CASE DIGEST (Transportation Law): Singson vs.

CA
SINGSON vs. COURT OF APPEALS and CATHAY PACIFIC AIRWAYS

(G.R. No. 119995. November 18, 1997)

FACTS:

Petitioner CARLOS SINGSON and his cousin Crescentino Tiongson bought from respondent Cathay Pacific Airways two (2) open-
dated, identically routed, round trip plane tickets (Manila to LA and vice versa). Each ticket consisted of six (6) flight coupons, each
would be detached at the start of each leg of the trip.

Singson failed to obtain a booking in LA for their to Manila; apparently, the coupon corresponding to the 5th leg of the trip was
missing and instead the 3rd was still attached. It was not until few days later that the defendant finally was able to arrange for his
return to Manila.

Singson commenced an action for damages based on breach of contract of carriage against CATHAY before the Regional Trial Court.

CATHAY alleged that there was no contract of carriage yet existing such that CATHAY’s refusal to immediately book him could not be
construed as breach of contract of carriage.

The trial court rendered a decision in favor of petitioner herein holding that CATHAY was guilty of gross negligence amounting to
malice and bad faith for which it was adjudged to pay petitioner P20,000.00 for actual damages with interest at the legal rate of
twelve percent (12%) per annum from 26 August 1988 when the complaint was filed until fully paid, P500,000.00 for moral
damages, P400,000.00 for exemplary damages, P100,000.00 for attorney’s fees, and, to pay the costs.

On appeal by CATHAY, the Court of Appeals reversed the trial court’s finding that there was gross negligence amounting to bad faith
or fraud and, accordingly, modified its judgment by deleting the awards for moral and exemplary damages, and the attorney’s fees as
well.

ISSUES:

1.) whether a breach of contract was committed by CATHAY when it failed to confirm the booking of petitioner.

2.) whether the carrier was liable not only for actual damages but also for moral and exemplary damages, and attorney’s fees.

HELD:

1.) Yes. x x x the round trip ticket issued by the carrier to the passenger was in itself a complete written contract by and between the
carrier and the passenger. It had all the elements of a complete written contract, to wit: (a) the consent of the contracting parties
manifested by the fact that the passenger agreed to be transported by the carrier to and from Los Angeles via San Francisco and Hong
Kong back to the Philippines, and the carrier’s acceptance to bring him to his destination and then back home; (b) cause or
consideration, which was the fare paid by the passenger as stated in his ticket; and, (c) object, which was the transportation of the
passenger from the place of departure to the place of destination and back, which are also stated in his ticket. In fact, the contract of
carriage in the instant case was already partially executed as the carrier complied with its obligation to transport the passenger to his
destination, i.e., Los Angeles. , x x x the loss of the coupon was attributable to the negligence of CATHAY’s agents and was the
proximate cause of the non-confirmation of petitioner's return flight.

2.) Yes. x x x Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in
instances where the mishap results in the death of a passenger, or where the carrier is guilty of fraud or bad faith, there are situations
where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise
becomes entitled to recover moral damages.

x x x these circumstances reflect the carrier’s utter lack of care and sensitivity to the needs of its passengers, clearly constitutive of
gross negligence, recklessness and wanton disregard of the rights of the latter, acts evidently indistinguishable or no different from
fraud, malice and bad faith. As the rule now stands, where in breaching the contract of carriage the defendant airline is shown to have
acted fraudulently, with malice or in bad faith, the award of moral and exemplary damages, in addition to actual damages, is proper.

However, the P500,000.00 moral damages and P400,000.00 exemplary damages awarded by the trial court have to be reduced. The
well-entrenched principle is that the grant of moral damages depends upon the discretion of the court based on the circumstances of
each case. This discretion is limited by the principle that the "amount awarded should not be palpably and scandalously excessive" as
to indicate that it was the result of prejudice or corruption on the part of the trial court. Damages are not intended to enrich the
complainant at the expense of the defendant. They are awarded only to alleviate the moral suffering that the injured party had
undergone by reason of the defendant's culpable action. There is no hard-and-fast rule in the determination of what would be a fair
amount of moral damages since each case must be governed by its own peculiar facts.

In the instant case, the injury suffered by petitioner is not so serious or extensive as to warrant an award amounting to P900,000.00.
The assessment of P200,000.00 as moral damages and P50,000.00 as exemplary damages in his favor is, in our view, reasonable and
realistic.

