Corollary thereto, the Court held further that under Article 1733 of the Civil Code, common carriers
from the nature of their business and for reasons of public policy are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of passengers
transported by them according to all circumstances of each case. Thus, under Article 1735 of the
same Code, in all cases other than those mentioned in Article 1734 thereof, the common carrier
shall be presumed to have been at fault or to have acted negligently, unless it proves that it has
observed the extraordinary diligence required by law (Ibid., p. 595).

But more importantly, the Court ruled that common carriers cannot limit their liability for injury
or loss of goods where such injury or loss was caused by its own negligence. Otherwise stated,
the law on averages under the Code of Commerce cannot be applied in determining liability where
there is negligence (Ibid., p. 606).

Under the foregoing principle and in line with the Civil Code's mandatory requirement of
extraordinary diligence on common carriers in the car care of goods placed in their stead, it is but
reasonable to conclude that the issue of negligence must first be addressed before the proper
provisions of the Code of Commerce on the extent of liability may be applied.