for twelve (12) months with a salary of two hundred
THIRD DIVISION
[G.R. No. 129584. December 3, 1998]
TRIPLE EIGHT INTEGRATED SERVICES,
INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, HON.
LABOR ARBITER POTENCIANO S.
CANIZARES, JR. and ERLINDA R.
OSDANA, respondents.
DECISION
ROMERO, J.:
In this petition for certiorari now before us,
petitioner Triple Eight Integrated Services Inc. seeks
to annul the decision[1] of public respondent National
Labor Relations Commission (First Division, Quezon
City) dated March 11, 1997 affirming the August 20,
1996 decision[2] of Labor Arbiter Potenciano
Canizares.Petitioner was ordered to pay private
respondent Erlinda Osdana her salaries for the
unexpired portion of her employment contract,
unpaid salaries, salary differential, moral and
exemplary damages, as well as attorneys fees. On
April 28, 1997, the NLRC denied petitioners motion
for reconsideration.[3]
The antecedent facts follow.
Sometime in August 1992, private respondent
Osdana was recruited by petitioner for employment
with the latters principal, Gulf Catering Company
(GCC), a firm based in the Kingdom of Saudi Arabia.
Under the original employment contract, Osdana was
engaged to work as Food Server for a period of
thirty-six (36) months with a salary of five hundred
fifty Saudi rials (SR550).
Osdana claims she was required by petitioner to
pay a total of eleven thousand nine hundred fifty
pesos (P11,950.00) in placement fees and other
charges, for which no receipt was issued. She was
likewise asked to undergo a medical examination
conducted by the Philippine Medical Tests System, a
duly accredited clinic for overseas workers, which
found her to be Fit of Employment.
Subsequently, petitioner asked Osdana to sign
another Contractor-Employee Agreement[4] which
provided that she would be employed as a waitress
eighty US dollars ($280). It was this employment
agreement which was approved by the Philippine
Overseas Employment Administration (POEA).
On September 16, 1992, Osdana left for Riyadh,
Saudi Arabia, and commenced working for GCC. She
was assigned to the College of Public Administration
of the Oleysha University and, contrary to the terms
and conditions of the employment contract, was
made to wash dishes, cooking pots, and utensils,
perform janitorial work and other tasks which were
unrelated to her job designation as waitress. Making
matters worse was the fact that she was made to work
a gruelling twelve-hour shift, from six oclock in the
morning to six oclock in the evening, without
overtime pay.
Because of the long hours and the strenuous
nature of her work, Osdana suffered from numbness
and pain in her arms. The pain was such that she had
to be confined at the Ladies Villa, a housing facility
of GCC, from June 18 to August 22, 1993, during
which period, she was not paid her salaries.
After said confinement, Osdana was allowed to
resume work, this time as Food Server and Cook at
the Hota Bani Tameem Hospital, where she worked
seven days a week from August 22 to October 5,
1993. Again, she was not compensated.
Then, from October 6 to October 23, 1993,
Osdana was again confined at the Ladies Villa for no
apparent reason. During this period, she was still not
paid her salary.
On October 24, 1993, she was re-assigned to the
Oleysha University to wash dishes and do other
menial tasks. As with her previous assignment at the
said University, Osdana worked long hours and under
harsh conditions. Because of this, she was diagnosed
as having Bilateral Carpal Tunnel Syndrome, a
condition precipitated by activities requiring repeated
flexion, pronation, and supination of the wrist and
characterized by excruciating pain and numbness in
the arms.[5]
As the pain became unbearable, Osdana had to
be hospitalized. She underwent two surgical
operations, one in January 1994, another on April 23,
1994. Between these operations, she was not given
any work assignments even if she was willing and
able to do light work in accordance with her doctors
advice. Again,
Osdana wasnot paid any compensation for the period
between February to April 22, 1994.
 After her second operation, Osdana was
discharged from the hospital on April 25, 1994. The
medical report stated that she had very good
improvement of the symptoms and she was
discharged on the second day of the operation.[6]
Four days later, however, she was dismissed
from work, allegedly on the ground of illness. She
was not given any separation pay nor was she paid
her salaries for the periods when she was not allowed
to work.
Upon her return to the Philippines, Osdana
sought the help of petitioner, but to no avail. She was
thus constrained to file a complaint before the POEA
against petitioner, praying for unpaid and underpaid
salaries, salaries for the unexpired portion of the
employment contract, moral and exemplary damages
and attorneys fees, as well as the revocation,
cancellation, suspension and/or imposition of
administrative sanctions against petitioner.
Pursuant to Republic Act No. 8042, otherwise
known as the Migrant Workers and Overseas
Filipinos Act of 1995, the case was transferred to the
arbitration branch of the NLRC and assigned to
Labor Arbiter Canizares.
In a decision dated August 20, 1996, the labor
arbiter ruled in favor of Osdana. The dispositive
portion of the decision follows:
Wherefore, the respondent is hereby ordered to pay
the complainant US$2,499.00 as salaries for the
unexpired portion of the contract, and US$1,076.00
as unpaid salary and salary differential, or its
equivalent in Philippine Peso.
The respondent is likewise ordered to pay the
complainant P50,000 moral damages, and P20,000
exemplary damages.
The respondent is further ordered to pay the
complainant 10% of the monetary award as attorneys
fee.
Other claims are hereby dismissed for lack of
sufficient evidence.
SO ORDERED.
Aggrieved by the labor arbiters decision,
petitioner appealed to the NLRC, which affirmed the
decision in question on March 11, 1997. Petitioners
motion for reconsideration was likewise denied by
the NLRC in its order dated April 28, 1997.
Hence, this petition for certiorari.
Petitioner alleges grave abuse of discretion on
the part of the public respondents for the following
reasons: (a) ruling in favor of Osdana even if there
was no factual or legal basis for the award and, (b)
holding petitioner solely liable for her claims despite
the fact that its liability is joint and several with its
principal, GCC.
At the outset, petitioner argues that public
respondent Labor Arbiter gravely abused his
discretion when he rendered the questioned decision
dated August 20, 1996 without stating the facts and
the law where he derived his conclusions.[7] In
support of this argument, petitioner cites the first
paragraph of Article VIII, Section 14 of the
Constitution: No decision shall be rendered by any
court without expressing therein clearly and distinctly
the facts and the law on which it is based.
On this point, it is enough to note that the
decisions of both the labor arbiter and the NLRC
were based mainly on the facts and allegations in
Osdanas position paper and supporting
documents. We find these sufficient to constitute
substantial evidence to support the questioned
decisions. Generally, findings of facts of quasi-
judicial agencies like the NLRC are accorded great
respect and, at times, even finality if supported by
substantial evidence. Substantial evidence is such
amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion.[8]
Moreover, well-settled is the rule that if doubts
exist between the evidence presented by the employer
and the employee, the scales of justice must be tilted
in favor of the latter. Thus, in controversies between
a worker and her employer, doubts reasonably arising
from the evidence or in the interpretation of
agreements should be resolved in favor of the former.
Petitioner, for its part, was given the same
opportunity to file its own position paper but instead,
it opted to file a two-page Answer With Special And
Affirmative Defenses, denying generally the
allegations of the complaint.[9]
As observed by the labor arbiter, The record
shows the complainant filed complaint (sic), position
paper, and supporting documents, and prosecuted her
case diligently; while the respondent merely tried to
settle the case amicably, failing even to file its
position paper.[10] The present case being one for
illegal dismissal, it was incumbent upon petitioner
employer to show by substantial evidence that the
termination was validly made. In termination cases,
the burden of proof rests on the employer to show
that the dismissal is for a just cause.[11] Having failed
to file its position paper and to support its denials and
affirmative defenses in its answer, petitioner cannot
now fault the labor arbiter and the NLRC for relying
on the facts as laid down by Osdana in her position
paper and supported by other documents. The
essence of due process is that a party be afforded
reasonable opportunity to be heard and to submit any
evidence he may have in support of his
defense,[12] and this is exactly what petitioner was
accorded, although it chose not to fully avail thereof.
This Court, therefore, upholds the finding of
herein public respondents that the facts and the
evidence on record adduced by Osdana and taken in
relation to the answer of petitioner show that indeed
there was breach of the employment contract and
illegal dismissal committed by petitioners principal.
Petitioner claims that public respondents
committed grave abuse of discretion when they ruled
that Osdana had been illegally dismissed by GCC. It
maintains that the award for salaries for the
unexpired portion of the contract was improper
because Osdana was validly dismissed on the ground
of illness.
The argument must fail.
In its Answer, Memorandum of
Appeal,[13] Petition for Certiorari,[14] and
Consolidated Reply,[15] petitioner consistently
asserted that Osdana was validly repatriated for
medical reasons, but it failed to substantiate its claim
that such repatriation was justified and done in
accordance with law.
Article 284 of the Labor Code is clear on the
matter of termination by reason of disease or illness,
viz:
Art. 284. Disease as a ground for termination An
employer may terminate the services of an employee
who has been found to be suffering from any disease
and whose continued employment is prohibited by
law or prejudicial to his health as well as the health of
his co-employees: x x x.
Specifically, Section 8, Rule 1, Book VI of the
Omnibus Rules Implementing the Labor Code
provides:
Sec. 8. Disease as a ground for dismissal Where the
employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his
health or to the health of his co-employees, the
employer shall not terminate his employment unless
there is a certification by competent public authority
that the disease is of such nature or at such a stage
that it cannot be cured within a period of six (6)
months with proper medical treatment. If the disease
or ailment can be cured within the period, the
employer shall not terminate the employee but shall
ask the employee to take a leave. The employer shall
reinstate such employee to his former position
immediately upon the restoration of his normal
health. (Underscoring supplied)
Viewed in the light of the foregoing provisions,
the manner by which Osdana was terminated was
clearly in violation of the Labor Code and its
implementing rules and regulations.
In the first place, Osdanas continued
employment despite her illness was
not prohibited by law nor was it prejudicial to her
health, as well as that of her co-employees. In fact,
the medical report issued after her second operation
stated that she had very good improvement of the
symptoms. Besides, Carpal Tunnel Syndrome is not a
contagious disease.
Petitioner attributes good faith on the part of its
principal, claiming that It was the concern for the
welfare and physical well being (sic) of private
respondent that drove her employer to take the
painful decision of terminating her from the service
and having her repatriated to the Philippines at its
expense. The employer did not want to risk the
aggravation of the illness of private respondent which
could have been the logical consequence were private
respondent allowed to continue with her job.[16]
The Court notes, however, that aside from these
bare allegations, petitioner has not presented any
medical certificate or similar document from a
competent public health authority in support of its
claims.
On the medical certificate requirement,
petitioner erroneously argues that private respondent
was employed in Saudi Arabia and not here in the
Philippines. Hence, there was a physical
impossibility to secure from a Philippine public
health authority the alluded medical certificate that
public respondents illness will not be cured within a
period of six months.[17]
Petitioner entirely misses the point, as counsel
for private respondent states in the Comment.[18] The
rule simply prescribes a certification by a competent
public health authority and not a Philippine public
health authority.
 If, indeed, Osdana was physically unfit to
continue her employment, her employer could have
easily obtained a certification to that effect from a
competent public health authority in Saudi Arabia,
thereby heading off any complaint for illegal
dismissal.
The requirement for a medical certificate under
Article 284 of the Labor Code cannot be dispensed
with; otherwise, it would sanction the unilateral and
arbitrary determination by the employer of the
gravity or extent of the employees illness and thus
defeat the public policy on the protection of labor. As
the Court observed in Prieto v. NLRC,[19] The Court
is not unaware of the many abuses suffered by our
overseas workers in the foreign land where they have
ventured, usually with heavy hearts, in pursuit of a
more fulfilling future. Breach of contract,
maltreatment, rape, insufficient nourishment, sub-
human lodgings, insults and other forms of
debasement, are only a few of the inhumane acts to
which they are subjected by their foreign employers,
who probably feel they can do as they please in their
country. While these workers may indeed have
relatively little defense against exploitation while
they are abroad, that disadvantage must not continue
to burden them when they return to their own
territory to voice their muted complaint. There is no
reason why, in their own land, the protection of our
own laws cannot be extended to them in full measure
for the redress of their grievances.
Petitioner likewise attempts to sidestep the
medical certificate requirement by contending that
since Osdana was working in Saudi Arabia, her
employment was subject to the laws of the host
country. Apparently, petitioner hopes to make it
appear that the labor laws of Saudi Arabia do not
require any certification by a competent public health
authority in the dismissal of employees due to illness.
