TRANSPO CASES (I)

THE WARSAW CONVENTION

LHUILLER VS. BRITISH AIRWAYS

DEL CASTILLO, J.:

Jurisdictio est potestas de publico introducta cum necessitate juris dicendi. Jurisdiction is a power
introduced for the public good, on account of the necessity of dispensing justice.1

Factual Antecedents

On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint2 for damages against respondent
British Airways before the Regional Trial Court (RTC) of Makati City. She alleged that on February 28,
2005, she took respondent’s flight 548 from London, United Kingdom to Rome, Italy. Once on board, she
allegedly requested Julian Halliday (Halliday), one of the respondent’s flight attendants, to assist her in
placing her hand-carried luggage in the overhead bin. However, 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!"

Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight attendant,
Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the business class section
to lecture on plane safety. Allegedly, Kerrigan made her appear to the other passengers to be ignorant,
uneducated, stupid, and in need of lecturing on the safety rules and regulations of the plane. Affronted,
petitioner assured Kerrigan that she knew the plane’s safety regulations being a frequent traveler.
Thereupon, Kerrigan allegedly thrust his face a mere few centimeters away from that of the petitioner and
menacingly told her that "We don’t like your attitude."

Upon arrival in Rome, petitioner complained to respondent’s ground manager and demanded an apology.
However, the latter declared that the flight stewards were "only doing their job."

Thus, petitioner filed the complaint for damages, praying that respondent be ordered to pay ₱5 million as
moral damages, ₱2 million as nominal damages, ₱1 million as exemplary damages, ₱300,000.00 as
attorney’s fees, ₱200,000.00 as litigation expenses, and cost of the suit.

On May 16, 2005, summons, together with a copy of the complaint, was served on the respondent through
Violeta Echevarria, General Manager of Euro-Philippine Airline Services, Inc.3

On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion to
Dismiss4 on grounds of lack of jurisdiction over the case and over the person of the respondent.
Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have jurisdiction
over the complaint for damages pursuant to the Warsaw Convention,5 Article 28(1) of which provides:

An action for damages must be brought at the option of the plaintiff, either before the court of domicile of
the carrier or his principal place of business, or where he has a place of business through which the
contract has been made, or before the court of the place of destination.
Thus, since a) respondent is domiciled in London; b) respondent’s principal place of business is in
London; c) petitioner bought her ticket in Italy (through Jeepney Travel S.A.S, in Rome);6 and d) Rome,
Italy is petitioner’s place of destination, then it follows that the complaint should only be filed in the
proper courts of London, United Kingdom or Rome, Italy.

Likewise, it was alleged that the case must be dismissed for lack of jurisdiction over the person of the
respondent because the summons was erroneously served on Euro-Philippine Airline Services, Inc. which
is not its resident agent in the Philippines.

On June 3, 2005, the trial court issued an Order requiring herein petitioner to file her
Comment/Opposition on the Motion to Dismiss within 10 days from notice thereof, and for respondent to
file a Reply thereon.7 Instead of filing a Comment/Opposition, petitioner filed on June 27, 2005, an
Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint and Issuance of Alias
Summons.8 Petitioner alleged that upon verification with the Securities and Exchange Commission, she
found out that the resident agent of respondent in the Philippines is Alonzo Q. Ancheta. Subsequently, on
September 9, 2005, petitioner filed a Motion to Resolve Pending Incident and Opposition to Motion to
Dismiss.9

Ruling of the Regional Trial Court

On October 14, 2005, the RTC of Makati City, Branch 132, issued an Order10 granting respondent’s
Motion to Dismiss. It ruled that:

The Court sympathizes with the alleged ill-treatment suffered by the plaintiff. However, our Courts have
to apply the principles of international law, and are bound by treaty stipulations entered into by the
Philippines which form part of the law of the land. One of this is the Warsaw Convention. Being a
signatory thereto, the Philippines adheres to its stipulations and is bound by its provisions including the
place where actions involving damages to plaintiff is to be instituted, as provided for under Article 28(1)
thereof. The Court finds no justifiable reason to deviate from the indicated limitations as it will only run
counter to the provisions of the Warsaw Convention. Said adherence is in consonance with the comity of
nations and deviation from it can only be effected through proper denunciation as enunciated in the
Santos case (ibid). Since the Philippines is not the place of domicile of the defendant nor is it the principal
place of business, our courts are thus divested of jurisdiction over cases for damages. Neither was
plaintiff’s ticket issued in this country nor was her destination Manila but Rome in Italy. It bears stressing
however, that referral to the court of proper jurisdiction does not constitute constructive denial of
plaintiff’s right to have access to our courts since the Warsaw Convention itself provided for jurisdiction
over cases arising from international transportation. Said treaty stipulations must be complied with in
good faith following the time honored principle of pacta sunt servanda.

The resolution of the propriety of service of summons is rendered moot by the Court’s want of
jurisdiction over the instant case.

WHEREFORE, premises considered, the present Motion to Dismiss is hereby GRANTED and this case is
hereby ordered DISMISSED.

Petitioner filed a Motion for Reconsideration but the motion was denied in an Order 11 dated January 4,
2006.

Petitioner now comes directly before us on a Petition for Review on Certiorari on pure questions of law,
raising the following issues:
Issues

I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS CONDUCT

COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE PERSONNEL OF A
FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN
COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW CONVENTION.

II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION TO

DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE
AND OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED
ITSELF TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO, WHEN THE VERY
LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF THE CARRIER.

Petitioner’s Arguments

Petitioner argues that her cause of action arose not from the contract of carriage, but from the tortious
conduct committed by airline personnel of respondent in violation of the provisions of the Civil Code on
Human Relations. Since her cause of action was not predicated on the contract of carriage, petitioner
asserts that she has the option to pursue this case in this jurisdiction pursuant to Philippine laws.

Respondent’s Arguments

In contrast, respondent maintains that petitioner’s claim for damages fell within the ambit of Article 28(1)
of the Warsaw Convention. As such, the same can only be filed before the courts of London, United
Kingdom or Rome, Italy.

Our Ruling

The petition is without merit.

The Warsaw Convention has the force and effect of law in this country.

It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos III v.
Northwest Orient Airlines,12 we held that:

The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating
to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on
February 13, 1933. The Convention was concurred in by the Senate, through its Resolution No. 19, on
May 16, 1950. The Philippine instrument of accession was signed by President Elpidio Quirino on
October 13, 1950, and was deposited with the Polish government on November 9, 1950. The Convention
became applicable to the Philippines on February 9, 1951. On September 23, 1955, President Ramon
Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto, "to the end that the
same and every article and clause thereof may be observed and fulfilled in good faith by the Republic of
the Philippines and the citizens thereof."

The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as
such, has the force and effect of law in this country.13
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. It applies equally to gratuitous carriage by aircraft performed by an air
transport undertaking.

2. For the purposes of this Convention the expression "international carriage" means any carriage
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 carriage or a transhipment, are situated either
within the territories of two High Contracting Parties, or within the territory of a single High
Contracting Party, if there is an agreed stopping place within a territory subject to the
sovereignty, suzerainty, mandate or authority of another Power, even though that Power is not a
party to this Convention. A carriage without such an agreed stopping place between territories
subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party is
not deemed to be international for the purposes of this Convention. (Emphasis supplied)

Thus, when the place of departure and the place of destination in a contract of carriage are situated 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.14

In the case at bench, petitioner’s place of departure was London, United Kingdom while her place of
destination was Rome, Italy.15 Both the United Kingdom16 and Italy17 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 applies in the instant case, then the jurisdiction over the subject matter of
the action is governed by the provisions of the Warsaw Convention.

Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages 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; or

4. 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 second jurisdictional
rules, the petitioner may bring her case before the courts of London in the United Kingdom. In the
passenger ticket and baggage check presented by both the petitioner and respondent, it appears that the
ticket was issued in Rome, Italy. Consequently, under the third jurisdictional 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 is properly 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. We thus find that the RTC of Makati correctly ruled that it does not have
jurisdiction over the case filed by the petitioner.

Santos III v. Northwest Orient Airlines18 applies in this case.

Petitioner contends that Santos III v. Northwest Orient Airlines19 cited by the trial court is inapplicable to
the present controversy since the facts thereof are not similar with the instant case.

We are not persuaded.

In Santos III v. Northwest Orient Airlines,20 Augusto Santos III, a resident of the Philippines, purchased a
ticket from Northwest Orient Airlines in San Francisco, for transport between San Francisco and Manila
via Tokyo and back to San Francisco. He was wait-listed in the Tokyo to Manila segment of his ticket,
despite his prior reservation. Contending that Northwest Orient Airlines acted in bad faith and
discriminated against him when it canceled his confirmed reservation and gave his seat to someone who
had no better right to it, Augusto Santos III sued the carrier for damages before the RTC. Northwest
Orient Airlines moved to dismiss the complaint on ground of lack of jurisdiction citing Article 28(1) of
the Warsaw Convention. The trial court granted the motion which ruling was affirmed by the Court of
Appeals. When the case was brought before us, we denied the petition holding that under Article 28(1) of
the Warsaw Convention, Augusto Santos III must prosecute his claim in the United States, that place
being the (1) domicile of the Northwest Orient Airlines; (2) principal office of the carrier; (3) place where
contract had been made (San Francisco); and (4) place of destination (San Francisco).21

We further held that Article 28(1) of the Warsaw Convention is jurisdictional in character. Thus:

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 the mandatory 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 does not contain any provision
prescribing rules of jurisdiction other than Article 28(1), which means that the phrase "rules as to
jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last sentence of Article 32
specifically deals with the exclusive enumeration in Article 28(1) as "jurisdictions," which, as such,
cannot be left to the will of the parties regardless of the time when the damage occurred.

xxxx

In other words, 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.22

Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines23 is analogous to the
instant case because (1) the domicile of respondent is London, United Kingdom; 24 (2) the principal office
of respondent airline is likewise in London, United Kingdom;25 (3) the ticket was purchased in Rome,
Italy;26 and (4) the place of destination is Rome, Italy.27 In addition, petitioner based her complaint on
Article 217628 of the Civil Code on quasi-delict and Articles 1929 and 2130 of the Civil Code on Human
Relations. In Santos III v. Northwest Orient Airlines,31Augusto Santos III similarly posited that Article 28
(1) of the Warsaw Convention did not apply if the action is based on tort. Hence, contrary to the
contention of the petitioner, the factual setting of Santos III v. Northwest Orient Airlines 32 and the instant
case are parallel on the material points.

Tortious conduct as ground for the petitioner’s complaint is within the purview of the Warsaw
Convention.

Petitioner contends that in Santos III v. Northwest Orient Airlines,33 the cause of action was based on a
breach of contract while her cause of action arose from the tortious conduct of the airline personnel and
violation of the Civil Code provisions on Human Relations.34 In addition, she claims that our
pronouncement in Santos III v. Northwest Orient Airlines35 that "the allegation of willful misconduct
resulting in a tort is insufficient to exclude the case from the comprehension of the Warsaw Convention,"
is more of an obiter dictum rather than the ratio decidendi.36 She maintains that the fact that said acts
occurred aboard a plane is merely incidental, if not irrelevant.37

We disagree with the position taken by the petitioner. Black defines obiter dictum as "an opinion entirely
unnecessary for the decision of the case" and thus "are not binding as precedent." 38 In Santos III v.
Northwest Orient Airlines,39 Augusto Santos III categorically put in issue the applicability of Article
28(1) of the Warsaw Convention if the action is based on tort.

In the said case, we held that the allegation of willful misconduct resulting in a tort is insufficient to
exclude the case from the realm of the Warsaw Convention. In fact, our ruling that a cause of action based
on tort did not bring the case outside the sphere of the Warsaw Convention was our ratio decidendi in
disposing of the specific issue presented by Augusto Santos III. Clearly, the contention of the herein
petitioner that the said ruling is an obiter dictum is without basis.

Relevant to this particular issue is the case of Carey v. United Airlines,40 where the passenger filed an
action against the airline arising from an incident involving the former and the airline’s flight attendant
during an international flight resulting to a heated exchange which included insults and profanity. The
United States Court of Appeals (9th Circuit) held that the "passenger's action against the airline carrier
arising from alleged confrontational incident between passenger and flight attendant on international
flight was governed exclusively by the Warsaw Convention, even though the incident allegedly involved
intentional misconduct by the flight attendant."41

In Bloom v. Alaska Airlines,42 the passenger brought nine causes of action against the airline in the state
court, arising from a confrontation with the flight attendant during an international flight to Mexico. The
United States Court of Appeals (9th Circuit) held that the "Warsaw Convention governs actions arising
from international air travel and provides the exclusive remedy for conduct which falls within its
provisions." It further held that the said Convention "created no exception for an injury suffered as a
result of intentional conduct" 43 which in that case involved a claim for intentional infliction of emotional
distress.

It is thus settled that allegations of tortious conduct committed against an airline passenger during the
course of the international carriage do not bring the case outside the ambit of the Warsaw Convention.

