09 PAL v.

Miano
G.R. No. 106664 (8 March 1995)
Puno , J. / Tita K

Subject Matter: Damages; Moral Damages

Summary:
Miano took a PAL flight bound to Germany and had a connecting flight from Germany to Austria. Upon arrival in Austria, Miano’s
checked in baggage was lost. The suitcase was delivered to Miano eleven days after the incident. Miano sued for damages and was
awarded moral and exemplary damages by the RTC despite finding that PAL did not act in Bad faith. SC deleted the award of moral
and exemplary damages.

Doctrines:
 In breach of contract of carriage by air, moral damages are awarded only if the defendant acted fraudulently or in badfaith.
 Bad faith cannot be presumed and must be established by clear and convincing evidence.
 Where the defendant is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and
probable consequences of the breach of the obligation which the parties had foreseen or could reasonably have foreseen. The
damages however, will not include liability for moral damages.
Parties:
Petitioner Philippine Airlines
Respondent Florante A. Miano
Facts:
Miano took PAL flight bound for Frankfurt, Germany.
He checked-in one a 20kg brown suitcase containing money, documents, a Nikkon Camera, suits, sweaters, shirts, pants, shoes,
and other accessories.
He had a connecting flight to Vienna, Austria via Lufthansa flight.
Upon arrival at Vienna, Miano’s checked-in baggage was missing.
Eleven days after, his suitcase was delivered to him in his hotel in Piestany Czechoslovakia.
He claimed that because of the delay in the delivery of his suitcase, he was forced to borrow money to buys clothes, to pay $200
for the transport of his baggage from Vienna to Piestany, and that he lost his Nikkon Camera.
Miano demanded from PAL (1) P10k cost of the lost Nikkon camera; (2) $200 cost of baggage transport; and (3) P100k as
damages.
He then filed an action for Damages when his demands remained unheeded.
PAL contested the complaint arguing that it did not receive a tracer telex1 from Vienna Station informing PAL of the mishandled
baggae. If at all liable, its obligation is limited by the Warsaw Convention rate.
Trial court held that PAL did not act in bad faith. Nevertheless, it awarded Miano the ff:
$200 - cost of transporting suitcase from Vienna to Czechoslovakia
P40K - moral damages
P20K - exemplary damages
P15K - attoryney’s fees
Issue/s:

1. WON the award of moral damages is correct. (NO)

2. WON the award of exemplary damages is correct. (NO)
3. WON the award of attorney’s fees is correct. (NO)

Ratio:

No – The award of moral damages to Miano is not correct.

1Tracer telex, an airline lingo, is an action of any station that the airlines operate from whom a passenger may complain or have not received his
baggage upon arrival.
  In breach of contract of carriage by air, moral damages are awarded only if the defendant acted fraudulently or in badfaith.
Bad faith means a breach of a known duty through some motive of interest or ill will.
o The late delivery of the baggage was not motivated by ill will or bad faith. PAL immediately coordinated with the
Central Baggae Services to trace the missing suitcase.
o PAL did not receive any tracer telex and in the absence of tracer telex, the SC found it reasonable for PAL to
presume that the bag was handled normally and regularly.
o The delay was due to the lack of tracer telex. It was discovered that the baggage’s interline tag was accidentally
taken off. The tracer telex, which contained the baggage information, is the key to identifying tagless baggage.
Without it, the baggage remained unidentified and was costumarily held in the station until finally identified.
o As also found by the trial court, PAL exerted effort to assist Miano and conducted an investigation as to the
mishandled bag. Miano was also kept informed. (This was based on the letters bet. PAL and Miano)
 Bad faith cannot be presumed and must be established by clear and convincing evidence. Where the defendant is not
shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences
of the breach of the obligation which the parties had foreseen or could reasonably have foreseen. The damages however,
will not include liability for moral damages (LBC v. CA).

No – The award of exemplary damages is not correct.

 The prerequisite for the award of exemplary damages in cases of contract or quasi-contract is that the defendant acted in
wanton, fraudulent, reckless, oppressive, or malevolent manner.
o Facts do not so warrant the characterization of the action of PAL.

No – The award of attorney’s fees is not correct.

 Attorney’s fees must be deleted where the award of moral and exemplary damages are eliminated
 No premium should be placed on the right to litigate.
o Miano was compelled to litigate and incur expenses to protect or enforce his claim.

Wherefore, the assailed decision is modified deleting the award of moral and exemplary damages, and attorney’s fees.