On the issue of actual damages, we agree with the Court of Appeals that the amount of P20,000.00 granted by the trial court to
petitioner should not be disturbed.

As regards attorney's fees, they may be awarded when the defendant's act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest. It was therefore erroneous for the Court of Appeals to delete the award

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made by the trial court; consequently, petitioner should be awarded attorney's fees and the amount of P25,000.00, instead of
P100,000.00 earlier awarded, may be considered rational, fair and reasonable.

LUFTHANSA GERMAN AIRLINES vs. CA

G.R. No. 83612 November 24, 1994

FACTS:
Tirso V. Antiporda, Sr. was, contracted by Sycip, Gorres, Velayo & Co. (SGV) to be the institutional financial specialist for the
agricultural credit institution 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 ascheduled 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.

ISSUE: Was there a breach of obligation by the defendant in failing to 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. Although the contract of carriage was to be performed by several air
carriers, the same is to be treated as a single operation conducted by Lufthansa because Antiporda dealt exclusively with it which
issued him a Lufthansa ticket for the entire trip. By issuing a confirmed ticket, Lufthansa in effect guaranteed Antiporda a sure seat
with Air Kenya. Private respondent Antiporda, maintained 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 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
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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.

AMERICAN AIRLINES, petitioner, vs. COURT OF APPEALS,

HON. BERNARD L. SALAS and DEMOCRITO MENDOZA, respondents
G.R No. 116044-45. March 9, 2000

Facts:

Private respondent purchased from Singapore Airlines in Manila conjunction tickets from Manila-Singapore-Athens-Larnaca-Rome-
Turin-Zurich-Geneva-Copenhagen-New York. In Geneva, he decided to forego his trip to Copenhagen and go straight to New York. In
the absence of a direct flight under his conjunction tickets from Geneva to New York, he exchanged the unused portion of the
conjunction ticket for a one way ticket from Geneva to New York from American Airlines, which issued its own ticket to respondent
in Geneva and claimed the value of the unused portion of the conjunction ticket from the International Air Transport Association
(IATA) clearing house in Geneva. In September, 1989, respondent filed an action for damages before the Regional Trial Court of Cebu
for the alleged embarrassment and mental anguish he suffered at the Geneva Airport when American Airline’s security officers
prevented him from boarding the plane.

Issue:

Whether or not the issuance of American Airlines of a new ticket in exchange of the conjunction ticket the respondent purchased in
Manila bar him from seeking recourse in Philippine courts.

Ruling:

The petitioner contends that under Article 28 of the Warsaw Convention, action for damages may only be brought upon the following
courst:

a.) Domicile of the carrier

b.) Carrier’s principal place of business
c.) Place where carrier has a place of business
d.) Place of destination

Since neither of these elements is present in the case, the petitioner contends that plaintiff cannot file the case in the Philippines. He
further posits that the second contract cannot be deemed as an extension of the first as the petitioner airline is not a participating
airline in any of the destinations under the first contract.

Respondent on the other hand contends that the second contract she entered into at Geneva is part and parcel of the first contract,
thus the third option under Article 28 of the Warsaw Convention would apply to him. He further pointed out that petitioner cannot
deny the contract of agency with Singapore Airlines after it honored the conjunction tickets issued by the latter.

The court ruled that petitioner’s argument is void of merit with reference to Article 1(3) of the Warsaw Convention. According to the
said article, transportation to be performed by several carriers shall be deemed as one and undivided. The number of tickets issued
does not detract from the oneness of the contract of carriage. Hence, the third option of the plaintiff under Article 28 of the Warsaw
Convention is clothed with jurisdiction.

MAPA V. CA, G.R. No. 122308, July 8, 1997

Facts:
Petitioner filed a complaint for damages against Trans-World Airlines Inc. The RTC as well as the CA, on appeal, dismissed
the case for lack of jurisdiction because, none of the circumstances provided under Article 28 (1) of the Warsaw Convention occurred
in order to conclude that the courts of the Philippines could take cognizance of the case. Aggrieved, the petitioner filed this instant
petition essentially contending that the case was not covered by the Warsaw Convention as it is not an international transportation.
The transportations was solely done in the territory of the United States.

Issue: WON it is an international transportation, hence, covered by the Warsaw Convention.

Held: No.
There are [then] two categories of international transportation, viz., (1) that where the place of departure and the place of
destination are situated within the territories of two High Contracting Parties regardless of whether or not there be a break in the
transportation or a transshipment ; and (2) that where the place of destination are within the territory of 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.
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.

