What are the limitations to the liability of air carriers?
The right to damages shall be extinguished if an action is
1. In the carriage of persons – 250,000 francs for each
passenger. Nevertheless, by special contract, the carrier
and the passenger may agree to a higher limit of liability.
2. In the carriage of registered baggage and of cargo –
Two hundred and fifty (250) francs per kilogramme,
unless the passenger or consignor has made, at the time
when the package was handed over to the carrier, a
special declaration of interest in delivery at destination
and has paid a supplementary sum if the case so requires.
Note: In the case of loss, damage or delay of part of
registered baggage or cargo, or of any object contained
therein, the weight to be taken into consideration in
determining the amount to which the carrier's liability is
limited shall be only the total weight of the package or
packages concerned. Nevertheless, when the loss,
damage or delay of a part of the registered baggage or
cargo, or of an object contained therein, affects the value
of other packages covered by the same baggage check or
the same air waybill, the total weight of such package or
packages shall also be taken into consideration in
determining the limit of liability.
3. As regards objects of which the passenger takes charge
himself – Five thousand (5,000) francs per passenger.
(Art. 22) Note: Carrier is not entitled to the foregoing
limit if the damage is caused by willful misconduct or
default on its part (Art. 25)
Is a stipulation relieving the carrier from or limiting its
liability valid?
No. Any provision tending to relieve the carrier of liability
or to fix a lower limit than that which is laid down in this
Convention shall be null and void but the nullity of such
provision does not involve the nullity of the whole
contract. (Art. 23[1])
What are the exceptions to these limitations?
1. Willful misconduct
2. Default amounting to willful misconduct
3. Accepting passengers without ticket
4. Accepting goods without airway bill or baggage
without baggage check
When will one’s right to damages be extinguished?
not brought within two years, reckoned from the date of
arrival at the destination, or from the date on which the
aircraft ought to have arrived, or from the date on which
the carriage stopped.
Note: Despite the express mandate that an action for
damages should be filed within 2 years from the arrival
at the place of destination, such rule shall not be applied
where delaying tactics were employed by airline itself in
a case where a passenger wishes to settle his complaint
out-of-court but the airline gave him the runaround,
answering the passenger’s letters but not giving in to his
demands, hence, giving the passenger no time to
institute the complaint within the reglamentary period.
(United Airlines v. Uy, G.R. No. 127768, Nov. 19, 1999)
Could a person recover a claim covered by Warsaw
Convention after the lapse two years?
No. A claim covered by the Warsaw Convention can no
longer be recovered under local law, if the statute of
limitations of two years has already lapsed. (PAL. v.
Savillo, 557 SCRA 66)
What constitutes willful misconduct?
The definition of "willful misconduct" depends in some
measure on which court is deciding the issue. Some
common factors that courts will consider are:
1. Knowledge that an action will probably result in injury
or damage
2. Reckless disregard of the consequences of an action,
or
3. Deliberately failing to discharge a duty related to
safety. Courts may also consider other factors
Is the failure of the carrier to deliver the passenger’s
luggage at the designated time and place ipso facto
constitutes wilful misconduct?
No. There must be a showing that the acts complained of
were impelled by an intention to violate the law, or were
in persistent disregard of one's rights. It must be
evidenced by a flagrantly or shamefully wrong or
improper conduct (Luna vs. CA, GR No. 100374-‐75,
November 27, 1992).
Is the carrier’s guessing of which luggage contained the
firearms constitutes willful misconduct?
Yes. The guessing of which luggage contained the
firearms amounted to willful misconduct under Section
25(1) of the Warsaw Convention. (Northwest Airlines vs.
CA, GR No. 120334, January 20, 1998)
Is the allegation of willful misconduct resulting in a tort is
insufficient to exclude the case from the realm of
Warsaw Convention?
Yes. A cause of action based on tort did not bring the case
outside the sphere of the Warsaw Convention. (Lhuiller
vs. British Airways, GR No. 171092, March 15, 2010).
Edna Diago Lhuillier v. British Airways
•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.
• 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. 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.
• 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.
Lhuillier v British Airways
Facts
Edna Diago Lhuillier filed a Complaint for damages
against respondent British Airways before the Regional
Trial Court (RTC) of Makati. She took respondent’s flight
548 from London, United Kingdom to Rome, Italy. Once
on board, she allegedly requested Julian Halliday
(Halliday), one of the respondent’s flight attendants, to
assist her in placing her hand-carried luggage in the
overhead bin. However, Halliday allegedly refused to
help and assist her, and even sarcastically remarked that
“If I were to help all 300 passengers in this flight, I would
have a broken back!”
She 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. She assured Kerrigan that she knew the
plane’s safety regulations being a frequent traveler.
Kerrigan allegedly thrust his face a mere few centimeters
away from that of the petitioner and menacingly told her
that “We don’t like your attitude.”
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, Article 28(1): “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.”
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. She asserts that she has the option to pursue
this case in this jurisdiction pursuant to Philippine laws.
Issue
Whether or not the case is covered by the Warsaw
Convention
Whether or not PH courts have jurisdiction
Held
YES, it is governed by the Warsaw Convention.
NO, PH courts have no jurisdiction.
Ratio
YES, it is governed by the Warsaw Convention.
It is settled that the Warsaw Convention has the force
and effect of law in this country. 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.
For the purposes of the Convention the expression “inter
national 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.
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.
NO, PH courts have no jurisdiction.
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. 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.
PHILIPPINE AIRLINES, INC., petitioner,
vs.
HON. ADRIANO SAVILLO, Presiding Judge of RTC
Branch 30 , Iloilo City, and SIMPLICIO GRIÑO,
respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45
of the Rules of Court, assailing the Decision1 dated 17
August 2001, rendered by the Court of Appeals in CA-G.R.
SP No. 48664, affirming in toto the Order2 dated 9 June
1998, of Branch 30 of the Regional Trial Court (RTC) of
Iloilo City, dismissing the Motion to Dismiss filed by
petitioner Philippine Airlines Inc. (PAL) in the case
entitled, Simplicio Griño v. Philippine Airlines, Inc. and
Singapore Airlines, docketed as Civil Case No. 23773.
PAL is a corporation duly organized under Philippine law,
engaged in the business of providing air carriage for
passengers, baggage and cargo.3
Public respondent Hon. Adriano Savillo is the presiding
judge of Branch 30 of the Iloilo RTC, where Civil Case No.
23773 was filed; while private respondent Simplicio
Griño is the plaintiff in the aforementioned case.
The facts are undisputed.
Private respondent was invited to participate in the 1993
ASEAN Seniors Annual Golf Tournament held in Jakarta,
Indonesia. He and several companions decided to
purchase their respective passenger tickets from PAL
with the following points of passage: MANILA-
SINGAPORE-JAKARTA-SINGAPORE-MANILA. Private
respondent and his companions were made to
understand by PAL that its plane would take them from
Manila to Singapore, while Singapore Airlines would take
them from Singapore to Jakarta.4
On 3 October 1993, private respondent and his
companions took the PAL flight to Singapore and arrived
at about 6:00 o’clock in the evening. Upon their arrival,
they proceeded to the Singapore Airlines office to check-
in for their flight to Jakarta scheduled at 8:00 o’clock in
the same evening. Singapore Airlines rejected the tickets
of private respondent and his group because they were
not endorsed by PAL. It was explained to private
respondent and his group that if Singapore Airlines
honored the tickets without PAL’s endorsement, PAL
would not pay Singapore Airlines for their passage.
Private respondent tried to contact PAL’s office at the
airport, only to find out that it was closed.5
Stranded at the airport in Singapore and left with no
recourse, private respondent was in panic and at a loss
where to go; and was subjected to humiliation,
embarrassment, mental anguish, serious anxiety, fear
and distress. Eventually, private respondent and his
companions were forced to purchase tickets from
Garuda Airlines and board its last flight bound for Jakarta.
When they arrived in Jakarta at about 12:00 o’clock
midnight, the party who was supposed to fetch them
from the airport had already left and they had to arrange
for their transportation to the hotel at a very late hour.
After the series of nerve-wracking experiences, private
respondent became ill and was unable to participate in
the tournament. 6
Upon his return to the Philippines, private respondent
brought the matter to the attention of PAL. He sent a
demand letter to PAL on 20 December 1993 and another
to Singapore Airlines on 21 March 1994. However, both
airlines disowned liability and blamed each other for the
fiasco. On 15 August 1997, private respondent filed a
Complaint for Damages before the RTC docketed as Civil
Case No. 23773, seeking compensation for moral
damages in the amount of P1,000,000.00 and attorney’s
fees.7
Instead of filing an answer to private respondent’s
Complaint, PAL filed a Motion to Dismiss8 dated 18
September 1998 on the ground that the said complaint
was barred on the ground of prescription under Section
1(f) of Rule 16 of the Rules of Court.9 PAL argued that the
Warsaw Convention,10 particularly Article 29 thereof,11
governed this case, as it provides that any claim for
damages in connection with the international
transportation of persons is subject to the prescription
period of two years. Since the Complaint was filed on 15
August 1997, more than three years after PAL received
the demand letter on 25 January 1994, it was already
barred by prescription.
On 9 June 1998, the RTC issued an Order12 denying the
Motion to Dismiss. It maintained that the provisions of
the Civil Code and other pertinent laws of the Philippines,
not the Warsaw Convention, were applicable to the
present case.
The Court of Appeals, in its assailed Decision dated 17
August 2001, likewise dismissed the Petition for
Certiorari filed by PAL and affirmed the 9 June 1998
Order of the RTC. It pronounced that the application of
the Warsaw Convention must not be construed to
preclude the application of the Civil Code and other
pertinent laws. By applying Article 1144 of the Civil
Code,13 which allowed for a ten-year prescription period,
the appellate court declared that the Complaint filed by
private respondent should not be dismissed.14
Hence, the present Petition, in which petitioner raises
the following issues:
I
THE COURT OF APPEALS ERRED IN NOT GIVING DUE
COURSE TO THE PETITION AS RESPONDENT JUDGE
COMMITED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURSIDICTION IN DENYING PAL’S MOTION
TO DISMISS.
II
THE COURT OF APPEALS ERRED IN NOT APPLYING THE
PROVISIONS OF THE WARSAW CONVENTION DESPITE
THE FACT THAT GRIÑO’S CAUSE OF ACTION AROSE FROM
A BREACH OF CONTRACT FOR INTERNATIONAL AIR
TRANSPORT.
III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE COMPLAINT FILED BY GRIÑO BEYOND THE TWO (2)-
YEAR PERIOD PROVIDED UNDER THE WARSAW
CONVENTION IS ALREADY BARRED BY PRESCRIPTION.15
The petition is without merit.
In determining whether PAL’s Motion to Dismiss should
have been granted by the trial court, it must be
ascertained if all the claims made by the private
respondent in his Complaint are covered by the Warsaw
Convention, which effectively bars all claims made
outside the two-year prescription period provided under
Article 29 thereof. If the Warsaw Convention covers all of
private respondent’s claims, then Civil Case No. 23773
has already prescribed and should therefore be
dismissed. On the other hand, if some, if not all, of
respondent’s claims are outside the coverage of the
Warsaw Convention, the RTC may still proceed to hear
the case.
