Macondray and Co Inc v.

Acting Commissioner of Customs

3.)

Provide a safeguard against goods being

brought into this country on a vessel and then
smuggled ashore.

FACTS:

On November 2, 1962, the vessel S/S TAI PING, of which

petitioner is the local agent, arrived at the port of Manila from
San Francisco, California, U.S.A., conveying various
shipments of merchandise, among which was a shipment of
one (1) coil carbon steel, one (1 bundle carbon steel flat and
one (1) carbon containing carbon tool holders carbide cutters,
ground, all of which appeared in the Bill of Lading No. 22,
consigned to Bogo Medellin Millings Co., Inc. The shipment,
except the one (1) coil carbon steel was not reflected in the
Inward Cargo Manifest as required by Section 1005 in relation
to Section 2521 of the Tariff and Custom Code of the
Philippines. Allied Brokerage Corporation, acting for and in
behalf of Bogo Medellin Milling Co. requested petitioner
Macondray & Co., agent of the vessel S/S TAI PING, to
correct the manifest of the steamer so that it may take delivery
of the goods at Customs House. Collector of Custom required
petitioner to explain and show cause why no administrative
fine should be imposed upon said vessel. The fine of
1,000.00 was paid by petitioner under protest. Hearing of the
protest proceeded thereafter.
Collector of Customs of the Port of Manila ordered the
dismissal of said protest for lack of merit. On appeal to the
Commissioner of Customs the latter sustained the Collector of
Customs. Petitioner filed a petition for review with the Court of
Tax Appeals. The CTA affirmed the decision of the Collector of
Customs as affirmed by the Commissioner of Customs.

ISSUE:
Whether or not the Collector of Customs erred in imposing a
fine on vessel, S/S TAI PING, for alleged violation of Section
1005 in relation to Section 2521 of the Tariff and Customs
Code for landing unmanifested cargo at the port of Manila.
HELD:

sThe inclusion of the unmanifested cargoes in the Bill of

Lading does not satisfy the requirement of the aforequoted
sections of the Tariff and Customs Code. It is to be noted that
nowhere in the said sections is the presentation of a Bill of
Lading required required, but only the presentation of a
Manifest containing a true and accurate description of the
cargoes. This is for the simple reason that while a manifest is a
declaration of the entire cargo, a bill of lading is but a
declaration of a specific part of the cargo and is a matter of
business convenience based exclusively on a contract. The
Court cannot accept or place an implied imprimatur on the
contention of petitioner that the entries in the bill of lading
adequately supplied the deficiency of the manifest and cured
its infirmity. The mandate of the law is clear and Court cannot
settle for less. The law imposes the absolute obligation, under
penalty for failure, upon every vessel from a foreign port to
have on board complete written or typewritten manifests of all
her cargo, signed by the master. Where the law requires a
manifest to be kept or delivered, it is not complied with unless
the manifest is true and accurate. Amendment of cargo
manifest even if later approved by customs authorities does
not relieve carrying vessel of liability of fine incurred prior to its
correction. The philosophy and purpose behind the law
authorizing amendment, under paragraph 3 of Section 1005 of
the Tariff and Customs Code, is to protect innocent importers
or consignees from the mistake or unlawful acts of the master.

Bill of Lading is but a declaration of a specific part of the cargo and is a

matter of business convenience based exclusively on a contract.

It is ordinarily merely a convenient commercial instrument

designed to protect the importer or consignee, a manifest of
the cargo is absolutely essential to the exportation or
importation of property in all vessels, the evident intent and
object of which is to impose upon the owners and officers of
such vessel an imperative obligation to submit lists of the
entire loading of the ship in the prescribed form, to facilitate the
labors of the customs and immigration officers and to defeat
any attempt to make use of such vessels to secure the
unlawful entry of persons or things into the country.

Magellan Marketing Manufacturing vs CA

Lessons Applicable: Bill of Lading (Transportation)
Laws Applicable:

FACTS:

-Choju Co., Ltd purchased from Magellan Manufacturers Marketing Corp.

(MMMC) 136,000 anahaw fans for $23,220.
-through its president James Cu, MMMC contracted with F.E. Zuellig, a
shipping agent of Orient Overseas Container Lines, Inc., (OOCL),
through Mr. King, specifying that he needed an on-board bill of lading
and that transhipment is not allowed under the letter of credit
-MMMC paid F.E. Zuellig the freight charges and secured a copy of the
bill of lading which was presented to Allied Bank. The bank then credited
the amount of US$23,220 covered by the letter of credit to MMMC
-When MMMC's President James Cu, went back to the bank later, he
was informed that the payment was refused by the buying for lack of bill
of lading and there was a transhipment of goods
-The anahaw fans were shipped back to Manila through OOCL who are
demanding from MMMC P246,043.43 (freight charges from Japan to
Manila, demurrage incurred in Japan and Manila from October 22, 1980
up to May 20, 1981 and charges for stripping the container van of the
Anahaw fans on May 20, 1981) this was due to the lack of an on-board
bill of lading
-MMMC abandoned the whole cargo and asked OOCL for damages
OOCL: bill of lading clearly shows that there will be a transhipment and
that petitioner was well aware that MV (Pacific) Despatcher was only up
to Hongkong where the subject cargo will be transferred to another
vessel for Japan
RTC: favored OOCL:

BILL OF LADING VS CARGO MANIFEST

Manifest

It is a declaration of the entire cargo.

OBJECTS:
1.) Furnish the customs officers with a list to check
against;
2.) Inform our revenue officers what goods are
being brought into the country; and

consented because the bill of lading where it is clearly indicated that

there will be transhipment
MMMC was the one who ordered the reshipment of the cargo from
Japan to Manila
CA: Affirmed with modification of excluding demurrage in Manila

ISSUE: W/N the bill of lading which reflected the transhipment against
the letter of credit is consented by MMMC

HELD: YES. CA Affirmed with modification

Transhipment

petitioner had full knowledge that the bill issued to it contained terms
and conditions clearly violative of the requirements of the letter of credit.
Nonetheless, perhaps in its eagerness to conclude the transaction with
its Japanese buyer and in a race to beat the expiry date of the letter of
credit, petitioner took the risk of accepting the bill of lading even if it did
not conform with the indicated specifications, possibly entertaining a
glimmer of hope and imbued with a touch of daring that such violations
may be overlooked, if not disregarded, so long as the cargo is delivered
on time. Unfortunately, the risk did not pull through as hoped for.

We find no fault on the part of private respondents. On the matter of

transhipment, petitioner maintains that "... while the goods were
transferred in Hongkong from MV Pacific Despatcher, the feeder vessel,
to MV Oriental Researcher, a mother vessel, the same cannot be
considered transhipment because both vessels belong to the same
shipping company, the private respondent Orient Overseas Container
Lines, Inc." 7 Petitioner emphatically goes on to say: "To be sure, there
was no actual transhipment of the Anahaw fans. The private respondents
have executed a certification to the effect that while the Anahaw fans
were transferred from one vessel to another in Hong Kong, since the two
vessels belong to one and the same company then there was no
transhipment. 8

Any violation of the terms and conditions of the letter of credit as would
defeat its right to collect the proceeds thereof was, therefore, entirely of
the petitioner's making for which it must bear the consequences. As
finally averred by private respondents, and with which we agree, "... the
questions of whether or not there was a violation of the terms and
conditions of the letter of credit, or whether or not such violation was the
cause or motive for the rejection by petitioner's Japanese buyer should
not affect private respondents therein since they were not privies to the
terms and conditions of petitioner's letter of credit and cannot therefore
be held liable for any violation thereof by any of the parties thereto." 34

Transhipment, in maritime law, is defined as "the act of taking cargo out

of one ship and loading it in another," 9 or "the transfer of goods from the
vessel stipulated in the contract of affreightment to another vessel before
the place of destination named in the contract has been reached," 10 or
"the transfer for further transportation from one ship or conveyance to
another." 11 Clearly, either in its ordinary or its strictly legal acceptation,
there is transhipment whether or not the same person, firm or entity
owns the vessels. In other words, the fact of transhipment is not
dependent upon the ownership of the transporting ships or conveyances
or in the change of carriers, as the petitioner seems to suggest, but
rather on the fact of actual physical transfer of cargo from one vessel to
another.

Demurrage, in its strict sense, is the compensation provided for in the

contract of affreightment for the detention of the vessel beyond the time
agreed on for loading and unloading.

The terms of the contract as embodied in the bill of lading are clear and
thus obviates the need for any interpretation. The intention of the parties
which is the carriage of the cargo under the terms specified thereunder
and the wordings of the bill of lading do not contradict each other. The
terms of the contract being conclusive upon the parties and judging from
the contemporaneous and subsequent actuations of petitioner, to wit,
personally receiving and signing the bill of lading and paying the freight
charges, there is no doubt that petitioner must necessarily be charged
with full knowledge and unqualified acceptance of the terms of the bill of
lading and that it intended to be bound thereby.