PAL v. Court of Appeals 226 SCRA 423

Facts:

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Zapatos purchased a ticket from Philippine Air Lines (PAL) wherein it was agreed that the latter would transport him to Ozamiz City.
The plane’s route was from Cebu-Ozamiz-Cotabato. However, due to unfavoarable weather conditions and the fact that PAL did not
have an all-weather airport, PAL had bypassed Ozamiz City. PAL then informed Zapatos of his options, to return to Cebu on the same
day, or take the next flight to Cebu the following day, or to take the next available flight to Ozamiz City. Zapatos chose to return to
Ozamiz City on the same day. However, there were only six (6) seats available and, the seats were given to the passengers according
to their check-in sequence at Cebu. Consequently, Zapatos was stranded in Cotabato City, where a battle between the government
and the Muslims was ongoing.

During his stay in Cotabato City, PAL also failed to provide accomodations for Zapatos. It also refused to have the latter hitch a ride
with its employees on a ford truck bound for the City. It also failed to return Zapatos’ luggage.

This prompted Zapatos to file a complaint for damages against Philippine Air Lines for breach of contract.

PAL claimed that it should not be charged with the task of looking after the passengers' comfort and convenience because the diversion
of the flight was due to a fortuitous event, and that if made liable, an added burden is given to PAL which is over and beyond its duties
under the contract of carriage.

Issue:

w/n the occurrence of a fortuitous event extinguished PAL’s duty to observe extraordinary diligence towards its passengers?

Ruling:

No. The SC ruled in favor of Zapatos.

The contract of air carriage is a peculiar one. Being imbued with public interest, the law requires common carriers to carry the
passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard
for all the circumstances. 20 In Air France v. Carrascoso, 21 we held that —

A contract to transport passengers is quite different in kind and degree from any other contractual relation. And this, because of the
relation which an air carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the
comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty . . . . (
emphasis supplied).

The position taken by PAL in this case clearly illustrates its failure to grasp the exacting standard required by law. Undisputably, PAL's
diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL's
contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed
equipped to deal with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the relation of
carrier and passenger continues until the latter has been landed at the port of destination and has left the carrier's
premises. 22 Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort,
convenience and safety of its stranded passengers until they have reached their final destination. On this score, PAL grossly failed
considering the then ongoing battle between government forces and Muslim rebels in Cotabato City and the fact that the private
respondent was a stranger to the place.

Philippine Airlines v. Savillo

Facts:

 Savillo was a judge of the RTC of Iloilo

 He was invited to participate in the 1993 ASEAN Seniors Annual Golf Tournament in Jakarta Indonesia.

 So, in order to take part in such event, he purchased a ticket from PAL with the following itinerary: Manila-Singapore-
Jakarta-Singapore-Manila.

 PAL would take them from Manila to Signapore, while Singapore Airlines would take them from Singapore to Jakarta.

 When they arrived in Singapore, Singapore Airlines rejected the tickets of Savillo because they were not endorsed by PAL. It
was explained that if Singapore Airlines honoured the tickets without PALS’ endorsement, PAL would not pay Singapore
Airlines for their passage.

 Savillo demanded compensation from both PAL and Singapore Airlines, but his efforts were futile. He then sued PAL after 3
years, demanding moral damages.

 PAL , in its MTD, claimed that the cause of action has already prescribed invoking the Warsaw Convention (providing for a 2
year prescriptive period). Both RTC and CA ruled against PAL.

Issues:

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What is the applicable law, the Civil Code or the Warsaw Convention? Has the action prescribed?

Held:

The Civil Code is applicable. Therefore the action has not yet prescribed for the prescription period is 4 years.

If cause of action claims moral damages, not covered by Warsaw 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 statue of limitations of two years has elapsed.

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.

In U.S. 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 Mahaney v. Air France (US case), the court therein ruled that if the plaintiff were to claim damages based solely on the delay she
experienced- for instance, the costs of renting a van, which she had to arrange on her own as a consequence of the delay the
complaint would be barred by the two–year statute of limitations. However, where the plaintiff alleged that the airlines subjected her
to unjust discrimination or undue or unreasonable preference or disadvantage, an act punishable under the US law, then the plaintiff
may claim purely nominal compensatory damages for humiliation and hurt feelings, which are not provided for by the Warsaw
Convention.