Respondent, in seeking remedies from the trial court through special appearance of counsel, is not
deemed to have voluntarily submitted itself to the jurisdiction of the trial court.
Petitioner argues that respondent has effectively submitted itself to the jurisdiction of the trial court when
the latter stated in its Comment/Opposition to the Motion for Reconsideration that "Defendant [is at a
loss] x x x how the plaintiff arrived at her erroneous impression that it is/was Euro-Philippines Airlines
Services, Inc. that has been making a special appearance since x x x British Airways x x x has been
clearly specifying in all the pleadings that it has filed with this Honorable Court that it is the one making a
special appearance."44

In refuting the contention of petitioner, respondent cited La Naval Drug Corporation v. Court of
Appeals45 where we held that even if a party "challenges the jurisdiction of the court over his person, as
by reason of absence or defective service of summons, and he also invokes other grounds 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."46

This issue has been squarely passed upon in the recent case of Garcia v. Sandiganbayan, 47 where we
reiterated our ruling in La Naval Drug Corporation v. Court of Appeals48 and elucidated thus:

Special Appearance to Question a Court’s Jurisdiction Is Not

Voluntary Appearance

The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly provides:

Sec. 20. Voluntary appearance. – The defendant’s voluntary appearance in the action shall be equivalent
to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of
jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.

Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his person,
together with other grounds raised therein, is not deemed to have appeared voluntarily before the court.
What the rule on voluntary appearance – the first sentence of the above-quoted rule – means is that the
voluntary appearance of the defendant in court is without qualification, in which case he is deemed to
have waived his defense of lack of jurisdiction over his person due to improper service of summons.

The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she voluntarily
appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a) motion to
dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion for reconsideration; (d)
motion to consolidate forfeiture case with plunder case; and (e) motion to dismiss and/or to quash
Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash Forfeiture II; and (b) motion for
partial reconsideration.

The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for special
appearance with the purpose of challenging the jurisdiction of the SB over her person and that of her three
children. Petitioner asserts therein that SB did not acquire jurisdiction over her person and of her three
children for lack of valid service of summons through improvident substituted service of summons in
both Forfeiture I and Forfeiture II. This stance the petitioner never abandoned when she filed her motions
for reconsideration, even with a prayer to admit their attached Answer Ex Abundante Ad Cautelam dated
January 22, 2005 setting forth affirmative defenses with a claim for damages. And the other subsequent
pleadings, likewise, did not abandon her stance and defense of lack of jurisdiction due to improper
substituted services of summons in the forfeiture cases. Evidently, from the foregoing Sec. 20, Rule 14 of
the 1997 Revised Rules on Civil Procedure, petitioner and her sons did not voluntarily appear before the
SB constitutive of or equivalent to service of summons.
Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case. Said case
elucidates the current view in our jurisdiction that a special appearance before the court––challenging its
jurisdiction over the person through a motion to dismiss even if the movant invokes other grounds––is not
tantamount to estoppel or a waiver by the movant of his objection to jurisdiction over his person; and
such is not constitutive of a voluntary submission to the jurisdiction of the court.1avvphi1

Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB to cure
the defective substituted services of summons. They are, therefore, not estopped from questioning the
jurisdiction of the SB over their persons nor are they deemed to have waived such defense of lack of
jurisdiction. Consequently, there being no valid substituted services of summons made, the SB did not
acquire jurisdiction over the persons of petitioner and her children. And perforce, the proceedings in the
subject forfeiture cases, insofar as petitioner and her three children are concerned, are null and void for
lack of jurisdiction. (Emphasis supplied)

In this case, the special appearance of the counsel of respondent in filing the Motion to Dismiss and other
pleadings before the trial court cannot be deemed to be voluntary submission to the jurisdiction of the said
trial court. We hence disagree with the contention of the petitioner and rule that there was no voluntary
appearance before the trial court that could constitute estoppel or a waiver of respondent’s objection to
jurisdiction over its person.

WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional Trial Court of
Makati City, Branch 132, dismissing the complaint for lack of jurisdiction, is AFFIRMED.

SO ORDERED.

FEDERAL EXPRESS VS. AMERICAN HOME

PANGANIBAN, J.:
Basic is the requirement that before suing to recover loss of or damage to transported goods, the
plaintiff must give the carrier notice of the loss or damage, within the period prescribed by the Warsaw
Convention and/or the airway bill.

The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, challenging the June 4,
2001 Decision[2] and the September 21, 2001 Resolution[3] of the Court of Appeals (CA) in CA-GR CV
No. 58208. The assailed Decision disposed as follows:

WHEREFORE, premises considered, the present appeal is hereby DISMISSED for lack of merit. The
appealed Decision of Branch 149 of the Regional Trial Court of Makati City in Civil Case No. 95-
1219,entitled American Home Assurance Co. and PHILAM Insurance Co., Inc. v. FEDERAL EXPRESS
CORPORATION and/or CARGOHAUS, INC. (formerly U-WAREHOUSE, INC.), is
hereby AFFIRMED and REITERATED.

Costs against the [petitioner and Cargohaus, Inc.].[4]

The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
The antecedent facts are summarized by the appellate court as follows:

On January 26, 1994, SMITHKLINE Beecham (SMITHKLINE for brevity) of Nebraska, USA delivered
to Burlington Air Express (BURLINGTON), an agent of [Petitioner] Federal Express Corporation, a
shipment of 109 cartons of veterinary biologicals for delivery to consignee SMITHKLINE and French
Overseas Company in Makati City, Metro Manila. The shipment was covered by Burlington Airway Bill
No. 11263825 with the words, REFRIGERATE WHEN NOT IN TRANSIT and PERISHABLE stamp
marked on its face. That same day, Burlington insured the cargoes in the amount of $39,339.00 with
American Home Assurance Company (AHAC). The following day, Burlington turned over the custody of
said cargoes to Federal Express which transported the same to Manila. The first shipment, consisting of
92 cartons arrived in Manila on January 29, 1994 in Flight No. 0071-28NRT and was immediately stored
at [Cargohaus Inc.s] warehouse. While the second, consisting of 17 cartons, came in two (2) days later, or
on January 31, 1994, in Flight No. 0071-30NRT which was likewise immediately stored at Cargohaus
warehouse. Prior to the arrival of the cargoes, Federal Express informed GETC Cargo International
Corporation, the customs broker hired by the consignee to facilitate the release of its cargoes from the
Bureau of Customs, of the impending arrival of its clients cargoes.

On February 10, 1994, DARIO C. DIONEDA (DIONEDA), twelve (12) days after the cargoes arrived in
Manila, a non-licensed customs broker who was assigned by GETC to facilitate the release of the subject
cargoes, found out, while he was about to cause the release of the said cargoes, that the same [were]
stored only in a room with two (2) air conditioners running, to cool the place instead of a refrigerator.
When he asked an employee of Cargohaus why the cargoes were stored in the cool room only, the latter
told him that the cartons where the vaccines were contained specifically indicated therein that it should
not be subjected to hot or cold temperature. Thereafter, DIONEDA, upon instructions from GETC, did
not proceed with the withdrawal of the vaccines and instead, samples of the same were taken and brought
to the Bureau of Animal Industry of the Department of Agriculture in the Philippines by SMITHKLINE
for examination wherein it was discovered that the ELISA reading of vaccinates sera are below the
positive reference serum.

As a consequence of the foregoing result of the veterinary biologics test, SMITHKLINE abandoned the
shipment and, declaring total loss for the unusable shipment, filed a claim with AHAC through its
representative in the Philippines, the Philam Insurance Co., Inc. (PHILAM) which recompensed
SMITHKLINE for the whole insured amount of THIRTY NINE THOUSAND THREE HUNDRED
THIRTY NINE DOLLARS ($39,339.00). Thereafter, [respondents] filed an action for damages against
the [petitioner] imputing negligence on either or both of them in the handling of the cargo.

Trial ensued and ultimately concluded on March 18, 1997 with the [petitioner] being held solidarily liable
for the loss as follows:

WHEREFORE, judgment is hereby rendered in favor of [respondents] and [petitioner and its Co-
Defendant Cargohaus] are directed to pay [respondents], jointly and severally, the following:

1. Actual damages in the amount of the peso equivalent of US$39,339.00 with interest from the time of
the filing of the complaint to the time the same is fully paid.

2. Attorneys fees in the amount of P50,000.00 and

3. Costs of suit.
SO ORDERED.

Aggrieved, [petitioner] appealed to [the CA].[5]

Ruling of the Court of Appeals

The Test Report issued by the United States Department of Agriculture (Animal and Plant Health
Inspection Service) was found by the CA to be inadmissible in evidence. Despite this ruling, the appellate
court held that the shipping Receipts were a prima facie proof that the goods had indeed been delivered to
the carrier in good condition. We quote from the ruling as follows:

Where the plaintiff introduces evidence which shows prima facie that the goods were delivered to the
carrier in good condition [i.e., the shipping receipts], and that the carrier delivered the goods in a damaged
condition, a presumption is raised that the damage occurred through the fault or negligence of the
carrier, and this casts upon the carrier the burden of showing that the goods were not in good condition
when delivered to the carrier, or that the damage was occasioned by some cause excepting the carrier from
absolute liability. This the [petitioner] failed to discharge. x x x.[6]
Found devoid of merit was petitioners claim that respondents had no personality to sue. This
argument was supposedly not raised in the Answer or during trial.
Hence, this Petition.[7]

The Issues
In its Memorandum, petitioner raises the following issues for our consideration:
I.

Are the decision and resolution of the Honorable Court of Appeals proper subject for review by the
Honorable Court under Rule 45 of the 1997 Rules of Civil Procedure?
II.

Is the conclusion of the Honorable Court of Appeals petitioners claim that respondents have no
personality to sue because the payment was made by the respondents to Smithkline when the insured
under the policy is Burlington Air Express is devoid of merit correct or not?
III.

Is the conclusion of the Honorable Court of Appeals that the goods were received in good condition,
correct or not?
IV.

Are Exhibits F and G hearsay evidence, and therefore, not admissible?

V.

Is the Honorable Court of Appeals correct in ignoring and disregarding respondents own admission that
petitioner is not liable? and
VI.

Is the Honorable Court of Appeals correct in ignoring the Warsaw Convention?[8]

Simply stated, the issues are as follows: (1) Is the Petition proper for review by the Supreme Court?
(2) Is Federal Express liable for damage to or loss of the insured goods?

This Courts Ruling

The Petition has merit.

Preliminary Issue:
Propriety of Review
The correctness of legal conclusions drawn by the Court of Appeals from undisputed facts is a
question of law cognizable by the Supreme Court.[9]
In the present case, the facts are undisputed. As will be shown shortly, petitioner is questioning the
conclusions drawn from such facts. Hence, this case is a proper subject for review by this Court.

Main Issue:
Liability for Damages
Petitioner contends that respondents have no personality to sue -- thus, no cause of action against it --
because the payment made to Smithkline was erroneous.
Pertinent to this issue is the Certificate of Insurance[10] (Certificate) that both opposing parties cite in
support of their respective positions. They differ only in their interpretation of what their rights are under
its terms. The determination of those rights involves a question of law, not a question of fact. As
distinguished from a question of law which exists when the doubt or difference arises as to what the law
is on a certain state of facts -- there is a question of fact when the doubt or difference arises as to the truth
or the falsehood of alleged facts; or when the query necessarily invites calibration of the whole evidence
considering mainly the credibility of witnesses, existence and relevancy of specific surrounding
circumstance, their relation to each other and to the whole and the probabilities of the situation.[11]

Proper Payee
The Certificate specifies that loss of or damage to the insured cargo is payable to order x x x upon
surrender of this Certificate. Such wording conveys the right of collecting on any such damage or loss, as
fully as if the property were covered by a special policy in the name of the holder itself. At the back of the
Certificate appears the signature of the representative of Burlington. This document has thus been duly
indorsed in blank and is deemed a bearer instrument.
Since the Certificate was in the possession of Smithkline, the latter had the right of collecting or of
being indemnified for loss of or damage to the insured shipment, as fully as if the property were covered
by a special policy in the name of the holder. Hence, being the holder of the Certificate and having an
insurable interest in the goods, Smithkline was the proper payee of the insurance proceeds.
Subrogation
Upon receipt of the insurance proceeds, the consignee (Smithkline) executed a subrogation
Receipt[12] in favor of respondents. The latter were thus authorized to file claims and begin suit against
any such carrier, vessel, person, corporation or government. Undeniably, the consignee had a legal right
to receive the goods in the same condition it was delivered for transport to petitioner. If that right was
violated, the consignee would have a cause of action against the person responsible therefor.
Upon payment to the consignee of an indemnity for the loss of or damage to the insured goods, the
insurers entitlement to subrogation pro tanto -- being of the highest equity -- equips it with a cause of
action in case of a contractual breach or negligence.[13] Further, the insurers subrogatory right to sue for
recovery under the bill of lading in case of loss of or damage to the cargo is jurisprudentially upheld.[14]
In the exercise of its subrogatory right, an insurer may proceed against an erring carrier. To all
intents and purposes, it stands in the place and in substitution of the consignee. A fortiori, both the insurer
and the consignee are bound by the contractual stipulations under the bill of lading.[15]

Prescription of Claim
From the initial proceedings in the trial court up to the present, petitioner has tirelessly pointed out
that respondents claim and right of action are already barred. The latter, and even the consignee, never
filed with the carrier any written notice or complaint regarding its claim for damage of or loss to the
subject cargo within the period required by the Warsaw Convention and/or in the airway bill. Indeed, this
fact has never been denied by respondents and is plainly evident from the records.
Airway Bill No. 11263825, issued by Burlington as agent of petitioner, states:

6. No action shall be maintained in the case of damage to or partial loss of the shipment unless a written
notice, sufficiently describing the goods concerned, the approximate date of the damage or loss, and the
details of the claim, is presented by shipper or consignee to an office of Burlington within (14) days from
the date the goods are placed at the disposal of the person entitled to delivery, or in the case of total loss
(including non-delivery) unless presented within (120) days from the date of issue of the [Airway Bill].[16]
Relevantly, petitioners airway bill states:

12./12.1 The person entitled to delivery must make a complaint to the carrier in writing in the case:
12.1.1 of visible damage to the goods, immediately after discovery of the damage and at the
latest within fourteen (14) days from receipt of the goods;
12.1.2 of other damage to the goods, within fourteen (14) days from the date of receipt of the
goods;
12.1.3 delay, within twenty-one (21) days of the date the goods are placed at his disposal; and
12.1.4 of non-delivery of the goods, within one hundred and twenty (120) days from the date of
the issue of the air waybill.
12.2 For the purpose of 12.1 complaint in writing may be made to the carrier whose air waybill was used,
or to the first carrier or to the last carrier or to the carrier who performed the transportation during which
the loss, damage or delay took place.[17]
Article 26 of the Warsaw Convention, on the other hand, provides:

ART. 26. (1) Receipt by the person entitled to the delivery of baggage or goods without complaint shall
be prima facie evidence that the same have been delivered in good condition and in accordance with the
document of transportation.
(2) In case of damage, the person entitled to delivery must complain to the carrier forthwith after the
discovery of the damage, and, at the latest, within 3 days from the date of receipt in the case of baggage
and 7 days from the date of receipt in the case of goods. In case of delay the complaint must be made at
the latest within 14 days from the date on which the baggage or goods have been placed at his disposal.

