[1]
has become an accepted practice among them. A member airline which
G.R. Nos. 116044-45. March 9, 2000.*
AMERICAN AIRLINES, petitioner, vs. COURT OF APPEALS, HON.
BERNARDO LL. SALAS and DEMOCRITO MENDOZA, respondents.
Common Carriers; Air Transportation; Warsaw Convention;
International Law; The Warsaw Convention to which the Republic of the
Philippines is a party and which has the force and effect of law in this
country applies to all international transportation of persons, baggage or
goods performed by an aircraft gratuitously or for hire.—The Warsaw
Convention to which the Republic of the Philippines is a party and which has
the force and effect of law in this country applies to all international
transportation of persons, baggage or goods performed by an aircraft
gratuitously or for hire. As enumerated in the Preamble of the Convention,
one of the objectives is “to regulate in a uniform manner the conditions of
international transportation by air.” The contract of carriage entered into by
the private respondent with Singapore Airlines, and subsequently with the
petitioner, to transport him to nine cities in different countries with New
York as the final destination is a contract of international transportation and
the provisions of the Convention automatically apply and exclusively govern
the rights and liabilities of the airline and its passengers. This includes
Section 28 (1) which enumerates the four places where an action for damages
may be brought.
Same; Same; Same; Where an airline accepts an unused portion of a
conjunction ticket, enters it in the IATA clearing house and undertakes to
transport the passenger over the route covered by the unused portion of a
conjunction ticket, such airline tacitly recognizes its commitment under the
IATA pool arrangement to act as agent of the principal contracting airline as
to the segment of the trip the former agreed to undertake; When an airline,
constitutes itself as an agent of the principal carrier, its undertaking should
be taken as part of a single operation under the contract of carriage
executed by the passenger and the principal carrier.—The contract of
carriage between the private respondent and Singapore Airlines although
performed by different carriers under a series of airline tickets, including that
issued by the petitioner, constitutes a single operation. Members of the IATA
are under a general pool partnership agreement wherein they act as agent of
each other in the issuance of tickets to contracted passengers to boost ticket
sales worldwide and at the same time provide passengers easy access to
airlines which are otherwise inaccessible in some parts of the world. Booking
Transportation – Air Transportation
and reservation among airline members are allowed even by telephone and it
enters into a contract of carriage consisting of a series of trips to be
performed by different carriers is authorized to receive the fare for the whole
trip and through the required process of interline settlement of accounts by
way of the IATA clearing house an airline is duly compensated for the
segment of the trip serviced. Thus, when the petitioner accepted the unused
portion of the conjunction tickets, entered it in the IATA clearing house and
undertook to transport the private respondent over the route covered by the
unused portion of the conjunction tickets, i.e., Geneva to New York, the
petitioner tacitly recognized its commitment under the IATA pool
arrangement to act as agent of the principal contracting airline, Singapore
Airlines, as to the segment of the trip the petitioner agreed to undertake. As
such, the petitioner thereby assumed the obligation to take the place of the
carrier originally designated in the original conjunction ticket. The
petitioner’s argument that it is not a designated carrier in the original
conjunction tickets and that it issued its own ticket is not decisive of its
liability. The new ticket was simply a replacement for the unused portion of
the conjunction ticket, both tickets being for the same amount of US$ 2,760
and having the same points of departure and destination. By constituting
itself as an agent of the principal carrier the petitioner’s undertaking should
be taken as part of a single operation under the contract of carriage executed
by the private respondent and Singapore Airlines in Manila.
Same; Same; Same; Jurisdiction; An air carrier’s acquiescence to
take the place of the original designated carrier binds it under the contract
of carriage entered into by the latter, including the determination of the
place wherein the contract was made.—The quoted provision of the Warsaw
Convention Art. 1(3) clearly states that a contract of air transportation is
taken as a single operation whether it is founded on a single contract or a
series of contracts. The number of tickets issued does not detract from the
oneness of the contract of carriage as long as the parties regard the contract
as a single operation. The evident purpose underlying this Article is to
promote international air travel by facilitating the procurement of a series of
contracts for air transportation through a single principal and obligating
different airlines to be bound by one contract of transportation. Petitioner’s
acquiescence to take the place of the original designated carrier binds it under
the contract of carriage entered into by the private respondent and Singapore
Airlines in Manila. The third option of the plaintiff under Art. 28 (1) of the
Warsaw Convention e.g., to sue in the place of business of the carrier
wherein the contract was made, is therefore, Manila, and Philippine courts
are clothed with jurisdiction over this case. We note that while this case was
Page 1 of 30
filed in Cebu and not in Manila the issue of venue is no longer an issue as the
petitioner is deemed to have waived it when it presented evidence before the
trial court.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Quisumbing, Torres & Evangelista for petitioner.
     Amadeo D. Seno for private respondent.
GONZAGA-REYES, J.:
Before us is a petition for review of the decision dated December 24, 1993
rendered by the Court of Appeals in the consolidated cases docketed as CA-
G.R. SP Nos. 30946 and 31452 entitled American Airlines vs. The Presiding
Judge Branch 8 of the Regional Trial Court of Cebu and Democrito Mendoza,
petitions for certiorari and prohibition. In SP No. 30946, the petitioner assails
the trial court’s order denying the peti-tioner’s motion to dismiss the action for
damages filed by the private respondent for lack of jurisdiction under Section
28 (1) of the Warsaw Convention; and in SP No. 31452 the petitioner
challenges the validity of the trial court’s order striking off the record the
deposition of the petitioner’s security officer taken in Geneva, Switzerland for
failure of the said security officer to answer the cross interrogatories
propounded by the private respondent.
The sole issue raised in SP No. 30946 is the questioned jurisdiction of the
Regional Trial Court of Cebu to take cognizance of the action for damages
filed by the private respondent against herein petitioner in view of Art. 28 (1)
of the Warsaw Convention.1 It is undisputed that the private respondent
purchased from Singapore Airlines in Manila conjunction tickets for Manila-
Singapore-Athens-Larnaca-Rome-Turin-Zurich-Geneva-Copenhagen-New
York. The petitioner was not a participating airline in any of the segments in
the itinerary under the said conjunction tickets. In Geneva the petitioner
decided to forego his trip to Copenhagen and to go straight to New York and
in the absence of a direct flight under his conjunction tickets from Geneva to
New York, the private respondent on June 7, 1989 exchanged the unused
portion of the conjunction ticket for a one-way ticket from Geneva to New
York from the petitioner airline. Petitioner issued its own ticket to the private
respondent in Geneva and claimed the value of the unused portion of the
conjunction ticket from the IATA2 clearing house in Geneva.
Transportation – Air Transportation
In September 1989, private respondent filed an action for damages before
the Regional Trial Court of Cebu for the alleged embarrassment and mental
anguish he suffered at the Geneva Airport when the petitioner’s security
officers prevented him from boarding the plane, detained him for about an
hour and allowed him to board the plane only after all the other passengers
have boarded. The petitioner filed a motion to dismiss for lack of jurisdiction
of Philippine courts to entertain the said proceedings under Art. 28 (1) of the
Warsaw Convention. The trial court denied the motion. The order of denial
was elevated to the Court of Appeals which affirmed the ruling of the trial
court. Both the trial and the appellate courts held that the suit may be brought
in the Philippines under the pool partnership agreement among the IATA
members, which include Singapore Airlines and American Airlines, wherein
the members act as agents of each other in the issuance of tickets to those
who may need their services. The contract of carriage perfected in Manila
between the private respondent and Singapore Airlines binds the petitioner
as an agent of Singapore Airlines and considering that the petitioner has a
place of business in Manila, the third option of the plaintiff under the Warsaw
Convention i.e., the action may be brought in the place where the contract
was perfected and where the airline has a place of business, is applicable.
Hence this petition assailing the order upholding the jurisdiction of Philippine
courts over the instant action.
Both parties filed simultaneous memoranda pursuant to the resolution of this
Court giving due course to the petition. The petitioner’s theory is as follows:
Under Art. 28 (1) of the Warsaw Convention an action for damages must be
brought at the option of the plaintiff either before the court of the 1) domicile
of the carrier; 2) the carrier’s principal place of business; 3) the place where
the carrier has a place of business through which the contract was made; 4)
the place of destination. The petitioner asserts that the Philippines is neither
the domicile nor the principal place of business of the defendant airline; nor is
it the place of destination. As regards the third option of the plaintiff, the
petitioner contends that since the Philippines is not the place where the
contract of carriage was made between the parties herein, Philippine courts
do not have jurisdiction over this action for damages. The issuance of
petitioner’s own ticket in Geneva in exchange for the conjunction ticket
issued by Singapore Airlines for the final leg of the private respondent’s trip
gave rise to a separate and distinct contract of carriage from that entered into
by the private respondent with Singapore Airlines in Manila. Petitioner lays
stress on the fact that the plane ticket for a direct flight from Geneva to New
York was purchased by the private respondent from the petitioner by
“exchange and cash” which signifies that the contract of carriage with Singa-
pore Airlines was terminated and a second contract was perfected.
Moreover, the second contract of carriage cannot be deemed to have been
an extension of the first as the petitioner airline is not a participating airline in
any of the destinations under the first contract. The petitioner claims that the
private respondent’s argument that the petitioner is bound under the IATA
Page 2 of 30
Rules as agent of the principal airline is irrelevant and the alleged bad faith of
the airline does not remove the case from the applicability of the Warsaw
Convention. Further, the IATA Rule cited by the private respondent which is
admittedly printed on the ticket issued by the petitioner to him which states,
“An air carrier issuing a ticket for carriage over the lines of another carrier
does so only as its agent” does not apply herein, as neither Singapore
Airlines nor the petitioner issued a ticket to the private respondent covering
the route of the other. Since the conjunction tickets issued by Singapore
Airlines do not include the route covered by the ticket issued by the
petitioner, the petitioner airline submits that it did not act as an agent of
Singapore Airlines.
Private respondent controverts the applicability of the Warsaw Convention in
this case. He posits that under Article 17 of the Warsaw Convention 3 a carrier
may be held liable for damages if the “accident” occurred on board the airline
or in the course of “embarking or disembarking” from the carrier and that
under Article 25 (1)4 thereof the provisions of the convention will not apply if
the damage is caused by the “willful misconduct” of the carrier. He argues
that his cause of action is based on the incident at the pre-departure area of
the Geneva airport and not during the process of embarking nor
disembarking from the carrier and that security officers of the petitioner airline
acted in bad faith. Accordingly, this case is released from the terms of the
Convention. Private respondent argues that assuming that the Convention
applies, his trip to nine cities in different countries performed by different
carriers under the conjunction tickets issued in Manila by Singapore Airlines
is regarded as a single transaction; as such the final leg of his trip from
Geneva to New York with the petitioner airline is part and parcel of the
original contract of carriage perfected in Manila. Thus, the third option of the
plaintiff under Art. 28 (1) e.g., where the carrier has a place of business
through which the contract of carriage was made, applies herein and the
case was properly filed in the Philippines. The private respondent seeks
affirmance of the ruling of the lower courts that the petitioner acted as an
agent of Singapore Airlines under the IATA Rules and as an agent of the
principal carrier the petitioner may be held liable under the contract of
carriage perfected in Manila, citing the judicial admission made by the
petitioner that it claimed the value of the unused portion of the private
respondent’s conjunction tickets from the IATA Clearing House in Geneva
where the accounts of both airlines are respectively credited and debited.
Accordingly, the petitioner cannot now deny the contract of agency with
Singapore Airlines after it honored the conjunction tickets issued by the latter.
The petition is without merit.
The Warsaw Convention to which the Republic of the Philippines is a party
and which has the force and effect of law in this country applies to all
international transportation of persons, baggage or goods performed by an
Transportation – Air Transportation
aircraft gratuitously or for hire. 5 As enumerated in the Preamble of the
Convention, one of the objectives is “to regulate in a uniform manner the
conditions of international transportation by air.” 6 The contract of carriage
entered into by the private respondent with Singapore Airlines, and
subsequently with the petitioner, to transport him to nine cities in different
countries with New York as the final destination is a contract of international
transportation and the provisions of the Convention automatically apply and
exclusively govern the rights and liabilities of the airline and its passengers. 7
This includes Section 28 (1) which enumerates the four places where an
action for damages may be brought.
The threshold issue of jurisdiction of Philippine courts under Art. 28 (1) must
first be resolved before any pronouncements may be made on the liability of
the carrier thereunder.8 The objections raised by the private respondent that
this case is released from the terms of the Convention because the incident
on which this action is predicated did not occur in the process of embarking
and disembarking from the carrier under Art. 17 9 and that the employees of
the petitioner airline acted with malice and bad faith under Art. 25 (1) 10
pertain to the merits of the case which may be examined only if the action
has first been properly commenced under the rules on jurisdiction set forth in
Art. 28 (1).
Art. 28 (1) of the Warsaw Convention states:
Art. 28 (1) An action for damages must be brought at the option of the
plaintiff, in the territory of one of the High Contracting Parties, either before
the court of the domicile of the carrier or of his principal place of business or
where he has a place of business through which the contract has been
made, or before the court at the place of destination.
There is no dispute that petitioner issued the ticket in Geneva which was
neither the domicile nor the principal place of business of petitioner nor the
respondent’s place of destination.
The question is whether the contract of transportation between the petitioner
and the private respondent would be considered as a single operation and
part of the contract of transportation entered into by the latter with Singapore
Airlines in Manila.
Petitioner disputes the ruling of the lower court that it is. Petitioner’s main
argument is that the issuance of a new ticket in Geneva created a contract of
carriage separate and distinct from that entered by the private respondent in
Manila.
We find the petitioner’s argument without merit.
Page 3 of 30
Art. 1(3) of the Warsaw Convention which states:
“Transportation to be performed by several successive carriers shall be
deemed, for the purposes of this convention, to be one undivided
transportation, if it has been regarded by the parties as a single operation,
whether it has been agreed upon under the form of a single contract or a
series of contracts, and it shall not lose its international character merely
because one contract or series of contracts is to be performed entirely within
the territory subject of the sovereignty, suzerainty, mandate or authority of
the same High Contracting Party.”
The contract of carriage between the private respondent and Singapore
Airlines although performed by different carriers under a series of airline
tickets, including that issued by the petitioner, constitutes a single operation.
Members of the IATA are under a general pool partnership agreement
wherein they act as agent of each other in the issuance of tickets 11 to
contracted passengers to boost ticket sales worldwide and at the same time
provide passengers easy access to airlines which are otherwise inaccessible
in some parts of the world. Booking and reservation among airline members
are allowed even by telephone and it has become an accepted practice
among them.12 A member airline which enters into a contract of carriage
consisting of a series of trips to be performed by different carriers is
authorized to receive the fare for the whole trip and through the required
process of interline settlement of accounts by way of the IATA clearing house
an airline is duly compensated for the segment of the trip serviced. 13 Thus,
when the petitioner accepted the unused portion of the conjunction tickets,
entered it in the IATA clearing house and undertook to transport the private
respondent over the route covered by the unused portion of the conjunction
tickets, i.e., Geneva to New York, the petitioner tacitly recognized its
commitment under the IATA pool arrangement to act as agent of the principal
contracting airline, Singapore Airlines, as to the segment of the trip the
petitioner agreed to undertake. As such, the petitioner thereby assumed the
obligation to take the place of the carrier originally designated in the original
conjunction ticket. The petitioner’s argument that it is not a designated carrier
in the original conjunction tickets and that it issued its own ticket is not
decisive of its liability. The new ticket was simply a replacement for the
unused portion of the conjunction ticket, both tickets being for the same
amount of US$ 2,760 and having the same points of departure and
destination.14 By constituting itself as an agent of the principal carrier the
petitioner’s undertaking should be taken as part of a single operation under
the contract of carriage executed by the private respondent and Singapore
Airlines in Manila.
The quoted provision of the Warsaw Convention Art. 1(3) clearly states that a
contract of air transportation is taken as a single operation whether it is
founded on a single contract or a series of contracts. The number of tickets
Transportation – Air Transportation
issued does not detract from the oneness of the contract of carriage as long
as the parties regard the contract as a single operation. The evident purpose
underlying this Article is to promote international air travel by facilitating the
procurement of a series of contracts for air transportation through a single
principal and obligating different airlines to be bound by one contract of
transportation. Petitioner’s acquiescence to take the place of the original
designated carrier binds it under the contract of carriage entered into by the
private respondent and Singapore Airlines in Manila.
The third option of the plaintiff under Art. 28 (1) of the Warsaw Convention
e.g., to sue in the place of business of the carrier wherein the contract was
made, is therefore, Manila, and Philippine courts are clothed with jurisdiction
over this case. We note that while this case was filed in Cebu and not in
Manila the issue of venue is no longer an issue as the petitioner is deemed to
have waived it when it presented evidence before the trial court.
The issue raised in SP No. 31452 which is whether or not the trial court
committed grave abuse of discretion in ordering the deposition of the
petitioner’s security officer taken in Geneva to be stricken off the record for
failure of the said security officer to appear before the Philippine consul in
Geneva to answer the cross-interrogatories filed by the private respondent
does not have to be resolved. The subsequent appearance of the said
security officer before the Philippine consul in Geneva on September 19,
1994 and the answer to the cross-interrogatories propounded by the private
respondent was transmitted to the trial court by the Philippine consul in
Geneva on September 23, 1994 15 should be deemed as full compliance with
the requisites of the right of the private respondent to cross-examine the
petitioner’s witness. The deposition filed by the petitioner should be
reinstated as part of the evidence and considered together with the answer to
the cross-interrogatories.
WHEREFORE, the judgment of the appellate court in CA-G.R. SP No. 30946
is affirmed. The case is ordered remanded to the court of origin for further
proceedings. The decision of the appellate court in CA-G.R. SP No. 31452 is
set aside. The deposition of the petitioner’s security officer is reinstated as
part of the evidence.
SO ORDERED.
     Melo (Chairman), Vitug, Panganiban and Purisima, JJ., concur.
Judgment in CA-G.R. SP No. 30946 affirmed, case remanded to court a quo
for further proceedings. While set aside in CA-GR SP No. 31452.
Page 4 of 30
Notes.—The Warsaw Convention 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 or
resulting injury. (Northwest Airlines, Inc. vs. Court of Appeals, 284 SCRA 408
[1998])