The Warsaw Convention applies to "all international
transportation of persons, baggage or goods performed
by any aircraft for hire." It seeks to accommodate or
balance the interests of passengers seeking recovery for
personal injuries and the interests of air carriers seeking
to limit potential liability. It employs a scheme of strict
liability favoring passengers and imposing damage caps
to benefit air carriers.16 The cardinal purpose of the
Warsaw Convention is to provide uniformity of rules
governing claims arising from international air travel;
thus, it precludes a passenger from maintaining an action
for personal injury damages under local law when his or
her claim does not satisfy the conditions of liability under
the Convention.17
Article 19 of the Warsaw Convention provides for liability
on the part of a carrier for "damages occasioned by delay
in the transportation by air of passengers, baggage or
goods." Article 24 excludes other remedies by further
providing that "(1) in the cases covered by articles 18 and
19, any action for damages, however founded, can only
be brought subject to the conditions and limits set out in
this convention." Therefore, a claim covered by the
Warsaw Convention can no longer be recovered under
local law, if the statute of limitations of two years has
already lapsed.
Nevertheless, this Court notes that jurisprudence in the
Philippines and the United States also recognizes that the
Warsaw Convention does not "exclusively regulate" the
relationship between passenger and carrier on an
international flight. This Court finds that the present case
is substantially similar to cases in which the damages
sought were considered to be outside the coverage of
the Warsaw Convention.
In United Airlines v. Uy,18 this Court distinguished
between the (1) damage to the passenger’s baggage and
(2) humiliation he suffered at the hands of the airline’s
employees. The first cause of action was covered by the
Warsaw Convention which prescribes in two years, while
the second was covered by the provisions of the Civil
Code on torts, which prescribes in four years.
Similar distinctions were made in American
jurisprudence. In Mahaney v. Air France,19 a passenger
was denied access to an airline flight between New York
and Mexico, despite the fact that she held a confirmed
reservation. The court therein ruled that if the plaintiff
were to claim damages based solely on the delay she
experienced – for instance, the costs of renting a van,
which she had to arrange on her own as a consequence
of the delay – the complaint would be barred by the two-
year statute of limitations. However, where the plaintiff
alleged that the airlines subjected her to unjust
discrimination or undue or unreasonable preference or
disadvantage, an act punishable under the United States
laws, then the plaintiff may claim purely nominal
compensatory damages for humiliation and hurt
feelings, which are not provided for by the Warsaw
Convention. In another case, Wolgel v. Mexicana
Airlines,20 the court pronounced that actions for
damages for the "bumping off" itself, rather than the
incidental damages due to the delay, fall outside the
Warsaw Convention and do not prescribe in two years.
In the Petition at bar, private respondent’s Complaint
alleged that both PAL and Singapore Airlines were guilty
of gross negligence, which resulted in his being subjected
to "humiliation, embarrassment, mental anguish, serious
anxiety, fear and distress."21 The emotional harm
suffered by the private respondent as a result of having
been unreasonably and unjustly prevented from
boarding the plane should be distinguished from the
actual damages which resulted from the same incident.
Under the Civil Code provisions on tort,22 such emotional
harm gives rise to compensation where gross negligence
or malice is proven.
The instant case is comparable to the case of Lathigra v.
British Airways.23
In Lathigra, it was held that the airlines’ negligent act of
reconfirming the passenger’s reservation days before
departure and failing to inform the latter that the flight
had already been discontinued is not among the acts
covered by the Warsaw Convention, since the alleged
negligence did not occur during the performance of the
contract of carriage but, rather, days before the
scheduled flight.
In the case at hand, Singapore Airlines barred private
respondent from boarding the Singapore Airlines flight
because PAL allegedly failed to endorse the tickets of
private respondent and his companions, despite PAL’s
assurances to respondent that Singapore Airlines had
already confirmed their passage. While this fact still
needs to be heard and established by adequate proof
before the RTC, an action based on these allegations will
not fall under the Warsaw Convention, since the
purported negligence on the part of PAL did not occur
during the performance of the contract of carriage but
days before the scheduled flight. Thus, the present action
cannot be dismissed based on the statute of limitations
provided under Article 29 of the Warsaw Convention.
Had the present case merely consisted of claims
incidental to the airlines’ delay in transporting their
passengers, the private respondent’s Complaint would
have been time-barred under Article 29 of the Warsaw
Convention. However, the present case involves a special
species of injury resulting from the failure of PAL and/or
Singapore Airlines to transport private respondent from
Singapore to Jakarta – the profound distress, fear,
anxiety and humiliation that private respondent
experienced when, despite PAL’s earlier assurance that
Singapore Airlines confirmed his passage, he was
prevented from boarding the plane and he faced the
daunting possibility that he would be stranded in
Singapore Airport because the PAL office was already
closed.
These claims are covered by the Civil Code provisions on
tort, and not within the purview of the Warsaw
Convention. Hence, the applicable prescription period is
that provided under Article 1146 of the Civil Code:
Art. 1146. The following actions must be instituted within
four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict.
Private respondent’s Complaint was filed with the RTC on
15 August 1997, which was less than four years since PAL
received his extrajudicial demand on 25 January 1994.
Thus, private respondent’s claims have not yet
prescribed and PAL’s Motion to Dismiss must be denied.
Moreover, should there be any doubt as to the
prescription of private respondent’s Complaint, the more
prudent action is for the RTC to continue hearing the
same and deny the Motion to Dismiss. Where it cannot
be determined with certainty whether the action has
already prescribed or not, the defense of prescription
cannot be sustained on a mere motion to dismiss based
on what appears to be on the face of the complaint.24
And where the ground on which prescription is based
does not appear to be indubitable, the court may do well
to defer action on the motion to dismiss until after trial
on the merits.25
IN VIEW OF THE FOREGOING, the instant Petition is
DENIED. The assailed Decision of the Court of Appeals in
CA-G.R. SP No. 48664, promulgated on 17 August 2001 is
AFFIRMED. Costs against the petitioner.
SO ORDERED.
AIR FRANCE v. BONIFACIO H. GILLEGO
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. Was there legal and factual basis that Air France's
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. Is the amount of damages awarded by the RTC and
affirmed by the CA as moral and exemplary damages
excessive, unconscionable and unreasonable?
HELD: I. 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.
HELD: II. 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.
In Air France vs. Gillego, G.R. No 165266, December 15,
2010, the Supreme Court discussed the liability that
airlines have for lost luggage, particularly in terms of
moral damages due to a passenger. Unfortunately for
the airline, this was no ordinary passenger but a
Congressman on his way to deliver a speech.
In 1993, Congressman Gillego was the keynote speaker
at the 89th Inter-Parliamentary Conference Symposium
on “Parliament: Guardian of Human Rights”. The
Congressman left for Paris and was to take a connecting
flight to Budapest. He learned of an earlier flight to
Budapest and made arrangements for the same. He was
given a ticket and a boarding pass for this new flight as
well as a new baggage claim stub for his checked-in
luggage.
Upon arrival at Budapest, his luggage was not at the
claims section. He sought assistance and was advised to
wait at the hotel. His luggage was never delivered despite
inquiries.
Upon his return home, his lawyer wrote Air France
complaining about the loss and the damages he suffered
while in Budapest arising from his loss of personal
effects, medicines and even the speeches he had
prepared, among others. He only had his travel
documents, pocket money and the clothes on his back.
He was constrained to shop for personal items including
clothes and medicines which amounted to $1,000. He
even had to make another speech which was made more
difficult due to the lack of data and information that was
in his luggage. He asked for P1,000,000.00 from the
petitioner as compensation. Air France ignored his
repeated follow-ups on his lost luggage. He thereafter
filed a complaint for damages against Air France.
The trial court awarded P1,000,000.00 as moral
damages; P500,000.00 as exemplary damages and
P50,000.00 as attorney’s fees to the plaintiff. This was
affirmed by the Court of Appeals.
Air France sought relief before the Supreme Court,
arguing that the award of “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” and that “the damages awarded
are definitely not proportionate or commensurate to the
wrong or injury supposedly inflicted.” The plaintiff was
after all an expert in the field of human rights who could
have delivered his speech even without his notes.
The petition was found to be partly meritorious. The
Supreme Court held that being a “business intended to
serve the travelling public primarily, a contract of
carriage is imbued with public interest.” “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.” [emphasis supplied]
There is no dispute that the checked-in luggage was not
found upon arrival at plaintiff’s destination and was only
returned two years later. The action is founded on the
breach of the contract of carriage with Air France unable
to offer any satisfactory explanation for the
unreasonable delay in the delivery of the baggage. Since
the presumption of negligence was not overcome,
liability for the delay was established. Upon recovery of
the baggage during trial, the plaintiff no longer pressed
his claim for actual or compensatory damages.
For moral damages to be awarded in the 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. Not every case
of mental anguish, fright or serious anxiety calls for the
award of moral damages.” Where there is no showing of
fraud or 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.”
Air France was found liable for moral damages.
Petitioner’s station manager testified that upon receiving
the letter-complaint, she immediately began working on
the Property Irregularity Report (PIR). This is issued at the
airline station upon complaint by a passenger on missing
baggage. From the computer-printout, a PIR was was thus guilty of bad faith in breaching its contract of
initiated at the Budapest counter. A search telex was carriage with the respondent, which entitles the latter to
sent out on three subsequent dates. Based on the PIR the award of moral damages.” [emphasis supplied]
printout, the plaintiff only gave his Philippine address
However, the sum of P1,000,000.00 is “excessive and
and telephone number, and not the address and contact
not proportionate to the loss or suffering inflicted on the
number of his Budapest hotel. The PIR usually is printed
passenger under the circumstances.” The Court cited
in two originals, one for the station manager and the
Trans World Airlines v. Court of Appeals where it
other copy is for the passenger. There was no record or
considered the social standing of the aggrieved
entry in the PIR of any follow-up call made by the plaintiff
passenger who was a lawyer and director of several
in Budapest. Plaintiff claimed that he was not given a
companies but nonetheless reduced the award of moral
copy of this PIR and that his repeated telephone calls
damages.
were ignored.
Moral damages are awarded “to enable the injured party
It was found that Air France “acted in bad faith in
to obtain means, diversion or amusement that will serve
repeatedly ignoring respondent’s follow-up calls.” The
to alleviate the moral suffering he has undergone by
alleged entries in the PIR were not to be considered since
reason of defendant's culpable action.” Exemplary
these were not authenticated by the airline station
damages are to “deter serious wrongdoings.” Under
representative in Budapest. The Court did not accept as
Article 2216 of the Civil Code, the assessment of damages
justification that plaintiff should be faulted in allegedly
is left to the discretion of the court according to the
not giving his hotel address and phone number. It found
circumstances of each case. This is “limited by the
unbelievable that the plaintiff would not give his hotel
principle that the amount awarded should not be
and other information after he had promptly filed a
palpably excessive as to indicate that it was the result of
complaint. And even assuming that only the Philippine
prejudice or corruption on the part of the trial court.
details were given, this does not explain why Air France
Simply put, the amount of damages must be fair,
never communicated with plaintiff concerning the lost
reasonable and proportionate to the injury suffered.”
baggage long after he had returned to the Philippines.