(3) Every complaint must be made in writing upon the document of transportation or by separate notice in
writing dispatched within the times aforesaid.

(4) Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of
fraud on his part.[18]

Condition Precedent
In this jurisdiction, the filing of a claim with the carrier within the time limitation therefor actually
constitutes a condition precedent to the accrual of a right of action against a carrier for loss of or damage
to the goods.[19] The shipper or consignee must allege and prove the fulfillment of the condition. If it fails
to do so, no right of action against the carrier can accrue in favor of the former. The aforementioned
requirement is a reasonable condition precedent; it does not constitute a limitation of action.[20]
The requirement of giving notice of loss of or injury to the goods is not an empty formalism. The
fundamental reasons for such a stipulation are (1) to inform the carrier that the cargo has been damaged,
and that it is being charged with liability therefor; and (2) to give it an opportunity to examine the nature
and extent of the injury. This protects the carrier by affording it an opportunity to make an investigation
of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and
fraudulent claims.[21]
When an airway bill -- or any contract of carriage for that matter -- has a stipulation that requires a
notice of claim for loss of or damage to goods shipped and the stipulation is not complied with, its
enforcement can be prevented and the liability cannot be imposed on the carrier. To stress, notice is a
condition precedent, and the carrier is not liable if notice is not given in accordance with the
stipulation.[22] Failure to comply with such a stipulation bars recovery for the loss or damage suffered.[23]
Being a condition precedent, the notice must precede a suit for enforcement.[24] In the present case,
there is neither an allegation nor a showing of respondents compliance with this requirement within the
prescribed period. While respondents may have had a cause of action then, they cannot now enforce it for
their failure to comply with the aforesaid condition precedent.
In view of the foregoing, we find no more necessity to pass upon the other issues raised by
petitioner.
We note that respondents are not without recourse. Cargohaus, Inc. -- petitioners co-defendant in
respondents Complaint below -- has been adjudged by the trial court as liable for, inter alia, actual
damages in the amount of the peso equivalent of US $39,339.[25] This judgment was affirmed by the Court
of Appeals and is already final and executory.[26]
WHEREFORE, the Petition is GRANTED, and the assailed Decision REVERSED insofar as it
pertains to Petitioner Federal Express Corporation. No pronouncement as to costs.
SO ORDERED.
PAL VS. CA AND MEJIA

REGALADO, J.:
This is definitely not a case of first impression. The incident which eventuated in the present
controversy is a drama of common contentious occurrence between passengers and carriers whenever loss
is sustained by the former. Withal, the exposition of the factual ambience and the legal precepts in this
adjudication may hopefully channel the assertiveness of passengers and the intransigence of carriers into
the realization that at times a bad extrajudicial compromise could be better than a good judicial victory.
Assailed in this petition for review is the decision of respondent Court of Appeals in CA-G.R. CV
No. 42744[1] which affirmed the decision of the lower court[2] finding petitioner Philippine Air Lines, Inc.
(PAL) liable as follows:

ACCORDINGLY, judgment is hereby rendered ordering defendant Philippine Air Lines, Inc., to pay
plaintiff Gilda C. Mejia:

(1) P30,000.00 by way of actual damages of the microwave oven;

(2) P10,000.00 by way of moral damages;

(3) P20,000.00 by way of exemplary damages;

(4) P10,000.00 as attorneys fee;

all in addition to the costs of the suit.

Defendants counterclaim is hereby dismissed for lack of merit.[3]
The facts as found by respondent Court of Appeals are as follows:

On January 27, 1990, plaintiff Gilda C. Mejia shipped thru defendant, Philippine Airlines, one (1) unit
microwave oven, with a gross weight of 33 kilograms from San Francisco, U.S.A. to Manila, Philippines.
Upon arrival, however, of said article in Manila, Philippines, plaintiff discovered that its front glass door
was broken and the damage rendered it unserviceable. Demands both oral and written were made by
plaintiff against the defendant for the reimbursement of the value of the damaged microwave oven, and
transportation charges paid by plaintiff to defendant company. But these demands fell on deaf ears.

On September 25, 1990, plaintiff Gilda C. Mejia filed the instant action for damages against defendant in
the lower court.

In its answer, defendant Airlines alleged inter alia, by way of special and affirmative defenses, that the
court has no jurisdiction over the case; that plaintiff has no valid cause of action against defendant since it
acted only in good faith and in compliance with the requirements of the law, regulations, conventions and
contractual commitments; and that defendant had always exercised the required diligence in the selection,
hiring and supervision of its employees.[4]
What had theretofore transpired at the trial in the court a quo is narrated as follows:

Plaintiff Gilda Mejia testified that sometime on January 27, 1990, she took defendants plane from San
Francisco, U.S.A. for Manila, Philippines (Exh. F). Amongst her baggages (sic) was a slightly used
microwave oven with the brand name Sharp under PAL Air Waybill No. 0-79-1013008-3 (Exh. A). When
shipped, defendants office at San Francisco inspected it. It was in good condition with its front glass
intact. She did not declare its value upon the advice of defendants personnel at San Francisco.

When she arrived in Manila, she gave her sister Concepcion C. Dio authority to claim her baggag(e) (Exh.
G) and took a connecting flight for Bacolod City.

When Concepcion C. Dino claimed the baggag(e) (Exh. B) with defendant, then with the Bureau of
Customs, the front glass of the microwave oven was already broken and cannot be repaired because of the
danger of radiation. They demanded from defendant thru Atty. Paco P30,000.00 for the damages although
a brand new one costs P40,000.00, but defendant refused to pay.

Hence, plaintiff engaged the services of counsel. Despite demand (Exh. E) by counsel, defendant still
refused to pay.

The damaged oven is still with defendant. Plaintiff is engaged in (the) catering and restaurant
business. Hence, the necessity of the oven. Plaintiff suffered sleepless nights when defendant refused to
pay her (for) the broken oven and claims P 10,000.00 moral damages, P20,000.00 exemplary damages,
P10,000.00 attorneys fees plus P300.00 per court appearance and P15,000.00 monthly loss of income in
her business beginning February, 1990.

Defendant Philippine Airlines thru its employees Rodolfo Pandes and Vicente Villaruz posited that
plaintiffs claim was not investigated until after the filing of the formal claim on August 13, 1990 (Exh. 6
also Exh. E). During the investigations, plaintiff failed to submit positive proof of the value of the
cargo. Hence her claim was denied.

Also plaintiffs claim was filed out of time under paragraph 12, a(1) of the Air Waybill (Exh. A,
also Exh. 1) which provides: (a) the person entitled to delivery must make a complaint to the carrier in
writing in case: (1) of visible damage to the goods, immediately after discovery of the damage and at the
latest within 14 days from the receipt of the goods.[5]
As stated at the outset, respondent Court of Appeals similarly ruled in favor of private respondent by
affirming in full the trial courts judgment in Civil Case No. 6210, with costs against
petitioner.[6] Consequently, petitioner now impugns respondent appellate courts ruling insofar as it agrees
with (1) the conclusions of the trial court that since the air waybill is a contract of adhesion, its provisions
should be strictly construed against herein petitioner; (2) the finding of the trial court that herein
petitioners liability is not limited by the provisions of the air waybill; and (3) the award by the trial court
to private respondent of moral and exemplary damages, attorneys fees and litigation expenses.
The trial court relied on the ruling in the case of Fieldmens Insurance Co., Inc. vs. Vda.
De Songco, et al.[7] in finding that the provisions of the air waybill should be strictly construed against
petitioner. More particularly, the court below stated its findings thus:

In this case, it is seriously doubted whether plaintiff had read the printed conditions at the back of the Air
Waybill (Exh. 1), or even if she had, if she was given a chance to negotiate on the conditions for loading
her microwave oven. Instead she was advised by defendants employee at San Francisco, U.S.A., that
there is no need to declare the value of her oven since it is not brand new. Further, plaintiff testified that
she immediately submitted a formal claim for P30,000.00 with defendant. But their claim was referred
from one employee to another th(e)n told to come back the next day, and the next day, until she was
referred to a certain Atty. Paco. When they got tired and frustrated of coming without a settlement of their
claim in sight, they consulted a lawyer who demanded from defendant on August 13, 1990(Exh. E,
an[d] Exh. 6).

The conclusion that inescapably emerges from the above findings of fact is to concede it with
credence. x x x.[8]
Respondent appellate court approved said findings of the trial court in this manner:

We cannot agree with defendant-appellants above contention. Under our jurisprudence, the Air Waybill is
a contract of adhesion considering that all the provisions thereof are prepared and drafted only by the
carrier (Sweet Lines v. Teves, 83 SCRA 361). The only participation left of the other party is to affix his
signature thereto (BPI Credit Corporation vs. Court of Appeals, 204 SCRA 601; Saludo, Jr. vs. C.A., 207
SCRA 498; Maersk vs. Court of Appeals, 222 SCRA 108, among the recent cases). In the earlier case of
Angeles v. Calasanz, 135 SCRA 323, the Supreme Court ruled that the terms of a contract (of adhesion)
must be interpreted against the party who drafted the same. x x x.[9]
Petitioner airlines argues that the legal principle enunciated in Fieldmens Insurance does not apply to
the present case because the provisions of the contract involved here are neither ambiguous nor
obscure. The front portion of the air waybill contains a simple warning that the shipment is subject to the
conditions of the contract on the dorsal portion thereof regarding the limited liability of the carrier unless
a higher valuation is declared, as well as the reglementary period within which to submit a written claim
to the carrier in case of damage or loss to the cargo. Granting that the air waybill is a contract of adhesion,
it has been ruled by the Court that such contracts are not entirely prohibited and are in fact binding
regardless of whether or not respondent herein read the provisions thereof. Having contracted the services
of petitioner carrier instead of other airlines, private respondent in effect negotiated the terms of the
contract and thus became bound thereby.[10]
Counsel for private respondent refutes these arguments by saying that due to her eagerness to ship
the microwave oven to Manila, private respondent assented to the terms and conditions of the contract
without any opportunity to question or change its terms which are practically on a take-it-or-leave-it basis,
her only participation therein being the affixation of her signature. Further, reliance on
the Fieldmens insurance case is misplaced since it is not the ambiguity or obscurity of the stipulation that
renders necessary the strict interpretation of a contract of adhesion against the drafter, but the peculiarity
of the transaction wherein one party, normally a corporation, drafts all the provisions of the contract
without any participation whatsoever on the part of the other party other than affixment of signature.[11]
A review of jurisprudence on the matter reveals the consistent holding of the Court that contracts of
adhesion are not invalid per se and that it has on numerous occasions upheld the binding effect
thereof.[12] As explained in Ong Yiu vs. Court of Appeals, et al., supra:

x x x. Such provisions have been held to be a part of the contract of carriage, and valid and binding upon
the passenger regardless of the latters lack of knowledge or assent to the regulation. 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. x x x, 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.
As rationalized in Saludo, Jr. vs. Court of Appeals, et al., supra:

x x x, it should be borne in mind that a contract of adhesion may be struck down as void and
unenforceable, for being subversive of public policy, only when the weaker party is imposed upon in
dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal footing. x x x.
but subject to the caveat that

x x x. Just because we have said that Condition No. 5 of the airway bill is binding upon the parties to and
fully operative in this transaction, it does not mean, and let this serve as fair warning to respondent
carriers, that they can at all times whimsically seek refuge from liability in the exculpatory sanctuary of
said Condition No. 5 x x x.
The peculiar nature of such contracts behooves the Court to closely scrutinize the factual milieu to
which the provisions are intended to apply. Thus, just as consistently and unhesitatingly, but without
categorically invalidating such contracts, the Court has construed obscurities and ambiguities in the
restrictive provisions of contracts of adhesion strictly albeit not unreasonably against the drafter thereof
when justified in light of the operative facts and surrounding circumstances.[13]
We find nothing objectionable about the lower courts reliance upon the Fieldmens Insurance case,
the principles wherein squarely apply to the present petition. The parallelism between the aforementioned
case and this one is readily apparent for, just as in the instant case, it is the binding effect of the provisions
in a contract of adhesion (an insurance policy in FieldmensInsurance) that is put to test.
A judicious reading of the case reveals that what was pivotal in the judgment of liability against
petitioner insurance company therein, and necessarily interpreting the provisions of the insurance policy
as ineffective, was the finding that the representations made by the agent of the insurance company
rendered it impossible to comply with the conditions of the contract in question, rather than the mere
ambiguity of its terms. The extended pronouncements regarding strict construction of ambiguous
provisions in an adhesion contract against its drafter, which although made by the Court as an aside but
has perforce evolved into a judicial tenet over time, was actually an incidental statement intended to
emphasize the duty of the court to protect the weaker, as against the more dominant, party to a contract, as
well as to prevent the iniquitous situation wherein the will of one party is imposed upon the other in the
course of negotiation.
Thus, there can be no further question as to the validity of the terms of the air waybill, even if the
same constitutes a contract of adhesion. Whether or not the provisions thereof particularly on the limited
liability of the carrier are binding on private respondent in this instance must be determined from the facts
and circumstances involved vis-a-vis the nature of the provisions sought to be enforced, taking care that
equity and fair play should characterize the transaction under review.
On petitioners insistence that its liability for the damage to private respondents microwave oven, if
any, should be limited by the provisions of the air waybill, the lower court had this to say:

By and large, defendants evidence is anchored principally on plaintiffs alleged failure to comply with
paragraph 12, a(1) (Exh. 1-C-2) of the Air waybill (Exh. A, also Exh. 1), by filing a formal claim
immediately after discovery of the damage. Plaintiff filed her formal claim only on August 13,
1990 (Exh. 6, also Exh. E). And, failed to present positive proof on the value of the damaged microwave
oven.Hence, the denial of her claim.

