MAGSAYSAY VS AGAN
810); while general or gross averages include
FACTS:
In 1949, SS San Antonio, owned by AMInc, embarked
on its voyage to Batanes via Aparri. It was carrying
various cargoes, one of which was owned by Agan.
One fine weather day, it accidentally ran aground the
mouth of the Cagayan River due to the sudden
shifting of the sands below. SS San Antonio then
needed the services of Luzon Stevedoring Co. to tow
the ship and make it afloat so that it can continue its
journey. Later, AMInc required the cargo owners to
pay the expenses incurred in making the ship afloat
(P841.40 each). The expenses, AMInc claims, fall
under the General Averages Rule under the Code of
Commerce, which is to be shared by ship owner and
cargo owners as well.
ISSUE:
Whether or not general averages exist in the case at
bar.
HELD:
No. General averages contemplate that the
stranding of the vessel is intentionally done in order
to save the vessel itself from a certain and imminent
danger. Here, the stranding was accidental and it
was made afloat for the purpose of saving the
voyage and not the vessel. Note that this happened
on a fine weather day. Also, it cannot be said that
the towing was made to save the cargos, for the
cargos were not in danger imminent danger.
whether the expenses incurred in floating a vessel so
stranded should be considered general average and
shared by the cargo owners.
The law on averages is contained in the Code of
Commerce. Under that law, averages are classified
into simple or particular and general or gross.
Generally speaking, simple or particular averages
include all expenses and damages caused to the
vessel or cargo which have not inured to the common
benefit (Art. 809), and are, therefore, to be borne
only by the owner of the property gave rise to same
(Art.
all the damages and expenses which are deliberately
caused in order to save the vessel, its cargo, or both
at the same time, from a real and known risk (Art.
811). Being for the common benefit, gross averages
are to be borne by the owners of the articles saved
(Art. 812).
In classifying averages into simple or particular and
general or gross and defining each class, the Code
(Art. 809 and 811) at the same time enumerates
certain specific cases as coming specially under one
or the other denomination. Going over the specific
cases enumerated we find that, while the expenses
incurred in putting plaintiffs vessel afloat may well
come under number 2 of article 809-which refers to
expenses suffered by the vessel by reason of an
accident of the sea of the force majuere and
should therefore be classified as particular average,
the said expenses do not fit into any of the specific
cases of general average enumerated in article 811.
No. 6 of this article does mention expenses caused
in order to float a vessel, but it specifically refers to
a vessel intentionally stranded for the purpose of
saving it and would have no application where, as in
the present case, the stranding was not intentional.
Let us now see whether the expenses here in
question could come within the legal concept of the
general average. Tolentino, in his commentaries on
the Code of Commerce, gives the following
requisites for general average:
First, there must be a common danger. This means,
that both the ship and the cargo, after has been
loaded, are subject to the same danger, whether
during the voyage, or in the port of loading or
unloading; that the danger arises from the accidents
of the sea, dispositions of the authority, or faults of
men, provided that the circumstances producing the
peril should be ascertained and imminent or may
rationally be said to be certain and imminent. This
last requirement exclude measures undertaken
against a distant peril.
Second, that for the common safety part of the
vessel or of the cargo or both is sacrificed
deliberately.
Third, that from the expenses or damages caused
follows the successful saving of the vessel and
cargo.
Fourth, that the expenses or damages should have
been incurred or inflicted after taking proper legal
steps and authority. (Vol. 1, 7th ed., p. 155.)
With respect to the first requisite, the evidence does
not disclose that the expenses sought to be
recovered from defendant were incurred to save
vessel and cargo from a common danger. The vessel
ran aground in fine weather inside the port at the
mouth of a river, a place described as very shallow.
It would thus appear that vessel and cargo were at
the time in no imminent danger or a danger which
might rationally be sought to be certain and
imminent. It is, of course, conceivable that, if left
indefinitely at the mercy of the elements, they would
run the risk of being destroyed. But as stated at the
above quotation, this last requirement excludes
measures undertaken against a distant peril. It is the
deliverance from an immediate, impending peril, by a
common sacrifice, that constitutes the essence of
general average. (The Columbian Insurance Company
of Alexandria vs. Ashby & Stribling et al., 13 Peters
331; 10 L. Ed., 186). In the present case there is no
proof that the vessel had to be put afloat to save it
from imminent danger. What does appear from the
testimony of plaintiffs manager is that the vessel had
to be salvaged in order to enable it to proceed to its
port of destination. But as was said in the case just
cited it is the safety of the property, and not of the
voyage, which constitutes the true foundation of the
general average.
As to the second requisite, we need only repeat that
the expenses in question were not incurred for the
common safety of vessel and cargo, since they, or at
least the cargo, were not in imminent peril. The cargo
could, without need of expensive salvage operation,
have been unloaded by the owners if they had been
required to do so.
With respect to the third requisite, the salvage
operation, it is true, was a success. But as the
sacrifice was for the benefit of the vessel to enable
it to proceed to destination and not for the
purpose of saving the cargo, the cargo owners are
not in law bound to contribute to the expenses.
The final requisite has not been proved, for it does
not appear that the expenses here in question were
incurred after following the procedure laid down in
article 813 et seq.
In conclusion we found that plaintiff not made out a
case for general average, with the result that its claim
for contribution against the defendant cannot be
granted.
URRUTIA VS BACO RIVER
FACTS:
This action spring from a collision between the
steamship Nuestra Seora del Pilar, owned by the
plaintiff, and the schooner Mangyan owned by the
defendant, which occurred in the early morning of
the 8th of April, 1910, in Verde Island North Passage.
The sail vessel was sailing with a fresh breeze dead
astern, her sails wing and wing. The steamer was
seen by those on board the sailing vessel some time
before the actual collision, sailing erratically. The sail
vessel kept her course steadily until just before the
actual contact when her helmsman threw her hard to
port in an effort to avoid the collision. The movement,
however, was unsuccessful and the sail vessel
rammed the steamer on the starboard quarter well
aft. The steamer sank and eight lives were lost. The
sail vessel was considerably injured.
This action was brought by the owners of the
steamship against the owner of the sail vessel, to
recover the value of the destroyed steamer and the
damages caused by reason of its destruction, alleging
as a basis therefor the negligence of the said vessel.
The defendant denied the material allegations of the
complaint and set up a counterclaim for damages,
alleging as grounds therefor that the injuries
sustained by the said vessel were due to the gross
negligence of those handling plaintiff's steamer.
Before the action was tried, M. Garza made an
application to intervene under the provisions of
section 121 of the Code of Civil Procedure, he alleging
in support of his application that the steamer was
carrying for him at the time several thousand pesos'
worth of merchandise as freight, which was lost as a
result of the collision. He was permitted to intervene
and accordingly filed a complaint setting up the loss
of this merchandise and the value thereof and
alleging, as the basis for his right to recover, the
negligence of one or the other of the vessels, without
specifying which, and praying that the court award
him damages against the vessel the negligence of
which, upon the trial, was shown to have caused his
loss.
The case turns upon the question which of the
vessels was negligent in failing to conform to the
International Rules for the Prevention of Collissions
at Sea. The learned trials court found that those
managing the steamer were guilty of gross
negligence and that for that reason the plaintiff could
recover nothing.
ISSUE:
HELD:
In the case of The Badger State (8 Fed. Rep., 526),
the court said:
Where a sailing level and one propelled by steam
are approaching each other bow, on the steamer
must give away, In case of a collision between such
vessels, the steamer is prima facie in fault.
In the case of The Gate City (90 Fed. Rep., 314), the
court held, according to the syllabus:
The rule requiring a sailing vessel meeting a steamer
to hold her course is a broad and general one
intended to put the burden of avoiding a collision
upon the steamer; and, if the sailing vessel departs
from the injunction the burden is on her to show
some reasonable excuse therefor.
A disregard of the rule not demanded by a clearly
existing exigency should not be excused.
Therefore, she will not be held in fault for adhering
to her course, although the steamer seems to be
manuevering in an uncertain and dangerous way.
We are satisfied from the authorities that, under the
facts stated in the opinion of the trial court, the
defendant is entitled to recover such damages as
reasonably and naturally flowed from the collision.
There is sufficient evidence in the record to fix such
damages with reasonable accuracy. It was proved
upon the trial that it would require an expenditure of
P3,525 to put the sail vessel in the condition in which
it was before the injury; that it cost 245 to get the
vessel to Manila after the injury; that the value of the
supplies lost was P240.99. The evidence relative to
the loss of earnings is not sufficient to permit the
court to formulate any conclusion in relation thereto,
even if it be considered a proper item of damage.
We think the judgment of the trial court was correct
in dismissing the complaint of intervention. The
intervener had no "legal interest in the matter in
litigation, or in the success of either of the parties, or
an interest against both." Their action was personal,
involved no rights in property which extended
beyond their immediate selves, and touched no third
party in any of the ramifications of those rights.
The judgment of the court below, in so far as it finds
against the plaintiff and the intervener, is hereby
affirmed. As to that portion which dismisses the
counterclaim of the defendant, the Baco River
Plantation Company, the judgment is reversed and
the cause remanded, with instructions to the trial
court to enter judgment in favor of the defendant,
The Baco River Plantation Company, and against the
plaintiff, G. Urrutia & Company, for the sum of
P4,010.99 and costs. No costs on this appeal.
