March 15, 2010.EDNA DIAGO LHUILLIER vs. BRITISH AIRWAYS G.R. No. 171092 FACTS:OnApril28,2005,petitionerEdnaDiagoLhuillierfileda ComplaintfordamagesagainstrespondentBritishAirwaysbeforethe RegionalTrialCourt(RTC)ofMakatiCity.Thetortuousconductbythe flight attendants of said Airways, whichprompted petitioner to file a case fordamages,allegedlytranspiredwhenpetitionerboardedrespondents flight548fromLondon,UnitedKingdomtoRome,Italy.OnMay30, 2005, respondent, by way of special appearance through counsel, filed a MotiontoDismissongroundsoflackofjurisdictionoverthecaseand overthepersonoftherespondent.Respondentallegedthatonlythe courtsofLondon,UnitedKingdomorRome,Italy,havejurisdictionover thecomplaintfordamagespursuanttotheWarsawConvention,Article 28(1) of which provides:An action for damages must be brought at the option of the plaintiff, either before thecourt of domicile of the carrier or hisprincipalplaceofbusiness,orwherehehasaplaceofbusiness throughwhichthecontracthasbeenmade,orbeforethecourtofthe place of destination.ISSUE:WhetherornotPhilippines,asignatorytotheWarsaw Convention, shouldadhere to the provision of the Warsaw Convention in thedeterminationofitsjurisdictionwithrespecttoacasefordamages involving a tortuous conduct committed by an airline personnel while in an international carrier against a Filipino citizen.HELD:Yes.ItissettledthattheWarsawConventionhastheforceand effect of law inthis country.In Santos III v. Northwest Orient Airlines, 210 SCRA 256 (1992), we held that: TheRepublic of the Philippines is a party totheConventionfortheUnificationofCertainRulesRelatingto InternationalTransportationbyAir,otherwiseknownasthe WarsawConvention. It took effect on February 13, 1933. The Convention wasconcurredinbytheSenate,throughitsResolutionNo.19,onMay 16, 1950. The Philippine instrument ofaccession was signed by President ElpidioQuirinoonOctober13,1950,andwasdepositedwiththePolish government on November 9, 1950. The Convention becameapplicable to thePhilippinesonFebruary9,1951.OnSeptember23,1955, PresidentRamonMagsaysayissuedProclamationNo.201,declaringour formaladherencethereto,totheendthatthesameandeveryarticle andclausethereofmaybeobservedandfulfilledingoodfaithbythe RepublicofthePhilippinesandthecitizensthereof.TheConventionis thusatreatycommitmentvoluntarilyassumedbythePhilippine government and, as such, has the force and effect of law in this countryPhilippine Airlines v. SavilloFacts: !Savillo was a judge of the RTC of Iloilo!He was invited to participate in the 1993 ASEAN Seniors Annual Golf Tournament in Jakarta Indonesia. !So,inordertotakepartinsuchevent,hepurchasedaticketfrom PALwiththefollowingitinerary:Manila-Singapore-Jakarta-Singapore-Manila. !PALwouldtakethemfromManilatoSignapore,whileSingapore Airlines would take them from Singapore to Jakarta. !WhentheyarrivedinSingapore,SingaporeAirlinesrejectedthe ticketsofSavillobecausetheywerenotendorsedbyPAL.Itwas explainedthatifSingaporeAirlineshonouredtheticketswithoutPALS endorsement, PAL would not pay Singapore Airlines for their passage.!SavillodemandedcompensationfrombothPALandSingapore Airlines,buthiseffortswerefutile.HethensuedPALafter3years, demanding moral damages.!PAL,initsMTD,claimedthatthecauseofactionhasalready prescribedinvokingtheWarsawConvention(providingfora2year prescriptive period). Both RTC and CA ruled against PAL.Issues:Whatistheapplicablelaw,theCivilCodeortheWarsaw Convention? Has the action prescribed?Held:TheCivilCodeisapplicable.Thereforetheactionhasnotyet prescribed for the prescription period is 4 years.Ifcauseofactionclaimsmoraldamages,notcoveredbyWarsaw Convention. Article 19 of the Warsaw Convention provides for liability on thepartofacarrierfordamagesoccasionedbydelayinthe transportationbyairofpassengers,baggageorgoods.Article24 excludesotherremediesbyfurtherprovidingthat(1)inthecases coveredbyarticles18and19,anyactionfordamages,however founded, can only be brought subject to the conditions and limits set out inthisconvention.Therefore,aclaimcoveredbytheWarsaw Conventioncannolongerberecoveredunderlocallaw,ifthestatueof limitations of two years has elapsed. Nevertheless,thisCourtnotesthatjurisprudenceinthePhilippinesand the United States also recognizes that the Warsaw Convention does not exclusively regulate the relationship between passenger and carrier on an international