Bill of lading
An on board bill of lading is one in which it is stated that the goods have
been received on board the vessel which is to carry the goods, whereas
a received for shipment bill of lading is one in which it is stated that the
goods have been received for shipment with or without specifying the
vessel by which the goods are to be shipped.
Received for shipment bills of lading are issued whenever conditions are
not normal and there is insufficiency of shipping space. 29 An on board
bill of lading is issued when the goods have been actually placed aboard
the ship with every reasonable expectation that the shipment is as good
as on its way. 30 It is, therefore, understandable that a party to a
maritime contract would require an on board bill of lading because of its
apparent guaranty of certainty of shipping as well as the seaworthiness
of the vessel which is to carry the goods.

Dmurrage

Essentially, demurrage is the claim for damages for failure to accept

delivery. In a broad sense, every improper detention of a vessel may be
considered a demurrage. Liability for demurrage, using the word in its
strictly technical sense, exists only when expressly stipulated in the
contract. Using the term in its broader sense, damages in the nature of
demurrage are recoverable for a breach of the implied obligation to load
or unload the cargo with reasonable dispatch, but only by the party to
whom the duty is owed and only against one who is a party to the
shipping contract. 36 Notice of arrival of vessels or conveyances, or of
their placement for purposes of unloading is often a condition precedent
to the right to collect demurrage charge

Now, there is no dispute that private respondents expressly and on their

own volition granted petitioner an option with respect to the satisfaction
of freightage and demurrage charges. Having given such option,
especially since it was accepted by petitioner, private respondents are
estopped from reneging thereon. Petitioner, on its part, was well within
its right to exercise said option. Private respondents, in giving the option,
and petitioner, in exercising that option, are concluded by their respective
actions. To allow either of them to unilaterally back out on the offer and
on the exercise of the option would be to countenance abuse of rights as
an order of the day, doing violence to the long entrenched principle of
mutuality of contracts.

It will be remembered that in overland transportation, an unreasonable

delay in the delivery of transported goods is sufficient ground for the
abandonment of goods. By analogy, this can also apply to maritime
transportation. Further, with much more reason can petitioner in the
instant case properly abandon the goods, not only because of the
unreasonable delay in its delivery but because of the option which was
categorically granted to and exercised by it as a means of settling its
liability for the cost and expenses of reshipment. And, said choice having
been duly communicated, the same is binding upon the parties on legal
and equitable considerations of estoppel.

G.R. No. L-28028

November 25, 1927
JUAN YSMAEL & CO., INC. vs. GABINO BARRETTO & CO., LTD., ET
AL., defendants. ANDRES H. LIMGENGCO and VICENTE JAVIER
Facts:
A domestic corporation, seeks to recover from the defendants
P9,940.95 the alleged value of four cases of merchandise which it
delivered to the steamship Andres on October 25, 1922, at Manila to be
shipped to Surigao, but which were never delivered to Salomon Sharuff,
the consignee, or returned to the plaintiff.
Defendants make a specific denial of all of the material
allegations of the complaint, and as special defense allege that the four
cases of merchandise in question were never delivered to them, and that
under the provisions of paragraph the provisions of paragraph 7 of the
printed conditions appearing on the back of the bill of lading, plaintiff's
right of action is barred for the reason that it was not brought within sixty
days from the time the cause of action accrued.
Defendants further alleged that under and by virtue of
provision 12 of the bill of lading referred to in plaintiff's amended
complaint, the defendants are not liable in excess of three hundred
pesos (P300) for any package of silk unless the value and contents of
such packages are correctly declared in the bill of lading at the time of
shipment, etc.
Lower court: Judgment in favor of plaintiff for the full amount of its claim
Issue:
Whether or not the lower court erred in ruling in favor of
plaintiff and disregarding the stipulation limiting the value of defendants
liability under clause 12 printed in the Bill of lading.
Ruling: The SC upheld the findings of the trial court that the
defendants received from the plaintiff corporation 164 cases of
merchandise, and delivered at Surigao only 160 cases of such
merchandise, and that defendants failed to deliver the said four cases in
Surigao when plaintiff's representative took delivery of the cargo at that
port, and that the original figure "1" and the word "bulto" appearing on the
back of Exhibit 1 were changed by Galleros to read "5" and "bultos."
The testimony of Claro Galleros to the effect that, according to the tallies
made by him on the back of Exhibit 1 during the course of loading, only
160 cases were loaded, on board the steamer Andres stands
uncorroborated, and it is not supported by the tallies themselves, as
these tallies give a total of 161 cases.
Appellants rely on clause 12 of the bill of lading, which is as follows:
It is expressly understood that carrier shall not be liable for
loss or damage from any cause or for any reason to an amount
exceeding three hundred pesos (P300) Philippine currency for any
single package of silk or other valuable cargo, nor for an
amount exceeding one hundred pesos (P100) Philippine currency for
any single package of other cargo, unless the value and contents
of
such packages are correctly declared in this bill of lading at the time of
shipment and freight
paid in accord with the actual
measurement or weight of the cargo shipped.
That condition is printed on the back of the bill of lading. The
ship in question was a common carrier and, as such, must have been
operated as a public utility. It is a matter of common knowledge that large
quantities of silk are imported in the Philippine Islands, and that after
being imported, they are sold by the merchants in Manila and other large
seaports, and then shipped to different points and places in the Islands.
Hence, there is nothing unusual about the shipment of silk. In truth and in
fact, it is a matter of usual and ordinary business. There was no fraud or
concealment in the shipment in question. Clause 12 above quoted
places a limit of P300 "for any single package of silk." The evidence
shows that 164 "cases" were shipped, and that the value of each case
was very near P2,500. In this situation, the limit of defendants' liability for
each case of silk "for loss or damage from any cause or for any reason"
would put it in the power of the defendants to have taken the whole
cargo of 164 cases of silk at a valuation of P300 for each case, or less
than one-eight of its actual value. If that rule of law should be sustained,

no silk would ever be shipped from one island to another in the

Philippines. Such a limitation of value is unconscionable and void as
against public policy.
Citing case law:
PAR. 194. 6. Reasonable of Limitation. The validity of stipulations
limiting the carriers liability is to be determined by their
reasonableness and their conformity to the sound public policy, in
accordance with which the obligations of the carrier to the public are
settled. It cannot lawfully stipulate for exemption from liability, unless
such exemption is just and reasonable, and unless the contract is freely
and fairly made. No contractual limitation is reasonable which is
subversive of public policy.
PAR. 195. 7. What Limitations of Liability Permissible. a.
Negligence (1) Rule in America (a) In Absence of Organic or
Statutory Provisions Regulating Subject aa. Majority Rule. In the
absence of statute, it is settled by the weight of authority in the United
States, that whatever limitations against its common-law liability are
permissible to a carrier, it cannot limit its liability for injury to or loss
of goods shipped, where such injury or loss is caused by its own
negligence. This is the common-law doctrine and it makes no difference
that there is no statutory prohibition against contracts of this character.
PAR. 196. bb. Considerations on Which Rule Based. The rule, it is
said, rests on considerations of public policy. The undertaking is to carry
the goods, and to relieve the shipper from all liability for loss or damage
arising from negligence in performing its contract is to ignore the contract
itself. The natural effect of a limitation of liability against negligence is to
induce want of care on the part of the carrier in the performance of its
duty. The shipper and the common carrier are not on equal terms; the
shipper must send his freight by the common carrier, or not at all; he is
therefore entirely at the mercy of the carrier, unless protected by the
higher power of the law against being forced into contracts limiting the
carrier's liability. Such contracts are wanting in the element of voluntary
assent.
PAR. 197. cc. Application and Extent of Rule (aa) Negligence of
Servants. The rule prohibiting limitation of liability for negligence is
often stated as a prohibition of any contract relieving the carrier from loss
or damage caused by its own negligence or misfeasance, or that of its
servants; and it has been specifically decided in many cases that no
contract limitation will relieve the carrier from responsibility for the
negligence, unskillfulness, or carelessness of its employees.
Based upon the findings of fact of the trial court which are
sustained by the evidence, the plaintiff delivered to the defendants 164
cases of silk consigned and to be delivered by the defendants to
Salomon Sharuff in Surigao. Four of such cases were never delivered,
and the evidence shows that their value is the alleged in the complaint.
There is no merit in the appeal. The judgment of the lower
court is affirmed, with costs.