While it was held in the case of Philippine Shipping
Co. vs. Vergara (6 Phil. Rep., 281), that, in
accordance with articles 837 and 826 of the Code of
Commerce, the defendant in an action such as the
one at bar cannot be held responsible in damages
when the ship causing the injury was wholly lost by
reason of the accident, we do not apply it in this
case for the reason that the vessel lost was insured
and that the defendant collected the insurance. That
being the case, the insurance money substitutes the
vessel and must be used, so far as necessary, to pay
the judgment rendered in this case.
In coming to this conclusion we have not lost sight
of the case of Place vs. Norwich and N. Y. Trans. Co.
(118 U. S., 468), in which it was held that, under the
provision of the Act of Congress relative thereto,
insurance money obtained by reason of the loss of a
vessel causing damages, as in the case at bar, was
not subject to the payment of the damages
sustained by the negligence of the vessel lost by
reason of the accident in which the damages
occurred. We do not follow that case because we
are met in this jurisdiction with article 1186 of the
Civil Code, which provides that "after the obligation
is extinguished by the loss of the thing, all the
actions which the debtor may have against third
persons, by reason thereof, shall pertain to the
creditor," and with article 2 of the Code of
Commerce, which provides that where the Code of
Commerce is silent to the law relating to the
matters of which it treats, those matters shall be
governed by the provisions of the Civil Code.
That said article 1186 is, under the Spanish
jurisprudence, applicable to money obtained from
the insurance of the thing lost or destroyed, there
can be no doubt. (Manresa, vol. 8, 353.)
The judgment in this case is, therefore, collectible,
but the amount collected cannot exceed the amount
of insurance money actually received.
The writer of this opinion had doubts of the
applicability of article 1186, referred to; but has
yielded to the learning of the majority relative to the
Roman and Spanish jurisprudence on this point.
MARINE TRADING COMPANY VS THE GOVERNMENT
OF THE PHILIPPINE ISLANDS
FACTS:
Act No. 2630 empowered the Marine Trading
Company (Inc.) to bring action in the Court of First
Instance for the city of Manila to determine the
responsibility and liability for a collision between its
launch Active and a scow towed by the Government
launch bohol, and to fix the damages, if any, to which
the Marine Trading Company (Inc.) is entitled on
account of the collision. Acting under this authority,
the Marine Trading Company (Inc.) began action to
recover as damages from the Government of the
Philippine Islands the sum of P9,677, with interest
and costs, because of the reckless and negligent acts
of the defendant's agent and employee. The
Attorney-General interposed a general denial.
Judgment was rendered by the Honorable George R.
Harvey, judge of first instance, for the amount prayed
for by plaintiff, with legal interest from September 25,
1916, the date of filing the complaint, and costs of
suit.
On August 10, 1915, plaintiff owned a launch named
Active and defendant owned a launch named bohol.
Both launches were in use upon the Pasig River in the
city of Manila. About 8 o'clock in the morning of this
date, in the Pasig River, below and near the bridge of
Spain, the launch bohol was towing up the river two
rudderless scows or lighters, one behind the other.
The scow nearest the launch was about 5 meters
behind, was empty, and was high in the water. The
second lighter was tied to the rear of the fist one,
with a distance of about 2 meters intervening, was
loaded, and was lower in the water. The second
lighter was tied to the rear of the first one, with a
distance of about 2 meters intervening, was loaded,
and was lower in the water. The Active was coming
down the river from Pandacan toward Manila Bay.
The patron of the Active blew one blast of his whistle,
which indicated that the Active had a clear way and
should pass to starboard. When under the bridge of
Spain, the Active passed the bohol and the first scow
towed by it. But when the Active was about to pass
the second scow, the latter swerved to the left, and
its forward left end corner struck the Active on the
port side between the cabin and the bow with such
force and impact that the launch sank immediately.
The Active was in good condition and state of
operation before the collision occurred. The launch
was so seriously damaged by the collision and the
sinking that it took the sum of P9,677 to repair
it.lawphil.net
The applicable provisions of law are found in articles
826, 827, 828, and 830 of the Code of Commerce,
and in the Philippine Marine Regulations issued by
the Insular Collector of Customs. These provisions of
law and these regulations, in relation to the facts,
present the issue of whether or not the accident
occurred through the negligence of the bohol only, or
whether both launches can be blamed for the
collision. If the first be the holding, then, under the
law, plaintiff can recover. If the second be the result,
plaintiff cannot recover.
The trial court was clearly of the opinion that there
was negligence on the part of the patron of the bohol
in operating his launch and the scow in such a way as
to endanger the Active and its occupants. The court
was further of the opinion that there was no
negligence on the part of the patron of the Active.
With this view of the trial court, we are in accord.
ISSUE:

HELD:
Negligence on the part of the bohol is demonstrated
by the following:
(1) The patron of the bohol gave the whistle which
indicated that the Active had a clear way and should
pass to the starboard, and did not give four blasts of
the whistle in quick succession in order to denote
danger.
(2) The two scows in tow by the bohol were
apparently not properly fastened together, as
required by section 197 of the Philippine Marine
Regulations.
(3) The two launches passed each other under the
bridge of Spain, and the bohol, instead of steering
so as to avoid danger of a collision between the
Active and its scows, kept its course and crowded
the Active most against a buoy. While, in
accordance with paragraph 163 of the Philippine
Marine Regulations, steam vessels towing have the
right of way over steam vessels not towing this does
not mean that the vessel with a tow can usurp the
entire river so as to force another vessel into the
bank. In conformity with the doctrine cited by
appellant, that the preferred steamer will not be
held in fault for maintaining her course and speed,
this is only true so long as it is possible for the other
vessel to avoid her by the proper maneuver. (The
Delaware [1895], 161 U.S., 459.)
As opposed to the foregoing, we find that the
plaintiff's agent was in no way to blame for the
collision.
This disposes of the three assignments of error and
the principal issue in the case. It is to be noted,
however, that the judgment was for legal interest
and costs. Is this right?
It is the undoubted law that the State (in this
jurisdiction, the Government of the Philippine Islands)
never pays interest unless it expressly engages to do
so. This is especially true in case the claim is an
unliquidated one. Among other authorities, we find
Angarica vs. Bayard ([1888], 127 U.S., 251), in which
Justice Blatchford said:
The case, therefore, falls within the well-settled
principle, that the United States are not liable to pay
interest on claims against them, in the absence of
express statutory provision to that effect. I has been
established, as a general rule, in the practice of the
government, that interest is not allowed on claims
against it, whether such claims originate in contract
or in tort, and whether they arise in the ordinary
business of administration or under private acts of
relief, passed by Congress on special application. The
only recognized exceptions are where the
government stipulates to pay interest and where
interest is given expressly by an Act of Congress,
either by the name of interest or by that of damages.
The rule is equally well established that the State is
not liable for costs unless the statute expressly makes
it so.
Here, Act No. 2630 only authorized the court to fix
the damages if any, and to enter judgment
accordingly. Unless damages can be interpreted to
include interest and costs, plaintiff cannot recover
the same. This appearing to be a strained
interpretation, we believe we should hold to the view
that since the government has not stipulated to pay
interest or costs, the courts should not include these
items in the judgment. (
SMITH BELL VS CA
FACTS:
M/V Don Carlos, an inter-island vessel owned and
operated by private respondent Go Thong was sailing
south bound for Cebu, when it collided with M/S
Yotai Maru, a merchant vessel of Japanese registry
which was approaching the port of Manila coming in
from Kobe, Japan. The bow of the Don Carlos
rammed the left side of the Yotai Maru inflicting a
gaping hole through which seawater rushed in and
flooded the hatch, damaging all the cargo stowed
therein. The consignees of the damaged cargo having
been paid by their insurance companies, the latter in
turn commenced actions against private respondent
Go Thong for damages sustained by the various
shipments. 2 cases were filed before the RTC. The
first case (Smith Bell and Sumitomo Insurance v. Go
Thong) reached the SC which ruled in finality that
negligence was with the officers and crew of Don
Carlos. On the contrary, the second case (Smith Bell
and Tokyo Insurance v. Go Thong) was decided by the
CA holding the officers and crew of Yotai Maru at
fault in the collision. Hence the present petition.
ISSUE:
Whether or not inscrutable fault is present in said
collision.
HELD:
NO.
The Court believes that there are three (3) principal
factors which are constitutive of negligence on the
part of the Don Carlos, which negligence was the
proximate cause of the collision.
(1) The first of these factors was the failure of the
Don Carlos to comply with the requirements of
Rule 18 (a) of the International Rules of the Road
which provides as follows: (a) When two
power-driven vessels are meeting end on, or nearly
end on, so as to involve risk of collision, each shall
alter her course to starboard, so that each may pass
on the port side of the other. The evidence on this
factor state that Don Carlos altered its course by
five degrees to the left instead of to the right which
maneuver was the error that caused the collision in
question. Why it did so is because Don Carlos was
overtaking another vessel, the Don Francisco, and
was then at the right side of the aforesaid vessel. It
was in the process of overtaking Don Francisco that
Don Carlos was finally brought into a situation
where he was meeting end-on or nearly end-on
Yotai Maru, thus involving risk of collision.
(2) The second circumstance constitutive of
negligence on the part of the Don Carlos was its
failure to have on board that night a proper
look-out as required by Rule I (B) Under Rule 29 of
the same set of Rules, all consequences arising from
the failure of the Don Carlos to keep a proper
look-out must be borne by the Don Carlos. In the
case at bar, the failure of the Don Carlos to
recognize in a timely manner the risk of collision with
the Yotai Maru coming in from the opposite
direction, was at least in part due to the failure of the
Don Carlos to maintain a proper look-out.