Member airlines of the IATA are regarded as agents of each other in the
issuance of the tickets and other matters pertaining to their relationship.
(British Airways vs. Court of Appeals, 285 SCRA 450 [1998])

Transportation – Air Transportation Page 5 of 30

[2]
G.R. No. 150094. August 18, 2004.* THIRD DIVISION.
FEDERAL EXPRESS CORPORATION, petitioner, vs. AMERICAN HOME
ASSURANCE COMPANY and PHILAM INSURANCE COMPANY, INC.,
respondents.
Civil Law; Insurance; Subrogation; The insurer’s subrogatory right
to sue for recovery under the bill of lading in case of loss or damage to the
cargo is jurisprudentially upheld.—Upon payment to the consignee of an
indemnity for the loss of or damage to the insured goods, the insurer’s
entitlement to subrogation pro tanto—being of the highest equity—equips it
with a cause of action in case of a contractual breach or negligence. “Further,
the insurer’s subrogatory right to sue for recovery under the bill of lading in
case of loss of or damage to the cargo is jurisprudentially upheld.”
Same; Same; Same; The filing of a claim with the carrier within the
time limitation therefor actually constitutes a condition precedent to the
accrual of a right of action against a carrier for loss of or damage to the
goods.—In this jurisdiction, the filing of a claim with the carrier within the
time limitation therefor actually constitutes a condition precedent to the
accrual of a right of action against a carrier for loss of or damage to the
goods. The shipper or consignee must allege and prove the fulfillment of the
condition. If it fails to do so, no right of action against the carrier can accrue
in favor of the former. The aforementioned requirement is a reasonable
condition precedent; it does not constitute a limitation of action.
Same; Same; Same; Fundamental Reasons for Requiring of Giving
Notice of Loss or Injury to the Goods.—The requirement of giving notice of
loss of or injury to the goods is not an empty formalism. The fundamental
reasons for such a stipulation are (1) to inform the carrier that the cargo has
been damaged, and that it is being charged with liability therefor; and (2) to
give it an opportunity to examine the nature and extent of the injury. “This
protects the carrier by affording it an opportunity to make an investigation of
a claim while the matter is fresh and easily investigated so as to safeguard
itself from false and fraudulent claims.”
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
Transportation – Air Transportation
The facts are stated in the opinion of the Court.
     Emiliano S. Samson for petitioner.
     Astorga & Repol Law Office for respondents.
PANGANIBAN, J.:
Basic is the requirement that before suing to recover loss of or damage to
transported goods, the plaintiff must give the carrier notice of the loss or
damage, within the period prescribed by the Warsaw Convention and/or the
airway bill.
The Case
Before us is a Petition for Review 1 Rollo, pp. 14-33. under Rule 45 of the
Rules of Court, challenging the June 4, 2001 Decision 2 Id., pp. 35-43.
Twelfth Division. Penned by Justice Martin S. Villarama Jr., with the
concurrence of Justices Conrado M. Vasquez Jr. (Division chair) and Alicia
L. Santos (member). and the September 21, 2001 Resolution 3 Id., pp. 45-
47. of the Court of Appeals (CA) in CA-GR CV No. 58208. The assailed
Decision disposed as follows:
“WHEREFORE, premises considered, the present appeal is hereby
DISMISSED for lack of merit. The appealed Decision of Branch 149 of the
Regional Trial Court of Makati City in Civil Case No. 95-1219, entitled
‘American Home Assurance Co. and PHILAM Insurance Co., Inc. v.
FEDERAL EXPRESS CORPORATION and/or CARGOHAUS, INC. (formerly
U-WAREHOUSE, INC.),’ is hereby AFFIRMED and REITERATED.
“Costs against the [petitioner and Cargohaus, Inc.].” 4 Assailed CA Decision,
p. 9; Rollo, p. 43.
The assailed Resolution denied petitioner’s Motion for Reconsideration.
The Facts
The antecedent facts are summarized by the appellate court as follows:
“On January 26, 1994, SMITHKLINE Beecham (SMITHKLINE for brevity) of
Nebraska, USA delivered to Burlington Air Express (BURLINGTON), an
Page 6 of 30
agent of [Petitioner] Federal Express Corporation, a shipment of 109 cartons Co-Defendant Cargohaus] are directed to pay [respondents], jointly and
of veterinary biologicals for delivery to consignee SMITHKLINE and French severally, the following:
Overseas Company in Makati City, Metro Manila. The shipment was covered
by Burlington Airway Bill No. 11263825 with the words, ‘REFRIGERATE 1. 1. Actual damages in the amount of the peso equivalent of
WHEN NOT IN TRANSIT’ and ‘PERISHABLE’ stamp marked on its face. US$39,339.00 with interest from the time of the filing of the
That same day, Burlington insured the cargoes in the amount of $39,339.00 complaint to the time the same is fully paid.
with American Home Assurance Company (AHAC). The following day, 2. 2. Attorney’s fees in the amount of P50,000.00 and
Burlington turned over the custody of said cargoes to Federal Express which 3. 3. Costs of suit.
transported the same to Manila. The first shipment, consisting of 92 cartons
arrived in Manila on January 29, 1994 in Flight No. 0071-28NRT and was ‘SO ORDERED.’
immediately stored at [Cargohaus Inc.’s] warehouse. While the second,
consisting of 17 cartons, came in two (2) days later, or on January 31, 1994,
in Flight No. 0071-30NRT which was likewise immediately stored at “Aggrieved, [petitioner] appealed to [the CA].”5 Id., pp. 1-3 & 35-37.
Cargohaus’ warehouse. Prior to the arrival of the cargoes, Federal Express
informed GETC Cargo International Corporation, the customs broker hired by Ruling of the Court of Appeals
the consignee to facilitate the release of its cargoes from the Bureau of
Customs, of the impending arrival of its client’s cargoes.
The Test Report issued by the United States Department of Agriculture
(Animal and Plant Health Inspection Service) was found by the CA to be
“On February 10, 1994, DARIO C. DIONEDA (‘DIONEDA’), twelve (12) days inadmissible in evidence. Despite this ruling, the appellate court held that the
after the cargoes arrived in Manila, a non-licensed custom’s broker who was shipping Receipts were a prima facie proof that the goods had indeed been
assigned by GETC to facilitate the release of the subject cargoes, found out, delivered to the carrier in good condition. We quote from the ruling as follows:
while he was about to cause the release of the said cargoes, that the same
[were] stored only in a room with two (2) air conditioners running, to cool the
“Where the plaintiff introduces evidence which shows prima facie that the
place instead of a refrigerator. When he asked an employee of Cargohaus
goods were delivered to the carrier in good condition [i.e., the shipping
why the cargoes were stored in the ‘cool room’ only, the latter told him that
receipts], and that the carrier delivered the goods in a damaged condition, a
the cartons where the vaccines were contained specifically indicated therein
presumption is raised that the damage occurred through the fault or
that it should not be subjected to hot or cold temperature. Thereafter,
negligence of the carrier, and this casts upon the carrier the burden of
DIONEDA, upon instructions from GETC, did not proceed with the withdrawal
showing that the goods were not in good condition when delivered to the
of the vaccines and instead, samples of the same were taken and brought to
carrier, or that the damage was occasioned by some cause excepting the
the Bureau of Animal Industry of the Department of Agriculture in the
carrier from absolute liability. This the [petitioner] failed to discharge. x x
Philippines by SMITHKLINE for examination wherein it was discovered that
x.”6 Id., pp. 8 & 42.
the ‘ELISA reading of vaccinates sera are below the positive reference
serum.’
Found devoid of merit was petitioner’s claim that respondents had no
“As a consequence of the foregoing result of the veterinary biologics test, personality to sue. This argument was supposedly not raised in the Answer
SMITHKLINE abandoned the shipment and, declaring ‘total loss’ for the or during trial.
unusable shipment, filed a claim with AHAC through its representative in the
Philippines, the Philam Insurance Co., Inc. (‘PHILAM’) which recompensed Hence, this Petition.7 The case was deemed submitted for decision on
SMITHKLINE for the whole insured amount of THIRTY NINE THOUSAND
September 20, 2002, upon this Court’s receipt of respondents’
THREE HUNDRED THIRTY NINE DOLLARS ($39,339.00). Thereafter,
[respondents] filed an action for damages against the [petitioner] imputing Memorandum, signed by Atty. Mary Joyce M. Sasan. Petitioner’s
negligence on either or both of them in the handling of the cargo. Memorandum, signed by Atty. Emiliano S. Samson, was received by this...
The Issues
“Trial ensued and ultimately concluded on March 18, 1997 with the
[petitioner] being held solidarily liable for the loss as follows: ‘WHEREFORE,
judgment is hereby rendered in favor of [respondents] and [petitioner and its

