1.

189998

Notes only Makati Shangrila Hotel vs. Harper

Makati Shangri-La vs. Harper Digest

G.R. No. 189998 : August 29, 2012

MAKATI SHANGRI-LA HOTEL AND RESORT, INC., Petitioner, v. ELLEN JOHANNE HARPER,
JONATHAN CHRISTOPHER HARPER, and RIGOBERTO GILLERA, Respondents.

BERSAMIN, J.:

FACTS:

In the first week of November 1999, Christian Harper (Harper) came to Manila on a business
trip. He checked in at the Makati Shangri-La Hotel and was billeted at Room 1428. He was due to
check out on November 6, 1999. In the early morning of that date, however, he was murdered
inside his hotel room by still unidentified malefactors.

Thus, the heirs of Christian Harper sued the hotel for damages. Col. Rodrigo de Guzman, the
hotels Security Manager, testified that the management practice prior to the murder of Harper
had been to deploy only one security or roving guard for every three or four floors of the
building; that such ratio had not been enough considering the L-shape configuration of the hotel
that rendered the hallways not visible from one or the other end; and that he had
recommended to management to post a guard for each floor, but his recommendation had
been disapproved because the hotel "was not doing well" at that particular time.

And to prove heirship of the plaintiffs-appellees, they presented several documents which were
all kept in Norway. The documents had been authenticated by the Royal Norwegian Ministry of
Foreign Affairs and also bore the official seal of the Ministry and signature of one, Tanja Sorlie.
The documents were also accompanied by an Authentication by the Consul, Embassy of the
Republic of the Philippines in Stockholm, Sweden to the effect that, Tanja Sorlie was duly
authorized to legalize official documents for the Ministry.

The RTC ruled in favor of Christian Harpers heirs and found the hotel negligent. On appeal, the
CA affirmed the RTC.

ISSUES:

I. Whether or not the heirs substantially complied with the rules on the authentication and
proof of documents set by Section 24 and Section 25 of Rule 132 of the Rules of Court?

II. Whether or not Makati Shangri-La Hotel is liable to pay damages?

HELD: The CA is affirmed.

FIRST ISSUE: The requirements for authentication of documents establishing respondents legal
relationship with the victim as his heirs were complied with.

REMEDIAL LAW: proof of official record

Although Exhibit Q, Exhibit Q-1, Exhibit R and Exhibit R-1 were not attested by the officer having
the legal custody of the record or by his deputy in the manner required in Section 25 of Rule
132, and said documents did not comply with the requirement under Section 24 of Rule 132 to
the effect that if the record was not kept in the Philippines a certificate of the person having
custody must accompany the copy of the document that was duly attested stating that such
person had custody of the documents, the deviation was not enough reason to reject the utility
of the documents for the purposes they were intended to serve. The official participation in the
authentication process of Tanja Sorlie of the Royal Ministry of Foreign Affairs of Norway and the
attachment of the official seal of that office on each authentication indicated that Exhibit Q,
Exhibit R, Exhibit Q-1 and Exhibit R-1 were documents of a public nature in Norway, not merely
private documents.

That rules of procedure may be mandatory in form and application does not forbid a showing of
substantial compliance under justifiable circumstances, because substantial compliance does
not equate to a disregard of basic rules. For sure, substantial compliance and strict adherence
are not always incompatible and do not always clash in discord.

SECOND ISSUE: Petitioner was liable due to its own negligence.

CIVIL LAW: negligence; proximate cause

The CA resolved petitioners arguments thuswise: "negligence is defined as the omission to do

something which a reasonable man, guided by those considerations which ordinarily regulate
the conduct of human affairs, would do, or the doing of something which a prudent and
reasonable man would not do. It is a relative or comparative, not an absolute, term and its
application depends upon the situation of the parties and the degree of care and vigilance which
the circumstances reasonably require. In determining whether or not there is negligence on the
part of the parties in a given situation, jurisprudence has laid down the following test:Did
defendant, in doing the alleged negligent act, use that reasonable care and caution which an
ordinarily prudent person would have used in the same situation? If not, the person is guilty of
negligence. The law, in effect, adopts the standard supposed to be supplied by the imaginary
conduct of the discreet pater familias of the Roman law. Liability on the part of the defendant is
based upon the fact that he was in a better situation than the injured person to foresee and
prevent the happening of the injurious occurrence. Moreover, in applying the premises liability
rule in the instant case as it is applied in some jurisdiction in the United States, it is enough that
guests are injured while inside the hotel premises to make the hotelkeeper liable."
 Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken
by any efficient intervening cause, produces, the injury, and without which the result would not
have occurred. More comprehensively, proximate cause is that cause acting first and producing
the injury, either immediately or by setting other events in motion, all constituting a natural and
continuous chain of events, each having a close causal connection with its immediate
predecessor, the final event in the chain immediately effecting the injury as natural and
probable result of the cause which first acted, under such circumstances that the person
responsible for the first event should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that an injury to some person
might probably result therefrom. To reiterate, defendant-appellant is engaged in a business
imbued with public interest, ergo, it is bound to provide adequate security to its guests.

The Court AFFIRMS the judgment of the Court Appeals.

2. 199760

Main case Philippine Airlines vs. Court of Appeals

[Syllabus]

SECOND DIVISION

[G.R. No. 119706. March 14, 1996]

PHILIPPINE AIRLINES, INC., petitioner, vs. COURT OF APPEALS and GILDA C. MEJIA, respondents.

DECISION

REGALADO, J.:

This is definitely not a case of first impression. The incident which eventuated in the present
controversy is a drama of common contentious occurrence between passengers and carriers
whenever loss is sustained by the former. Withal, the exposition of the factual ambience and the
legal precepts in this adjudication may hopefully channel the assertiveness of passengers and
the intransigence of carriers into the realization that at times a bad extrajudicial compromise
could be better than a good judicial victory.

Assailed in this petition for review is the decision of respondent Court of Appeals in CA-G.R. CV
No. 42744[1] which affirmed the decision of the lower court[2] finding petitioner Philippine Air
Lines, Inc. (PAL) liable as follows:

ACCORDINGLY, judgment is hereby rendered ordering defendant Philippine Air Lines, Inc., to pay
plaintiff Gilda C. Mejia:
(1) P30,000.00 by way of actual damages of the microwave oven;

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

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

(4) P10,000.00 as attorneys fee;

all in addition to the costs of the suit.

Defendants counterclaim is hereby dismissed for lack of merit.[3]

The facts as found by respondent Court of Appeals are as follows:

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

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

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

What had theretofore transpired at the trial in the court a quo is narrated as follows:

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

When she arrived in Manila, she gave her sister Concepcion C. Dio authority to claim her
baggag(e) (Exh. G) and took a connecting flight for Bacolod City.
When Concepcion C. Dino claimed the baggag(e) (Exh. B) with defendant, then with the Bureau
of Customs, the front glass of the microwave oven was already broken and cannot be repaired
because of the danger of radiation. They demanded from defendant thru Atty. Paco P30,000.00
for the damages although a brand new one costs P40,000.00, but defendant refused to pay.

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

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

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

Also plaintiffs claim was filed out of time under paragraph 12, a(1) of the Air Waybill (Exh. A, also
Exh. 1) which provides: (a) the person entitled to delivery must make a complaint to the carrier
in writing in case: (1) of visible damage to the goods, immediately after discovery of the damage
and at the latest within 14 days from the receipt of the goods.[5]

As stated at the outset, respondent Court of Appeals similarly ruled in favor of private
respondent by affirming in full the trial courts judgment in Civil Case No. 6210, with costs
against petitioner.[6] Consequently, petitioner now impugns respondent appellate courts ruling
insofar as it agrees with (1) the conclusions of the trial court that since the air waybill is a
contract of adhesion, its provisions should be strictly construed against herein petitioner; (2) the
finding of the trial court that herein petitioners liability is not limited by the provisions of the air
waybill; and (3) the award by the trial court to private respondent of moral and exemplary
damages, attorneys fees and litigation expenses.

The trial court relied on the ruling in the case of Fieldmens Insurance Co., Inc. vs. Vda. De
Songco, et al.[7] in finding that the provisions of the air waybill should be strictly construed
against petitioner. More particularly, the court below stated its findings thus:

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

The conclusion that inescapably emerges from the above findings of fact is to concede it with
credence. x x x.[8]

Respondent appellate court approved said findings of the trial court in this manner:

We cannot agree with defendant-appellants above contention. Under our jurisprudence, the Air
Waybill is a contract of adhesion considering that all the provisions thereof are prepared and
drafted only by the carrier (Sweet Lines v. Teves, 83 SCRA 361). The only participation left of the
other party is to affix his signature thereto (BPI Credit Corporation vs. Court of Appeals, 204
SCRA 601; Saludo, Jr. vs. C.A., 207 SCRA 498; Maersk vs. Court of Appeals, 222 SCRA 108, among
the recent cases). In the earlier case of Angeles v. Calasanz, 135 SCRA 323, the Supreme Court
ruled that the terms of a contract (of adhesion) must be interpreted against the party who
drafted the same. x x x.[9]

Petitioner airlines argues that the legal principle enunciated in Fieldmens Insurance does not
apply to the present case because the provisions of the contract involved here are neither
ambiguous nor obscure. The front portion of the air waybill contains a simple warning that the
shipment is subject to the conditions of the contract on the dorsal portion thereof regarding the
limited liability of the carrier unless a higher valuation is declared, as well as the reglementary
period within which to submit a written claim to the carrier in case of damage or loss to the
cargo. Granting that the air waybill is a contract of adhesion, it has been ruled by the Court that
such contracts are not entirely prohibited and are in fact binding regardless of whether or not
respondent herein read the provisions thereof. Having contracted the services of petitioner
carrier instead of other airlines, private respondent in effect negotiated the terms of the
contract and thus became bound thereby.[10]

Counsel for private respondent refutes these arguments by saying that due to her eagerness to
ship the microwave oven to Manila, private respondent assented to the terms and conditions of
the contract without any opportunity to question or change its terms which are practically on a
take-it-or-leave-it basis, her only participation therein being the affixation of her signature.
Further, reliance on the Fieldmens insurance case is misplaced since it is not the ambiguity or
obscurity of the stipulation that renders necessary the strict interpretation of a contract of
adhesion against the drafter, but the peculiarity of the transaction wherein one party, normally
a corporation, drafts all the provisions of the contract without any participation whatsoever on
the part of the other party other than affixment of signature.[11]

A review of jurisprudence on the matter reveals the consistent holding of the Court that
contracts of adhesion are not invalid per se and that it has on numerous occasions upheld the
binding effect thereof.[12] As explained in Ong Yiu vs. Court of Appeals, et al., supra:
x x x. Such provisions have been held to be a part of the contract of carriage, and valid and
binding upon the passenger regardless of the latters lack of knowledge or assent to the
regulation. It is what is known as a contract of adhesion, in regards which it has been said that
contracts of adhesion wherein one party imposes a ready-made form of contract on the other,
as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres
to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. x x x, a
contract limiting liability upon an agreed valuation does not offend against the policy of the law
forbidding one from contracting against his own negligence.

As rationalized in Saludo, Jr. vs. Court of Appeals, et al., supra:

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

but subject to the caveat that

x x x. Just because we have said that Condition No. 5 of the airway bill is binding upon the
parties to and fully operative in this transaction, it does not mean, and let this serve as fair
warning to respondent carriers, that they can at all times whimsically seek refuge from liability
in the exculpatory sanctuary of said Condition No. 5 x x x.