Prohibited and Limiting Stipulations

Shewaram vs. PAL
G.R. No. L-200999, July 7, 1966
Facts:
On November 23, 1959, Paramanand (plaintiff), a paying
passenger with ticket No. 4-30976, on defendant's aircraft flight No.
976/910 from Zamboanga City bound for Manila; that defendant is a
common carrier engaged in air line transportation in the Philippines,
offering its services to the public to carry and transport passengers and
cargoes from and to different points in the Philippines; that on the abovementioned date of November 23, 1959, he checked in three (3) pieces of
baggages a suitcase and two (2) other pieces; that the suitcase was
mistagged by defendant's personnel in Zamboanga City, as I.G.N. (for
Iligan) with claim check No. B-3883, instead of MNL (for Manila). When
plaintiff Parmanand Shewaram arrived in Manila on the date of

November 23, 1959, his suitcase did not arrive with his flight because it
was sent to Iligan. So, he made a claim with defendant's personnel in
Manila airport and another suitcase similar to his own which was the only
baggage left for that flight, the rest having been claimed and released to
the other passengers of said flight, was given to the plaintiff for him to
take delivery but he did not and refused to take delivery of the same on
the ground that it was not his, alleging that all his clothes were white and
the National transistor 7 and a Rollflex camera were not found inside the
suitcase, and moreover, it contained a pistol which he did not have nor
placed inside his suitcase; that after inquiries made by defendant's
personnel in Manila from different airports where the suitcase in question
must have been sent, it was found to have reached Iligan and the station
agent of the PAL in Iligan caused the same to be sent to Manila for
delivery to Mr. Shewaram and which suitcase belonging to the plaintiff
herein arrived in Manila airport on November 24, 1959; that it was also
found out that the suitcase shown to and given to the plaintiff for delivery
which he refused to take delivery belonged to a certain Del Rosario who
was bound for Iligan in the same flight with Mr. Shewaram; that when the
plaintiff's suitcase arrived in Manila as stated above on November 24,
1959, he was informed by Mr. Tomas Blanco, Jr., the acting station
agent of the Manila airport of the arrival of his suitcase but of course
minus his Transistor Radio 7 and the Rollflex Camera; that Shewaram
made demand for these two (2) items or for the value thereof but the
same was not complied with by defendant.
It is admitted by defendant that there was mistake in tagging the suitcase
of plaintiff as IGN. The tampering of the suitcase is more apparent when
on November 24, 1959, when the suitcase arrived in Manila, defendant's
personnel could open the same in spite of the fact that plaintiff had it
under key when he delivered the suitcase to defendant's personnel in
Zamboanga City. Moreover, it was established during the hearing that
there was space in the suitcase where the two items in question could
have been placed. It was also shown that as early as November 24,
1959, when plaintiff was notified by phone of the arrival of the suitcase,
plaintiff asked that check of the things inside his suitcase be made and
defendant admitted that the two items could not be found inside the
suitcase. There was no evidence on record sufficient to show that
plaintiff's suitcase was never opened during the time it was placed in
defendant's possession and prior to its recovery by the plaintiff. However,
defendant had presented evidence that it had authority to open
passengers' baggage to verify and find its ownership or identity. Exhibit
"1" of the defendant would show that the baggage that was offered to
plaintiff as his own was opened and the plaintiff denied ownership of the
contents of the baggage. This proven fact that baggage may and could
be opened without the necessary authorization and presence of its
owner, applied too, to the suitcase of plaintiff which was mis-sent to
Iligan City because of mistagging. The possibility of what happened in
the baggage of Mr. Del Rosario at the Manila Airport in his absence
could have also happened to plaintiffs suitcase at Iligan City in the
absence of plaintiff. Hence, the Court believes that these two items were
really in plaintiff's suitcase and defendant should be held liable for the
same by virtue of its contract of carriage.

The requirements provided in Article 1750 of the New Civil Code must be
complied with before a common carrier can claim a limitation of its
pecuniary liability in case of loss, destruction or deterioration of the
goods it has undertaken to transport. In the case before us We believe
that the requirements of said article have not been met. It can not be said
that the appellee had actually entered into a contract with the appellant,
embodying the conditions as printed at the back of the ticket stub that
was issued by the appellant to the appellee. The fact that those
conditions are printed at the back of the ticket stub in letters so small that
they are hard to read would not warrant the presumption that the
appellee was aware of those conditions such that he had "fairly and
freely agreed" to those conditions. The trial court has categorically stated
in its decision that the "Defendant admits that passengers do not sign the
ticket, much less did plaintiff herein sign his ticket when he made the
flight on November 23, 1959." We hold, therefore, that the appellee is
not, and can not be, bound by the conditions of carriage found at the
back of the ticket stub issued to him when he made the flight on
appellant's plane on November 23, 1959.
The liability of the appellant in the present case should be governed by
the provisions of Articles 1734 and 1735 of the New Civil Code, which
We quote as follows:
ART. 1734. Common carries are responsible for the loss,
destruction, or deterioration of the goods, unless the same is
due to any of the following causes only:
(1) Flood, storm, earthquake, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the
containers;
(5) Order or act of competent public authority.1wph1.t
ART. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4 and
5 of the preceding article, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence
as required in Article 1733.
It having been clearly found by the trial court that the transistor radio and
the camera of the appellee were lost as a result of the negligence of the
appellant as a common carrier, the liability of the appellant is clear it
must pay the appellee the value of those two articles.

Issue:
Whether the limited liability rule shall apply in the case at bar?
Held:
No.

In the case of Ysmael and Co. vs. Barreto, 51 Phil. 90, cited by the trial
court in support of its decision, this Court had laid down the rule that the
carrier can not limit its liability for injury to or loss of goods shipped where
such injury or loss was caused by its own negligence.
Corpus Juris, volume 10, p. 154, says:

The law that may be invoked, in this connection is Article 1750 of the
New Civil Code which provides as follows:
A contract fixing the sum that may be recovered by the owner
or shipper for the loss, destruction, or deterioration of the
goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.
In accordance with the above-quoted provision of Article 1750 of the
New Civil Code, the pecuniary liability of a common carrier may, by
contract, be limited to a fixed amount. It is required, however, that the
contract must be "reasonable and just under the circumstances and has
been fairly and freely agreed upon."

"Par. 194, 6. Reasonableness of Limitations. The validity of

stipulations limiting the carrier's liability is to be determined by
their reasonableness and their conformity to the sound public
policy, in accordance with which the obligations of the carrier
to the public are settled. It cannot lawfully stipulate for
exemption from liability, unless such exemption is just and
reasonable, and unless the contract is freely and fairly made.
No contractual limitation is reasonable which is subversive of
public policy.
"Par. 195. 7. What Limitations of Liability Permissible. a.
Negligence (1) Rule in America (a) In Absence of
Organic or Statutory Provisions Regulating Subject aa.
Majority Rule. In the absence of statute, it is settled by the
weight of authority in the United States, that whatever

limitations against its common-law liability are permissible to a

carrier, it cannot limit its liability for injury to or loss of goods
shipped, where such injury or loss is caused by its own
negligence. This is the common law doctrine and it makes no
difference that there is no statutory prohibition against
contracts of this character.
"Par. 196. bb. Considerations on which Rule Based. The
rule, it is said, rests on considerations of public policy. The
undertaking is to carry the goods, and to relieve the shipper
from all liability for loss or damage arising from negligence in
performing its contract is to ignore the contract itself. The
natural effect of a limitation of liability against negligence is to
induce want of care on the part of the carrier in the
performance of its duty. The shipper and the common carrier
are not on equal terms; the shipper must send his freight by
the common carrier, or not at all; he is therefore entirely at the
mercy of the carrier unless protected by the higher power of
the law against being forced into contracts limiting the carrier's
liability. Such contracts are wanting in the element of voluntary
assent.
"Par. 197. cc. Application and Extent of Rule
(aa) Negligence of Servants. The rule prohibiting limitation
of liability for negligence is often stated as a prohibition of any
contract relieving the carrier from loss or damage caused by its
own negligence or misfeasance, or that of its servants; and it
has been specifically decided in many cases that no contract
limitation will relieve the carrier from responsibility for the
negligence, unskillfulness, or carelessness of its employer."
(Cited in Ysmael and Co. vs. Barreto, 51 Phil. 90, 98, 99).