This Court has misgivings about these pretensions of defendant.

xxx xxx xxx

Finally, the Court finds no merit to defendants contention that under the Warsaw Convention, its liability
if any, cannot exceed U.S. $20.00 based on weight as plaintiff did not declare the contents of her baggage
nor pay additional charges before the flight.[14]
The appellate court declared correct the non-application by the trial court of the limited liability of
therein defendant-appellant under the Conditions of the Contract contained in the air waybill , based on
the ruling in Cathay Pacific Airways, Ltd. vs. Court of Appeals, et al.,[15] which substantially enunciates
the rule that while the Warsaw Convention has the force and effect of law in the Philippines, being a
treaty commitment by the government and as a signatory thereto, the same does not operate as an
exclusive enumeration of the instances when a carrier shall be liable for breach of contract or as an
absolute limit of the extent of liability, nor does it preclude the operation of the Civil Code or other
pertinent laws.
Petitioner insists that both respondent court and the trial court erred in finding that petitioners
liability, if any, is not limited by the provisions of the air waybill, for, as evidence of the contract of
carriage between petitioner and private respondent, it substantially states that the shipper certifies to the
correctness of the entries contained therein and accepts that the carriers liability is limited to US$20 per
kilogram of goods lost, damaged or destroyed unless a value is declared and a supplementary charge paid.
Inasmuch as no such declaration was made by private respondent, as she admitted during cross-
examination, the liability of petitioner, if any, should be limited to 28 kilograms multiplied by US$20,
or $560. Moreover, the validity of these conditions has been upheld in the leading case of Ong Yiu vs.
Court of Appeals, et al., supra, and subsequent cases, for being a mere reiteration of the limitation of
liability under the. Warsaw Convention, which treaty has the force and effect of law.[16]
It is additionally averred that since private respondent was merely advised, not ordered, that she need
not declare a higher value for her cargo, the final decision of refraining from making such a declaration
fell on private respondent and should not put the petitioner in estoppel from invoking its limited
liability.[17]
In refutation, private respondent explains that the reason for the absence of a declaration of a higher
value was precisely because petitioners personnel in San Francisco, U.S.A.advised her not to declare the
value of her cargo, which testimony has not at all been rebutted by petitioner. This being so, petitioner
is estopped from faulting private respondent for her failure to declare the value of the microwave oven.[18]
The validity of provisions limiting the liability of carriers contained in bills of lading have been
consistently upheld for the following reason:

x x x. The stipulation in the bill of lading limiting the common carriers liability to the value of goods
appearing in the bill, unless the shipper or owner declares a greater value, is valid and binding. The
limitation of the carriers liability is sanctioned by the freedom of the contracting parties to establish such
stipulations, clauses, terms, or conditions as they may deem convenient, provided they are not contrary to
law, morals, good customs and public policy. x x x.[19]
However, the Court has likewise cautioned against blind reliance on adhesion contracts where the
facts and circumstances warrant that they should be disregarded.[20]
In the case at bar, it will be noted that private respondent signified an intention to declare the value
of the microwave oven prior to shipment, but was explicitly advised against doing so by PALs personnel
in San Francisco, U.S.A., as borne out by her testimony in court:
xxx xxx xxx
Q Did you declare the value of the shipment?
A No. I was advised not to.
 Q Who advised you?
A At the PAL Air Cargo.[21]
It cannot be denied that the attention of PAL through its personnel in San Francisco was sufficiently
called to the fact that private respondents cargo was highly susceptible to breakage as would necessitate
the declaration of its actual value. Petitioner had all the opportunity to check the condition and manner of
packing prior to acceptance for shipment,[22] as well as during the preparation of the air waybill
by PALs Acceptance Personnel based on information supplied by the shipper,[23] and to reject the cargo if
the contents or the packing did not meet the companys required specifications. Certainly, PAL could not
have been otherwise prevailed upon to merely accept the cargo.
While Vicente Villaruz, officer-in-charge of the PAL Import Section at the time of incident, posited
that there may have been inadequate and improper packing of the cargo,[24] which by itself could be a
ground for refusing carriage of the goods presented for shipment, he nonetheless admitted on cross-
examination that private respondents cargo was accepted by PAL in its San Francisco office:
ATTY. VINCO
So that, be that as it may, my particular concern is that, it is the PAL personnel
that accepts the baggage?
WITNESS
Yes, sir.
ATTY. VINCO
Also, if he comes from abroad like in this particular case, it is the PAL personnel
who accepts the baggage?
WITNESS
Yes, sir.
ATTY. VINCO
And the PAL personnel may or may not accept the baggage?
WITNESS
Yes, sir.
ATTY. VINCO
According to what is stated as in the acceptance of the cargo, it is to the best interest of the
airlines, that is, he want(s) also that the airlines would be free from any liability. Could that
be one of the grounds for not admitting a baggage?
WITNESS
Safety is number one (I)
xxx xxx xxx
ATTY. VINCO
So, this baggage was accepted and admitted in San Francisco?
WITNESS
 Yes, sir.
ATTY. VINCO
And you could not show any document to the Court that would suggest that this baggage
was denied admittance by your office at San Francisco?
WITNESS
No, I cannot show.
ATTY. VINCO
Now, can you show any document that would suggest that there was
insufficient pac(k)aging on this particular baggage from abroad?
WITNESS
No, sir.[25]
In response to the trial courts questions during the trial, he also stated that while the passengers
declaration regarding the general or fragile character of the cargo is to a certain extent determinative of its
classification, PAL nevertheless has and exercises discretion as to the manner of handling required by the
nature of the cargo it accepts for carriage. He further opined that the microwave oven was only a general,
not a fragile, cargo which did not require any special handling.[26]
There is no absolute obligation on the part of a carrier to accept a cargo. Where a common carrier
accepts a cargo for shipment for valuable consideration, it takes the risk of delivering it in good condition
as when it was loaded. And if the fact of improper packing is known to the carrier or its personnel, or
apparent upon observation but it accepts the goods notwithstanding such condition, it is not relieved of
liability for loss or injury resulting therefrom.[27]
The acceptance in due course by PAL of private respondents cargo as packed and its advice against
the need for declaration of its actual value operated as an assurance to private respondent that in fact there
was no need for such a declaration. Petitioner can hardly be faulted for relying on the representations
of PALs own personnel.
In other words, private respondent Mejia could and would have complied with the conditions stated
in the air waybill, i.e., declaration of a higher value and payment of supplemental transportation charges,
entitling her to recovery of damages beyond the stipulated limit of US$20 per kilogram of cargo in the
event of loss or damage, had she not been effectively prevented from doing so upon the advice
of PALs personnel for reasons best known to themselves.
As pointed out by private respondent, the aforestated facts were not denied by PAL in any of its
pleadings nor rebutted by way of evidence presented in the course of the trial, and thus in effect it
judicially admitted that such an advice was given by its personnel in San Francisco, U.S.A. Petitioner,
therefore, is estopped from blaming private respondent for not declaring the value of the cargo shipped
and which would have otherwise entitled her to recover a higher amount of damages. The Courts bidding
in the Fieldmens Insurance case once again rings true:

x x x. As estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will
befall an innocent party due to its injurious reliance, the failure to apply it in this case would result in
gross travesty of justice.
We likewise uphold the lower courts finding that private respondent complied with the requirement
for the immediate filing of a formal claim for damages as required in the air waybill or, at least, we find
that there was substantial compliance therewith.
 Private respondent testified that she authorized her sister, Concepcion Dio, to claim her cargo
consisting of a microwave oven since the former had to take a connecting flight to Bacolod City on the
very same afternoon of the day of her arrival.[28] As instructed, Concepcion Dio promptly proceeded
to PALs Import Section the next day to claim the oven. Upon discovering that the glass door was broken,
she immediately filed a claim by way of the baggage freight claim[29] on which was duly annotated the
damage sustained by the oven.[30]
Her testimony relates what took place thereafter:
ATTY. VINCO
So, after that inspection, what did you do?
WITNESS
After that annotation placed by Mr. Villaruz, I went home and I followed it up the next day
with the Clerk of PAL cargo office.
ATTY. VINCO
What did the clerk tell you?
WITNESS
She told me that the claim was being processed and I made several phone calls after that. I
started my follow-ups February up to June 1990.
ATTY. VINCO
And what results did those follow-ups produce?
WITNESS
All they said (was) that the document was being processed, that they were waiting for
Atty. Paco to report to the office and they could refer the matter to Atty. Paco.
ATTY. VINCO
Who is this Atty. Paco?
WITNESS
He was the one in-charge of approving our claim.
ATTY. VINCO
Were you able to see Atty. Paco?
WITNESS
Yes, sir. I personally visited Atty. Paco together with my auntie who was a former PAL
employee.
xxx xxx xxx
ATTY. VINCO
So, what did you do, did you make a report or did you tell Atty. Paco of your scouting
around for a possible replacement?
WITNESS
 I did call him back at his office. I made a telephone call.
ATTY. VINCO
And what answer did Atty. Paco make after you have reported back to him?
WITNESS
They told me that they were going to process the claim based on the price that I gave them
but there was no definite result.
ATTY. VINCO
How many times did you go and see Atty. Paco regarding the claim of your sister?
WITNESS
I made one personal visit and several follow-up calls. With Atty. Paco, I made one phone
call but I made several phone calls with his secretary or the clerk at PAL cargo office and I
was trying to locate him but unfortunately, he was always out of his office.[31]
PAL claims processor, Rodolfo Pandes,* confirmed having received the baggage freight claim
on January 30, 1990[32] and the referral to and extended pendency of the private respondents claim with
the office of Atty. Paco, to wit:
ATTY. VINCO:
Q And you did instruct the claimant to see the Claim Officer of the company, right?
WITNESS:
A Yes, sir.
ATTY. VINCO:
Q And the Claim Officer happened to be Atty. Paco?
WITNESS:
A Yes, sir.
ATTY. VINCO:
Q And you know that the plaintiff thru her authorized representative Concepcion Dio, who is
her sister had many times gone to Atty. Paco, in connection with this claim of her sister?
WITNESS:
A Yes, sir.
ATTY. VINCO:
Q As a matter of fact even when the complaint was already filed here in Court the claimant had
continued to call about the settlement of her claim with Atty. Paco, is that correct?
xxx xxx xxx
WITNESS:
A Yes, sir.
ATTY. VINCO.
 Q You know this fact because a personnel saw you in one of the pre-trial here when this case
was heard before the sala of Judge Moscardon, is that correct?
WITNESS:
A Yes.
ATTY. VINCO:
Q In other words, the plaintiff rather had never stop(ped) in her desire for your company to
settle this claim, right?
WITNESS
A Yes, sir.[33]
Considering the abovementioned incidents and private respondent Mejias own zealous efforts in
following up the claim,[34] it was clearly not her fault that the letter of demand for damages could only be
filed, after months of exasperating follow-up of the claim, on August 13, 1990.[35] If there was any failure
at all to file the formal claim within the prescriptive period contemplated in the air waybill, this was
largely because of PALs own doing, the consequences of which cannot, in all fairness, be attributed to
private respondent.
Even if the claim for damages was conditioned on the timely filing of a formal claim, under Article
1186 of the Civil Code that condition was deemed fulfilled, considering that the collective action
of PALs personnel in tossing around the claim and leaving it unresolved for an indefinite period of time
was tantamount to voluntarily preventing its fulfillment. On grounds of equity, the filing of the baggage
freight claim, which sufficiently informed PAL of the damage sustained by private respondents cargo,
constituted substantial compliance with the requirement in the contract for the filing of a formal claim.
All told, therefore, respondent appellate court did not err in ruling that the provision on limited
liability is not applicable in this case. We, however, note in passing that while the facts and circumstances
of this case do not call for the direct application of the provisions of the Warsaw Convention, it should be
stressed that, indeed, recognition of the Warsaw Convention does not preclude the operation of the Civil
Code and other pertinent laws in the determination of the extent of liability of the common carrier.[36]
The Warsaw Convention, being a treaty to which the Philippines is a signatory, is as much a part of
Philippine law as the Civil Code, Code of Commerce and other municipal special laws. [37] The provisions
therein contained, specifically on the limitation of carriers liability, are operative in the Philippines but
only in appropriate situations.
Petitioner ascribes ultimate error in the award of moral exemplary damages and attorneys fees in
favor of private respondent in that other than the statement of the trial court that petitioner acted in bad
faith in denying private respondents claim, which was affirmed by the Court of Appeals, there is no
evidence on record that the same is true. The denial of private respondents claim was supposedly in the
honest belief that the same had prescribed, there being no timely formal claim filed; and despite having
been given an opportunity to submit positive proof of the value of the damaged microwave oven, no such
proof was submitted. Petitioner insists that its failure to deliver the oven in the condition in which it was
shipped could hardly be considered as amounting to bad faith.[38]
Private respondent counters that petitioners failure to deliver the microwave oven in the condition in
which it was received can be describe as gross negligence amounting to bad faith, on the further
consideration that it failed to prove that it exercised the extraordinary diligence required by law, and that
no explanation whatsoever was given as to why the front glass of the oven was broken.[39]
 The trial court justified its award of actual, moral and exemplary damages, and attorneys fees in
favor of private respondent in this wise:

Since the plaintiffs baggage destination was the Philippines, Philippine law governs the liability of the
defendant for damages for the microwave oven.