The peculiar nature of such contracts behooves the Court to closely scrutinize the factual milieu
to which the provisions are intended to apply. Thus, just as consistently and unhesitatingly, but
without categorically invalidating such contracts, the Court has construed obscurities and
ambiguities in the restrictive provisions of contracts of adhesion strictly albeit not unreasonably
against the drafter thereof when justified in light of the operative facts and surrounding
circumstances.[13]

We find nothing objectionable about the lower courts reliance upon the Fieldmens Insurance
case, the principles wherein squarely apply to the present petition. The parallelism between the
aforementioned case and this one is readily apparent for, just as in the instant case, it is the
binding effect of the provisions in a contract of adhesion (an insurance policy in Fieldmens
Insurance) that is put to test.

A judicious reading of the case reveals that what was pivotal in the judgment of liability against
petitioner insurance company therein, and necessarily interpreting the provisions of the
insurance policy as ineffective, was the finding that the representations made by the agent of
the insurance company rendered it impossible to comply with the conditions of the contract in
question, rather than the mere ambiguity of its terms. The extended pronouncements regarding
strict construction of ambiguous provisions in an adhesion contract against its drafter, which
although made by the Court as an aside but has perforce evolved into a judicial tenet over time,
was actually an incidental statement intended to emphasize the duty of the court to protect the
weaker, as against the more dominant, party to a contract, as well as to prevent the iniquitous
situation wherein the will of one party is imposed upon the other in the course of negotiation.

Thus, there can be no further question as to the validity of the terms of the air waybill, even if
the same constitutes a contract of adhesion. Whether or not the provisions thereof particularly
on the limited liability of the carrier are binding on private respondent in this instance must be
determined from the facts and circumstances involved vis-a-vis the nature of the provisions
sought to be enforced, taking care that equity and fair play should characterize the transaction
under review.

On petitioners insistence that its liability for the damage to private respondents microwave
oven, if any, should be limited by the provisions of the air waybill, the lower court had this to
say:

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

This Court has misgivings about these pretensions of defendant.

xxx xxx xxx

Finally, the Court finds no merit to defendants contention that under the Warsaw Convention,
its liability if any, cannot exceed U.S. $20.00 based on weight as plaintiff did not declare the
contents of her baggage nor pay additional charges before the flight.[14]

The appellate court declared correct the non-application by the trial court of the limited liability
of therein defendant-appellant under the Conditions of the Contract contained in the air waybill
, based on the ruling in Cathay Pacific Airways, Ltd. vs. Court of Appeals, et al.,[15] which
substantially enunciates the rule that while the Warsaw Convention has the force and effect of
law in the Philippines, being a treaty commitment by the government and as a signatory
thereto, the same does not operate as an exclusive enumeration of the instances when a carrier
shall be liable for breach of contract or as an absolute limit of the extent of liability, nor does it
preclude the operation of the Civil Code or other pertinent laws.

Petitioner insists that both respondent court and the trial court erred in finding that petitioners
liability, if any, is not limited by the provisions of the air waybill, for, as evidence of the contract
of carriage between petitioner and private respondent, it substantially states that the shipper
certifies to the correctness of the entries contained therein and accepts that the carriers liability
is limited to US$20 per kilogram of goods lost, damaged or destroyed unless a value is declared
and a supplementary charge paid. Inasmuch as no such declaration was made by private
respondent, as she admitted during cross-examination, the liability of petitioner, if any, should
be limited to 28 kilograms multiplied by US$20, or $560. Moreover, the validity of these
conditions has been upheld in the leading case of Ong Yiu vs. Court of Appeals, et al., supra, and
subsequent cases, for being a mere reiteration of the limitation of liability under the. Warsaw
Convention, which treaty has the force and effect of law.[16]

It is additionally averred that since private respondent was merely advised, not ordered, that
she need not declare a higher value for her cargo, the final decision of refraining from making
such a declaration fell on private respondent and should not put the petitioner in estoppel from
invoking its limited liability.[17]

In refutation, private respondent explains that the reason for the absence of a declaration of a
higher value was precisely because petitioners personnel in San Francisco, U.S.A. advised her
not to declare the value of her cargo, which testimony has not at all been rebutted by
petitioner. This being so, petitioner is estopped from faulting private respondent for her failure
to declare the value of the microwave oven.[18]

The validity of provisions limiting the liability of carriers contained in bills of lading have been
consistently upheld for the following reason:

x x x. The stipulation in the bill of lading limiting the common carriers liability to the value of
goods appearing in the bill, unless the shipper or owner declares a greater value, is valid and
binding. The limitation of the carriers liability is sanctioned by the freedom of the contracting
parties to establish such stipulations, clauses, terms, or conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs and public policy. x x
x.[19]

However, the Court has likewise cautioned against blind reliance on adhesion contracts where
the facts and circumstances warrant that they should be disregarded.[20]

In the case at bar, it will be noted that private respondent signified an intention to declare the
value of the microwave oven prior to shipment, but was explicitly advised against doing so by
PALs personnel in San Francisco, U.S.A., as borne out by her testimony in court:

xxx xxx xxx

Q Did you declare the value of the shipment?

A No. I was advised not to.

Q Who advised you?

A At the PAL Air Cargo.[21]

It cannot be denied that the attention of PAL through its personnel in San Francisco was
sufficiently called to the fact that private respondents cargo was highly susceptible to breakage
as would necessitate the declaration of its actual value. Petitioner had all the opportunity to
check the condition and manner of packing prior to acceptance for shipment,[22] as well as
during the preparation of the air waybill by PALs Acceptance Personnel based on information
supplied by the shipper,[23] and to reject the cargo if the contents or the packing did not meet
the companys required specifications. Certainly, PAL could not have been otherwise prevailed
upon to merely accept the cargo.

While Vicente Villaruz, officer-in-charge of the PAL Import Section at the time of incident,
posited that there may have been inadequate and improper packing of the cargo,[24] which by
itself could be a ground for refusing carriage of the goods presented for shipment, he
nonetheless admitted on cross-examination that private respondents cargo was accepted by
PAL in its San Francisco office:

ATTY. VINCO

So that, be that as it may, my particular concern is that, it is the PAL personnel that accepts the
baggage?

WITNESS

Yes, sir.

ATTY. VINCO

Also, if he comes from abroad like in this particular case, it is the PAL personnel who accepts the
baggage?

WITNESS

Yes, sir.

ATTY. VINCO

And the PAL personnel may or may not accept the baggage?

WITNESS

Yes, sir.

ATTY. VINCO
According to what is stated as in the acceptance of the cargo, it is to the best interest of the
airlines, that is, he want(s) also that the airlines would be free from any liability. Could that be
one of the grounds for not admitting a baggage?

WITNESS

Safety is number one (I)

xxx xxx xxx

ATTY. VINCO

So, this baggage was accepted and admitted in San Francisco?

WITNESS

Yes, sir.

ATTY. VINCO

And you could not show any document to the Court that would suggest that this baggage was
denied admittance by your office at San Francisco?

WITNESS

No, I cannot show.

ATTY. VINCO

Now, can you show any document that would suggest that there was insufficient pac(k)aging on
this particular baggage from abroad?

WITNESS

No, sir.[25]

In response to the trial courts questions during the trial, he also stated that while the passengers
declaration regarding the general or fragile character of the cargo is to a certain extent
determinative of its classification, PAL nevertheless has and exercises discretion as to the
manner of handling required by the nature of the cargo it accepts for carriage. He further
opined that the microwave oven was only a general, not a fragile, cargo which did not require
any special handling.[26]
There is no absolute obligation on the part of a carrier to accept a cargo. Where a common
carrier accepts a cargo for shipment for valuable consideration, it takes the risk of delivering it in
good condition as when it was loaded. And if the fact of improper packing is known to the
carrier or its personnel, or apparent upon observation but it accepts the goods notwithstanding
such condition, it is not relieved of liability for loss or injury resulting therefrom.[27]

The acceptance in due course by PAL of private respondents cargo as packed and its advice
against the need for declaration of its actual value operated as an assurance to private
respondent that in fact there was no need for such a declaration. Petitioner can hardly be
faulted for relying on the representations of PALs own personnel.

In other words, private respondent Mejia could and would have complied with the conditions
stated in the air waybill, i.e., declaration of a higher value and payment of supplemental
transportation charges, entitling her to recovery of damages beyond the stipulated limit of
US$20 per kilogram of cargo in the event of loss or damage, had she not been effectively
prevented from doing so upon the advice of PALs personnel for reasons best known to
themselves.

As pointed out by private respondent, the aforestated facts were not denied by PAL in any of its
pleadings nor rebutted by way of evidence presented in the course of the trial, and thus in effect
it judicially admitted that such an advice was given by its personnel in San Francisco, U.S.A.
Petitioner, therefore, is estopped from blaming private respondent for not declaring the value
of the cargo shipped and which would have otherwise entitled her to recover a higher amount
of damages. The Courts bidding in the Fieldmens Insurance case once again rings true:

x x x. As estoppel is primarily based on the doctrine of good faith and the avoidance of harm
that will befall an innocent party due to its injurious reliance, the failure to apply it in this case
would result in gross travesty of justice.

We likewise uphold the lower courts finding that private respondent complied with the
requirement for the immediate filing of a formal claim for damages as required in the air waybill
or, at least, we find that there was substantial compliance therewith.

Private respondent testified that she authorized her sister, Concepcion Dio, to claim her cargo
consisting of a microwave oven since the former had to take a connecting flight to Bacolod City
on the very same afternoon of the day of her arrival.[28] As instructed, Concepcion Dio
promptly proceeded to PALs Import Section the next day to claim the oven. Upon discovering
that the glass door was broken, she immediately filed a claim by way of the baggage freight
claim[29] on which was duly annotated the damage sustained by the oven.[30]

Her testimony relates what took place thereafter:

ATTY. VINCO
So, after that inspection, what did you do?

WITNESS

After that annotation placed by Mr. Villaruz, I went home and I followed it up the next day with
the Clerk of PAL cargo office.

ATTY. VINCO

What did the clerk tell you?

WITNESS

She told me that the claim was being processed and I made several phone calls after that. I
started my follow-ups February up to June 1990.

ATTY. VINCO

And what results did those follow-ups produce?

WITNESS

All they said (was) that the document was being processed, that they were waiting for Atty.
Paco to report to the office and they could refer the matter to Atty. Paco.

ATTY. VINCO

Who is this Atty. Paco?

WITNESS

He was the one in-charge of approving our claim.

ATTY. VINCO

Were you able to see Atty. Paco?

WITNESS

Yes, sir. I personally visited Atty. Paco together with my auntie who was a former PAL employee.

xxx xxx xxx

ATTY. VINCO
So, what did you do, did you make a report or did you tell Atty. Paco of your scouting around for
a possible replacement?

WITNESS

I did call him back at his office. I made a telephone call.

ATTY. VINCO

And what answer did Atty. Paco make after you have reported back to him?

WITNESS

They told me that they were going to process the claim based on the price that I gave them but
there was no definite result.

ATTY. VINCO

How many times did you go and see Atty. Paco regarding the claim of your sister?

WITNESS

I made one personal visit and several follow-up calls. With Atty. Paco, I made one phone call but
I made several phone calls with his secretary or the clerk at PAL cargo office and I was trying to
locate him but unfortunately, he was always out of his office.[31]

PAL claims processor, Rodolfo Pandes,* confirmed having received the baggage freight claim on
January 30, 1990[32] and the referral to and extended pendency of the private respondents
claim with the office of Atty. Paco, to wit:

ATTY. VINCO:

Q And you did instruct the claimant to see the Claim Officer of the company, right?

WITNESS:

A Yes, sir.

ATTY. VINCO:

Q And the Claim Officer happened to be Atty. Paco?

WITNESS:
A Yes, sir.

ATTY. VINCO:

Q And you know that the plaintiff thru her authorized representative Concepcion Dio, who is her
sister had many times gone to Atty. Paco, in connection with this claim of her sister?

WITNESS:

A Yes, sir.