The missing luggage was returned only after the trial. Since Air France “failed to act timely on the passenger’s
predicament caused by its employees’ mistake and more
than ordinary inadvertence or inattention, and the
In addition, the PIR only establishes that telex searches passenger failed to show any act of arrogance,
were made but there is no attempt to explain the loss of discourtesy or rudeness committed by the air carrier’s
the luggage. Air France “did not give the attention and employees, the amounts of P200,000.00, P50,000.00 and
care due to its passenger whose baggage was not P30,000.00 as moral damages, exemplary damages and
transported and delivered to him at his travel destination attorney’s fees would be sufficient and justified."
and scheduled time. Inattention to and lack of care for
It is ironic that the award of damages, just like the
the interest of its passengers who are entitled to its
luggage, comes too late since the plaintiff has already
utmost consideration, particularly as to their
passed away. Justice, just like baggage, can be just as
convenience, amount to bad faith which entitles the
delayed. DENIED
passenger to an award of moral damages.” Bad faith may
be “in securing the contract and in the execution thereof,
as well as in the enforcement of its terms, or any other
kind of deceit.” [emphasis supplied]

The failure to cite any act of discourtesy or rudeness does

not make plaintiff’s “loss and moral suffering
insignificant and less deserving of compensation.” “In
repeatedly ignoring respondent’s inquiries, petitioner’s
employees exhibited an indifferent attitude without due
regard for the inconvenience and anxiety he experienced
after realizing that his luggage was missing. Petitioner
 [G.R. No. 116044-45. March 9, 2000]
AMERICAN AIRLINES, petitioner, vs. COURT OF
APPEALS, HON. BERNARDO LL. SALAS and DEMOCRITO
MENDOZA, respondents
DECISION
GONZAGA_REYES, J.:
Before us is a petition for review of the decision dated
December 24, 1993 rendered by the Court of Appeals in
the consolidated cases docketed as CA-G.R. SP nos.
30946 and 31452 entitled American Airlines vs. The
Presiding Judge Branch 8 of the Regional Trial Court of
Cebu and Democrito Mendoza, petitions for certiorari
and prohibition. In SP no. 30946, the petitioner assails
the trial courts order denying the petitioners motion to
dismiss the action for damages filed by the private
respondent for lack of jurisdiction under section 28 (1) of
the Warsaw Convention; and in SP No. 31452 the
petitioner challenges the validity of the trial courts order
striking off the record the deposition of the petitioners
security officer taken in Geneva, Switzerland for failure
of the said security officer to answer the cross
interrogatories propounded by the private respondent.
The sole issue raised in SP No. 30946 is the questioned
jurisdiction of the Regional Trial Court of Cebu to take
cognizance of the action for damages filed by the private
respondent against herein petitioner in view of Art 28 (1)
of the Warsaw Convention.[1] It is undisputed that the
private respondent purchased from Singapore Airlines in
Manila conjunction tickets for Manila - Singapore -
Athens - Larnaca - Rome - Turin - Zurich - Geneva -
Copenhagen - New York. The petitioner was not a
participating airline in any of the segments in the
itinerary under the said conjunction tickets. In Geneva
the petitioner decided to forego his trip to Copenhagen
and to go straight to New York and in the absence of a
direct flight under his conjunction tickets from Geneva to
New York, the private respondent on June 7, 1989
exchanged the unused portion of the conjunction ticket
for a one-way ticket from Geneva to New York from the
petitioner airline. Petitioner issued its own ticket to the
private respondent in Geneva and claimed the value of
the unused portion of the conjunction ticket from the
IATA[2] clearing house in Geneva.
In September 1989, private respondent filed an action
for damages before the regional trial court of Cebu for
the alleged embarassment and mental anguish he
suffered at the Geneva Airport when the petitioners
security officers prevented him from boarding the plane,
detained him for about an hour and allowed him to board
the plane only after all the other passengers have
boarded. The petitioner filed a motion to dismiss for lack
of jurisdiction of Philippine courts to entertain the said
proceedings under Art. 28 (1) of the Warsaw Convention.
The trial court denied the motion. The order of denial
was elevated to the Court of Appeals which affirmed the
ruling of the trial court. Both the trial and that appellate
courts held that the suit may be brought in the
Philippines under the pool partnership agreement
among the IATA members, which include Singapore
Airlines and American Airlines, wherein the members act
as agents of each other in the issuance of tickets to those
who may need their services. The contract of carriage
perfected in Manila between the private respondent and
Singapore Airlines binds the petitioner as an agent of
Singapore Airlines and considering that the petitioner
has a place of business in Manila, the third option of the
plaintiff under the Warsaw Convention i.e. the action
may be brought in the place where the contract was
perfected and where the airline has a place of business,
is applicable. Hence this petition assailing the order
upholding the jurisdiction of Philippine courts over the
instant action.
Both parties filed simultaneous memoranda pursuant to
the resolution of this Court giving due course to the
petition.
The petitioners theory is as follows: Under Art 28 (1) of
the Warsaw convention an action for damages must be
brought at the option of the plaintiff either before the
court of the 1) domicile of the carrier; 2) the carriers
principal place of business; 3) the place where the carrier
has a place of business through which the contract was
made; 4) the place of destination. The petitioner asserts
that the Philippines is neither the domicile nor the
principal place of business of the defendant airline; nor
is it the place of destination. As regards the third option
of the plaintiff, the petitioner contends that since the
Philippines is not the place where the contract of carriage
was made between the parties herein, Philippine courts
do not have jurisdiction over this action for damages. The
issuance of petitioners own ticket in Geneva in exchange
for the conjunction ticket issued by Singapore Airlines for
the final leg of the private respondents trip gave rise to a
separate and distinct contract of carriage from that
entered into by the private respondent with Singapore
Airlines in Manila. Petitioner lays stress on the fact that
the plane ticket for a direct flight from Geneva to New
York was purchased by the private respondent from the
petitioner by "exchange and cash" which signifies that
the contract of carriage with Singapore Airlines was
terminated and a second contract was perfected.
Moreover, the second contract of carriage cannot be
deemed to have been an extension of the first as the
petitioner airline is not a participating airline in any of the
destinations under the first contract. The petitioner
claims that the private respondents argument that the
petitioner is bound under the IATA Rules as agent of the
principal airline is irrelevant and the alleged bad faith of
the airline does not remove the case from the
applicability of the Warsaw Convention. Further, the
IATA Rule cited by the private respondent which is
admittedly printed on the ticket issued by the petitioner
to him which states, "An air carrier issuing a ticket for
carriage over the lines of another carrier does so only as
its agent" does not apply herein, as neither Singapore
Airlines nor the petitioner issued a ticket to the private
respondent covering the route of the other. Since the
conjunction tickets issued by Singapore Airlines do not
include the route covered by the ticket issued by the
petitioner, the petitioner airline submits that it did not
act as an agent of Singapore Airlines. Sdaa miso
Private respondent controverts the applicability of the
Warsaw Convention in this case. He posits that under
Article 17 of the Warsaw Convention[3] a carrier may be
held liable for damages if the "accident" occurred on
board the airline or in the course of "embarking or
disembarking" from the carrier and that under Article 25
(1)[4] thereof the provisions of the convention will not
apply if the damage is caused by the "willful misconduct"
of the carrier. He argues that his cause of action is based
on the incident at the pre-departure area of the Geneva
airport and not during the process of embarking nor
disembarking from the carrier and that security officers
of the petitioner airline acted in bad faith. Accordingly,
this case is released from the terms of the Convention.
Private respondent argues that assuming that the
convention applies, his trip to nine cities in different
countries performed by different carriers under the
conjunction tickets issued in Manila by Singapore Airlines
is regarded as a single transaction; as such the final leg of
his trip from Geneva to New York with the petitioner
airline is part and parcel of the original contract of
carriage perfected in Manila. Thus, the third option of the
plaintiff under Art. 28 (1) e.g., where the carrier has a
place of business through which the contract of carriage
was made, applies herein and the case was properly filed
in the Philippines. The private respondent seeks
affirmance of the ruling of the lower courts that the
petitioner acted as an agent of Singapore Airlines under
the IATA Rules and as an agent of the principal carrier the
petitioner may be held liable under the contract of
carriage perfected in Manila, citing the judicial admission
made by the petitioner that it claimed the value of the
unused portion of the private respondents conjunction
tickets from the IATA Clearing House in Geneva where
the accounts of both airlines are respectively credited
and debited. Accordingly, the petitioner cannot now
deny the contract of agency with Singapore Airlines after
it honored the conjunction tickets issued by the latter.
Sdaad
The petition is without merit.
The Warsaw Convention to which the Republic of the
Philippines is a party and which has the force and effect
of law in this country applies to all international
transportation of persons, baggage or goods performed
by an aircraft gratuitously or for hire.[5] As enumerated
in the Preamble of the Convention, one of the objectives
is "to regulate in a uniform manner the conditions of
international transportation by air".[6] The contract of
carriage entered into by the private respondent with
Singapore Airlines, and subsequently with the petitioner,
to transport him to nine cities in different countries with
New York as the final destination is a contract of
international transportation and the provisions of the
Convention automatically apply and exclusively govern
the rights and liabilities of the airline and its
passengers.[7] This includes section 28 (1) which
enumerates the four places where an action for damages
may be brought. Scs daa
The threshold issue of jurisdiction of Philippine courts
under Art 28 (1) must first be resolved before any
pronouncements may be made on the liability of the
carrier thereunder.[8] The objections raised by the
private respondent that this case is released from the
terms of the Convention because the incident on which
this action is predicated did not occur in the process of
embarking and disembarking from the carrier under Art
17[9] and that the employees of the petitioner airline
acted with malice and bad faith under Art 25 (1)[10]
pertain to the merits of the case which may be examined
only if the action has first been properly commenced
under the rules on jurisdiction set forth in Art. 28 (1).
Art (28) (1) of the Warsaw Convention states: Sup rem
Art 28 (1) An action for damages must be brought at the
option of the plaintiff, in the territory of one of the High
Contracting Parties, either before the court of the
domicile of the carrier or of his principal place of business
or where he has a place of business through which the
contract has been made, or before the court at the place
of destination.
There is no dispute that petitioner issued the ticket in
Geneva which was neither the domicile nor the principal
place of business of petitioner nor the respondents place
of destination.
The question is whether the contract of transportation
between the petitioner and the private respondent
would be considered as a single operation and part of the
contract of transportation entered into by the latter with
Singapore Airlines in Manila.
Petitioner disputes the ruling of the lower court that it is.
Petitioners main argument is that the issuance of a new
ticket in Geneva created a contract of carriage separate
and distinct from that entered by the private respondent
in Manila.
We find the petitioners argument without merit. Juris
Art 1(3) of the Warsaw Convention which states:
"Transportation to be performed by several successive
carriers shall be deemed, for the purposes of this
convention, to be one undivided transportation, if it has
been regarded by the parties as a single operation,
whether it has been agreed upon under the form of a
single contract or a series of contracts, and it shall not
lose its international character merely because one
contract or series of contracts is to be performed entirely
within the territory subject of the sovereignty,
suzerainty, mandate or authority of the same High
contracting Party." Sc juri
The contract of carriage between the private respondent
and Singapore Airlines although performed by different
carriers under a series of airline tickets, including that
issued by petitioner, constitutes a single operation.
Members of the IATA are under a general pool
partnership agreement wherein they act as agent of each
other in the issuance of tickets[11] to contracted
passengers to boost ticket sales worldwide and at the
same time provide passengers easy access to airlines
which are otherwise inaccessible in some parts of the
world. Booking and reservation among airline members
are allowed even by telephone and it has become an
accepted practice among them.[12] A member airline
which enters into a contract of carriage consisting of a
series of trips to be performed by different carriers is
authorized to receive the fare for the whole trip and
through the required process of interline settlement of
accounts by way of the IATA clearing house an airline is
duly compensated for the segment of the trip
serviced.[13] Thus, when the petitioner accepted the
unused portion of the conjunction tickets, entered it in
the IATA clearing house and undertook to transport the
private respondent over the route covered by the unused
portion of the conjunction tickets, i.e., Geneva to New
York, the petitioner tacitly recognized its commitment
under the IATA pool arrangement to act as agent of the
principal contracting airline, Singapore Airlines, as to the
segment of the trip the petitioner agreed to undertake.