(3) The third factor constitutive of negligence on the
part of the Don Carlos relates to the fact that
Second Mate Benito German was, immediately
before and during the collision, in command of the
Don Carlos. Second Mate German simply did not
have the level of experience, judgment and skill
essential for recognizing and coping with the risk of
collision as it presented itself that early morning
when the Don Carlos, running at maximum speed
and having just overtaken the Don Francisco then
approximately one mile behind to the right side of
the Don Carlos, found itself head-on or nearly head
on vis-a-vis the Yotai Maru. It is essential to point
out that this situation was created by the Don
Carlos itself.
FOR ALL THE FOREGOING, the Decision of the Court
of Appeals is hereby REVERSED and SET ASIDE.
*Inscrutable Fault where it cannot be determined
which of the 2 vessels caused the collision, each
vessel shall suffer its own damages, and both shall be
solidarily responsible for the losses and damages
occasioned to their cargoes.
GOVERNMENT OF THE PHILIPPINE ISLANDS VS
PHILIPPINE STEAMSHIP
FACTS:
It appears in evidence that at about 10 o'clock at
night on February 10, 1920, the coastwise Isabel,
equipped with motor and sails, left the port of Manila
with primary destination to Balayan, Batangas,
carrying, among its cargo, 911 sacks of rice belonging
to the plaintiff and consigned to points in the south.
After the boat had been under weigh for about four
hours, and has passed the San Nicolas Light near the
entrance into Manila Bay, the watch and the mate on
the bridge of the Isabel discerned the light of another
vessel, which proved to be the Antipolo, also a
coastwise vessel, on its way to Manila and coming
towards the Isabel. At about the same time both the
watch and mate on the bridge of the Antipolo also
saw the Isabel, the two vessels being then about one
mile and a half or two miles apart. Each vessel was
going approximately at the speed of 6 miles an hour,
and in about ten minutes they had together
traversed the intervening space and were in close
proximity to each other.
When the mate of the Antipolo, who was then at the
wheel, awoke to the danger of the situation and saw
the Isabel "almost on top of him," to use the words of
the committee on marine accidents reporting the
incident, he put his helm hard to the starboard.
This maneuver was correct, and if the helmsman of
the Isabel had done likewise, all would apparently
have been well, as in that event the two vessels
should have passed near to each other on the port
side without colliding. As chance would have it,
however, the mate on the Isabel at this critical
juncture lost his wits and, in disregard of the
regulations and of common prudence, at once placed
his own helm hard to port, with the result that his
boat veered around directly in the path of the other
vessel and a collision became inevitable. Upon this
the mate on the Antipolo fortunately stopped his
engines, but the Isabel continued with full speed
ahead, and the two vessels came together near the
bows. The Isabel immediately sank, with total loss of
vessel and cargo, though the members of her crew
were picked up from the water and saved.
ISSUE:
HELD:
The trial judge was in our opinion entirely right in
finding that negligence was imputable to both vessels,
though differing somewhat in character and decree
with respect to each. The mate of the Antipolo was
clearly negligent in having permitted that vessel to
approach directly towards the Isabel until the two
were in dangerous proximity. For this there was no
excuse whatever, since the navigable sea at this point
is wide and the incoming steamer could easily have
given the outgoing vessel a wide berth. On the other
hand it is not clear that the Isabel was chargeable
with negligence in keeping on its course; for this boat
had its jib sail hoisted, and may for that reason be
considered to have had the right of way. (G. Urrutia &
Co. vs. Baco River Plantation Co., 26 Phil., 632.)
Negligence shortly preceding the moment of collision
is, however, undoubtedly chargeable to the Isabel,
for the incorrect and incompetent way in which this
vessel was then handled. The explanation of this may
perhaps be found in the fact that the mate on the
Isabel had been on continuous duty during the whole
preceding day and night; and being almost absolutely
exhausted, he probably was either dozing or
inattentive to duty at the time the other vessel
approached.
It results, as already stated, that both vessels were at
fault; and although the negligence on the part of the
mate of the incoming vessel preceded the negligence
on the part of the mate of the outgoing vessel by an
appreciable interval of time, the first vessel cannot
on that account be absolved from responsibility.
Indeed, in G. Urrutia & Co. vs. Baco River Plantation
Co., supra, this court found reason for holding that
the responsibility rested exclusively on a steamer
which had allowed dangerous proximity to a sailing
vessel to be brought about under somewhat similar
conditions.
We are of the opinion therefore that his Honor, the
trial judge, committed no error in holding that both
vessels were to blame and in applying article 827 of
the Code of Commerce to the situation before him. It
is there declared that where both vessels are to
blame, both shall be solidarily responsible for the
damage occasioned to their cargoes. As the Isabel
was a total loss and cannot sustain any part of this
liability, the burden of responding to the Government
of the Philippine Islands, as owner of the rice
embarked on the Isabel, must fall wholly upon the
owner of the other ship, that is, upon the defendant,
the Philippine Steamship Company, Inc.
DOMINGO ANG VS AMERICAN STEAMSHIP
FACTS:
Yau Yue Commercial Bank, Ltd. of Hongkong, also
referred to hereafter as Yau Yue, agreed to sell one
boat (50 feet, 30 tons) containing used U.S. Military
Surplus to one Davao Merchandising Corp. for the
sum of $8,820.27 (US), and 42 cases (62 sets and 494
pieces) of Hiranos Automatic Cop Change for Cotton
Loom for Calieo to one Herminio Teves for the sum of
$18,246.,65 (US), respectively.
Said agreements were both subject to the following
terms and arrangements: (a) the purchase price
should be covered by a bank draft for the
corresponding amount which should be paid by the
purchaser in exchange for the delivery of the
corresponding bill of lading to be deposited with a
local bank, the Hongkong & Shanghai Bank of Manila;
(b) upon arrival of the articles in Manila the
purchaser would be notified and would have to pay
the amount called for in the corresponding demand
draft, after which the bill of lading would be delivered
to said purchaser; and (c) the purchaser would
present said bill of lading to the carrier's agent;
American Steamship Agencies, Inc., which would then
issue the correspoding "Permit To Deliver Imported
Articles" to be presented to the Bureau of Custom to
obtain the release of the articles.
Pursuant thereto, on February 17, 1961, Hirahira &
Co., Ltd. shipped the 42 cases (62 sets and 494
pieces ) of Hiranos Automatic Cop Change for Cotton
Loom for Calico at Nagoya, aboard the "S.S. CELEBES
MARU", for Manila, with the Kansai Steamship Co.,
Ltd. of Osaka, Japan, as carrier, of which the
American Steamship Agencies, Inc. is the agent in the
Philippines, under a shipping agreement, Bill of
Lading No. NM 1, dated February 17, 1961, consigned
"to order of the shipper", with Herminio G. Teves as
the party to be notified of the arrival of said
articles.1wph1.t bills of lading were already delivered by them to the
Similarly, on June 3, 1961, the United States
Contracting Officer, on behalf of Nippon Trading
Shokai for Nishiman Kaihatsu Co., Ltd. shipped the
boat containing U.S. Military Surplus at Yokohama,
Japan, the "KYOJU MARU", with Sankyo Kiun
Kabushiki Kaisha of Japan as carrier, of which the
American Steamship Agencies, Inc. is the agent in the
Philippines, under a shipping agreement, Bill of
Lading No. YM-3, dated June 3, 1961, consigned "to
the order of Yau Yue Commercial Bank, Ltd. of
Hongkong", with Davao Merchandising Corporation
as the party to be notified of the arrival of said boat.
The bills of lading were indorsed to the order of Yau
Yue and delivered to it by the respective shippers.
Upon receipt thereof, Yan Yue drew demand drafts
together with the bills of lading against Teves and
Davao Merchandising Corp., through the Hongkong &
Shanghai Bank.
The shipment for Teves arrived in Manila on March 2,
1961; that of Davao Merchandising Corp., arrived on
June 10, 1961. Accordingly, Hongkong & Shanghai
Bank notified Teves and the Davao Merchandising
Corporation, the "notify parties" under the bills of
lading, of the arrival of the goods and requested
payment of the demand drafts representing the
purchase prices of the articles. The Davao
Merchandising Corp. and Teves, however, did not pay
the respective drafts, prompting the bank in both
cases to make the corresponding protests. The bank
likewise returned the bills of lading and demand
drafts to Yau Yue which indorsed both bills of lading
to Domingo Ang.
Teves and Davao Merchandising Corporation,
however, were able to obtain bank guaranties in
favor of the American Steamship Agencies., Inc., as
carriers' agent, to the effect that they would
surrender the original and negotiable bills of lading
duly indorsed by Yau Yue. And on the strength of said
guaranties, Davao Merchandising Corp. and Teves
each succeeded in securing a "Permit To Deliver
Imported Articles" from the carriers' agent, which
they presented to the Bureau of Customs. In turn the
latter released to them the articles covered by the
bills of lading.
After being informed by the American Steamship
Agencies that the articles covered by the respective
Davao Merchandising Corp. and to Teves, Domingo
Ang filed claims with the carriers' agent for the cost
of said articles, interests and damages. The American
Steamship Agencies, Inc., however, refused payment.
Domingo Ang thereafter filed separate complaints in
the Court of First Instance of Manila against the
American Steamship Agencies, Inc., for having
allegedly wrongfully delivered and/or converted the
goods covered by the bills of lading belonging to
plaintiff Ang, to the damage and prejudice of the
latter. The suit as to the Teves shipment was filed on
October 30, 1963; that referring to the Davao
Merchandising Corp.'s shipment was filed on
November 14, 1963.