Again, petitioners argument is without merit.
First, established is the rule that lex loci
contractus (the law of the place where the contract is
made) governs in this jurisdiction. There is no
question that the contract of employment in this case
was perfected here in the Philippines. Therefore, the
Labor Code, its implementing rules and regulations,
and other laws affecting labor apply in this
case. Furthermore, settled is the rule that the courts of
the forum will not enforce any foreign claim
obnoxious to the forums public policy.[20] Here in the
Philippines, employment agreements are more than
contractual in nature. The Constitution itself, in
Article XIII Section 3, guarantees the special
protection of workers, to wit:
The State shall afford full protection to labor, local
and overseas, organized and unorganized, and
promote full employment and equality of
employment opportunities for all.
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right
to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate
in policy and decision-making processes affecting
their rights and benefits as may be provided by law.
x x x x x x x x x.
This public policy should be borne in mind in
this case because to allow foreign employers to
determine for and by themselves whether an overseas
contract worker may be dismissed on the ground of
illness would encourage illegal or arbitrary pre-
termination of employment contracts.
As regards the monetary award of salaries for
the unexpired portion of the employment contract,
unpaid salaries and salary differential granted by
public respondents to Osdana, petitioner assails the
same for being contrary to law, evidence and existing
jurisprudence, all of which therefore constitutes grave
abuse of discretion.
Although this contention is without merit, the
award for salaries for the unexpired portion of the
contract must, however, be reduced. Paragraph 5,
Section 10 ofR.A. No. 8042, applies in this case,
thus:
In case of termination of overseas employment
without just, valid or authorized cause as defined by
law or contract, the worker shall be entitled to the full
reimbursement of his placement fee with interest at
twelve percent (12%) per annum, plus his salaries for
the unexpired portion of his employment contract or
for three (3) months for every year of the unexpired
term, whichever is less.
In the case at bar, while it would appear that the
employment contract approved by the POEA was
only for a period of twelve months, Osdanas actual
stint with the foreign principal lasted for one year and
seven-and-a-half months. It may be inferred,
therefore, that the employer renewed her employment
contract for another year. Thus, the award for the
unexpired portion of the contract should have been
US$1,260 (US$280 x 4 months) or its equivalent in
Philippine pesos, not US$2,499 as adjudged by the
labor arbiter and affirmed by the NLRC.
As for the award for unpaid salaries and
differential amounting to US$1,076 representing
seven months unpaid salaries and one month
underpaid salary, the same is proper because, as
correctly pointed out by Osdana, the no work, no pay
rule relied upon by petitioner does not apply in this
case. In the first place, the fact that she had not
worked from June 18 to August 22, 1993 and then
from January 24 to April 29, 1994, was due to her
illness which was clearly work-related. Second, from
August 23 to October 5, 1993, Osdana actually
worked as food server and cook for seven days a
week at the Hota Bani Tameem Hospital, but was not
paid any salary for the said period. Finally, from
October 6 to October 23, 1993, she was confined to
quarters and was not given any work for no reason at
all.
Now, with respect to the award of moral and
exemplary damages, the same is likewise proper but
should be reduced. Worth reiterating is the rule that
moral damages are recoverable where the dismissal
of the employee was attended by bad faith or fraud or
constituted an act oppressive to labor, or was done in
a manner contrary to morals, good customs, or public
policy.[21] Likewise, exemplary damages may be
awarded if the dismissal was effected in a wanton,
oppressive or malevolent manner.[22]
According to the facts of the case as stated by
public respondent, Osdana was made to perform such
menial chores, as dishwashing and janitorial work,
among others, contrary to her job designation as
waitress. She was also made to work long hours
without overtime pay. Because of such arduous
working conditions, she developed Carpal Tunnel
Syndrome. Her illness was such that she had to
undergo surgery twice. Since her employer
determined for itself that she was no longer fit to
continue working, they sent her home posthaste
without as much as separation pay or compensation
for the months when she was unable to work because
of her illness.Since the employer is deemed to have
acted in bad faith, the award for attorneys fees is
likewise upheld.
Finally, petitioner alleges grave abuse of
discretion on the part of public respondents for
holding it solely liable for the claims of Osdana
despite the fact that its liability with the principal is
joint and several.
Petitioner misunderstands the decision in
question. It should be noted that contrary to
petitioners interpretation, the decision of the labor
arbiter which was affirmed by the NLRC did not
really absolve the foreign principal.
Petitioner was the only one held liable for
Osdanas monetary claims because it was the only
respondent named in the complaint and it does not
appear that petitioner took steps to have its principal
included as co-respondent. Thus, the POEA, and later
the labor arbiter, did not acquire jurisdiction over the
foreign principal.
This is not to say, however, that GCC may not
be held liable at all. Petitioner can still claim
reimbursement or contribution from it for the
amounts awarded to the illegally-dismissed
employee.
WHEREFORE, in view of the foregoing, the
instant petition is DISMISSED. Accordingly, the
decisions of the labor arbiter dated August 20, 1996,
and of the NLRC dated March 11, 1997, are
AFFIRMED with the MODIFICATION that the
award to private respondent Osdana should be one
thousand two hundred sixty US dollars (US$1,260),
or its equivalent in Philippine pesos, as salaries for
the unexpired portion of the employment contract,
and one thousand seventy six US dollars (US$1,076),
or its equivalent in Philippine pesos, representing
unpaid salaries for seven (7) months and underpaid
salary for one (1) month, plus interest.
Petitioner is likewise ordered to pay private
respondent P30,000.00 in moral
damages, P10,000.00 in exemplary damages and 10%
attorneys fees.
This decision is without prejudice to any
remedy or claim for reimbursement or contribution
petitioner may institute against its foreign principal,
Gulf Catering Company. No pronouncement as to
costs.
SO ORDERED.
G.R. No. 101538 June 23, 1992
AUGUSTO BENEDICTO SANTOS III,
represented by his father and legal guardian,
Augusto Benedicto Santos, petitioner,
vs.
NORTHWEST ORIENT AIRLINES and COURT
OF APPEALS, respondents.
CRUZ, J.:
This case involves the Proper interpretation of
Article 28(1) of the Warsaw Convention, reading
as follows:
Art. 28. (1) An action for
damage must be brought at the
option of the plaintiff, in the
territory of one of the High
Contracting Parties, either
before the court of the domicile
of the carrier or of his principal
place of business, or where he
has a place of business through
which the contract has been
made, or before the court at the
place of destination.
The petitioner is a minor and a resident of the
Philippines. Private respondent Northwest Orient
Airlines (NOA) is a foreign corporation with
principal office in Minnesota, U.S.A. and
licensed to do business and maintain a branch
office in the Philippines.
On October 21, 1986, the petitioner purchased
from NOA a round-trip ticket in San Francisco.
U.S.A., for his flight from San Francisco to
Manila via Tokyo and back. The scheduled
departure date from Tokyo was December 20,
1986. No date was specified for his return to
San Francisco. 1
On December 19, 1986, the petitioner checked
in at the NOA counter in the San Francisco
airport for his scheduled departure to Manila.
Despite a previous confirmation and re-
confirmation, he was informed that he had no
reservation for his flight from Tokyo to Manila.
He therefore had to be wait-listed.
On March 12, 1987, the petitioner sued NOA for
damages in the Regional Trial Court of Makati.
On April 13, 1987, NOA moved to dismiss the
complaint on the ground of lack of jurisdiction.
Citing the above-quoted article, it contended that
the complaint could be instituted only in the
territory of one of the High Contracting Parties,
before:
1. the court of the domicile of
the carrier;
2. the court of its principal place
of business;
3. the court where it has a place
of business through which the
contract had been made;
4. the court of the place of
destination.
The private respondent contended that the
Philippines was not its domicile nor was this its
principal place of business. Neither was the
petitioner's ticket issued in this country nor was
his destination Manila but San Francisco in the
United States.
On February 1, 1988, the lower court granted
the motion and dismissed the case. 2 The
petitioner appealed to the Court of Appeals,
which affirmed the decision of the lower
court. 3 On June 26, 1991, the petitioner filed a
motion for reconsideration, but the same was
denied. 4 The petitioner then came to this Court,
raising substantially the same issues it
submitted in the Court of Appeals.
The assignment of errors may be grouped into
two major issues, viz:
(1) the constitutionality of Article 28(1) of the
Warsaw Convention; and
(2) the jurisdiction of Philippine courts over the
case.
The petitioner also invokes Article 24 of the Civil
Code on the protection of minors.
I
 THE ISSUE OF
CONSTITUTIONALITY
A. The petitioner claims that the
lower court erred in not ruling
that Article 28(1) of the Warsaw
Convention violates the
constitutional guarantees of due
process and equal protection.
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." 5
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 petitioner contends that Article 28(1) cannot
be applied in the present case because it is
unconstitutional. He argues that there is no
substantial distinction between a person who
purchases a ticket in Manila and a person who
purchases his ticket in San Francisco. The
classification of the places in which actions for
damages may be brought is arbitrary and
irrational and thus violates the due process and
equal protection clauses.
It is well-settled that courts will assume
jurisdiction over a constitutional question only if
it is shown that the essential requisites of a
judicial inquiry into such a question are first
satisfied. Thus, there must be an actual case or
controversy involving a conflict of legal rights
susceptible of judicial determination; the
constitutional question must have been
opportunely raised by the proper party; and the
resolution of the question is unavoidably
necessary to the decision of the case itself. 6
Courts generally avoid having to decide a
constitutional question. This attitude is based on
the doctrine of separation of powers, which
enjoins upon the departments of the government
a becoming respect for each other's acts.
The treaty which is the subject matter of this
petition was a joint legislative-executive act. The
presumption is that it was first carefully studied
and determined to be constitutional before it was
adopted and given the force of law in this
country.
The petitioner's allegations are not convincing
enough to overcome this presumption.
Apparently, the Convention considered the four
places designated in Article 28 the most
convenient forums for the litigation of any claim
that may arise between the airline and its
passenger, as distinguished from all other
places. At any rate, we agree with the
respondent court that this case can be decided
on other grounds without the necessity of
resolving the constitutional issue.
B. The petitioner claims that the
lower court erred in not ruling
that Art. 28(1) of the Warsaw
Convention is inapplicable
because of a fundamental
change in the circumstances
that served as its basis.
The petitioner goes at great lengths to show that
the provisions in the Convention were intended
to protect airline companies under "the
conditions prevailing then and which have long
ceased to exist." He argues that in view of the
significant developments in the airline industry
through the years, the treaty has become
irrelevant. Hence, to the extent that it has lost its
basis for approval, it has become
unconstitutional.
The petitioner is invoking the doctrine of rebus
sic stantibus. According to Jessup, "this doctrine
constitutes an attempt to formulate a legal
principle which would justify non-performance of
a treaty obligation if the conditions with relation
to which the parties contracted have changed so
materially and so unexpectedly as to create a
situation in which the exaction of performance
would be unreasonable." 7 The key element of
this doctrine is the vital change in the condition
of the contracting parties that they could not
have foreseen at the time the treaty was
concluded.
The Court notes in this connection the following
observation made in Day v. Trans World
Airlines, Inc.: 8
The Warsaw drafters wished to
create a system of liability rules
that would cover all the hazards
of air travel . . . The Warsaw
delegates knew that, in the
years to come, civil aviation
would change in ways that they
could not foresee. They wished
to design a system of air law
that would be both durable and
flexible enough to keep pace
with these changes . . . The
ever-changing needs of the
system of civil aviation can be
served within the framework
they created.
It is true that at the time the Warsaw Convention
was drafted, the airline industry was still in its
infancy. However, that circumstance alone is not
sufficient justification for the rejection of the
treaty at this time. The changes recited by the
petitioner were, realistically, not entirely
unforeseen although they were expected in a
general sense only. In fact, the Convention itself,
anticipating such developments, contains the
following significant provision:
Article 41. Any High Contracting
Party shall be entitled not earlier
than two years after the coming
into force of this convention to
call for the assembling of a new
international conference in order
to consider any improvements
which may be made in this
convention. To this end, it will
communicate with the
Government of the French
Republic which will take the
necessary measures to make
preparations for such
conference.
But the more important consideration is that the
treaty has not been rejected by the Philippine
government. The doctrine of rebus sic
stantibus does not operate automatically to
render the treaty inoperative. There is a
necessity for a formal act of rejection, usually
made by the head of State, with a statement of
the reasons why compliance with the treaty is no
longer required.