As such, the petitioner thereby assumed the obligation
to take the place of the carrier originally designated in
the original conjunction ticket. The petitioners argument
that it is not a designated carrier in the original
conjunction tickets and that it issued its own ticket is not
decisive of its liability. The new ticket was simply a
replacement for the unused portion of the conjunction
ticket, both tickets being for the same amount of US$
2,760 and having the same points of departure and
destination.[14] By constituting itself as an agent of the
principal carrier the petitioners undertaking should be
taken as part of a single operation under the contract of
carriage executed by the private respondent and
Singapore Airlines in Manila.
The quoted provisions of the Warsaw Convention Art.
1(3) clearly states that a contract of air transportation is
taken as a single operation whether it is founded on a
single contract or a series of contracts. The number of
tickets issued does not detract from the oneness of the
contract of carriage as long as the parties regard the
contract as a single operation. The evident purpose
underlying this Article is to promote international air
travel by facilitating the procurement of a series of
contracts for air transportation through a single principal
and obligating different airlines to be bound by one
contract of transportation. Petitioners acquiescence to
take the place of the original designated carrier binds it
under the contract of carriage entered into by the private
respondent and Singapore Airlines in Manila. Juris sc
The third option of the plaintiff under Art 28 (1) of the
Warsaw Convention e.g., to sue in the place of business
of the carrier wherein the contract was made, is
therefore, Manila, and Philippine courts are clothed with
jurisdiction over this case. We note that while this case
was filed in Cebu and not in Manila the issue of venue is
no longer an issue as the petitioner is deemed to have
waived it when it presented evidence before the trial
court.
The issue raised in SP No. 31452 which is whether or not
the trial court committed grave abuse of discretion in
ordering the deposition of the petitioners security officer
taken in Geneva to be stricken off the record for failure
of the said security officer to appear before the
Philippine consul in Geneva to answer the cross-
interrogatories filed by the private respondent does not
have to be resolved. The subsequent appearance of the
said security officer before the Philippine consul in
Geneva on September 19, 1994 and the answer to the
cross-interrogatories propounded by the private
respondent was transmitted to the trial court by the
Philippine consul in Geneva on September 23, 1994[15]
should be deemed as full compliance with the requisites
of the right of the private respondent to cross-examine
the petitioners witness. The deposition filed by the
petitioner should be reinstated as part of the evidence
and considered together with the answer to the cross-
interrogatories.
WHEREFORE, the judgment of the appellate court in CA-
G.R. SP No. 30946 is affirmed. The case is ordered
remanded to the court of origin for further proceedings.
The decision of the appellate court in CA-G.R. SP. No.
31452 is set aside. The deposition of the petitioners
security officer is reinstated as part of the evidence.
SO ORDERED.
[G.R. No. 127768. November 19, 1999]
UNITED AIRLINES, petitioner, vs. WILLIE J. UY,
respondent.
DECISION
BELLOSILLO, J.:
UNITED AIRLINES assails in this petition for review on
certiorari under Rule 45 the 29 August 1995 Decision of
the Court of Appeals in CA-G.R. CV No. 39761 which
reversed the 7 August 1992 order issued by the trial court
in Civil Case No. Q-92-12410[1] granting petitioner's
motion to dismiss based on prescription of cause of
action. The issues sought to be resolved are whether the
notice of appeal to the appellate court was timely filed,
and whether Art. 29 of the Warsaw Convention[2] should
apply to the case at bar.
On 13 October 1989 respondent Willie J. Uy, a revenue
passenger on United Airlines Flight No. 819 for the San
Francisco - Manila route, checked in together with his
luggage one piece of which was found to be overweight
at the airline counter. To his utter humiliation, an
employee of petitioner rebuked him saying that he
should have known the maximum weight allowance to
be 70 kgs. per bag and that he should have packed his
things accordingly. Then, in a loud voice in front of the
milling crowd, she told respondent to repack his things
and transfer some of them from the overweight luggage
to the lighter ones. Not wishing to create further scene,
respondent acceded only to find his luggage still
overweight. The airline then billed him overweight
charges which he offered to pay with a miscellaneous
charge order (MCO) or an airline pre-paid credit.
However, the airlines employee, and later its airport
supervisor, adamantly refused to honor the MCO
pointing out that there were conflicting figures listed on
it. Despite the explanation from respondent that the last
figure written on the MCO represented his balance,
petitioners employees did not accommodate him. Faced
with the prospect of leaving without his luggage,
respondent paid the overweight charges with his
American Express credit card.
Respondents troubles did not end there. Upon arrival in
Manila, he discovered that one of his bags had been
slashed and its contents stolen. He particularized his
losses to be around US $5,310.00. In a letter dated 16
October 1989 respondent bewailed the insult,
embarrassment and humiliating treatment he suffered in
the hands of United Airlines employees, notified
petitioner of his loss and requested reimbursement
thereof. Petitioner United Airlines, through Central
Baggage Specialist Joan Kroll, did not refute any of
respondents allegations and mailed a check representing
the payment of his loss based on the maximum liability
of US $9.70 per pound. Respondent, thinking the amount
to be grossly inadequate to compensate him for his
losses, as well as for the indignities he was subjected to,
sent two (2) more letters to petitioner airline, one dated
4 January 1990 through a certain Atty. Pesigan, and
another dated 28 October 1991 through Atty. Ramon U.
Ampil demanding an out-of-court settlement of
P1,000,000.00. Petitioner United Airlines did not accede
to his demands.
Consequently, on 9 June 1992 respondent filed a
complaint for damages against United Airlines alleging
that he was a person of good station, sitting in the board
of directors of several top 500 corporations and holding
senior executive positions for such similar firms;[3] that
petitioner airline accorded him ill and shabby treatment
to his extreme embarrassment and humiliation; and, as
such he should be paid moral damages of at least
P1,000,000.00, exemplary damages of at least
P500,000.00, plus attorney's fees of at least P50,000.00.
Similarly, he alleged that the damage to his luggage and
its stolen contents amounted to around $5,310.00, and
requested reimbursement therefor.
United Airlines moved to dismiss the complaint on the
ground that respondents cause of action had prescribed,
invoking Art. 29 of the Warsaw Convention which
provides -
Art. 29 (1) The right to damages shall be extinguished if
an action is not brought within two (2) years, reckoned
from the date of arrival at the destination, or from the
date on which the aircraft ought to have arrived, or from
the date on which the transportation stopped.
(2) The method of calculating the period of limitation
shall be determined by the law of the court to which the
case is submitted.
Respondent countered that par. (1) of Art. 29 of the
Warsaw Convention must be reconciled with par. (2)
thereof which states that "the method of calculating the
period of limitation shall be determined by the law of the
court to which the case is submitted." Interpreting thus,
respondent noted that according to Philippine laws the
prescription of actions is interrupted "when they are filed
before the court, when there is a written extrajudicial
demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor."[4] Since he
made several demands upon United Airlines: first,
through his personal letter dated 16 October 1989;
second, through a letter dated 4 January 1990 from Atty.
Pesigan; and, finally, through a letter dated 28 October
1991 written for him by Atty. Ampil, the two (2)-year
period of limitation had not yet been exhausted.
On 2 August 1992 the trial court ordered the dismissal of
the action holding that the language of Art. 29 is clear
that the action must be brought within two (2) years
from the date of arrival at the destination. It held that
although the second paragraph of Art. 29 speaks of
deference to the law of the local court in "calculating the
period of limitation," the same does not refer to the local
forums rules in interrupting the prescriptive period but
only to the rules of determining the time in which the
action may be deemed commenced, and within our
jurisdiction the action shall be deemed "brought" or
commenced by the filing of a complaint. Hence, the trial
court concluded that Art. 29 excludes the application of
our interruption rules.
Respondent received a copy of the dismissal order on 17
August 1992. On 31 August 1992, or fourteen (14) days
later, he moved for the reconsideration of the trial courts
order. The trial court denied the motion and respondent
received copy of the denial order on 28 September 1992.
Two (2) days later, on 1 October 1992 respondent filed
his notice of appeal.
United Airlines once again moved for the dismissal of the
case this time pointing out that respondents fifteen (15)-
day period to appeal had already elapsed. Petitioner
argued that having used fourteen (14) days of the
reglementary period for appeal, respondent Uy had only
one (1) day remaining to perfect his appeal, and since he
filed his notice of appeal two (2) days later, he failed to
meet the deadline.
In its questioned Decision dated 29 August 1995[5] the
appellate court gave due course to the appeal holding
that respondents delay of two (2) days in filing his notice
of appeal did not hinder it from reviewing the appealed
order of dismissal since jurisprudence dictates that an
appeal may be entertained despite procedural lapses
anchored on equity and justice.
On the applicability of the Warsaw Convention, the
appellate court ruled that the Warsaw Convention did
not preclude the operation of the Civil Code and other
pertinent laws. Respondents failure to file his complaint
within the two (2)-year limitation provided in the
Warsaw Convention did not bar his action since he could
still hold petitioner liable for breach of other provisions
of the Civil Code which prescribe a different period or
procedure for instituting an action. Further, under
Philippine laws, prescription of actions is interrupted
where, among others, there is a written extrajudicial
demand by the creditors, and since respondent Uy sent
several demand letters to petitioner United Airlines, the
running of the two (2)-year prescriptive period was in
effect suspended. Hence, the appellate court ruled that
respondents cause of action had not yet prescribed and
ordered the records remanded to the Quezon City trial
court for further proceedings.
Petitioner now contends that the appellate court erred
in assuming jurisdiction over respondent's appeal since it
is clear that the notice of appeal was filed out of time. It
argues that the courts relax the stringent rule on
perfection of appeals only when there are extraordinary
circumstances, e.g., when the Republic stands to lose
hundreds of hectares of land already titled and used for
educational purposes; when the counsel of record was
already dead; and wherein appellant was the owner of
the trademark for more than thirty (30) years, and the
circumstances of the present case do not compare to the
above exceptional cases.[6]
Section 1 of Rule 45 of the 1997 Rules of Civil Procedure
provides that "a party may appeal by certiorari, from a
judgment of the Court of Appeals, by filing with the
Supreme Court a petition for certiorari, within fifteen
(15) days from notice of judgment or of the denial of his
motion for reconsideration filed in due time x x x x" This
Rule however should not be interpreted as "to sacrifice
the substantial right of the appellant in the sophisticated
altar of technicalities with impairment of the sacred
principles of justice."[7] It should be borne in mind that
the real purpose behind the limitation of the period of
appeal is to forestall or avoid an unreasonable delay in
the administration of justice. Thus, we have ruled that
delay in the filing of a notice of appeal does not justify
the dismissal of the appeal where the circumstances of
the case show that there is no intent to delay the
administration of justice on the part of appellant's
counsel,[8] or when there are no substantial rights
affected,[9] or when appellant's counsel committed a
mistake in the computation of the period of appeal, an
error not attributable to negligence or bad faith.[10]
In the instant case, respondent filed his notice of appeal
two (2) days later than the prescribed period. Although
his counsel failed to give the reason for the delay, we are
inclined to give due course to his appeal due to the
unique and peculiar facts of the case and the serious
question of law it poses. In the now almost trite but still
good principle, technicality, when it deserts its proper
office as an aid to justice and becomes its great
hindrance and chief enemy, deserves scant
consideration.[11]
Petitioner likewise contends that the appellate court
erred in ruling that respondent's cause of action has not
prescribed since delegates to the Warsaw Convention
clearly intended the two (2)-year limitation incorporated
in Art. 29 as an absolute bar to suit and not to be made
subject to the various tolling provisions of the laws of the
forum. Petitioner argues that in construing the second
paragraph of Art. 29 private respondent cannot read into
it Philippine rules on interruption of prescriptive periods
and state that his extrajudicial demand has interrupted
the period of prescription.[12] American jurisprudence
has declared that "Art. 29 (2) was not intended to permit
forums to consider local limitation tolling provisions but
only to let local law determine whether an action had
been commenced within the two-year period, since the
method of commencing a suit varies from country to
country."[13]
Within our jurisdiction we have held that the Warsaw
Convention can be applied, or ignored, depending on the
peculiar facts presented by each case.[14] Thus, we have
ruled that the Convention's provisions do not regulate or
exclude liability for other breaches of contract by the
carrier or misconduct of its officers and employees, or for
some particular or exceptional type of damage.[15]
Neither may the Convention be invoked to justify the
disregard of some extraordinary sort of damage resulting
to a passenger and preclude recovery therefor beyond
the limits set by said Convention.[16] Likewise, we have
held that the Convention does not preclude the
operation of the Civil Code and other pertinent laws.[17]
It does not regulate, much less exempt, the carrier from
liability for damages for violating the rights of its
passengers under the contract of carriage, especially if
willful misconduct on the part of the carrier's employees
is found or established.[18]
Respondent's complaint reveals that he is suing on two
(2) causes of action: (a) the shabby and humiliating
treatment he received from petitioner's employees at
the San Francisco Airport which caused him extreme
embarrassment and social humiliation; and, (b) the
slashing of his luggage and the loss of his personal effects
amounting to US $5,310.00.