In the Petition at bar, Savillo’s Complaint alleged that both PAL and Singapore Airlines were guilty of gross negligence, which resulted
in his being subjected to “humiliation, embarrassment, mental anguish, serious anxiety, fear and distress” therefore this case is not
covered by the Warsaw Convention.

When the negligence happened before the performance of the contract of carriage, not covered by the Warsaw Convention.
Also, this case is comparable to Lathigra v. British Airways. In that case, it was held that the airlines’ negligent act of reconfirming the
passenger’s reservation days before departure and failing to inform the latter that the flight had already been discontinued is not
among the acts covered by the Warsaw Convention, since the alleged negligence did not occur during the performance of the contract
of carriage but, rather, days before the scheduled flight.

In the case at hand, Singapore Airlines barred Savillo 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 Savillo that Singapore Airlines had already
confirmed their passage. While this fact still needs to 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 party 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 Statue of Limitations provided under Article 29 of the Warsaw Convention.

UNITED AIRLINES vs. UY G.R. No. 127768, November 19,1999

Facts: 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 repair his things and transfer some of them to the light ones. Respondent acceded
but his luggage was still overweight. Petitioner billed him overweight charges but its employee reused 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 petitioner of his loss and requested reimbursement. Petitioner 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 petitioner Airline. Petitioner 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.”

Issues:
1) Does the Warsaw Convention preclude the operation of the Civil Code and other pertinent laws?

2) Has the respondent’s cause of action prescribed?

Held: 1) No. 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 therefore3 beyond the

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limits et 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 ofcarriage, especially if willful misconduct on the part of the carriers employees is found or established.

2) No. 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 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 2nd cause 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.

PHILIPPINE AIRLINES, INC., Petitioner, vs. COURT OF APPEALS and GILDA C. MEJIA, respondents. [G.R. No. 119706. March
14, 1996]

FACTS: Plaintiff, Gilda C. Mejia, shipped thru defendant, Philippine Airlines, one (1) unit microwave oven, from San Francisco, U.S.A.
to Manila, Philippines. Upon arrival, however, of said article in Manila, Philippines, plaintiff discovered that its front glass door was
broken and the damage rendered it unserviceable. Demands both oral and written were made by plaintiff against the defendant for
the reimbursement of the value of the damaged microwave oven, and transportation charges paid by plaintiff to defendant company.
Plaintiff filed the instant action for damages against defendant in the lower court. Defendant Airlines alleged inter alia, by way of
special and affirmative defenses, that the court has no jurisdiction over the case; that plaintiff has no valid cause of action against
defendant since it acted only in good faith and in compliance with the requirements of the law, regulations, conventions and
contractual commitments; and that defendant had always exercised the required diligence in the selection, hiring and supervision of
its employees. Petitioner airlines argues that the legal principle enunciated in Fieldmen’s Insurance does not apply to the present
case because the provisions of the contract involved here are neither ambiguous nor obscure. 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 Bayi 4 formal claim was filed
beyond the period as provided in the Air Waybill when actually, Concepcion Diño 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. , sister of plaintiff
has immediately filed the formal claim upon discovery of the damage.

ISSUE:

WON the air waybill should be strictly construed against petitioner.

WON PAL acted in bad faith justifying the grant for damages.

RULING: 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 the limited liability of the carrier are binding
on private respondent in this instance must be determined from the facts and circumstances involved vis-a-vis the nature of the
provisions sought to be enforced, taking care that equity and fair play should characterize the transaction under review. 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. 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 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

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which constitutes gross carelessness or negligence which by itself justifies the present award of damages. The unprofessional
indifference of PAL’s personnel despite full and actual knowledge of the damage to private respondent’s cargo, just to be exculpated
from liability on pure technicality and bureaucratic subterfuge, smacks of willful misconduct and insensitivity to a passenger’s plight
tantamount to bad faith and renders unquestionable petitioner’s liability for damages. The assailed judgment of respondent Court of
Appeals is AFFIRMED.

BRITISH AIRWAYS, petitioner, vs. COURT OF APPEALS, GOP MAHTANI, and PHILIPPINE AIRLINES, respondents. [G.R. No.
121824, January 29, 1998]

FACTS: On April 16, 1989, Mahtani (respondent) decided to visit his relatives in Bombay, India. Mr. Gumar, purchased a ticket from
British Airlines when Mahtani obtained his services. Since BA had no direct flights from Manila to Bombay, Mahtani had to take a
flight to Hongkong via PAL, and upon arrival in Hongkong he had to take a connecting flight to Bombay on board BA. Mahtani checked
in at the PAL counter in Manila his two pieces of luggage containing his clothings and personal effects. When he arrived in Bombay he
discovered that his luggage was missing. A week after, BA finally advised him to file a claim by accomplishing the “Property
Irregularity Report.”