In lieu thereof, the treaty may be denounced
even without an expressed justification for this
action. Such denunciation is authorized under its
Article 39, viz:
Article 39. (1) Any one of the
High Contracting Parties may
denounce this convention by a
notification addressed to the
Government of the Republic of
Poland, which shall at once
inform the Government of each
of the High Contracting Parties.
(2) Denunciation shall take
effect six months after the
notification of denunciation, and
shall operate only as regards
the party which shall have
proceeded to denunciation.
Obviously. rejection of the treaty, whether on the
ground of rebus sic stantibus or pursuant to
Article 39, is not a function of the courts but of
the other branches of government. This is a
political act. The conclusion and renunciation of
treaties is the prerogative of the political
departments and may not be usurped by the
judiciary. The courts are concerned only with the
interpretation and application of laws and
treaties in force and not with their wisdom or
efficacy.
C. The petitioner claims that the
lower court erred in ruling that
the plaintiff must sue in the
United States, because this
would deny him the right to
access to our courts.
The petitioner alleges that the expenses and
difficulties he will incur in filing a suit in the
United States would constitute a constructive
denial of his right to access to our courts for the
protection of his rights. He would consequently
be deprived of this vital guaranty as embodied in
the Bill of Rights.
Obviously, the constitutional guaranty of access
to courts refers only to courts with appropriate
jurisdiction as defined by law. It does not mean
that a person can go to any court for redress of
his grievances regardless of the nature or value
of his claim. If the petitioner is barred from filing
his complaint before our courts, it is because
they are not vested with the appropriate
jurisdiction under the Warsaw Convention, which
is part of the law of our land.
II
THE ISSUE OF
JURISDICTION.
A. The petitioner claims that the
lower court erred in not ruling
that Article 28(1) of the Warsaw
Convention is a rule merely of
venue and was waived by
defendant when it did not move
to dismiss on the ground of
improper venue.
By its own terms, the Convention applies to all
international transportation of persons
performed by aircraft for hire.
International transportation is defined in
paragraph (2) of Article 1 as follows:
(2) For the purposes of this
convention, the expression
"international transportation"
shall mean any transportation in
which, according to the contract
made by the parties, the place
of departure and the place of
destination, whether or not there
be a break in the transportation
or a transshipment, are situated
[either] within the territories of
two High Contracting Parties . . .
Whether the transportation is "international" is
determined by the contract of the parties, which
in the case of passengers is the ticket. When the
contract of carriage provides for the
transportation of the passenger between certain
designated terminals "within the territories of two
High Contracting Parties," the provisions of the
Convention automatically apply and exclusively
govern the rights and liabilities of the airline and
its passenger.
Since the flight involved in the case at bar is
international, the same being from the United
States to the Philippines and back to the United
States, it is subject to the provisions of the
Warsaw Convention, including Article 28(1),
which enumerates the four places where an
action for damages may be brought.
Whether Article 28(1) refers to jurisdiction or
only to venue is a question over which
authorities are sharply divided. While the
petitioner cites several cases holding that Article
28(1) refers to venue rather than
jurisdiction, 9 there are later cases cited by the
private respondent supporting the conclusion
that the provision is jurisdictional. 10
Venue and jurisdiction are entirely distinct
matters. Jurisdiction may not be conferred by
consent or waiver upon d court which otherwise
would have no jurisdiction over the subject-
matter of an action; but the venue of an action
as fixed by statute may be changed by the
consent of the parties and an objection that the
plaintiff brought his suit in the wrong county may
be waived by the failure of the defendant to
make a timely objection. In either case, the court
may render a valid judgment. Rules as to
jurisdiction can never be left to the consent or
agreement of the parties, whether or not a
prohibition exists against their alteration. 11
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.
This issue was analyzed in the leading case
of Smith v. Canadian Pacific Airways,
Ltd., 12 where it was held:
. . . Of more, but still incomplete,
assistance is the wording of
Article 28(2), especially when
considered in the light of Article
32. Article 28(2) provides that
"questions of procedure shall be
governed by the law of the court
to which the case is submitted"
(Emphasis supplied). Section
(2) thus may be read to leave
for domestic decision questions
regarding the suitability and
location of a particular Warsaw
Convention case.
In other words, where the matter is governed by
the Warsaw Convention, jurisdiction takes on a
dual concept. Jurisdiction in the international
sense must be established in accordance with
Article 28(1) of the Warsaw Convention,
following which the jurisdiction of a particular
court must be established pursuant to the
applicable domestic law. Only after the question
of which court has jurisdiction is determined will
the issue of venue be taken up. This second
question shall be governed by the law of the
court to which the case is submitted.
The petitioner submits that since Article 32
states that the parties are precluded "before the
damages occurred" from amending the rules of
Article 28(1) as to the place where the action
may be brought, it would follow that the Warsaw
Convention was not intended to preclude them
from doing so "after the damages occurred."
Article 32 provides:
Art. 32. Any clause contained in
the contract and all special
agreements entered into before
the damage occurred by which
the parties purport to infringe
the rules laid down by this
convention, whether by deciding
the law to be applied, or by
altering the rules as to
jurisdiction, shall be null and
void. Nevertheless for the
transportation of goods,
arbitration clauses shall be
allowed, subject to this
convention, if the arbitration is to
take place within one of the
jurisdictions referred to in the
first paragraph of Article 28.
His point is that since the requirements of Article
28(1) can be waived "after the damages (shall
have) occurred," the article should be regarded
as possessing the character of a "venue" and
not of a "jurisdiction" provision. Hence, in
moving to dismiss on the ground of lack of
jurisdiction, the private respondent has waived
improper venue as a ground to dismiss.
The foregoing examination of Article 28(1) in
relation to Article 32 does not support this
conclusion. In any event, we agree that even
granting arguendo that Article 28(1) is a venue
and not a jurisdictional provision, dismissal of
the case was still in order. The respondent court
was correct in affirming the ruling of the trial
court on this matter, thus:
Santos' claim that NOA waived
venue as a ground of its motion
to dismiss is not correct. True it
is that NOA averred in its
MOTION TO DISMISS that the
ground thereof is "the Court has
no subject matter jurisdiction to
entertain the Complaint" which
SANTOS considers as
equivalent to "lack of jurisdiction
over the subject matter . . ."
However, the gist of NOA's
argument in its motion is that
the Philippines is not the proper
place where SANTOS could file
the action meaning that the
venue of the action is improperly
laid. Even assuming then that
the specified ground of the
motion is erroneous, the fact is
the proper ground of the motion
improper venue has been
discussed therein.
Waiver cannot be lightly inferred. In case of
doubt, it must be resolved in favor of non-waiver
if there are special circumstances justifying this
conclusion, as in the petition at bar. As we
observed in Javier vs. Intermediate Court of
Appeals: 13
Legally, of course, the lack of
proper venue was deemed
waived by the petitioners when
they failed to invoke it in their
original motion to dismiss. Even
so, the motivation of the private
respondent should have been
taken into account by both the
trial judge and the respondent
court in arriving at their
decisions.
The petitioner also invokes KLM Royal Dutch
Airlines v. RTC, 14 a decision of our Court of
Appeals, where it was held that Article 28(1) is a
venue provision. However, the private
respondent avers that this was in effect reversed
by the case of Aranas v. United
Airlines, 15 where the same court held that
Article 28(1) is a jurisdictional provision. Neither
of these cases is binding on this Court, of
course, nor was either of them appealed to us.
Nevertheless, we here express our own
preference for the later case of Aranas insofar
as its pronouncements on jurisdiction conform to
the judgment we now make in this petition.
B. The petitioner claims that the
lower court erred in not ruling
that under Article 28(1) of the
Warsaw Convention, this case
was properly filed in the
Philippines, because Manila
was the destination of the
plaintiff.
The Petitioner contends that the facts of this
case are analogous to those in Aanestad v. Air
Canada. 16 In that case, Mrs. Silverberg
purchased a round-trip ticket from Montreal to
Los Angeles and back to Montreal. The date and
time of departure were specified but not of the
return flight. The plane crashed while on route
from Montreal to Los Angeles, killing Mrs.
Silverberg. Her administratrix filed an action for
damages against Air Canada in the U.S. District
Court of California. The defendant moved to
dismiss for lack of jurisdiction but the motion
was denied thus:
. . . It is evident that the contract
entered into between Air
Canada and Mrs. Silverberg as
evidenced by the ticket booklets
and the Flight Coupon No. 1,
was a contract for Air Canada to
carry Mrs. Silverberg to Los
Angeles on a certain flight, a
certain time and a certain class,
but that the time for her to return
remained completely in her
power. Coupon No. 2 was only
a continuing offer by Air Canada
to give her a ticket to return to
Montreal between certain dates.
...
The only conclusion that can be
reached then, is that "the place
of destination" as used in the
Warsaw Convention is
considered by both the
Canadian C.T.C. and the United
States C.A.B. to describe at
least two "places of
destination," viz., the "place of
destination" of a particular flight
either an "outward destination"
from the "point of origin" or from
the "outward point of
destination" to any place in
Canada.
Thus the place of destination
under Art. 28 and Art. 1 of the
Warsaw Convention of the flight
on which Mrs. Silverberg was
killed, was Los Angeles
according to the ticket, which
was the contract between the
parties and the suit is properly
filed in this Court which has
jurisdiction.
The Petitioner avers that the present case falls
squarely under the above ruling because the
date and time of his return flight to San
Francisco were, as in the Aanestad case, also
left open. Consequently, Manila and not San
Francisco should be considered the petitioner's
destination.
The private respondent for its part invokes the
ruling in Butz v. British Airways, 17 where the
United States District Court (Eastern District of
Pennsylvania) said:
 . . . Although the authorities
which addressed this precise
issue are not extensive, both the
cases and the commentators
are almost unanimous in
concluding that the "place of
destination" referred to in the
Warsaw Convention "in a trip
consisting of several parts . . . is
the ultimate destination that is
accorded treaty jurisdiction." . . .
But apart from that
distinguishing feature, I cannot
agree with the Court's analysis
in Aanestad; whether the return
portion of the ticket is
characterized as an option or a
contract, the carrier was legally
bound to transport the
passenger back to the place of
origin within the prescribed time
and. the passenger for her part
agreed to pay the fare and, in
fact, did pay the fare. Thus there
was mutuality of obligation and
a binding contract of carriage,
The fact that the passenger
could forego her rights under
the contract does not make it
any less a binding contract.
Certainly, if the parties did not
contemplate the return leg of the
journey, the passenger would
not have paid for it and the
carrier would not have issued a
round trip ticket.
We agree with the latter case. The place of
destination, within the meaning of the Warsaw
Convention, is determined by the terms of the
contract of carriage or, specifically in this case,
the ticket between the passenger and the
carrier. Examination of the petitioner's ticket
shows that his ultimate destination is San
Francisco. Although the date of the return flight
was left open, the contract of carriage between
the parties indicates that NOA was bound to
transport the petitioner to San Francisco from
Manila. Manila should therefore be considered
merely an agreed stopping place and not the
destination.
The petitioner submits that the Butz case could
not have overruled the Aanestad case because
these decisions are from different jurisdictions.
But that is neither here nor there. In fact, neither
of these cases is controlling on this Court. If we
have preferred the Butz case, it is because,
exercising our own freedom of choice, we have
decided that it represents the better, and correct,
interpretation of Article 28(1).
Article 1(2) also draws a distinction between a
"destination" and an "agreed stopping place." It
is the "destination" and not an "agreed stopping
place" that controls for purposes of ascertaining
jurisdiction under the Convention.
The contract is a single undivided operation,
beginning with the place of departure and
ending with the ultimate destination. The use of
the singular in this expression indicates the
understanding of the parties to the Convention
that every contract of carriage has one place of
departure and one place of destination. An
intermediate place where the carriage may be
broken is not regarded as a "place of
destination."
C. The petitioner claims that the
lower court erred in not ruling
that under Art. 28(1) of the
Warsaw Convention, this case
was properly filed in the
Philippines because the
defendant has its domicile in the
Philippines.
The petitioner argues that the Warsaw
Convention was originally written in French and
that in interpreting its provisions, American
courts have taken the broad view that the
French legal meaning must govern. 18 In
French, he says, the "domicile" of the carrier
means every place where it has a branch office.
The private respondent notes, however, that
in Compagnie Nationale Air France vs.