ATTY. VINCO:

Q As a matter of fact even when the complaint was already filed here in Court the claimant had
continued to call about the settlement of her claim with Atty. Paco, is that correct?

xxx xxx xxx

WITNESS:

A Yes, sir.

ATTY. VINCO.

Q You know this fact because a personnel saw you in one of the pre-trial here when this case
was heard before the sala of Judge Moscardon, is that correct?

WITNESS:

A Yes.

ATTY. VINCO:

Q In other words, the plaintiff rather had never stop(ped) in her desire for your company to
settle this claim, right?

WITNESS

A Yes, sir.[33]

Considering the abovementioned incidents and private respondent Mejias own zealous efforts
in following up the claim,[34] it was clearly not her fault that the letter of demand for damages
could only be filed, after months of exasperating follow-up of the claim, on August 13, 1990.[35]
If there was any failure at all to file the formal claim within the prescriptive period contemplated
in the air waybill, this was largely because of PALs own doing, the consequences of which
cannot, in all fairness, be attributed to private respondent.

Even if the claim for damages was conditioned on the timely filing of a formal claim, under
Article 1186 of the Civil Code that condition was deemed fulfilled, considering that the collective
action of PALs personnel in tossing around the claim and leaving it unresolved for an indefinite
period of time was tantamount to voluntarily preventing its fulfillment. On grounds of equity,
the filing of the baggage freight claim, which sufficiently informed PAL of the damage sustained
by private respondents cargo, constituted substantial compliance with the requirement in the
contract for the filing of a formal claim.

All told, therefore, respondent appellate court did not err in ruling that the provision on limited
liability is not applicable in this case. We, however, note in passing that while the facts and
circumstances of this case do not call for the direct application of the provisions of the Warsaw
Convention, it should be stressed that, indeed, recognition of the Warsaw Convention does not
preclude the operation of the Civil Code and other pertinent laws in the determination of the
extent of liability of the common carrier.[36]

The Warsaw Convention, being a treaty to which the Philippines is a signatory, is as much a part
of Philippine law as the Civil Code, Code of Commerce and other municipal special laws.[37] The
provisions therein contained, specifically on the limitation of carriers liability, are operative in
the Philippines but only in appropriate situations.

Petitioner ascribes ultimate error in the award of moral exemplary damages and attorneys fees
in favor of private respondent in that other than the statement of the trial court that petitioner
acted in bad faith in denying private respondents claim, which was affirmed by the Court of
Appeals, there is no evidence on record that the same is true. The denial of private respondents
claim was supposedly in the honest belief that the same had prescribed, there being no timely
formal claim filed; and despite having been given an opportunity to submit positive proof of the
value of the damaged microwave oven, no such proof was submitted. Petitioner insists that its
failure to deliver the oven in the condition in which it was shipped could hardly be considered as
amounting to bad faith.[38]

Private respondent counters that petitioners failure to deliver the microwave oven in the
condition in which it was received can be describe as gross negligence amounting to bad faith,
on the further consideration that it failed to prove that it exercised the extraordinary diligence
required by law, and that no explanation whatsoever was given as to why the front glass of the
oven was broken.[39]

The trial court justified its award of actual, moral and exemplary damages, and attorneys fees in
favor of private respondent in this wise:
Since the plaintiffs baggage destination was the Philippines, Philippine law governs the liability
of the defendant for damages for the microwave oven.

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

xxx xxx xxx

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

Respondent appellate court was in full agreement with the trial courts finding of bad faith on
the part of petitioner as a basis for the award of the aforestated damages, declaring that:

As to the last assigned error, a perusal of the facts and law of the case reveals that the lower
courts award of moral and exemplary damages, attorneys fees and costs of suit to plaintiff-
appellee is in accordance with current laws and jurisprudence on the matter. Indeed, aside from
the fact that defendant-appellant acted in bad faith in breaching the contract and in denying
plaintiffs valid claim for damages, plaintiff-appellee underwent profound distress, sleepless
nights, and anxiety upon knowledge of her damaged microwave oven in possession of
defendant-appellant, entitling her to the award of moral and exemplary damages (Cathay Pacific
Airways, Ltd. vs. C.A., supra; Arts. 2219 & 2221, New Civil Code), and certainly plaintiff-
appellants unjust refusal to comply with her valid demand for payment, thereby also entitling
her to reasonable attorneys fees [Art. 2208 (2) and (11), id.].[41]

It will be noted that petitioner never denied that the damage to the microwave oven was
sustained while the same was in its custody. The possibility that said damage was due to causes
beyond the control of PAL has effectively been ruled out since the entire process in handling of
the cargo - from the unloading thereof from the plane, the towing and transfer to the PAL
warehouse, the transfer to the Customs examination area, and its release thereafter to the
shipper - was done almost exclusively by, and with the intervention or, at the very least, under
the direct supervision of a responsible PAL personnel.[42]

The very admissions of PAL, through Vicente Villaruz of its Import Section, as follows:

ATTY. VINCO
So that, you now claim, Mr. Witness, that from the time the cargo was unloaded from the plane
until the time it reaches the Customs counter where it was inspected, all the way, it was the PAL
personnel who did all these things?

WITNESS

Yes, however, there is also what we call the Customs storekeeper and the Customs guard along
with the cargo.

ATTY. VINCO

You made mention about a locator?

WITNESS

Yes, sir.

ATTY. VINCO

This locator, is he an employee of the PAL or the Customs?

WITNESS

He is a PAL employee.[43]

lead to the inevitable conclusion that whatever damage may have been sustained by the cargo
is due to causes attributable to PALs personnel or, at all events, under their responsibility.

Moreover, the trial court underscored the fact that petitioner was not able to overcome the
statutory presumption of negligence in Article 1735 which, as a common carrier, it was laboring
under in case of loss, destruction or deterioration of goods, through proper showing of the
exercise of extraordinary diligence. Neither did it prove that the damage to the microwave oven
was because of any of the excepting causes under Article 1734, all of the same Code. Inasmuch
as the subject item was received in apparent good condition, no contrary notation or exception
having been made on the air waybill upon its acceptance for shipment, the fact that it was
delivered with a broken glass door raises the presumption that PALs personnel were negligent in
the carriage and handling of the cargo.[44]

Furthermore, there was glaringly no attempt what so ever on the part of petitioner to explain
the cause of the damage to the oven. The unexplained cause of damage to private respondents
cargo constitutes gross carelessness or negligence which by itself justifies the present award of
damages.[45] The equally unexplained and inordinate delay in acting on the claim upon referral
thereof to the claims officer, Atty. Paco, and the noncommittal responses to private
respondents entreaties for settlement of her claim for damages belies petitioners pretension
that there was no bad faith on its part. This unprofessional indifference of PALs personnel
despite full and actual knowledge of the damage to private respondents cargo, just to be
exculpated from liability on pure technicality and bureaucratic subterfuge, smacks of willful
misconduct and insensitivity to a passengers plight tantamount to bad faith[46] and renders
unquestionable petitioners liability for damages. In sum, there is no reason to disturb the
findings of the trial court in this case, especially with its full affirmance by respondent Court of
Appeals.

On this note, the case at bar goes into the annals of our jurisprudence after six years and
recedes into the memories of our legal experience as just another inexplicable inevitability. We
will never know exactly how many man-hours went into the preparation, litigation and
adjudication of this simple dispute over an oven, which the parties will no doubt insist they
contested as a matter of principle. One thing, however, is certain. As long as the first letter in
principle is somehow outplaced by the peso sign, the courts will always have to resolve similar
controversies although mutual goodwill could have dispensed with judicial recourse.

IN VIEW OF ALL OF THE FOREGOING, the assailed judgment of respondent Court of Appeals is
AFFIRMED in toto.

SO ORDERED.

Romero, Puno, and Mendoza, JJ., concur.

[1] Per Justice Lourdes K. Tayao-Jaguros, ponente, with Justices Jesus M. Elbinias and B.A.
Adefuin-De la Cruz, concurring; Rollo, 38-45.

[2] Original Record, 132-137; penned by Judge Ramon B. Posadas, Regional Trial Court, Branch
51, Bacolod City.

[3] Ibid., 137.

[4] Ibid., 39.

[5] Ibid., 47-48.

[6] Ibid 45.

[7] L-24834. September 23, 1968, 25 SCRA 70.

[8] Original Record, 135.

[9] Rollo, 42.

[10] Ibid., 23-25; 78-79.

[11] Ibid., 2-64.

[12] Ong Yiu vs. Court of Appeals, et al., L-40597, June 29, 1979, 91 SCRA 223; Servando, et al vs.
Philippine Steam Navigation L-34681-2, October 23, 1982, 117 SCRA 832; Sea Land Services, Inc.
vs. Intermediate Appellate Court, et al., G.R. No. 75118, August 31 1987, 153 SCRA 552; Pan
American World Airways, Inc. vs. Intermediate Appellate Court et al., G.R. No. 70462, August 11,
1988. 164 SCRA 28; Citadel Lines, Inc. vs. Court of Appeals, et al., G.R. No. 88092, April 25, 1990,
184 SCRA 544; Magellan Manufacturing Marketing Corporation vs. Court of Appeals, et al., G.R.
No 95529, August 22, 1991, 201 SCRA 102; Saludo, Jr. vs. Court of Appeals, et al., G.R. No.
95536, March 23, 1992, 207 SCRA 498; Pan American World Airways, Inc. vs. Rapadas, et al.,
G.R. No. 60673, May 19 1992,209 SCRA 67.

[13] See Shewaram vs. Philippine Airlines, Inc., L-20099, July 7, 1966, 17 SCRA 606; Qua Chee
Gan vs. Law Union and Rock Insurance Co., Ltd., etc., 98 Phil. 85 (1955); Fieldmens Insurance
Co., Inc. vs. Court of Appeals, et al., supra; Sweet Lines, Inc. vs. Teves etc., et al., L-37750. May
19, 1978,83 SCRA 361; Angeles vs. Calasanz, L-42283, March 18, 1985, 135 SCRA 323; BPI Credit
Corporation vs. Court of Appeals, et al., G.R. No. 96755, December 1, 1991,204 SCRA 601;
Maersk Line vs. Court of Appeals, et al., G.R. No. 94761, May 17 1993, 222 SCRA 108.

[14] Original Record, 134, 136.

[15] G.R. No. 60501, March 5, 1993, 219 SCRA 521.

[16] Rollo, 26-31.

[17] Ibid., 80-81.

[18] Ibid., 64-65.

[19] St. Paul Fire & Marine Insurance Co. vs. Macondray & Co., L-27796, March 25, 1976, 70
SCRA 122, 126. See also Land Services, Inc. vs. Intermediate Appellate Court, et al., supra; Pan
American World Airways, Inc. vs. Intermediate Appellate Court, et al., supra; Citadel Lines, Inc.
vs. Court of Appeals, et al., supra.

[20] Sweet Lines, Inc. vs. Teves, supra; Pan American World Airways, Inc. vs. Rapadas, et al.,
supra

[21] TSN, February 13,1992,40.

[22] Ibid., id., 17.

[23] Ibid., August 14, 1992, 34-36.

[24] Ibid., August 13, 1992, 11-14.

[25] Ibid., August 14, 1992,30-33.

[26] Ibid., id., 37-41.

[27] Agbayani, A.F., Commentaries and Jurisprudence on the Commercial Laws of the
Philippines, Vol. IV, 1993 ed., 31-32.

[28] Ibid., February 13, 1992, 18-20.

[29] Exhibit B; Original Record, 73.

[30] Ibid., March 17, 1992, 10-19; August 14,1992, 23-27.

[31] Ibid., March 17, 1992,21-23,26-28.

* His surname is spelled Pandas in some parts of the records.

[32] Ibid., July 2, 1992, 26-27.

[33] Ibid., July 2, 1992, 30-32.

[34] TSN, February 13, 1992, 20-22, 25.