Back in the Philippines, Mahtani filed his complaint for damages and attorney’s fees against BA and Mr. Gumar before the trial court.
BA filed its answer with counter claim to the complaint raising, as special and affirmative defenses, that Mahtani did not have a cause
of action against it. BA filed a third-party complaint against PAL alleging that the reason for the non-transfer of the luggage was due
to the latter’s late arrival in Hongkong, thus leaving hardly any time for the proper transfer of Mahtani’s luggage to the BA aircraft
bound for Bombay. PAL filed its answer to the third-party complaint, wherein it disclaimed any liability, arguing that there was, in
fact, adequate time to transfer the luggage to BA facilities in Hongkong. Furthermore, the transfer of the luggage to Hongkong
authorities should be considered as transfer to BA. Trial Court favored Mahtani and ordered BA to pay for the valuables and for
damages. Third party complaint against PAL was dismissed. BA appealed to the Court of Appeals, which however, affirmed the trial
court’s findings. Hence, this appeal by certiorari.

ISSUE: WON the amount of compensatory damages was without basis.

RULING: It is apparent that the contract of carriage was between Mahtani and BA. And courts have assessed the airlines’ culpability
in the form of damages for breach of contract involving misplaced luggage based on a number of decided cases. Admittedly, in a
contract of air carriage a declaration by the passenger of a higher value is needed to recover a greater amount. American
jurisprudence provides that an air carrier is not liable for the loss of baggage in an amount in excess of the limits specified in the tariff
which was filed with the proper authorities, such tariff being binding on the passenger regardless of the passenger’s lack of
knowledge thereof or assent thereto. This doctrine is recognized in this jurisdiction. SC have held that benefits of limited liability are
subject to waiver such as when the air carrier failed to raise timely objections during the trial when questions and answers regarding
the actual claims and damages sustained by the passenger were asked. BA had waived the defense of limited liability when it allowed
Mahtani to testify as to the actual damages he incurred due to the misplacement of his luggage, without any objection when it has the
right to do so. Objection must be made at the earliest opportunity, lest silence when there is opportunity to speak may operate as a
waiver of objections. BA has precisely failed in this regard. SC, however, did not agree with the dismissal of the third-complaint.
Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view of their contract of carriage. Yet, BA
adamantly disclaimed its liability and instead imputed it to PAL which the latter naturally denies. In other words, BA and PAL are
blaming each other for the incident. It is worth observing that the contract of air transportation was exclusively between Mahtani and
BA Since the instant petition was based on breach of contract of carriage, Mahtani can only sue BA alone, and not PAL, since the latter
was not a party to the contract.

However, this is not to say that PAL is relieved from any liability due to any of its negligent acts. In China Air Lines, Ltd. v. Court of
Appeals The decision of the Court of Appeals is MODIFIED, reinstating the third-party complaint filed by British Airways dated
November 9, 1990 against Philippine Airlines. , while not exactly in point, the case, however, illustrates the principle which governs
this particular situation. In that case, we recognized that a carrier (PAL), acting as an agent of another carrier, is also liable for its own
negligent acts or omission in the performance of its duties. It is but logical, fair and equitable to allow BA to sue PAL for
indemnification, if it is proven that the latter’s negligence was the proximate cause of Mahtani’s unfortunate experience, instead of
totally absolving PAL from any liability.

SABENA BELGIAN WORLD AIRLINES, petitioner, vs. HON. COURT OF APPEALS and MA. PAULA SAN AGUSTIN, respondents.
[G.R. No. 104685. March 14, 1996]