The provisions of the New Civil Code on common carriers are Article(s) 1733, 1735 and 1753 x x x.

xxx xxx xxx

In this case, defendant failed to overcome, not only the presumption but more importantly, plaintiffs
evidence that defendants negligence was the proximate cause of the damages of the microwave
oven.Further, plaintiff has established that defendant acted in bad faith when it denied the formers claim
on the ground that the formal claim was filed beyond the period as provided in paragraph 12 (a-1)
(Exh. 1-C-2) of the Air Waybill (Exh. 1, also Exh A), when actually, Concepcion Dio, sister of plaintiff
has immediately filed the formal claim upon discovery of the damage.[40]
Respondent appellate court was in full agreement with the trial courts finding of bad faith on the part
of petitioner as a basis for the award of the aforestated damages, declaring that:

As to the last assigned error, a perusal of the facts and law of the case reveals that the lower courts award
of moral and exemplary damages, attorneys fees and costs of suit to plaintiff-appellee is in accordance
with current laws and jurisprudence on the matter. Indeed, aside from the fact that defendant-appellant
acted in bad faith in breaching the contract and in denying plaintiffs valid claim for damages, plaintiff-
appellee underwent profound distress, sleepless nights, and anxiety upon knowledge of her damaged
microwave oven in possession of defendant-appellant, entitling her to the award of moral and exemplary
damages (Cathay Pacific Airways, Ltd. vs. C.A., supra; Arts. 2219 & 2221, New Civil Code), and
certainly plaintiff-appellants unjust refusal to comply with her valid demand for payment, thereby also
entitling her to reasonable attorneys fees [Art. 2208 (2) and (11), id.].[41]
It will be noted that petitioner never denied that the damage to the microwave oven was sustained
while the same was in its custody. The possibility that said damage was due to causes beyond the control
of PAL has effectively been ruled out since the entire process in handling of the cargo - from the
unloading thereof from the plane, the towing and transfer to the PAL warehouse, the transfer to the
Customs examination area, and its release thereafter to the shipper - was done almost exclusively by, and
with the intervention or, at the very least, under the direct supervision of a responsible PAL personnel.[42]
The very admissions of PAL, through Vicente Villaruz of its Import Section, as follows:
ATTY. VINCO
So that, you now claim, Mr. Witness, that from the time the cargo was unloaded from the
plane until the time it reaches the Customs counter where it was inspected, all the way, it
was the PAL personnel who did all these things?
WITNESS
Yes, however, there is also what we call the Customs storekeeper and the Customs guard
along with the cargo.
ATTY. VINCO
You made mention about a locator?
WITNESS
 Yes, sir.
ATTY. VINCO
This locator, is he an employee of the PAL or the Customs?
WITNESS
He is a PAL employee.[43]
lead to the inevitable conclusion that whatever damage may have been sustained by the cargo is due to
causes attributable to PALs personnel or, at all events, under their responsibility.
Moreover, the trial court underscored the fact that petitioner was not able to overcome the statutory
presumption of negligence in Article 1735 which, as a common carrier, it was laboring under in case of
loss, destruction or deterioration of goods, through proper showing of the exercise of extraordinary
diligence. Neither did it prove that the damage to the microwave oven was because of any of
the excepting causes under Article 1734, all of the same Code. Inasmuch as the subject item was received
in apparent good condition, no contrary notation or exception having been made on the air waybill upon
its acceptance for shipment, the fact that it was delivered with a broken glass door raises the presumption
that PALs personnel were negligent in the carriage and handling of the cargo.[44]
Furthermore, there was glaringly no attempt what so ever on the part of petitioner to explain the
cause of the damage to the oven. The unexplained cause of damage to private respondents cargo
constitutes gross carelessness or negligence which by itself justifies the present award of damages. [45] The
equally unexplained and inordinate delay in acting on the claim upon referral thereof to the claims officer,
Atty. Paco, and the noncommittal responses to private respondents entreaties for settlement of her claim
for damages belies petitioners pretension that there was no bad faith on its part. This unprofessional
indifference of PALs personnel despite full and actual knowledge of the damage to private respondents
cargo, just to be exculpated from liability on pure technicality and bureaucratic subterfuge, smacks of
willful misconduct and insensitivity to a passengers plight tantamount to bad faith[46] and renders
unquestionable petitioners liability for damages. In sum, there is no reason to disturb the findings of the
trial court in this case, especially with its full affirmance by respondent Court of Appeals.
On this note, the case at bar goes into the annals of our jurisprudence after six years and recedes into
the memories of our legal experience as just another inexplicable inevitability. We will never know
exactly how many man-hours went into the preparation, litigation and adjudication of this simple dispute
over an oven, which the parties will no doubt insist they contested as a matter of principle. One thing,
however, is certain. As long as the first letter in principle is somehow outplaced by the peso sign, the
courts will always have to resolve similar controversies although mutual goodwill could have dispensed
with judicial recourse.
IN VIEW OF ALL OF THE FOREGOING, the assailed judgment of respondent Court of Appeals
is AFFIRMED in toto.
SO ORDERED.

UNITED AIRLINES VS. UY

BELLOSILLO, J.:
UNITED AIRLINES assails in this petition for review on certiorari under Rule 45 the 29 August
1995 Decision of the Court of Appeals in CA-G.R. CV No. 39761 which reversed the 7 August 1992
order issued by the trial court in Civil Case No. Q-92-12410[1] granting petitioner's motion to dismiss
based on prescription of cause of action. The issues sought to be resolved are whether the notice of appeal
to the appellate court was timely filed, and whether Art. 29 of the Warsaw Convention [2] should apply to
the case at bar.
On 13 October 1989 respondent Willie J. Uy, a revenue passenger on United Airlines Flight No. 819
for the San Francisco - Manila route, checked in together with his luggage one piece of which was found
to be overweight at the airline counter. To his utter humiliation, an employee of petitioner rebuked him
saying that he should have known the maximum weight allowance to be 70 kgs. per bag and that he
should have packed his things accordingly. Then, in a loud voice in front of the milling crowd, she told
respondent to repack his things and transfer some of them from the overweight luggage to the lighter
ones. Not wishing to create further scene, respondent acceded only to find his luggage still
overweight. The airline then billed him overweight charges which he offered to pay with a miscellaneous
charge order (MCO) or an airline pre-paid credit. However, the airlines employee, and later its airport
supervisor, adamantly refused to honor the MCO pointing out that there were conflicting figures listed on
it.Despite the explanation from respondent that the last figure written on the MCO represented his
balance, petitioners employees did not accommodate him. Faced with the prospect of leaving without his
luggage, respondent paid the overweight charges with his American Express credit card.
Respondents troubles did not end there. Upon arrival in Manila, he discovered that one of his bags
had been slashed and its contents stolen. He particularized his losses to be around US $5,310.00. In a
letter dated 16 October 1989 respondent bewailed the insult, embarrassment and humiliating treatment he
suffered in the hands of United Airlines employees, notified petitioner of his loss and requested
reimbursement thereof. Petitioner United Airlines, through Central Baggage Specialist Joan Kroll, did not
refute any of respondents allegations and mailed a check representing the payment of his loss based on
the maximum liability of US $9.70 per pound. Respondent, 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 (2) more
letters to petitioner airline, one dated 4 January 1990 through a certain Atty. Pesigan, and another dated
28 October 1991 through Atty. Ramon U. Ampil demanding an out-of-court settlement
of P1,000,000.00. Petitioner United Airlines did not accede to his demands.
Consequently, on 9 June 1992 respondent filed a complaint for damages against United Airlines
alleging that he was a person of good station, sitting in the board of directors of several top 500
corporations and holding senior executive positions for such similar firms; [3] that petitioner airline
accorded him ill and shabby treatment to his extreme embarrassment and humiliation; and, as such he
should be paid moral damages of at least P1,000,000.00, exemplary damages of at least P500,000.00, plus
attorney's fees of at least P50,000.00. Similarly, he alleged that the damage to his luggage and its stolen
contents amounted to around $5,310.00, and requested reimbursement therefor.
United Airlines moved to dismiss the complaint on the ground that respondents cause of action had
prescribed, invoking Art. 29 of the Warsaw Convention which provides -

Art. 29 (1) The right to damages shall be extinguished if an action is not brought within two (2) years,
reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have
arrived, or from the date on which the transportation stopped.

(2) The method of calculating the period of limitation shall be determined by the law of the court to which
the case is submitted.
Respondent countered that par. (1) of Art. 29 of the Warsaw Convention must be reconciled with
par. (2) thereof which states that "the method of calculating the period of limitation shall be determined
by the law of the court to which the case is submitted." Interpreting thus, respondent noted that according
to Philippine laws the prescription of actions is interrupted "when they are filed before the court, when
there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of
the debt by the debtor."[4] Since he made several demands upon United Airlines: first, through his
personal letter dated 16 October 1989; second, through a letter dated 4 January 1990 from Atty. Pesigan;
and, finally, through a letter dated 28 October 1991 written for him by Atty. Ampil, the two (2)-year
period of limitation had not yet been exhausted.
On 2 August 1992 the trial court ordered the dismissal of the action holding that the language of Art.
29 is clear that the action must be brought within two (2) years from the date of arrival at the
destination. It held that although the second paragraph of Art. 29 speaks of deference to the law of the
local court in "calculating the period of limitation," the same does not refer to the local forums rules in
interrupting the prescriptive period but only to the rules of determining the time in which the action may
be deemed commenced, and within our jurisdiction the action shall be deemed "brought" or commenced
by the filing of a complaint. Hence, the trial court concluded that Art. 29 excludes the application of our
interruption rules.
Respondent received a copy of the dismissal order on 17 August 1992. On 31 August 1992, or
fourteen (14) days later, he moved for the reconsideration of the trial courts order. The trial court denied
the motion and respondent received copy of the denial order on 28 September 1992. Two (2) days later,
on 1 October 1992 respondent filed his notice of appeal.
United Airlines once again moved for the dismissal of the case this time pointing out that
respondents fifteen (15)-day period to appeal had already elapsed. Petitioner argued that having used
fourteen (14) days of the reglementary period for appeal, respondent Uy had only one (1) day remaining
to perfect his appeal, and since he filed his notice of appeal two (2) days later, he failed to meet the
deadline.
In its questioned Decision dated 29 August 1995[5] the appellate court gave due course to the appeal
holding that respondents delay of two (2) days in filing his notice of appeal did not hinder it from
reviewing the appealed order of dismissal since jurisprudence dictates that an appeal may be entertained
despite procedural lapses anchored on equity and justice.
On the applicability of the Warsaw Convention, the appellate court ruled that the Warsaw
Convention did not preclude the operation of the Civil Code and other pertinent laws. Respondents failure
to file his complaint within the two (2)-year limitation provided in the Warsaw Convention did not bar his
action since he could still hold petitioner liable for breach of other provisions of the Civil Code which
prescribe a different period or procedure for instituting an action. Further, under Philippine laws,
prescription of actions is interrupted where, among others, there is a written extrajudicial demand by the
creditors, and since respondent Uy sent several demand letters to petitioner United Airlines, the running
of the two (2)-year prescriptive period was in effect suspended. Hence, the appellate court ruled that
respondents cause of action had not yet prescribed and ordered the records remanded to the Quezon City
trial court for further proceedings.
Petitioner now contends that the appellate court erred in assuming jurisdiction over respondent's
appeal since it is clear that the notice of appeal was filed out of time. It argues that the courts relax the
stringent rule on perfection of appeals only when there are extraordinary circumstances, e.g., when the
Republic stands to lose hundreds of hectares of land already titled and used for educational purposes;
when the counsel of record was already dead; and wherein appellant was the owner of the trademark for
more than thirty (30) years, and the circumstances of the present case do not compare to the above
exceptional cases.[6]
Section 1 of Rule 45 of the 1997 Rules of Civil Procedure provides that "a party may appeal by
certiorari, from a judgment of the Court of Appeals, by filing with the Supreme Court a petition for
certiorari, within fifteen (15) days from notice of judgment or of the denial of his motion for
reconsideration filed in due time x x x x" This Rule however should not be interpreted as "to sacrifice the
substantial right of the appellant in the sophisticated altar of technicalities with impairment of the sacred
principles of justice."[7] It should be borne in mind that the real purpose behind the limitation of the period
of appeal is to forestall or avoid an unreasonable delay in the administration of justice. Thus, we have
ruled that delay in the filing of a notice of appeal does not justify the dismissal of the appeal where the
circumstances of the case show that there is no intent to delay the administration of justice on the part of
appellant's counsel,[8] or when there are no substantial rights affected,[9] or when appellant's counsel
committed a mistake in the computation of the period of appeal, an error not attributable to negligence or
bad faith.[10]
In the instant case, respondent filed his notice of appeal two (2) days later than the prescribed
period. Although his counsel failed to give the reason for the delay, we are inclined to give due course to
his appeal due to the unique and peculiar facts of the case and the serious question of law it poses. In the
now almost trite but still good principle, technicality, when it deserts its proper office as an aid to justice
and becomes its great hindrance and chief enemy, deserves scant consideration.[11]
Petitioner likewise contends that the appellate court erred in ruling that respondent's cause of action
has not prescribed since delegates to the Warsaw Convention clearly 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. Petitioner argues that in construing the second paragraph of Art. 29
private respondent cannot read into it Philippine rules on interruption of prescriptive periods and state that
his extrajudicial demand has interrupted the period of prescription.[12] American jurisprudence has
declared that "Art. 29 (2) was not intended to permit forums to consider local limitation tolling provisions
but only to let local law determine whether an action had been commenced within the two-year period,
since the method of commencing a suit varies from country to country."[13]
Within our jurisdiction we have held that the Warsaw Convention can be applied, or ignored,
depending on the peculiar facts presented by each case.[14] 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. [15] 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.[16] Likewise, we have
held that the Convention does not preclude the operation of the Civil Code and other pertinent laws. [17] 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.[18]
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.
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.
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.
In this regard, Philippine Airlines, Inc. v. Court of Appeals[19] is instructive. In this case of PAL,
private respondent filed an action for damages against petitioner airline for the breakage of the front glass
of the microwave oven which she shipped under PAL Air Waybill No. 0-79-1013008-3. Petitioner
averred that, the action having been filed seven (7) months after her arrival at her port of destination, she
failed to comply with par. 12, subpar. (a) (1), of the Air Waybill which expressly provided that the person
entitled to delivery must make a complaint to the carrier in writing in case of visible damage to the goods,
immediately after discovery of the damage and at the latest within 14 days from receipt of the
goods. Despite non-compliance therewith the Court held that by private respondent's immediate
submission of a formal claim to petitioner, which however was not immediately entertained as it was
referred from one employee to another, she was deemed to have substantially complied with the
requirement. The Court noted that with private respondent's own zealous efforts in pursuing her claim it
was clearly not her fault that the letter of demand for damages could only be filed, after months of
exasperating follow-up of the claim, on 13 August 1990, and that if there was any failure at all to file the
formal claim within the prescriptive period contemplated in the Air Waybill, this was largely because of
the carrier's own doing, the consequences of which could not in all fairness be attributed to private
respondent.
In the same vein must we rule upon the circumstances brought before us. 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. Let the records of the case be remanded to the court of origin for
further proceedings taking its bearings from this disquisition.
SO ORDERED.