Transportation – Air Transportation Page 7 of 30

In its Memorandum, petitioner raises the following issues for our
consideration:
“I.
Are the decision and resolution of the Honorable Court of Appeals proper
subject for review by the Honorable Court under Rule 45 of the 1997 Rules of
Civil Procedure?
“II.
Is the conclusion of the Honorable Court of Appeals—petitioner’s claim that
respondents have no personality to sue because the payment was made by
the respondents to Smithkline when the insured under the policy is Burlington
Air Express is devoid of merit—correct or not?
“III.
Is the conclusion of the Honorable Court of Appeals that the goods were
received in good condition, correct or not?
“IV.
Are Exhibits ‘F’ and ‘G’ hearsay evidence, and therefore, not admissible?
“V.
Is the Honorable Court of Appeals correct in ignoring and disregarding
respondents’ own admission that petitioner is not liable? and
“VI.
Is the Honorable Court of Appeals correct in ignoring the Warsaw
Convention?”8 Petitioner’s Memorandum, p. 10; Rollo, p. 116. Citations
omitted.
Simply stated, the issues are as follows: (1) Is the Petition proper for review
by the Supreme Court? (2) Is Federal Express liable for damage to or loss of
the insured goods?
This Court’s Ruling
The Petition has merit.
Transportation – Air Transportation
Preliminary Issue:
Propriety of Review
The correctness of legal conclusions drawn by the Court of Appeals from
undisputed facts is a question of law cognizable by the Supreme
Court.9 Pilar Development Corp. v. Intermediate Appellate Court, 146 SCRA
215, December 12, 1986.
In the present case, the facts are undisputed. As will be shown shortly,
petitioner is questioning the conclusions drawn from such facts. Hence, this
case is a proper subject for review by this Court.
Main Issue:
Liability for Damages
Petitioner contends that respondents have no personality to sue—thus, no
cause of action against it—because the payment made to Smithkline was
erroneous.
Pertinent to this issue is the Certificate of Insurance 10 Exhibit “D”; Records,
p. 142. (“Certificate”) that both opposing parties cite in support of their
respective positions. They differ only in their interpretation of what their rights
are under its terms. The determination of those rights involves a question of
law, not a question of fact. “As distinguished from a question of law which
exists ‘when the doubt or difference arises as to what the law is on a certain
state of facts’—‘there is a question of fact when the doubt or difference arises
as to the truth or the falsehood of alleged facts’; or when the ‘query
necessarily invites calibration of the whole evidence considering mainly the
credibility of witnesses, existence and relevancy of specific surrounding
circumstance, their relation to each other and to the whole and the
probabilities of the situation.’ ” 11 Bernardo v. Court of Appeals, 216 SCRA
224, December 7, 1992, per Campos, Jr., J.
Proper Payee
The Certificate specifies that loss of or damage to the insured cargo is
“payable to order x x x upon surrender of this Certificate.” Such wording
conveys the right of collecting on any such damage or loss, as fully as if the
property were covered by a special policy in the name of the holder itself. At
the back of the Certificate appears the signature of the representative of
Burlington. This document has thus been duly indorsed in blank and is
deemed a bearer instrument.
Page 8 of 30
Since the Certificate was in the possession of Smithkline, the latter had the
right of collecting or of being indemnified for loss of or damage to the insured
shipment, as fully as if the property were covered by a special policy in the
name of the holder. Hence, being the holder of the Certificate and having an
insurable interest in the goods, Smithkline was the proper payee of the
insurance proceeds.
Subrogation
Upon receipt of the insurance proceeds, the consignee (Smithkline) executed
a subrogation Receipt12 Exhibit “N”; Records, p. 159. in favor of
respondents. The latter were thus authorized “to file claims and begin suit
against any such carrier, vessel, person, corporation or government.”
Undeniably, the consignee had a legal right to receive the goods in the same
condition it was delivered for transport to petitioner. If that right was violated,
the consignee would have a cause of action against the person responsible
therefor.
Upon payment to the consignee of an indemnity for the loss of or damage to
the insured goods, the insurer’s entitlement to subrogation pro tanto—being
of the highest equity—equips it with a cause of action in case of a contractual
breach or negligence.13 Philippine American General Insurance Co., Inc. v.
Sweet Lines, Inc., 212 SCRA 194, August 5, 1992 (citing Fireman’s Fund
Insurance Company, Inc. v. Jamila & Company, Inc., 70 SCRA 323, April
7, 1976). “Further, the insurer’s subrogatory right to sue for recovery under
the bill of lading in case of loss of or damage to the cargo is jurisprudentially
upheld.”14 Philippine American General Insurance Co., Inc. v. Sweet Lines,
Inc., supra, p. 201, per Regalado, J. (citing National Development
Company v. Court of Appeals, 164 SCRA 593, August 19, 1988).
In the exercise of its subrogatory right, an insurer may proceed against an
erring carrier. To all intents and purposes, it stands in the place and in
substitution of the consignee. A fortiori, both the
insurer and the consignee are bound by the contractual stipulations under the
bill of lading.15 Philippine American General Insurance Co., Inc. v. Sweet
Lines, Inc., supra.
Prescription of Claim
From the initial proceedings in the trial court up to the present, petitioner has
tirelessly pointed out that respondents’ claim and right of action are already
Transportation – Air Transportation
barred. The latter, and even the consignee, never filed with the carrier any
written notice or complaint regarding its claim for damage of or loss to the
subject cargo within the period required by the Warsaw Convention and/or in
the airway bill. Indeed, this fact has never been denied by respondents and is
plainly evident from the records.
Airway Bill No. 11263825, issued by Burlington as agent of petitioner, states:
“6. No action shall be maintained in the case of damage to or partial loss of
the shipment unless a written notice, sufficiently describing the goods
concerned, the approximate date of the damage or loss, and the details of
the claim, is presented by shipper or consignee to an office of Burlington
within (14) days from the date the goods are placed at the disposal of the
person entitled to delivery, or in the case of total loss (including non-delivery)
unless presented within (120) days from the date of issue of the [Airway
Bill].”16 Exhibit “B” of respondent; Records, p. 139-A. This airway bill was
issued on January 26, 1994.
Relevantly, petitioner’s airway bill states:
1. “12./12.1 The person entitled to delivery must make a complaint to
the carrier in writing in the case:
1. 12.1.1 of visible damage to the goods, immediately after discovery of
the damage and at the latest within fourteen (14) days from receipt
of the goods;
2. 12.1.2 of other damage to the goods, within fourteen (14) days from
the date of receipt of the goods;
3. 12.1.3 delay, within twenty-one (21) days of the date the goods are
placed at his disposal; and
4. 12.1.4 of non-delivery of the goods, within one hundred and twenty
(120) days from the date of the issue of the air waybill.
1. 12.2 For the purpose of 12.1 complaint in writing may be made to the
carrier whose air waybill was used, or to the first carrier or to the
last carrier or to the carrier who performed the transportation during
which the loss, damage or delay took place.” 17 Exhibit “5-a” of
Federal Express; Records, p. 189-A.
Article 26 of the Warsaw Convention, on the other hand, provides:
“ART. 26. (1) Receipt by the person entitled to the delivery of baggage or
goods without complaint shall be prima facie evidence that the same have
Page 9 of 30
been delivered in good condition and in accordance with the document of
transportation.
1. (2) In case of damage, the person entitled to delivery must complain
to the carrier forthwith after the discovery of the damage, and, at
the latest, within 3 days from the date of receipt in the case of
baggage and 7 days from the date of receipt in the case of goods.
In case of delay the complaint must be made at the latest within 14
days from the date on which the baggage or goods have been
placed at his disposal.
2. (3) Every complaint must be made in writing upon the document of
transportation or by separate notice in writing dispatched within the
times aforesaid.
3. (4) Failing complaint within the times aforesaid, no action shall lie
against the carrier, save in the case of fraud on his part.” 18 51 OG
5091-5092, October 1955.
Condition Precedent
In this jurisdiction, the filing of a claim with the carrier within the time limitation
therefor actually constitutes a condition precedent to the accrual of a right of
action against a carrier for loss of or damage to the goods. 19 Philippine
American General Insurance Co., Inc. v. Sweet Lines, Inc., supra.
shipper or consignee must allege and prove the fulfillment of the condition. If
it fails to do so, no right of action against the carrier can accrue in favor of the
former. The aforementioned requirement is a reasonable condition
precedent; it does not constitute a limitation of action. 20 Government of the
Philippine Islands v. Inchausti & Co., 24 Phil. 315, February 14, 1913;
Triton Insurance Co. v. Jose, 33 Phil. 194, January 14, 1916.
The requirement of giving notice of loss of or injury to the goods is not an
empty formalism. The fundamental reasons for such a stipulation are (1) to
inform the carrier that the cargo has been damaged, and that it is being
charged with liability therefor; and (2) to give it an opportunity to examine the
nature and extent of the injury. “This protects the carrier by affording it an
opportunity to make an investigation of a claim while the matter is fresh and
easily investigated so as to safeguard itself from false and fraudulent
claims.”21 Philippine American General Insurance Co., Inc. v. Sweet Lines,
Inc., supra, p. 208, per Regalado, J.
When an airway bill—or any contract of carriage for that matter—has a
stipulation that requires a notice of claim for loss of or damage to goods
shipped and the stipulation is not complied with, its enforcement can be
Transportation – Air Transportation
prevented and the liability cannot be imposed on the carrier. To stress, notice
is a condition precedent, and the carrier is not liable if notice is not given in
accordance with the stipulation.22 Id., (citing 14 Am. Jur. 2d, Carriers 97;
Roldan v. Lim Ponzo & Co., 37 Phil. 285, December 7, 1917; Consunji v.
Manila Port Service, 110 Phil. 231, November 29, 1960). Failure to comply
with such a stipulation bars recovery for the loss or damage
suffered.23 Philippine American General Insurance Co., Inc. v. Sweet Lines,
Inc., supra, pp. 208-209.
Being a condition precedent, the notice must precede a suit for
enforcement.24 Philippine American General Insurance Co. Inc v. Sweet
Lines, Inc., supra. In the present case, there is neither an allegation nor a
showing of respondents’ compliance with this requirement within the
prescribed period. While respondents may have had a cause of action then,
they cannot now enforce it for their failure to comply with the aforesaid
condition precedent.
In view of the foregoing, we find no more necessity to pass upon the other
issues raised by petitioner.
The
We note that respondents are not without recourse. Cargohaus, Inc.—
petitioner’s co-defendant in respondents’ Complaint below—has been
adjudged by the trial court as liable for, inter alia, “actual damages in the
amount of the peso equivalent of US $39,339.” 25 The insured value of the
goods lost.
This judgment was affirmed by the Court of Appeals and is already final and
executory.26 Entry of judgment in the Supreme Court was made on March
11, 2003.
WHEREFORE, the Petition is GRANTED, and the assailed Decision
REVERSED insofar as it pertains to Petitioner Federal Express Corporation.
No pronouncement as to costs.
SO ORDERED.
     Corona and Carpio-Morales, JJ., concur.
     Sandoval-Gutierrez, J., On Leave.
Page 10 of 30
Petition granted, assailed decision reversed.

Note.—The guarantor who pays is subrogated by virtue thereof to all the

rights which the creditor has against the debtor, including any maritime lien
over a vessel owned by the debtor. (Philippine National Bank vs. Court of
Appeals, 337 SCRA 381 [2000])