Giliberto, 19 it was held:
The plaintiffs' first contention is
that Air France is domiciled in
the United States. They say that
the domicile of a corporation
includes any country where the
airline carries on its business on
"a regular and substantial
basis," and that the United
States qualifies under such
 definition. The meaning of
domicile cannot, however, be so
extended. The domicile of a
corporation is customarily
regarded as the place where it
is incorporated, and the courts
have given the meaning to the
term as it is used in article 28(1)
of the Convention. (See Smith v.
Canadian Pacific Airways, Ltd.
(2d Cir. 1971), 452 F2d 798,
802; Nudo v. Societe Anonyme
Belge d' Exploitation de la
Navigation Aerienne Sabena
Belgian World Airlines (E.D. pa.
1962). 207 F. Supp, 191;
Karfunkel v. Compagnie
Nationale Air France (S.D.N.Y.
1977), 427 F. Suppl. 971, 974).
Moreover, the structure of article
28(1), viewed as a whole, is
also incompatible with the
plaintiffs' claim. The article, in
stating that places of business
are among the bases of the
jurisdiction, sets out two places
where an action for damages
may be brought; the country
where the carrier's principal
place of business is located,
and the country in which it has a
place of business through which
the particular contract in
question was made, that is,
where the ticket was bought,
Adopting the plaintiffs' theory
would at a minimum blur these
carefully drawn distinctions by
creating a third intermediate
category. It would obviously
introduce uncertainty into
litigation under the article
because of the necessity of
having to determine, and
without standards or criteria,
whether the amount of business
done by a carrier in a particular
country was "regular" and
"substantial." The plaintiff's
request to adopt this basis of
jurisdiction is in effect a request
to create a new jurisdictional
standard for the Convention.
Furthermore, it was argued in another
case 20 that:
. . . In arriving at an
interpretation of a treaty whose
sole official language is French,
are we bound to apply French
law? . . . We think this question
and the underlying choice of law
issue warrant some discussion
. . . We do not think this
statement can be regarded as a
conclusion that internal French
law is to be "applied" in the
choice of law sense, to
determine the meaning and
scope of the Convention's
terms. Of course, French legal
usage must be considered in
arriving at an accurate English
translation of the French. But
when an accurate English
translation is made and agreed
upon, as here, the inquiry into
meaning does not then revert to
a quest for a past or present
French law to be "applied" for
revelation of the proper scope of
the terms. It does not follow
from the fact that the treaty is
written in French that in
interpreting it, we are forever
chained to French law, either as
it existed when the treaty was
written or in its present state of
development. There is no
suggestion in the treaty that
French law was intended to
govern the meaning of
Warsaw's terms, nor have we
found any indication to this
effect in its legislative history or
from our study of its application
and interpretation by other
courts. Indeed, analysis of the
cases indicates that the courts,
in interpreting and applying the
Warsaw Convention, have, not
considered themselves bound to
apply French law simply
because the Convention is
written in French. . . .
We agree with these rulings.
Notably, the domicile of the carrier is only one of
the places where the complaint is allowed to be
filed under Article 28(1). By specifying the three
other places, to wit, the principal place of
business of the carrier, its place of business
where the contract was made, and the place of
destination, the article clearly meant that these
three other places were not comprehended in
the term "domicile."
D. The petitioner claims that the
lower court erred in not ruling
that Art. 28(1) of the Warsaw
Convention does not apply to
actions based on tort.
The petitioner alleges that the gravamen of the
complaint is that private respondent acted
arbitrarily and in bad faith, discriminated against
the petitioner, and committed a willful
misconduct because it canceled his confirmed
reservation and gave his reserved seat to
someone who had no better right to it. In short.
the private respondent committed a tort.
Such allegation, he submits, removes the
present case from the coverage of the Warsaw
Convention. He argues that in at least two
American cases, 21 it was held that Article 28(1)
of the Warsaw Convention does not apply if the
action is based on tort.
This position is negated by Husserl v. Swiss Air
Transport Company, 22 where the article in
question was interpreted thus:
. . . Assuming for the present
that plaintiff's claim is "covered"
by Article 17, Article 24 clearly
excludes any relief not provided
for in the Convention as
modified by the Montreal
Agreement. It does not,
however, limit the kind of cause
of action on which the relief may
be founded; rather it provides
that any action based on the
injuries specified in Article 17
"however founded," i.e.,
regardless of the type of action
on which relief is founded, can
only be brought subject to the
conditions and limitations
established by the Warsaw
System. Presumably, the
reason for the use of the phrase
"however founded," in two-fold:
to accommodate all of the
multifarious bases on which a
claim might be founded in
different countries, whether
under code law or common law,
whether under contract or tort,
etc.; and to include all bases on
which a claim seeking relief for
an injury might be founded in
any one country. In other words,
if the injury occurs as described
in Article 17, any relief available
is subject to the conditions and
limitations established by the
Warsaw System, regardless of
the particular cause of action
which forms the basis on which
a plaintiff could seek
relief . . .
The private respondent correctly contends that
the allegation of willful misconduct resulting in a
tort is insufficient to exclude the case from the
comprehension of the Warsaw Convention. The
petitioner has apparently misconstrued the
import of Article 25(l) of the Convention, which
reads as follows:
Art. 25 (1). The carrier shall not
be entitled to avail himself of the
provisions of this Convention
which exclude or limit his
liability. if the damage is caused
by his willful misconduct or by
such default on his part as, in
accordance with the law of the
court to which the case is
submitted, is considered to be
equivalent to willful misconduct.
It is understood under this article that the court
called upon to determine the applicability of the
limitation provision must first be vested with the
appropriate jurisdiction. Article 28(1) is the
provision in the Convention which defines that
jurisdiction. Article 22 23 merely fixes the
monetary ceiling for the liability of the carrier in
cases covered by the Convention. If the carrier
is indeed guilty of willful misconduct, it can avail
itself of the limitations set forth in this article. But
this can be done only if the action has first been
commenced properly under the rules on
jurisdiction set forth in Article 28(1).
III
 THE ISSUE OF PROTECTION
TO MINORS
The petitioner calls our attention to Article 24 of
the Civil Code, which states:
Art. 24. In all contractual
property or other relations, when
one of the parties is at a
disadvantage on account of his
moral dependence, ignorance,
indigence, mental weakness,
tender age or other handicap,
the courts must be vigilant for
his protection.
Application of this article to the present case is
misplaced. The above provision assumes that
the court is vested with jurisdiction to rule in
favor of the disadvantaged minor, As already
explained, such jurisdiction is absent in the case
at bar.
CONCLUSION
A number of countries have signified their
concern over the problem of citizens being
denied access to their own courts because of
the restrictive provision of Article 28(1) of the
Warsaw Convention. Among these is the United
States, which has proposed an amendment that
would enable the passenger to sue in his own
domicile if the carrier does business in that
jurisdiction. The reason for this proposal is
explained thus:
not yet been ratified by the required minimum
number of contracting parties. Pending such
ratification, the petitioner will still have to file his
complaint only in any of the four places
designated by Article 28(1) of the Warsaw
Convention.
The proposed amendment bolsters the ruling of
this Court that a citizen does not necessarily
have the right to sue in his own courts simply
because the defendant airline has a place of
business in his country.
The Court can only sympathize with the
petitioner, who must prosecute his claims in the
United States rather than in his own country at
least inconvenience. But we are unable to grant
him the relief he seeks because we are limited
by the provisions of the Warsaw Convention
which continues to bind us. It may not be amiss
to observe at this point that the mere fact that he
will have to litigate in the American courts does
not necessarily mean he will litigate in vain. The
judicial system of that country in known for its
sense of fairness and, generally, its strict
adherence to the rule of law.
WHEREFORE, the petition is DENIED, with
costs against the petitioner. It is so ordered.

In the event a US citizen

temporarily residing abroad
purchases a Rome to New York
to Rome ticket on a foreign air
carrier which is generally
subject to the jurisdiction of the
US, Article 28 would prevent
that person from suing the
carrier in the US in a "Warsaw
Case" even though such a suit
could be brought in the absence
of the Convention.

The proposal was incorporated in the

Guatemala Protocol amending the Warsaw
Convention, which was adopted at Guatemala
City on March 8,
1971. 24 But it is still ineffective because it has

FIRST DIVISION
[G.R. No. 104685. March 14, 1996]
SABENA BELGIAN WORLD
AIRLINES, petitioner, vs. HON.
COURT OF APPEALS and MA.
PAULA SAN AGUSTIN, respondents.
DECISION
VITUG, J.:
The appeal before the Court involves the
issue of an airlines liability for lost luggage. The
petition for review assails the decision of the
Court Appeals,[1] dated 27 February 1992,
affirming an award of damages made by the trial
court in a complaint filed by private respondent
against petitioner.
The factual background of the case,
narrated by the trial court and reproduced at
length by the appellate court, is hereunder
quoted:
On August 21, 1987, plaintiff was a passenger on
board Flight SN 284 of defendant airline originating
from Casablanca to Brussels, Belgium on her way
back to Manila. Plaintiff checked in her luggage
which contained her valuables, namely: jewelries
valued at $2,350.00; clothes $1,500.00; shoes/bag
$150; accessories $75; luggage itself $10.00; or a
total of $4,265.00, for which she was issued Tag No.
71423. She stayed overnight in Brussels and her
luggage was left on board Flight SN 284.
Plaintiff arrived at Manila International Airport on
September 2, 1987 and immediately submitted her
Tag No. 71423 to facilitate the release of her luggage
hut the luggage was missing. She was advised to
accomplish and submit a property Irregularity Report
which she submitted and filed on the same day.
She followed up her claim on September 14, 1987
but the luggage remained to be missing.
On September 15, 1987, she filed her formal
complaint with the office of Ferge Massed,
defendants Local Manager, demanding immediate
attention (Exh. A).
On September 30, 1987, on the occasion of plaintiffs
following up of her luggage claim, she was furnished
copies of defendants telexes with an information that
the Brussels Office of defendant found the luggage
and that they have broken the locks for identification
(Exhibit B). Plaintiff was assured by the defendant
that it has notified its Manila Office that the luggage
will be shipped to Manila on October 27, 1987. But
unfortunately plaintiff was informed that the luggage
was lost for the second time (Exhibits C and C-1).
At the time of the filling of the complaint, the
luggage with its content has not been found.
Plaintiff demanded from the defendant the money
value of the luggage and its contents amounting to
$4,265.00 or its exchange value, but defendant
refused to settle the claim.
Defendant asserts in its Answer and its evidence tend
to show that while it admits that the plaintiff was a
passenger on board Flight No. SN 284 with a piece of
checked in luggage bearing Tag No. 71423, the loss
of the luggage was due to plaintiffs sole if not
contributory negligence; that she did not declare the
valuable items in her checked-in luggage at the flight
counter when she checked in for her flight from
Casablanca to Brussels so that either the
representative of the defendant at the counter would
have advised her to secure an insurance on the
alleged valuable items and required her to pay
additional charges, or would have refused acceptance
of her baggage as required by the generally accepted
practices of international carriers; that Section 9(a),
Article IX of General Conditions of carriage
requiring passengers to collect their checked baggage
at the place of stopover, plaintiff neglected to claim
her baggage at the Brussels Airport; that plaintiff
should have retrieved her undeclared valuables from
her baggage at the Brussels Airport since her flight
from Brussels to Manila will still have to visit for
confirmation inasmuch as only her flight from
Casablanca to Brussels was confirmed; that
defendant incorporated in all Sabena Plane Tickets,
including Sabena Ticket No. 082422-72502241
issued to plaintiff in Manila on August 21, 1987, a
warning that Items of value should be carried on your
person and that some carriers assume no liability for
fragile, valuable or perishable articles and that further
information may he obtained from the carrier for
guidance; that granting without conceding that
defendant is liable, its liability is limited only to US
$20.00 per kilo due to plaintiffs failure to declare a
higher value on the contents of her checked in
luggage and pay additional charges thereon.[2]
The trial court rendered judgment ordering
petitioner Sabena Belgian World Airlines to pay
private respondent Ma. Paula San Agustin
(a) x x x US$4,265.00 or its legal exchange in
Philippine pesos;
(b) x x x P30,000.00 as moral damages;
(c) x x x P10,000.00 as exemplary damages;
(d) x x x P10,000.00 attorneys fees; and
(e) (t)he costs of the suit.[3]
Sabena appealed the decision of the
Regional Trial Court to the Court of Appeals.
The appellate court, in its decision of 27
February 1992, affirmed in toto the trial courts
judgment.