Subsequently, defendant filed motions to dismiss
upon the ground that plaintiff's causes of action have
prescribed under the Carriage of Goods by Sea Act
(Commonwealth Act No. 65), more particularly
section 3(6), paragraph 4, which provides:
In any event, the carrier and the ship shall be
discharged from all liability in respect to loss or
damage unless suit is brought within one year after
delivery of the goods or the date when the goods
should have been delivered.
It argued that the cargoes should have been
delivered to the person entitled to the delivery
thereof, i.e., plaintiff, on March 2, 1961 (Teves
shipment) and June 10, 1961 (Davao Merchandising
Corp. shipment), the respective dates of the vessels'
arrival in Manila, and that even allowing a reasonable
time (even one month) after such arrivals within
which to make delivery, still, the actions commenced
on October 30, 1963 and November 14, 1963.
respectively, were filed beyond the prescribed period
of one year.
By order dated February 21, 1964, copy of which was
received by plaintiff on February 28, 1964, the lower
court presided over by the Hon. Judge Guillermo S.
Santos, dismissed the action (in re the 42 cases [62
sets and 494 pieces] of Hiranos Automatic Cop
Change for Cotton Loom for Calico) on the ground of
prescription. His motion for reconsideration dated
March 20, 1964 having been denied by the lower
court in its order dated June 5, 1964, plaintiff
appealed to the Court of Appeals. This is now L-25050
and refers to the Teves shipment.
ISSUE:
HELD:
The point has already been resolved by this Court in a
case involving the same parties and parallel facts to
those herein involved. In Domingo Ang vs. American
Steamship Agencies, Inc., L-22491, January 27, 1967,
We held that the one-year prescriptive period under
Section 3(6), paragraph 4 of the Carriage of Goods by
Sea Act does not apply to cases of misdelivery or
conversion. For convenience, We quote the ruling
therein:
The provision of law involved in this case speaks of
"loss or damage". That there was no damage caused
to the goods which were delivered intact to Herminio
G. Teves who did not file any notice of damage, is
admitted by both parties in this case. What is to be
resolved in order to determine the applicability of
the prescriptive period of one year to the case at bar
is whether or not there was 'loss' of the goods
subject matter of the complaint.
Nowhere is "loss" defined in the Carriage of Goods by
Sea Act. Therefore, recourse must be had to the Civil
Code which provides in Article 18 thereof that, "In
matters which are governed by the Code of
Commerce and special law, their deficiency shall be
supplied by the provision of this Code."
Article 1189 of the Civil Code defines the word 'loss'
in cases where condition have been imposed with the
intention of suspending the efficacy of an obligation
to give. The contract of carriage under consideration
entered into by and between American Steamship
Agencies, Inc. and the Yau Yue (which later on
endorsed the bill of lading covering the shipment to
plaintiff herein Domingo Ang), is one involving an
obligation to give or to deliver the goods "to the
order of shipper" that is, upon the presentation and
surrender of the bill of lading. This being so, said
article can be applied to the present controversy,
more specifically paragraph 2 thereof which provides
that, "... it is understood that a thing is lost when it
perishes, or goes out of commerce, or disappears in
such a way that its existence is unknown or it cannot
be recovered."
As defined in the Civil Code and as applied to
Section 3(6), paragraph 4 of the Carriage of Goods
by Sea Act, 'loss' contemplates merely a situation
where no delivery at all was made by the shipper of
the goods because the same had perished, gone out
of commerce, or disappeared in much a way that
their existence is unknown or they cannot be
recovered. It does not include a situation where
there was indeed delivery but delivery to the
wrong person, or a misdelivery, as alleged fir the
complaint in this case.
xxx xxx xxx
The point that matters here is that the situation is
either delivery or misdelivery, but not non-delivery.
Thus, the goods were either rightly delivered or
misdelivered, but they were not lost. There being no
loss or damage to the goods, the aforequoted
provision of the Carriage of Goods by Sea Act stating
that "In any event, the carrier and the ship shall be
discharged from all liability in respect of loss or
damage unless it is brought within one year after
delivery of the goods or the date of when the goods
should have been delivered," does not apply. The
reason is not difficult to see. Said one-year period of
limitation is designed to meet the exigencies of
maritime hazards. In a case where the goods
shipped were neither lost nor damaged in transit
but were, on the contrary, delivered in port to
someone who claimed to be entitled thereto, the
situation is different, and the special need for the
short period of limitation in case of loss or damage
caused by maritime perils does not obtain.
It follows that for suits predicated not upon loss or
damage but on alleged misdelivery (or conversion)
of the goods, the applicable rule on prescription is
that found in the Civil Code, namely, either ten
years for breach of a written contract or four years
for quasi-delict (Arts. 1144[1], 1146, Civil Code). ...
The goods covered by the two shipments subject
matter of these appealed cases were also delivered
to the notify parties, Davao Merchandising
Corporation and Herminio Teves, despite the latter's
inability to present the proper bills of lading and
without the knowledge and consent of
plaintiff-appellant Domingo Ang to whom were
endorsed said bills of lading. There is therefore
likewise misdelivery not nondelivery. Finally, the
recipients of said goods did not file any complaint
with defendant regarding any damage to the same.
No loss nor damage is therefore involved in these
cases. And thus the prescriptive period under
Section 3(6), paragraph 4 of the Carriage of Goods
by Sea Act does not apply. The applicable
prescriptive period is that found in the Civil Code,
namely, either ten years for breach of a written
contract or four years for quasi-delict (Arts. 1144[1]
and 1146). Since the complaints in these appealed
cases were filed two years and five months (as to
Davao Merchandising Corp. shipment) and 2 years
and 8 months (as to Teves shipment), from the
arrival of the two shipments, it is clear that the
causes of action have not yet prescribed.
LHUILLIER VS BRITISH AIRWAYS
FACTS:
Edna Diago Lhuillier took British Airway flight 548
from London to Rome. Once on board,she requested
Julian Halliday, one of its flight attendants, to assist
her in placing her hand-carried luggage in the
overhead bin. Halliday allegedly refused to help and
assist her, and even sarcastically remarked that "If I
were to help all 300 passengers in this flight, I would
have a broken back!". Edna further alleged that when
the plane was about to land in Rome, another flight
attendant, Nickolas Kerrigan (Kerrigan), singled her
out from among all the passengers in the business
class section to lecture on plane safety. Upon arrival
in Rome, petitioner complained to British Airwayss
ground
manager and demanded an apology. However, the
latter declared that the flight stewards were "only
doing their job."Edna then filed a complaint against
British Airways before the Regional Trial Court (RTC)
of Makati City. Summons, together with a copy of the
complaint, was served on British Airways through
Violeta Echevarria, General Manager of
Euro-Philippine Airline Services, Inc. British Airways
filed a Motion to Dismiss on grounds of lack of
jurisdiction over the case and over the person of the
respondent. It 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).
The RTC of Makati City granted the Motion to
Dismiss. Edna filed a Motion for Reconsideration but
the motion was denied. Hence, this petition.
ISSUE:
Whether Philippine Courts have jurisdiction over a
tortious conduct committed against aFilipino citizen
and resident by airline personnel of a foreign carrier
travelling beyond the territoriallimit of any foreign
country
HELD:
Petition
DENIED
.It is settled that the Warsaw Convention has the
force and effect of law in this country.
xxx
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. The Warsaw Convention applies because the
air travel, where the alleged tortious conduct
occurred, was between the United Kingdom and Italy,
which are both signatories to the Warsaw
Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage
of persons, luggage or goods performed by aircraft
for reward. I applies equally to gratuitous carriage by
aircraft performed by an air transport undertaking.
Thus, when the place of departure and the place of
destination in a contract of carriage aresituated
within the territories of two High Contracting Parties,
said carriage is deemed an"international carriage".
The High Contracting Parties referred to herein were
the signatories to the Warsaw Convention and those
which subsequently adhered to it.
In the case at bench, petitioners place of departure
was London, United Kingdom while her
place of destination was Rome, Italy. Both the United
Kingdom and Italy signed and ratified the Warsaw
Convention. As such, the transport of the petitioner is
deemed to be an "international
carriage" within the contemplation of the Warsaw
Convention. Since the Warsaw Convention appliesin
the instant case, then the jurisdiction over the
subject matter of the action is governed by
theprovisions of the Warsaw Convention.Under
Article 28(1) of the Warsaw Convention, the plaintiff
may bring the action fordamages before:
1. the court where the carrier is domiciled;2. the
court where the carrier has its principal place of
business;3. the court where the carrier has an
establishment by which the contract has been made;
or4. the court of the place of destination.In this case,
it is not disputed that respondent is a British
corporation domiciled in London,United Kingdom
with London as its principal place of business. Hence,
under the first and secondjurisdictional rules, the
petitioner may bring her case before the courts of
London in the UnitedKingdom. In the passenger ticket
and baggage check presented by both the petitioner
andrespondent, it appears that the ticket was issued
in Rome, Italy. Consequently, under the
thirdjurisdictional rule, the petitioner has the option
to bring her case before the courts of Rome in
Italy.Finally, both the petitioner and respondent aver
that the place of destination is Rome, Italy, which
isproperly designated given the routing presented in
the said passenger ticket and baggage check.