——o0o——

Transportation – Air Transportation Page 11 of 30

[3]
G.R. No. 151783. July 8, 2003.* THIRD DIVISION.
VICTORINO SAVELLANO, VIRGINIA B. SAVELLANO and DEOGRACIAS
B. SAVELLANO, petitioners, vs. NORTHWEST AIRLINES, respondent.
Civil Law; Contracts; Contract of Carriage; A contract is the law
between the parties.—A contract is the law between the parties. Thus, in
determining whether petitioners’ rights were violated, we must look into its
provisions, which are printed on the airline ticket. Condition 9 in the
agreement states that a “x x x [c]arrier may without notice substitute alternate
carriers or aircraft, and may alter or omit stopping places shown on the ticket
in case of necessity. x x x.”
Same; Same; Same; Adhesion; The ambiguities in the contract,
being one of adhesion, should be construed against the party that caused its
preparation.—The ambiguities in the contract, being one of adhesion, should
be construed against the party that caused its preparation—in this case,
respondent. Since the conditions enumerated on the ticket do not specifically
allow it to change stopping places or to fly the passengers to alternate
connecting cities without consulting them, then it must be construed to mean
that such unilateral change was not permitted.
Same; Same; Same; Appeals; As a general rule, the factual findings
of the CA when supported by substantial evidence on record are final and
conclusive and may not be reviewed on appeal.—As a general rule, the
factual findings of the CA when supported by substantial evidence on record
are final and conclusive and may not be reviewed on appeal. An exception to
this rule is when the lower court and the CA arrive at different factual
findings. In this case, the trial court found the presence of bad faith and hence
awarded moral and exemplary damages; while the CA found none and hence
deleted the award of damages. Thus, the Court is now behooved to review
the basis for sustaining the award or deletion of damages.
Same; Same; Same; Damages; Moral Damages; In the absence of
bad faith, ill will, malice or wanton conduct, respondent cannot be held
liable for moral damages.—In the absence of bad faith, ill will, malice or
wanton conduct, respondent cannot be held liable for moral damages. Article
2219 of the Civil Code enumerates the instances in which moral damages
may be awarded. In a breach of contract, such damages are not awarded if the
Transportation – Air Transportation
defendant is not shown to have acted fraudulently or with malice or bad faith.
Insufficient to warrant the award of moral damages is the fact that
complainants suffered economic hardship, or that they worried and
experienced mental anxiety.
Same; Same; Same; Same; Exemplary Damages; In contracts and
quasi-contracts, the court may award exemplary damages if the defendant
acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.—
Neither are exemplary damages proper in the present case. The Civil Code
provides that “[i]n contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.” Respondent has not been proven to have
acted in that manner. At most, it can only be found guilty of having acted
without first considering and weighing all other possible courses of actions it
could have taken, and without consulting petitioners and securing their
consent to the new stopping places. The unexpected and sudden requirement
of having to arrange the connecting flights of every single person in the
distressed plane in just a few hours, in addition to the Northwest employees’
normal workload, was difficult to satisfy perfectly. We cannot find
respondent liable for exemplary damages for its imperfection of neglecting to
consult with the passengers beforehand.
Same; Same; Same; Nominal Damages; Nominal damages are
recoverable if no actual, substantial or specific damages were shown to have
resulted from the breach.—Nominal damages are recoverable if no actual,
substantial or specific damages were shown to have resulted from the breach.
The amount of such damages is addressed to the sound discretion of the
court, taking into account the relevant circumstances.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     The Law Firm of Raymundo A. Armovit for petitioners.
     Quisumbing, Torres for private respondent.
PANGANIBAN, J.:
When, as a result of engine malfunction, a commercial airline is unable to
ferry its passengers on the original contracted route, it nonetheless has the
Page 12 of 30
duty of fulfilling its responsibility of carrying them to their contracted
destination on the most convenient route possible. Failing in this, it cannot
just unilaterally shuttle them, without their consent, to other routes or
stopping places outside of the contracted sectors. However, moral damages
cannot be awarded without proof of the carrier’s bad faith, ill will, malice or
wanton conduct. Neither will actual damages be granted in the absence of
convincing and timely proof of loss. But nominal damages may be allowed
under the circumstances in the case herein.
The Case
Before the Court is a Petition for Review under Rule 45 of the Rules of Court,
seeking to set aside the June 29, 2001 Decision 1 Rollo, pp. 49-57. of the
Court of Appeals2 Tenth Division, composed of Justices Conchita Carpio-
Morales (chairman, ponente and now a member of this Court) Candido V.
Rivera and Rebecca de Guia-Salvador. (CA) in CA-GR CV No. 47165. The
dispositive part of the Decision reads:
“WHEREFORE, the judgment of July 29, 1994 is hereby REVERSED and
SET ASIDE and another rendered DISMISSING [petitioners’] Complaint. No
pronouncement as to costs.” 3 Assailed Decision, p. 9; Rollo, p. 57. The
Petition does not mention, however, the CA’s January 16, 2002 Resolution,
which denied the Motion for Reconsideration.
On the other hand, the dispositive portion of the Regional Trial Court (RTC)
Decision4 Penned by Judge Florencio A. Ruiz, Jr. of the RTC of Cabugao,
Ilocos Sur. that was reversed by the CA disposed thus:
“WHEREFORE, premises considered, decision is hereby rendered in favor of
the plaintiffs and against the defendant, sentencing the latter to pay to the
former, the following amounts:
1. P500,000.00 as actual damages;
2. P3,000,000.00 as moral damages;
3. P500,000.00 as exemplary damages; and
4. P500,000.00 as attorney’s fees;
“All such sums shall bear legal interest, i.e., 6% per annum pursuant to
Article 2209 of the Civil Code (Reformina vs. Tomol, 139 SCRA 260) from the
Transportation – Air Transportation
date of the filing of the complaint until fully paid. Costs against the x x x
Northwest Airlines, Inc.
“[Respondent’s] counterclaim is ordered dismissed, for lack of merit.” 5 RTC
Decision, p. 19; Rollo, p. 48.
The Facts
The facts of the case are summarized by the CA as follows:
“[Petitioner] Victorino Savellano (Savellano) was a Cabugao, Ilocos Sur
mayor for many terms, former Chairman of the Commission on Elections and
Regional Trial Court (RTC) judge. His wife, [Petitioner] Virginia is a
businesswoman and operates several rural banks in Ilocos Sur. The couple’s
x x x son [Petitioner] Deogracias was, at the time [of] the incident subject of
the case, the Vice-Governor of Ilocos Sur.
“On October 27, 1991, at around 1:45 p.m., [petitioners] departed from San
Francisco, USA on board Northwest Airlines (NW) Flight 27, Business Class,
bound for Manila, Philippines using the NW round-trip tickets which were
issued at [respondent’s] Manila ticketing office.
“[Petitioners] were expected to arrive at the Ninoy Aquino International
Airport (NAIA), Manila on October 29, 1991 (Manila time) or after twelve (12)
hours of travel.
“After being airborne for approximately two and one-half (2 1/2) hours or at
about 4:15 p.m. of the same day, October 27, 1991 (Seattle, USA time), NW
Flight 27’s pilot made an emergency landing in Seattle after announcing that
a fire had started in one of the plane’s engines.
“[Petitioners] and the other passengers proceeded to Gate 8 of the Seattle
Airport where they were instructed to go home to Manila the next day, ‘using
the same boarding passes with the same seating arrangements’
“[Respondent’s] shuttle bus thereafter brought all passengers to the Seattle
Red Lion Hotel where they were billeted by, and at the expense of
[respondent].
“[Petitioners] who were travelling as a family were assigned one room at the
hotel. At around 12:00 midnight, they were awakened by a phone call from
[respondent’s] personnel who advised them to be at the Seattle Airport by
7:00 a.m. (Seattle time) the following day, October 28,
Page 13 of 30
1991, for departure. To reach the airport on time, the NW shuttle bus fetched
them early, making them skip the 6:30 a.m. hotel breakfast.
“Prior to leaving the hotel, however, [petitioners] met at the lobby Col.
Roberto Delfin, a Filipino co-passenger who was also travelling Business
Class, who informed them that he and some passengers were leaving the
next day, October 29, 1991, on board the same plane with the same itinerary.
“On account of the ‘engine failure’ of the plane, [petitioner] Virginia developed
nervousness. On getting wind of information that they were ‘bumped off’, she
took ‘valium’ to calm her nerves and ‘cough syrup’ for the fever and colds she
had developed during the trip.
“When [petitioners] reached the Seattle Airport, [respondent’s] ground
stewardess belatedly advised them that instead of flying to Manila they would
have to board NW Flight 94, a DC-10 plane, bound for a 3-hour flight to Los
Angeles for a connecting flight to Manila. When [Petitioner] Savellano
insisted theirs was a direct flight to Manila, the female ground stewardess just
told them to hurry up as they were the last passengers to board.
“In Los Angeles, [petitioners] and the other passengers became confused for
while ‘there was a sort of a board’ which announced a Seoul-Bangkok flight,
none was posted for a Manila flight. It was only after they complained to the
NW personnel that the latter ‘finally changed the board to include Manila.’
“Before boarding NW Flight 23 for Manila via Seoul, [petitioners] encountered
another problem. Their three small handcarried items which were not
padlocked as they were merely closed by zippers were ‘not allowed’ to be
placed inside the passengers’ baggage compartments of the plane by an
arrogant NW ground stewardess.
“On [petitioners’] arrival at the NAIA, Manila where they saw Col. Delfin and
his wife as well as the other passengers of the distressed flight who unlike
them [petitioners] who left Seattle on October 28, 1991, left Seattle on
October 29, 1991, they were teased for taking the longer and tiresome route
to the Philippines.
“When [petitioners] claimed their luggage at the baggage carousel, they
discovered that the would-have-been handcarried items which were not
allowed to be placed inside the passengers’ baggage compartment had been
ransacked and the contents thereof stolen. Virginia was later to claim having
lost her diamond earrings costing P300,000.00, two (2) Perry Gan shoes
worth US$250.00, four (4) watches costing US$ 40.00 each, two (2) pieces of
Tag Heuer watch and three (3) boxes of Elizabeth Arden [perfumes].
Deogracias, on the other hand, claimed to have lost two (2) pairs of Cole
Transportation – Air Transportation
Haan shoes which he bought for his wife, and the clothes, camera, personal
computer, and jeans he bought for his children.
“By letter of November 22, 1991, [petitioners] through counsel demanded
from [respondent] the amount of P3,000,000.00 as damages for what they
claimed to be the humiliation and inconvenience they suffered in the hands of
its personnel. [Respondent] did not accede to the demand, however,
impelling [petitioners] to file a case for damages at the RTC of Cabugao,
Ilocos Sur—subject of the present appeal.
“[Petitioners] concede that they were not downgraded in any of the flights on
their way home to Manila. Their only complaint is that they suffered
inconvenience, embarrassment, and humiliation for taking a longer route.
“During the trial, the [RTC], on motion of [petitioners], issued on October 29,
1993 a subpoena duces tecum directing [respondent] to submit the
passengers’ manifest of the distressed flight from San Francisco to Tokyo on
October 27, 1991, the passengers’ manifest of the same distressed plane
from Seattle to Tokyo which took off on October 29, 1991, and the passenger
manifest of the substitute plane from Seattle to Los Angeles and Los Angeles
to Seoul enroute to Manila which took off on October 28, 1991.
“The subpoena duces tecum was served on December 1, 1993 but was not
complied with, however, by [respondent], it proffering that its Minneapolis
head office retains documents only for one year after which they are
destroyed.
“x x x Branch 24 of the RTC of Cabugao, Ilocos Sur rendered judgment in
favor of [petitioners] x x x.
“In granting moral and actual damages to [petitioners], the [RTC] credited
[petitioners’] claim that they were excluded from the Seattle-Tokyo-Manila
flight to accommodate several Japanese passengers bound for Japan. And
as basis of its award of actual damages arising from the allegedly lost articles
contained in the would-have-been handcarried [luggage], the [RTC], passing
on the lack of receipts covering the same, took judicial notice of the Filipinos’
practice of often bringing home pasalubong for friends and
relatives.”6 Assailed Decision, pp. 1-5; id., pp. 49-53. Citations omitted.
Ruling of the Court of Appeals
The CA ruled that petitioners had failed to show respondent’s bad faith,
negligence or malice in transporting them via the Seattle-Los Angeles-Seoul-
Manila route. Hence, it held that there was no basis for the RTC’s award of
Page 14 of 30
moral and exemplary damages. Neither did it find any reason to grant
attorney’s fees.
It further ruled:
“[Petitioners’] testimonial claim of losses is unsupported by any other
evidence at all. It is odd and even contrary to human experience for
[petitioner] Virginia not to have taken out a P300,000.00 pair of diamond
earrings from an unlocked small luggage after such luggage was not allowed
to be placed inside the passenger’s baggage compartment, given the ease
with which it could have been done as the small luggage was merely closed
by zipper. Just as it is odd why no receipts for alleged purchases for valuable
pasalubongs including Tag Huer watches, camera and personal computer
were presented. x x x.”7 Id., pp. 8 & 56.
Thus, even the trial court’s award of actual damages was reversed by the
appellate court.
8
Hence this Petition. This case was deemed submitted for resolution on
December 19, 2002, upon receipt by this Court of respondent’s
Memorandum, which was signed by Attys. Rodrigo Lope S. Quimbo and
Alejandre C. Dueñas II of Quisumbing Torres. Petitioners’ Memo...
Issues
In their appeal, petitioners ask this Court to rule on these issues:
“x x x [W]hether or not petitioners’ discriminatory bump-off from NW Flight
No. 0027 on 28 October 1991 (not the diversion of the distressed plane to
Seattle the day before, i.e. NW Flight 27 on 27 October 1991) constitutes
breach by respondent airline of its air-carriage contract?
“And if so, whether or not petitioners are entitled to actual, moral and
exemplary damages—including attorney’s fees—as a
consequence?”9 Petitioners’ Memorandum, p. 21; Rollo, p. 126.
The Court’s Ruling
The Petition is partly meritorious.
Transportation – Air Transportation
First Issue:
Breach of Contract
Petitioners’ contract of carriage with Northwest was for the San Francisco-
Tokyo(Narita)-Manila flights scheduled for October 27, 1991. This itinerary
was not followed when the aircraft used for the first segment of the journey
developed engine trouble. Petitioners stress that they are questioning, not
the cancellation of the original itinerary, but its substitution, which they
allegedly had not contracted for or agreed to. They insist that, like the other
passengers of the distressed flight, they had the right to be placed on Flight
27, which had a connecting flight from Japan to Manila. They add that in
being treated differently and shabbily, they were being discriminated against.
A contract is the law between the parties. 10 Tuazon v. Court of Appeals, 341
SCRA 707, October 3, 2000; Barrameda v. Atienza, 369 SCRA 311,
November 19, 2001; Mc Engineering, Inc. v. Court of Appeals, G.R. No.
104047, April 3, 2002, 380 SCRA 116. Thus, in determining whether
petitioners’ rights were violated, we must look into its provisions, which are
printed on the airline ticket. Condition 9 in the agreement states that a “x x x
[c]arrier may without notice substitute alternate carriers or aircraft, and may
alter or omit stopping places shown on the ticket in case of necessity. x x
x.”11 Exhibits “1-a”, “2-a” and “3-a”; Records, pp. 159-161.
The basis of the Complaint was the way respondent allegedly treated
petitioners like puppets that could be shuttled to Manila via Los Angeles and
Seoul without their consent.12 TSN July 14, 1993, p. 8. Undeniably, it did not
take the time to explain how it would be meeting its contractual obligation to
transport them to their final destination. Its employees merely hustled the
confused petitioners into boarding one plane after another without giving the
latter a choice from other courses of action that were available. It unilaterally
decided on the most expedient way for them to reach their final destination.
Passengers’ Consent
After an examination of the conditions printed on the airline ticket, we find
nothing there authorizing Northwest to decide unilaterally, after the distressed
flight landed in Seattle, what other stopping places petitioners should take
and when they should fly. True, Condition 9 on the ticket allowed respondent
to substitute alternate carriers or aircraft without notice. However, nothing
there permits shuttling passengers—without so much as a by yourleave—to
stopping places that they have not been previously notified of, much less
agreed to or been prepared for. Substituting aircrafts or carriers without
Page 15 of 30
notice is entirely different from changing stopping places or connecting cities
without notice.
The ambiguities in the contract, being one of adhesion, should be construed
against the party that caused its preparation—in this case,
respondent.13 Article 1377 of the Civil Code; Power Commercial and
Industrial Corp. v. Court of Appeals, 274 SCRA 597, June 20, 1997. Since
the conditions enumerated on the ticket do not specifically allow it to change
stopping places or to fly the passengers to alternate connecting cities without
consulting them, then it must be construed to mean that such unilateral
change was not permitted.
Proof of Necessity of Alteration
Furthermore, the change in petitioners’ flight itinerary does not fall under the
situation covered by the phrase “may alter or omit stopping places shown on
the ticket in case of necessity.”14 Supra at p. 10. A case of necessity must
first be proven. The burden of proving it necessarily fell on respondent. This
responsibility it failed to discharge.
Petitioners do not question the stop in Seattle, so we will not delve into this
matter. The airplane engine trouble that developed during the flight bound for
Tokyo from San Francisco definitely merited the “necessity” of landing the
plane at some place for repair—in this case, Seattle—but not that of shuttling
petitioners to other connecting points thereafter without their consent.
Northwest failed to show a “case of necessity” for changing the stopping
place from Tokyo to Los Angeles and Seoul. It is a fact that some of the
passengers on the distressed flight continued on to the Tokyo (Narita)
connecting place. No explanation whatsoever was given to petitioners as to
why they were not similarly allowed to do so. It may be that the Northwest
connecting flight from Seattle to Tokyo to Manila could no longer
accommodate them. Yet it
may also be that there were other carriers that could have accommodated
them for these sectors of their journey, and whose route they might have
preferred to the more circuitous one unilaterally chosen for them by
respondent.
In the absence of evidence as to the actual situation, the Court is hard
pressed to determine if there was a “case of necessity” sanctioning the
alteration of the Tokyo stopping place in the case of petitioners. Thus, we
hold that in the absence of a demonstrated necessity thereof and their
rerouting to Los Angeles and Seoul as stopping places without their consent,
respondent committed a breach of the contract of carriage.
Transportation – Air Transportation
Second Issue:
Damages
Being guilty of a breach of their contract, respondent may be held liable for
damages suffered by petitioners in accordance with Articles 1170 and 2201
of the Civil Code, which state:
“Art. 1170. Those who in the performance of their obligations are guilty of
fraud, negligence, or delay and those who in any manner contravene the
tenor thereof are liable for damages.” (Emphasis supplied)
“Art. 2201. In contracts and quasi-contracts, the damages for which the
obligor who acted in good faith is liable shall be those that are the natural and
probable consequences of the breach of the obligation, and which the parties
have foreseen or could have reasonably foreseen at the time the obligation
was constituted.”
“In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-
performance of the obligation.”
As a general rule, the factual findings of the CA when supported by
substantial evidence on record are final and conclusive and may not be
reviewed on appeal.15 Batingal v. Court of Appeals, 351 SCRA 60, February
1, 2001; Atillo III v. Court of Appeals, 266 SCRA 596, January 23, 1997;
Estonina v. Court of Appeals, 266 SCRA 627, January 27, 1997. An
exception to this rule is when the lower court and the CA arrive at different
factual findings.16 Lustan v. Court of Appeals, 266 SCRA 663, January 27,
1997; Yobido v. Court of Appeals, 281 SCRA 1, October 17, 1997. In this
case, the trial court found the presence of bad faith and hence awarded
moral and exemplary damages; while the CA found none and hence deleted
the award of damages. Thus, the Court is now behooved to review the basis
for sustaining the award or deletion of damages.
Petitioners impute oppression, discrimination, recklessness and malevolence
to respondent. We are not convinced. There is no persuasive evidence that
they were maliciously singled out to fly the Seattle-Los Angeles-Seoul-Manila
route. It appears that the passengers of the distressed flight were randomly
divided into two groups. One group was made to take the Tokyo-Manila flight;
and the other, the Los Angeles-Seoul-Manila flight. The selection of who was
to take which flight was handled via the computer reservation system, which
took into account only the passengers’ final destination. 17 See the
Page 16 of 30
 Deposition of Mr. Todd C. Anderson, a witness for respondent, taken
before the Philippine Consulate General in Seattle, Washington, on June
17, 1993. Deposition, p. 11; Records, p. 198.
The records show that respondent was impelled by sincere motives to get
petitioners to their final destination by whatever was the most expeditious
course—in its judgment, if not in theirs. Though they claim that they were not
accommodated on Flight 27 from Seattle to Tokyo because respondent had
taken on Japanese passengers, petitioners failed to present convincing
evidence to back this allegation. In the absence of convincing evidence, we
cannot find respondent guilty of bad faith.
Lopez, Zulueta and Ortigas
Rulings Not Applicable
Petitioners cite the cases of Lopez v. Pan American World Airways,18 16
SCRA 431, March 30, 1966. Zulueta v. Pan American World Airways,
Inc.19 43 SCRA 397, February 29, 1972. and Ortigas Jr. v. Lufthansa
20
German Airlines 64 SCRA 610, June 30, 1975. to support their claim for
moral and exemplary damages.
In Lopez, Honorable Fernando Lopez, then an incumbent senator and former
Vice President of the Philippines—together with his wife, his daughter and his
son-in-law—made first-class reservations with the Pan American World
Airways on its Tokyo-San Francisco flight. The reservation having been
confirmed, first-class
tickets were subsequently issued in their favor. Mistakenly, however,
defendant’s agent cancelled the reservation. But expecting other
cancellations before the flight scheduled a month later, the reservations
supervisor decided to withhold the information from them, with the result that
upon arrival in Tokyo, the Lopezes discovered they had no first-class
accommodations. Thus, they were compelled to take the tourist class, just so
the senator could be on time for his pressing engagements in the United
States.
In the light of these facts, the Court held there was a breach of the contract of
carriage. The failure of the defendant to inform the plaintiffs on time that their
reservations for the first class had long been cancelled was considered as
the element of bad faith entitling them to moral damages for the contractual
breach. According to the Court, such omission had placed them in a
predicament that enabled the company to keep them as their passengers in
the tourist class. Thus, the defendant was able to retain the business and to
Transportation – Air Transportation
promote its self-interest at the expense of embarrassment, discomfort and
humiliation on their part.
In Zulueta, the passenger was coming home to Manila from Honolulu via a
Pan-American flight. The plane had a stopover at Wake Island, where Rafael
Zulueta went down to relieve himself. At flight time, he could not be located
immediately. Upon being found, an altercation ensued between him and the
Pan-Am employees. One of them remonstrated: “What in the hell do you
think you are? Get on that plane.” An exchange of angry words followed, and
the pilot went to the extent of referring to the Zuluetas as “those monkeys.”
Subsequently, for his “belligerent” attitude, Rafael Zulueta was intentionally
off-loaded and left at Wake Island with the prospect of being stranded there
for a week, with malice aforethought. The Court awarded to the Zuluetas
P500,000.00 as moral damages, P200,000.00 as exemplary damages and
P75,000.00 as attorney’s fees, apart from the actual damages of P5,502.85.
In Ortigas, Francisco Ortigas, Jr. had a confirmed and validated first-class
ticket for Lufthansa’s Flight No. 646. His reserved firstclass seat was,
however, given to a Belgian. As a result, he was forced to take economy
class on the same flight. Lufthansa succeeded in keeping him as a
passenger by assuring him that he would be given first-class accommodation
at the next stop. The proper arrangements therefor had supposedly been
made already, when in truth such was not the case. In justifying the award of
moral and exemplary damages, the Court explained.
“x x x [W]hen it comes to contracts of common carriage, inattention and lack
of care on the part of the carrier resulting in the failure of the passenger to be
accommodated in the class contracted for amounts to bad faith or fraud
which entitles the passenger to the award of moral damages in accordance
with Article 2220 of the Civil Code. But in the instant case, the breach
appears to be of graver nature, since the preference given to the Belgian
passenger over plaintiff was done willfully and in wanton disregard of
plaintiff’s rights and his dignity as a human being and as a Filipino, who may
not be discriminated against with impunity.”
To summarize, in Lopez despite sufficient time—one month—to inform the
passengers of what had happened to their booking, the airline agent
intentionally withheld that information from them. In Zulueta, the passenger
was deliberately off-loaded after being gravely insulted during an altercation.
And in Ortigas, the passenger was intentionally downgraded in favor of a
European.
These cases are different from and inapplicable to the present case. Here,
there is no showing that the breach of contract was done with the same
entrepreneurial motive or self-interest as in Lopez or with ill will as in Zulueta
Page 17 of 30
and Ortigas. Petitioners have failed to show convincingly that they were
rerouted by respondent to Los Angeles and Seoul because of malice, profit
motive or self-interest. Good faith is presumed, while bad faith is a matter of
fact that needs to be proved 21 GSIS v. Labung-Deang, 365 SCRA 341,
September 17, 2001. by the party alleging it.
In the absence of bad faith, ill will, malice or wanton conduct, respondent
cannot be held liable for moral damages. Article 2219 of the Civil
Code22 Art. 2219. Moral damages may be recovered in the following and
analogous cases:(1) A criminal offense resulting in physical injuries;(2)
Quasi-delicts causing physical injuries;(3) Seduction, abduction, rape, or
other lascivious acts;(4) Adultery or ... enumerates the instances in which
moral damages
may be awarded. In a breach of contract, such damages are not awarded if
the defendant is not shown to have acted fraudulently or with malice or bad
faith.23 Art. 2201, Civil Code. Insufficient to warrant the award of moral
damages is the fact that complainants suffered economic hardship, or that
they worried and experienced mental anxiety. 24 GSIS v. Labung-Deang,
supra, p. 349; Calalas v. Court of Appeals, 332 SCRA 356, May 31, 2000.
Neither are exemplary damages proper in the present case. The Civil Code
provides that “[i]n contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.”25 Article 2232. Respondent has not
been proven to have acted in that manner. At most, it can only be found
guilty of having acted without first considering and weighing all other possible
courses of actions it could have taken, and without consulting petitioners and
securing their consent to the new stopping places.
The unexpected and sudden requirement of having to arrange the connecting
flights of every single person in the distressed plane in just a few hours, in
addition to the Northwest employees’ normal workload, was difficult to satisfy
perfectly. We cannot find respondent liable for exemplary damages for its
imperfection of neglecting to consult with the passengers beforehand.
Nevertheless, herein petitioners will not be totally deprived of compensation.
Nominal damages may be awarded as provided by the Civil Code, from
which we quote:
Transportation – Air Transportation
“Art. 2221. Nominal damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the plaintiff
for any loss suffered by him.”
“Art. 2222. 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.”
Nominal damages are recoverable if no actual, substantial or specific
damages were shown to have resulted from the breach. 26 Go v.
intermediate Appellate Court, 197 SCRA 22, 28-29, May 13, 1991;
Ventanilla v. Centeno, 1 SCRA 215, 220, January 28, 1961;
RobesFrancisco Realty & Development Corporation v. Court of First
Instance of Rizal (Branch XXXIV), 86 SCRA 59, 65-66, Octo... The amount
of such damages is addressed to the sound discretion of the court, taking
into account the relevant circumstances. 27 Cojuangco, Jr. v. Court of
Appeals, 369 Phil. 41; 309 SCRA 602, July 2, 1999; Pedrosa v. Court of
Appeals, 353 SCRA 620, March 5, 2001; China Air Lines, Ltd. v. Court of
Appeals, 185 SCRA 449, May 18, 1990.
In the present case, we must consider that petitioners suffered the
inconveniences of having to wake up early after a bad night and having to
miss breakfast; as well as the fact that they were business class passengers.
They paid more for better service; thus, rushing them and making them miss
their small comforts was not a trivial thing. We also consider their social and
official status. Victorino Savellano was a former mayor, regional trial court
judge and chairman of the Commission on Elections. Virginia B. Savellano
was the president of five rural banks, and Deogracias Savellano was then the
incumbent vice governor of Ilocos Sur. Hence, it will be proper to grant one
hundred fifty thousand pesos (P150,000) as nominal damage 28 Five years
ago, in Japan Airlines v. Court of Appeals, 355 Phil. 444; 294 SCRA 19,
August 7, 1998, the Court awarded P100,000 nominal damages to
passengers who did not have the same or equal official responsibility or
status as herein petitioners. to each of them, in order to vindicate and
recognize their right29 People v. Gopio, 346 SCRA 408, November 29,
2000, citing Sumalpong v. Court of Appeals, 335 Phil. 1218; 268 SCRA
764, February 26, 1997. to be notified and consulted before their
contracted stopping place was changed.
Page 18 of 30
A claim for the alleged lost items from the baggage of petitioners cannot
prosper, because they failed to give timely notice of the loss to respondent.
The Conditions printed on the airline ticket plainly read:
“2. Carriage hereunder is subject to the rules and limitations relating to
liability established by the Warsaw Convention unless such carriage is not
‘International carriage’as defined by that Convention.
admitted against respondent with respect to alleged damage to or loss of
petitioners’ baggage.
WHEREFORE, the Petition is hereby PARTIALLY GRANTED, and the
assailed Decision MODIFIED. Respondent is ORDERED to pay one hundred
fifty thousand pesos (P150,000) to each of the three petitioners as nominal
damages. No pronouncement as to costs.