[35] Exhibit E; Original Record, 76.

[36] Cathay Pacific Airways, Inc. vs. Court of Appeals, et al., supra; Luna, et al. vs. Court of
Appeals, et al., G.R. No. 100374-75, November 27, 1992, 216 SCRA 107.

[37] Santos III vs. Northwest Airlines, et al., G.R. No. 101538, June 23, 1992, 210 SCRA 256.

[38] Rollo, 33, 81-82.

[39] Ibid., 65-66.

[40] Original Record, 136-137.

[41] Rollo, 44-45.

[42] TSN, August 14,1992, 4-18.

[43] Ibid., id., 22-23.

 [44] See National Development Corporation vs. Court of Appeals, et al., L-49407, August 19,
1988, 164 SCRA 593.

[45] See Maersk Line vs. Court of Appeals, et al., supra.

[46] Trans World Airlines vs. Court of Appeals, et al., G.R. No. 78656, August 30, 1988, 165 SCRA
143; Cathay Pacific Airways, Ltd. vs. Court of Appeals, et al., G.R. No. 60501, March 5, 1993, 219
SCRA 520.

3. 165266

Main case air france vs. gillego

THIRD DIVISION

AIR FRANCE,

Petitioner,

- versus -
G.R. No. 165266

Present:

CARPIO MORALES, J.,

Chairperson,
BERSAMIN,

MENDOZA,*

VILLARAMA, JR., and

SERENO, JJ.

BONIFACIO H. GILLEGO, substituted by his surviving heirs represented by Dolores P. Gillego,

Respondent.

Promulgated:

December 15, 2010

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

For review is the Decision[1] dated June 30, 2004 of the Court of Appeals (CA) in CA-G.R. CV No.
56587 which affirmed the Decision[2] dated January 3, 1996 of the Regional Trial Court (RTC) of
Makati City, Branch 137 in Civil Case No. 93-2328.

The facts follow:

Sometime in April 1993, respondent Bonifacio H. Gillego,[3] then incumbent Congressman of

the Second District of Sorsogon and Chairman of the House of Representatives Committee on
Civil, Political and Human Rights, was invited to participate as one of the keynote speakers at the
89th Inter-Parliamentary Conference Symposium on Parliament Guardian of Human Rights to be
held in Budapest, Hungary and Tokyo, Japan from May 19 to 22, 1993. The Philippines is a
member of the Inter-Parliamentary Union which organized the event.[4]

On May 16, 1993, respondent left Manila on board petitioner Air Frances aircraft bound for
Paris, France. He arrived in Paris early morning of May 17, 1993 (5:00 a.m.). While waiting at the
De Gaulle International Airport for his connecting flight to Budapest scheduled at 3:15 p.m. that
same day, respondent learned that petitioner had another aircraft bound for Budapest with an
earlier departure time (10:00 a.m.) than his scheduled flight. He then went to petitioners
counter at the airport and made arrangements for the change in his booking. He was given a
corresponding ticket and boarding pass for Flight No. 2024 and also a new baggage claim stub
for his checked-in luggage.[5]

However, upon arriving in Budapest, respondent was unable to locate his luggage at the
claiming section. He sought assistance from petitioners counter at the airport where petitioners
representative verified from their computer that he had indeed a checked-in luggage. He was
advised to just wait for his luggage at his hotel and that petitioners representatives would take
charge of delivering the same to him that same day. But said luggage was never delivered by
petitioners representatives despite follow-up inquiries by respondent.

Upon his return to the Philippines, respondents lawyer immediately wrote petitioners Station
Manager complaining about the lost luggage and the resulting damages he suffered while in
Budapest. Respondent claimed that his single luggage contained his personal effects such as
clothes, toiletries, medicines for his hypertension, and the speeches he had prepared, including
the notes and reference materials he needed for the conference. He was thus left with only his
travel documents, pocket money and the clothes he was wearing. Because petitioners
representatives in Budapest failed to deliver his luggage despite their assurances and his
repeated follow-ups, respondent was forced to shop for personal items including new clothes
and his medicines. Aside from these unnecessary expenditures of about $1,000, respondent had
to prepare another speech, in which he had difficulty due to lack of data and information.
Respondent thus demanded the sum of P1,000,000.00 from the petitioner as compensation for
his loss, inconvenience and moral damages.[6] Petitioner, however, continued to ignore
respondents repeated follow-ups regarding his lost luggage.

On July 13, 1993, respondent filed a complaint[7] for damages against the petitioner alleging
that by reason of its negligence and breach of obligation to transport and deliver his luggage,
respondent suffered inconvenience, serious anxiety, physical suffering and sleepless nights. It
was further alleged that due to the physical, mental and emotional strain resulting from the loss
of his luggage, aggravated by the fact that he failed to take his regular medication, respondent
had to be taken to a medical clinic in Tokyo, Japan for emergency treatment. Respondent
asserted that as a common carrier which advertises and offers its services to the public,
petitioner is under obligation to observe extraordinary diligence in the vigilance over checked-in
luggage and to see to it that respondents luggage entrusted to petitioners custody would
accompany him on his flight and/or could be claimed by him upon arrival at his point of
destination or delivered to him without delay. Petitioner should therefore be held liable for
actual damages ($2,000.00 or P40,000.00), moral damages (P1,000,000.00), exemplary damages
(P500,000.00), attorneys fees (P50,000.00) and costs of suit.

Petitioner filed its answer[8] admitting that respondent was issued tickets for the flights
mentioned, his subsequent request to be transferred to another flight while at the Paris airport
and the loss of his checked-in luggage upon arrival at Budapest, which luggage has not been
retrieved to date and the respondents repeated follow-ups ignored. However, as to the rest of
respondents allegations, petitioner said it has no knowledge and information sufficient to form a
belief as to their truth. As special and affirmative defense, petitioner contended that its liability
for lost checked-in baggage is governed by the Warsaw Convention for the Unification of Certain
Rules Relating to International Carriage. Under the said treaty, petitioners liability for lost or
delayed registered baggage of respondent is limited to 250 francs per kilogram or US$20.00,
which constitutes liquidated damages and hence respondent is not entitled to any further
damage.

Petitioner averred that it has taken all necessary measures to avoid loss of respondents
baggage, the contents of which respondent did not declare, and that it has no intent to cause
such loss, much less knew that such loss could occur. The loss of respondents luggage is due to
or occasioned by force majeure or fortuitous event or other causes beyond the carriers control.
Diligent, sincere and timely efforts were exerted by petitioner to locate respondents missing
luggage and attended to his problem with utmost courtesy, concern and dispatch. Petitioner
further asserted that it exercised due diligence in the selection and supervision of its employees
and acted in good faith in denying respondents demand for damages. The claims for actual,
moral and exemplary damages and attorneys fees therefore have no basis in fact and in law, and
are, moreover speculative and unconscionable.

In his Reply,[9] respondent maintained that the loss of his luggage cannot be attributed to
anything other than petitioners simple negligence and its failure to perform the diligence
required of a common carrier.

On January 3, 1996, the trial court rendered its decision in favor of respondent and against the
petitioner, as follows:

WHEREFORE, premises considered, judgment is rendered ordering defendant to pay plaintiff:

1. The sum of P1,000,000.00 as moral damages;

2. The sum of P500,000.00 as exemplary damages;

3. The sum of P50,000.00 as attorneys fees; and

4. The costs.

SO ORDERED.[10]
The trial court found there was gross negligence on the part of petitioner which failed to
retrieve respondents checked-in luggage up to the time of the filing of the complaint and as
admitted in its answer, ignored respondents repeated follow-ups. It likewise found petitioner
guilty of willful misconduct as it persistently disregarded the rights of respondent who was no
ordinary individual but a high government official. As to the applicability of the limited liability
for lost baggage under the Warsaw Convention, the trial court rejected the argument of
petitioner citing the case of Alitalia v. Intermediate Appellate Court.[11]

Petitioner appealed to the CA, which affirmed the trial courts decision. The CA noted that in the
memorandum submitted by petitioner before the trial court it was mentioned that respondents
luggage was eventually found and delivered to him, which was not denied by respondent and
thus resulted in the withdrawal of the claim for actual damages. As to the trial courts finding of
gross negligence, bad faith and willful misconduct which justified the award of moral and
exemplary damages, the CA sustained the same, stating thus:

It bears stressing that defendant-appellant committed a breach of contract by its failure to

deliver the luggage of plaintiff-appellee on time despite demand from plaintiff-appellee. The
unreasonable delay in the delivery of the luggage has not been satisfactorily explained by
defendant-appellant, either in its memorandum or in its appellants brief. Instead of justifying
the delay, defendant-appellant took refuge under the provisions of the Warsaw Convention to
escape liability. Neither was there any showing of apology on the part of defendant-appellant as
to the delay. Furthermore, the unapologetic defendant-appellant even faulted plaintiff-appellee
for not leaving a local address in Budapest in order for the defendant-appellant to contact him
(plaintiff-appellee) in the event the luggage is found. This actuation of defendant-appellant is a
clear showing of willful misconduct and a deliberate design to avoid liability. It amounts to bad
faith. As elucidated by Chief Justice Hilario Davide, Jr., [b]ad faith does not simply connote bad
judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious
doing of a wrong, a breach of a known duty through some motive or interest or ill will that
partakes of the nature of fraud.[12] (Emphasis supplied.)

Its motion for reconsideration having been denied, petitioner filed the present Rule 45 petition
raising the following grounds:

I.

THE AMOUNTS AWARDED TO RESPONDENT AS MORAL AND EXEMPLARY DAMAGES ARE

EXCESSIVE, UNCONSCIONABLE AND UNREASONABLE.

II.

THERE IS NO LEGAL AND FACTUAL BASIS TO THE FINDINGS OF THE TRIAL COURT AND THE
COURT OF APPEALS THAT PETITIONERS ACTIONS WERE ATTENDED BY GROSS NEGLIGENCE, BAD
FAITH AND WILLFUL MISCONDUCT AND THAT IT ACTED IN A WANTON, FRAUDULENT, RECKLESS,
OPPRESSIVE OR MALEVOLENT MANNER, TO JUSTIFY THE AWARD OF MORAL AND EXEMPLARY
DAMAGES.[13]

Petitioner assails the trial and appellate courts for awarding extravagant sums to respondent
that already tend to punish the petitioner and enrich the respondent, which is not the function
at all of moral damages. Upon the facts established, the damages awarded are definitely not
proportionate or commensurate to the wrong or injury supposedly inflicted. Without belittling
the problems respondent experienced in Budapest after losing his luggage, petitioner points out
that despite the unfortunate incident, respondent was able to reconstruct the speeches, notes
and study guides he had earlier prepared for the conference in Budapest and Tokyo, and to
attend, speak and participate therein as scheduled. Since he prepared the research and wrote
his speech, considering his acknowledged and long-standing expertise in the field of human
rights in the Philippines, respondent should have had no difficulty delivering his speech even
without his notes. In addition, there is no evidence that members of the Inter-Parliamentary
Union made derogatory statements or even knew that he was unprepared for the conference.
Bearing in mind that the actual damages sought by respondent was only $2,000.00, then clearly
the trial court went way beyond that amount in determining the appropriate damages, inspite
of the fact that the respondent eventually got back his baggage.[14]

Comparing the situation in this case to other cases awarding similar damages to the aggrieved
passenger as a result of breaches of contract by international carriers, petitioner argues that
even assuming that respondent was entitled to moral and exemplary damages, the sums
adjudged should be modified or reduced. It is stressed that petitioner or its agents were never
rude or discourteous toward respondent; he was not subjected to humiliating treatment or
comments as in the case of Lopez, et al. v. Pan American World Airways,[15] Ortigas, Jr. v.
Lufthansa German Airlines[16] and Zulueta v. Pan American World Airways, Inc.[17]. The mere
fact that respondent was a Congressman should not result in an automatic increase in the moral
and exemplary damages recoverable. As held in Kierulf v. Court of Appeals[18] the social and
financial standing of a claimant may be considered only if he or she was subjected to
contemptuous conduct despite the offenders knowledge of his or her social and financial
standing.[19]