AMERICAN AIRLINES VS. CA

GONZAGA_REYES, J.:
Before us is a petition for review of the decision dated December 24, 1993 rendered by the Court of
Appeals in the consolidated cases docketed as CA-G.R. SP nos. 30946 and 31452 entitled American
Airlines vs. The Presiding Judge Branch 8 of the Regional Trial Court of Cebu and Democrito Mendoza,
petitions for certiorari and prohibition. In SP no. 30946, the petitioner assails the trial courts order
denying the petitioners motion to dismiss the action for damages filed by the private respondent for lack
of jurisdiction under section 28 (1) of the Warsaw Convention; and in SP No. 31452 the petitioner
challenges the validity of the trial courts order striking off the record the deposition of the petitioners
security officer taken in Geneva, Switzerland for failure of the said security officer to answer the cross
interrogatories propounded by the private respondent. Ncm

The sole issue raised in SP No. 30946 is the questioned jurisdiction of the Regional Trial Court of Cebu
to take cognizance of the action for damages filed by the private respondent against herein petitioner in
view of Art 28 (1) of the Warsaw Convention.[1] It is undisputed that the private respondent purchased
from Singapore Airlines in Manila conjunction tickets for Manila - Singapore - Athens - Larnaca - Rome
- Turin - Zurich - Geneva - Copenhagen - New York. The petitioner was not a participating airline in any
of the segments in the itinerary under the said conjunction tickets. In Geneva the petitioner decided to
forego his trip to Copenhagen and to go straight to New York and in the absence of a direct flight under
his conjunction tickets from Geneva to New York, the private respondent on June 7, 1989 exchanged the
unused portion of the conjunction ticket for a one-way ticket from Geneva to New York from the
petitioner airline. Petitioner issued its own ticket to the private respondent in Geneva and claimed the
value of the unused portion of the conjunction ticket from the IATA[2] clearing house in Geneva.Ncmmis

In September 1989, private respondent filed an action for damages before the regional trial court of Cebu
for the alleged embarassment and mental anguish he suffered at the Geneva Airport when the petitioners
security officers prevented him from boarding the plane, detained him for about an hour and allowed him
to board the plane only after all the other passengers have boarded. The petitioner filed a motion to
dismiss for lack of jurisdiction of Philippine courts to entertain the said proceedings under Art. 28 (1) of
the Warsaw Convention. The trial court denied the motion. The order of denial was elevated to the Court
of Appeals which affirmed the ruling of the trial court. Both the trial and that appellate courts held that the
suit may be brought in the Philippines under the pool partnership agreement among the IATA members,
which include Singapore Airlines and American Airlines, wherein the members act as agents of each
other in the issuance of tickets to those who may need their services. The contract of carriage perfected in
Manila between the private respondent and Singapore Airlines binds the petitioner as an agent of
Singapore Airlines and considering that the petitioner has a place of business in Manila, the third option
of the plaintiff under the Warsaw Convention i.e. the action may be brought in the place where the
contract was perfected and where the airline has a place of business, is applicable. Hence this petition
assailing the order upholding the jurisdiction of Philippine courts over the instant action. Scnc m

Both parties filed simultaneous memoranda pursuant to the resolution of this Court giving due course to
the petition.

The petitioners theory is as follows: Under Art 28 (1) of the Warsaw convention an action for damages
must be brought at the option of the plaintiff either before the court of the 1) domicile of the carrier; 2) the
carriers principal place of business; 3) the place where the carrier has a place of business through which
the contract was made; 4) the place of destination. The petitioner asserts that the Philippines is neither the
domicile nor the principal place of business of the defendant airline; nor is it the place of destination. As
regards the third option of the plaintiff, the petitioner contends that since the Philippines is not the place
where the contract of carriage was made between the parties herein, Philippine courts do not have
jurisdiction over this action for damages. The issuance of petitioners own ticket in Geneva in exchange
for the conjunction ticket issued by Singapore Airlines for the final leg of the private respondents trip
gave rise to a separate and distinct contract of carriage from that entered into by the private respondent
with Singapore Airlines in Manila. Petitioner lays stress on the fact that the plane ticket for a direct flight
from Geneva to New York was purchased by the private respondent from the petitioner by "exchange and
cash" which signifies that the contract of carriage with Singapore Airlines was terminated and a second
contract was perfected. Moreover, the second contract of carriage cannot be deemed to have been an
extension of the first as the petitioner airline is not a participating airline in any of the destinations under
the first contract. The petitioner claims that the private respondents argument that the petitioner is bound
under the IATA Rules as agent of the principal airline is irrelevant and the alleged bad faith of the airline
does not remove the case from the applicability of the Warsaw Convention. Further, the IATA Rule cited
by the private respondent which is admittedly printed on the ticket issued by the petitioner to him which
states, "An air carrier issuing a ticket for carriage over the lines of another carrier does so only as its
agent" does not apply herein, as neither Singapore Airlines nor the petitioner issued a ticket to the private
respondent covering the route of the other. Since the conjunction tickets issued by Singapore Airlines do
not include the route covered by the ticket issued by the petitioner, the petitioner airline submits that it did
not act as an agent of Singapore Airlines. Sdaa miso

Private respondent controverts the applicability of the Warsaw Convention in this case. He posits that
under Article 17 of the Warsaw Convention[3] a carrier may be held liable for damages if the "accident"
occurred on board the airline or in the course of "embarking or disembarking" from the carrier and that
under Article 25 (1)[4] thereof the provisions of the convention will not apply if the damage is caused by
the "willful misconduct" of the carrier. He argues that his cause of action is based on the incident at the
pre-departure area of the Geneva airport and not during the process of embarking nor disembarking from
the carrier and that security officers of the petitioner airline acted in bad faith. Accordingly, this case is
released from the terms of the Convention. Private respondent argues that assuming that the convention
applies, his trip to nine cities in different countries performed by different carriers under the conjunction
tickets issued in Manila by Singapore Airlines is regarded as a single transaction; as such the final leg of
his trip from Geneva to New York with the petitioner airline is part and parcel of the original contract of
carriage perfected in Manila. Thus, the third option of the plaintiff under Art. 28 (1) e.g., where the carrier
has a place of business through which the contract of carriage was made, applies herein and the case was
properly filed in the Philippines. The private respondent seeks affirmance of the ruling of the lower courts
that the petitioner acted as an agent of Singapore Airlines under the IATA Rules and as an agent of the
principal carrier the petitioner may be held liable under the contract of carriage perfected in Manila, citing
the judicial admission made by the petitioner that it claimed the value of the unused portion of the private
respondents conjunction tickets from the IATA Clearing House in Geneva where the accounts of both
airlines are respectively credited and debited. Accordingly, the petitioner cannot now deny the contract of
agency with Singapore Airlines after it honored the conjunction tickets issued by the latter. Sdaad

The petition is without merit.

The Warsaw Convention to which the Republic of the Philippines is a party and which has the force and
effect of law in this country applies to all international transportation of persons, baggage or goods
performed by an aircraft gratuitously or for hire.[5] As enumerated in the Preamble of the Convention, one
of the objectives is "to regulate in a uniform manner the conditions of international transportation by
air".[6] The contract of carriage entered into by the private respondent with Singapore Airlines, and
subsequently with the petitioner, to transport him to nine cities in different countries with New York as
the final destination is a contract of international transportation and the provisions of the Convention
automatically apply and exclusively govern the rights and liabilities of the airline and its
passengers.[7] This includes section 28 (1) which enumerates the four places where an action for damages
may be brought.Scs daad
The threshold issue of jurisdiction of Philippine courts under Art 28 (1) must first be resolved before any
pronouncements may be made on the liability of the carrier thereunder.[8] The objections raised by the
private respondent that this case is released from the terms of the Convention because the incident on
which this action is predicated did not occur in the process of embarking and disembarking from the
carrier under Art 17[9] and that the employees of the petitioner airline acted with malice and bad faith
under Art 25 (1)[10] pertain to the merits of the case which may be examined only if the action has first
been properly commenced under the rules on jurisdiction set forth in Art. 28 (1).

Art (28) (1) of the Warsaw Convention states: Sup rema

Art 28 (1) An action for damages 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.

There is no dispute that petitioner issued the ticket in Geneva which was neither the domicile nor the
principal place of business of petitioner nor the respondents place of destination.

The question is whether the contract of transportation between the petitioner and the private respondent
would be considered as a single operation and part of the contract of transportation entered into by the
latter with Singapore Airlines in Manila.

Petitioner disputes the ruling of the lower court that it is. Petitioners main argument is that the issuance of
a new ticket in Geneva created a contract of carriage separate and distinct from that entered by the private
respondent in Manila.

We find the petitioners argument without merit. Juris

Art 1(3) of the Warsaw Convention which states:

"Transportation to be performed by several successive carriers shall be deemed, for the

purposes of this convention, to be one undivided transportation, if it has been regarded by
the parties as a single operation, whether it has been agreed upon under the form of a
single contract or a series of contracts, and it shall not lose its international character
merely because one contract or series of contracts is to be performed entirely within the
territory subject of the sovereignty, suzerainty, mandate or authority of the same High
contracting Party." Sc juris

The contract of carriage between the private respondent and Singapore Airlines although performed by
different carriers under a series of airline tickets, including that issued by petitioner, constitutes a single
operation. Members of the IATA are under a general pool partnership agreement wherein they act as
agent of each other in the issuance of tickets[11] to contracted passengers to boost ticket sales worldwide
and at the same time provide passengers easy access to airlines which are otherwise inaccessible in some
parts of the world. Booking and reservation among airline members are allowed even by telephone and it
has become an accepted practice among them.[12] A member airline which enters into a contract of
carriage consisting of a series of trips to be performed by different carriers is authorized to receive the
fare for the whole trip and through the required process of interline settlement of accounts by way of the
IATA clearing house an airline is duly compensated for the segment of the trip serviced. [13] Thus, when
the petitioner accepted the unused portion of the conjunction tickets, entered it in the IATA clearing
house and undertook to transport the private respondent over the route covered by the unused portion of
the conjunction tickets, i.e., Geneva to New York, the petitioner tacitly recognized its commitment under
the IATA pool arrangement to act as agent of the principal contracting airline, Singapore Airlines, as to
the segment of the trip the petitioner agreed to undertake. As such, the petitioner thereby assumed the
obligation to take the place of the carrier originally designated in the original conjunction ticket. The
petitioners argument that it is not a designated carrier in the original conjunction tickets and that it issued
its own ticket is not decisive of its liability. The new ticket was simply a replacement for the unused
portion of the conjunction ticket, both tickets being for the same amount of US$ 2,760 and having the
same points of departure and destination.[14] By constituting itself as an agent of the principal carrier the
petitioners undertaking should be taken as part of a single operation under the contract of carriage
executed by the private respondent and Singapore Airlines in Manila.