x x x      x x x      x x x SO ORDERED.

“7. Checked baggage will be delivered to bearer of the baggage check. In      Puno (Chairman), Sandoval-Gutierrez and Corona, JJ., concur.
case of damage to baggage moving in international transportation complaint
must be made in writing to carrier forthwith after discovery of damage, and at      Carpio-Morales, J., No part.
the latest, within 7 days from receipt; in case of delay, complaint must be
made within 21 days from date the baggage was delivered. x x x.” 30 Exhibit Petition partially granted, assailed judgment modified.
“A”; Records, p. 159.
Note.—In a breach of contract, moral damages are not awarded if the
The pertinent provisions of the Rules Relating to International Carriage by Air defendant is not shown to have acted fraudulently or with malice or bad faith.
(Warsaw Convention) state: (Government Service Insurance System vs. Labung-Deang, 365 SCRA 341
[2001])
“Article 26
——o0o——
1. 1. Receipt by the person entitled to delivery of luggage or goods
without complaint is prima facie evidence that the same have been
delivered in good condition and in accordance with the document of
carriage.
2. 2. In case of damage, the person entitled to delivery must complain
to the carrier forthwith after the discovery of the damage, and, at
the latest, within three days from the date of receipt in the case of
luggage and seven days from date of receipt in the case of goods.
In the case of delay the complaint must be made at the latest within
fourteen days from the date on which the luggage or goods have
been placed at his disposal.
3. 3. Every complaint must be made in writing upon the document of
carriage or by separate notice in writing dispatched within the times
aforesaid.
4. 4. Failing complaint within the times aforesaid, no action shall lie
against the carrier, save in the case of fraud on his part.”