In any event, petitioner invokes the application of the exception to the rule that only questions
of law may be entertained by this Court in a petition for review under Rule 45 as to allow a
factual review of the case. First, petitioner contends that it has always maintained that the
admission in its answer was only made out of inadvertence, considering that it was inconsistent
with the special and affirmative defenses set forth in the same pleading. The trial court
incorrectly concluded that petitioner had not prepared a Property Irregularity Report (PIR) but
fabricated one only as an afterthought. A PIR can only be initiated upon the instance of a
passenger whose baggage had been lost, and in this case it was prepared by the station where
the loss was reported. The PIR in this case was automatically and chronologically recorded in
petitioners computerized system. Respondent himself admitted in his testimony that he gave his
Philippine address and telephone number to the lady in charge of petitioners complaint desk in
Budapest. It was not necessary to furnish a passenger with a copy of the PIR since its purpose is
for the airline to trace a lost baggage. What respondent ought to have done was to make a
xerox copy thereof for himself.[20]

Petitioner reiterates that there was no bad faith or negligence on its part and the burden is on
the respondent to prove by clear and convincing evidence that it acted in bad faith. Respondent
in his testimony miserably failed to prove that bad faith, fraud or ill will motivated or caused the
delay of his baggage. This Court will surely agree that mere failure of a carrier to deliver a
passengers baggage at the agreed place and time did not ipso facto amount to willful
misconduct as to make it liable for moral and exemplary damages. Petitioner adduced evidence
showing that it exerted diligent, sincere and timely efforts to locate the missing baggage,
eventually leading to its recovery. It attended to respondents problem with utmost courtesy,
concern and dispatch. Respondent, moreover, never alleged that petitioners employees were at
anytime rude, mistreated him or in anyway showed improper behavior.[21]

The petition is partly meritorious.

A business intended to serve the travelling public primarily, a contract of carriage is imbued with
public interest.[22] The law governing common carriers consequently imposes an exacting
standard. Article 1735 of the Civil Code provides that in case of lost or damaged goods, common
carriers are presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as required by Article 1733. Thus, in an action based on a
breach of contract of carriage, the aggrieved party does not have to prove that the common
carrier was at fault or was negligent. All that he has to prove is the existence of the contract and
the fact of its non-performance by the carrier.[23]

That respondents checked-in luggage was not found upon arrival at his destination and was not
returned to him until about two years later[24] is not disputed. The action filed by the
respondent is founded on such breach of the contract of carriage with petitioner who offered no
satisfactory explanation for the unreasonable delay in the delivery of respondents baggage. The
presumption of negligence was not overcome by the petitioner and hence its liability for the
delay was sufficiently established. However, upon receipt of the said luggage during the
pendency of the case in the trial court, respondent did not anymore press on his claim for actual
or compensatory damages and neither did he adduce evidence of the actual amount of loss and
damage incurred by such delayed delivery of his luggage. Consequently, the trial court
proceeded to determine only the propriety of his claim for moral and exemplary damages, and
attorneys fees.

In awarding moral damages for breach of contract of carriage, the breach must be wanton and
deliberately injurious or the one responsible acted fraudulently or with malice or bad faith.[25]
Not every case of mental anguish, fright or serious anxiety calls for the award of moral
damages.[26] Where in breaching the contract of carriage the airline is not shown to have acted
fraudulently or in bad faith, liability for damages is limited to the natural and probable
consequences of the breach of the obligation which the parties had foreseen or could have
reasonably foreseen. In such a case the liability does not include moral and exemplary
damages.[27]

Bad faith should be established by clear and convincing evidence. The settled rule is that the law
always presumes good faith such that any person who seeks to be awarded damages due to the
acts of another has the burden of proving that the latter acted in bad faith or with ill motive.[28]

In the case of Tan v. Northwest Airlines, Inc.,[29] we sustained the CAs deletion of moral and
exemplary damages awarded to a passenger whose baggage were loaded to another plane with
the same expected date and time of arrival but nevertheless not delivered to her on time. We
found that respondent carrier was not motivated by malice or bad faith in doing so due to
weight and balance restrictions as a safety measure. In another case involving the off-loading of
private respondents baggage to another destination, taken together with petitioner airlines
neglect in providing the necessary accommodations and assistance to its stranded passengers,
aggravated by the discourteous acts of its employees, we upheld the CA in sustaining the trial
courts decision awarding moral and exemplary damages and attorneys fees. We pointed out
that it is PALs duty to provide assistance to private respondents and to any other passenger
similarly inconvenienced due to delay in the completion of the transport and the receipt of their
baggage.[30]

After a careful review, we find that petitioner is liable for moral damages.

Petitioners station manager, Ma. Lourdes Reyes, testified that upon receiving the letter-
complaint of respondents counsel, she immediately began working on the PIR from their
computerized data. Based on her testimony, a PIR is issued at the airline station upon complaint
by a passenger concerning missing baggage. From the information obtained in the computer-
printout, it appears that a PIR[31] was initiated at petitioners Budapest counter. A search telex
for the missing luggage was sent out on the following dates: May 17, May 21 and May 23, 1993.
As shown in the PIR printout, the information respondent supposedly furnished to petitioner
was only his Philippine address and telephone number, and not the address and contact number
of the hotel where he was billeted at Budapest. According to the witness, PIR usually is printed
in two originals, one is kept by the station manager and the other copy given to the passenger.
The witness further claimed that there was no record or entry in the PIR of any follow-up call
made by the respondent while in Budapest.[32] Respondent, on the other hand, claimed that he
was not given a copy of this PIR and that his repeated telephone calls to inquire about his lost
luggage were ignored.

We hold that the trial and appellate courts did not err in finding that petitioner acted in bad
faith in repeatedly ignoring respondents follow-up calls. The alleged entries in the PIR deserve
scant consideration, as these have not been properly identified or authenticated by the airline
station representative in Budapest who initiated and inputed the said entries. Furthermore, this
Court cannot accept the convenient excuse given by petitioner that respondent should be
faulted in allegedly not giving his hotel address and telephone number. It is difficult to believe
that respondent, who had just lost his single luggage containing all his necessities for his stay in
a foreign land and his reference materials for a speaking engagement, would not give an
information so vital such as his hotel address and contact number to the airline counter where
he had promptly and frantically filed his complaint. And even assuming arguendo that his
Philippine address and contact number were the only details respondent had provided for the
PIR, still there was no explanation as to why petitioner never communicated with respondents
concerning his lost baggage long after respondent had already returned to the Philippines.
While the missing luggage was eventually recovered, it was returned to respondent only after
the trial of this case.

Furthermore, the alleged copy of the PIR confirmed that the only action taken by the petitioner
to locate respondents luggage were telex searches allegedly made on May 17, 21 and 23, 1993.
There was not even any attempt to explain the reason for the loss of respondents luggage.
Clearly, petitioner did not give the attention and care due to its passenger whose baggage was
not transported and delivered to him at his travel destination and scheduled time. Inattention to
and lack of care for the interest of its passengers who are entitled to its utmost consideration,
particularly as to their convenience, amount to bad faith which entitles the passenger to an
award of moral damages.[33] What the law considers as bad faith which may furnish the
ground for an award of moral damages would be bad faith in securing the contract and in the
execution thereof, as well as in the enforcement of its terms, or any other kind of deceit.[34]

While respondent failed to cite any act of discourtesy, discrimination or rudeness by petitioners
employees, this did not make his loss and moral suffering insignificant and less deserving of
compensation. In repeatedly ignoring respondents inquiries, petitioners employees exhibited an
indifferent attitude without due regard for the inconvenience and anxiety he experienced after
realizing that his luggage was missing. Petitioner was thus guilty of bad faith in breaching its
contract of carriage with the respondent, which entitles the latter to the award of moral
damages.

However, we agree with petitioner that the sum of P1,000,000.00 awarded by the trial court is
excessive and not proportionate to the loss or suffering inflicted on the passenger under the
circumstances. As in Trans World Airlines v. Court of Appeals[35] where this Court after
considering the social standing of the aggrieved passenger who is a lawyer and director of
several companies, the amount of P500,000.00 awarded by the trial court as moral damages
was still reduced to P300,000.00, the moral damages granted to herein respondent should
likewise be adjusted.

The purpose of awarding moral damages is to enable the injured party to obtain means,
diversion or amusement that will serve to alleviate the moral suffering he has undergone by
reason of defendant's culpable action. On the other hand, the aim of awarding exemplary
damages is to deter serious wrongdoings.[36] Article 2216 of the Civil Code provides that
assessment of damages is left to the discretion of the court according to the circumstances of
each case. This discretion is limited by the principle that the amount awarded should not be
palpably excessive as to indicate that it was the result of prejudice or corruption on the part of
the trial court. Simply put, the amount of damages must be fair, reasonable and proportionate
to the injury suffered.[37]

Where as in this case the air carrier failed to act timely on the passengers predicament caused
by its employees mistake and more than ordinary inadvertence or inattention, and the
passenger failed to show any act of arrogance, discourtesy or rudeness committed by the air
carriers employees, the amounts of P200,000.00, P50,000.00 and P30,000.00 as moral damages,
exemplary damages and attorneys fees would be sufficient and justified.[38]

WHEREFORE, the petition is DENIED. The Decision dated June 30, 2004 of the Court of Appeals
in CA-G.R. CV No. 56587 is hereby AFFIRMED with MODIFICATION in that the award of moral
damages, exemplary damages and attorneys fees are hereby reduced to P200,000.00,
P50,000.00 and P30,000.00, respectively.

With costs against the petitioner.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice

Chairperson

LUCAS P. BERSAMIN

Associate Justice
JOSE CATRAL MENDOZA

Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice
ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES

Associate Justice

Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairpersons
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA

Chief Justice

* Designated additional member per Special Order No. 921 dated December 13, 2010.

[1] CA rollo, pp. 129-136. Penned by Associate Justice Hakim S. Abdulwahid and concurred in by
Associate Justices Elvi John S. Asuncion and Mariano C. Del Castillo (now a Member of this
Court).
[2] Records, pp. 318-326. Penned by Judge Jaime D. Discaya.

[3] Died during the pendency of the appeal and duly substituted by his surviving spouse and
children. CA rollo, pp. 122-124.

[4] Records, pp. 76-159.

[5] Id. at 160-162.

[6] Id. at 163-164.

[7] Id. at 1-6.

[8] Id. at 17-25.

[9] Id. at 26.

[10] Id. at 326.

[11] G.R. No. 71929, December 4, 1990, 192 SCRA 9.

[12] CA rollo, pp. 134-135.

[13] Rollo, p. 9.

[14] Id. at 10-12.

[15] No. L-22415, March 30, 1966, 16 SCRA 431.

[16] No. L-28773, June 30, 1975, 64 SCRA 610.

[17] No. L-28589, February 29, 1972, 43 SCRA 397.

[18] G.R. Nos. 99301 & 99343, March 13, 1997, 269 SCRA 433, 446.

[19] Rollo, pp. 13-16.

[20] Id. at 17-21.

[21] Id. at 23-25.

[22] British Airways v. Court of Appeals, G.R. No. 121824, January 29, 1998, 285 SCRA 450, 457-
458.
[23] China Air Lines, Ltd. v. Court of Appeals, G.R. Nos. 45985 & 46036, May 18, 1990, 185 SCRA
449, 457.

[24] Records, p. 231.

[25] Cervantes v. Court of Appeals, G.R. No. 125138, March 2, 1999, 304 SCRA 25, 32, citing
Perez v. Court of Appeals, No. L-20238, January 30, 1965, 13 SCRA 137, 142.