flight.InU.S.v.Uy,thisCourtdistinguishedbetweenthe(1)damagetothe passengers baggage and (2) humiliation he suffered at the hands of the airlines employees. The First cause of action was covered by the Warsaw Convention which prescribes in two years, while the second was covered bytheprovisionsoftheCivilCodeontorts,whichprescribesinfour years. InMahaneyv.AirFrance(UScase),thecourtthereinruledthatifthe plaintiffweretoclaimdamagesbasedsolelyonthedelayshe experienced-forinstance,thecostsofrentingavan,whichshehadto arrange on her own as a consequence of the delay the complaint would bebarredbythetwoyearstatuteoflimitations.However,wherethe plaintiff alleged that the airlines subjected her to unjust discrimination or undueorunreasonablepreferenceordisadvantage,anactpunishable undertheUSlaw,thentheplaintiffmayclaimpurelynominal compensatorydamagesforhumiliationandhurtfeelings,whicharenot provided for by the Warsaw Convention.InthePetitionatbar,SavillosComplaintallegedthatbothPALand Singapore Airlines were guilty of gross negligence, which resulted in his being subjected to humiliation, embarrassment, mental anguish, serious anxiety,fearanddistressthereforethiscaseisnotcoveredbythe Warsaw Convention.When the negligence happened before the performance of the contract of carriage,notcoveredbytheWarsawConvention.Also,thiscaseis comparable to Lathigra v. British Airways. In that case, it was held that theairlinesnegligentactofreconfirmingthepassengersreservation 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,sincetheallegednegligencedidnotoccurduringthe performanceofthecontractofcarriagebut,rather,daysbeforethe scheduled flight.In the case at hand, Singapore Airlines barred Savillo from boarding the SingaporeAirlinesflightbecausePALallegedlyfailedtoendorsethe ticketsofprivaterespondentandhiscompanions,despitePALs assurances to Savillo that Singapore Airlines had already confirmed their passage. While this fact still needs to heard and established by adequate proofbeforetheRTC,anactionbasedontheseallegationswillnotfall undertheWarsawConvention,sincethepurportednegligenceonthe partyofPALdidnotoccurduringtheperformanceofthecontractof carriagebutdaysbeforethescheduledflight.Thus,thepresentaction cannotbedismissedbasedontheStatueofLimitationsprovidedunder Article 29 of the Warsaw Convention.AGUSTINO B. ONG YIU vs. CA and PHILIPPINE AIR LINES G.R. No. L-40597 June 29, 1979 MELENCIO-HERRERA, J.:FACTS:OnAugust26,1967,petitionerwasafarepayingpassengerof respondent Philippine Air Lines, Inc. (PAL) from Mactan Cebu, bound for Butuan City. As a passenger, he checked in one piece of luggage, a blue "maleta"forwhichhewasissuedClaimCheck.Uponarrival,petitioner claimed his luggage but it could not be found. According to petitioner, it wasonlyafterreactingindignantlytothelossthatthematterwas attendedtobytheporterclerk,MaximoGomez,which,however,the latter denies, At about 3:00 o'clock P.M., PAL Butuan, sent a message to PAL, Cebu, inquiring about the missing luggage,Subsequently, PAL Manila wiredPALCebuadvisingthattheluggagehadbeenovercarriedto ManilaandthatitwouldbeforwardedtoCebuonthesameday. Instructions were also given that the luggage be immediately forwarded toButuanCityonthefirstavailableflight.Petitionerwasworriedabout themissingluggagebecauseitcontainedvitaldocumentsneededfor trial the next day.Early in the morning of the next day, August 27, 1967, petitioner went to theBancasiAirporttoinquireabouthisluggage.Hedidnotwait, however,forthemorningflightwhicharrivedat10:00o'clockthat morning.Thisflightcarriedthemissingluggage.Theporterclerk, MaximoGomez,pagedpetitioner,butthelatterhadalreadyleft.A certain Emilio Dagorro a driver of a "colorum" car, who also used to drive forpetitioner,volunteeredtotaketheluggagetopetitioner.AsMaximo Gomez knew Dagorro to be the same driver used by petitioner whenever the latter was in Butuan City, Gomez took the luggage and placed it on the counter. Dagorro examined the lock, pressed it, and it opened. After calling the attention of Maximo Gomez, the "maleta" was opened, Gomez tookalookatitscontents,butdidnottouchthem.Dagorrothen deliveredthe"maleta"topetitioner,withtheinformationthatthelock wasopen.Uponinspection,petitionerfoundthatafoldercontaining certain exhibits, transcripts and private documents in Civil Case and Sp. Procs.weremissing,asidefromtwogiftitemsforhisparents-in-law. Petitionerrefusedtoaccepttheluggage.Dagorroreturnedittothe