The quoted provisions of the Warsaw Convention Art. 1(3) clearly states that a contract of air
transportation is taken as a single operation whether it is founded on a single contract or a series of
contracts. The number of tickets issued does not detract from the oneness of the contract of carriage as
long as the parties regard the contract as a single operation. The evident purpose underlying this Article is
to promote international air travel by facilitating the procurement of a series of contracts for air
transportation through a single principal and obligating different airlines to be bound by one contract of
transportation. Petitioners acquiescence to take the place of the original designated carrier binds it under
the contract of carriage entered into by the private respondent and Singapore Airlines in Manila. Juris sc

The third option of the plaintiff under Art 28 (1) of the Warsaw Convention e.g., to sue in the place of
business of the carrier wherein the contract was made, is therefore, Manila, and Philippine courts are
clothed with jurisdiction over this case. We note that while this case was filed in Cebu and not in Manila
the issue of venue is no longer an issue as the petitioner is deemed to have waived it when it presented
evidence before the trial court.

The issue raised in SP No. 31452 which is whether or not the trial court committed grave abuse of
discretion in ordering the deposition of the petitioners security officer taken in Geneva to be stricken off
the record for failure of the said security officer to appear before the Philippine consul in Geneva to
answer the cross-interrogatories filed by the private respondent does not have to be resolved. The
subsequent appearance of the said security officer before the Philippine consul in Geneva on September
19, 1994 and the answer to the cross-interrogatories propounded by the private respondent was
transmitted to the trial court by the Philippine consul in Geneva on September 23, 1994 [15] should be
deemed as full compliance with the requisites of the right of the private respondent to cross-examine the
petitioners witness. The deposition filed by the petitioner should be reinstated as part of the evidence and
considered together with the answer to the cross-interrogatories.

WHEREFORE, the judgment of the appellate court in CA-G.R. SP No. 30946 is affirmed. The case is
ordered remanded to the court of origin for further proceedings. The decision of the appellate court in
CA-G.R. SP. No. 31452 is set aside. The deposition of the petitioners security officer is reinstated as part
of the evidence. Misj uris

SO ORDERED.

LUFTHANSA GERMAN VS. CA

ROMERO, J.:
In this petition for review on certiorari, the Court is confronted with the issue of whether or not petitioner
Lufthansa German Airlines which issued a confirmed Lufthansa ticket to private respondent Antiporda
covering a five-leg trip abroad different airlines should be held liable for damages occasioned by the
"bumping-off" of said private respondent Antiporda by Air Kenya, one of the airlines contracted to carry
him to a particular destination of the five-leg trip.

Tirso V. Antiporda, Sr. was an associate director of the Central Bank of the Philippines and a
registered consultant of the Asian Development Bank, the World Bank and the UNDP. He was,
contracted by Sycip, Gorres, Velayo & Co. (SGV) to be the institutional financial specialist for
the agricultural credit institution project of the Investment and Development Bank of Malawi in
Africa. According to the letter of August 30, 1984 addressed to Antiporda from J.F. Singson of
SGV, he would render his services to the Malawi bank as an independent contractor for which he
would be paid US$9,167 for a 50-day period commencing sometime in September 1984. For the
engagement, Antiporda would be provided one round-trip economy ticket from Manila to
Blantyre and back with a maximum travel time of four days per round-trip and, in addition, a
travel allowance of $50 per day, a travel insurance coverage of P100,000 and major
hospitalization with AFIA and an accident insurance coverage of P150,000.1 On September 17,
1984, Lufthansa, through SGV, issued ticket No. 3477712678 for Antiporda's confirmed flights
to Malawi, Africa. The ticket particularized his itinerary as follows:

Carrier Flight Date Time Status

Manila to SQ 081 25-9-84 1530 OK

Singapore

Singapore to LH 695 25-9-84 2200 OK

Bombay

Bombay to KQ 203 26-9-84 0215 OK

Nairobi

Nairobi to QM 335 26-9-84 1395 OK

Lilongwe

Lilongwe to QM 031 26-9-84 1600 OK

Blantyre

Thus, on September 25, 1984, Antiporda took the Lufthansa flight to Singapore from where he proceeded
to Bombay on board the same airline. He arrived in Bombay as scheduled and waited at the transit area of
the airport for his connecting flight to Nairobi which was, per schedule given him by Lufthansa, to leave
Bombay in the morning of September 26, 1984. Finding no representative of Lufthansa waiting for him at
the gate, Antiporda asked the duty officer of Air India how he could get in touch with Lufthansa. He was
told to call up Lufthansa which informed him that somebody would attend to him shortly. Ten minutes
later, Gerard Matias, Lufthansa's traffic officer, arrived, asked for Antiporda's ticket and told him to just
sit down and wait. Matias returned with one Leslie Benent, duty officer of Lufthansa, who informed
Antiporda that his seat in Air Kenya Flight 203 to Nairobi had been given to a very important person of
Bombay who was attending a religious function in Nairobi. Antiporda protested, stressing that he had an
important professional engagement in Blantyre, Malawi in the afternoon of September 26, 1984. He
requested that the situation be remedied but Air Kenya Flight 203 left for Nairobi without him on board.
Stranded in Bombay, Antiporda was booked for Nairobi via Addis Ababa only on September 27, 1984.
He finally arrived in Blantyre at 9:00 o'clock in the evening of September 28, 1984, more than a couple of
days late for his appointment with people from the institution he was to work with in Malawi.

Consequently, on January 8, 1985, Antiporda's counsel wrote the general manager of Lufthansa in Manila
demanding P1,000,000 in damages for the airline's "malicious, wanton, disregard of the contract of
carriage." 2 In reply, Lufthansa general manager Hagen Keilich assured Antiporda that the matter would
be investigated.

Apparently getting no positive action from Lufthansa, on January 21, 1985, Antiporda filed with the
Regional Trial Court of Quezon City a complaint against Lufthansa which was docketed as Civil Case
No. Q-43810.

The lower court, 3 guided by the Supreme Court ruling in KLM Dutch Airlines v. Court of Appeals, et
al., 4 found that Lufthansa breached the contract to transport Antiporda from Manila to Blantyre on a trip
of five legs. It said:

The threshold issue that confronts this Court is:

Was there a breach of obligation by the defendant in failing to transport the plaintiff from
Manila to Blantyre, Malawi, Africa?

The defendant admits the issuance and validity of Ticket

No. 3477712678 (Exh. B). However, it denies its obligation to transport the plaintiff to
his point of destination at Blantyre, Malawi, Africa. Defendant claims that it was
obligated to transport the plaintiff only up to Bombay.

This case is one of a contract of carriage. And the ticket issued by the defendant to the
plaintiff is the written agreement between the
parties herein. Ticket No. 3477712678 particularizes the itinerary of the plaintiff . . .

xxx xxx xxx

From the ticket, therefore, it is indubitably clear that it was the duty and responsibility of
the defendant Lufthansa to transport the plaintiff from Manila to Blantyre, on a trip of
five legs.

The posture taken by the defendant that it was Air Kenya's, not Lufthansa's, liability to
transport plaintiff from Bombay to Malawi, is inacceptable. The plaintiff dealt
exclusively with the defendant Lufthansa which issued to him the ticket for his entire trip
and which in effect guaranteed to the plaintiff that he would have sure space in Air
Kenya's flight to Nairobi. Plaintiff, under that assurance of the defendant, naturally, had
the right to expect that his ticket would be honored by Air Kenya, to which, in the legal
sense, Lufthansa had endorsed and in effect guaranteed the performance of its principal
engagement to carry out plaintiff's scheduled itinerary previously and mutually agreed
upon by the parties. Defendant itself admitted that the flight from Manila, Singapore,
Bombay, Nairobi, Lilongwe, Blantyre, Malawi, were all confirmed with the stamped
letters "OK" thereon. In short, after issuing a confirmed ticket from Manila to Malawi
and receiv(ing) payment from the plaintiff for such one whole trip, how can the defendant
now deny its contractual obligation by alleging that its responsibility ceased at the
Bombay Airport?
 The contract of air transportation was exclusively between the plaintiff Antiporda and the
defendant Lufthansa, the latter merely endorsing its performance to Air Kenya, as its
subcontractor or agent. The fourth paragraph of the "Conditions of Contracts" of the
ticket (Exh. B) issued by Lufthansa to plaintiff indubitably shows that the contract was
one of continuous air transportation from Manila to Blantyre, Malawi.

4. . . . carriage to be performed hereunder by several successive carriers

is regarded as a single operation.

This condition embodied in the ticket issued to plaintiff is diametrically opposed to the
defense theory that Lufthansa's liability is only limited up to Bombay.

Pursuant to the above reasoning, the lower court held that Lufthansa cannot limit its liability as a mere
ticket issuing agent for other airlines and only to untoward occurrences on its own line.

The lower court added that under the pool arrangement of the International Air Transport Association
(IATA), of which Lufthansa and Air Kenya are members, member airlines are agents of each other in the
issuance of tickets and, therefore, in accordance with Ortigas v. Lufthansa,5 an airline company is
considered bound by the mistakes committed by another member of IATA which, in behalf of the former,
had confirmed a passenger's reservation for accommodation.

In justifying its award of moral and exemplary damages, the lower court emphasized that the breach of
contract was "aggravated by the discourteous and highly arbitrary conduct of Gerard Matias, an official of
petitioner Lufthansa in Bombay." Its factual findings on the matter are the following:

. . . . Bumped off from his connecting flight to Nairobi and stranded in the Bombay
Airport for 32 hours, when plaintiff insisted on taking his scheduled flight to Nairobi,
Gerard Matias got angry and threw the ticket and passport on plaintiff's lap and was
ordered to go to the basement with his heavy luggages for no reason at all. It was a
difficult task for the plaintiff to carry three luggages and yet Gerard Matias did not even
offer to help him. Plaintiff requested accommodation but Matias ignored it and just left.
Not even Lufthansa office in Bombay, after learning plaintiff's being stranded in Bombay
and his accommodation problem, provided any relief to plaintiff's sordid situation.
Plaintiff had to stay in the transit area and could not sleep for fear that his luggages might
be lost. Everytime he went to the toilet, he had to drag with him his luggages. He tried to
eat the high-seasoned food available at the airport but developed stomach trouble. It was
indeed a pathetic sight that the plaintiff, an official of the Central Bank, a multi-awarded
institutional expert, tasked to perform consultancy work in a World Bank funded
agricultural bank project in Malawi instead found himself stranded in a foreign land
where nobody was expected to help him in his predicament except the defendant, who
displayed utter lack of concern of its obligation to the plaintiff and left plaintiff alone in
his misery at the Bombay airport.

Citing Air France v. Carrascoso, 6 the lower court ruled that passengers have a right to be treated with
kindness, respect, courtesy and consideration by the carrier's employees apart from their right to be
protected against personal misconduct, injurious language, indignities and abuses from such employees.

Consequently, the trial court ordered Lufthansa to pay Antiporda the following:

(a) the amount of P300,000.00 as moral damages;

 (b) the amount of P200,000.00 as exemplary damages; and

(c) the amount of P50,000.00 as reasonable attorney's fees.

With costs against the defendant.

Lufthansa elevated the case to the Court of Appeals arguing that it cannot be held liable for the acts
committed by Air Kenya on the basis of the following:

(a) it merely acted as a ticket-issuing agent in behalf of Air Kenya; consequently the
contract of carriage entered into is between respondent Antiporda and Air Kenya, to the
exclusion of petitioner Lufthansa;

(b) under sections (1) and (2) Article 30 of the Warsaw Convention, an airline carrier is
liable only to untoward occurrences on its own line;

(c) the award of moral and exemplary damages in addition to attorney's fees by the trial
court is without basis in fact and in law.

The Court of Appeals not convinced with Lufthansa's appeal, affirmed the decision on the trial court
sought to be reviewed.

Explained the Court of Appeals: although the contract of carriage was to be performed by several air
carriers, the same is to be treated as a single operation conducted by Lufthansa because Antiporda dealt
exclusively with it which issued him a Lufthansa ticket for the entire trip. By issuing a confirmed ticket,
Lufthansa in effect guaranteed Antiporda a sure seat with Air Kenya. Private respondent Antiporda,
maintained the Court of Appeals, had the right to expect that his ticket would be honored by Air Kenya
which, in the legal sense, Lufthansa had endorsed and, in effect, guaranteed the performance of its
principal engagement to carry out his five-leg trip.

The appellate court also ruled that Lufthansa cannot rely on Sections (1) and (2), Article 30 of the
Warsaw Convention 7 because the provisions thereof are not applicable under the circumstances of the
case.

Sections (1) and (2), Article 30 of the Warsaw Convention provide:

Art. 30 (1). In the case of transportation to be performed by various successive carriers

and falling within the definition set out in the third paragraph of Article I, each carrier
who accepts passengers, baggage, or goods shall be subject to the rules set out in the
convention, and shall be deemed to be one of the contracting parties to the contract of
transportation insofar as the contract deals with that part of the transportation which is
performed under his supervision.