Accordingly, petitioner may bring her action before
the courts of Rome, Italy. The Court finds thatthe RTC
of Makati correctly ruled that it does not have
jurisdiction over the case filed by thepetitioner. The
Court further held that Article 28(1) of the Warsaw
Convention is jurisdictional incharacter:
A number of reasons tends to support the
characterization of Article 28(1) as a jurisdiction and
not a venue provision. First,the wording of Article 32,
which indicates the places where the action for
damages "must" be brought, underscores
themandatory nature of Article 28(1). Second, this
characterization is consistent with one of the
objectives of the Convention, which is to "regulate in
a uniform manner the conditions of international
transportation by air." Third, the Convention doesnot
contain any provision prescribing rules of jurisdiction
other than Article 28(1), which means that the phrase
"rules as tojurisdiction" used in Article 32 must refer
only to Article 28(1). In fact, the last sentence of
Article 32 specifically deals withthe exclusive
enumeration in Article 28(1) as "jurisdictions," which,
as such, cannot be left to the will of the parties
regardlessof the time when the damage occurred.x x
xx
In other words, where the matter is governed by the
Warsaw Convention, jurisdiction takeson a dual
concept. Jurisdiction in the international sense must
be established in accordance with Article 28(1) of the
Warsaw Convention, following which the jurisdiction
of a particular court mustbe established pursuant to
the applicable domestic law. Only after the question
of which court hasjurisdiction is determined will the
issue of venue be taken up. This second question
shall be governedby the law of the court to which the
case is submitted. Tortious conduct as ground for the
Lhuiller
s complaint is within the purview of the Warsaw
Convention. It is thus settled that allegations of
tortious conduct committed against an
airlinepassenger during the course of the
international carriage do not bring the case outside
the ambit of the Warsaw Convention. British Airways,
in seeking remedies from the trial court through
specialappearance of counsel, is not deemed to have
voluntarily submitted itself to the jurisdiction of
thetrial court. xxx In refuting the contention of
petitioner, respondent cited La Naval Drug
Corporation v.Court of Appeals
where the Court held that even if a party "challenges
the jurisdiction of the courtover his person, as by
reason of absence or defective service of summons,
and he also invokes othergrounds for the dismissal of
the action under Rule 16, he is not deemed to be in
estoppel or to have waived his objection to the
jurisdiction over his person."

UNITED AIRLINES VS UY
FACTS:
October 13, 1989 Respondent Willie Uy is a
passenger of petitioner United Airlines, bound from
San Francisco to Manila. While in San Francisco, it
was found that one piece of his luggage was over the
maximum weight allowance of 70 kg. per bag. A
United Airlines employee rebuked him and in a loud
voice, in front of the milling crowd, ordered him to
repack his things accordingly. Wishing not to create a
scene, Willie did as asked. Unfortunately, his luggage
was still overweight so the airline billed him
overweight charges. Willie offered to pay the charges
with a Miscellaneous Charge Order (MCO) or an
airline pre-paid credit but the same employee, and an
airline supervisor, refused to honor it, contending
that there were discrepancies in the figures. Thus,
Willie was forced to pay the charges with his
American Express credit card. Upon arrival in Manila,
Willie discovered that one of his bags had been
slashed and its contents, amounting to US$5,310.00,
stolen.
October 16, 1989 he sent his first letter of demand
to United Airlines. The airline did not refute Willies
allegations and mailed a check representing payment
of his loss based on the maximum liability of US$9.70
per pound. Willie, thinking the amount to be grossly
inadequate to compensate him for his losses as well
as for the indignities he was subjected to, sent two
more letters to petitioner airline, one dated January 4,
1990 and the other dated October 28, 1991,
demanding out-of-court settlement of P1,000,000.00.
June 9, 1992 Willie filed a complaint for damages
before the Philippine courts. He had two causes of
action: (1) the shabby and humiliating treatment he
received from petitioners employees at the San
Francisco Airport which caused him extreme
embarrassment and social humiliation; and (2) the
slashing of his luggage and the loss of personal
effects amounting to US$5,310.00.
For its part, United Airlines moved to dismiss the
complaint on the ground that it was filed out of time.
Under Art. 29 of the Warsaw Convention, the right to
damages shall be extinguished if an action is not
brought within 2 years. However, the second
paragraph of the said provision stated that the
method of calculating the period of limitation shall be
determined by the law of the court to which the case
is submitted. It is Willies position that our rules on
interruption of prescriptive period should apply.
When he sent his letters of demand, the 2-year
period was tolled, giving him ample time to file his
complaint.
The trial court ordered the dismissal of the case,
holding that Art. 29(2) refers not to the local forums
rules in interrupting the prescriptive period but only
to the rules of determining the time in which the
action was deemed commenced (meaning filed).
Willie filed his motion for reconsideration of the
order of dismissal only on the 14th day. The trial
court denied his motion and 2 days later Willie filed
his notice of appeal. United Airlines this time
contended that the notice of appeal was filed beyond
the 15-day reglementary period and should therefore
be dismissed. The CA, however, took cognizance of
the case in the interest of justice and ruled in favour
of respondent. Hence, this petition for certiorari.
ISSUE:
Whether or not the action for damages is barred by
the lapse of the 2-year prescriptive period under Art.
29 of the Warsaw Convention
HELD:
Supreme Court held that although the 2-year
prescriptive period under the Warsaw Convention
has lapsed, it did not preclude the application of
other pertinent provisions of the Civil Code. Thus, the
action for damages could still be filed based on tort
which can be filed within 4 years from the time cause
of action accrued. As for the action pertaining to the
loss of the contents of the luggage, while it was well
within the bounds of the Warsaw Convention, the
Supreme Court found that there was an exception to
the applicability of the 2-year prescriptive period
that is when the airline employed delaying tactics and
gave the passenger the run-around.
Applicability of the Warsaw Convention: Courts have
discretion whether to apply them or not
Within our jurisdiction we have held that the Warsaw
Convention can be applied, or ignored, depending on
the peculiar facts presented by each case. Thus, we
have ruled that the Convention's provisions 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. 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. 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.
Respondent's complaint reveals that he is suing on
two (2) causes of action: (a) the shabby and
humiliating treatment he received from petitioner's
employees at the San Francisco Airport which caused
him extreme embarrassment and social humiliation;
and, (b) the slashing of his luggage and the loss of his
personal effects amounting to US $5,310.00.
While his second 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 first cause of action -an action for
damages arising from the misconduct of the airline
employees and the violation of respondent's rights as
passenger - clearly is not.
Action for damages arising from the misconduct of
the airline employees and the violation of the
respondents rights as passengers is covered under
the Civil Code
Consequently, insofar as the first cause of action is
concerned, respondent's failure to file his complaint
within the two (2)-year limitation of the Warsaw
Convention does not bar his action since petitioner
airline may still be held liable for breach of other
provisions of the Civil Code which prescribe a
different period or procedure for instituting the
action, specifically, Art. 1146 thereof which
prescribes four (4) years for filing an action based on
torts.
Exception to the Application of the 2-year
prescriptive period: When airline employed delaying
tactics
As for respondent's second cause of action, indeed
the travaux preparatories of the Warsaw Convention
reveal that the delegates thereto intended the two
(2)-year limitation incorporated in Art. 29 as an
absolute bar to suit and not to be made subject to
the various tolling provisions of the laws of the forum.
This therefore forecloses the application of our own
rules on interruption of prescriptive periods. Article
29, par. (2), was intended only to let local laws
determine whether an action had been commenced
within the two (2)-year period, and within our
jurisdiction an action shall be deemed commenced
upon the filing of a complaint. Since it is
indisputable that respondent filed the present action
beyond the two (2)-year time frame his second cause
of action must be barred. Nonetheless, it cannot be
doubted that respondent exerted efforts to
immediately convey his loss to petitioner, even
employed the services of two (2) lawyers to follow up
his claims, and that the filing of the action itself was
delayed because of petitioner's evasion.
Verily, respondent filed his complaint more than two
(2) years later, beyond the period of limitation
prescribed by the Warsaw Convention for filing a
claim for damages. However, it is obvious that
respondent was forestalled from immediately filing
an action because petitioner airline 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 his claims
were denied by petitioner 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 Art. 29 of the Warsaw
Convention that an action for damages should be
filed within two (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 airline itself. Thus, private
respondent's second cause of action cannot be
considered as time-barred under Art. 29 of the
Warsaw Convention.
WHEREFORE, the assailed Decision of the Court of
Appeals reversing and setting aside the appealed
order of the trial court granting the motion to dismiss
the complaint, as well as its Resolution denying
reconsideration, is AFFIRMED.
SANTOS VS NORTHWEST ORIENT AIRLINES
FACTS:
Petitioner is a minor and a resident of the Philippines.
Private respondent Nortwest Orient Airlines (NOA) is
a foreign corporation with principal office in
Minnesota, U.S.A. and licensed to do business and
maintain a branch office in the Philippines. The
petitioner purchased from NOA a round-trip ticket in
San Francisco, U.S.A. In December 19, 1986, the
petitioner checked in the at the NOA counter in the
San Francisco airport for his departure to Manila.
Despite a previous confirmation and re-confirmation,
he was informed that he had no reservation for his
flight for Tokyo to Manila. He therefore had to be
wait-listed. On March 12, 1987, the petitioner sued
NOA for damages in RTC Makati. NOA moved to
dismiss the complaint on the ground of lack of
jurisdiction.
ISSUE:
Whether or not Article 28 (1) of the Warsaw
Convention is in accordance with the constitution so
as to deprive the Philippine Courts jurisdiction over
the case
HELD:
Art. 28. (1) An action for damage must be brought at
the option of the plaintiff, in the territory of one of
the High Contracting Parties, either before the court
of the domicile of the carrier or of his principal place
of business, or where he has a place of business
through which the contract has been made, or before
the court at the place of destination.