Early in the morning of the next day, petitioner went to the

Bancasi Airport to inquire about his luggage. He did not wait, however,
for the morning flight which arrived at 10:00 o'clock that morning. This
flight carried the missing luggage. The porter clerk, Maximo Gomez,
paged petitioner, but the latter had already left. A certain Emilio Dagorro
a driver of a "colorum" car, who also used to drive for petitioner,
volunteered to take the luggage to petitioner. As Maximo Gomez knew
Dagorro to be the same driver used by petitioner whenever the latter was
in Butuan City, Gomez took the luggage and placed it on the counter.
Dagorro examined the lock, pressed it, and it opened. After calling the
attention of Maximo Gomez, the "maleta" was opened, Gomez took a
look at its contents, but did not touch them. Dagorro then delivered the
"maleta" to petitioner, with the information that the lock was open. Upon
inspection, petitioner found that a folder containing certain exhibits,
transcripts and private documents was missing, aside from two gift items
for his parents-in-law. Petitioner refused to accept the luggage. Dagorro
returned it to the porter clerk, Maximo Gomez, who sealed it and
forwarded the same to PAL Cebu.
Meanwhile, petitioner asked for postponement of the hearing
of Civil Case No. 1005 due to loss of his documents, which was granted.
Petitioner returned to Cebu City and in a letter demanded that his
luggage be produced intact, and that he be compensated for actual and
moral damages within five days from receipt of the letter, otherwise, he
would be left with no alternative but to file suit.
Messrs. de Leon, Navarsi, and Agustin, all of PAL Cebu, went
to petitioner's office to deliver the "maleta". In the presence of Mr. Jose
Yap and Atty. Manuel Maranga the contents were listed and receipted for
by petitioner. Petitioner then sent a tracer letter to PAL Cebu inquiring
about the results of the investigation which Messrs. de Leon, Navarsi,
and Agustin had promised to conduct to pinpoint responsibility for the
unauthorized opening of the "maleta.The following day, PAL sent its
reply containing the latters apology for the delay in informing petitioner
of the result of the investigation and that they still have not found the
supposedly lost folder of papers nor have they been able to pinpoint the
personnel who allegedly pilferred his baggage. Thus, petitioner filed a
Complaint against PAL for damages for breach of contract of
transportation.

Ong Yiu vs. CA

G.R. No. L-40597, June 29, 1979
J. Melencio-Herrera:

ISSUE:

FACTS:

HELD:

Ong Yiu was a fare paying passenger of respondent PAL on

board a flight from Mactan Cebu, bound for Butuan City. He was
scheduled to attend the trial of a civil case and a special proceeding. He
checked in one piece of luggage, a blue "maleta" for which he was
issued a Claim Check. The plane left Mactan Airport, Cebu, at about
1:00 o'clock P.M., and arrived at Bancasi airport, Butuan City, at past
2:00 o'clock P.M., of the same day. Upon arrival, petitioner claimed his
luggage but it could not be found. According to petitioner, it was only
after reacting indignantly to the loss that the matter was attended to by
the porter clerk, Maximo Gomez, which, however, the latter denies, At
about 3:00 o'clock P.M., PAL Butuan, sent a message to PAL, Cebu,
inquiring about the missing luggage, which message was, in turn relayed
in full to the Mactan Airport teletype operator at 3:45 P.M that same
afternoon. It must have been transmitted to Manila immediately, for at
3:59 that same afternoon, PAL Manila wired PAL Cebu advising that the
luggage had been over carried to Manila and that it would be forwarded
to Cebu on the same day. Instructions were also given that the luggage
be immediately forwarded to Butuan City on the first available flight. At
5:00 P.M. of the same afternoon, PAL Cebu sent a message to PAL
Butuan that the luggage would be forwarded on a flight the following day.
However, this message was not received by PAL Butuan as all the
personnel had already left since there were no more incoming flights that
afternoon.
In the meantime, petitioner was worried about the missing
luggage because it contained vital documents needed for trial the next
day. At 10:00 o'clock that evening, petitioner wired PAL Cebu demanding
the delivery of his baggage before noon the next day, otherwise, he
would hold PAL liable for damages, and stating that PAL's gross
negligence had caused him undue inconvenience, worry, anxiety and
extreme embarrassment. This telegram was received by the Cebu PAL
supervisor but the latter felt no need to wire petitioner that his luggage
had already been forwarded on the assumption that by the time the
message reached Butuan City, the luggage would have arrived.

Whether or not the court erred in limiting the carriers carriage

liability to the amount of P100.00 as printed at the back of the ticket.

As a general proposition, the plaintiff's maleta having been

pilfered while in the custody of the defendant, it is presumed that the
defendant had been negligent. The liability, however, of PAL for the loss,
in accordance with the stipulation written on the back of the ticket, Exhibit
12, is limited to P100.00 per baggage, plaintiff not having declared a
greater value, and not having called the attention of the defendant on its
true value and paid the tariff therefor. The validity of this stipulation is not
questioned by the plaintiff. They are printed in reasonably and fairly big
letters, and are easily readable. Moreover, plaintiff had been a frequent
passenger of PAL from Cebu to Butuan City and back, and he, being a
lawyer and businessman, must be fully aware of these conditions. The
pertinent Condition of Carriage printed at the back of the plane ticket
reads:
8. BAGGAGE LIABILITY ... The total liability of the
Carrier for lost or damaged baggage of the
passenger is LIMITED TO P100.00 for each ticket
unless a passenger declares a higher valuation in
excess of P100.00, but not in excess, however, of a
total valuation of P1,000.00 and additional charges
are paid pursuant to Carrier's tariffs.
There is no dispute that petitioner did not declare any higher value for his
luggage, much less did he pay any additional transportation charge. But
petitioner argues that there is nothing in the evidence to show that he
had actually entered into a contract with PAL limiting the latter's liability
for loss or delay of the baggage of its passengers, and that Article 1750*
of the Civil Code has not been complied with.
While it may be true that petitioner had not signed the plane
ticket, he is nevertheless bound by the provisions thereof. "Such
provisions have been held to be a part of the contract of carriage, and
valid and binding upon the passenger regardless of the latter's lack of
knowledge or assent to the regulation". 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.
Considering, therefore, that petitioner had failed to declare a
higher value for his baggage, he cannot be permitted a recovery in
excess of P100.00.Besides, passengers are advised not to place
valuable items inside their baggage but "to avail of our V-cargo service." I
t is likewise to be noted that there is nothing in the evidence to show the
actual value of the goods allegedly lost by petitioner.

COURT OF APPEALS

The CA affirmed the decision of the court a quo but deleted

the award of attorney's fees and costs of suit.

ISSUES:
1. Whether the loss occurred while the cargo in question was in the
custody of E. Razon, Inc. or of Citadel Lines, Inc; and
2. Whether the stipulation limiting the liability of the carrier contained in
the bill of lading is binding on the consignee.

G.R. No. 88092 April 25, 1990

CITADEL
vs.
COURT OF APPEALS
INC., respondents.

LINES,
and

INC., petitioner,
MANILA

WINE

MERCHANTS,

FACTS:

Petitioner Citadel Lines, (CARRIER) Inc. is the general agent

of the vessel "Cardigan Bay/Strait Enterprise,"
Respondent Manila Wine Merchants, (IMPORTER) Inc. is the
importer of the subject shipment of Dunhill cigarettes from
England.
The vessel "Cardigan Bay/Strait Enterprise" loaded on board
at Southampton, England, for carriage to Manila, 180 Filbrite
cartons of mixed British manufactured cigarettes called
"Dunhill International Filter" and "Dunhill International
Menthol," as evidenced by Bill of Lading No. 70621374 2 and
Bill of Lading No. 70608680 3 of the Ben Line Containers Ltd.
The shipment arrived at the Port of Manila Pier 13, on April 18,
1979 in container van No. BENU 204850-9. The said container
was received by E. Razon, Inc. (later known as Metro Port
Service, Inc. and ARRASTRE).
The container van, which contained two shipments was
stripped.
One shipment was delivered and the other shipment
consisting of the imported British manufactured cigarettes
was palletized. (Due to lack of space at the Special Cargo
Coral, the aforesaid cigarettes were placed in two containers
with two pallets)
The CARRIER'S headchecker discovered that container van
had a different padlock and the seal was tampered with.
It was reported to Jose G. Sibucao, Pier Superintendent, Pier
13, and upon verification, it was found that 90 cases of
imported British manufactured cigarettes were missing.
Per investigation conducted by the ARRASTRE, it was
revealed that the cargo in question was not formally turned
over to it by the CARRIER but was kept inside container van
which was padlocked and sealed by the representatives of the
CARRIER without any participation of the ARRASTRE.

TRIAL COURT

When the CONSIGNEE learned that 90 cases were missing, it

filed a formal claim with the CARRIER, demanding the
payment of P315,000.00 representing the market value of
the missing cargoes.
The CARRIER, in admitted the loss but alleged that the same
occurred at Pier 13, an area absolutely under the control of
the ARRASTRE.
In view thereof, the CONSIGNEE filed a formal claim, with the
ARRASTRE, demanding payment of the value of the goods
but said claim was denied.
DECISION: Exonerating the ARRASTRE of any liability on
the ground that the subject container van was not formally
turned over to its custody, and adjudging the CARRIER
liable for the principal amount of P312,480.00 representing the
market value of the lost shipment, and the sum of P30,000.00
as and for attorney's fees and the costs of suit

RULING:
1. The subject shipment was lost while it was still in the custody of the
CARRIER, and considering further that it failed to prove that the loss was
occasioned by an excepted cause, the inescapable conclusion is that the
CARRIER was negligent and should be held liable.