Facts: On August 21, 1987, plaintiff (MA. PAULA SAN AGUSTIN) was a passenger on defendant airline (SABENA BELGIAN WORLD
AIRLINES) from Casablanca to Brussels, Belgium on her way back to Manila. Her luggage with valuables was left on board Flight SN
284. Upon arrival she submitted documents to support her baggage claim but luggage remained to be missing. A formal complaint
was filed by the plaintiff with the manger of the airline. Plaintiff was furnished copies of telexes with an information that the Brussel’s
Office of defendant found the luggage and that they have broken the locks for identification (Exhibit ‘B’). Plaintiff was assured by the
defendant that it has notified its Manila Office that the luggage will be shipped to Manila on October 27, 1987. But unfortunately
plaintiff was informed that the luggage was lost for the second time. At the time of fiing of complaint the luggage is still missing.
Plaintiff demanded from the defendant the money value of the luggage and its contents or its exchange value, but defendant refused
to settle the claim, asserting that the loss of the luggage was due to plaintiff’s sole if not contributory negligence; non-declaration of
valuable items in her checked-in luggage at the flight counter when she checked in. Trial court favored the plaintiff and ordered the
Sabena Belgian World Airlines to pay private respondent Ma. Paula San Agustin. Hence this appeal.
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Issue: WON the private respondent is at fault on the loss of the luggage by negligence.

Ruling: Fault or negligence consists in the omission of that diligence which is demanded by the nature of an obligation and
corresponds with the circumstances of the person, of the time, and of the place. When the source of an obligation is derived from a
contract, the mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on the part of the obligor. This
rule is not different in the case of common carriers in the carriage of goods which, indeed, are bound to observe not just the due
diligence of a good father of a family but that of “extraordinary” care in the vigilance over the goods. It remained undisputed that
private respondent’s luggage was lost while it was in the custody of petitioner. When it was found missing the respondent, promptly
processed all the necessary document but to no avail. The “loss of said baggage not only once by twice,” said the appellate court,
“underscores the wanton negligence and lack of care” on the part of the carrier. Under domestic law and jurisprudence (the
Philippines being the country of destination), the attendance of gross negligence (given the equivalent of fraud or bad faith) holds the
common carrier liable for all damages which can be reasonably attributed, although unforeseen, to the non-performance of the
obligation, including moral and exemplary damages. WHEREFORE, the decision appealed from is AFFIRMED.

LIABILITY OF AIR CARRIERS

What are the limitations to the liability of air carriers?

1. In the carriage of persons – 250,000 francs for each passenger. Nevertheless, by special contract, the carrier and the passenger
may agree to a higher limit of liability.

2. In the carriage of registered baggage and of cargo – Two hundred and fifty (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.

Note: 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 waybill, 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 – Five thousand (5,000) francs per passenger. (Art. 22) Note:
Carrier is not entitled to the foregoing limit if the damage is caused by willful misconduct or default on its part (Art. 25)

Is a stipulation relieving the carrier from or limiting its liability valid?

No. Any provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in this Convention shall
be null and void but the nullity of such provision does not involve the nullity of the whole contract. (Art. 23[1])

What are the exceptions to these limitations?

1. Willful misconduct

2. Default amounting to willful misconduct

3. Accepting passengers without ticket

4. Accepting goods without airway bill or baggage without baggage check

When will one’s right to damages be extinguished?

The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the
destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

Note: Despite the express mandate 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 where delaying tactics were employed by airline itself in a case where a passenger wishes
to settle his complaint out-of-court but the airline gave him the runaround, answering the passenger’s letters but not giving in to his
demands, hence, giving the passenger no time to institute the complaint within the reglamentary period. (United Airlines v. Uy, G.R.
No. 127768, Nov. 19, 1999)

Could a person recover a claim covered by Warsaw Convention after the lapse two years?

No. 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. (PAL. v. Savillo, 557 SCRA 66)

What constitutes willful misconduct?

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The definition of "willful misconduct" depends in some measure on which court is deciding the issue. Some common factors that
courts will consider are:

1. Knowledge that an action will probably result in injury or damage

2. Reckless disregard of the consequences of an action, or

3. Deliberately failing to discharge a duty related to safety. Courts may also consider other factors

Is the failure of the carrier to deliver the passenger’s luggage at the designated time and place ipso facto constitutes wilful
misconduct?

No. There must be a showing that the acts complained of were impelled by an intention to violate the law, or were in persistent
disregard of one's rights. It must be evidenced by a flagrantly or shamefully wrong or improper conduct (Luna vs. CA, GR No. 100374-
‐75, November 27, 1992).

Is the carrier’s guessing of which luggage contained the firearms constitutes willful misconduct?

Yes. The guessing of which luggage contained the firearms amounted to willful misconduct under Section 25(1) of the Warsaw
Convention. (Northwest Airlines vs. CA, GR No. 120334, January 20, 1998)

Is the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the realm of Warsaw
Convention?

Yes. A cause of action based on tort did not bring the case outside the sphere of the Warsaw Convention. (Lhuiller vs. British Airways,
GR No. 171092, March 15, 2010).