porterclerk,MaximoGomez,whosealeditandforwardedthesameto PAL Cebu.OnSeptember13,1967,petitionerfiledaComplaintagainstPALfor damagesforbreachofcontractoftransportation.Afterduetrial,the lowerCourtfoundPALtohaveactedinbadfaithandwithmaliceand declared petitioner entitled to moral damages in the sum of P80,000.00, exemplarydamagesofP30,000.00,attorney'sfeesofP5,000.00,and costs.ISSUE: Whether or not respondent Court committed grave error when it limited PAL's carriage liability to the amount of P100.00 as stipulated at the back of the ticket.HELD:NO.TherespondentCourtcorrectlyopined:Asageneral proposition,theplaintiff'smaletahavingbeenpilferedwhileinthe custodyofthedefendant,itispresumedthatthedefendanthadbeen negligent.Theliability,however,ofPALfortheloss,inaccordancewith the stipulation written on the back of the ticket, Exhibit 12, is limited to P100.00 per baggage, plaintiff not having declared a greater value, and nothavingcalledtheattentionofthedefendantonitstruevalueand paidthetarifftherefor.Thevalidityofthisstipulationisnotquestioned by the plaintiff. They are printed in reasonably and fairly big letters, and are easily readable. Moreover, plaintiff had been a frequent passenger of PALfromCebutoButuanCityandback,andhe,beingalawyerand businessman, must be fully aware of these conditions. 4We agree with the foregoing finding. The pertinent Condition of Carriage printed at the back of the plane ticket reads: 8. BAGGAGE LIABILITY ... ThetotalliabilityoftheCarrierforlostordamagedbaggageofthe passengerisLIMITEDTOP100.00foreachticketunlessapassenger declaresahighervaluationinexcessofP100.00,butnotinexcess, however,ofatotalvaluationofP1,000.00andadditionalchargesare paid pursuant to Carrier's tariffs.Thereisnodisputethatpetitionerdidnotdeclareanyhighervaluefor his luggage, much less did he pay any additional transportation charge. But petitioner argues that there is nothing in the evidence to show that hehadactuallyenteredintoacontractwithPALlimitingthelatter's liabilityforlossordelayofthebaggageofitspassengers,andthat Article 1750* of the Civil Code has not been complied with. While it may be true that petitioner had not signed the plane ticket he is nevertheless bound by the provisions thereof. "Such provisions have been held to be a partofthecontractofcarriage,andvalidandbindinguponthe passenger regardless of the latter's lack of knowledge or assent to theregulation". 5 It is what is known as a contract of "adhesion", in regards whichithasbeensaidthatcontractsofadhesionwhereinoneparty imposes a ready made form of contract on the other, as the plane ticket inthecaseatbar,arecontractsnotentirelyprohibited.Theonewho adherestothecontractisinrealityfreetorejectitentirely;ifhe adheres,hegiveshisconsent.6AndasheldinRandolphv.American Airlines,103OhioApp.172,144N.E.2d878;Rosencheinvs.Trans WorldAirlines,Inc.,349S.W.2d483,"acontractlimitingliabilityupon anagreedvaluationdoesnotoffendagainstthepolicyofthelaw forbidding one from contracting against his own negligence.Considering,therefore,thatpetitionerhadfailedtodeclareahigher valueforhisbaggage,hecannotbepermittedarecoveryinexcessof P100.00.Besides,passengersareadvisednottoplacevaluableitems inside their baggage but "to avail of our V-cargo service " (Exh. "1"). I t is likewise to be noted that there is nothing in the evidence to show the actual value of the goods allegedly lost by petitioner.Everett Steamship Corporation vs. CAG.R. No.122494, October 8, 1998PARTIES:Everett Steamship Corporation, petitioner Court of Appeals and Hernandez Trading Co. Inc., respondentsBRIEF STATEMENT OF THE CASE:Validity of the Bill of lading in a contract of carriageBRIEF STATEMENT OF THE FACTS:Privaterespondentimported3cratesofbussparepartsmarkedas MARCOC/No.12,MARCOC/No.13andMARCOC/No.14,fromits supplier,MarumanTradingCompany,Ltd.(MarumanTrading),aforeign corporationbasedinInazawa,Aichi,Japan.Thecrateswereshipped fromNagoya,JapantoManilaonboard"ADELFAEVERETTE,"avessel owned by petitioner's principal, Everett Orient Lines. Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 wasmissing.Privaterespondentclaimuponpetitionerforthevalueof the lost cargo amounting to One Million Five Hundred Fifty Two Thousand Five Hundred (Y1, 552,500.00) Yen, the amount shown in an Invoice No. MTM-941, dated November 14, 1991. However, petitioner offered to pay onlyOneHundredThousand(Y100,000.00)Yen,themaximumamount stipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner. Private respondent rejected the offer and thereafter institutedasuitforcollection.Thetrialcourtrenderedadecisionin favour of the private respondents and this was affirmed by the Court of Appeals. Thus, this instant petition.ISSUES:1.Isthepetitionerliablefortheactualvalueandnotthe maximum value recoverable under the bill of lading? 2.Is private respondent, as consignee, who is not a signatory to the bill of lading bound by the stipulations thereof?ARGUMENTS:1. The Petitioner is only liable for the maximum value recoverable under the bill of lading.Clause 18 of the covering bill of lading:18.Allclaimsforwhichthecarriermaybeliableshallbeadjustedand settledonthebasisoftheshipper'snetinvoicecostplusfreightand insurancepremiums,ifpaid,andinnoeventshallthecarrierbeliable for any loss of possible profits or any consequential loss.The carrier shall not be liable for any loss of or any damage to or in any connectionwith,goodsinanamountexceedingOneHundredthousand YeninJapaneseCurrency(Y100,000.00)oritsequivalentinanyother currencyperpackageorcustomaryfreightunit(whicheverisleast) unlessthevalueofthegoodshigherthanthisamountisdeclaredin writingbytheshipperbeforereceiptofthegoodsbythecarrierand insertedintheBillofLadingandextrafreightispaidasrequired. (Emphasis supplied)Pertinent provisions that is applicable as to this case:Art.1749.Astipulationthatthecommoncarrier'sliabilityislimitedto the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been freely and fairly agreed upon.Pursuanttotheafore-quotedprovisionsoflaw,itisrequiredthatthe stipulationlimitingthecommoncarrier'sliabilityforlossmustbe "reasonableandjustunderthecircumstances,andhasbeenfreelyand fairly agreed upon."The above stipulations are reasonable and just. In the bill of lading, the carriermadeitclearthatitsliabilitywouldonlybeuptoOneHundred Thousand(Y100,000.00)Yen.However,theshipper,MarumanTrading, had the option to declare a higher valuation if the value of its cargo was higherthanthelimitedliabilityofthecarrier.Consideringthatthe shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations.2.PrivateRespondentsarestillboundbythestipulationsofthebillof ladingInSea-LandService,Inc.vs.IntermediateAppellateCourt(supra),it was held that even if the consignee was not a signatory to the contract ofcarriagebetweentheshipperandthecarrier,theconsigneecanstill be bound by the contract.RULING:ThedecisionoftheCourtofAppealsisherebyREVERSEDandSET ASIDE.In fine, the liability of petitioner for the loss of the cargo is limited to One Hundred Thousand (Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading..ALITALIA vs. IAC and FELIPA E. PABLO [G.R. No. 71929 : December 4, 1990.] 192 SCRA 9Facts: Dr. Felipa Pablo an associate professor in the University of the Philippines,andaresearchgranteeofthePhilippineAtomicEnergy AgencywasinvitedtotakepartatameetingoftheDepartmentof Research and Isotopes of the United Nations in Ispra, Italy. To fulfill this engagement, Dr. Pablo booked passage on petitioner airline, ALITALIA.ShearrivedinMilanonthedaybeforethemeeting.Shewashowever toldbytheALITALIApersonnelthereatMilanthatherluggagewas "delayedinasmuchasthesame...(was)inoneofthesucceeding flights from Rome to Milan." Her luggage consisted of two (2) suitcases: onecontainedherclothingandotherpersonalitems;theother,her scientific papers, slides and other research material. But the other flights arriving from Rome did not have her baggage on board. By then feeling desperate, she went to Rome to try to locate her bags herself. However, her baggage could not be found. Completely distraught and discouraged, she returned to Manila without attending the meeting in Ispra, Italy.OncebackinManilashedemandedthatALITALIAmakereparationfor thedamagesthussufferedbyher.SherejectedAlitaliasofferoffree airlineticketsandcommencedanactionfordamages.Asitturnedout, theluggagewasactuallyforwardedtoIspra,butonlyadayafterthe scheduled appearance. It was returned to her after 11 months. The trial court ruled in favor of Dr. Pablo awarding P20,000 as nominal damages, theAppellateCourtnotonlyaffirmedtheTrialCourt'sdecisionbutalso increasedtheawardofnominaldamagespayablebyALITALIAto P40,000.Issue[1]:WhetherornottheWarsawConventionshouldhavebeen