While his second cause of action - an action for damages
arising from theft or damage to property or goods - is
well within the bounds of the Warsaw Convention, his
first cause of action -an action for damages arising from
the misconduct of the airline employees and the
violation of respondent's rights as passenger - clearly is
not.
Consequently, insofar as the first cause of action is
concerned, respondent's failure to file his complaint
within the two (2)-year limitation of the Warsaw
Convention does not bar his action since petitioner
airline may still be held liable for breach of other
provisions of the Civil Code which prescribe a different
period or procedure for instituting the action,
specifically, Art. 1146 thereof which prescribes four (4)
years for filing an action based on torts.
As for respondent's second cause of action, indeed the
travaux preparatories of the Warsaw Convention reveal
that the delegates thereto intended the two (2)-year
limitation incorporated in Art. 29 as an absolute bar to
suit and not to be made subject to the various tolling
provisions of the laws of the forum. This therefore
forecloses the application of our own rules on
interruption of prescriptive periods. Article 29, par. (2),
was intended only to let local laws determine whether an
action had been commenced within the two (2)-year
period, and within our jurisdiction an action shall be
deemed commenced upon the filing of a complaint.
Since it is indisputable that respondent filed the present
action beyond the two (2)-year time frame his second
cause of action must be barred. Nonetheless, it cannot
be doubted that respondent exerted efforts to
immediately convey his loss to petitioner, even
employed the services of two (2) lawyers to follow up his
claims, and that the filing of the action itself was delayed
because of petitioner's evasion.
In this regard, Philippine Airlines, Inc. v. Court of
Appeals[19] is instructive. In this case of PAL, private
respondent filed an action for damages against
petitioner airline for the breakage of the front glass of
the microwave oven which she shipped under PAL Air
Waybill No. 0-79-1013008-3. Petitioner averred that, the
action having been filed seven (7) months after her
arrival at her port of destination, she failed to comply
with par. 12, subpar. (a) (1), of the Air Waybill which
expressly provided that the person entitled to delivery
must make a complaint to the carrier in writing in case of
visible damage to the goods, immediately after discovery
of the damage and at the latest within 14 days from
receipt of the goods. Despite non-compliance therewith
the Court held that by private respondent's immediate
submission of a formal claim to petitioner, which
however was not immediately entertained as it was
referred from one employee to another, she was
deemed to have substantially complied with the
requirement. The Court noted that with private
respondent's own zealous efforts in pursuing her claim it
was clearly not her fault that the letter of demand for
damages could only be filed, after months of
exasperating follow-up of the claim, on 13 August 1990,
and that if there was any failure at all to file the formal
claim within the prescriptive period contemplated in the
Air Waybill, this was largely because of the carrier's own
doing, the consequences of which could not in all fairness
be attributed to private respondent.
In the same vein must we rule upon the circumstances
brought before us. Verily, respondent filed his complaint
more than two (2) years later, beyond the period of
limitation prescribed by the Warsaw Convention for filing
a claim for damages. However, it is obvious that
respondent was forestalled from immediately filing an
action because petitioner airline gave him the
runaround, answering his letters but not giving in to his
demands. True, respondent should have already filed an
action at the first instance when his claims were denied
by petitioner but the same could only be due to his desire
to make an out-of-court settlement for which he cannot
be faulted. Hence, despite the express mandate of Art.
29 of the Warsaw Convention that an action for damages
should be filed within two (2) years from the arrival at
the place of destination, such rule shall not be applied in
the instant case because of the delaying tactics employed
by petitioner airline itself. Thus, private respondent's
second cause of action cannot be considered as time-
barred under Art. 29 of the Warsaw Convention.

WHEREFORE, the assailed Decision of the Court of
Appeals reversing and setting aside the appealed order
of the trial court granting the motion to dismiss the
complaint, as well as its Resolution denying
reconsideration, is AFFIRMED. Let the records of the case
be remanded to the court of origin for further
proceedings taking its bearings from this disquisition.
SO ORDERED.
G.R. No. 172822 December 18, 2009
MOF Co., Inc. v Shin Yang Brokerage Corp.
DECISION
DEL CASTILLO, J.:
The necessity of proving lies with the person who sues.
The refusal of the consignee named in the bill of lading
to pay the freightage on the claim that it is not privy to
the contract of affreightment propelled the shipper to
sue for collection of money, stressing that its sole
evidence, the bill of lading, suffices to prove that the
consignee is bound to pay. Petitioner now comes to us
by way of Petition for Review on Certiorari[1] under Rule
45 praying for the reversal of the Court of Appeals' (CA)
judgment that dismissed its action for sum of money for
insufficiency of evidence.
Factual Antecedents
On October 25, 2001, Halla Trading Co., a company based
in Korea, shipped to Manila secondhand cars and other
articles on board the vessel Hanjin Busan 0238W. The bill
of lading covering the shipment, i.e., Bill of Lading No.
HJSCPUSI14168303,[2] which was prepared by the
carrier Hanjin Shipping Co., Ltd. (Hanjin), named
respondent Shin Yang Brokerage Corp. (Shin Yang) as the
consignee and indicated that payment was on a Freight
Collect basis, i.e., that the consignee/receiver of the
goods would be the one to pay for the freight and other
charges in the total amount of P57,646.00.[3]
The shipment arrived in Manila on October 29, 2001.
Thereafter, petitioner MOF Company, Inc. (MOF),
Hanjins exclusive general agent in the Philippines,
repeatedly demanded the payment of ocean freight,
documentation fee and terminal handling charges from
Shin Yang. The latter, however, failed and refused to pay
contending that it did not cause the importation of the
goods, that it is only the Consolidator of the said
shipment, that the ultimate consignee did not endorse in
its favor the original bill of lading and that the bill of
lading was prepared without its consent.
Thus, on March 19, 2003, MOF filed a case for sum of
money before the Metropolitan Trial Court of Pasay City
(MeTC Pasay) which was docketed as Civil Case No. 206-
03 and raffled to Branch 48. MOF alleged that Shin Yang,
a regular client, caused the importation and shipment of
the goods and assured it that ocean freight and other
charges would be paid upon arrival of the goods in
Manila. Yet, after Hanjin's compliance, Shin Yang unjustly
breached its obligation to pay. MOF argued that Shin
Yang, as the named consignee in the bill of lading,
entered itself as a party to the contract and bound itself
to the Freight Collect arrangement. MOF thus prayed for
the payment of P57,646.00 representing ocean freight,
documentation fee and terminal handling charges as well
as damages and attorneys fees.
Claiming that it is merely a consolidator/forwarder and
that Bill of Lading No. HJSCPUSI14168303 was not
endorsed to it by the ultimate consignee, Shin Yang
denied any involvement in shipping the goods or in
promising to shoulder the freightage. It asserted that it
never authorized Halla Trading Co. to ship the articles or
to have its name included in the bill of lading. Shin Yang
also alleged that MOF failed to present supporting
documents to prove that it was Shin Yang that caused the
importation or the one that assured payment of the
shipping charges upon arrival of the goods in Manila.
Ruling of the Metropolitan Trial Court
On June 16, 2004, the MeTC of Pasay City, Branch 48
rendered its Decision[4] in favor of MOF. It ruled that
Shin Yang cannot disclaim being a party to the contract
of affreightment because:
x x x it would appear that defendant has business
transactions with plaintiff. This is evident from
defendants letters dated 09 May 2002 and 13 May 2002
(Exhibits 1 and 2, defendants Position Paper) where it
requested for the release of refund of container deposits
x x x. [In] the mind of the Court, by analogy, a written
contract need not be necessary; a mutual understanding
[would suffice]. Further, plaintiff would have not
included the name of the defendant in the bill of lading,
had there been no prior agreement to that effect.
In sum, plaintiff has sufficiently proved its cause of action
against the defendant and the latter is obliged to honor
its agreement with plaintiff despite the absence of a
written contract.[5]
The dispositive portion of the MeTC Decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of plaintiff and against the defendant,
ordering the latter to pay plaintiff as follows:
1. P57,646.00 plus legal interest from the date of
demand until fully paid,
2. P10,000.00 as and for attorneys fees and
3. the cost of suit.
Ruling of the Regional Trial Court
The Regional Trial Court (RTC) of Pasay City, Branch 108
affirmed in toto the Decision of the MeTC. It held that:
MOF and Shin Yang entered into a contract of
affreightment which Blacks Law Dictionary defined as a
contract with the ship owner to hire his ship or part of it,
for the carriage of goods and generally take the form
either of a charter party or a bill of lading.
The bill of lading contain[s] the information embodied in
the contract.
Article 652 of the Code of Commerce provides that the
charter party must be in writing; however, Article 653
says: If the cargo should be received without charter
party having been signed, the contract shall be
understood as executed in accordance with what
appears in the bill of lading, the sole evidence of title with
regard to the cargo for determining the rights and
obligations of the ship agent, of the captain and of the
charterer. Thus, the Supreme Court opined in the Market
Developers, Inc. (MADE) vs. Honorable Intermediate
Appellate Court and Gaudioso Uy, G.R. No. 74978,
September 8, 1989, this kind of contract may be oral. In
another case, Compania Maritima vs. Insurance
Company of North America, 12 SCRA 213 the contract of
affreightment by telephone was recognized where the
oral agreement was later confirmed by a formal booking.
Defendant is liable to pay the sum of P57,646.00, with
interest until fully paid, attorneys fees of P10,000.00
[and] cost of suit.
Considering all the foregoing, this Court affirms in toto
the decision of the Court a quo.
Ruling of the Court of Appeals
Seeing the matter in a different light, the CA dismissed
MOFs complaint and refused to award any form of
damages or attorneys fees. It opined that MOF failed to
substantiate its claim that Shin Yang had a hand in the
importation of the articles to the Philippines or that it
gave its consent to be a consignee of the subject goods.
In its March 22, 2006 Decision,[8] the CA said:
This Court is persuaded [that except] for the Bill of
Lading, respondent has not presented any other
evidence to bolster its claim that petitioner has entered
[into] an agreement of affreightment with respondent,
be it verbal or written. It is noted that the Bill of Lading
was prepared by Hanjin Shipping, not the petitioner.