Petitioner airline company, in contending
that the alleged negligence of private
respondent should be considered the primary
cause for the loss of her luggage, avers that,
despite her awareness that the flight ticket had
been confirmed only for Casablanca and
Brussels, and that her flight from Brussels to
Manila had yet to be confirmed, she did not
retrieve the luggage upon arrival in
Brussels. Petitioner insists that private
respondent, being a seasoned international
traveler, must have likewise been familiar with
the standard provisions contained in her flight
ticket that items of value are required to be
hand-carried by the passenger and that the
liability of the airline or loss, delay or damage to
baggage would be limited, in any event, to only
US$20.00 per kilo unless a higher value is
declared in advance and corresponding
additional charges are paid thereon. At the
Casablanca International Airport, private
respondent, in checking in her luggage,
evidently did not declare its contents or
value. Petitioner cites Section 5(c), Article IX, of
the General Conditions of Carriage, signed at
Warsaw, Poland, on 02 October 1929, as
amended by the Hague Protocol
of 1955, generally observed by International
carriers, stating, among other things, that:
Passengers shall not include in his checked baggage,
and the carrier may refuse to carry as checked
baggage, fragile or perishable articles, money,
jewelry, precious metals, negotiable papers, securities
or other valuables.[4]
Fault or negligence consists in the omission
of that diligence which is demanded by the
nature of an obligation and corresponds with the
circumstances of the person, of the time, and of
the place. When the source of an obligation is
derived from a contract, the mere breach or non-
fulfillment of the prestation gives rise to the
presumption of fault on the part of the
obligor. This rule is not different in the case of
common carriers in the carriage of goods which,
indeed, are bound to observe not just the due
diligence of a good father of a family but that of
extraordinary care in the vigilance over the
goods. The appellate court has aptly observed:
x x x Art. 1733 of the [Civil] Code provides that from
the very nature of their business and by reasons of
public policy, common carriers are bound to observe
extraordinary diligence in the vigilance over the
goods transported by them. This extraordinary
responsibility, according to Art. 1736, lasts from the
time the goods are unconditionally placed in the
possession of and received by the carrier until they
are delivered actually or constructively to the
consignee or person who has the right to receive
them. Art. 1737 states that the common carriers duty
to observe extraordinary diligence in the vigilance
over the goods transported by them remains in full
force and effect even when they are temporarily
unloaded or stored in transit. And Art. 1735
establishes the presumption that if the goods are lost,
destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they had observed
extraordinary diligence as required in Article 1733.
The only exceptions to the foregoing extraordinary
responsibility of the common carrier is when the loss,
destruction, or deterioration of the goods is due to
any of the following causes:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the had been lost for the second time. Thus, the
packing or in the containers; appellate court, given all the facts before it,
sustained the trial court in finding petitioner
(5) Order or act of competent public authority. ultimately guilty of gross negligence in the
handling of private respondents luggage. The
Not one of the above excepted causes obtains in this loss of said baggage not only once by twice,
case.[5] said the appellate court, underscores the wanton
negligence and lack of care on the part of the
carrier.
The above rules remain basically
unchanged even when the contract is breached
The above findings, which certainly cannot be said to
by tort[6] although noncontradictory principles on
be without basis, foreclose whatever rights petitioner
quasi-delict may then be assimilated as also
might have had to the possible limitation of liabilities
forming part of the governing law. Petitioner is
enjoyed by international air carriers under the
not thus entirely off track when it has likewise
Warsaw Convention (Convention for the Unification
raised in its defense the tort doctrine of
of Certain Rules Relating to International Carriage by
proximate cause. Unfortunately for petitioner,
Air, as amended by the Hague Protocol of 1955, the
however, the doctrine cannot, in this particular
Montreal Agreement of 1966, the Guatemala
instance, support its case. Proximate cause is
Protocol of 1971 and the Montreal Protocols of
that which, in natural and continuous sequence,
1975). In Alitalia vs. Intermediate Appellate
unbroken by any efficient intervening cause,
Court,[8] now Chief Justice Andres R. Narvasa,
produces injury and without which the result
speaking for the Court, has explained it well; he said:
would not have occurred. The exemplification by
the Court in one case[7] is simple and explicit;
viz: The Warsaw Convention however denies to the
carrier availment of the provisions which exclude or
limit his liability, if the damage is caused by his
(T)he proximate legal cause is that acting first and
wilful misconduct or by such default on his part as, in
producing the injury, either immediately or by setting
accordance with the law of the court seized of the
other events in motion, all constituting a natural and
Continuous chain of events, each having a close case, is considered to be equivalent to wilful
causal Connection with its immediate predecessor, misconduct, or if the damage is (similarly) caused x x
x by any agent of the carrier acting within the scope
the final event in the chain immediately affecting the
of his employment. The Hague Protocol amended the
injury as a natural and probable result of the cause
Warsaw Convention by removing the provision that
which first acted, under such circumstances that the
if the airline took all necessary steps to avoid the
person responsible for the first event should, as an
ordinarily prudent, and intelligent person, have damage, it could exculpate itself completely, and
reasonable ground to expect at the moment of his act declaring the stated limits of liability not applicable if
it is proved that the damage resulted from an act or
or default that an injury to some person might
omission of the carrier, its servants or agents, done
probably result therefrom.
with intent to cause damage or recklessly and with
knowledge that damage would probably result. The
It remained undisputed that private same deletion was effected by the Montreal
respondents luggage was lost while it was in the Agreement of 1966, with the result that a passenger
custody of petitioner. It was supposed to arrive could recover unlimited damages upon proof of
on the same flight that private respondent took wilful misconduct.
in returning to Manila on 02 September
1987. When she discovered that the luggage
The Convention does not thus operate as an exclusive
was missing, she promptly accomplished and
enumeration of the instances of an airlines liability,
filed a Property Irregularity Report. She followed
or as an absolute limit of the extent of that
up her claim on 14 September 1987, and filed,
liability. Such a proposition is not borne out by the
on the following day, a formal letter-complaint
language of the Convention, as this Court has now,
with petitioner. She felt relieved when, on 23
and at an earlier time, pointed out. Moreover, slight
October 1987, she was advised that her luggage
reflection readily leads to the conclusion that it
had finally been found, with its contents intact
should be deemed a limit of liability only in those
when examined, and that she could expect it to
cases where the cause of the death or injury to
arrive on 27 October 1987. She then waited
person, or destruction, loss or damage to property or
anxiously only to be told later that her luggage
delay in its transport is not attributable to or attended G.R. No. 120334 January 20, 1998
by any wilful misconduct, bad faith, recklessness or
otherwise improper conduct on the part of any NORTHWEST AIRLINES, INC. petitioner,
official or employee for which the carrier is vs.
responsible, and there is otherwise no special or COURT OF APPEALS and ROLANDO I.
extraordinary form of resulting injury. The TORRES, respondents.
Contentions provisions, in short, do not regulate or
exclude liability for other breaches of contract by the
G.R. No. 120337 January 20, 1998
carrier or misconduct of its officers and employees,
or for some particular or exceptional type of
damage. Otherwise, an air carrier would be exempt ROLANDO I. TORRES, petitioner,
from any liability for damages in the event of its vs.
absolute refusal, in bad faith, to comply with a COURT OF APPEALS and NORTHWEST
contract of carriage, which is absurd. Nor may it for a AIRLINES, INC., respondents.
moment be supposed that if a member of the aircraft
complement should inflict some physical injury on a
passenger, or maliciously destroy or damage the
latters property, the Convention might successfully DAVIDE, JR., J.:
be pleaded as the sole gauge to determine the carriers
liability to the passenger.Neither may the Convention Unable to accept the decision of the Court of
be invoked to justify the disregard of some Appeals in CA-G.R. CV No. 24068, 1 petitioner
extraordinary sort of damage resulting to a passenger Northwest Airlines, Inc., (hereafter
and preclude recovery therefor beyond the limits set NORTHWEST) and petitioner Rolando I. Torres
by said Convention. It is in this sense that the (hereafter TORRES) filed separate petitions for
Convention has been applied, or ignored, depending review under Rule 45 of the Rules of Court,
on the peculiar facts presented by each case. which were docketed as G.R. No. 120334 and
G.R. No. 120337 and thereafter consolidated.
The Court thus sees no error in the
preponderant application to the instant case by The antecedents of these cases were
the appellate court, as well as by the trial court, summarized by the Court of Appeals as follows:2
of the usual rules on the extent of recoverable
damages beyond the Warsaw limitations. Under
The plaintiff, [Torres], allegedly
domestic law and jurisprudence (the Philippines
on a special mission to
being the country of destination), the attendance
purchase firearms for the
of gross negligence (given the equivalent of
Philippine Senate, purchased a
fraud or bad faith) holds the common carrier
round trip ticket from defendant
liable for all damages which can be reasonably
[Northwest] for his travel to
attributed, although unforeseen, to the non-
Chicago and back to Manila. Via
performance of the obligation,[9] including moral
defendant's flight, plaintiff left for
and exemplary damages.[10]
United States.
WHEREFORE, the decision appealed from
is AFFIRMED. Costs against petitioner. After purchasing firearms and
on the way back to Manila,
SO ORDERED.
plaintiff checked-in and
presented before defendant's
representative his two identical
baggage, one of which
contained firearms. Defendant's
representative required the
baggage to be opened and the
supporting evidence to be
presented. Plaintiff showed
them his authorization from the
Philippine government and the
purchase receipts. Plaintiff
thereafter sealed the baggage
and defendant's representative
placed a red tag on the
baggage with firearms with the
marking "CONTAINS
FIREARMS".
Upon arrival in Manila on June
22, 1988 plaintiff was not able to
claim one of his baggages.
Plaintiff was informed by
defendant's representative that
his baggage containing firearms
was recalled back to Chicago by
defendant for US Customs
verification. A telex to this effect
was shown to plaintiff.
On June 28, 1988, after being
advised of the arrival of his
other baggage, plaintiff claimed
and opened the baggage in the
presence of defendant's
representative and found out
that the firearms were missing.
A Personal Property Missing
Damage Report was issued by
defendant to plaintiff.
On account of continuous
refusal of defendant to settle
amicably, plaintiff then prayed
before the trial court that
defendant be ordered to pay
actual damages, moral
damages, temperate damages,
exemplary damages and
attorney's fees (pp. 1-6,
Complaint; p. 1, Record).
In its answer, defendant
pleaded: a) that it was the
agents from the US Customs
who ordered for the return of the
weapons which plaintiff
checked-in; b) that when
opened in the presence of US
Customs agents the box
contained no firearms; and c)
that since the baggage which
was returned back to Chicago
did not contain any firearms,
then the baggage which plaintiff
received upon arrival in Manila
must have contained the
firearms (pp. 3-5, Answer; pp.
32-34, Record).
After plaintiff had presented its
evidence, defendant filed a
"Motion to Dismiss (By Way of
Demurrer to the Evidence with
Motion for Summary Judgment)"
dated April 24, 1989.
In said motion, defendant
moved for the "dismissal of the
complaint in so far as it prays for
moral, exemplary and temperate
damages and attorney's fees"
and further moved for "summary
judgment to be rendered
awarding the plaintiff $640.00 as
actual damages." (Motion to
Dismiss By Way of Demurrer to
Evidence with Motion for
Summary Judgment; p. 115,
Records).
Plaintiff on the other hand,
offered no objection to the
submission of the case for
decision but insisted that he is
entitled to damages as prayed
for (p. 1, Comment on
Defendant's Motion to Dismiss
by Way of Demurrer to
Evidence with Summary
Judgment; pp. 136-169,
Records).
We add to this summary the following relevant
matters:
NORTHWEST argued in its motion for summary
judgment that the Warsaw Convention and the
contract of carriage limited its liability to US$640
and that the evidence presented by TORRES
did not entitle him to moral, exemplary, and
temperate damages and attorney's fees.3
Instead of just ruling on NORTHWEST's Motion
to Dismiss (By Way of Demurrer to Evidence)
with Motion for Summary Judgment, which it
considered submitted for resolution in the order
of 14 June 1989, 4 the trial court rendered on 13
September 1989 a full-blown decision 5 ordering
NORTHWEST to pay TORRES the following
amounts:
 1. The amount of $9,009.32,
with legal interest thereon from
the date of the filing of the
complaint, in its peso equivalent
at the official rate of exchange
at the time payment is made,
representing the value of the
goods lost by the plaintiff;
2. The amount of P100,000.00
by way of attorney's fees;
3. The amount of P5,181.09 as
filing fees paid by the plaintiff
and the amount of P20,000.00
for expenses of litigation,
representing travel expenses
and hotel accommodations of
plaintiff's counsels; and
4. The amount of P50,000.00 as
moral damages.