applied to limit ALITALIA'S liability.Held [1]: NO. Under the Warsaw Convention, an air carrier is made liable for damages for:a.The death, wounding or other bodily injury of a passenger if the accident causing it took place on board the aircraft or I the course of its operations of embarking or disembarking;b.Thedestructionorlossof,ordamageto,anyregistered luggageorgoods,iftheoccurrencecausingittookplaceduringthe carriage by air; and c.Delayinthetransportationbyairofpassengers,luggage or goods.TheConventionalsopurportstolimittheliabilityofthecarriersinthe following manner:1.In the carriage of passengers the liability of the carrier for eachpassengerislimitedtothesumof250,000francs... Nevertheless,byspecialcontract,thecarrierandthepassengermay agree to a higher limit of liability. 2.(a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of 250 francs per kilogramme, unlessthepassengerorconsignorhasmade,atthetimewhenthe package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case sorequires.Inthatcasethecarrierwillbeliabletopayasumnot exceedingthedeclaredsum,unlessheprovesthatsumisgreaterthan theactualvaluetotheconsignoratdelivery.(b)Inthecaseofloss, damage or delay of part of registered baggage or cargo, or of any object containedtherein,theweighttobetakenintoconsiderationin determining the amount to which the carrier's liability is limited shall be onlythetotalweightofthepackageorpackagesconcerned. Nevertheless, when the loss, damage or delay of a part of the registered baggage or cargo, or of an object contained therein, affects the value of other packages covered by the same baggage check or the same air way bill, the total weight of such package or packages shall also be taken into consideration in determining the limit of liability.3.Asregardsobjectsofwhichthepassengertakescharge himself the liability of the carrier is limited to 5000 francs per passenger. 4.Thelimitsprescribed..shallnotpreventthecourtfrom awarding, in accordance with its own law, in addition, the whole or part of the court costs and of the other expenses of litigationincurredbytheplaintiff.Theforegoingprovisionshallnotapplyifthe amountofthedamagesawarded,excludingcourtcostsandother expenses of the litigation, does not exceed the sum which the carrier has offered in writing to the plaintiff within a period of six months from the dateoftheoccurrencecausi ngthedamage,orbeforethe commencement of the action, if that is later.The Warsaw Convention however denies to the carrier availment "of the provisions which exclude or limit his liability, if the damage is caused by hiswilfulmisconductorbysuchdefaultonhispartas,inaccordance withthelawofthecourtseizedofthecase,isconsideredtobe equivalent to wilful misconduct," or "if the damage is (similarly) caused . . by any agent of the carrier acting within the scope of his employment."TheHagueProtocolamendedtheWarsawConventionbyremovingthe provision that if the airline took all necessary steps to avoid the damage, itcouldexculpateitselfcompletely,anddeclaringthestatedlimitsof liabilitynotapplicable"ifitisprovedthatthedamageresultedfroman act or omission of the carrier, its servants or agents, done with intent to causedamageorrecklesslyandwithknowledgethatdamagewould probablyresult."ThesamedeletionwaseffectedbytheMontreal Agreementof1966,withtheresultthatapassengercouldrecover unlimited damages upon proof of wilful misconduct.The Convention's provisions, in short, do not "regulate or exclude liability for other breaches of contract by the carrier" or misconduct of its officers and employees, or for some particular or exceptional type of damage. On theotherhand,theWarsawConventionhasinvariablybeenheld inapplicable, or as not restrictive of the carrier's liability, where there was satisfactory evidence of malice or bad faith attributable to its officers and employees.Inthecaseatbar,nobadfaithorotherwiseimproperconductmaybe ascribedtotheemployeesofpetitionerairline;andDr.Pablo'sluggage waseventuallyreturnedtoher,belatedly,itistrue,butwithout appreciabledamage.Thefactis,nevertheless,thatsomespeciesof injury was caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time appointed - a breach of itscontractofcarriage.Certainly,thecompensationfortheinjury sufferedbyDr.Pablocannotunderthecircumstancesberestrictedto thatprescribedbytheWarsawConventionfordelayinthetransportof