Hanjin is the principal while respondent is the formers
agent. (p. 43, rollo)
The conclusion of the court a quo, which was upheld by
the RTC Pasay City, Branch 108 xxx is purely speculative
and conjectural. A court cannot rely on speculations,
conjectures or guesswork, but must depend upon
competent proof and on the basis of the best evidence
obtainable under the circumstances. Litigation cannot be
properly resolved by suppositions, deductions or even
presumptions, with no basis in evidence, for the truth
must have to be determined by the hard rules of
admissibility and proof (Lagon vs. Hooven Comalco
Industries, Inc. 349 SCRA 363).
While it is true that a bill of lading serves two (2)
functions: first, it is a receipt for the goods shipped;
second, it is a contract by which three parties, namely,
the shipper, the carrier and the consignee who
undertake specific responsibilities and assume stipulated
obligations (Belgian Overseas Chartering and Shipping
N.V. vs. Phil. First Insurance Co., Inc., 383 SCRA 23), x x x
if the same is not accepted, it is as if one party does not
accept the contract. Said the Supreme Court:
A bill of lading delivered and accepted constitutes the
contract of carriage[,] even though not signed, because
the acceptance of a paper containing the terms of a
proposed contract generally constitutes an acceptance
of the contract and of all its terms and conditions of
which the acceptor has actual or constructive notice
(Keng Hua Paper Products Co., Inc. vs. CA, 286 SCRA 257).
In the present case, petitioner did not only [refuse to]
accept the bill of lading, but it likewise disown[ed] the
shipment x x x. [Neither did it] authorize Halla Trading
Company or anyone to ship or export the same on its
behalf.
It is settled that a contract is upheld as long as there is
proof of consent, subject matter and cause (Sta. Clara
Homeowners Association vs. Gaston, 374 SCRA 396). In
the case at bar, there is not even any iota of evidence to
show that petitioner had given its consent.
He who alleges a fact has the burden of proving it and a
mere allegation is not evidence (Luxuria Homes Inc. vs.
CA, 302 SCRA 315).
The 40-footer van contains goods of substantial value. It
is highly improbable for petitioner not to pay the
charges, which is very minimal compared with the value
of the goods, in order that it could work on the release
thereof.
For failure to substantiate its claim by preponderance of
evidence, respondent has not established its case against
petitioner.[9]
Petitioners filed a motion for reconsideration but it was
denied in a Resolution[10] dated May 25, 2006. Hence,
this petition for review on certiorari.
Petitioners Arguments
In assailing the CAs Decision, MOF argues that the factual
findings of both the MeTC and RTC are entitled to great
weight and respect and should have bound the CA. It
stresses that the appellate court has no justifiable reason
to disturb the lower courts judgments because their
conclusions are well-supported by the evidence on
record.
MOF further argues that the CA erred in labeling the
findings of the lower courts as purely speculative and
conjectural. According to MOF, the bill of lading, which
expressly stated Shin Yang as the consignee, is the best
evidence of the latters actual participation in the
transportation of the goods. Such document, validly
entered, stands as the law among the shipper, carrier
and the consignee, who are all bound by the terms stated
therein. Besides, a carriers valid claim after it fulfilled its
obligation cannot just be rejected by the named
consignee upon a simple denial that it ever consented to
be a party in a contract of affreightment, or that it ever
participated in the preparation of the bill of lading. As
against Shin Yangs bare denials, the bill of lading is the
sufficient preponderance of evidence required to prove
MOFs claim. MOF maintains that Shin Yang was the one
that supplied all the details in the bill of lading and
acquiesced to be named consignee of the shipment on a
Freight Collect basis.
Lastly, MOF claims that even if Shin Yang never gave its
consent, it cannot avoid its obligation to pay, because it
never objected to being named as the consignee in the
bill of lading and that it only protested when the
shipment arrived in the Philippines, presumably due to a
botched transaction between it and Halla Trading Co.
Furthermore, Shin Yangs letters asking for the refund of
container deposits highlight the fact that it was aware of
the shipment and that it undertook preparations for the
intended release of the shipment.
Respondents Arguments
Echoing the CA decision, Shin Yang insists that MOF has
no evidence to prove that it consented to take part in the
contract of affreightment. Shin Yang argues that MOF
miserably failed to present any evidence to prove that it
was the one that made preparations for the subject
shipment, or that it is an actual shipping practice that
forwarders/consolidators as consignees are the ones
that provide carriers details and information on the bills
of lading.
Shin Yang contends that a bill of lading is essentially a
contract between the shipper and the carrier and
ordinarily, the shipper is the one liable for the freight
charges. A consignee, on the other hand, is initially a
stranger to the bill of lading and can be liable only when
the bill of lading specifies that the charges are to be paid
by the consignee. This liability arises from either a) the
contract of agency between the shipper/consignor and
the consignee; or b) the consignees availment of the
stipulation pour autrui drawn up by and between the
shipper/ consignor and carrier upon the consignees
demand that the goods be delivered to it. Shin Yang
contends that the fact that its name was mentioned as
the consignee of the cargoes did not make it
automatically liable for the freightage because it never
benefited from the shipment. It never claimed or
accepted the goods, it was not the shippers agent, it was
not aware of its designation as consignee and the original
bill of lading was never endorsed to it.
Issue
The issue for resolution is whether a consignee, who is
not a signatory to the bill of lading, is bound by the
stipulations thereof. Corollarily, whether respondent
who was not an agent of the shipper and who did not
make any demand for the fulfillment of the stipulations
of the bill of lading drawn in its favor is liable to pay the
corresponding freight and handling charges.
Our Ruling
Since the CA and the trial courts arrived at different
conclusions, we are constrained to depart from the
general rule that only errors of law may be raised in a
Petition for Review on Certiorari under Rule 45 of the
Rules of Court and will review the evidence
presented.[11]
The bill of lading is oftentimes drawn up by the
shipper/consignor and the carrier without the
intervention of the consignee. However, the latter can be
bound by the stipulations of the bill of lading when a)
there is a relation of agency between the shipper or
consignor and the consignee or b) when the consignee
demands fulfillment of the stipulation of the bill of lading
which was drawn up in its favor.[12]
In Keng Hua Paper Products Co., Inc. v. Court of
Appeals,[13] we held that once the bill of lading is
received by the consignee who does not object to any
terms or stipulations contained therein, it constitutes as
an acceptance of the contract and of all of its terms and
conditions, of which the acceptor has actual or
constructive notice.
In Mendoza v. Philippine Air Lines, Inc.,[14] the consignee
sued the carrier for damages but nevertheless claimed
that he was never a party to the contract of
transportation and was a complete stranger thereto. In
debunking Mendozas contention, we held that:
x x x First, he insists that the articles of the Code of
Commerce should be applied; that he invokes the
provisions of said Code governing the obligations of a
common carrier to make prompt delivery of goods given
to it under a contract of transportation. Later, as already
said, he says that he was never a party to the contract of
transportation and was a complete stranger to it, and
that he is now suing on a tort or a violation of his rights
as a stranger (culpa aquiliana). If he does not invoke the
contract of carriage entered into with the defendant
company, then he would hardly have any leg to stand on.
His right to prompt delivery of the can of film at the Pili
Air Port stems and is derived from the contract of
carriage under which contract, the PAL undertook to
carry the can of film safely and to deliver it to him
promptly. Take away or ignore that contract and the
obligation to carry and to deliver and right to prompt
delivery disappear. Common carriers are not obligated
by law to carry and to deliver merchandise, and persons
are not vested with the right to prompt delivery, unless
such common carriers previously assume the obligation.
Said rights and obligations are created by a specific
contract entered into by the parties. In the present case,
the findings of the trial court which as already stated, are
accepted by the parties and which we must accept are to
the effect that the LVN Pictures Inc. and Jose Mendoza
on one side, and the defendant company on the other,
entered into a contract of transportation (p. 29, Rec. on
Appeal). One interpretation of said finding is that the LVN
Pictures Inc. through previous agreement with Mendoza
acted as the latter's agent. When he negotiated with the
LVN Pictures Inc. to rent the film 'Himala ng Birhen' and
show it during the Naga town fiesta, he most probably
authorized and enjoined the Picture Company to ship the
film for him on the PAL on September 17th. Another
interpretation is that even if the LVN Pictures Inc. as
consignor of its own initiative, and acting independently
of Mendoza for the time being, made Mendoza a
consignee. [Mendoza made himself a party to the
contract of transportaion when he appeared at the Pili
Air Port armed with the copy of the Air Way Bill (Exh. 1)
demanding the delivery of the shipment to him.] The
very citation made by appellant in his memorandum
supports this view. Speaking of the possibility of a conflict
between the order of the shipper on the one hand and
the order of the consignee on the other, as when the
shipper orders the shipping company to return or retain
the goods shipped while the consignee demands their
delivery, Malagarriga in his book Codigo de Comercio
Comentado, Vol. 1, p. 400, citing a decision of the
Argentina Court of Appeals on commercial matters, cited
by Tolentino in Vol. II of his book entitled 'Commentaries
and Jurisprudence on the Commercial Laws of the
Philippines' p. 209, says that the right of the shipper to
countermand the shipment terminates when the
consignee or legitimate holder of the bill of lading
appears with such bill of lading before the carrier and
makes himself a party to the contract. Prior to that time
he is a stranger to the contract.
Still another view of this phase of the case is that
contemplated in Art. 1257, paragraph 2, of the old Civil
Code (now Art. 1311, second paragraph) which reads
thus:
Should the contract contain any stipulation in favor of a
third person, he may demand its fulfillment provided he
has given notice of his acceptance to the person bound
before the stipulation has been revoked.'

Here, the contract of carriage between the LVN Pictures
Inc. and the defendant carrier contains the stipulations
of delivery to Mendoza as consignee. His demand for the
delivery of the can of film to him at the Pili Air Port may
be regarded as a notice of his acceptance of the
stipulation of the delivery in his favor contained in the
contract of carriage and delivery. In this case he also
made himself a party to the contract, or at least has come
to court to enforce it. His cause of action must
necessarily be founded on its breach.[15] (Emphasis
Ours)
In sum, a consignee, although not a signatory to the
contract of carriage between the shipper and the carrier,
becomes a party to the contract by reason of either a)
the relationship of agency between the consignee and
the shipper/ consignor; b) the unequivocal acceptance of
the bill of lading delivered to the consignee, with full
knowledge of its contents or c) availment of the
stipulation pour autrui, i.e., when the consignee, a third
person, demands before the carrier the fulfillment of the
stipulation made by the consignor/shipper in the
consignees favor, specifically the delivery of the
goods/cargoes shipped.[16]
In the instant case, Shin Yang consistently denied in all of
its pleadings that it authorized Halla Trading, Co. to ship
the goods on its behalf; or that it got hold of the bill of
lading covering the shipment or that it demanded the
release of the cargo. Basic is the rule in evidence that the
burden of proof lies upon him who asserts it, not upon
him who denies, since, by the nature of things, he who
denies a fact cannot produce any proof of it.[17] Thus,
MOF has the burden to controvert all these denials, it
being insistent that Shin Yang asserted itself as the
consignee and the one that caused the shipment of the
goods to the Philippines.