The award of US$9,009.32, representing the
value of the lost firearms, was grounded on the
trial court's finding that "the act of
[NORTHWEST's] personnel in Tokyo or Narita
Airport in just guessing which baggage
contained the firearms was careless and
imprudent, amounting to careless disregard for
the safety of the luggage of the passenger."
According to the trial court, such act constituted
willful misconduct which brought the case
beyond the application of Section 22(2) of the
Warsaw Convention, thereby depriving
NORTHWEST of the limitation of the liability
provided for in said section.
The awards of attorney's fees and expenses of
litigation were premised on NORTHWEST's
having ignored the demands of TORRES forcing
the latter to litigate in order to assert his right.
TORRES was also awarded moral damages
because of the "inconvenience, anxiety and
worry" he suffered by reason of NORTHWEST's
unjustifiable refusal to settle his claim.
Both TORRES and NORTHWEST appealed
from the decision to the Court of Appeals, which
docketed the case as CA-G.R. CV No. 24068.
TORRES assailed the failure of the trial court to
award the actual, moral, and exemplary
damages prayed for by him. 6 NORTHWEST, on
the other hand, alleged that in prematurely
resolving the case on the merits the court
prevented it from presenting evidence, thereby
denying it due process; and that even assuming
that the trial court could resolve the entire case
on the merits, it erred in awarding damages,
attorney's fees, and expenses of litigation.7
In its Decision 8 of 14 September 1994, the
Court of Appeals sustained the trial court's
judgment that TORRES was entitled to actual
damages, since NORTHWEST had, in effect,
admitted the loss of the firearms when it insisted
that its liability was limited to $9.07 per pound or
$20 per kilo. The appellate court then concluded
that NORTHWEST's guessing of which luggage
contained the firearms amounted to willful
misconduct under Section 25(1) of the Warsaw
Convention which entitled TORRES to claim
actual damages in excess of the limitation
provided for under Section 22(2) of said
Convention.
Nevertheless, the Court of Appeals held that
while the trial court properly ruled on the right of
TORRES to actual damages, it erred in
determining by way of summary judgment the
amount of damages; for under Section 3 of Rule
34 of the Rules of Court, a summary judgment
may be rendered upon proper motion except as
to the amount of damages.
As to the trial court's act of disposing of the
entire case by way of summary judgment, the
Court of Appeals noted that NORTHWEST
categorically moved for summary judgment only
on the issue of actual damages, but not on the
claims for moral damages and attorney's fees.
NORTHWEST moved for the dismissal of the
latter claims by way of demurrer to evidence.
That being so, the trial court could not, by way of
summary judgment, dispose of the case on its
entirety. Section 2 of Rule 34 of the Rules of
Court required that summary judgment should
be issued only after the motion therefor has
been heard. Since there was no such motion as
to the claims for moral damages and attorney's
fees, no summary judgment thereon could be
made.
Anent the demurrer to evidence, the Court of
Appeals held that the trial court had to either
grant or deny it. If granted, no award therefor
could have been validly made. If denied, then
under Section 1 of Rule 35 of the Rules of Court,
NORTHWEST should have been allowed to
present its evidence, as it was not deemed to
have waived that right. This section provided:
Sec. 1. Effect of judgment on
demurrer to evidence. After
the plaintiff has completed the
presentation of his evidence, the
defendant without waiving his
right to offer evidence in the
event the motion is not granted,
may move for a dismissal on the
ground that upon facts and the
law the plaintiff has shown no
right to relief. However, if the
motion is granted and order of
dismissal is reversed on appeal,
the movant loses his right to
present evidence in his behalf.9
The Court of Appeals then held that since the
demurrer was impliedly denied by the trial court,
NORTHWEST should have been allowed to
present its evidence in accordance with the
above rule.
Accordingly, the Court of Appeals affirmed the
trial court's finding as to the right of TORRES to
actual damages but set aside the rest of the
appealed decision. It then remanded the case to
the court a quo for further proceedings.
On 23 May 1995, the Court of Appeals
denied 10 NORTHWEST's motion for a partial
reconsideration of the decision.
Hence, the present petitions.
NORTHWEST contests the right of TORRES to
actual damages on the following grounds: (1)
the loss of firearms was disputed; (2) the finding
of willful misconduct was arbitrary; and (3)
TORRES failed to produce a United States
license for the shipment of the firearms; hence,
the importation was illegal and no damages
could arise therefrom.
TORRES, on the other hand, claims that the
Court of Appeals erred (1) in setting aside the
appealed decision of the court a quo as to the
awards of damages, attorney's fees, and cost of
suit; (2) in remanding the case to the court a
quo for further proceedings; and (3) in failing to
award other damages for breach of contract and
willful misconduct committed by Northwest for
mishandling the cargo.
NORTHWEST's Motion to Dismiss (By Way of
Demurrer to Evidence) with Motion for Summary
Judgment involved two distinct and separate
processes, viz: (1) demurrer to evidence, which
was then governed by Rule 35, now by Rule 33;
and (2) motion for summary judgment, which
was then governed by Rule 34, now Rule 35, of
the Rules of Court. The subject of the demurrer
were the claims for moral, exemplary, and
temperate damages and attorney's fees; while
the target of the motion for summary judgment
was the claim for actual damages.
We agree with the Court of Appeals in its
holding that the trial court erred in deciding the
entire case on its merits. Indeed, as to the
demurrer to evidence, the trial court should have
been solely guided by the procedure laid down
in the abovementioned rule on demurrer to
evidence. It had no choice other than to grant or
to deny the demurrer. It could not, without
committing grave abuse of discretion amounting
to excess of jurisdiction, deny the motion and
then forthwith grant TORRES' claims on a
finding that TORRES has established a
preponderance of evidence in support of such
claims. In the instant case, the trial court did just
that insofar as moral damages, attorney's fees,
and expenses of litigation were concerned. What
it should have done was to merely deny the
demurrer and set a date for the reception of
NORTHWEST's evidence in chief.
As to the motion for summary judgment, both
the trial court and the Court of Appeals were in
error. Summary judgments were formerly
governed by Rule 34 of the Rules of Court. The
rule is now Rule 35 of the 1987 Rules of Civil
Procedure with the amendments allowing the
parties to submit not only affidavits but also
depositions or admissions in support of their
respective contentions. 11 Motions for summary
judgment may be filed by the claimant or by the
defending party. Sections 1, 2, and 3 of the old
Rule 34, the governing law in this case, provided
as follows:
Sec. 1. Summary judgment for
claimant. A party seeking to
recover upon a claim,
counterclaim, or cross-claim or
to obtain a declaratory relief
 may, at any time after the
pleading in answer thereto has
been served, move with
supporting affidavits for a
summary judgment in his favor
upon all or any part thereof.
Sec. 2. Summary judgment for
defending party. A party
against whom a claim,
counterclaim, or cross-claim is
asserted or a declaratory relief
is sought may, at any time,
move with supporting affidavits
for a summary judgment in his
favor as to all or any part
thereof.
Sec. 3. Motion and proceedings
thereon. The motion shall be
served at least ten (10) days
before the time specified for the
hearing. The adverse party prior
to the day of hearing may serve
opposing affidavits. After the
hearing, the judgment sought
shall be rendered forthwith if the
pleadings, depositions, and
admissions on file together with
the affidavits, show that, except
as to the amount of damages,
there is no genuine issue as to
any material fact and that the
moving party is entitled to a
judgment as a matter of law.
NORTHWEST, the defending party, moved for
summary judgment on the claim for actual
damages after TORRES had presented his
evidence in chief. This was allowed by Section 2
where the motion may be filed "at any time," as
distinguished from section 1 where the claimant,
like TORRES, may file the motion at any time
after the answer is filed.
Summary judgment is allowed if, except as to
the amount of damages, there is no genuine
issue as to any material fact and the moving
party is entitled to a judgment as a matter of law.
In this case, NORTHWEST denied in its Answer
the material allegations in the complaint and
asserted, in fact, that it was not liable for actual
damages because the box containing the
alleged lost firearms was the one received by
TORRES when he arrived in Manila. It likewise
contended that, even granting that the firearms
were lost, its liability was limited by the Warsaw
Convention and the contract of transportation to
$9.07 per pound, or a total of $640 as the box
weighed 70 pounds. 12 It also denied having
acted fraudulently or in bad faith. 13
In thus submitting for summary judgment the
matter of its liability only to the maximum
allowed in Section 22(2) of the Warsaw
Convention, NORTHWEST was deemed to have
hypothetically admitted arguendo that the
firearms were lost. It did not waive the
presentation of evidence that it was not in fact
liable for the alleged loss of firearms. And even if
it was not liable beyond the maximum provided
in said Section 22(2). Notably, TORRES prayed
for actual damages in the amounts of (1)
$9,009.32 representing the value of the lost
firearms; and (2) P39,065 14representing the
cost of his place tickets.
Concretely the, there remained a genuine issue
on the fact and amount of actual damages. The
motion for summary judgment was not therefore
in order. NORTHWEST must have resorted to it,
in like manner as it did in filing the demurrer, to
delay the progress of the trial of the case. Verily,
it was grave abuse of discretion on the part of
the trial court to grant such motion and award
TORRES actual damages commensurate to the
value of the firearms and based on his evidence
alone.
We, however, agree with both the trial court and
the Court of Appeals that NORTHWEST's
liability for actual damages may not be limited to
that prescribed in Section 22(2) of the Warsaw
Convention. In Alitalia v. Intermediate Appellate
Court, 15 we held:
The [Warsaw] Convention does
not operate as an exclusive
enumeration of the instances of
an airline's liability, or as an
absolute limit of the extent of
that liability. Such a proposition
is not borne out by the language
of the Convention, as this Court
has now, and at an earlier time,
pointed out. Moreover, slight
reflection readily leads to the
conclusion that it should be
deemed a limit of liability only in
 those cases where the cause of
the death or injury to person, or
destruction, loss or damage to
property or delay in its transport
is not attributable to or attended
by any willful misconduct, bad
faith, recklessness, or otherwise
improper conduct on the part of
any official or employee for
which the carrier is responsible,
and there is otherwise no
special or extraordinary form of
resulting injury. The
Convention's provisions,
short, 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.
IN VIEW WHEREOF, judgment is hereby
rendered (1) PARTLY GRANTING the petition in
G.R. No. 120334 by setting aside that portion of
the challenge decision of the Court of Appeals in
CA-G.R. CV No. 24068 affirming the summary
judgment as to the right of respondent
ROLANDO I. TORRES to actual damages; (2)
DENYING for want of merit the petition in G.R.
No. 120337; and (3) REMANDING this case to
the trial court for the reception of the evidence
for Northwest Airlines, Inc. in Civil Case No. 88-
46117 and, thereafter, for the rendition of the
judgment therein on the merits.
No pronouncement as to costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 118664. August 7, 1998]
JAPAN AIRLINES, petitioner, vs. THE COURT
OF APPEALS ENRIQUE AGANA,
MARIA ANGELA NINA AGANA,
ADALIA B. FRANCISCO and JOSE
MIRANDA, respondents.
in
DECISION
ROMERO, J.:
Before us is an appeal by certiorari filed by
petitioner Japan Airlines, Inc. (JAL) seeking the
reversal of the decision of the Court of
Appeals,[1]which affirmed with modification the
award of damages made by the trial court in
favor of herein private respondents Enrique
Agana, Maria Angela Nina Agana, Adelia
Francisco and Jose Miranda.
On June 13, 1991, private respondent Jose
Miranda boarded JAL flight No. JL 001 in San
Francisco, California bound for Manila. Likewise,
on the same day private respondents Enrique
Agana, Maria Angela Nina Agana and Adelia
Francisco left Los Angeles, California for Manila
via JAL flight No. JL 061. As an incentive for
travelling on the said airline, both flights were to
make an overnight stopover at Narita, Japan, at
the airlines expense, thereafter proceeding to
Manila the following day.
Upon arrival at Narita, Japan on June 14,
1991, private respondents were billeted at Hotel
Nikko Narita for the night. The next day, private
respondents, on the final leg of their journey,
went to the airport to take their flight to
Manila. However, due to the Mt. Pinatubo
eruption, unrelenting ashfall blanketed Ninoy
Aquino International Airport (NAIA), rendering it
inaccessible to airline traffic. Hence, private
respondents trip to Manila was cancelled
indefinitely.