baggage.Issue [2]: Whether or not Dr. Pablo is entitled to nominal damages.Held[2]:YES.Theopportunitytoclaimthishonorordistinctionwas irretrievably lost to Dr. Pablo because of Alitalia's breach of its contract.Apartfromthis,therecanbenodoubtthatDr.Pablounderwent profound distress and anxiety, which gradually turned to panic and finally despair, from the time she learned that her suitcases were missing up to the time when, having gone to Rome, she finally realized that she would nolongerbeabletotakepartintheconference.Assheherselfputit, she "was really shocked and distraught and confused."Certainly,thecompensationfortheinjurysufferedbyDr.Pablocannot under the circumstances be restricted to that prescribed by the Warsaw Convention for delay in the transport of baggage.CHINA AIRLINES vs. DANIEL CHIOK G.R. No. 152122 July 30, 2003Facts:OnSeptember18,1981,DanielChiokpurchasedfromChina Airlines,Ltd.(CALforbrevity)apassengerticketforairtransportation coveringManila-Taipei-Hongkong-Manila.Saidticketwasexclusively endorsable to Philippine Airlines, Ltd. (PAL for brevity)Subsequently, on November 21, 1981, Chiok took his trip from Manila to Taipei using the CAL ticket.Beforeheleftforsaidtrip,thetripscoveredbytheticketwere pre-scheduledandconfirmedbytheformer.WhenhearrivedinTaipei, he went to the CAL office and confirmed his Hongkong to Manila trip on boardPALFlightNo.PR311.TheCALofficeattachedayellowsticker indicating that his flight status was OK.When Chiok reached Hongkong, he went to the PAL office and sought to reconfirmhisflightbacktoManila.ThePALofficealsoconfirmedhis return trip on board Flight No. PR 311 and attached its own sticker.OnNovember24,1981,ChiokproceededtoHongkongInternational AirportforhisreturntriptoManila.However,uponreachingthePAL counter,ChioksawaposterstatingthatPALFlightNo.PR311was cancelledduetotyphooninManila.Hewastheninformedthatallthe confirmedticketholdersofPALFlightNo.PR311wereautomatically booked for the next flight the following day.On November 25, 1981, Chiok was not able to board the plane because his name did not appear in PALs computer list of passengers. Chiok then soughttorecoverhisluggagebutfoundonlytwoandrealizedthathis newSamsoniteluggagewasmissingwhichcontainedcosmeticsworth HK$14,128.80HethenproceededtoPALandconfrontedthereservationofficerwho previouslyconfirmedhisflightbacktoManila.However,thereservation officer showed him that his name was on the list.ChiokthendecidedtousehisCALticketandaskedPALsreservation officerifhecouldusethetickettobookhimforthesaidflight;The latter,onceagain,bookedandconfirmedtheformerstriponaflight scheduled to depart that eveningLater, Chiok went to the PAL check-in counter and it was Carmen Chan, PALsterminalsupervisorwhoattendedtohim.Asthisjuncture,Chiok had already placed his travel documents, including his clutchbag, on top of the PAL check-in counter.Thereafter, Carmen directed PAL personnel to transfer counters. In the ensuing commotion, Chiok lost his clutchbagcontainingthefollowing,towit:(a)$2,000.00;(b)HK$2,000.00; (c) Taipei $8,000.00; (d) P2,000.00; (e) a three-piece set of gold(18carats)crosspensvaluedatP3,500;(f)aCartierwatchworth aboutP7,500.00;(g)atieclipwithagarnetbirthstoneanddiamond worth P1,800.00; and (h) a [pair of] Christian Dior reading glasses.Subsequently,hewasplacedonstand-byandataround7:30 p.m., PAL personnel informed him that he could now check-inConsequently, Chiok as plaintiff, filed a Complaint on November 9, 1982 for damages, against PAL and CAL, as defendants, docketed as Civil Case No.82-13690,withBranch31,RegionalTrialCourt,NationalCapital Judicial Region, Manila.RTC:heldCALandPALjointlyandseverallyliabletorespondentbut didnt rule on respective cross- claimsCA:affirmedRTCsdecisionanddebunkedpetitionersclaimthatithad merelyactedasanissuingagentfortheticketcoveringHK-Manilaleg; Cited the decision in KLM Royal Dutch Airlines v CA:Article30oftheWarsawprovidingthatincaseoftransportationtobe performed by various successive carriers, the passenger can take action onlyagainstthecarrierwhoperformedthetransportationduringwhich the accident or the delay occurred presupposes the occurrence of either anaccidentordelayinthecourseoftheairtrip,anddoesnotapplyif thedamageiscausedbythewillfulmisconductonthepartofthe carriers employee or agent acting within the scope of his employment.On