In civil cases, the party having the burden of proof must
establish his case by preponderance of evidence,[18]
which means evidence which is of greater weight, or
more convincing than that which is offered in
opposition to it.[19] Here, MOF failed to meet the
required quantum of proof. Other than presenting the
bill of lading, which, at most, proves that the carrier
acknowledged receipt of the subject cargo from the
shipper and that the consignee named is to shoulder the
freightage, MOF has not adduced any other credible
evidence to strengthen its cause of action. It did not even
present any witness in support of its allegation that it was
Shin Yang which furnished all the details indicated in the
bill of lading and that Shin Yang consented to shoulder
the shipment costs. There is also nothing in the records
which would indicate that Shin Yang was an agent of
Halla Trading Co. or that it exercised any act that would
bind it as a named consignee. Thus, the CA correctly
dismissed the suit for failure of petitioner to establish its
cause against respondent.
WHEREFORE, the petition is DENIED. The assailed
Decision of the Court of Appeals dated March 22, 2006
dismissing petitioners complaint and the Resolution
dated May 25, 2006 denying the motion for
reconsideration are AFFIRMED.
SO ORDERED.
G.R. No. 146018. June 25, 2003]
EDGAR COKALIONG SHIPPING LINES, INC., petitioner,
vs. UCPB GENERAL INSURANCE COMPANY, INC.,
DECISION
PANGANIBAN, J.:
The liability of a common carrier for the loss of goods may, by
stipulation in the bill of lading, be limited to the value declared
by the shipper. On the other hand, the liability of the insurer is
determined by the actual value covered by the insurance
policy and the insurance premiums paid therefor, and not
necessarily by the value declared in the bill of lading.
The Case
Before the Court is a Petition for Review[1] under Rule 45 of
the Rules of Court, seeking to set aside the August 31, 2000
Decision[2] and the November 17, 2000 Resolution[3] of the
Court of Appeals[4] (CA) in CA-GR SP No. 62751. The
dispositive part of the Decision reads:
IN THE LIGHT OF THE FOREGOING, the appeal is GRANTED. The
Decision appealed from is REVERSED. [Petitioner] is hereby
condemned to pay to [respondent] the total amount of
P148,500.00, with interest thereon, at the rate of 6% per
annum, from date of this Decision of the Court. [Respondents]
claim for attorneys fees [is] DISMISSED. [Petitioners]
counterclaims are DISMISSED.[5]
The assailed Resolution denied petitioners Motion for
Reconsideration.
On the other hand, the disposition of the Regional Trial
Courts[6] Decision,[7] which was later reversed by the CA,
states:
WHEREFORE, premises considered, the case is hereby
DISMISSED for lack of merit. No cost.[8]
The Facts
The facts of the case are summarized by the appellate
court in this wise:
Sometime on December 11, 1991, Nestor Angelia
delivered to the Edgar Cokaliong Shipping Lines, Inc.
(now Cokaliong Shipping Lines), [petitioner] for brevity,
cargo consisting of one (1) carton of Christmas dcor and
two (2) sacks of plastic toys, to be transported on board
the M/V Tandag on its Voyage No. T-189 scheduled to
depart from Cebu City, on December 12, 1991, for
Tandag, Surigao del Sur. [Petitioner] issued Bill of Lading
No. 58, freight prepaid, covering the cargo. Nestor
Angelia was both the shipper and consignee of the cargo
valued, on the face thereof, in the amount of P6,500.00.
Zosimo Mercado likewise delivered cargo to [petitioner],
consisting of two (2) cartons of plastic toys and Christmas
decor, one (1) roll of floor mat and one (1) bundle of
various or assorted goods for transportation thereof
from Cebu City to Tandag, Surigao del Sur, on board the
said vessel, and said voyage. [Petitioner] issued Bill of
Lading No. 59 covering the cargo which, on the face
thereof, was valued in the amount of P14,000.00. Under
the Bill of Lading, Zosimo Mercado was both the shipper
and consignee of the cargo.
On December 12, 1991, Feliciana Legaspi insured the
cargo, covered by Bill of Lading No. 59, with the UCPB
General Insurance Co., Inc., [respondent] for brevity, for
the amount of P100,000.00 against all risks under Open
Policy No. 002/91/254 for which she was issued, by
[respondent], Marine Risk Note No. 18409 on said date.
She also insured the cargo covered by Bill of Lading No.
58, with [respondent], for the amount of P50,000.00,
under Open Policy No. 002/91/254 on the basis of which
[respondent] issued Marine Risk Note No. 18410 on said
date.
When the vessel left port, it had thirty-four (34)
passengers and assorted cargo on board, including the
goods of Legaspi. After the vessel had passed by the
Mandaue-Mactan Bridge, fire ensued in the engine
room, and, despite earnest efforts of the officers and
crew of the vessel, the fire engulfed and destroyed the
entire vessel resulting in the loss of the vessel and the
cargoes therein. The Captain filed the required Marine
Protest.
Shortly thereafter, Feliciana Legaspi filed a claim, with
[respondent], for the value of the cargo insured under
Marine Risk Note No. 18409 and covered by Bill of Lading
No. 59. She submitted, in support of her claim, a Receipt,
dated December 11, 1991, purportedly signed by Zosimo
Mercado, and Order Slips purportedly signed by him for
the goods he received from Feliciana Legaspi valued in
the amount of P110,056.00. [Respondent] approved the
claim of Feliciana Legaspi and drew and issued UCPB
Check No. 612939, dated March 9, 1992, in the net
amount of P99,000.00, in settlement of her claim after
which she executed a Subrogation Receipt/Deed, for said
amount, in favor of [respondent]. She also filed a claim
for the value of the cargo covered by Bill of Lading No.
58. She submitted to [respondent] a Receipt, dated
December 11, 1991 and Order Slips, purportedly signed
by Nestor Angelia for the goods he received from
Feliciana Legaspi valued at P60,338.00. [Respondent]
approved her claim and remitted to Feliciana Legaspi the
net amount of P49,500.00, after which she signed a
Subrogation Receipt/Deed, dated March 9, 1992, in favor
of [respondent].
On July 14, 1992, [respondent], as subrogee of Feliciana
Legaspi, filed a complaint anchored on torts against
[petitioner], with the Regional Trial Court of Makati City,
for the collection of the total principal amount of
P148,500.00, which it paid to Feliciana Legaspi for the
loss of the cargo, praying that judgment be rendered in
its favor and against the [petitioner] as follows:
WHEREFORE, it is respectfully prayed of this Honorable
Court that after due hearing, judgment be rendered
ordering [petitioner] to pay [respondent] the following
1. Actual damages in the amount of P148,500.00 plus
interest thereon at the legal rate from the time of filing
of this complaint until fully paid;
2. Attorneys fees in the amount of P10,000.00; and
3. Cost of suit.
[Respondent] further prays for such other reliefs and
remedies as this Honorable Court may deem just and
equitable under the premises.
[Respondent] alleged, inter alia, in its complaint, that the
cargo subject of its complaint was delivered to, and
received by, [petitioner] for transportation to Tandag,
Surigao del Sur under Bill of Ladings, Annexes A and B of
the complaint; that the loss of the cargo was due to the
negligence of the [petitioner]; and that Feliciana Legaspi
had executed Subrogation Receipts/Deeds in favor of
[respondent] after paying to her the value of the cargo
on account of the Marine Risk Notes it issued in her favor
covering the cargo.
In its Answer to the complaint, [petitioner] alleged that:
(a) [petitioner] was cleared by the Board of Marine
Inquiry of any negligence in the burning of the vessel; (b)
the complaint stated no cause of action against
[petitioner]; and (c) the shippers/consignee had already
been paid the value of the goods as stated in the Bill of
Lading and, hence, [petitioner] cannot be held liable for
the loss of the cargo beyond the value thereof declared
in the Bill of Lading.
After [respondent] rested its case, [petitioner] prayed for
and was allowed, by the Court a quo, to take the
depositions of Chester Cokaliong, the Vice-President and
Chief Operating Officer of [petitioner], and a resident of
Cebu City, and of Noel Tanyu, an officer of the Equitable
Banking Corporation, in Cebu City, and a resident of Cebu
City, to be given before the Presiding Judge of Branch 106
of the Regional Trial Court of Cebu City. Chester
Cokaliong and Noel Tanyu did testify, by way of
deposition, before the Court and declared inter alia, that:
[petitioner] is a family corporation like the Chester
Marketing, Inc.; Nestor Angelia had been doing business
with [petitioner] and Chester Marketing, Inc., for years,
and incurred an account with Chester Marketing, Inc. for
his purchases from said corporation; [petitioner] did
issue Bills of Lading Nos. 58 and 59 for the cargo
described therein with Zosimo Mercado and Nestor
Angelia as shippers/consignees, respectively; the engine
room of the M/V Tandag caught fire after it passed the
Mandaue/Mactan Bridge resulting in the total loss of the
vessel and its cargo; an investigation was conducted by
the Board of Marine Inquiry of the Philippine Coast Guard
which rendered a Report, dated February 13, 1992
absolving [petitioner] of any responsibility on account of
the fire, which Report of the Board was approved by the
District Commander of the Philippine Coast Guard; a few
days after the sinking of the vessel, a representative of
the Legaspi Marketing filed claims for the values of the
goods under Bills of Lading Nos. 58 and 59 in behalf of
the shippers/consignees, Nestor Angelia and Zosimo
Mercado; [petitioner] was able to ascertain, from the
shippers/consignees and the representative of the
Legaspi Marketing that the cargo covered by Bill of
Lading No. 59 was owned by Legaspi Marketing and
consigned to Zosimo Mercado while that covered by Bill
of Lading No. 58 was purchased by Nestor Angelia from
the Legaspi Marketing; that [petitioner] approved the
claim of Legaspi Marketing for the value of the cargo
under Bill of Lading No. 59 and remitted to Legaspi
Marketing the said amount under Equitable Banking
Corporation Check No. 20230486 dated August 12, 1992,
in the amount of P14,000.00 for which the
representative of the Legaspi Marketing signed Voucher
No. 4379, dated August 12, 1992, for the said amount of
P14,000.00 in full payment of claims under Bill of Lading
No. 59; that [petitioner] approved the claim of Nestor
Angelia in the amount of P6,500.00 but that since the
latter owed Chester Marketing, Inc., for some purchases,
[petitioner] merely set off the amount due to Nestor
Angelia under Bill of Lading No. 58 against his account
with Chester Marketing, Inc.; [petitioner]
lost/[misplaced] the original of the check after it was
received by Legaspi Marketing, hence, the production of
the microfilm copy by Noel Tanyu of the Equitable
Banking Corporation; [petitioner] never knew, before
settling with Legaspi Marketing and Nestor Angelia that
the cargo under both Bills of Lading were insured with
[respondent], or that Feliciana Legaspi filed claims for the
value of the cargo with [respondent] and that the latter
approved the claims of Feliciana Legaspi and paid the
total amount of P148,500.00 to her; [petitioner] came to
know, for the first time, of the payments by [respondent]
of the claims of Feliciana Legaspi when it was served with
the summons and complaint, on October 8, 1992; after
settling his claim, Nestor Angelia x x x executed the
Release and Quitclaim, dated July 2, 1993, and Affidavit,
dated July 2, 1993 in favor of [respondent]; hence,
[petitioner] was absolved of any liability for the loss of
the cargo covered by Bills of Lading Nos. 58 and 59; and
even if it was, its liability should not exceed the value of
the cargo as stated in the Bills of Lading.
[Petitioner] did not anymore present any other witnesses
on its evidence-in-chief. x x x[9] (Citations omitted)
Ruling of the Court of Appeals
The CA held that petitioner had failed to prove that the
fire which consumed the vessel and its cargo was caused
by something other than its negligence in the upkeep,
maintenance and operation of the vessel.[10]
Petitioner had paid P14,000 to Legaspi Marketing for the
cargo covered by Bill of Lading No. 59. The CA, however,
held that the payment did not extinguish petitioners
obligation to respondent, because there was no evidence
that Feliciana Legaspi (the insured) was the
owner/proprietor of Legaspi Marketing. The CA also
pointed out the impropriety of treating the claim under
Bill of Lading No. 58 -- covering cargo valued therein at
P6,500 -- as a setoff against Nestor Angelias account with
Chester Enterprises, Inc.