[26] China Air Lines, Ltd. v. Court of Appeals, G.R. No. 129988, July 14, 2003, 406 SCRA 113, 133.

[27] Cathay Pacific Airways Ltd. v. Vasquez, G.R. No. 150843, March 14, 2003, 399 SCRA 20 7,
222-223, citing Tan v. Northwest Airlines, Inc., G.R. No. 135802, March 3, 2000, 327 SCRA 263,
268 and Morris v. Court of Appeals, G.R. No. 127957, February 21, 2001, 352 SCRA 428, 436.

[28] Ford Philippines, Inc. v. Court of Appeals, G.R. No. 99039, February 3, 1997, 267 SCRA 320,
328-329, citing Philippine Air Lines v. Miano, G.R. No. 106664, March 8, 1995, 242 SCRA 235, 240
and Chua v. Court of Appeals, G.R. No. 112660, March 14, 1995, 242 SCRA 341, 345.

[29] G.R. No. 135802, March 3, 2000, 327 SCRA 263.

[30] Philippine Airlines, Inc. v. Court of Appeals, G.R. No. 119641, May 17, 1996, 257 SCRA 33,
45.

[31] Records, p. 212.

[32] TSN, February 6, 1995, pp. 5-27; records, pp. 288-310.

[33] See Trans World Airlines v. Court of Appeals, No. L-78656, August 30, 1988, 165 SCRA 143,
147 and Alitalia Airways v. Court of Appeals, G.R. No. 77011, July 24, 1990, 187 SCRA 763, 771.

[34] Japan Airlines v. Simangan, G.R. No. 170141, April 22, 2008, 552 SCRA 341, 362, citing
Philippine Airlines, Inc. v. Court of Appeals, G.R. No. 119641, May 17, 1996, 257 SCRA 33, 43.

[35] No. L-78656, August 30, 1988, 165 SCRA 143, 147-148.

[36] Philippine Airlines, Incorporated v. Court of Appeals, G.R. No. 123238, September 22, 2008,
566 SCRA 124, 138.

[37] Id., citing Singson v. Court of Appeals, G.R. No. 119995, November 18, 1997, 282 SCRA 149,
163-164.

[38] See Singson v. Court of Appeals, G.R. No. 119995, November 18, 1997, 282 SCRA 149.
165226 notes only

G.R. No. 165266: December 15, 2010

AIR FRANCE, Petitioner, v. BONIFACIO H. GILLEGO, substituted by his surviving heirs represented
by Dolores P. Gillego,Respondent.

VILLARAMA, JR., J.:

FACTS:

Gillego, then incumbent Congressman and Chairman of the House of Representatives

Committee on Civil, Political and Human Rights, was invited to participate as one of the keynote
speakers at the 89th Inter-Parliamentary Conference Symposium on Parliament Guardian of
Human Rights to be held in Budapest, Hungary and Tokyo, Japan.

On May 16, 1993, Gillego left Manila on board Air Frances aircraft bound for Paris, France.
While waiting at the Airport for his connecting flight to Budapest scheduled a few hours after his
arrival learned that Air France had another aircraft bound for Budapest with an earlier departure
time than his scheduled flight. He then made arrangements for the change in his booking. He
was given a corresponding ticket and boarding pass and also a new baggage claim stub for his
checked-in luggage. However, his baggage despite numerous follow-up was never delivered to
him prompting Gillego to purchase new set of clothes and other personal effects.

Gillego filed a complaint for damages against the Air France alleging that by reason of its
negligence and breach of obligation to transport and deliver his luggage, Gillego suffered
inconvenience, serious anxiety, physical suffering and sleepless nights. It was further alleged
that due to the physical, mental and emotional strain resulting from the loss of his luggage,
aggravated by the fact that he failed to take his regular medication, Gillego had to be taken to a
medical clinic in Tokyo, Japan for emergency treatment.

The RTC found there was gross negligence on the part of Air France. It likewise found Air France
guilty of willful misconduct as it persistently disregarded the rights of Gillego. As to the
applicability of the limited liability for lost baggage under the Warsaw Convention, the trial court
rejected the argument of Air France. The CA affirmed the trial courts decision.

ISSUES:

I. Whether or not there is legal and factual basis that Air Frances actions were attended by gross
negligence, bad faith and willful misconduct and that it acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner to justify award of moral and exemplary damages.
II. Whether or not the amount of damages awarded by the RTC and affirmed by the CA as moral
and exemplary damages are excessive, unconscionable and unreasonable.

HELD: Petition is DENIED.

CIVIL LAW; CONTRACT OF CARRIAGE

First issue: In an action based on a breach of contract of carriage, the aggrieved party does not
have to prove that the common carrier was at fault or was negligent. All that he has to prove is
the existence of the contract and the fact of its non-performance by the carrier.

The action filed by the respondent is founded on such breach of the contract of carriage with
petitioner who offered no satisfactory explanation for the unreasonable delay in the delivery of
respondents baggage. The presumption of negligence was not overcome by the petitioner and
hence its liability for the delay was sufficiently established.

The Court held that the trial and appellate courts did not err in finding that petitioner acted in
bad faith in repeatedly ignoring respondents follow-up calls. Clearly, Air France did not give the
attention and care due to its passenger whose baggage was not transported and delivered to
him at his travel destination and scheduled time; inattention to and lack of care for the interest
of its passengers who are entitled to its utmost consideration, particularly as to their
convenience, amount to bad faith which entitles the passenger to an award of moral damages.

CIVIL LAW; DAMAGES

Second issue: The amount of damages must be fair, reasonable and proportionate to the injury
suffered. The purpose of awarding moral damages is to enable the injured party to obtain
means, diversion or amusement that will serve to alleviate the moral suffering he has
undergone by reason of defendant's culpable action. On the other hand, the aim of awarding
exemplary damages is to deter serious wrongdoings. Hence, the Court held that the sum of
P1,000,000.00 awarded by the trial court is excessive and not proportionate to the loss or
suffering inflicted on the passenger under the circumstances.

The Decision of the CA is hereby AFFIRMED with MODIFICATION.

4. 138334
Main case- Crisostomo vs. CA

FIRST DIVISION

[G.R. No. 138334. August 25, 2003]

ESTELA L. CRISOSTOMO, petitioner, vs. the Court of Appeals and CARAVAN TRAVEL & TOURS
INTERNATIONAL, INC., respondents.

DECISION

YNARES-SANTIAGO, J.:

In May 1991, petitioner Estela L. Crisostomo contracted the services of respondent Caravan
Travel and Tours International, Inc. to arrange and facilitate her booking, ticketing and
accommodation in a tour dubbed Jewels of Europe. The package tour included the countries of
England, Holland, Germany, Austria, Liechstenstein, Switzerland and France at a total cost of
P74,322.70. Petitioner was given a 5% discount on the amount, which included airfare, and the
booking fee was also waived because petitioners niece, Meriam Menor, was respondent
companys ticketing manager.

Pursuant to said contract, Menor went to her aunts residence on June 12, 1991 a Wednesday to
deliver petitioners travel documents and plane tickets. Petitioner, in turn, gave Menor the full
payment for the package tour. Menor then told her to be at the Ninoy Aquino International
Airport (NAIA) on Saturday, two hours before her flight on board British Airways.

Without checking her travel documents, petitioner went to NAIA on Saturday, June 15, 1991, to
take the flight for the first leg of her journey from Manila to Hongkong. To petitioners dismay,
she discovered that the flight she was supposed to take had already departed the previous day.
She learned that her plane ticket was for the flight scheduled on June 14, 1991. She thus called
up Menor to complain.

Subsequently, Menor prevailed upon petitioner to take another tour the British Pageant which
included England, Scotland and Wales in its itinerary. For this tour package, petitioner was asked
anew to pay US$785.00 or P20,881.00 (at the then prevailing exchange rate of P26.60). She gave
respondent US$300 or P7,980.00 as partial payment and commenced the trip in July 1991.

Upon petitioners return from Europe, she demanded from respondent the reimbursement of
P61,421.70, representing the difference between the sum she paid for Jewels of Europe and the
amount she owed respondent for the British Pageant tour. Despite several demands,
respondent company refused to reimburse the amount, contending that the same was non-
refundable.[1] Petitioner was thus constrained to file a complaint against respondent for breach
of contract of carriage and damages, which was docketed as Civil Case No. 92-133 and raffled to
Branch 59 of the Regional Trial Court of Makati City.

In her complaint,[2] petitioner alleged that her failure to join Jewels of Europe was due to
respondents fault since it did not clearly indicate the departure date on the plane ticket.
Respondent was also negligent in informing her of the wrong flight schedule through its
employee Menor. She insisted that the British Pageant was merely a substitute for the Jewels of
Europe tour, such that the cost of the former should be properly set-off against the sum paid for
the latter.

For its part, respondent company, through its Operations Manager, Concepcion Chipeco, denied
responsibility for petitioners failure to join the first tour. Chipeco insisted that petitioner was
informed of the correct departure date, which was clearly and legibly printed on the plane
ticket. The travel documents were given to petitioner two days ahead of the scheduled trip.
Petitioner had only herself to blame for missing the flight, as she did not bother to read or
confirm her flight schedule as printed on the ticket.

Respondent explained that it can no longer reimburse the amount paid for Jewels of Europe,
considering that the same had already been remitted to its principal in Singapore, Lotus Travel
Ltd., which had already billed the same even if petitioner did not join the tour. Lotus European
tour organizer, Insight International Tours Ltd., determines the cost of a package tour based on
a minimum number of projected participants. For this reason, it is accepted industry practice to
disallow refund for individuals who failed to take a booked tour.[3]

Lastly, respondent maintained that the British Pageant was not a substitute for the package tour
that petitioner missed. This tour was independently procured by petitioner after realizing that
she made a mistake in missing her flight for Jewels of Europe. Petitioner was allowed to make a
partial payment of only US$300.00 for the second tour because her niece was then an employee
of the travel agency. Consequently, respondent prayed that petitioner be ordered to pay the
balance of P12,901.00 for the British Pageant package tour.

After due proceedings, the trial court rendered a decision,[4] the dispositive part of which reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering the defendant to return and/or refund to the plaintiff the amount of Fifty Three
Thousand Nine Hundred Eighty Nine Pesos and Forty Three Centavos (P53,989.43) with legal
interest thereon at the rate of twelve percent (12%) per annum starting January 16, 1992, the
date when the complaint was filed;

2. Ordering the defendant to pay the plaintiff the amount of Five Thousand (P5,000.00) Pesos as
and for reasonable attorneys fees;

3. Dismissing the defendants counterclaim, for lack of merit; and

4. With costs against the defendant.

SO ORDERED.[5]

The trial court held that respondent was negligent in erroneously advising petitioner of her
departure date through its employee, Menor, who was not presented as witness to rebut
petitioners testimony. However, petitioner should have verified the exact date and time of
departure by looking at her ticket and should have simply not relied on Menors verbal
representation. The trial court thus declared that petitioner was guilty of contributory
negligence and accordingly, deducted 10% from the amount being claimed as refund.

Respondent appealed to the Court of Appeals, which likewise found both parties to be at fault.
However, the appellate court held that petitioner is more negligent than respondent because as
a lawyer and well-traveled person, she should have known better than to simply rely on what
was told to her. This being so, she is not entitled to any form of damages. Petitioner also
forfeited her right to the Jewels of Europe tour and must therefore pay respondent the balance
of the price for the British Pageant tour. The dispositive portion of the judgment appealed from
reads as follows:

WHEREFORE, premises considered, the decision of the Regional Trial Court dated October 26,
1995 is hereby REVERSED and SET ASIDE. A new judgment is hereby ENTERED requiring the
plaintiff-appellee to pay to the defendant-appellant the amount of P12,901.00, representing the
balance of the price of the British Pageant Package Tour, the same to earn legal interest at the
rate of SIX PERCENT (6%) per annum, to be computed from the time the counterclaim was filed
until the finality of this decision. After this decision becomes final and executory, the rate of
TWELVE PERCENT (12%) interest per annum shall be additionally imposed on the total obligation
until payment thereof is satisfied. The award of attorneys fees is DELETED. Costs against the
plaintiff-appellee.