Constitutionality of the Warsaw Convention
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.
Does the Warsaw Convention apply in this case?
By its own terms, the Convention applies to all
international transportation of persons performed by
aircraft for hire.
International transportation is defined in paragraph
(2) of Article 1 as follows:
(2) For the purposes of this convention, the
expression "international transportation" shall mean
any transportation in which, 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 . . .
Whether the transportation is "international" is
determined by the contract of the parties, which in
the case of passengers is the ticket. When the
contract of carriage provides for the transportation of
the passenger between certain designated terminals
"within the territories of two High Contracting
Parties," the provisions of the Convention
automatically apply and exclusively govern the rights
and liabilities of the airline and its passenger.
Since the flight involved in the case at bar is
international, the same being from the United States
to the Philippines and back to the United States, it is
subject to the provisions of the Warsaw Convention,
including Article 28(1), which enumerates the four
places where an action for damages may be brought.
Does Article 28(1) refer to Jurisdiction or Venue?
...where the matter is governed by the Warsaw
Convention, jurisdiction takes on a dual concept.
Jurisdiction in the international sense must be
established in accordance with Article 28(1) of the
Warsaw Convention, following which the jurisdiction
of a particular court must be established pursuant to
the applicable domestic law. Only after the question
of which court has jurisdiction is determined will the
issue of venue be taken up. This second question
shall be governed by the law of the court to which
the case is submitted.
Was the case properly filed in the Philippines, since
the plaintiffs destination was Manila?
The place of destination, within the meaning of the
Warsaw Convention, is determined by the terms of
the contract of carriage or, specifically in this case,
the ticket between the passenger and the carrier.
Examination of the petitioner's ticket shows that his
ultimate destination is San Francisco. Although the
date of the return flight was left open, the contract of
carriage between the parties indicates that NOA was
bound to transport the petitioner to San Francisco
from Manila. Manila should therefore be considered
merely an agreed stopping place and not the
destination.
Article 1(2) also draws a distinction between a
"destination" and an "agreed stopping place." It is the
"destination" and not an "agreed stopping place" that
controls for purposes of ascertaining jurisdiction
under the Convention.
The contract is a single undivided operation,
beginning with the place of departure and ending
with the ultimate destination. The use of the singular
in this expression indicates the understanding of the
parties to the Convention that every contract of
carriage has one place of departure and one place of
destination. An intermediate place where the
carriage may be broken is not regarded as a "place of
destination."
WHEREFORE, the petition is DENIED, with costs
against the petitioner. It is so ordered.
ALITALIA VS IAC
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
Alitalias offer of free airline tickets and commenced
an action for damages. As it turned out, the luggage
was actually forwarded to Ispra, but only aday 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:
W/N (1) the Warsaw Convention should be applied
to limit Alitalias liability; (2) Dr. Pablo isentitled to
nominal damages
HELD:
(1) NEGATIVE.
Under the Warsaw Convention, an air carrier is made
liable for damages for:a.The death, wounding or
other bodily injury of a passenger if the accident
causing it took place onboard the aircraft or I the
course of its operations of embarking or
disembarking;b.The destruction or loss of, or damage
to, any registered luggage or goods, if the
occurrencecausing it took place during the carriage
by air; andc.Delay in the transportation by air of
passengers, luggage or goods.The 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 The assigned errors shall be discussed seriatim
such default on his part as is considered to
beequivalent to willful misconduct. The Convention
does not thus operate as an exclusive enumeration of 1. The airline ticket (Exh. "G') contains the
theinstances of an airline's liability, or as an absolute following conditions:
limit of the extent of that liability. It should be
deemed alimit of liability only in those cases where
the cause of the death or injury to person, or NOTICE
destruction, loss or damage to property or delay in its
transport is not attributable to or attended by any
willful misconduct, badfaith, recklessness, or
otherwise improper conduct on the part of any If the passenger's journey involves an ultimate
official or employee for which thecarrier is destination or stop in a country other than the
responsible, and there is otherwise no special or country of departure the Warsaw Convention may be
extraordinary form of resulting injury.In the case at applicable and the Convention governs and in most
bar, no bad faith or otherwise improper conduct may cases limits the liability of carriers for death or
be ascribed to the employees of petitioner airline; personal injury and in respect of loss of or damage to
and Dr. Pablo's luggage was eventually returned to baggage. See also notice headed "Advice to
her, belatedly, it is true, but withoutappreciable International Passengers on Limitation of Liability.
damage. The fact is, nevertheless, that some species
of injury was caused to Dr. Pablobecause petitioner
ALITALIA misplaced her baggage and failed to deliver CONDITIONS OF CONTRACT
it to her at the time appointed - abreach of its
contract of carriage. Certainly, the compensation for
the injury suffered by Dr. Pablo cannotunder the
1. As used in this contract "ticket" means this
circumstances be restricted to that prescribed by the
passenger ticket and baggage check of which these
Warsaw Convention for delay in thetransport of
conditions and the notices form part, "carriage" is
baggage.
equivalent to "transportation," "carrier" means all air
carriers that carry or undertake to carry the
passenger or his baggage hereunder or perform any
(2) POSITIVE. other service incidental to such air carriage.
"WARSAW CONVENTION" means the convention for
She is not, of course, entitled to be compensated for
the Unification of Certain Rules Relating to
loss or damage to her luggage. She is however
International Carriage by Air signed at Warsaw, 12th
entitled to nominal damages which, as the law says,
October 1929, or that Convention as amended at The
is adjudicated in order that a right of the plaintiff,
Hague, 28th September 1955, whichever may be
whichhas been violated or invaded by the defendant,
applicable.
may be vindicated and recognized, and not for the
purposeof indemnifying the plaintiff that for any loss
suffered and this Court agrees that the respondent
Court of Appeals correctly set the amount thereof 2. Carriage hereunder is subject to the rules and
at PhP 40,000.00 limitations relating to liability established by the
Warsaw Convention unless such carriage is not
"international carriage" as defined by that
Convention.
PAN AMERICA WORLD AIRWAYS VS IAC

3. To the extent not in conflict with the foregoing

FACTS:
carriage and other services performed by each carrier
are subject to: (i) provisions contained in this ticket,
(ii) applicable tariffs, (iii) carrier's conditions of
ISSUE: carriage and related regulations which are made part
hereof (and are available on application at the offices
of carrier), except in transportation between a place
HELD: in the United States or Canada and any place outside
thereof to which tariffs in force in those countries
apply.
xxx xxx xxx
NOTICE OF BAGGAGE LIABILITY LIMITATIONS
Liability for loss, delay, or damage to baggage is
limited as follows unless a higher value is declared in
advance and additional charges are paid: (1)for most
international travel (including domestic portions of
international journeys) to approximately $9.07 per
pound ($20.00 per kilo) for checked baggage and
$400 per passenger for unchecked baggage: (2) for
travel wholly between U.S. points, to $750 per
passenger on most carriers (a few have lower limits).
Excess valuation may not be declared on certain
types of valuable articles. Carriers assume no liability
for fragile or perishable articles. Further information
may be obtained from the carrier. [Emphasis
supplied.].
On the basis of the foregoing stipulations printed at
the back of the ticket, petitioner contends that its
liability for the lost baggage of private respondent
Pangan is limited to $600.00 ($20.00 x 30 kilos) as the
latter did not declare a higher value for his baggage
and pay the corresponding additional charges.
To support this contention, petitioner cites the case
of Ong Yiu v. Court of Appeals [G.R. No. L-40597,
June 29, 1979, 91 SCRA 223], where the Court
sustained the validity of a printed stipulation at the
back of an airline ticket limiting the liability of the
carrier for lost baggage to a specified amount and
ruled that the carrier's liability was limited to said
amount since the passenger did not declare a higher
value, much less pay additional charges.
We find the ruling in Ong Yiu squarely applicable to
the instant case. In said case, the Court, through
Justice Melencio Herrera, stated:
Petitioner further contends that respondent Court
committed grave error when it limited PAL's
carriage liability to the amount of P100.00 as
stipulated at the back of the ticket....
We agree with the foregoing finding. The pertinent
Condition of Carriage printed at the back of the
plane ticket reads:
8. BAGGAGE LIABILITY ... The total liability of the
Carrier for lost or damage 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 Pl,000.00 and additional charges are
paid pursuant to Carrier's tariffs.
There is no dispute that petitioner did not declare
any higher value for his luggage, much less (lid he
pay any additional transportation charge.
But petitioner argues that there is nothing in the
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 Article 1750 * of the Civil Code has not been
complied with.
While it may be true that petitioner had not signed
the plane ticket (Exh. "12"), 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." [Tannebaum v. National Airline,
Inc., 13 Misc. 2d 450,176 N.Y.S. 2d 400; Lichten v.
Eastern Airlines, 87 Fed. Supp. 691; Migoski v.
Eastern Air Lines, Inc., Fla., 63 So. 2d 634.] It is what
is known as a contract of "adhesion," in regards
which it has been said that contracts of adhesion
wherein one party imposes a ready made form of
contract on the other, as the plane ticket in the case
at bar, are contracts not entirely prohibited. The
one who adheres to the contract is in reality free to
reject it entirely; if he adheres, he gives his
consent,[Tolentino, Civil Code, Vol. IV, 1962 ed., p.