PALs appeal, CA ruled that the airlines negligence was the proximate cause of the incident since in spite of the confirmations he had secured, his name didnt appear in the list of passengersIssues:(1) W/N CA committed judicial misconduct in finding liability against CAL onthebasisofmisquotationfromKLMRoyalDutchvCAandin magnifyingitsmisconductbydenyingCALsmotionforreconsideration on a mere syllabus, unofficial at that;(2) W/N CAL is liable for damages;Ruling:(1)Yes,CAcommittedalapsewhenitreliedmerelyontheunofficial syllabusofourrulinginKLMv.C.AIndeed,lawyersandlitigantsare mandated to quote decisions of this Court accurately. However, since this caseisnotadministrativeinnature,wecannotruleontheCAjustices administrativeliability,ifany,forthislapse.Inthecaseatbar,wecan onlydeterminewhethertheerrorinquotationwouldbesufficientto reverse or modify the CA Decision.Intheinstantcase,theCAruledthatunderthecontractof transportation,petitioner--astheticket-issuingcarrier(likeKLM)-- wasliableregardlessofthefactthatPALwastoperformorhad performed the actual carriage. It elucidated on this point as follows:By the very nature of their contract, defendant-appellant CAL is clearly liable under the contract of carriage with [respondent] and remains to be so,regardlessofthoseinstanceswhenactualcarriagewastobe performed by another carrier. The issuance of a confirmed CAL ticket in favor of [respondent] covering his entire trip abroad concretely attests to this.Thisalsoservesasproofthatdefendant-appellantCAL,ineffect guaranteedthatthecarrier,suchasdefendant-appellantPALwould honorhisticket,assurehimofaspacethereinandtransporthimona particular segment of his trip.Notwithstandingtheerrantquotation,wehavefoundaftercareful deliberation that the assailed Decision is supported in substance by KLM v. CA. The misquotation by the CA cannot serve as basis for the reversal of its ruling.(2) Yes, CAL is liable for damages;Itissignificanttonotethatthecontractofairtransportationwas between petitioner and respondent, with the former endorsing to PAL the HongKong-to-Manilasegmentofthejourney.Suchcontractofcarriage hasalwaysbeentreatedinthisjurisdictionasasingleoperation.This jurisprudential rule is supported by the Warsaw Convention, to which the Philippinesisaparty,andbytheexistingpracticesoftheInternational Air Transport Association (IATA).Article 1, Section 3 of the Warsaw Convention states:Transportationtobeperformedbyseveralsuccessiveaircarriersshall bedeemed,forthepurposesofthisConvention,tobeoneundivided transportation,ifithasbeenregardedbythepartiesasasingle operation,whetherithasbeenagreeduponundertheformofasingle contract or of a series of contracts, and it shall not lose its international charactermerelybecauseonecontractoraseriesofcontractsistobe performedentirelywithinaterritorysubjecttothesovereignty, suzerainty, mandate, or authority of the same High Contracting Party.Article 15 of IATA-Recommended Practice similarly provides:Carriagetobeperformedbyseveralsuccessivecarriersunderone ticket,orunderaticketandanyconjunctionticketissuedtherewith,is regarded as a single operation.InAmericanAirlinesv.CourtofAppeals,wehavenotedthatundera generalpoolpartnershipagreement,theticket-issuingairlineisthe principal in a contract of carriage, while the endorsee-airline is the agent.Likewise,astheprincipalinthecontractofcarriage,thepetitionerin British Airways v. Court of Appeals was held liable, even when the breach ofcontracthadoccurred,notonitsownflight,butonthatofanother airline. The Decision followed our ruling in Lufthansa German Airlines v. Court of Appeals, in which we had held that the obligation of the ticket-issuing airline remained and did not cease,regardlessofthefactthatanotherairlinehadundertakentocarrythe passengers to one of their destinations.In the instant case, following the jurisprudence cited above, PAL acted as the carrying agent of CAL. In the same way that we ruled against British AirwaysandLufthansaintheaforementionedcases,wealsorulethat CAL cannot evade liability to respondent, even though it may have been only a ticket issuer for the Hong Kong-Manila sector.G.R. No. 101538 June 23, 1992AUGUSTO BENEDICTO SANTOS III vs. NORTHWEST ORIENT AIRLINES and COURT OF APPEALS FACTS:PetitionerisaminorandaresidentofthePhilippines.Private respondentNortwestOrientAirlines(NOA)isaforeigncorporationwith