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Pan Am Case
Pan Am Case
1. Pertinent Condition of Carriage printed at the back of the ticket While it may be true that Pangan had not signed the plane
ticket (Article 1750), he is nevertheless bound by the
The pertinent Condition of Carriage printed at the back of the
provisions thereof.
plane ticket reads:
Such provisions have been held to be a part of the contract of
“(8) BAGGAGE LIABILITY . . . The total liability of the Carrier for lost or
damage baggage of the passenger is LIMITED TO P100.00 for each ticket carriage, and valid and binding upon the passenger regardless
unless a passenger declares a higher valuation in excess of P100.00, but of the latter’s lack of knowledge or assent to the regulation.
not in excess, however, of a total valuation of P1,000.00 and additional It is what is known as a contract of “adhesion,” in regards
charges are paid pursuant to Carrier’s tariffs.” which it has been said that contracts of adhesion wherein one
2. Ong Yiu case applicable party imposes a ready made form of contract on the other, as
the plane ticket, are contracts not entirely prohibited.
In the case of Ong Yiu v. Court of Appeals [G.R. No. L-40597, June The one who adheres to the contract is in reality free to reject
29, 1979, 91 SCRA 223), the Court sustained the validity of a it entirely; if he adheres, he gives his consent.
printed stipulation at the back of an airline ticket limiting the And as held in Randolph v. American Airlines (103 Ohio App.
liability of the carrier for lost baggage to a specified amount and 172, 144 N.E. 2d 878) and Rosenchein v. Trans World Airlines,
ruled that the carrier’s liability was limited to said amount since Inc. (349 S.W. 2d 483), “a contract limiting liability upon an
the passenger did not declare a higher value, much less pay agreed valuation does not offend against the policy of the law
additional charges. forbidding one from contracting against his own negligence.”
The ruling in Ong Yiu squarely applicable to the instant case.
Herein, on the basis of the stipulations printed at the back of
the ticket, Pan Am’s liability for the lost baggage of Pangan is
limited to $600.00 ($20.00 x 30 kilos) as the latter did not declare
a higher value for his baggage and pay the corresponding
additional charges.
4. Shewaram case not applicable
Pangan did not declare any higher value for his luggage, much less
did he pay any additional transportation charge. The ruling in Shewaram v. Philippine Air Lines, Inc. [G.R. No.
L-20099, July 2, 1966, 17 SCRA 606], where the Court held
3. Provisions in plane ticket a contract of adhesion; Contracts of
that the stipulation limiting the carrier’s liability to a specified
adhesion not entirely prohibited
52. Pan American World Airways, Inc. v IAC GR No. L-70462 (164 SCRA 268); August 11, 1988; 3 rd
Division- Cortes, J.II. COMMON CARRIERS
D. Damages Recoverable from Common Carriers; (2) Actual or Compensatory
amount was invalid, finds no application in the instant case, as cancelled.
the ruling in said case was premised on the finding that the The rule laid down in Mendoza v. Philippine Air Lines, Inc. [90
conditions printed at the back of the ticket were so small and Phil. 836 (1952)] cannot be any clearer:
hard to read that they would not warrant the presumption “Under Art. 1107 of the Civil Code, a debtor in good
that the passenger was aware of the conditions and that he faith may be held liable only for damages that were
had freely and fairly agreed thereto. foreseen or might have been foreseen at the time the
Herein, similar facts that would make the case fall under the contract of transportation was entered into.”
exception have not been alleged, much less shown to exist.
Herein, in the absence of a showing that Pan Am’s
5. Clarification of the Northwest Airlines case which was relied upon
attention was called to the special circumstances
by the Court of Appeals
requiring prompt delivery of Pangan’s luggages, Pan
The Court of Appeal’s reliance on a quotation from Am cannot be held liable for the cancellation of
Northwest Airlines, Inc. v. Cuenca [G.R. No. L- 22425, August Pangan’s contracts as it could not have foreseen such
31, 1965, 14 SCRA 1063] to sustain the view that “to apply the an eventuality when it accepted the luggages for
Warsaw Convention which limits a carrier’s liability to US$9.07 transit.
per pound or US$20.00 per kilo in cases of contractual breach
of carriage is against public policy” is utterly misplaced.
The Court never intended to, and in fact never did, rule
against the validity of provisions of the Warsaw Convention.
Consequently, by no stretch of the imagination may said
quotation from Northwest be considered as supportive of the
appellate court’s statement that the provisions of the Warsaw
Convention limited a carrier’s liability are against public policy. 7. Requisite for liability for special damages; Chapman vs. Fargo,
L.R.A. (1918 F, p. 1049)
6. Pan Am not liable for lost profits when film showing contracts Before defendant could be held to special damages such as
were cancelled; Mendoza vs. PAL the present alleged loss of profits on account of delay or
failure of delivery it must have appeared that he had notice
The Court finds itself unable to agree with the decision of the at the time of delivery to him of the particular circumstances
trial court, and affirmed by the Court of Appeals, awarding attending the shipment and which probably would lead to
Pangan damages as and for lost profits when their contracts to such special loss if he defaulted.
show the films in Guam and San Francisco, California were Or, as the rule has been stated in another form in order to
52. Pan American World Airways, Inc. v IAC GR No. L-70462 (164 SCRA 268); August 11, 1988; 3 rd
Division- Cortes, J.II. COMMON CARRIERS
D. Damages Recoverable from Common Carriers; (2) Actual or Compensatory
impose on the defaulting party further liability than for paid additional charges.
damages naturally and directly i.e., in the ordinary course of Neither was Pan Am privy to Pangan’s contracts nor was its
things arising from a breach of contract such unusual or attention called to the condition therein requiring delivery of
extraordinary damages must have been brought within the the promotional and advertising materials on or before a
contemplation of the parties as the probable result of breach certain date.
at the time of or prior to contracting.
9. Award of attorney’s fees lost support
Generally notice then of any special circumstances which will
show that the damages to be anticipated from a breach would With the Court’s holding that Pan Am’s liability is limited to
be enhanced has been held sufficient far this effect. the amount stated in the ticket, the award of attorney’s fees,
The attention of the common carrier must be called to the which is grounded on the alleged unjustified refusal of
nature of the articles shipped, the purpose of shipment, and petitioner to satisfy Pangan’s just and valid claim, loses
the desire to rush the shipment. support and must be set aside.