462, citing Mr. Justice J.B.L. Reyes, Lawyer's Journal,
Jan. 31, 1951, p. 49]. And as held in Randolph v.
American Airlines, 103 Ohio App. 172,144 N.E. 2d
878; Rosenchein v. Trans World Airlines, Inc., 349
S.W. 2d 483.] "a contract limiting liability upon an
agreed valuation does not offend against the policy
of the law forbidding one from contracting against
his own negligence."
Considering, therefore, that petitioner had failed to
declare a higher value for his baggage, he cannot be
permitted a recovery in excess of P100.00....
On the other hand, the ruling in Shewaram v.
Philippine Air Lines, Inc. [G.R. No. L-20099, July 2,
1966, 17 SCRA 606], where the Court held that the
stipulation limiting the carrier's liability to a
specified amount was invalid, finds no application in
the instant case, as the ruling in said case was
premised on the finding that the conditions printed
at the back of the ticket were so small and hard to
read that they would not warrant the presumption
that the passenger was aware of the conditions and
that he had freely and fairly agreed thereto. In the
instant case, similar facts that would make the case
fall under the exception have not been alleged,
much less shown to exist.
In view thereof petitioner's liability for the lost
baggage is limited to $20.00 per kilo or $600.00, as
stipulated at the back of the ticket.
/////WARSAW///// At this juncture, in order to
rectify certain misconceptions the Court finds it
necessary to state that the Court of Appeal's reliance
on a quotation from Northwest Airlines, Inc. v.
Cuenca [G.R. No. L-22425, August 31, 1965, 14 SCRA
1063] to sustain the view that "to apply the Warsaw
Convention which limits a carrier's liability to US$9.07
per pound or US$20.00 per kilo in cases of
contractual breach of carriage ** is against public
policy" is utterly misplaced, to say the least. In said
case, while the Court, as quoted in the Intermediate
Appellate Court's decision, said:
Petitioner argues that pursuant to those provisions,
an air "carrier is liable only" in the event of death of a
passenger or injury suffered by him, or of destruction
or loss of, or damages to any checked baggage or any
goods, or of delay in the transportation by air of
passengers, baggage or goods. This pretense is not
borne out by the language of said Articles. The same
merely declare the carrier liable for damages in
enumerated cases, if the conditions therein specified
are present. Neither said provisions nor others in the
aforementioned Convention regulate or exclude
liability for other breaches of contract by the carrier.
Under petitioner's theory, 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.
it prefaced this statement by explaining that:
...The case is now before us on petition for review by
certiorari, upon the ground that the lower court has
erred: (1) in holding that the Warsaw Convention of
October 12, 1929, relative to transportation by air is
not in force in the Philippines: (2) in not holding that
respondent has no cause of action; and (3) in
awarding P20,000 as nominal damages.
We deem it unnecessary to pass upon the First
assignment of error because the same is the basis of
the second assignment of error, and the latter is
devoid of merit, even if we assumed the former to be
well taken. (Emphasis supplied.)
Thus, it is quite clear that the Court never intended to,
and in fact never did, rule against the validity of
provisions of the Warsaw Convention. Consequently,
by no stretch of the imagination may said quotation
from Northwest be considered as supportive of the
appellate court's statement that the provisions of the
Warsaw Convention limited a carrier's liability are
against public policy.
NORTHWEST VS CUENCA
FACTS:
This is an action for damages for alleged breach of
contract. After appropriate proceedings the Court of
First Instance of Manila, in which the case was
originally filed, rendered judgment sentencing
defendant Northwest Airlines, Inc. hereinafter
referred to as petitioner to pay to plaintiff Cuenca
hereinafter referred to as respondent the sum
of P20,000 as moral damages, together with the sum
of P5,000 as exemplary damages, with legal interest
thereon from the date of the filing of complaint,"
December 12, 1959, "until fully paid, plus the further
sum of P2,000 as attorney's fees and expenses of
litigation." On appeal taken by petitioner, said
decision was affirmed by the Court of Appeals, except
as to the P5,000.00 exemplary damages, which was
eliminated, and the P20,000.00 award for moral
damages, which was converted into nominal
damages. The case is now before us on petition for
review by certiorari filed by petitioner, upon the
ground that the lower court has erred: (1) in holding
that the Warsaw Convention of October 12, 1929,
relative to transportation by air is not in force in the
Philippines; (2) in not holding that respondent has no
cause of action; and (3) in awarding P20,000 as
nominal damages.
ISSUE:
HELD:
Indeed the second assignment of error is predicated
upon Articles 17, 18 and 19 of said Convention,
reading:
ART. 17. The carrier shall be liable for damages
sustained in the event of the death or wounding of a
passenger or any other bodily injury suffered by a
passenger, if the accident which caused the damage
so sustained took place on board the aircraft or in the
course of any of the operations of embarking or
disembarking.
ART. 18. (1) The carrier shall be liable for damage
sustained in the event of the destruction or loss of, or
of damage to, any checked baggage, or any goods, if
the occurrence which caused the damage so
sustained took place during the transportation by air.
(2) The transportation by air within the meaning of
the preceding paragraph shall comprise the period
during which the baggage or goods are in charge of
the carrier, whether in an airport or on board an
aircraft, or, in the case of a landing outside an airport,
in any place whatsoever.
(3) The period of the transportation by air shall not
extend to any transportation by land, by sea, or by
river performed outside an airport. If, however, such
transportation takes place in the performance of a
contract for transportation by air, for the purpose of
loading, delivery, or transhipment, any damage is
presumed, subject to proof to the contrary, to have
been the result of an event which took place during
the transportation by air.
ART. 19. The carrier shall be liable for damage
occasioned by delay in the transportation by air of
passengers, baggage, or goods.
Petitioner argues that pursuant to those provisions,
an air "carrier is liable only" in the event of death of
a passenger or injury suffered by him, or of
destruction or loss of, or damage to any checked
baggage or any goods, or of delay in the
transportation by air of passengers, baggage or
goods. This pretense is not borne out by the
language of said Articles. The same merely declare
the carrier liable for damages in the enumerated
cases, if the conditions therein specified are present.
Neither said provisions nor others in the
aforementioned Convention regulate or exclude
liability for other breaches of contract by the carrier.
Under petitioner's theory, 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.
The third assignment of error is based upon Medina
vs. Cresencia (52 Off. Gaz. 4606), and Quijano vs.
Philippine Air Lines (CA-G.R. No. 21804-R). Neither
case is, however, in point, aside from the fact that
the latter is not controlling upon us. In the first case,
this Court eliminated a P10,000 award for nominal
damages, because the aggrieved party had already
been awarded P6,000 as compensatory damages,
P30,000 as moral damages and P10,000 as exemplary
damages, and "nominal damages cannot co-exist
with compensatory damages." In the case at bar, the
Court of Appeals has adjudicated no such
compensatory, moral and exemplary damages to
respondent herein.
Moreover, there are special reasons why the
P20,000.00 award in favor of respondent herein is
justified, even if said award were characterized as
nominal damages. When his contract of carriage was
violated by the petitioner, respondent held the
office of Commissioner of Public Highways of the
Republic of the Philippines. Having boarded
petitioner's plane in Manila with a first class ticket
to Tokyo, he was, upon arrival at Okinawa,
transferred to the tourist class compartment.
Although he revealed that he was traveling in his
official capacity as official delegate of the Republic
to a conference in Tokyo, an agent of petitioner
rudely compelled him in the presence of other
passengers to move, over his objection, to the
tourist class, under threat of otherwise leaving him
in Okinawa. In order to reach the conference on
time, respondent had no choice but to obey.
It is true that said ticket was marked "W/L," but
respondent's attention was not called thereto.
Much less was he advised that "W/L" meant "wait
listed." Upon the other hand, having paid the first
class fare in full and having been given first class
accommodation as he took petitioner's plane in
Manila, respondent was entitled to believe that this
was a confirmation of his first class reservation and
that he would keep the same until his ultimate
destination, Tokyo. Then, too, petitioner has not
tried to explain or even alleged that the person to
whom respondent's first class seat was given had a
better right thereto. In other words, since the
offense had been committed with full knowledge of
the fact that respondent was an official
representative of the Republic of the Philippines,
the sum of P20,000 awarded as damages may well
be considered as merely nominal. At any rate,
considering that petitioner's agent had acted in a
wanton, reckless and oppressive manner, said
award may also be considered as one for exemplary
damages.
AIR FRANCE VS CARRASCOSO
FACTS:
Carrascoso, a civil engineer, was a first class
passenger of Air France on his way to Rome for a
pilgrimage. From Manila to Bangkok, he traveled in
first class, but at Bangkok, the Manager of Air
France forced him to vacate his seat in favor of a
white man who had a better right to the seat.
Carrascoso filed for moral damages, averring in his
complaint the contract of carriage between Air
France and himself. Air France claims that to
authorize an award for moral damages there must be
an averment of fraud or bad faith, upon which
Carrascosos complaint is silent.
ISSUE:
HELD:
A contract to transport passengers is quite different
in kind and degree from any other contractual
relation. 43And 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. Neglect or
malfeasance of the carriers employees, naturally,
could give ground for an action for damages.
Passengers do not contract merely for transportation.