Common carriers, from the nature of their business and for

reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of
the passengers transported by them, according to all the
circumstances of each case.
If the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extra
ordinary diligence as required in Article 1733 of the Civil
Code.
The duty of the consignee is to prove merely that the goods
were lost. Thereafter, the burden is shifted to the carrier to
prove that it has exercised the extraordinary diligence required
by law.

2. The Court find the award of damages in the amount of P312,800.00

for the value of the goods lost, based on the alleged market value, to
be erroneous.

It is clearly and expressly provided under Clause 6 of the

aforementioned bills of lading issued by the CARRIER that
its liability is limited to $2.00 per kilo.
A stipulation limiting the liability of the carrier to the value of
the goods appearing in the bill of lading, unless the shipper or
owner declares a greater value, is binding.
A contract fixing the sum that may be recovered by the owner
or shipper for the loss, destruction or deterioration of the
goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.
The CONSIGNEE itself admits in its memorandum that the
value of the goods shipped does not appear in the bills of
lading.
Hence, the stipulation on the carrier's limited liability
applies. There is no question that the stipulation is just and
reasonable under the circumstances and has been fairly and
freely agreed upon.
Art. 1750 itself in providing a limit to liability only if a greater
value is not declared for the shipment in the bill of lading.

The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos
per carton. Since 90 cartons were lost and the weight of said cartons is
2,233.80 kilos, at $2.00 per kilo the CARRIER's liability amounts to
only US$4,467.60.

F. PROHIBITED AND LIMITING STIPULATIONS

G.R. No. L-16598

October 3, 1921

H.
E.
HEACOCK
COMPANY, plaintiff-appellant,
vs.
MACONDRAY & COMPANY, INC., defendant-appellant.

ISSUES:
1.

2.
FACTS:
On or about the 5th day of June, 1919, the plaintiff (Heacock)
caused to be delivered on board of steamship Bolton Castle,
then in the harbor of New York, four cases of merchandise one
of which contained twelve (12) 8-day Edmond clocks properly
boxed and marked for transportation to Manila, and paid
freight on said clocks from New York to Manila in advance.
The said steampship arrived in the port of Manila on or about
the 10th day of September, 1919, consigned to the defendant
(Macondray) as agent and representative of said vessel in said
port. Neither the master of said vessel nor the defendant
herein, as its agent, delivered to the plaintiff the aforesaid
twelve 8-day Edmond clocks, although demand was made
upon them for their delivery.
The invoice value of the said twelve 8-day Edmond clocks in
the city of New York was P22 and the market value of the
same in the City of Manila at the time when they should have
been delivered to the plaintiff was P420.
The bill of lading issued and delivered to the plaintiff by the
master of the said steamship Bolton Castle contained, among
others, the following clauses:
1. It is mutually agreed that the value of the goods
receipted for above does not exceed $500 per
freight ton, or, in proportion for any part of a ton,
unless the value be expressly stated herein and ad
valorem freight paid thereon.
9. Also, that in the event of claims for short delivery
of, or damage to, cargo being made, the carrier shall
not be liable for more than the net invoice price plus
freight and insurance less all charges saved, and
any loss or damage for which the carrier may be
liable shall be adjusted pro rata on the said basis.
No greater value than $500, U. S. currency, per freight ton was
declared by the plaintiff on the aforesaid clocks, and no ad
valorem freight was paid thereon.
On or about October 9, 1919, the defendant tendered to the
plaintiff P76.36, the proportionate freight ton value of the
aforesaid twelve 8-day Edmond clocks, in payment of plaintiff's
claim, which tender plaintiff rejected.
The lower court, in accordance with clause 9 of the bill of lading above
quoted, rendered judgment in favor of the plaintiff against the defendant
for the sum of P226.02, this being the invoice value of the clocks in
question plus the freight and insurance thereon, with legal interest
thereon from November 20, 1919, the date of the complaint, together
with costs. From that judgment both parties appealed to this court.
The plaintiff-appellant (Heacock) insists that it is entitled to recover from
the defendant the market value of the clocks in question, to wit: the sum
of P420. The defendant-appellant (Macondray), on the other hand,
contends that, in accordance with clause 1 of the bill of lading, the
plaintiff is entitled to recover only the sum of P76.36, the proportionate
freight ton value of the said clocks. The claim of the plaintiff is based
upon the argument that the two clause in the bill of lading above quoted,
limiting the liability of the carrier, are contrary to public order and,
therefore, null and void. The defendant, on the other hand, contends that
both of said clauses are valid, and the clause 1 should have been
applied by the lower court instead of clause 9.

May a common carrier, by stipulations inserted in the bill of

lading, limit its liability for the loss of or damage to the cargo to
an agreed valuation of the latter?
Whether clause 1 or clause 9 of the bill of lading is to be
adopted as the measure of defendant's liability.

HELD:
1. Yes, it may do so.
Three kinds of stipulations have often been made in a bill of lading.
The first is one exempting the carrier from any and all liability for loss or
damage occasioned by its own negligence. The second is one providing
for an unqualified limitation of such liability to an agreed valuation. And
the third is one limiting the liability of the carrier to an agreed valuation
unless the shipper declares a higher value and pays a higher rate of
freight.
According to an almost uniform weight of authority, the first and second
kinds of stipulations are invalid as being contrary to public policy, but the
third is valid and enforceable.
The authorities relied upon by the plaintiff-appellant (Heacock) support
the proposition that the first and second stipulations in a bill of lading are
invalid which either exempt the carrier from liability for loss or damage
occasioned by its negligence, or provide for an unqualified limitation of
such liability to an agreed valuation.
A reading of clauses 1 and 9 of the bill of lading, however, clearly shows
that the present case falls within the third stipulation, to wit: That a clause
in a bill of lading limiting the liability of the carrier to a certain amount
unless the shipper declares a higher value and pays a higher rate of
freight, is valid and enforceable.
A limitation of liability based upon an agreed value to obtain a lower rate
does not conflict with any sound principle of public policy; and it is not
conformable to plain principles of justice that a shipper may understate
value in order to reduce the rate and then recover a larger value in case
of loss.
It seems clear from the foregoing authorities that the clauses (1 and 9) of
the bill of lading here in question are not contrary to public order. Article
1255 of the Civil Code provides that "the contracting parties may
establish any agreements, terms and conditions they may deem
advisable, provided they are not contrary to law, morals or public order."
Said clauses of the bill of lading are, therefore, valid and binding upon
the parties thereto.
2. It will be noted, however, that whereas clause 1 contains only
an implied undertaking to settle in case of loss on the basis of not
exceeding
$500
per
freight
ton,
clause
9
contains
an express undertaking to settle on the basis of the net invoice price plus
freight and insurance less all charges saved. "Any loss or damage for
which the carrier may be liable shall be adjusted pro rata on the said
basis," clause 9 expressly provides. It seems to the Court that there is an
irreconcilable conflict between the two clauses with regard to the
measure of defendant's liability. It is difficult to reconcile them without
doing violence to the language used and reading exceptions and
conditions into the undertaking contained in clause 9 that are not there.
This being the case, the bill of lading in question should be interpreted
against the defendant carrier, which drew said contract. "A written
contract should, in case of doubt, be interpreted against the party who
has drawn the contract. It is a well-known principle of construction that
ambiguity or uncertainty in an agreement must be construed most
strongly against the party causing it. These rules as applicable to
contracts contained in bills of lading. "In construing a bill of lading given
by the carrier for the safe transportation and delivery of goods shipped
by a consignor, the contract will be construed most strongly against the
carrier, and favorably to the consignor, in case of doubt in any matter of
construction."

It follows from all of the foregoing that the judgment appealed from
should be affirmed.

ALITALIA v. INTERMEDIATE APPELLATE COURT and FELIPA E.