Finally, it ruled that respondent is not bound by the
valuation of the cargo under the Bills of Lading, x x x nor
is the value of the cargo under said Bills of Lading
conclusive on the [respondent]. This is so because, in the
first place, the goods were insured with the [respondent]
for the total amount of P150,000.00, which amount may
be considered as the face value of the goods.[11]
Hence this Petition.[12]
Issues
Petitioner raises for our consideration the following alleged
errors of the CA:
I disaster or calamity. In Eastern Shipping Lines, Inc. v.
The Honorable Court of Appeals erred, granting arguendo that
petitioner is liable, in holding that petitioners liability should
be based on the actual insured value of the goods and not from
actual valuation declared by the shipper/consignee in the bill
of lading.
II
The Court of Appeals erred in not affirming the findings of the
Philippine Coast Guard, as sustained by the trial court a quo,
holding that the cause of loss of the aforesaid cargoes under
Bill of Lading Nos. 58 and 59 was due to force majeure and due
diligence was [exercised] by petitioner prior to, during and
immediately after the fire on [petitioners] vessel.
III
The Court of Appeals erred in not holding that respondent
UCPB General Insurance has no cause of action against the
petitioner.[13]
In sum, the issues are: (1) Is petitioner liable for the loss of the
goods? (2) If it is liable, what is the extent of its liability?
This Courts Ruling
The Petition is partly meritorious.
First Issue:
Liability for Loss
Petitioner argues that the cause of the loss of the goods,
subject of this case, was force majeure. It adds that its
exercise of due diligence was adequately proven by the
findings of the Philippine Coast Guard.
We are not convinced. The uncontroverted findings of
the Philippine Coast Guard show that the M/V Tandag
sank due to a fire, which resulted from a crack in the
auxiliary engine fuel oil service tank. Fuel spurted out of
the crack and dripped to the heating exhaust manifold,
causing the ship to burst into flames. The crack was
located on the side of the fuel oil tank, which had a mere
two-inch gap from the engine room walling, thus
precluding constant inspection and care by the crew.
Having originated from an unchecked crack in the fuel oil
service tank, the fire could not have been caused by force
majeure. Broadly speaking, force majeure generally
applies to a natural accident, such as that caused by a
lightning, an earthquake, a tempest or a public
enemy.[14] Hence, fire is not considered a natural
Intermediate Appellate Court,[15] we explained:
x x x. This must be so as it arises almost invariably from
some act of man or by human means. It does not fall
within the category of an act of God unless caused by
lighting or by other natural disaster or calamity. It may
even be caused by the actual fault or privity of the
carrier.
Article 1680 of the Civil Code, which considers fire as an
extraordinary fortuitous event refers to leases or rural
lands where a reduction of the rent is allowed when
more than one-half of the fruits have been lost due to
such event, considering that the law adopts a protective
policy towards agriculture.
As the peril of fire is not comprehended within the
exceptions in Article 1734, supra, Article 1735 of the Civil
Code provides that in all cases other than those
mentioned in Article 1734, the common carrier shall be
presumed to have been at fault or to have acted
negligently, unless it proves that it has observed the
extraordinary diligence required by law.
Where loss of cargo results from the failure of the
officers of a vessel to inspect their ship frequently so as
to discover the existence of cracked parts, that loss
cannot be attributed to force majeure, but to the
negligence of those officials.[16]
The law provides that a common carrier is presumed to
have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported.
Ensuring the seaworthiness of the vessel is the first step
in exercising the required vigilance. Petitioner did not
present sufficient evidence showing what measures or
acts it had undertaken to ensure the seaworthiness of
the vessel. It failed to show when the last inspection and
care of the auxiliary engine fuel oil service tank was
made, what the normal practice was for its maintenance,
or some other evidence to establish that it had exercised
extraordinary diligence. It merely stated that constant
inspection and care were not possible, and that the last
time the vessel was dry-docked was in November 1990.
Necessarily, in accordance with Article 1735[17] of the
Civil Code, we hold petitioner responsible for the loss of
the goods covered by Bills of Lading Nos. 58 and 59.
Second Issue:
Extent of Liability
Respondent contends that petitioners liability should be
based on the actual insured value of the goods, subject
of this case. On the other hand, petitioner claims that its
liability should be limited to the value declared by the
shipper/consignee in the Bill of Lading.
The records[18] show that the Bills of Lading covering the
lost goods contain the stipulation that in case of claim for
loss or for damage to the shipped merchandise or
property, [t]he liability of the common carrier x x x shall
not exceed the value of the goods as appearing in the bill
of lading.[19] The attempt by respondent to make light
of this stipulation is unconvincing. As it had the
consignees copies of the Bills of Lading,[20] it could have
easily produced those copies, instead of relying on mere
allegations and suppositions. However, it presented
mere photocopies thereof to disprove petitioners
evidence showing the existence of the above stipulation.
A stipulation that limits liability is valid[21] as long as it is
not against public policy. In Everett Steamship
Corporation v. Court of Appeals,[22] the Court stated:
A stipulation in the bill of lading limiting the common
carriers liability for loss or destruction of a cargo to a
certain sum, unless the shipper or owner declares a
greater value, is sanctioned by law, particularly Articles
1749 and 1750 of the Civil Code which provides:
Art. 1749. A stipulation that the common carriers liability
is limited to the value of the goods appearing in the bill
of lading, unless the shipper or owner declares a greater
value, is binding.
Art. 1750. A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has
been freely and fairly agreed upon.
Such limited-liability clause has also been consistently
upheld by this Court in a number of cases. Thus, in Sea-
Land Service, Inc. vs. Intermediate Appellate Court, we
ruled:
It seems clear that even if said section 4 (5) of the
Carriage of Goods by Sea Act did not exist, the validity
and binding effect of the liability limitation clause in the
bill of lading here are nevertheless fully sustainable on
the basis alone of the cited Civil Code Provisions. That
said stipulation is just and reasonable is arguable from
the fact that it echoes Art. 1750 itself in providing a limit
to liability only if a greater value is not declared for the
shipment in the bill of lading. To hold otherwise would
amount to questioning the justness and fairness of the
law itself, and this the private respondent does not
pretend to do. But over and above that consideration,
the just and reasonable character of such stipulation is
implicit in it giving the shipper or owner the option of
avoiding accrual of liability limitation by the simple and
surely far from onerous expedient of declaring the
nature and value of the shipment in the bill of lading.
Pursuant to the afore-quoted provisions of law, it is
required that the stipulation limiting the common
carriers liability for loss must be reasonable and just
under the circumstances, and has been freely and fairly
agreed upon.
The bill of lading subject of the present controversy
specifically provides, among others
18. All claims for which the carrier may be liable shall be
adjusted and settled on the basis of the shippers net
invoice cost plus freight and insurance premiums, if paid,
and in no event shall the carrier be liable for any loss of
possible profits or any consequential loss
The carrier shall not be liable for any loss of or any
damage to or in any connection with, goods in an amount
exceeding One Hundred Thousand Yen in Japanese
Currency (100,000.00) or its equivalent in any other
currency per package or customary freight unit
(whichever is least) unless the value of the goods higher
than this amount is declared in writing by the shipper
before receipt of the goods by the carrier and inserted in
the Bill of Lading and extra freight is paid as required.
The above stipulations are, to our mind, reasonable and
just. In the bill of lading, the carrier made it clear that its
liability would only be up to One Hundred Thousand
(Y100,000.00) Yen. However, the shipper, Maruman
Trading, had the option to declare a higher valuation if
the value of its cargo was higher than the limited liability
of the carrier. Considering that the shipper did not
declare a higher valuation, it had itself to blame for not
complying with the stipulations. (Italics supplied)
In the present case, the stipulation limiting petitioners
liability is not contrary to public policy. In fact, its just and
reasonable character is evident.
shippers/consignees may recover the full value of the
goods by the simple expedient of declaring the true value
of the shipment in the Bill of Lading. Other than the
payment of a higher freight, there was nothing to stop
them from placing the actual value of the goods therein.
In fact, they committed fraud against the common carrier
by deliberately undervaluing the goods in their Bill of
Lading, thus depriving the carrier of its proper and just
transport fare.
Concededly, the purpose of the limiting stipulation in the
Bill of Lading is to protect the common carrier. Such
stipulation obliges the shipper/consignee to notify the
common carrier of the amount that the latter may be
liable for in case of loss of the goods. The common carrier
can then take appropriate measures -- getting insurance,
if needed, to cover or protect itself. This precaution on
the part of the carrier is reasonable and prudent. Hence,
a shipper/consignee that undervalues the real worth of
the goods it seeks to transport does not only violate a
valid contractual stipulation, but commits a fraudulent
act when it seeks to make the common carrier liable for
more than the amount it declared in the bill of lading.
Indeed, Zosimo Mercado and Nestor Angelia misled
petitioner by undervaluing the goods in their respective
Bills of Lading. Hence, petitioner was exposed to a risk
that was deliberately hidden from it, and from which it
could not protect itself.
It is well to point out that, for assuming a higher risk (the
alleged actual value of the goods) the insurance company
was paid the correct higher premium by Feliciana
Legaspi; while petitioner was paid a fee lower than what
it was entitled to for transporting the goods that had
been deliberately undervalued by the shippers in the Bill
of Lading. Between the two of them, the insurer should
bear the loss in excess of the value declared in the Bills
of Lading. This is the just and equitable solution.
In Aboitiz Shipping Corporation v. Court of Appeals,[23]
the description of the nature and the value of the goods
shipped were declared and reflected in the bill of lading,
like in the present case. The Court therein considered this
declaration as the basis of the carriers liability and
ordered payment based on such amount. Following this
ruling, petitioner should not be held liable for more than
what was declared by the shippers/consignees as the
value of the goods in the bills of lading.
The We find no cogent reason to disturb the CAs finding that
Feliciana Legaspi was the owner of the goods covered by
Bills of Lading Nos. 58 and 59. Undoubtedly, the goods
were merely consigned to Nestor Angelia and Zosimo
Mercado, respectively; thus, Feliciana Legaspi or her
subrogee (respondent) was entitled to the goods or, in
case of loss, to compensation therefor. There is no
evidence showing that petitioner paid her for the loss of
those goods. It does not even claim to have paid her.
On the other hand, Legaspi Marketing filed with
petitioner a claim for the lost goods under Bill of Lading
No. 59, for which the latter subsequently paid P14,000.
But nothing in the records convincingly shows that the
former was the owner of the goods. Respondent was,
however, able to prove that it was Feliciana Legaspi who
owned those goods, and who was thus entitled to
payment for their loss. Hence, the claim for the goods
under Bill of Lading No. 59 cannot be deemed to have
been extinguished, because payment was made to a
person who was not entitled thereto.
With regard to the claim for the goods that were covered
by Bill of Lading No. 58 and valued at P6,500, the parties
have not convinced us to disturb the findings of the CA
that compensation could not validly take place. Thus, we
uphold the appellate courts ruling on this point.
WHEREFORE, the Petition is hereby PARTIALLY
GRANTED. The assailed Decision is MODIFIED in the
sense that petitioner is ORDERED to pay respondent the
sums of P14,000 and P6,500, which represent the value
of the goods stated in Bills of Lading Nos. 59 and 58,
respectively. No costs. SO ORDERED.