(2) In the case of transportation of this nature, the passenger or his representative can take
action only against the carrier who performed the transportation during which
the accident or the delay occurred, save in the case where, by express agreement, the first
carrier has assumed liability for the whole journey. (Emphasis supplied).
According to the Court of Appeals, Antiporda's cause of action is not premised on the occurrence of an
accident or delay as contemplated under Section 2 of said Article but on Air Kenya's refusal to transport
him in order to accommodate another. To support this ruling, the Court of Appeals cited the Supreme
Court ruling in KLM Royal Dutch Airlines v. Court of Appeals, 8 which held, inter alia, that:

1. The applicability insisted upon by the KLM of Article 30 of the Warsaw Convention
cannot be sustained. That article presupposes the occurrence of either an accident or a
delay, neither of which took place at the Barcelona airport; what is here manifest, instead,
is that the Aer Lingus, through its manager there, refused to transport the respondents to
their planned and contracted destination.

The Court of Appeals concluded that Lufthansa cannot, thus, invoke Sections (1) and (2), Article 30 of
the Warsaw Convention to evade liability.

Failing to obtain a favorable decision, Lufthansa filed this petition for review on certiorari anchored on
the following arguments:

1. The respondent court erred as a matter of law in refusing to apply the Warsaw
Convention to the instant case.

2. Respondent court's ruling that Lufthansa had deceived private respondent has no
factual or legal basis.

3. The respondent court erred as a matter of law in affirming the trial court's award of
moral damages in the face of this Court's rulings concerning moral damages in cases of
breach of contract.

4. The respondent court erred as a matter of law in affirming the trial court's award of
exemplary damages for lack of legal or factual basis therefor.

The arguments propounded by petitioner Lufthansa cannot suffice to reverse the appellate court's decision
as prayed for. Lufthansa raised four assignments of error but the focal point at issue has been defined by
us at the inception of this ponencia.

Lufthansa maintains that its liability to any passenger is limited to occurrences in its own line, and, thus,
in the case at bench, its liability to Antiporda is limited to the extent that it had transported him from
Manila to Singapore and from Singapore to Bombay; that therefrom, responsibility for the performance of
the contract of carriage is assumed by the succeeding carriers tasked to transport him for the remaining
leg of his trip because at that stage, its contract of carriage with Antiporda ceases, with Lufthansa acting,
no longer as the principal in the contract of carriage, but merely as a ticket-issuing agent for the other
carriers.

In further advancing this line of defense, Lufthansa invoked Section 2, Article 30 of the Warsaw
Convention9 which expressly stipulates that in cases where the transportation of passengers or goods is
performed by various successive carriers, the passenger can take action only against the carrier which
performed the transportation, during which the accident or delay occurred. Lufthansa further advanced
the theory that this provision of the Warsaw Convention is applicable to the present case, contrary to the
decision of the Court of Appeals which relied on the Supreme Court ruling in KLM Royal Dutch
Lines. 10 For Lufthansa, "bumping-off" is considered delay since delay would inevitably result therefrom.
It implored this Court to re-examine our ruling in KLM and take heed of jurisprudence 11 in the U.S.
where "delay," unlike in our ruling in KLM, contemplates the instance of "bumping-off." In KLM, we
held that the term "delay" does not encompass the instance of "bumping-off," the latter having been
defined as refusal to carry or transport a passenger.

On his part, private respondent Antiporda insists that he entered with Lufthansa an exclusive contract of
carriage, the nature of which is a continuous carriage by air from Manila to Blantyre Malawi; that it did
not enter into a series of independent contracts with the carriers that transported him for the remaining leg
of his trip.

The basis for such claim is well-founded. As ruled by the trial court, with the Court of Appeals concurring
favorably, Antiporda was issued a confirmed Lufthansa ticket all throughout the five-leg trip. The fourth
paragraph of the "Conditions of Contract" stipulated in the ticket indubitably showed that the contract of
carriage was considered as one of continuous air transportation from Manila to Blantyre, Malawi, thus:

4. . . . carriage to be performed hereunder by several successive carriers is regarded as

a single operation.

In light of the stipulations expressly specified in the ticket defining the true nature of its contract of
carriage with Antiporda, Lufthansa cannot claim that its liability thereon ceased at Bombay Airport and
thence, shifted to the various carriers that assumed the actual task of transporting said private respondent.

We, therefore, reject Lufthansa's theory that from the time another carrier was engaged to transport
Antiporda on another segment of his trip, it merely acted as a ticket-issuing agent in behalf of said carrier.
In the very nature of their contract, Lufthansa is clearly the principal in the contract of carriage with
Antiporda and remains to be so, regardless of those instances when actual carriage was to be performed
by various carriers. The issuance of a confirmed Lufthansa ticket in favor of Antiporda covering his entire
five-leg trip abroad successive carriers concretely attests to this. This also serves as proof that Lufthansa,
in effect guaranteed that the successive carriers, such as Air Kenya would honor his ticket; assure him of
a space therein and transport him on a particular segment of his trip. This ruling finds corroboration in the
Supreme Court decision in KLM , 12 where the same issues were confronted, thus:

xxx xxx xxx

The passage tickets of the respondents provide that the carriage to be performed
thereunder by several successive carriers "is to be regarded as a single operation," which
is diametrically incompatible with the theory of the KLM that the respondents entered
into a series of independent contracts with the carriers which took them on the various
segments of their trip. This position of KLM we reject. The respondents dealt exclusively
with the KLM which issued them tickets for their entire trip and which in effect
guaranteed to them that they would have sure space in Aer Lingus flight 861. The
respondents, under that assurance of the internationally prestigious KLM, naturally had
the right to expect that their tickets would be honored by Aer Lingus to which, in the
legal sense, the KLM had indorsed and in effect guaranteed the performance of its
principal engagement to carry out the respondents' scheduled itinerary previously and
mutually agreed upon between the parties.

On the issue of whether the Warsaw Convention, particularly Section 2, Article 30 thereof is applicable
herein, we agree with the Court of Appeals in ruling in the negative. We reiterate what has been settled in
KLM:
 1. The applicability insisted upon by the KLM of Article 30 of the Warsaw Convention
cannot be sustained. That article presupposes the occurrence of either an accident or a
delay, neither of which took place at the Barcelona airport; what is here manifest, instead,
is that the Aer Lingus, through its manager there, refused to transport the respondents to
their planned and contracted destination. . . .

Lufthansa prays this court to take heed of jurisprudence in the United States where the term "delay" was
interpreted to include "bumping-off" or failure to carry a passenger with a confirmed reservation. These
decisions in the United States are not controlling in this jurisdiction. We are not prepared, absent reasons
of compelling nature, to entertain an extended meaning of the term "delay," which in KLM was given its
ordinary signification. "Construction and interpretation come only after it has been demonstrated that
application is impossible or inadequate without them. The ordinary language of a statute must be given its
ordinary meaning and limited to a reasonable interpretation." 13In its ordinary sense, "delay" means to
prolong the time of or before; to stop, detain or hinder for a time, or cause someone or something to be
behind in schedule or usual rate of movement in progress. 14 "Bumping-off," which is the refusal to
transport passengers with confirmed reservation to their planned and contracted destinations, totally
forecloses said passengers' right to be transported, whereas delay merely postpones for a time being the
enforcement of such right.

Consequently, Section 2, Article 30 of the Warsaw Convention which does not contemplate the instance
of "bumping-off" but merely of simple delay, cannot provide a handy excuse for Lufthansa as to
exculpate it from any liability to Antiporda. The payment of damages is, thus, deemed warranted by this
Court. We find no reversible error in the lower court's award of moral and exemplary damages, including
attorney's fees in favor of Antiporda.

Article 2220 of the Civil Code provides:

Art. 2220. Willful injury to property may be a legal ground for awarding moral damages
if the court should find that, under the circumstances, such damages are justly due. The
same rule applies to breaches of contract where the defendant acted fraudulently or in bad
faith.

According to the findings of the appellate court which affirmed that of the lower court, the reasons given
by the witnesses for Lufthansa for private respondent's being "bumped off" at Bombay airport were
conflicting.

Observed the Court of Appeals:

If there was really no seat available because of over-booking, why did Lufthansa confirm
the ticket of the plaintiff-appellee? It has to be pointed out that the confirmed ticket is up
to Blantyre, Malawi, not only to Bombay.

If the plaintiff-appellee was not in the list of passengers of Kenya Airways (the
connecting flight) then Lufthansa must have deceived him in Manila because according
to Gerard Matias, the passengers booked by Kenya Airways for Boeing 707 were 190
passengers when the plane could accommodate only 144 passengers considering that the
name of plaintiff-appellee was not in the list. If that was the situation, Lufthansa by the
issuance of its ticket should have not assured the plaintiff-appellee that he could get the
connecting flights as scheduled. Surely, Lufthansa before confirming the ticket of the
plaintiff-appellee must have confirmed the flight with Kenya Airways. If it was
 impossible to get a seat upon its own investigation in Bombay, then it should have not
confirmed the ticket of the plaintiff-appellee. It is the defendant-appellant who was
negligent in the performance of its duties, and plaintiff-appellee was just plainly
deceived.

Since the ticket was marked O.K., meaning confirmed, therefore plaintiff-appellee must
have a definite seat with Kenya Airways but it was lost or given to another person. It is
not true therefore, that plaintiff-appellee's name was not in the list of Kenya Airways.
Besides, why should Lufthansa allow a passenger to depart from the Philippines with a
confirmed ticket, without instructing its Bombay office to reserve a seat with Kenya
Airways for its connecting flight? In spite of the confirmation, Nelda Aquino testified
that plaintiff-appellee was stranded in Bombay because he did not get a seat with Kenya
Airways, and his name did not appear in the list of passengers. Then contrary to the
testimonies of
Berndt Loewe and Gerard Matias that the obligation of the
defendant-appellant is only up to Bombay and the reason why plaintiff-appellee was not
in the list of passengers is because of overbooking. Nelda Aquino contrary to the
testimonies of the two, testified that the reason for the bumping-off is that the seat was
given to another passenger, to wit:

Q Did you know or eventually learned later that the name of Antiporda
was not in the list of confirmed passengers?

A I only learned from the office at Bombay that it was given to other
passenger which I only learned from the office at Bombay.

Q Who informed you that the seat of Mr. Antiporda was given to other
passenger?

A From our international officer.

Q Who is he?

A Our Sales Manager.

Q Is he your Sales Manager in Bombay?

A Yes, our Manager.

If Nelda Aquino knew that the reason for the bumping-off is that the seat was given to
another, how come Berndt Loewe, passenger Sales Manager of defendant, Gerard Matias,
an employee of defendant-appellant in Bombay did not know the said reason why the
name of plaintiff-appellee did not appear in the list of passengers? It is either they knew
the truth but because they wanted to escape liability they pretended not to know the truth.

Clearly, bad faith attended the performance of the contract of carriage, for even while Antiporda was in
Bombay, representatives of Lufthansa already tried to evade liability first, by claiming that the contract of
carriage between Lufthansa and Antiporda ceased at Bombay airport, in disregard of the fact that
Antiporda was holding a Lufthansa ticket for the entire five-leg trip; second, despite Berndt Loewe's
knowledge that Antiporda's seat was allowed to be given to another passenger, the same suppressed the
information and feigned ignorance of the matter, presenting altogether another reason why Antiporda was
not listed in the manifest, i.e. that Air Kenya Boeing 707 was overbooked, notwithstanding clear proof
that Lufthansa in Manila confirmed his reservation for said flight.

Antiporda is likewise entitled to the award of exemplary damages on the basis of Article 2232 of the Civil
Code which provides:

Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if
the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

There is every indication that Lufthansa, through its representatives in Bombay, acted in a reckless and
malevolent manner in dealing with Antiporda.

As found by the trial court:

The breach of the guarantee was aggravated by the discourteous and highly arbitrary
conduct of Gerard Matias, an official of Lufthansa in Bombay. Bumped off from his
connecting flight to Nairobi and stranded in the Bombay Airport for 32 hours, when
plaintiff insisted on taking his scheduled flight to Nairobi, Gerard Matias got angry and
threw the ticket and passport on plaintiff's lap and was ordered to go to the basement with
his heavy luggages for no reason at all. It was a difficult task for the plaintiff to carry
three luggages and yet Gerard Matias did not even offer to help him. Plaintiff requested
accommodation but Matias ignored it and just left. Not even Lufthansa office in Bombay,
after learning plaintiff's being stranded in Bombay and his accommodation problem,
provided any relief to plaintiff's sordid situation. Plaintiff has to stay in the transit area
and could not sleep for fear that his luggages might be lost. Everytime he went to the
toilet, he had to drag with him his luggages. He tried to eat the high-seasoned food
available at the airport but developed stomach trouble. It was indeed a pathetic sight that
the plaintiff, an official of the Central Bank, a multi-awarded institutional expert, tasked
to perform consultancy work in a World Bank funded agricultural bank project in Malawi
instead found himself stranded in a foreign land where nobody was expected to help him
in his predicament except the defendant, who displayed utter lack of concern of its
obligation to the plaintiff and left plaintiff alone in his misery at the Bombay airport.

These findings of the trial court were affirmed by the Court of Appeals on the ground that there are no
cogent reasons to justify a contrary finding. The same holds true with this Court. The findings of fact of
lower courts are binding on us and will not be generally disturbed on appeal. 15 In affirming the lower
court's award of damages to Antiporda, we take into account his high position in the government, coupled
with the fact that he failed to meet his professional commitment in Blantyre, Malawi due to the
"bumping-off" incident accompanied by rude and discourteous behavior on the part of airline officials
who should have been the first to attend to his travel needs.

WHEREFORE, the petition for review is hereby DENIED and the decision of the Court of Appeals
AFFIRMED.

Costs against petitioner.

SO ORDERED.