PABLO
Facts:

Dr. Felipa Pablo, an associate professor in the University of

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

In the case at bar, no bad faith or otherwise improper conduct may be

ascribed to the employees of petitioner airline; and Dr. Pablo's luggage
was eventually returned to her, belatedly, it is true, but without
appreciable damage. The fact is, nevertheless, that some species of
injury was caused to Dr. Pablo because petitioner ALITALIA misplaced
her baggage and failed to deliver it to her at the time appointed - a
breach of its contract of carriage. Certainly, the compensation for the
injury suffered by Dr. Pablo cannot under the circumstances be restricted
to that prescribed by the Warsaw Convention for delay in the transport of
baggage.
YES. She is not, of course, entitled to be compensated for loss or
damage to her luggage. She is however entitled to nominal damages
which, as the law says, is adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated
and recognized, and not for the purpose of indemnifying the plaintiff that
for any loss suffered and this Court agrees that the respondent Court of
Appeals correctly set the amount thereof at PhP 40,000.00.
The Court also agrees that respondent Court of Appeals correctly
awarded attorneys fees to Dr. Pablo and the amount of PhP 5,000.00
set by it is reasonable in the premises. The law authorizes recovery of
attorneys fees inter alia where, as here, the defendants act or omission
has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest or where the court deems it just and
equitable.
The opportunity to claim the honor or distinction was irretrievably lost by
Dr. Pablo because of Alitalia's breach of its contract. Apart from this,
there can be no doubt that Dr. Pablo underwent profound distress and
anxiety, which gradually turned to panic and finally despair, from the time
she learned that her suitcases were missing up to the time when, having
gone to Rome, she finally realized that she would no longer be able to
take part in the conference. As she herself put it, she was really
shocked and distraught and confused. Certainly, the compensation for
the injury suffered by Dr. Pablo cannot under the circumstances
be restricted to that prescribed by the Warsaw Convention for delay in
the transport of baggage.

Issues:
WON the Warsaw Convention should be applied to limit Alitalias liability.
WON Dr. Pablo is entitled to nominal damages.
Held:
NO. Under the Warsaw Convention, an air carrier is made liable for
damages for:
a. The death, wounding or other bodily injury of a passenger if the
accident causing it took place on board the aircraft or I the course of its
operations of embarking or disembarking;
b. The destruction or loss of, or damage to, any registered luggage or
goods, if the occurrence causing it took place during the carriage by air;
and
c. Delay in the transportation by air of passengers, luggage or goods.
The convention however denies to the carrier availment of the provisions
which exclude or limit his liability, if the damage is caused by his wilful
misconduct, or by such default on his part as is considered to be
equivalent to wilful misconduct. The Convention does not thus operate
as an exclusive enumeration of the instances of an airline's liability, or as
an absolute limit of the extent of that liability. It should be deemed a limit
of liability only in those cases where the cause of the death or injury to
person, or destruction, loss or damage to property or delay in its
transport is not attributable to or attended by any wilful misconduct, bad
faith, recklessness, or otherwise improper conduct on the part of any
official or employee for which the carrier is responsible, and there is
otherwise no special or extraordinary form of resulting injury.

Pan American Airways vs. IAC. GR L-70462, 11 August 1988

FACTS: On 25 April 1978, Rene V. Pangan, president and general
manager of the Sotang Bastos and Archer Productions, while in San
Francisco, California and Primo Quesada of Prime Films, San Francisco,
California, entered into an agreement whereby the former, for and in
consideration of the amount of US $2,500.00 per picture, bound himself
to supply the latter with three films. Ang Mabait, Masungit at ang Pangit,
Big Happening with Chikiting and Iking, and Kambal Dragon for
exhibition in the United States. It was also their agreement that Pangan,
et. al. would provide the necessary promotional and advertising materials
for said films on or before 30 May 1978.
On his way home to the Philippines, Pangan visited Guam
where he contacted Leo Slutchnick of the Hafa Adai Organization.
Pangan likewise entered into a verbal agreement with Slutchnick for the
exhibition of two of the films a at the Hafa Adai Theater in Guam on 30
May 1978 for the consideration of P7,000.00 per picture. Pangan
undertook to provide the necessary promotional and advertising
materials for said films on or before the exhibition date on 30 May 1978.
By virtue of the agreements, Pangan caused the preparation of
the requisite promotional handbills and still pictures for which he paid the
total sum of P12,900.00. Likewise in preparation for his trip abroad to
comply with his contracts, Pangan purchased 14 clutch bags, 4 capiz
lamps and 4 barong tagalog, with a total value of P4,400.00.
On 18 May 1978, Pangan obtained from Pan Ams Manila
Office, through the Your Travel Guide, an economy class airplane ticket
0269207406324 for passage from Manila to Guam on Pan Ams Flight

842 of 27 May 1978, upon payment by Pangan of the regular fare. The
Your Travel Guide is a tour and travel office owned and managed by
plaintiffs witness Mila de la Rama.
On 27 May 1978, two hours before departure time Pangan
was at Pan Ams ticket counter at the Manila International Airport and
presented his ticket and checked in his two luggages, for which he was
given baggage claim tickets 963633 and 963649. The two luggages
contained the promotional and advertising materials, the clutch bags,
barong tagalog and his personal belongings. Subsequently, Pangan was
informed that his name was not in the manifest and so he could not take
Flight 842 in the economy class. Since there was no space in the
economy class, Pangan took the first class because he wanted to be on
time in Guam to comply with his commitment, paying an additional sum
of $112.00.
When Pangan arrived in Guam on the date of 27 May 1978,
his two luggages did not arrive with his flight, as a consequence of which
his agreements with Slutchnick and Quesada for the exhibition of the
films in Guam and in the United States were cancelled. Thereafter, he
filed a written claim for his missing luggages.
Upon arrival in the Philippines, Pangan contacted his lawyer,
who made the necessary representations to protest as to the treatment
which he received from the employees of PanAm and the loss of his two
luggages. Pan Am assured Pangan that his grievances would be
investigated and given its immediate consideration. Due to Pan Ams
failure to communicate with Pangan about the action taken on his
protests, a complaint was filed by Pangan.
The CFI found Pan Am liable and (1) ordered Pan Am to pay
Pangan, et. al. the sum of P83,000.00, for actual damages, with interest
thereon at the rate of 14% per annum from 6 December 1978, when the
complaint was filed, until the same is fully paid, plus the further sum of
P10,000.00 as attorneys fees; (2) ordered Pan Am to pay Pangan the
sum of P8,123.34, for additional actual damages, with interest thereon at
the rate of 14% per annum from 6 December 1978, until the same is fully
paid; (3) dismissed the counterclaim interposed by Pan-Am; and (4)
ordered Pan-Am to pay the costs of suit.
On appeal, the then Intermediate Appellate Court affirmed the
trial court decision. Hence, the petition for review.
ISSUES: 1. Whether or not the respondent court erred as a matter of law
in affirming the trial court's award of actual damages beyond the
limitation of liability set forth in the Warsaw Convention and the contract
of carriage.
2. Whether or not the respondent court erred as a matter of law in
affirming the trial court's award of actual damages consisting of alleged
lost profits in the face of this Court's ruling concerning special or
consequential damages as set forth in Mendoza v. Philippine Airlines [90
Phil. 836 (1952).

HELD:
1. The Supreme Court granted the Petition, set aside the Decision of
the Intermediate Appellate Court, and rendered a new judgment
ordering Pan Am to pay Pangan damages in the amount of
US$600.00 or its equivalent in Philippine currency at the time of
actual payment.
- Pertinent Condition of Carriage printed at the back of the
ticket
The pertinent Condition of Carriage printed at the back of the
plane ticket reads: (8) BAGGAGE LIABILITY . . . The total liability of the
Carrier for lost or damage baggage of the passenger is LIMITED TO
P100.00 for each ticket unless a passenger declares a higher valuation
in excess of P100.00, but not in excess, however, of a total valuation of
P1,000.00 and additional charges are paid pursuant to Carriers tariffs.
-Ong Yiu case applicable
In the case of Ong Yiu v. Court of Appeals [G.R. No. L-40597,
June 29, 1979, 91 SCRA 223), the Court sustained the validity of a
printed stipulation at the back of an airline ticket limiting the liability of the
carrier for lost baggage to a specified amount and ruled that the carriers
liability was limited to said amount since the passenger did not declare a
higher value, much less pay additional charges. The ruling in Ong Yiu
squarely applicable to the instant case. Herein, on the basis of the
stipulations printed at the back of the ticket, Pan Ams liability for the lost
baggage of Pangan is limited to $600.00 ($20.00 x 30 kilos) as the latter