To accommodate the needs of its stranded
passengers, JAL rebooked all the Manila-bound
passengers on flight No. 741 due to depart on
June 16, 1991 and also paid for the hotel
expenses for their unexpected overnight
stay. On June 16, 1991, much to the dismay of
the private respondents, their long anticipated
flight to Manila was again cancelled due to
NAIAs indefinite closure. At this point, JAL
informed the private respondents that it would
no longer defray their hotel and accommodation
expense during their stay in Narita.
Since NAIA was only reopened to airline
traffic on June 22, 1991, private respondents
were forced to pay for their accommodations
and meal expenses from their personal funds
from June 16 to June 21, 1991. Their
unexpected stay in Narita ended on June 22,
1991 when they arrived in Manila on board JL
flight No. 741.
Obviously, still reeling from the
experience, private respondents, on July 25,
1991, commenced an action for damages
against JAL before the Regional Trial Court of
Quezon City, Branch 104.[2] To support their
claim, private respondents asserted that JAL
failed to live up to its duty to provide care and
comfort to its stranded passengers when it
refused to pay for their hotel and
accommodation expenses from June 16 to 21,
1991 at Narita, Japan. In other words, they
insisted that JAL was obligated to shoulder their
expenses as long as they were still stranded in
Narita. On the other hand, JAL denied this
allegation and averred that airline passengers
have no vested right to these amenities in case
a flight is cancelled due to force majeure.
On June 18, 1992, the trial court rendered
its judgment in favor of private respondents
holding JAL liable for damages, viz.:
WHEREFORE, judgment is rendered in favor of
plaintiffs ordering the defendant Japan Airlines
to pay the plaintiffs Enrique Agana, Adalia B.
Francisco and Maria Angela Nina Agana the
sum of One million Two Hundred forty-six
Thousand Nine Hundred Thirty-Six Pesos
(P1,246,936.00) and Jose Miranda the sum of
Three Hundred Twenty Thousand Six Hundred
sixteen and 31/100 (P320,616.31) as actual,
moral and exemplary damages and pay
attorneys fees in the amount of Two Hundred
Thousand Pesos (P200,000.00), and to pay the
costs of suit.
Undaunted, JAL appealed the decision
before the Court of Appeals, which, however,
with the exception of lowering the damages
awarded affirmed the trial courts finding,[3] thus:
Thus, the award of moral damages should be as
it is hereby reduced to P200,000.00 for each of
the plaintiffs, the exemplary damages
to P300,000.00 and the attorneys fees
to P100,000.00 plus the costs.
WHEREFORE, with the foregoing Modification,
the judgment appealed from is hereby
AFFIRMED in all other respects.
JAL filed a motion for reconsideration which
proved futile and unavailing.[4]
Failing in its bid to reconsider the decision,
JAL has now filed this instant petition.
The issue to be resolved is whether JAL, as
a common carrier has the obligation to shoulder
the hotel and meal expenses of its stranded
passengers until they have reached their final
destination, even if the delay were caused by
force majeure.
To begin with, there is no dispute that the
Mt. Pinatubo eruption prevented JAL from
proceeding to Manila on schedule. Likewise,
private respondents concede that such event
can be considered as force majeure since their
delayed arrival in Manila was not imputable to
JAL.[5]
However, private respondents contend that
while JAL cannot be held responsible for the
delayed arrival in Manila, it was nevertheless
liable for their living expenses during their
unexpected stay in Narita since airlines have the
obligation to ensure the comfort and
convenience of its passengers.While we
sympathize with the private respondents plight,
we are unable to accept this contention.
We are not unmindful of the fact that in a
plethora of cases we have consistently ruled that
a contract to transport passengers is quite
different in kind and degree from any other
contractual relation. It is safe to conclude that it
is a relationship imbued with public
interest. Failure on the part of the common
carrier to live up to the exacting standards
of care and diligence renders it liable for any
damages that may be sustained by its
passengers.However, this is not to say that
common carriers are absolutely responsible for
all injuries or damages even if the same were
caused by a fortuitous event. To rule otherwise
would render the defense of force majeure, as
an exception from any liability, illusory and
ineffective.
Accordingly, there is no question that when
a party is unable to fulfill his obligation because
of force majeure, the general rule is that he
cannot be held liable for damages for non-
performance.[6] Corollarily, when JAL was
prevented from resuming its flight to Manila due
to the effects of Mt. Pinatubo eruption, whatever
losses or damages in the form of hotel and meal
expenses the stranded passengers incurred,
cannot be charged to JAL.Yet it is undeniable
that JAL assumed the hotel expenses of
respondents for their unexpected overnight stay
on June 15, 1991.
Admittedly, to be stranded for almost a
week in a foreign land was an exasperating
experience for the private respondents. To be
sure, they underwent distress and anxiety during
their unanticipated stay in Narita, but their
predicament was not due to the fault or
negligence of JAL but the closure of NAIA to
international flights. Indeed, to hold JAL, in the
absence of bad faith or negligence, liable for the
amenities of its stranded passengers by reason
of a fortuitous event is too much of a burden to
assume.
Furthermore, it has been held that airline
passengers must take such risks incident to the
mode of travel.[7] In this regard, adverse weather
conditions or extreme climatic changes are
some of the perils involved in air travel, the
consequences of which the passenger must
assume or expect.After all, common carriers are
not the insurer of all risks.[8]
Paradoxically, the Court of Appeals, despite
the presence of force majeure, still ruled against
JAL relying in our decision in PAL v. Court of
Appeals,[9] thus:
The position taken by PAL in this case clearly
illustrates its failure to grasp the exacting
standard required by law. Undisputably, PALs
diversion of its flight due to inclement weather
was a fortuitous event. Nonetheless, such
occurrence did not terminate PALs contract with
its passengers. Being in the business of air
carriage and the sole one to operate in the
country, PAL is deemed equipped to deal with
situations as in the case at bar. What we said in
one case once again must be stressed, i.e., the
relation of carrier and passenger continues until
the latter has been landed at the port of
destination and has left the carriers
premises. Hence, PAL necessarily would still
have to exercise extraordinary diligence in
safeguarding the comfort, convenience and
safety of its stranded passengers until they have
reached their final destination. On this score,
PAL grossly failed considering the then ongoing
battle between government forces and Muslim
rebels in Cotabato City and the fact that the
private respondent was a stranger to the place.
The reliance is misplaced. The factual
background of the PAL case is different from the
instant petition. In that case there was indeed a
fortuitous event resulting in the diversion of the
PAL flight. However, the unforeseen diversion
was worsened when private respondents
(passenger) was left at the airport and could not
even hitch a ride in a Ford Fiera loaded with
PAL personnel,[10] not to mention the apparent
apathy of the PAL station manager as to the
predicament of the stranded passengers.[11] In
light of these circumstances, we held that if the
fortuitous event was accompanied by neglect
and malfeasance by the carriers employees, an
action for damages against the carrier is
permissible. Unfortunately, for private
respondents, none of these conditions are
present in the instant petition.
We are not prepared, however, to
completely absolve petitioner JAL from any
liability. It must be noted that private
respondents bought tickets from the United
States with Manila as their final destination.
While JAL was no longer required to defray
private respondents living expenses during their
stay in Narita on account of the fortuitous event,
JAL had the duty to make the
necessary arrangements to transport private
respondents on the first available connecting
flight to Manila. Petitioner JAL reneged on its
obligation to look after the comfort and
convenience of its passengers when it
declassified private respondents from transit
passengers to new passengers as a result of
which private respondents were obliged to make
the necessary arrangements themselves for the
next flight to Manila. Private respondents were
placed on the waiting list from June 20 to June
24. To assure themselves of a seat on an
available flight, they were compelled to stay in
the airport the whole day of June 22, 1991 and it
was only at 8:00 p.m. of the aforesaid date that
they were advised that they could be
accommodated in said flight which flew at about
9:00 a.m. the next day.
We are not oblivious to the fact that the
cancellation of JAL flights to Manila from June
15 to June 21, 1991 caused considerable
disruption in passenger booking and
reservation. In fact, it would be unreasonable to
expect, considering NAIAs closure, that JAL
flight operations would be normal on the days
affected. Nevertheless, this does not excuse
JAL from its obligation to make the necessary
arrangements to transport private respondents
on its first available flight to Manila. After all, it
had a contract to transport private respondents
from the United States to Manila as their final
destination.
Consequently, the award of nominal
damages is in order. Nominal damages are
adjudicated in order that a right of a plaintiff,
which has been violated or invaded by the
defendant, may be vindicated or recognized and
not for the purpose of indemnifying any loss
suffered by him.[12] The court may award
nominal damages in every obligation arising
from any source enumerated in Article 1157, or
in every case where any property right has been
invaded.[13]
WHEREFORE, in view of the foregoing, the
decision of the Court of Appeals dated
December 22, 1993 is hereby MODIFIED. The
award of actual, moral and exemplary damages
is hereby DELETED. Petitioner JAL is ordered to
pay each of the private respondents
nominal damages in the sum of P100,000.00
each including attorneys fees of P50,000.00 plus
costs.
SO ORDERED.
G.R. No. 127768 November 19, 1999
UNITED AIRLINES, petitioner,
vs.
WILLIE J. UY, respondent.
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 airline's 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, petitioner's
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.
Respondent's 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 respondent's
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 respondent's 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
forum's 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 court's 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
respondent's 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 respondent's 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.
Respondent's 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
respondent's 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
Sec. 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 . . . ."
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. 104235 November 18, 1993
SPOUSES CESAR & SUTHIRA ZALAMEA and
LIANA ZALAMEA, petitioners,
vs.
HONORABLE COURT OF APPEALS and
TRANSWORLD AIRLINES, INC., respondents.
Sycip, Salazar, Hernandez, Gatmaitan for
petitioners.
Quisumbing, Torres & Evangelista for private-
respondent.
NOCON, J.:
Disgruntled over TransWorld Airlines, Inc.'s
refusal to accommodate them in TWA Flight 007
departing from New York to Los Angeles on
June 6, 1984 despite possession of confirmed
tickets, petitioners filed an action for damages
before the Regional Trial Court of Makati, Metro
Manila, Branch 145. Advocating petitioner's
position, the trial court categorically ruled that
respondent TransWorld Airlines (TWA)
breached its contract of carriage with petitioners
and that said breach was "characterized by bad
faith." On appeal, however, the appellate court
found that while there was a breach of contract
on respondent TWA's part, there was neither
fraud nor bad faith because under the Code of
Federal Regulations by the Civil Aeronautics
Board of the United States of America it is
allowed to overbook flights.
The factual backdrop of the case is as follows:
Petitioners-spouses Cesar C. Zalamea and
Suthira Zalamea, and their daughter, Liana
Zalamea, purchased three (3) airline tickets from
the Manila agent of respondent TransWorld
Airlines, Inc. for a flight to New York to Los
Angeles on June 6, 1984. The tickets of
petitioners-spouses were purchased at a
discount of 75% while that of their daughter was
a full fare ticket. All three tickets represented
confirmed reservations.
While in New York, on June 4, 1984, petitioners
received notice of the reconfirmation of their
reservations for said flight. On the appointed
date, however, petitioners checked in at 10:00
a.m., an hour earlier than the scheduled flight at
11:00 a.m. but were placed on the wait-list
because the number of passengers who had
checked in before them had already taken all the
seats available on the flight. Liana Zalamea
appeared as the No. 13 on the wait-list while the
two other Zalameas were listed as "No. 34,
showing a party of two." Out of the 42 names on
the wait list, the first 22 names were eventually
allowed to board the flight to Los Angeles,
including petitioner Cesar Zalamea. The two
others, on the other hand, at No. 34, being
ranked lower than 22, were not able to fly. As it
were, those holding full-fare tickets were given
first priority among the wait-listed passengers.
Mr. Zalamea, who was holding the full-fare ticket
of his daughter, was allowed to board the plane;
while his wife and daughter, who presented the
discounted tickets were denied boarding.
According to Mr. Zalamea, it was only later when
he discovered the he was holding his daughter's
full-fare ticket.
Even in the next TWA flight to Los Angeles Mrs.
Zalamea and her daughter, could not be
accommodated because it was also fully
booked. Thus, they were constrained to book in
another flight and purchased two tickets from
American Airlines at a cost of Nine Hundred
Eighteen ($918.00) Dollars.