They have a right to be treated by the carriers
employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected
against personal misconduct, injurious language,
indignities and abuses from such employees. So it is,
that any rule or discourteous conduct on the part of
employees towards a passenger gives the latter an
action for damages against the carrier. 44
Thus, Where a steamship company 45 had accepted
a passengers check, it was a breach of contract and a
tort, giving a right of action for its agent in the
presence of third persons to falsely notify her that
the check was worthless and demand payment under
threat of ejection, though the language used was not
insulting and she was not ejected. 46 And this,
because, although the relation of passenger and
carrier is contractual both in origin and nature
nevertheless the act that breaks the contract may be
also a tort. 47 And in another case, Where a
passenger on a railroad train, when the conductor
came to collect his fare tendered him the cash fare to
a point where the train was scheduled not to stop,
and told him that as soon as the train reached such
point he would pay the cash fare from that point to
destination, there was nothing in the conduct of the
passenger which justified the conductor in using
insulting language to him, as by calling him a lunatic,
48 and the Supreme Court of South Carolina there
held the carrier liable for the mental suffering of said
passenger.
Petitioners contract with Carrascoso is one attended
with public duty. The stress of Carrascosos action as
we have said, is placed upon his wrongful expulsion.
This is a violation of public duty by the petitioner air
carrier a case of quasi-delict. Damages are proper.
ZULUETA VS PAN
FACTS:
Spouses Rafael Zulueta and Telly Albert Zulueta, with
their daughter boarded a PANAM plane from
Honolulu to Manila, the first leg of which was Wake
Island. While on stopover, Mr. Zulueta found the
need to relieve himself and after finding the
terminals comfort rooms full, he walked down the
beach to do his business. Meanwhile, the flight was
called and Mr. Zuluetas absence was noticed.
Heading towards the ram, plaintiff remarked, You
people almost made me miss your flight. You have a
defective announcing system and I was not paged.
Instead of allowing plaintiff to board the plane,
however, the airport manager stopped plaintiff and
asked him to surrender his baggages for inspection.
Refusing to comply with the order, plaintiff was not
allowed to board the plane. His wife and daughter
were able to proceed but were instructed to leave
their baggages behind.
Plaintiff instituted present petition for recovery of
damages against respondents for breach of contract.
The defendants, however, maintain that plaintiffs
reason for going to the beach was not to relieve
himself but because he had a quarrel with his wife.
////We find this pretense devoid of merit. Although
Mr. Zulueta had to look for a secluded place in the
beach to relieve himself, beyond the view of others,
defendant's airport manager, whom Mr. Zulueta
informed about it, soon after the departure of the
plane, could have forthwith checked the veracity of
Mr. Zulueta's statement by asking him to indicate the
specific place where he had been in the beach and
then proceeding thereto for purposes of verification.
Then, again, the passenger of a plane seldom knows
how many toilets it has. As a general rule, his
knowledge is limited to the toilets for the class
first class or tourist class in which he is. Then, too,
it takes several minutes for the passengers of big
aircrafts, like those flying from the U.S. to the
Philippines, to deplane. Besides, the speed with
which a given passenger may do so depends, largely,
upon the location of his seat in relation to the exit
door. He cannot go over the heads of those nearer
than he thereto. Again, Mr. Zulueta may have stayed
in the toilet terminal for some time, expecting one of
the commodes therein to be vacated soon enough,
before deciding to go elsewhere to look for a place
suitable to his purpose. But he had to walk, first, from
the plane to the terminal building and, then, after
vainly waiting therein for a while, cover a distance of
about 400 yards therefrom to the beach, and seek
there a place not visible by the people in the plane
and in the terminal, inasmuch as the terrain at Wake
Island is flat. What is more, he must have had to
takeoff part, at least, of his clothing, because,
without the facilities of a toilet, he had to wash
himself and, then, dry himself up before he could be
properly attired and walk back the 400 yards that
separated him from the terminal building and/or the
plane. Considering, in addition to the foregoing, the
fact that he was not feeling well, at that time, We are
not prepared to hold that it could not have taken him
around an hour to perform the acts narrated by him.
But, why asks the defendant did he not reveal
the same before the plane took off? The record
shows that, even before Mr. Zulueta had reached the
ramp leading to the plane, Capt. Zentner was already
demonstrating at him in an intemperate and arrogant
tone and attitude ("What do you think you are?),
thereby impelling Mr. Zulueta to answer back in the
same vein. As a consequence, there immediately
ensued an altercation in the course of which each
apparently tried to show that he could not be cowed
by the other. Then came the order of Capt. Zentner
to off-load all of the Zuluetas, including Mrs. Zulueta
and the minor Miss Zulueta, as well as their luggage,
their overcoats and other effects handcarried by
them; but, Mr. Zulueta requested that the ladies be
allowed to continue the trip. Meanwhile, it had taken
time to locate his four (4) pieces of luggage. As a
matter of fact, only three (3) of them were found,
and the fourth eventually remained in the plane. In
short, the issue between Capt. Zentner and Mr.
Zulueta had been limited to determining whether the
latter would allow himself to be browbeaten by the
former. In the heat of the altercation, nobody had
inquired about the cause of Mr. Zulueta's delay in
returning to the plane, apart from the fact that it was
rather embarrassing for him to explain, in the
presence and within the hearing of the passengers
and the crew, then assembled around them, why he
had gone to the beach and why it had taken him
some time to answer there a call of nature, instead of
doing so in the terminal building.
ISSUE:
Whether or not plaintiff is entitled to damages for
breach of contract.
HELD:

YES!!!!!
Award for exemplary damages:
It is urged by the defendant that exemplary damages
are not recoverable in quasi-delicts, pursuant to
Article 2231 of our Civil Code, except when the
defendant has acted with "gross negligence," and
that there is no specific finding that it had so acted. It
is obvious, however, that in off-loading plaintiff at
Wake Island, under the circumstances heretofore
adverted to, defendant's agents had acted with
malice aforethought and evident bad faith. If "gross
negligence" warrants the award of exemplary
damages, with more reason is its imposition justified
when the act performed is deliberate, malicious and
tainted with bad faith.
Thus, in Lopez v. PANAM, We held:
The rationale behind exemplary or corrective
damages is, as the name implies, to provide an
example or correction for public good. Defendant
having breached its contracts in bad faith, the court,
as stated earlier, may award exemplary damages in
addition to moral damages (Articles 2229, 2232, New
Civil Code.)
Award for moral damages:
In fact, Article 2217 of the Civil Code of the
Philippines explicitly provides that "(t)hough
incapable of pecuniary computation, moral damages
may be recovered if they are the proximate result of
the defendant's wrongful act or omission." Hence,
"(n)o proof pecuniary loss necessary" pursuant to
Article 2216 of the same Code "in order that
moral ... damages may be adjudicated." And "(t)he
assessment of such damages ... is left to the
discretion of the court" - said article adds - "according
to the circumstances of each case."
From the 1972 case:
The records amply establish plaintiffs' right to recover
both moral and exemplary damages. Indeed, the
rude and rough reception plaintiff received at the
hands of Sitton or Captain Zentner when the latter
met him at the ramp ("what in the hell do you think
you are? Get on that plane"); the menacing attitude
of Zentner or Sitton and the supercilious manner in
which he had asked plaintiff to open his bags ("open
your bag," and when told that a fourth bag was
missing, "I don't give a damn"); the abusive language
and highly scornful reference to plaintiffs as monkeys
by one of PANAM's employees (who turning to Mrs.
Zulueta and Miss Zulueta remarked, "will you pull
these three monkeys out of here?"); the unfriendly
attitude, the ugly stares and unkind remarks to which
plaintiffs were subjected, and their being cordoned
by men in uniform as if they were criminals, while
plaintiff was arguing with Sitton; the airline officials'
refusal to allow plaintiff to board the plane on the
pretext that he was hiding a bomb in his luggage and
their arbitrary and high-handed decision to leave him
in Wake; Mrs. Zulueta's having suffered a nervous
breakdown for which she was hospitalized as a result
of the embarrassment, insults and humiliations to
which plaintiffs were exposed by the conduct of
PANAM's employees; Miss Zulueta's having suffered
shame, humiliation and embarrassment for the
treatment received by her parents at the airport
all these justify an award for moral damages resulting
from mental anguish, serious anxiety, wounded
feelings, moral shock, and social humiliation thereby
suffered by plaintiffs.
YES, plaintiff is entitled to damages. Firstly,
plaintiffs testimony about what he did upon
reaching the beach is uncontradicted. Furthermore,
there is absolutely no direct evidence about said
alleged quarrel. If such was true, surely, plaintiff
would not have walked back from the beach to the
terminal before the plane had resumed its flight to
Manila, thereby exposing his presence to the full
view of those who were looking for him.
Anent the request of the common carrier to inspect
the bags of plaintiff, it appears that Captain Zentner
received information that one of the passengers
expressed a fear of a bomb on board the plane. As a
result, he asked for the plaintiffs bags to verify the
bomb. Nevertheless, this claim is unfounded. The
Captain failed to explain why he seemingly assumed
that the alleged apprehension of his information
was justified. Plaintiff himself intimated to them
that he was well known to the US State Department
and that the Captain was not even aware of the
informants name or any circumstances which may
substantiate the latters fear of a certain bomb.
Defendants further argue that plaintiff was also
guilty of contributory negligence for failure to
reboard the plane within the 30 minutes announced
before the passengers debarked therefrom. This
may have justified a reduction of the damages had
plaintiff been unwittingly left by the plane, owing to
the negligence of PANAM personnel, or even,
wittingly, if he could not be found before the planes
departure. It does not, and cannot have such
justification in the case at bar, plaintiff having
shown up before the plane had taken off and he
having been off-loaded intentionally and with
malice.

With all the foregoing, it is clear that plaintiff is

entitled to damages from respondent company.