did not declare a higher value for his baggage and pay the
corresponding additional charges.
-Provisions in plane ticket a contract of adhesion;
Contracts of adhesion not entirely prohibited.
While it may be true that Pangan had not signed the plane
ticket (Article 1750), he is nevertheless bound by the provisions thereof.
Such provisions have been held to be a part of the contract of carriage
and valid and binding upon the passenger regardless of the 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, 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.
-Shewaram case not applicable
The ruling in Shewaram v. Philippine Air Lines, Inc. where the
Court held that the stipulation limiting the carriers liability to a specified
amount was invalid, finds no application in the instant case, as the ruling
in said case was premised on the finding that the conditions printed at
the back of the ticket were so small and hard to read that they would not
warrant the presumption that the passenger was aware of the conditions
and that he had freely and fairly agreed thereto. Herein, similar facts that
would make the case fall under the exception have not been alleged,
much less shown to exist.
2. Pan Am not liable for lost profits when film showing contracts
were cancelled; Mendoza vs.
PAL
-The Court finds itself unable to agree with the decision of the
trial court, and affirmed by the Court of Appeals, awarding Pangan
damages as and for lost profits when their contracts to show the films in
Guam and San Francisco, California were cancelled. The rule laid down
in Mendoza v. Philippine Air Lines, Inc. [90 Phil. 836 (1952)] cannot be
any clearer: Under Art. 1107 of the Civil Code, a debtor in good faith
may be held liable only for damages that were foreseen or might have
been foreseen at the time the contract of transportation was entered
into. Herein, in the absence of a showing that Pan Ams attention was
called to the special circumstances requiring prompt delivery of Pangans
luggages, Pan Am cannot be held liable for the cancellation of
Pangans contracts as it could not have foreseen such an
eventuality when it accepted the luggages for transit.
Requisite for liability for special damages; Chapman vs. Fargo,
L.R.A. (1918 F, p. 1049)
-Before defendant could be held to special damages such as
the present alleged loss of profits on account of delay or failure of
delivery it must have appeared that he had notice at the time of
delivery to him of the particular circumstances attending the
shipment and which probably would lead to such special loss if he
defaulted. Or, as the rule has been stated in another form in order to
impose on the defaulting party further liability than for damages naturally
and directly i.e., in the ordinary course of things arising from a
breach of contract such unusual or extraordinary damages must
have been brought within the contemplation of the parties as the
probable result of breach at the time of or prior to contracting.
Generally notice then of any special circumstances which will show that
the damages to be anticipated from a breach would be enhanced has
been held sufficient far this effect. The attention of the common carrier
must be called to the nature of the articles shipped, the purpose of
shipment, and the desire to rush the shipment.

CHINA AIRLINES, petitioner v DANIEL CHIOK, respondent

G.R. No. 152122

Facts:

July 30, 2003

On September 18, 1981, Daniel Chiok purchased from China Airlines,

Ltd. (CAL for brevity) a passenger ticket for air transportation covering
Manila-Taipei-Hongkong-Manila. Said ticket was exclusively endorsable
to Philippine Airlines, Ltd. (PAL for brevity)
Subsequently, on November 21, 1981, Chiok took his trip from Manila to
Taipei using the CAL ticket. Before he left for said trip, the trips covered
by the ticket were pre-scheduled and confirmed by the former. When he
arrived in Taipei, he went to the CAL office and confirmed his Hongkong
to Manila trip on board PAL Flight No. PR 311. The CAL office attached
a yellow sticker indicating that his flight status was OK.
When Chiok reached Hongkong, he went to the PAL office and sought to
reconfirm his flight back to Manila. The PAL office also confirmed his
return trip on board Flight No. PR 311 and attached its own sticker.
On November 24, 1981, Chiok proceeded to Hongkong International
Airport for his return trip to Manila. However, upon reaching the PAL
counter, Chiok saw a poster stating that PAL Flight No. PR 311 was
cancelled due to typhoon in Manila. He was then informed that all the
confirmed ticket holders of PAL Flight No. PR 311 were automatically
booked for the next flight the following day.

damage is caused by the willful misconduct on the part of the carriers

employee or agent acting within the scope of his employment.
On PALs appeal, CA ruled that the airlines negligence was the
proximate cause of the incident since in spite of the confirmations he had
secured, his name didnt appear in the list of passengers
Issues:
(1)

(2)
Ruling:
(1)

On November 25, 1981, Chiok was not able to board the plane because
his name did not appear in PALs computer list of passengers. Chiok
then sought to recover his luggage but found only two and realized that
his new Samsonite luggage was missing which contained cosmetics
worth HK$14,128.80

Later, Chiok went to the PAL check-in counter and it was Carmen Chan,
PALs terminal supervisor who attended to him. As this juncture, Chiok
had already placed his travel documents, including his clutch bag, on top
of the PAL check-in counter.Thereafter, Carmen directed PAL personnel
to transfer counters. In the ensuing commotion, Chiok lost his clutch bag
containing the following, to wit: (a) $2,000.00; (b) HK$2,000.00; (c)
Taipei $8,000.00; (d) P2,000.00; (e) a three-piece set of gold (18 carats)
cross pens valued atP3,500; (f) a Cartier watch worth
about P7,500.00; (g) a tie clip with a garnet birthstone and diamond
worth P1,800.00; and (h) a [pair of] Christian Dior reading
glasses. Subsequently, he was placed on stand-by and at around 7:30
p.m., PAL personnel informed him that he could now check-in
Consequently, Chiok as plaintiff, filed a Complaint on November 9, 1982
for damages, against PAL and CAL, as defendants, docketed as Civil
Case No. 82-13690, with Branch 31, Regional Trial Court, National
Capital Judicial Region, Manila.
RTC: held CAL and PAL jointly and severally liable to respondent but
didnt rule on respective cross-claims

Yes, CA committed a lapse when it relied merely on the

unofficial syllabus of our ruling in KLM v. C.A Indeed, lawyers
and litigants are mandated to quote decisions of this Court
accurately. However, since this case is not administrative in
nature, we cannot rule on the CA justices administrative
liability, if any, for this lapse. In the case at bar, we can only
determine whether the error in quotation would be sufficient to
reverse or modify the CA Decision.
In the instant case, the CA ruled that under the contract of
transportation, petitioner -- as the ticket-issuing carrier (like
KLM) -- was liable regardless of the fact that PAL was to
perform or had performed the actual carriage. It elucidated on
this point as follows:

He then proceeded to PAL and confronted the reservation officer who

previously confirmed his flight back to Manila. However, the reservation
officer showed him that his name was on the list.
Chiok then decided to use his CAL ticket and asked PALs reservation
officer if he could use the ticket to book him for the said flight; The latter,
once again, booked and confirmed the formers trip on a flight scheduled
to depart that evening

W/N CA committed judicial misconduct in finding liability

against CAL on the basis of misquotation from KLM Royal
Dutch v CA and in magnifying its misconduct by denying CALs
motion for reconsideration on a mere syllabus, unofficial at
that;
W/N CAL is liable for damages;

By the very nature of their contract, defendant-appellant CAL is clearly

liable under the contract of carriage with [respondent] and remains to be
so, regardless of those instances when actual carriage was to be
performed by another carrier. The issuance of a confirmed CAL ticket in
favor of [respondent] covering his entire trip abroad concretely attests to
this. This also serves as proof that defendant-appellant CAL, in effect
guaranteed that the carrier, such as defendant-appellant PAL would
honor his ticket, assure him of a space therein and transport him on a
particular segment of his trip.
Notwithstanding the errant quotation, we have found after
careful deliberation that the assailed Decision is supported in
substance by KLM v. CA. The misquotation by the CA cannot
serve as basis for the reversal of its ruling.
(2)

Yes, CAL is liable for damages;

It is significant to note that the contract of air transportation
was between petitioner and respondent, with the former
endorsing to PAL the Hong Kong-to-Manila segment of the
journey. Such contract of carriage has always been treated in
this jurisdiction as a single operation. This jurisprudential rule
is supported by the Warsaw Convention, to which the
Philippines is a party, and by the existing practices of the
International Air Transport Association (IATA).

Article 1, Section 3 of the Warsaw Convention states:

CA: affirmed RTCs decision and debunked petitioners claim that it had
merely acted as an issuing agent for the ticket covering HK-Manila leg;
Cited the decision in KLM Royal Dutch Airlines v CA:
Article 30 of the Warsaw providing that in case of transportation to be
performed by various successive carriers, the passenger can take action
only against the carrier who performed the transportation during which
the accident or the delay occurred presupposes the occurrence of either
an accident or delay in the course of the air trip, and does not apply if the

Transportation to be performed by several successive air 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 of a series of contracts, and it shall not lose its international
character merely because one contract or a series of contracts is to be
performed entirely within a territory subject to the sovereignty,
suzerainty, mandate, or authority of the same High Contracting Party.

Article 15 of IATA-Recommended Practice similarly provides:

Carriage to be performed by several successive carriers under one
ticket, or under a ticket and any conjunction ticket issued therewith, is
regarded as a single operation.
In American Airlines v. Court of Appeals, we have noted that under a
general pool partnership agreement, the ticket-issuing airline is the
principal in a contract of carriage, while the endorsee-airline is the agent.

4. the court of the place of destination.