Upon their arrival in the Philippines, petitioners
filed an action for damages based on breach of
contract of air carriage before the Regional Trial
Court of Makati, Metro Manila, Branch 145. As
aforesaid, the lower court ruled in favor of
petitioners in its decision 1 dated January 9,
1989 the dispositive portion of which states as
follows:
WHEREFORE, judgment is
hereby rendered ordering the
defendant to pay plaintiffs the
following amounts:
(1) US $918.00, or its peso
equivalent at the time of
payment representing the price
of the tickets bought by Suthira
and Liana Zalamea from
American Airlines, to enable
them to fly to Los Angeles from
New York City;
(2) US $159.49, or its peso
equivalent at the time of
payment, representing the price
of Suthira Zalamea's ticket for
TWA Flight 007;
(3) Eight Thousand Nine
Hundred Thirty-Four Pesos and
Fifty Centavos (P8,934.50,
Philippine Currency,
representing the price of Liana
Zalamea's ticket for TWA Flight
007,
(4) Two Hundred Fifty Thousand
Pesos (P250,000.00), Philippine
Currency, as moral damages for
all the plaintiffs'
(5) One Hundred Thousand
Pesos (P100,000.00), Philippine
Currency, as and for attorney's
fees; and
(6) The costs of suit.
SO ORDERED. 2
On appeal, the respondent Court of Appeals
held that moral damages are recoverable in a
damage suit predicated upon a breach of
contract of carriage only where there is fraud or
bad faith. Since it is a matter of record that
overbooking of flights is a common and
accepted practice of airlines in the United States
and is specifically allowed under the Code of
Federal Regulations by the Civil Aeronautics
Board, no fraud nor bad faith could be imputed
on respondent TransWorld Airlines.
Moreover, while respondent TWA was remiss in
not informing petitioners that the flight was
overbooked and that even a person with a
confirmed reservation may be denied
accommodation on an overbooked flight,
nevertheless it ruled that such omission or
negligence cannot under the circumstances be
considered to be so gross as to amount to bad
faith.
Finally, it also held that there was no bad faith in
placing petitioners in the wait-list along with
forty-eight (48) other passengers where full-fare
first class tickets were given priority over
discounted tickets.
The dispositive portion of the decision of
respondent Court of Appeals3 dated October 25,
1991 states as follows:
WHEREFORE, in view of all the
foregoing, the decision under
review is hereby MODIFIED in
that the award of moral and
exemplary damages to the
plaintiffs is eliminated, and the
defendant-appellant is hereby
ordered to pay the plaintiff the
following amounts:
(1) US$159.49, or its peso
equivalent at the time of the
payment, representing the price
of Suthira Zalamea's ticket for
TWA Flight 007;
(2) US$159.49, or its peso
equivalent at the time of the
payment, representing the price
of Cesar Zalamea's ticket for
TWA Flight 007;
(3) P50,000.00 as and for
attorney's fees.
(4) The costs of suit.
SO ORDERED.4
Not satisfied with the decision, petitioners raised
the case on petition for review on certiorari and
alleged the following errors committed by the
respondent Court of Appeals, to wit:
I.
. . . IN HOLDING THAT THERE
WAS NO FRAUD OR BAD
FAITH ON THE PART OF
RESPONDENT TWA
BECAUSE IT HAS A RIGHT TO
OVERBOOK FLIGHTS.
II.
. . . IN ELIMINATING THE
AWARD OF EXEMPLARY
DAMAGES.
III.
. . . IN NOT ORDERING THE
REFUND OF LIANA
ZALAMEA'S TWA TICKET AND
PAYMENT FOR THE
AMERICAN AIRLINES
TICKETS.5
That there was fraud or bad faith on the part of
respondent airline when it did not allow
petitioners to board their flight for Los Angeles in
spite of confirmed tickets cannot be disputed.
The U.S. law or regulation allegedly authorizing
overbooking has never been proved. Foreign
laws do not prove themselves nor can the courts
take judicial notice of them. Like any other fact,
they must be alleged and proved.6 Written law
may be evidenced by an official publication
thereof or by a copy attested by the officer
having the legal custody of the record, or by his
deputy, and accompanied with a certificate that
such officer has custody. The certificate may be
made by a secretary of an embassy or legation,
consul general, consul, vice-consul, or consular
agent or by any officer in the foreign service of
the Philippines stationed in the foreign country in
which the record is kept, and authenticated by
the seal of his office.7
Respondent TWA relied solely on the statement
of Ms. Gwendolyn Lather, its customer service
agent, in her deposition dated January 27, 1986
that the Code of Federal Regulations of the Civil
Aeronautics Board allows overbooking. Aside
from said statement, no official publication of
said code was presented as evidence. Thus,
respondent court's finding that overbooking is
specifically allowed by the US Code of Federal
Regulations has no basis in fact.
Even if the claimed U.S. Code of Federal
Regulations does exist, the same is not
applicable to the case at bar in accordance with
the principle of lex loci contractus which require
that the law of the place where the airline ticket
was issued should be applied by the court where
the passengers are residents and nationals of
the forum and the ticket is issued in such State
by the defendant airline.8 Since the tickets were
sold and issued in the Philippines, the applicable
law in this case would be Philippine law.
Existing jurisprudence explicitly states that
overbooking amounts to bad faith, entitling the
passengers concerned to an award of moral
damages. In Alitalia Airways v. Court of
Appeals,9 where passengers with confirmed
bookings were refused carriage on the last
minute, this Court held that when an airline
issues a ticket to a passenger confirmed on a
particular flight, on a certain date, a contract of
carriage arises, and the passenger has every
right to expect that he would fly on that flight and
on that date. If he does not, then the carrier
opens itself to a suit for breach of contract of
carriage. Where an airline had deliberately
overbooked, it took the risk of having to deprive
some passengers of their seats in case all of
them would show up for the check in. For the
indignity and inconvenience of being refused a
confirmed seat on the last minute, said
passenger is entitled to an award of moral
damages.
Similarly, in Korean Airlines Co., Ltd. v. Court of
Appeals, 10 where private respondent was not
allowed to board the plane because her seat
had already been given to another passenger
even before the allowable period for passengers
to check in had lapsed despite the fact that she
had a confirmed ticket and she had arrived on
time, this Court held that petitioner airline acted
in bad faith in violating private respondent's
rights under their contract of carriage and is
therefore liable for the injuries she has sustained
as a result.
In fact, existing jurisprudence abounds with
rulings where the breach of contract of carriage
amounts to bad faith. In Pan American World
Airways, Inc. v. Intermediate Appellate
Court, 11 where a would-be passenger had the
necessary ticket, baggage claim and clearance
from immigration all clearly and unmistakably
showing that she was, in fact, included in the
passenger manifest of said flight, and yet was
denied accommodation in said flight, this Court
did not hesitate to affirm the lower court's finding
awarding her damages.
A contract to transport passengers is quite
different in kind and degree from any other
contractual relation. So ruled this Court
in Zulueta v. Pan American World Airways,
Inc. 12 This is so, for a contract of carriage
generates a relation attended with public duty
a duty to provide public service and convenience
to its passengers which must be paramount to
self-interest or enrichment. Thus, it was also
held that the switch of planes from Lockheed
1011 to a smaller Boeing 707 because there
were only 138 confirmed economy class
passengers who could very well be
accommodated in the smaller planes, thereby
sacrificing the comfort of its first class
passengers for the sake of economy, amounts
to bad faith. Such inattention and lack of care for
the interest of its passengers who are entitled to
its utmost consideration entitles the passenger
to an award of moral damages. 13
Even on the assumption that overbooking is
allowed, respondent TWA is still guilty of bad
faith in not informing its passengers beforehand
that it could breach the contract of carriage even
if they have confirmed tickets if there was
overbooking. Respondent TWA should have
incorporated stipulations on overbooking on the
tickets issued or to properly inform its
passengers about these policies so that the
latter would be prepared for such eventuality or
would have the choice to ride with another
airline.
Respondent TWA contends that Exhibit I, the
detached flight coupon upon which were written
the name of the passenger and the points of
origin and destination, contained such a notice.
An examination of Exhibit I does not bear this
out. At any rate, said exhibit was not offered for
the purpose of showing the existence of a notice
of overbooking but to show that Exhibit I was
used for flight 007 in first class of June 11, 1984
from New York to Los Angeles.
Moreover, respondent TWA was also guilty of
not informing its passengers of its alleged policy
of giving less priority to discounted tickets. While
the petitioners had checked in at the same time,
and held confirmed tickets, yet, only one of them
was allowed to board the plane ten minutes
before departure time because the full-fare ticket
he was holding was given priority over
discounted tickets. The other two petitioners
were left behind.
It is respondent TWA's position that the practice
of overbooking and the airline system of
boarding priorities are reasonable policies,
which when implemented do not amount to bad
faith. But the issue raised in this case is not the
reasonableness of said policies but whether or
not said policies were incorporated or deemed
written on petitioners' contracts of carriage.
Respondent TWA failed to show that there are
provisions to that effect. Neither did it present
any argument of substance to show that
petitioners were duly apprised of the overbooked
condition of the flight or that there is a hierarchy
of boarding priorities in booking passengers. It is
evident that petitioners had the right to rely upon
the assurance of respondent TWA, thru its agent
in Manila, then in New York, that their tickets
represented confirmed seats without any
qualification. The failure of respondent TWA to
so inform them when it could easily have done
so thereby enabling respondent to hold on to
them as passengers up to the last minute
amounts to bad faith. Evidently, respondent
TWA placed its self-interest over the rights of
petitioners under their contracts of carriage.
Such conscious disregard of petitioners' rights
makes respondent TWA liable for moral
damages. To deter breach of contracts by
respondent TWA in similar fashion in the future,
we adjudge respondent TWA liable for
exemplary damages, as well.
Petitioners also assail the respondent court's
decision not to require the refund of Liana
Zalamea's ticket because the ticket was used by
her father. On this score, we uphold the
respondent court. Petitioners had not shown
with certainty that the act of respondent TWA in
allowing Mr. Zalamea to use the ticket of her
daughter was due to inadvertence or deliberate
act. Petitioners had also failed to establish that
they did not accede to said agreement. The
logical conclusion, therefore, is that both
petitioners and respondent TWA agreed, albeit
impliedly, to the course of action taken.
The respondent court erred, however, in not
ordering the refund of the American Airlines
tickets purchased and used by petitioners
Suthira and Liana. The evidence shows that
petitioners Suthira and Liana were constrained
to take the American Airlines flight to Los
Angeles not because they "opted not to use their
TWA tickets on another TWA flight" but because
respondent TWA could not accommodate them
either on the next TWA flight which was also
fully booked. 14 The purchase of the American
Airlines tickets by petitioners Suthira and Liana
was the consequence of respondent TWA's
unjustifiable breach of its contracts of carriage
with petitioners. In accordance with Article 2201,
New Civil Code, respondent TWA should,
therefore, be responsible for all damages which
may be reasonably attributed to the non-
performance of its obligation. In the previously
cited case of Alitalia Airways v. Court of
Appeals, 15 this Court explicitly held that a
passenger is entitled to be reimbursed for the
cost of the tickets he had to buy for a flight to
another airline. Thus, instead of simply being
refunded for the cost of the unused TWA tickets,
petitioners should be awarded the actual cost of
their flight from New York to Los Angeles. On
this score, we differ from the trial court's ruling
which ordered not only the reimbursement of the
American Airlines tickets but also the refund of
the unused TWA tickets. To require both
prestations would have enabled petitioners to fly
from New York to Los Angeles without any fare
being paid.
The award to petitioners of attorney's fees is
also justified under Article 2208(2) of the Civil
Code which allows recovery when the
defendant's act or omission has compelled
plaintiff to litigate or to incur expenses to protect
his interest. However, the award for moral
damages and exemplary damages by the trial
court is excessive in the light of the fact that only
Suthira and Liana Zalamea were actually
"bumped off." An award of P50,000.00 moral
damages and another P50,000.00 exemplary
damages would suffice under the circumstances
obtaining in the instant case.
WHEREFORE, the petition is hereby GRANTED
and the decision of the respondent Court of
Appeals is hereby MODIFIED to the extent of
adjudging respondent TransWorld Airlines to
pay damages to petitioners in the following
amounts, to wit:
(1) US$918.00 or its peso equivalent at the time
of payment representing the price of the tickets
bought by Suthira and Liana Zalamea from
American Airlines, to enable them to fly to Los
Angeles from New York City;
(2) P50,000.00 as moral damages;
(3) P50,000.00 as exemplary damages;
(4) P50,000.00 as attorney's fees; and
(5) Costs of suit.

SO ORDERED.