University of the Philippines College of Law

CPE, 1-D

Topic Agreement Limiting Liability; As to amount of liability

Case No. G.R. No. 40597 / June 29, 1979
Case Name Ong Yiu v. CA
Ponente Melencio-Herrera, J.

RELEVANT FACTS
Petition for damages based on breach of contract of transportation filed by Agustino Ong Yiu against
PAL due to missing documents in his maleta which was mistakenly carried to another destination.
 Aug. 26, 1967 – Agustino Ong Yiu was a passenger of PAL on a flight from Mactan to Butuan.
o He was going to Butuan to attend trials (civil/specpro) on Aug. 28-31.
o Checked in a blue maleta.
o Plane left 1 PM and arrived past 2 PM. The maleta could not be found (Allegedly, porter clerk
Maximo Gomez only attended to Ong Yiu after Ong Yiu reacted indignantly to the loss).
o By 3:59 PM, it was found that the maleta was carried to Manila and would be forwarded to
Butuan the same day.
o At 5 PM, PAL Cebu sent a message to PAL Butuan that the maleta would be forwarded on Aug.
27 – NOT received by PAL Butuan as there were no more incoming flights and all the personnel
left).
o At 10 PM, Ong Yiu demanded from PAL Cebu for the delivery of the maleta before noon of Aug.
27, or he will hold them liable for damages.
 Received by PAL Cebu the following day – they did not reply as the luggage would have
arrived at the airport by then.
 Aug. 27, 1967 – Morning flight carrying missing maleta arrived.
o At 10 AM, Ong Yiu went to Bancasi Airport to inquire, BUT he did not wait for the arrival of the
morning flight. Maximo Gomez tried to page Ong Yiu, but he already left.
 Emilio Dagorro, driver of a ‘colorum’ car, offered to deliver the maleta to Ong Yiu.
 Dagorro examined the lock on the maleta, which opened after pressing it, delivered it to
Ong Yiu with the information that it was opened.
 Ong Yiu found that that a folder and 2 gift items for his parents were missing.
 Maleta was returned to PAL Cebu.
o Ong Yiu asked for postponement of hearing, which was granted.
 Aug. 29, 1967 – Ong Yiu sent letter to PAL Cebu demanding return of his luggage intact, and
compensation for moral and actual damage (250K).
 Sep. 06, 1967 – PAL replied rejecting demand.
 RTC: PAL LIABLE for damages (80k moral, 30k exemplary, 5k atty’s).
 CA: RTC AFFIRMED with modification (no moral and exemplary, 100 actual/contractual baggage
liability).
ISSUE AND RATIO DECIDENDI

Issue
W/N PAL committed gross
negligence/bad faith to
entitle Ong Yiu to
moral/exemplary damages
Ratio
NO.
Re: Moral and Exemplary Damages
Bad faith means a breach of a known duty through some motive of interest or
 University of the Philippines College of Law
CPE, 1-D

ill will. It was the duty of PAL to look for petitioner's luggage which had been
NO. miscarried. PAL exerted due diligence in complying with such duty.
 PAL had exerted diligent effort to locate plaintiff's baggage. The trial
court saw evidence of bad faith because PAL sent the telegraphic
message to Mactan only at 3:00 o'clock that same afternoon, despite
plaintiff's indignation for the non-arrival of his baggage. The message
was sent within less than one hour after plaintiff's luggage could not
be located. Efforts had to be exerted to locate plaintiff's maleta. Then
the Bancasi airport had to attend to other incoming passengers and
to the outgoing passengers. Certainly, no evidence of bad faith can be
inferred from these facts.
o Cebu office immediately wired Manila inquiring about the
missing baggage of the plaintiff. At 3:59 P.M., Manila station
agent at the domestic airport wired Cebu that the baggage
was over carried to Manila. And this message was received in
Cebu one minute thereafter, or at 4:00 P.M.
o There was no bad faith in the assumption made by said
supervisor that the plane carrying the bag would arrive at
Butuan earlier than a reply telegram.
 In the absence of a wrongful act or omission or of fraud or bad faith,
petitioner is not entitled to moral damages.
 Exemplary damages can be granted if the defendant acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner,
which has not been proven in this case.

Re: Actual Damages

 Condition of Carriage in Ticket:
8. BAGGAGE LIABILITY ... The total liability of the Carrier for lost or damaged
baggage of the passenger is LIMITED TO P100.00 for each ticket unless a
passenger declares a higher valuation in excess of P100.00, but not in excess,
however, of a total valuation of P1,000.00 and additional charges are paid
pursuant to Carrier's tariffs.
 Ong Yiu: No evidence to show that he had actually entered into a
contract with PAL limiting the latter's liability for loss or delay of the
baggage of its passengers, and that NCC 1750 has not been complied
with.
 SC: While it may be true that petitioner had not signed the plane
ticket, he is nevertheless bound by the provisions thereof. "Such
provisions have been held to be a part of the contract of carriage, and
valid and binding upon the passenger regardless of the latter's lack of
knowledge or assent to the regulation.” (Ticket was a contract of
adhesion)

RULING

WHEREFORE, Petition is DENIED. CA AFFIRMED.