Northwest avers files MOTION TO DISMISS that the ground

thereof is "the Court has no subject matter jurisdiction to entertain
the Complaint" (filing of in improper venue) Philippines was not its
domicile nor was this its principal place of business. Neither was the
petitioner's ticket issued in this country nor was his destination
Manila but San Francisco in the United States
RTC dismissed the case (Feb 1, 1988)
CA affirmed RTC decision; motion for recon by Santos also denied
Petitioner Santos III contends:

Likewise, as the principal in the contract of carriage, the petitioner

in British Airways v. Court of Appeals was held liable, even when the
breach of contract had occurred, not on its own flight, but on that of
another airline. The Decision followed our ruling in Lufthansa German
Airlines v. Court of Appeals, in which we had held that the obligation of
the ticket-issuing airline remained and did not cease, regardless of the
fact that another airline had undertaken to carry the passengers to one of
their destinations.

Article 28(1) is unconstitutional.

that there is no substantial distinction between a person who
purchases a ticket in Manila and a person who purchases his
ticket in San Francisco.
The classification of the places in which actions for damages
may be brought is arbitrary and irrational and thus violates the
due process and equal protection clauses.

In the instant case, following the jurisprudence cited above, PAL

acted as the carrying agent of CAL. In the same way that we ruled
against British Airways and Lufthansa in the aforementioned cases, we
also rule that CAL cannot evade liability to respondent, even though
it may have been only a ticket issuer for the Hong Kong-Manila
sector.

Also, petitioner claims that the lower court erred in ruling that the
plaintiff must sue in the United States, because this would deny
him the right to access to our courts.

The petitioner claims that the lower court erred in not ruling that
Article 28(1) of the Warsaw Convention is a rule merely of venue
and was waived by defendant when it did not move to dismiss on
the ground of improper venue.

G.R. No. 101538 June 23, 1992

ISSUES:

AUGUSTO BENEDICTO SANTOS III, represented by his father and

legal
guardian,
Augusto
Benedicto
Santos
vs.
NORTHWEST ORIENT AIRLINES and COURT OF APPEALS

(1) The constitutionality of Article 28(1) of the Warsaw Convention; and

(2) The jurisdiction of Philippine courts over the case.
HELD:

Article 28(1) of the Warsaw Convention

The petition is DENIED
Art. 28. (1) An action for damage must be brought at the option of
the plaintiff, in the territory of one of the High Contracting Parties,
either before the court of the domicile of the carrier or of his
principal place of business, or where he has a place of business
through which the contract has been made, or before the court at
the place of destination.

ART 28 (1), Warsaw Convention IT IS CONSTITUTIONAL

The Convention is a treaty commitment, joint legislative-executive

act, voluntarily assumed by the Philippine government and, as such,
has the force and effect of law in this country.
The petitioner's allegations are not convincing enough to overcome
this presumption. Apparently, the Convention considered the four
places designated in Article 28 the most convenient forums for the
litigation of any claim that may arise between the airline and its
passenger, as distinguished from all other places.

FACTS

(1)

The petitioner is a minor and a resident of the Philippines.

Private respondent Northwest Orient Airlines (NOA) is a foreign
corporation with principal office in Minnesota, U.S.A. and licensed to
do business and maintain a branch office in the Philippines.
October 21, 1986: Santos III purchased NOA a round-trip ticket in
San Francisco. U.S.A., Flight departures Dec 19 SF Tokyo MNL
Tokyo SF.
Flight: Tokyo to MNL departure date Dec 20. No date was specified
for his return to San Francisco.
Dec 19: Petitioner checked in at NOA Counter in SF Airport. Was
informed that he had no reservation for his flight from Tokyo to
Manila; was waitlisted.
March 12, 1987: the petitioner sued NOA for damages in the RTC
of Makati.
April 13, 1987: Respondent NOA moved to dismiss the complaint
on the ground of lack of jurisdiction. Citing the above-quoted article,
it contended that the complaint could be instituted only in the
territory of one of the High Contracting Parties, before:
1. the court of the domicile of the carrier;
2. the court of its principal place of business;
3. the court where it has a place of business through which
the contract had been made;

The petitioner is invoking the doctrine of rebus sic stantibus

(things standing thus) key element of this doctrine: the vital change
in the condition of the contracting parties that they could not have
foreseen at the time the treaty was concluded.
According to Jessup, "this doctrine constitutes an attempt to formulate a
legal principle which would justify non-performance of a treaty obligation
if the conditions with relation to which the parties contracted have
changed so materially and so unexpectedly as to create a situation in
which the exaction of performance would be unreasonable."

The more important consideration is that the treaty has not been
rejected by the Philippine government. The doctrine of rebus sic
stantibus does not operate automatically to render the treaty
inoperative. There is a necessity for a formal act of rejection,
usually made by the head of State, with a statement of the
reasons why compliance with the treaty is no longer required.
(Art 39 of the Treat provides for an authorized denunciation and
the steps the High Contracting Party must take)

Rejection of the treaty, whether on the ground of rebus sic

stantibus or pursuant to Article 39, is not a function of the courts but
of the other branches of government. This is a political act.

(2)

US Courts have jurisdiction on this case (Not SC of the Phil)

The place of destination, within the meaning of the Warsaw

Convention, is determined by the terms of the contract of
carriage or, specifically in this case, the ticket between the
passenger and the carrier.
Examination of the petitioner's ticket shows that his ultimate
destination is San Francisco.
Although the date of the return flight was left open, the contract of
carriage between the parties indicates that NOA was bound to
transport the petitioner to San Francisco from Manila.
Manila should therefore be considered merely an agreed stopping
place and not the destination.
Article 1(2), Warsaw Convention also draws a distinction between a
"destination" and an "agreed stopping place." It is the
"destination" and not an "agreed stopping place" that controls
for purposes of ascertaining jurisdiction under the Convention.
The contract is a single undivided operation, beginning with the
place of departure and ending with the ultimate destination. The use
of the singular in this expression indicates the understanding of the
parties to the Convention that every contract of carriage has one
place of departure and one place of destination. An intermediate
place where the carriage may be broken is not regarded as a
"place of destination."

International transportation is defined in paragraph (2) of Article 1,

Warsaw Convention as follows:
(2) For the purposes of this convention, the expression "international
transportation" shall mean any transportation in which, according to the
contract made by the parties, the place of departure and the place of
destination, whether or not there be a break in the transportation or a
transshipment, are situated [either] within the territories of two High
Contracting Parties . . .

Since the flight involved in the case at bar is international, it is

subject to the provisions of the Warsaw Convention, including
Article 28(1)
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. [SEE NOTES BELOW]

Rules as to jurisdiction can never be left to the consent or

agreement of the parties, whether or not a prohibition exists
against their alteration

Venue of an action
-

as fixed by statute may be changed by the consent of the

parties and an objection that the plaintiff brought his suit in the
wrong county may be waived by the failure of the defendant to
make a timely objection

A number of reasons tends to support the characterization of Article

28(1) as a jurisdiction and not a venue provision.
(1)

(2)

(3)

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).
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."
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).

Warsaw Convention brief history

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."

UNITED AIRLINES, petitioner, vs. WILLIE J. UY, respondent.

[G.R. No. 127768. November 19, 1999]
FACTS:

NOTES:
Whether Article 28(1) refers to jurisdiction or only to venue is a
question over which authorities are sharply divided. While the
petitioner cites several cases holding that Article 28(1) refers to venue
rather than jurisdiction, there are later cases cited by the private
respondent supporting the conclusion that the provision is jurisdictional.

VENUE AND JURISDICTION are entirely distinct matters.

Jurisdiction
-

may not be conferred by consent or waiver upon d court which

otherwise would have no jurisdiction over the subject-matter of
an action;

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.
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.
Faced with the prospect of leaving without his luggage,
respondent paid the overweight charges with his American
Express credit card.

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.
Consequently, on 9 June 1992 respondent filed a complaint for
damages against United Airlines:
o
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.

TRIAL COURT:
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.

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."
Court of Appeals reversed the 7 August 1992 order
issued by the trial court granting petitioner's motion to
dismiss based on prescription of cause of action.
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.

ISSUE: WON Art. 29 of the Warsaw Convention must be applied in

determining the prescriptive period for submitting the case for damages.
HELD:

Within our jurisdiction we have held that the Warsaw

Convention can be applied, or ignored, depending on the
peculiar facts presented by each case.
Thus, we have ruled that the Convention's provisions do not
regulate or exclude liability for other breaches of contract by
the carrier or misconduct of its officers and employees, or for
some particular or exceptional type of damage.
Likewise, we have held that the Convention does not preclude
the operation of the Civil Code and other pertinent laws.
It does not regulate, much less exempt, the carrier from liability
for damages for violating the rights of its passengers under the
contract of carriage, especially if willful misconduct on the part
of the carrier's employees is found or established.
Respondent's complaint reveals that he is suing on two (2)
causes of action: (a) the shabby and humiliating treatment he
received from petitioner's employees at the San Francisco
Airport which caused him extreme embarrassment and social
humiliation; and, (b) the slashing of his luggage and the loss of
his personal effects amounting to US $5,310.00.
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.
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.
DENIED.