SO ORDERED.[6]

Upon denial of her motion for reconsideration,[7] petitioner filed the instant petition under Rule
45 on the following grounds:

It is respectfully submitted that the Honorable Court of Appeals committed a reversible error in
reversing and setting aside the decision of the trial court by ruling that the petitioner is not
entitled to a refund of the cost of unavailed Jewels of Europe tour she being equally, if not
more, negligent than the private respondent, for in the contract of carriage the common carrier
is obliged to observe utmost care and extra-ordinary diligence which is higher in degree than the
ordinary diligence required of the passenger. Thus, even if the petitioner and private respondent
were both negligent, the petitioner cannot be considered to be equally, or worse, more guilty
than the private respondent. At best, petitioners negligence is only contributory while the
private respondent [is guilty] of gross negligence making the principle of pari delicto inapplicable
in the case;

II

The Honorable Court of Appeals also erred in not ruling that the Jewels of Europe tour was not
indivisible and the amount paid therefor refundable;

III

The Honorable Court erred in not granting to the petitioner the consequential damages due her
as a result of breach of contract of carriage.[8]

Petitioner contends that respondent did not observe the standard of care required of a common
carrier when it informed her wrongly of the flight schedule. She could not be deemed more
negligent than respondent since the latter is required by law to exercise extraordinary diligence
in the fulfillment of its obligation. If she were negligent at all, the same is merely contributory
and not the proximate cause of the damage she suffered. Her loss could only be attributed to
respondent as it was the direct consequence of its employees gross negligence.

Petitioners contention has no merit.

By definition, a contract of carriage or transportation is one whereby a certain person or

association of persons obligate themselves to transport persons, things, or news from one place
to another for a fixed price.[9] Such person or association of persons are regarded as carriers
and are classified as private or special carriers and common or public carriers.[10] A common
carrier is defined under Article 1732 of the Civil Code as persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods or both, by
land, water or air, for compensation, offering their services to the public.

It is obvious from the above definition that respondent is not an entity engaged in the business
of transporting either passengers or goods and is therefore, neither a private nor a common
carrier. Respondent did not undertake to transport petitioner from one place to another since
its covenant with its customers is simply to make travel arrangements in their behalf.
Respondents services as a travel agency include procuring tickets and facilitating travel permits
or visas as well as booking customers for tours.

While petitioner concededly bought her plane ticket through the efforts of respondent
company, this does not mean that the latter ipso facto is a common carrier. At most, respondent
acted merely as an agent of the airline, with whom petitioner ultimately contracted for her
carriage to Europe. Respondents obligation to petitioner in this regard was simply to see to it
that petitioner was properly booked with the airline for the appointed date and time. Her
transport to the place of destination, meanwhile, pertained directly to the airline.
The object of petitioners contractual relation with respondent is the latters service of arranging
and facilitating petitioners booking, ticketing and accommodation in the package tour. In
contrast, the object of a contract of carriage is the transportation of passengers or goods. It is in
this sense that the contract between the parties in this case was an ordinary one for services
and not one of carriage. Petitioners submission is premised on a wrong assumption.

The nature of the contractual relation between petitioner and respondent is determinative of
the degree of care required in the performance of the latters obligation under the contract. For
reasons of public policy, a common carrier in a contract of carriage is bound by law to carry
passengers as far as human care and foresight can provide using the utmost diligence of very
cautious persons and with due regard for all the circumstances.[11] As earlier stated, however,
respondent is not a common carrier but a travel agency. It is thus not bound under the law to
observe extraordinary diligence in the performance of its obligation, as petitioner claims.

Since the contract between the parties is an ordinary one for services, the standard of care
required of respondent is that of a good father of a family under Article 1173 of the Civil
Code.[12] This connotes reasonable care consistent with that which an ordinarily prudent
person would have observed when confronted with a similar situation. The test to determine
whether negligence attended the performance of an obligation is: did the defendant in doing
the alleged negligent act use that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then he is guilty of negligence.[13]

In the case at bar, the lower court found Menor negligent when she allegedly informed
petitioner of the wrong day of departure. Petitioners testimony was accepted as indubitable
evidence of Menors alleged negligent act since respondent did not call Menor to the witness
stand to refute the allegation. The lower court applied the presumption under Rule 131, Section
3 (e)[14] of the Rules of Court that evidence willfully suppressed would be adverse if produced
and thus considered petitioners uncontradicted testimony to be sufficient proof of her claim.

On the other hand, respondent has consistently denied that Menor was negligent and maintains
that petitioners assertion is belied by the evidence on record. The date and time of departure
was legibly written on the plane ticket and the travel papers were delivered two days in advance
precisely so that petitioner could prepare for the trip. It performed all its obligations to enable
petitioner to join the tour and exercised due diligence in its dealings with the latter.

We agree with respondent.

Respondents failure to present Menor as witness to rebut petitioners testimony could not give
rise to an inference unfavorable to the former. Menor was already working in France at the time
of the filing of the complaint,[15] thereby making it physically impossible for respondent to
present her as a witness. Then too, even if it were possible for respondent to secure Menors
testimony, the presumption under Rule 131, Section 3(e) would still not apply. The opportunity
and possibility for obtaining Menors testimony belonged to both parties, considering that
Menor was not just respondents employee, but also petitioners niece. It was thus error for the
lower court to invoke the presumption that respondent willfully suppressed evidence under
Rule 131, Section 3(e). Said presumption would logically be inoperative if the evidence is not
intentionally omitted but is simply unavailable, or when the same could have been obtained by
both parties.[16]

In sum, we do not agree with the finding of the lower court that Menors negligence concurred
with the negligence of petitioner and resultantly caused damage to the latter. Menors
negligence was not sufficiently proved, considering that the only evidence presented on this
score was petitioners uncorroborated narration of the events. It is well-settled that the party
alleging a fact has the burden of proving it and a mere allegation cannot take the place of
evidence.[17] If the plaintiff, upon whom rests the burden of proving his cause of action, fails to
show in a satisfactory manner facts upon which he bases his claim, the defendant is under no
obligation to prove his exception or defense.[18]

Contrary to petitioners claim, the evidence on record shows that respondent exercised due
diligence in performing its obligations under the contract and followed standard procedure in
rendering its services to petitioner. As correctly observed by the lower court, the plane
ticket[19] issued to petitioner clearly reflected the departure date and time, contrary to
petitioners contention. The travel documents, consisting of the tour itinerary, vouchers and
instructions, were likewise delivered to petitioner two days prior to the trip. Respondent also
properly booked petitioner for the tour, prepared the necessary documents and procured the
plane tickets. It arranged petitioners hotel accommodation as well as food, land transfers and
sightseeing excursions, in accordance with its avowed undertaking.

Therefore, it is clear that respondent performed its prestation under the contract as well as
everything else that was essential to book petitioner for the tour. Had petitioner exercised due
diligence in the conduct of her affairs, there would have been no reason for her to miss the
flight. Needless to say, after the travel papers were delivered to petitioner, it became incumbent
upon her to take ordinary care of her concerns. This undoubtedly would require that she at least
read the documents in order to assure herself of the important details regarding the trip.

The negligence of the obligor in the performance of the obligation renders him liable for
damages for the resulting loss suffered by the obligee. Fault or negligence of the obligor consists
in his failure to exercise due care and prudence in the performance of the obligation as the
nature of the obligation so demands.[20] There is no fixed standard of diligence applicable to
each and every contractual obligation and each case must be determined upon its particular
facts. The degree of diligence required depends on the circumstances of the specific obligation
and whether one has been negligent is a question of fact that is to be determined after taking
into account the particulars of each case.[21]

The lower court declared that respondents employee was negligent. This factual finding,
however, is not supported by the evidence on record. While factual findings below are generally
conclusive upon this court, the rule is subject to certain exceptions, as when the trial court
overlooked, misunderstood, or misapplied some facts or circumstances of weight and substance
which will affect the result of the case.[22]

In the case at bar, the evidence on record shows that respondent company performed its duty
diligently and did not commit any contractual breach. Hence, petitioner cannot recover and
must bear her own damage.

WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of
Appeals in CA-G.R. CV No. 51932 is AFFIRMED. Accordingly, petitioner is ordered to pay
respondent the amount of P12,901.00 representing the balance of the price of the British
Pageant Package Tour, with legal interest thereon at the rate of 6% per annum, to be computed
from the time the counterclaim was filed until the finality of this Decision. After this Decision
becomes final and executory, the rate of 12% per annum shall be imposed until the obligation is
fully settled, this interim period being deemed to be by then an equivalent to a forbearance of
credit.[23]

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.

[1] TSN, March 4, 1993, pp. 4-6.

[2] RTC Records, p. 1.

[3] TSN, August 30, 1994, pp. 6-9.

[4] Rollo, pp. 38-43.

[5] Id. at 43; penned by Judge Lucia Violago Isnani.

[6] Id. at 36.

[7] Id. at 37.

[8] Id. at 15.

[9] Commentaries and Jurisprudence on the Commercial Laws of the Philippines, Vol. 4 (1993
Edition), Aguedo F. Agbayani, p. 1, citing 1 Blanco 640.

[10] Id. at 4.

[11] Civil Code of the Philippines, Article 1755.

[12] Article 1173. The fault or negligence of the obligor consists in the omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows bad faith, the provisions of
Articles 1171 and 2201, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in the performance,
that which is expected of a good father of a family shall be required.

[13] Jarco Marketing Corporation v. Court of Appeals, 378 Phil. 991, 1003 (1999), citing Picart v.
Smith, 37 Phil. 809 (1918).

[14] This rule states:

SEC. 3. Disputable presumptions. The following presumptions are satisfactory if uncontradicted,

but may be contradicted and overcome by other evidence:

xxxxxxxxx

(e) That evidence willfully suppressed would be adverse if produced;

xxxxxxxxx

[15] Supra, note 3 at 10.

[16] The Revised Rules of Court in the Philippines, Vol. VII, Part II (1999 Edition) V. Francisco, p.
92.

[17] Pimentel v. Court of Appeals, 307 SCRA 38.

[18] Castilex Industrial Corporation v. Vasquez, Jr., 378 Phil. 1009, 1018 (1999), citing Belen v.
Belen, 13 Phil. 202, 206 (1909), cited in Martin v. Court of Appeals, G.R. No. 82248, 205 SCRA
591 (1992).

[19] Supra, note 2 at 60 & 94.

[20] Bayne Adjusters and Surveyors, Inc. v. Court of Appeals, G.R. No. 116332, 323 SCRA 231
(2000), citing Articles 1170, 1172-73, Civil Code; Southeastern College, Inc. v. Court of Appeals,
354 Phil 434 (1998).

[21] Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. IV (1999 Edition),
Arturo M. Tolentino, p. 124.
 [22] Supra, note 13, citing Borillo v. CA, G.R. No. 55691, 209 SCRA 130 (1992); Mckee v.
Intermediate Appellate Court, G.R. No. 68102, 211 SCRA 517 (1992); and Salvador v. Court of
Appeals, 313 Phil. 36 (1995).

[23] Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78,
97.

5. 171092

Lhuiller vs. court of appeals

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 171092 March 15, 2010

EDNA DIAGO LHUILLIER, Petitioner,

vs.
BRITISH AIRWAYS, Respondent.