After allegedly finding that their luggage had been ransacked, petitioners
never lodged a complaint with any Northwest airport personnel. Neither did
they mention the alleged loss of their valuables in their November 22, 1991
demand letter.31 Annex “M” to the original Complaint; id., pp. 51-52. Hence,
in accordance with the parties’ contract of carriage, no claim can be heard or

Transportation – Air Transportation Page 19 of 30

[4]
G.R. No. 171092. March 15, 2010.*
EDNA DIAGO LHUILLIER, petitioner, vs. BRITISH AIRWAYS, respondent.
Civil Law; Common Carriers; Warsaw Convention; Damages; It is
settled that the Warsaw Convention has the force and effect of law in this
country.—It is settled that the Warsaw Convention has the force and effect of
law in this country. In Santos III v. Northwest Orient Airlines, 210 SCRA
256 (1992), we held that: The Republic of the Philippines is a party to the
Convention for the Unification of Certain Rules Relating to International
Transportation by Air, otherwise known as the Warsaw Convention. It took
effect on February 13, 1933. The Convention was concurred in by the Senate,
through its Resolution No. 19, on May 16, 1950. The Philippine instrument
of accession was signed by President Elpidio Quirino on October 13, 1950,
and was deposited with the Polish government on November 9,1950. The
Convention became applicable to the Philippines on February 9, 1951. On
September 23, 1955, President Ramon Magsaysay issued Proclamation No.
201, declaring our formal adherence thereto, “to the end that the same and
every article and clause thereof may be observed and fulfilled in good faith
by the Republic of the Philippines and the citizens thereof.” The Convention
is thus a treaty commitment voluntarily assumed by the Philippine
government and, as such, has the force and effect of law in this country.
Same; Same; Same; Same; Meaning of “International Carriage.”—
For the purposes of this Convention the expression “international carriage”
means any carriage in which, according to the contract made by the parties,
the place of departure and the place of destination, whether or not there be a
break in the carriage or a transhipment, are situated either within the
territories of two High Contracting Parties, or within the territory of a single
High Contracting Party, if there is an agreed stopping place within a territory
subject to the sovereignty, suzerainty, mandate or authority of another Power,
even though that Power is not a party to this Convention. A carriage without
such an agreed stopping place between territories subject to the sovereignty,
suzerainty, mandate or authority of the same High Contracting Party is not
deemed to be international for the purposes of this Convention.
Same; Same; Same; Same; Place where plaintiff may bring the
action for damages.—Under Article 28(1) of the Warsaw Convention, the
plaintiff may bring the action for damages before—the court where the
Transportation – Air Transportation
carrier is domiciled; 2. the court where the carrier has its principal place of
business; 3. the court where the carrier has an establishment by which the
contract has been made; or 4. the court of the place of destination.
Same; Same; Same; Jurisdiction; Article 28(1) of the Warsaw
Convention is jurisdictional in character.—We further held that Article 28(1)
of the Warsaw Convention is jurisdictional in character. Thus: A number of
reasons tends to support the characterization of Article 28(1) as a jurisdiction
and not a venue provision. First, the wording of Article 32, which indicates
the places where the action for damages “must” be brought, underscores the
mandatory nature of Article 28(1). Second, this characterization is consistent
with one of the objectives of the Convention, which is to “regulate in a
uniform manner the conditions of international transportation by air.” Third,
the Convention does not contain any provision prescribing rules of
jurisdiction other than Article 28(1), which means that the phrase “rules as to
jurisdiction” used in Article 32 must refer only to Article 28(1). In fact, the
last sentence of Article 32 specifically deals with the exclusive enumeration
in Article 28(1) as “jurisdictions,” which, as such, cannot be left to the will of
the parties regardless of the time when the damage occurred.
Remedial Law; Jurisdiction; Voluntary Appearance; A defendant who files a
motion to dismiss assailing the jurisdiction of the court over his person
together with other grounds raised therein is not deemed to have appeared
voluntarily before the court.—The second sentence of Sec. 20, Rule 14 of the
Revised Rules of Civil Procedure clearly provides: Sec. 20. Voluntary
appearance.—The defendant’s voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of
other grounds aside from lack of jurisdiction over the person of the defendant
shall not be deemed a voluntary appearance. Thus, a defendant who files a
motion to dismiss, assailing the jurisdiction of the court over his person,
together with other grounds raised therein, is not deemed to have appeared
voluntarily before the court. What the rule on voluntary appearance—the first
sentence of the above-quoted rule—means is that the voluntary appearance of
the defendant in court is without qualification, in which case he is deemed to
have waived his defense of lack of jurisdiction over his person due to
improper service of summons.
PETITION for review on certiorari of an order of the Regional Trial Court of
Makati City, Br. 132.
   The facts are stated in the opinion of the Court.
Page 20 of 30
  PJL Legal Services Group for petitioner. grounds of lack of jurisdiction over the case and over the person of the
respondent. Respondent alleged that only the courts of London, United
  A.Q. Ancheta & Partners for respondent. Kingdom or Rome, Italy, have jurisdiction over the complaint for damages
pursuant to the Warsaw Convention,5 Article 28(1) of which provides:
DEL CASTILLO, J.:
“An action for damages must be brought at the option of the plaintiff, either
before the court of domicile of the carrier or his principal place of business, or
Jurisdictio est potestas de publico introducta cum necessitate juris dicendi.
where he has a place of business through which the contract has been
Jurisdiction is a power introduced for the public good, on account of the
made, or before the court of the place of destination.”
necessity of dispensing justice.1

Thus, since a) respondent is domiciled in London; b) respondent’s principal

Factual Antecedents
place of business is in London; c) petitioner bought her ticket in Italy (through
Jeepney Travel S.A.S, in Rome);6 and d) Rome, Italy is petitioner’s place of
On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint2 for destination, then it follows that the complaint should only be filed in the
damages against respondent British Airways before the Regional Trial Court proper courts of London, United Kingdom or Rome, Italy.
(RTC) of Makati City. She alleged that on February 28, 2005, she took
respondent’s flight 548 from London, United Kingdom to Rome, Italy. Once
Likewise, it was alleged that the case must be dismissed for lack of
on board, she allegedly requested Julian Halliday (Halliday), one of the
jurisdiction over the person of the respondent because the summons was
respondent’s flight attendants, to assist her in placing her hand-carried
erroneously served on Euro-Philippine Airline Services, Inc. which is not its
luggage in the overhead bin. However, Halliday allegedly refused to help and
resident agent in the Philippines.
assist her, and even sarcastically remarked that “If I were to help all 300
passengers in this flight, I would have a broken back!”
On June 3, 2005, the trial court issued an Order requiring herein petitioner to
file her Comment/Opposition on the Motion to Dismiss within 10 days from
Petitioner further alleged that when the plane was about to land in Rome,
notice thereof, and for respondent to file a Reply thereon.7 Instead of filing a
Italy, another flight attendant, Nickolas Kerrigan (Kerrigan), singled her out
Comment/Opposition, petitioner filed on June 27, 2005, an Urgent Ex-Parte
from among all the passengers in the business class section to lecture on
Motion to Admit Formal Amendment to the Complaint and Issuance of Alias
plane safety. Allegedly, Kerrigan made her appear to the other passengers to
Summons.8 Petitioner alleged that upon verification with the Securities and
be ignorant, uneducated, stupid, and in need of lecturing on the safety rules
Exchange Commission, she found out that the resident agent of respondent
and regulations of the plane. Affronted, petitioner assured Kerrigan that she
in the Philippines is Alonzo Q. Ancheta. Subsequently, on September 9,
knew the plane’s safety regulations being a frequent traveler. Thereupon,
2005, petitioner filed a Motion to Resolve Pending Incident and Opposition to
Kerrigan allegedly thrust his face a mere few centimeters away from that of
Motion to Dismiss.9
the petitioner and menacingly told her that “We don’t like your attitude.”

Ruling of the Regional Trial Court

Upon arrival in Rome, petitioner complained to respondent’s ground manager
and demanded an apology. However,the latter declared that the flight
stewards were “only doing their job.” On October 14, 2005, the RTC of Makati City, Branch 132, issued an
Order10 granting respondent’s Motion to Dismiss. It ruled that:
Thus, petitioner filed the complaint for damages, praying that respondent be
ordered to pay P5 million as moral damages, P2 million as nominal damages, “The Court sympathizes with the alleged ill-treatment suffered by the plaintiff.
P1 million as exemplary damages, P300,000.00 as attorney’s fees, However, our Courts have to apply the principles of international law, and are
P200,000.00 as litigation expenses, and cost of the suit. bound by treaty stipulations entered into by the Philippines which form part of
the law of the land. One of this is the Warsaw Convention. Being a signatory
thereto, the Philippines adheres to its stipulations and is bound by its
On May 16, 2005, summons, together with a copy of the complaint, was
provisions including the place where actions involving damages to plaintiff is
served on the respondent through Violeta Echevarria, General Manager of
to be instituted, as provided for under Article 28(1) thereof. The Court finds
Euro-Philippine Airline Services, Inc.3On May 30, 2005, respondent, by way
no justifiable reason to deviate from the indicated limitations as it will only run
of special appearance through counsel, filed a Motion to Dismiss4 on

Transportation – Air Transportation Page 21 of 30

counter to the provisions of the Warsaw Convention. Said adherence is in
consonance with the comity of nations and deviation from it can only be
effected through proper denunciation as enunciated in the Santos case (ibid).
Since the Philippines is not the place of domicile of the defendant nor is it the
principal place of business, our courts are thus divested of jurisdiction over
cases for damages. Neither was plaintiff’s ticket issued in this country nor
was her destination Manila but Rome in Italy. It bears stressing however, that
referral to the court of proper jurisdiction does not constitute constructive
denial of plaintiff’s right to have access to our courts since the Warsaw
Convention itself provided for jurisdiction over cases arising from
international transportation. Said treaty stipulations must be complied with in
good faith following the time honored principle of pacta sunt servanda.
The resolution of the propriety of service of summons is rendered moot by
the Court’s want of jurisdiction over the instant case.
WHEREFORE, premises considered, the present Motion to Dismiss is
hereby GRANTED and this case is hereby ordered DISMISSED.”
Petitioner filed a Motion for Reconsideration but the motion was denied in an
Order11 dated January 4, 2006.
Petitioner now comes directly before us on a Petition for Review on Certiorari
on pure questions of law, raising the following issues:
Issues
I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A
TORTIOUS CONDUCT COMMITTED AGAINST A FILIPINO CITIZEN AND
RESIDENT BY AIRLINE PERSONNEL OF A FOREIGN CARRIER
TRAVELLING BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN
COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW
CONVENTION.
   II. WHETHER X X X RESPONDENT AIR CARRIER OF PASSENGERS,
IN FILING ITS MOTION TO DISMISS BASED ON LACK OF JURISDICTION
OVER THE SUBJECT MATTER OF THE CASE AND OVER ITS PERSON
MAY BE DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED ITSELF
TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO,
WHEN THE VERY LAWYER ARGUING FOR IT IS HIMSELF THE
RESIDENT AGENT OF THE CARRIER.
Petitioner’s Arguments
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Petitioner argues that her cause of action arose not from the contract of
carriage, but from the tortious conduct committed by airline personnel of
respondent in violation of the provisions of the Civil Code on Human
Relations. Since her cause of action was not predicated on the contract of
carriage, petitioner asserts that she has the option to pursue this case in this
jurisdiction pursuant to Philippine laws.
Respondent’s Arguments
In contrast, respondent maintains that petitioner’s claim for damages fell
within the ambit of Article 28(1) of the Warsaw Convention. As such, the
same can only be filed before the courts of London, United Kingdom or
Rome, Italy.
Our Ruling
The petition is without merit.
The Warsaw Convention has the force
and effect of law in this country.
It is settled that the Warsaw Convention has the force and effect of law in this
country. In Santos III v. Northwest Orient Airlines,12 we held that:
“The Republic of the Philippines is a party to the Convention for the
Unification of Certain Rules Relating to International Transportation by Air,
otherwise known as the Warsaw Convention. It took effect on February 13,
1933. The Convention was concurred in by the Senate, through its
Resolution No. 19, on May 16, 1950. The Philippine instrument of accession
was signed by President Elpidio Quirino on October 13, 1950, and was
deposited with the Polish government on November 9, 1950. The Convention
became applicable to the Philippines on February 9, 1951. On September 23,
1955, President Ramon Magsaysay issued Proclamation No. 201, declaring
our formal adherence thereto, “to the end that the same and every article and
clause thereof may be observed and fulfilled in good faith by the Republic of
the Philippines and the citizens thereof.”
The Convention is thus a treaty commitment voluntarily assumed by the
Philippine government and, as such, has the force and effect of law in this
country.”13
The Warsaw Convention applies because
the air travel, where the alleged tortious
conduct occurred, was between the United
Page 22 of 30
Kingdom and Italy, which are both signa-
tories to the Warsaw Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons,
luggage or goods performed by aircraft for reward. It applies equally to
gratuitous carriage by aircraft performed by an air transport
undertaking.
2. For the purposes of this Convention the expression “international
carriage” means any carriage in which, according to the contract made
by the parties, the place of departure and the place of destination,
whether or not there be a break in the carriage or a transhipment, are
situated either within the territories of two High Contracting Parties, or
within the territory of a single High Contracting Party, if there is an
agreed stopping place within a territory subject to the sovereignty,
suzerainty, mandate or authority of another Power, even though that
Power is not a party to this Convention. A carriage without such an
agreed stopping place between territories subject to the sovereignty,
suzerainty, mandate or authority of the same High Contracting Party is
not deemed to be international for the purposes of this Convention.
(Emphasis supplied)
Thus, when the place of departure and the place of destination in a contract
of carriage are situated within the territories of two High Contracting Parties,
said carriage is deemed an “international carriage.” The High Contracting
Parties referred to herein were the signatories to the Warsaw Convention and
those which subsequently adhered to it.14
In the case at bench, petitioner’s place of departure was London, United
Kingdom while her place of destination was Rome, Italy.15 Both the United
Kingdom16 and Italy17 signed and ratified the Warsaw Convention. As such,
the transport of the petitioner is deemed to be an “international carriage”
within the contemplation of the Warsaw Convention.
Since the Warsaw Convention applies in
the instant case, then the jurisdiction
over the subject matter of the action is
governed by the provisions of the Warsaw Convention.
Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the
action for damages before—
1. the court where the carrier is domiciled;
Transportation – Air Transportation
2. the court where the carrier has its principal place of business;
3. the court where the carrier has an establishment by which the
contract has been made; or
4. the court of the place of destination.
In this case, it is not disputed that respondent is a British corporation
domiciled in London, United Kingdom with London as its principal place of
business. Hence, under the first and second jurisdictional rules, the petitioner
may bring her case before the courts of London in the United Kingdom. In the
passenger ticket and baggage check presented by both the petitioner and
respondent, it appears that the ticket was issued in Rome, Italy.
Consequently, under the third jurisdictional rule, the petitioner has the option
to bring her case before the courts of Rome in Italy. Finally, both the
petitioner and respondent aver that the place of destination is Rome, Italy,
which is properly designated given the routing presented in the said
passenger ticket and baggage check. Accordingly, petitioner may bring her
action before the courts of Rome, Italy. We thus find that the RTC of Makati
correctly ruled that it does not have jurisdiction over the case filed by the
petitioner.
Santos III v. Northwest Orient
Airlines18 applies in this case.
Petitioner contends that Santos III v. Northwest Orient Airlines19 cited by the
trial court is inapplicable to the present controversy since the facts thereof
are not similar with the instant case.
We are not persuaded.
In Santos III v. Northwest Orient Airlines,20 Augusto Santos III, a resident of
the Philippines, purchased a ticket from Northwest Orient Airlines in San
Francisco, for transport between San Francisco and Manila via Tokyo and
back to San Francisco. He was wait-listed in the Tokyo to Manila segment of
his ticket, despite his prior reservation. Contending that Northwest Orient
Airlines acted in bad faith and discriminated against him when it canceled his
confirmed reservation and gave his seat to someone who had no better right
to it, Augusto Santos III sued the carrier for damages before the RTC.
Northwest Orient Airlines moved to dismiss the complaint on ground of lack
of jurisdiction citing Article 28(1) of the Warsaw Convention. The trial court
granted the motion which ruling was affirmed by the Court of Appeals. When
the case was brought before us, we denied the petition holding that under
Article 28(1) of the Warsaw Convention, Augusto Santos III must prosecute
his claim in the United States, that place being the (1) domicile of the
Page 23 of 30
Northwest Orient Airlines; (2) principal office of the carrier; (3) place where
contract had been made (San Francisco); and (4) place of destination (San
Francisco).21
 