DECISION

DEL CASTILLO, J.:

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

Factual Antecedents

On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint2 for damages against
respondent British Airways before the Regional Trial Court (RTC) of Makati City. She alleged that
on February 28, 2005, she took respondents flight 548 from London, United Kingdom to Rome,
Italy. Once on board, she allegedly requested Julian Halliday (Halliday), one of the respondents
flight attendants, to assist her in placing her hand-carried luggage in the overhead bin. However,
Halliday allegedly refused to help and assist her, and even sarcastically remarked that "If I were
to help all 300 passengers in this flight, I would have a broken back!"
Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight
attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the
business class section to lecture on plane safety. Allegedly, Kerrigan made her appear to the
other passengers to be ignorant, uneducated, stupid, and in need of lecturing on the safety rules
and regulations of the plane. Affronted, petitioner assured Kerrigan that she knew the planes
safety regulations being a frequent traveler. Thereupon, Kerrigan allegedly thrust his face a
mere few centimeters away from that of the petitioner and menacingly told her that "We dont
like your attitude."

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

Thus, petitioner filed the complaint for damages, praying that respondent be ordered to pay P5
million as moral damages, P2 million as nominal damages, P1 million as exemplary damages,
P300,000.00 as attorneys fees, P200,000.00 as litigation expenses, and cost of the suit.

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

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

An action for damages must be brought at the option of the plaintiff, either before the court of
domicile of the carrier or his principal place of business, or where he has a place of business
through which the contract has been made, or before the court of the place of destination.

Thus, since a) respondent is domiciled in London; b) respondents principal place of business is

in London; c) petitioner bought her ticket in Italy (through Jeepney Travel S.A.S, in Rome);6 and
d) Rome, Italy is petitioners place of destination, then it follows that the complaint should only
be filed in the proper courts of London, United Kingdom or Rome, Italy.

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

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

Ruling of the Regional Trial Court

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

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

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

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

Petitioner filed a Motion for Reconsideration but the motion was denied in an Order11 dated
January 4, 2006.

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

Issues

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

COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE PERSONNEL OF A FOREIGN
CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN COUNTRY; AND THUS
IS OUTSIDE THE AMBIT OF THE WARSAW CONVENTION.
II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION TO
DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE AND OVER
ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED ITSELF TO THE
JURISDICTION OF THE LOWER COURT, ESPECIALLY SO, WHEN THE VERY LAWYER ARGUING FOR
IT IS HIMSELF THE RESIDENT AGENT OF THE CARRIER.

Petitioners Arguments

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

Respondents Arguments

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

Our Ruling

The petition is without merit.

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

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

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

The Convention is thus a treaty commitment voluntarily assumed by the Philippine government
and, as such, has the force and effect of law in this country.13
The Warsaw Convention applies because the air travel, where the alleged tortious conduct
occurred, was between the United Kingdom and Italy, which are both signatories to the Warsaw
Convention.

Article 1 of the Warsaw Convention provides:

1. This Convention applies to all international carriage of persons, luggage or goods performed
by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air
transport undertaking.

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

Thus, when the place of departure and the place of destination in a contract of carriage are
situated within the territories of two High Contracting Parties, said carriage is deemed an
"international carriage". The High Contracting Parties referred to herein were the signatories to
the Warsaw Convention and those which subsequently adhered to it.14

In the case at bench, petitioners place of departure was London, United Kingdom while her
place of destination was Rome, Italy.15 Both the United Kingdom16 and Italy17 signed and
ratified the Warsaw Convention. As such, the transport of the petitioner is deemed to be an
"international carriage" within the contemplation of the Warsaw Convention.

Since the Warsaw Convention applies in the instant case, then the jurisdiction over the subject
matter of the action is governed by the provisions of the Warsaw Convention.

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

1. the court where the carrier is domiciled;

2. the court where the carrier has its principal place of business;

3. the court where the carrier has an establishment by which the contract has been made; or

4. the court of the place of destination.

In this case, it is not disputed that respondent is a British corporation domiciled in London,
United Kingdom with London as its principal place of business. Hence, under the first and
second jurisdictional rules, the petitioner may bring her case before the courts of London in the
United Kingdom. In the passenger ticket and baggage check presented by both the petitioner
and respondent, it appears that the ticket was issued in Rome, Italy. Consequently, under the
third jurisdictional rule, the petitioner has the option to bring her case before the courts of
Rome in Italy. Finally, both the petitioner and respondent aver that the place of destination is
Rome, Italy, which is properly designated given the routing presented in the said passenger
ticket and baggage check. Accordingly, petitioner may bring her action before the courts of
Rome, Italy. We thus find that the RTC of Makati correctly ruled that it does not have jurisdiction
over the case filed by the petitioner.

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

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

We are not persuaded.

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

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

A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and
not a venue provision. First, the wording of Article 32, which indicates the places where the
action for damages "must" be brought, underscores the mandatory nature of Article 28(1).
Second, this characterization is consistent with one of the objectives of the Convention, which is
to "regulate in a uniform manner the conditions of international transportation by air." Third,
the Convention does not contain any provision prescribing rules of jurisdiction other than Article
28(1), which means that the phrase "rules as to jurisdiction" used in Article 32 must refer only to
Article 28(1). In fact, the last sentence of Article 32 specifically deals with the exclusive
enumeration in Article 28(1) as "jurisdictions," which, as such, cannot be left to the will of the
parties regardless of the time when the damage occurred.

xxxx

In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a
dual concept. Jurisdiction in the international sense must be established in accordance with
Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular court
must be established pursuant to the applicable domestic law. Only after the question of which
court has jurisdiction is determined will the issue of venue be taken up. This second question
shall be governed by the law of the court to which the case is submitted.22

Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines23 is analogous
to the instant case because (1) the domicile of respondent is London, United Kingdom;24 (2) the
principal office of respondent airline is likewise in London, United Kingdom;25 (3) the ticket was
purchased in Rome, Italy;26 and (4) the place of destination is Rome, Italy.27 In addition,
petitioner based her complaint on Article 217628 of the Civil Code on quasi-delict and Articles
1929 and 2130 of the Civil Code on Human Relations. In Santos III v. Northwest Orient
Airlines,31 Augusto Santos III similarly posited that Article 28 (1) of the Warsaw Convention did
not apply if the action is based on tort. Hence, contrary to the contention of the petitioner, the
factual setting of Santos III v. Northwest Orient Airlines32 and the instant case are parallel on
the material points.

Tortious conduct as ground for the petitioners complaint is within the purview of the Warsaw
Convention.

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

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

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

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

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

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

Respondent, in seeking remedies from the trial court through special appearance of counsel, is
not deemed to have voluntarily submitted itself to the jurisdiction of the trial court.

Petitioner argues that respondent has effectively submitted itself to the jurisdiction of the trial
court when the latter stated in its Comment/Opposition to the Motion for Reconsideration that
"Defendant [is at a loss] x x x how the plaintiff arrived at her erroneous impression that it is/was
Euro-Philippines Airlines Services, Inc. that has been making a special appearance since x x x
British Airways x x x has been clearly specifying in all the pleadings that it has filed with this
Honorable Court that it is the one making a special appearance."44

In refuting the contention of petitioner, respondent cited La Naval Drug Corporation v. Court of
Appeals45 where we held that even if a party "challenges the jurisdiction of the court over his
person, as by reason of absence or defective service of summons, and he also invokes other
grounds for the dismissal of the action under Rule 16, he is not deemed to be in estoppel or to
have waived his objection to the jurisdiction over his person."46

This issue has been squarely passed upon in the recent case of Garcia v. Sandiganbayan,47
where we reiterated our ruling in La Naval Drug Corporation v. Court of Appeals48 and
elucidated thus:
Special Appearance to Question a Courts Jurisdiction Is Not

Voluntary Appearance

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

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

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

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

The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for
special appearance with the purpose of challenging the jurisdiction of the SB over her person
and that of her three children. Petitioner asserts therein that SB did not acquire jurisdiction over
her person and of her three children for lack of valid service of summons through improvident
substituted service of summons in both Forfeiture I and Forfeiture II. This stance the petitioner
never abandoned when she filed her motions for reconsideration, even with a prayer to admit
their attached Answer Ex Abundante Ad Cautelam dated January 22, 2005 setting forth
affirmative defenses with a claim for damages. And the other subsequent pleadings, likewise,
did not abandon her stance and defense of lack of jurisdiction due to improper substituted
services of summons in the forfeiture cases. Evidently, from the foregoing Sec. 20, Rule 14 of the
1997 Revised Rules on Civil Procedure, petitioner and her sons did not voluntarily appear before
the SB constitutive of or equivalent to service of summons.

Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case. Said
case elucidates the current view in our jurisdiction that a special appearance before the court
challenging its jurisdiction over the person through a motion to dismiss even if the movant
invokes other groundsis not tantamount to estoppel or a waiver by the movant of his
objection to jurisdiction over his person; and such is not constitutive of a voluntary submission
to the jurisdiction of the court.1avvphi1
Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB
to cure the defective substituted services of summons. They are, therefore, not estopped from
questioning the jurisdiction of the SB over their persons nor are they deemed to have waived
such defense of lack of jurisdiction. Consequently, there being no valid substituted services of
summons made, the SB did not acquire jurisdiction over the persons of petitioner and her
children. And perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and
her three children are concerned, are null and void for lack of jurisdiction. (Emphasis supplied)

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

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

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
ChairpersonARTURO D. BRION
Associate Justice ROBERTO A. ABAD
Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
attestation, it is hereby certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

Footnotes

1 50 C.J.S. 1089.

2 Records, pp. 1-5.

3 Id. at 11.

4 Id. at 12-16.

5 Convention for the Unification of Certain Rules Relating To International Transportation by Air,
signed at Warsaw on October 12, 1929.

6 Records, p. 8.

7 Id. at 21

8 Id. at 25-27.

9 Id. at 37-41.

10 Id. at 56-57; penned by Judge Rommel O. Baybay. Emphasis in the original text.

11 Id. at 75.

12 G.R. No. 101538, June 23, 1992, 210 SCRA 256.

13 Id. at 260-261.

14 Mapa v. Court of Appeals, 341 Phil. 281, 295 (1997).

15 Rollo, pp. 155-157.

16 The United Kingdom signed the Warsaw Convention on October 12, 1929 and ratified the
same on February 14, 1933. The Convention became effective in the United Kingdom on March
15, 1933.

17 Italy signed the Warsaw Convention on October 12, 1929 and ratified the same on February
14, 1933. The Convention became effective in Italy on May 15, 1933.

18 Supra note 12.

19 Id.

20 Id.

21 In said case, we distinguished between a "destination" and an "agreed stopping place." We

held that:

Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place." It is
the "destination" and not an "agreed stopping place" that controls for purposes of ascertaining
jurisdiction under the Convention.

The contract is a single undivided operation, beginning with the place of departure and ending
with the ultimate destination. The use of the singular in the 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." Id. at 270-271.

22 Id. at 266-267.

23 Id.

24 Rollo, p. 139.

25 Id.

26 Id. at 174.

27 Id. at 155-157.

28 Article 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by
provisions of this Chapter.
29 Article 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due and observe honesty and good faith.

30 Article 21. Any person, who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the damage.

31 Supra note 12.

32 Id.

33 Id.

34 Rollo, pp. 159 and 162.

35 Supra note 12.

36 Rollo, p. 159.

37 Id. at 162.

38 Blacks Law Dictionary, 6th ed., 1990.

39 Supra note 12.

40 255 F.3d 1044.

41 Id.

42 36 Fed. Appx. 278, 2002 WL 1136727 (C.A. 9).

43 Id.

44 Rollo, p. 169.

45 G.R. No. 103200, August 31, 1994, 236 SCRA 78.

46 Id. at 89.

47 G.R. No. 170122, October 12, 2009.

48 Supra.

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