We further held that Article 28(1) of the Warsaw Convention is jurisdictional
in character. Thus:
“A number of reasons tends to support the characterization of Article 28(1) as
a jurisdiction and not a venue provision. First, the wording of Article 32, which
indicates the places where the action for damages “must” be brought,
underscores the mandatory nature of Article 28(1). Second, this
characterization is consistent with one of the objectives of the Convention,
which is to “regulate in a uniform manner the conditions of international
transportation by air.” Third, the Convention does not contain any provision
prescribing rules of jurisdiction other than Article 28(1), which means that the
phrase “rules as to jurisdiction” used in Article 32 must refer only to Article
28(1). In fact, the last sentence of Article 32 specifically deals with the
exclusive enumeration in Article 28(1) as “jurisdictions,” which, as such,
cannot be left to the will of the parties regardless of the time when the
damage occurred.
xxxx
In other words, where the matter is governed by the Warsaw Convention,
jurisdiction takes on a dual concept. Jurisdiction in the international sense
must be established in accordance with Article 28(1) of the Warsaw
Convention, following which the jurisdiction of a particular court must be
established pursuant to the applicable domestic law. Only after the question
of which court has jurisdiction is determined will the issue of venue be taken
up. This second question shall be governed by the law of the court to which
the case is submitted.”22
Contrary to the contention of petitioner, Santos III v. Northwest Orient
Airlines23 is analogous to the instant case because (1) the domicile of
respondent is London, United Kingdom;24 (2) the principal office of
respondent airline is likewise in London, United Kingdom;25 (3) the ticket
was purchased in Rome, Italy;26 and (4) the place of destination is Rome,
Italy.27 In addition, petitioner based her complaint on Article 217628 of the
Civil Code on quasi-delict and Articles 1929 and 2130 of the Civil Code on
Human Relations. In Santos III v. Northwest Orient Airlines,31 Augusto
Santos III similarly posited that Article 28 (1) of the Warsaw Convention did
not apply if the action is based on tort. Hence, contrary to the contention of
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the petitioner, the factual setting of Santos III v. Northwest Orient Airlines32
and the instant case are parallel on the material points.
Tortious conduct as ground for the
petitioner’s complaint is within the
purview of the Warsaw Convention.
Petitioner contends that in Santos III v. Northwest Orient Airlines,33 the
cause of action was based on a breach of contract while her cause of action
arose from the tortious conduct of the airline personnel and violation of the
Civil Code provisions on Human Relations.34 In addition, she claims that our
pronouncement in Santos III v. Northwest Orient Airlines35 that “the
allegation of willful misconduct resulting in a tort is insufficient to exclude the
case from the comprehension of the Warsaw Convention,” is more of an
obiter dictum rather than the ratio decidendi.36 She maintains that the fact
that said acts occurred aboard a plane is merely incidental, if not
irrelevant.37
We disagree with the position taken by the petitioner. Black defines obiter
dictum as “an opinion entirely unnecessary for the decision of the case” and
thus “are not binding as precedent.”38 In Santos III v. Northwest Orient
Airlines,39 Augusto Santos III categorically put in issue the applicability of
Article 28(1) of the Warsaw Convention if the action is based on tort.
In the said case, we held that the allegation of willful misconduct resulting in
a tort is insufficient to exclude the case from the realm of the Warsaw
Convention. In fact, our ruling that a cause of action based on tort did not
bring the case outside the sphere of the Warsaw Convention was our ratio
decidendi in disposing of the specific issue presented by Augusto Santos III.
Clearly, the contention of the herein petitioner that the said ruling is an obiter
dictum is without basis.
Relevant to this particular issue is the case of Carey v. United Airlines,40
where the passenger filed an action against the airline arising from an
incident involving the former and the airline’s flight attendant during an
international flight resulting to a heated exchange which included insults and
profanity. The United States Court of Appeals (9th Circuit)
held that the “passenger’s action against the airline carrier arising from
alleged confrontational incident between passenger and flight attendant on
international flight was governed exclusively by the Warsaw Convention,
even though the incident allegedly involved intentional misconduct by the
flight attendant.”41
Page 24 of 30
In Bloom v. Alaska Airlines,42 the passenger brought nine causes of action
against the airline in the state court, arising from a confrontation with the
flight attendant during an international flight to Mexico. The United States
Court of Appeals (9th Circuit) held that the “Warsaw Convention governs
actions arising from international air travel and provides the exclusive remedy
for conduct which falls within its provisions.” It further held that the said
Convention “created no exception for an injury suffered as a result of
intentional conduct”43 which in that case involved a claim for intentional
infliction of emotional distress.
It is thus settled that allegations of tortious conduct committed against an
airline passenger during the course of the international carriage do not bring
the case outside the ambit of the Warsaw Convention.
Respondent, in seeking remedies from the
trial court through special appearance of
counsel, is not deemed to have voluntarily
submitted itself to the jurisdiction of the
trial court.
Petitioner argues that respondent has effectively submitted itself to the
jurisdiction of the trial court when the latter stated in its Comment/Opposition
to the Motion for Reconsideration that “Defendant [is at a loss] x x x how the
plaintiff arrived at her erroneous impression that it is/was Euro Philippines
Airlines Services, Inc. that has been making a special appearance since x x x
British Airways x x x has been clearly specifying in all the pleadings that it
has filed with this Honorable Court that it is the one making a special
appearance.”44
In refuting the contention of petitioner, respondent cited La Naval Drug
Corporation v. Court of Appeals45 where we held that even if a party
“challenges the jurisdiction of the court over his person, as by reason of
absence or defective service of summons, and he also invokes other grounds
for the dismissal of the action under Rule 16, he is not deemed to be in
estoppel or to have waived his objection to the jurisdiction over his
person.”46
This issue has been squarely passed upon in the recent case of Garcia v.
Sandiganbayan,47 where we reiterated our ruling in La Naval Drug
Corporation v. Court of Appeals48 and elucidated thus:
Special Appearance to Question a Court’s Jurisdiction Is Not Voluntary
Appearance
Transportation – Air Transportation
The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil
Procedure clearly provides:
Sec. 20. Voluntary appearance.—The defendant’s voluntary
appearance in the action shall be equivalent to service of summons.
The inclusion in a motion to dismiss of other grounds aside from lack
of jurisdiction over the person of the defendant shall not be deemed a
voluntary appearance.
Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of
the court over his person, together with other grounds raised therein, is not
deemed to have appeared voluntarily before the court. What the rule on
voluntary appearance—the first sentence of the above-quoted rule—means
is that the voluntary appearance of the defendant in court is without
qualification, in which case he is deemed to have waived his defense of lack
of jurisdiction over his person due to improper service of summons.
The pleadings filed by petitioner in the subject forfeiture cases, however, do
not show that she voluntarily appeared without qualification. Petitioner filed
the following pleadings in Forfeiture I: (a) motion to dismiss; (b) motion for
reconsideration and/or to admit answer; (c) second motion for
reconsideration; (d) motion to consolidate forfeiture case with plunder case;
and (e) motion to dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a)
motion to dismiss and/or to quash Forfeiture II; and (b) motion for partial
reconsideration.
The foregoing pleadings, particularly the motions to dismiss, were filed by
petitioner solely for special appearance with the purpose of challenging the
jurisdiction of the SB over her person and that of her three children. Petitioner
asserts therein that SB did not acquire jurisdiction over her person and of her
three children for lack of valid service of summons through improvident
substituted service of summons in both Forfeiture I and Forfeiture II. This
stance the petitioner never abandoned when she filed her motions for
reconsideration, even with a prayer to admit their attached Answer Ex
Abundante Ad Cautelam dated January 22, 2005 setting forth affirmative
defenses with a claim for damages. And the other subsequent pleadings,
likewise, did not abandon her stance and defense of lack of jurisdiction due
to improper substituted services of summons in the forfeiture cases.
Evidently, from the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on
Civil Procedure, petitioner and her sons did not voluntarily appear before the
SB constitutive of or equivalent to service of summons.
Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the
instant case. Said case elucidates the current view in our jurisdiction that a
special appearance before the court—challenging its jurisdiction over the
Page 25 of 30
person through a motion to dismiss even if the movant invokes other grounds
—is not tantamount to estoppel or a waiver by the movant of his objection to
jurisdiction over his person; and such is not constitutive of a voluntary
submission to the jurisdiction of the court.

    Thus, it cannot be said that petitioner and her three children voluntarily
appeared before the SB to cure the defective substituted services of
summons. They are, therefore, not estopped from questioning the jurisdiction
of the SB over their persons nor are they deemed to have waived such
defense of lack of jurisdiction. Consequently, there being no valid substituted
services of summons made, the SB did not acquire jurisdiction over the
persons of petitioner and her children. And perforce, the proceedings in the
subject forfeiture cases, insofar as petitioner and her three children are
concerned, are null and void for lack of jurisdiction.” (Emphasis supplied)

   In this case, the special appearance of the counsel of respondent in filing

the Motion to Dismiss and other pleadings before the trial court cannot be
deemed to be voluntary submission to the jurisdiction of the said trial court.
We hence disagree with the contention of the petitioner and rule that there
was no voluntary appearance before the trial court that could constitute
estoppel or a waiver of respondent’s objection to jurisdiction over its person.

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

SO ORDERED.

Carpio (Chairperson), Brion, Abad and Perez, JJ., concur.

Petition denied, order affirmed.

Note.—Jurisprudence in the Philippines and the United States also

recognizes that the Warsaw Convention does not “exclusively regulate” the
relationship between passenger and carrier on an international flight.
(Philippine Airlines, Inc. vs. Savillo, 557 SCRA 66 [2008])

——o0o—— 

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[5]
G.R. No. 149547. July 4, 2008.*
PHILIPPINE AIRLINES, INC., petitioner, vs. HON. ADRIANO SAVILLO,
Presiding Judge of RTC Branch 30, Iloilo City, and SIMPLICIO GRIÑO,
respondents.
Civil Law; Common Carriers; Damages; The cardinal purpose of
the Warsaw Convention is to provide uniformity of rules governing claims
arising from international air travel; thus, it precludes a passenger from
maintaining an action for personal injury damages under local law when his
or her claim does not satisfy the conditions of liability under the Convention.
—The Warsaw Convention applies to “all international transportation of
persons, baggage or goods performed by any aircraft for hire.” It seeks to
accommodate or balance the interests of passengers seeking recovery for
personal injuries and the interests of air carriers seeking to limit potential
liability. It employs a scheme of strict liability favoring passengers and
imposing damage caps to benefit air carriers. The cardinal purpose of the
Warsaw Convention is to provide uniformity of rules governing claims
arising from international air travel; thus, it precludes a passenger from
maintaining an action for personal injury damages under local law when his
or her claim does not satisfy the conditions of liability under the Convention.
Same; Same; Same; A claim covered by the Warsaw Convention can
no longer be recovered under local law, if the statute of limitations of two
years has already lapsed.—Article 19 of the Warsaw Convention provides
for liability on the part of a carrier for “damages occasioned by delay in the
transportation by air of passengers, baggage or goods.” Article 24 excludes
other remedies by further providing that “(1) in the cases covered by articles
18 and 19, any action for damages, however founded, can only be brought
subject to the conditions and limits set out in this convention.” Therefore, a
claim covered by the Warsaw Convention can no longer be recovered under
local law, if the statute of limitations of two years has already lapsed.
Same; Same; Same; Jurisprudence in the Philippines and the United
States also recognizes that the Warsaw Convention does not “exclusively
regulate” the relationship between passenger and carrier on an
international flight.—This Court notes that jurisprudence in the Philippines
and the United States also recognizes that the Warsaw Convention does not
“exclusively regulate” the relationship between passenger and carrier on an
Transportation – Air Transportation
international flight. This Court finds that the present case is substantially
similar to cases in which the damages sought were considered to be outside
the coverage of the Warsaw Convention.
Same; Same; Same; Distinction between damages to the passenger’s
baggage and humiliation he suffered at the hands of the airline’s employees.
—In United Airlines v. Uy, 318 SCRA 576 (1999), this Court distinguished
between the (1) damage to the passenger’s baggage and (2) humiliation he
suffered at the hands of the airline’s employees. The first cause of action was
covered by the Warsaw Convention which prescribes in two years, while the
second was covered by the provisions of the Civil Code on torts, which
prescribes in four years.
PETITION for review on certiorari of a decision of the Court of Appeals.
   The facts are stated in the opinion of the Court.
  Siguion Reyna, Montecillo & Ongsiako for petitioner.
  Padohinog, Amane, Gengos, Billena & Coo Law Offices for private
respondent S. Griño.
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, assailing the Decision1 dated 17 August 2001, rendered by the Court
of Appeals in CA-G.R. SP No.48664, affirming in toto the Order2 dated 9
June 1998, of Branch 30 of the Regional Trial Court (RTC) of Iloilo City,
dismissing the Motion to Dismiss filed by petitioner Philippine Airlines, Inc.
(PAL) in the case entitled, Simplicio Griño v. Philippine Airlines, Inc. and
Singapore Airlines, docketed as Civil Case No. 23773.
PAL is a corporation duly organized under Philippine law, engaged in the
business of providing air carriage for passengers, baggage and cargo.3
Public respondent Hon. Adriano Savillo is the presiding judge of Branch 30 of
the Iloilo RTC, where Civil Case No. 23773 was filed; while private
respondent Simplicio Griño is the plaintiff in the aforementioned case.
The facts are undisputed.
Page 27 of 30
Private respondent was invited to participate in the 1993 ASEAN Seniors
Annual Golf Tournament held in Jakarta, Indonesia. He and several
companions decided to purchase their respective passenger tickets from PAL
with the following points of passage: MANILA-SINGAPORE-JAKARTA-
SINGAPORE-MANILA. Private respondent and his companions were made
to understand by PAL that its plane would take them from Manila to
Singapore, while Singapore Airlines would take them from Singapore to
Jakarta.4
On 3 October 1993, private respondent and his companions took the PAL
flight to Singapore and arrived at about 6:00 o’clock in the evening. Upon
their arrival, they proceeded to the Singapore Airlines office to check-in for
their flight to Jakarta scheduled at 8:00 o’clock in the same evening.
Singapore Airlines rejected the tickets of private respondent and his group
because they were not endorsed by PAL. It was explained to private
respondent and his group that if Singapore Airlines honored the tickets
without PAL’s endorsement,
PAL would not pay Singapore Airlines for their passage. Private respondent
tried to contact PAL’s office at the airport, only to find out that it was closed.5
Stranded at the airport in Singapore and left with no recourse, private
respondent was in panic and at a loss where to go; and was subjected to
humiliation, embarrassment, mental anguish, serious anxiety, fear and
distress. Eventually, private respondent and his companions were forced to
purchase tickets from Garuda Airlines and board its last flight bound for
Jakarta. When they arrived in Jakarta at about 12:00 o’clock midnight, the
party who was supposed to fetch them from the airport had already left and
they had to arrange for their transportation to the hotel at a very late hour.
After the series of nerve-wracking experiences, private respondent became ill
and was unable to participate in the tournament.6
Upon his return to the Philippines, private respondent brought the matter to
the attention of PAL. He sent a demand letter to PAL on 20 December 1993
and another to Singapore Airlines on 21 March 1994. However, both airlines
disowned liability and blamed each other for the fiasco. On 15 August 1997,
private respondent filed a Complaint for Damages before the RTC docketed
as Civil Case No. 23773, seeking compensation for moral damages in the
amount of P1,000,000.00 and attorney’s fees.7
Instead of filing an answer to private respondent’s Complaint, PAL filed a
Motion to Dismiss8 dated 18 September 1998 on the ground that the said
complaint was barred on the ground of prescription under Section 1(f) of Rule
16 of the Rules of Court.9 PAL argued that the Warsaw Convention,10
particularly Article 29 thereof,11 governed this case, as it provides that any
Transportation – Air Transportation
claim for damages in connection with the international transportation of
persons is subject to the prescription period of two years. Since the
Complaint was filed on 15 August 1997, more than three years after PAL
received the demand letter on 25 January 1994, it was already barred by
prescription.
On 9 June 1998, the RTC issued an Order12 denying the Motion to Dismiss.
It maintained that the provisions of the Civil Code and other pertinent laws of
the Philippines, not the Warsaw Convention, were applicable to the present
case.
The Court of Appeals, in its assailed Decision dated 17 August 2001, likewise
dismissed the Petition for Certiorari filed by PAL and affirmed the 9 June
1998 Order of the RTC. It pronounced that the application of the Warsaw
Convention must not be construed to preclude the application of the Civil
Code and other pertinent laws. By applying Article 1144 of the Civil Code,13
which allowed for a ten-year prescription period, the appellate court declared
that the Complaint filed by private respondent should not be dismissed.14
Hence, the present Petition, in which petitioner raises the following issues:
I
THE COURT OF APPEALS ERRED IN NOT GIVING DUE COURSE TO
THE PETITION AS RESPONDENT JUDGE COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DENYING
PAL’S MOTION TO DISMISS.
II
THE COURT OF APPEALS ERRED IN NOT APPLYING THE PROVISIONS
OF THE WARSAW CONVENTION DESPITE THE FACT THAT GRIÑO’S
CAUSE OF ACTION AROSE FROM A BREACH OF CONTRACT FOR
INTERNATIONAL AIR TRANSPORT.
III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
COMPLAINT FILED BY GRIÑO BEYOND THE TWO (2)-YEAR PERIOD
PROVIDED UNDER THE WARSAW CONVENTION IS ALREADY BARRED
BY PRESCRIPTION.15
The petition is without merit.
Page 28 of 30
In determining whether PAL’s Motion to Dismiss should have been granted
by the trial court, it must be ascertained if all the claims made by the private
respondent in his Complaint are covered by the Warsaw Convention, which
effectively bars all claims made outside the two-year prescription period
provided under Article 29 thereof. If the Warsaw Convention covers all of
private respondent’s claims, then Civil Case No. 23773 has already
prescribed and should therefore be dismissed. On the other hand, if some, if
not all, of respondent’s claims are outside the coverage of the Warsaw
Convention, the RTC may still proceed to hear the case.
The Warsaw Convention applies to “all international transportation of
persons, baggage or goods performed by any aircraft for hire.” It seeks to
accommodate or balance the interests of passengers seeking recovery for
personal injuries and the interests of air carriers seeking to limit potential
liability. It employs a scheme of strict liability favoring passengers and
imposing damage caps to benefit air carriers.16 The cardinal purpose of the
Warsaw Convention is to provide uniformity of rules governing claims arising
from international air travel; thus, it precludes a passenger from maintaining
an action for personal injury damages under local law when his or her claim
does not satisfy the conditions of liability under the Convention.17
Article 19 of the Warsaw Convention provides for liability on the part of a
carrier for “damages occasioned by delay in the transportation by air of
passengers, baggage or goods.” Article 24 excludes other remedies by
further providing that “(1) in the cases covered by articles 18 and 19, any
action for damages, however founded, can only be brought subject to the
conditions and limits set out in this convention.” Therefore, a claim covered
by the Warsaw Convention can no longer be recovered under local law, if the
statute of limitations of two years has already lapsed.
Nevertheless, this Court notes that jurisprudence in the Philippines and the
United States also recognizes that the Warsaw Convention does not
“exclusively regulate” the relationship between passenger and carrier on an
international flight. This Court finds that the present case is substantially
similar to cases in which the damages sought were considered to be outside
the coverage of the Warsaw Convention.
In United Airlines v. Uy,18 this Court distinguished between the (1) damage
to the passenger’s baggage and (2) humiliation he suffered at the hands of
the airline’s employees. The first cause of action was covered by the Warsaw
Convention which prescribes in two years, while the second was covered by
the provisions of the Civil Code on torts, which prescribes in four years.
Transportation – Air Transportation
Similar distinctions were made in American jurisprudence. In Mahaney v. Air
France,19 a passenger was denied access to an airline flight between New
York and Mexico, despite the fact that she held a confirmed reservation. The
court therein ruled that if the plaintiff were to claim damages based solely on
the delay she experienced – for instance, the costs of renting a van, which
she had to arrange on her own as a consequence of the delay – the
complaint would be barred by the two-year statute of limitations. However,
where the plaintiff alleged that the airlines subjected her to unjust
discrimination or undue or unreasonable preference or disadvantage, an act
punishable under the United States laws, then the plaintiff may claim purely
nominal compensatory damages for humiliation and hurt feelings, which are
not provided for by the Warsaw Convention. In another case, Wolgel v.
Mexicana
Airlines,20 the court pronounced that actions for damages for the “bumping
off” itself, rather than the incidental damages due to the delay, fall outside the
Warsaw Convention and do not prescribe in two years.
In the Petition at bar, private respondent’s Complaint alleged that both PAL
and Singapore Airlines were guilty of gross negligence, which resulted in his
being subjected to “humiliation, embarrassment, mental anguish, serious
anxiety, fear and distress.”21 The emotional harm suffered by the private
respondent as a result of having been unreasonably and unjustly prevented
from boarding the plane should be distinguished from the actual damages
which resulted from the same incident. Under the Civil Code provisions on
tort,22 such emotional harm gives rise to compensation where gross
negligence or malice is proven.
The instant case is comparable to the case of Lathigra v. British Airways.23
In Lathigra, it was held that the airlines’ negligent act of reconfirming the
passenger’s reservation days before departure and failing to inform the latter
that the flight had already been discontinued is not among the acts covered
by the Warsaw Convention, since the alleged negligence did not occur during
the performance of the contract of carriage but, rather, days before the
scheduled flight.
In the case at hand, Singapore Airlines barred private respondent from
boarding the Singapore Airlines flight because PAL allegedly failed to
endorse the tickets of private respondent and his companions, despite PAL’s
assurances to respondent that Singapore Airlines had already confirmed their
passage. While this fact still needs to be heard and established by adequate
proof before the RTC, an action based on these allegations will not fall under
the Warsaw Convention, since the purported negligence on the part of PAL
did not occur during the performance of the contract of carriage but days
Page 29 of 30
before the scheduled flight. Thus, the present action cannot be dismissed
based on the statute of limitations provided under Article 29 of the Warsaw
Convention.
Had the present case merely consisted of claims incidental to the airlines’
delay in transporting their passengers, the private respondent’s Complaint
would have been time-barred under Article 29 of the Warsaw Convention.
However, the present case involves a special species of injury resulting from
the failure of PAL and/or Singapore Airlines to transport private respondent
from Singapore to Jakarta—the profound distress, fear, anxiety and
humiliation that private respondent experienced when, despite PAL’s earlier
assurance that Singapore Airlines confirmed his passage, he was prevented
from boarding the plane and he faced the daunting possibility that he would
be stranded in Singapore Airport because the PAL office was already closed.
Ynares-Santiago (Chairperson), Austria-Martinez, Nachura and Reyes, JJ.,
concur.
Petition denied, judgment affirmed.
Note.—In an action for breach of contract of carriage, the aggrieved party
does not have to prove that the common carrier was at fault or was negligent
—all that is necessary to prove is the existence of the contract and the fact of
its no-performance by the carrier. (Singapore Airlines Limited vs. Fernandez,
417 SCRA 474 [2003])
——o0o——

These claims are covered by the Civil Code provisions on tort, and not within
the purview of the Warsaw Convention. Hence, the applicable prescription
period is that provided under Article 1146 of the Civil Code:

“Art. 1146. The following actions must be instituted within four years:

(1) Upon an injury to the rights of the plaintiff;

(2) Upon a quasi-delict.”

Private respondent’s Complaint was filed with the RTC on 15 August 1997,
which was less than four years since PAL received his extrajudicial demand
on 25 January 1994. Thus, private respondent’s claims have not yet
prescribed and PAL’s Motion to Dismiss must be denied.

Moreover, should there be any doubt as to the prescription of private

respondent’s Complaint, the more prudent action is for the RTC to continue
hearing the same and deny the Motion to Dismiss. Where it cannot be
determined with certainty whether the action has already prescribed or not,
the defense of prescription cannot be sustained on a mere motion to dismiss
based on what appears to be on the face of the complaint.24 And where the
ground on which prescription is based does not appear to be indubitable, the
court may do well to defer action on the motion to dismiss until after trial on
the merits.25

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed

Decision of the Court of Appeals in CA-G.R. SP No. 48664, promulgated on
17 August 2001 is AFFIRMED. Costs against the petitioner.

SO ORDERED.

Transportation – Air Transportation Page 30 of 30