principalofficeinMinnesota,U.S.A.andlicensedtodobusinessand maintain a branch office in the Philippines. The petitioner purchased from NOA a round-trip ticket in San Francisco, U.S.A. In December 19, 1986, thepetitionercheckedintheattheNOAcounterintheSanFrancisco airportforhisdeparturetoManila.Despiteapreviousconfirmationand re-confirmation, he was informed that he had no reservation for his flight forTokyotoManila.Hethereforehadtobewait-listed.OnMarch12, 1987,thepetitionersuedNOAfordamagesinRTCMakati.NOAmoved to dismiss the complaint on the ground of lack of jurisdiction.ISSUE:WhetherornotArticle28(1)oftheWarsawConventionisin accordancewiththeconstitutionsoastodeprivethePhilippineCourts jurisdiction over the caseHELD: Art. 28. (1) An action for damage must be brought at the option oftheplaintiff,intheterritoryofoneoftheHighContractingParties, eitherbeforethecourtofthedomicileofthecarrierorofhisprincipal 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.Constitutionality of the Warsaw ConventionTheRepublicofthePhilippinesisapartytotheConventionforthe UnificationofCertainRulesRelatingtoInternationalTransportationby Air,otherwiseknownastheWarsawConvention.Ittookeffecton February13,1933.TheConventionwasconcurredinbytheSenate, throughitsResolutionNo.19,onMay16,1950.ThePhilippine instrumentofaccessionwassignedbyPresidentElpidioQuirinoon October13,1950,andwasdepositedwiththePolishgovernmenton November 9, 1950. The Convention became applicable to the Philippines onFebruary9,1951.OnSeptember23,1955,PresidentRamon Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto. "to the end that the same and every article and clause thereof maybeobservedandfulfilledingoodfaithbytheRepublicofthe Philippines and the citizens thereof."The Convention is thus a treaty commitment voluntarily assumed by the Philippinegovernmentand,assuch,hastheforceandeffectoflawin this country.Does the Warsaw Convention apply in this case?Byitsownterms,theConventionappliestoallinternational transportation of persons performed by aircraft for hire.Internationaltransportationisdefinedinparagraph(2)ofArticle1as follows:(2)Forthepurposesofthisconvention,theexpression"international transportation" shall mean any transportation in which, according to the contractmadebytheparties,theplaceofdepartureandtheplaceof destination,whetherornottherebeabreakinthetransportationora transshipment,aresituated[either]withintheterritoriesoftwoHigh Contracting Parties . . .Whetherthetransportationis"international"isdeterminedbythe contractoftheparties,whichinthecaseofpassengersistheticket. Whenthecontractofcarriageprovidesforthetransportationofthe passenger between certain designated terminals "within the territories of twoHighContractingParties,"theprovisionsoftheConvention automatically apply and exclusively govern the rights and liabilities of the airline and its passenger.Sincetheflightinvolvedinthecaseatbarisinternational,thesame beingfromtheUnitedStatestothePhilippinesandbacktotheUnited States,itissubjecttotheprovisionsoftheWarsawConvention, includingArticle28(1),whichenumeratesthefourplaceswherean action for damages may be brought.Does Article 28(1) refer to Jurisdiction or Venue?...wherethematterisgovernedbytheWarsawConvention,jurisdiction takesonadualconcept.Jurisdictionintheinternationalsensemustbe establishedinaccordancewithArticle28(1)oftheWarsawConvention, 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.WasthecaseproperlyfiledinthePhilippines,sincetheplaintiffs destination was Manila?The place of destination, within the meaning of the Warsaw Convention, isdeterminedbythetermsofthecontractofcarriageor,specificallyin this case, the ticket between the passenger and the carrier. Examination ofthepetitioner'sticketshowsthathisultimatedestinationisSan Francisco.Althoughthedateofthereturnflightwasleftopen,the contract of carriage between the parties indicates that NOA was bound to transportthepetitionertoSanFranciscofromManila.Manilashould thereforebeconsideredmerelyanagreedstoppingplaceandnotthe destination.Article1(2)alsodrawsadistinctionbetweena"destination"andan "agreedstoppingplace."Itisthe"destination"andnotan"agreed stoppingplace"thatcontrolsforpurposesofascertainingjurisdiction under the Convention.The contract is a single undivided operation, beginning with the place of departureandendingwiththeultimatedestination.Theuseofthe singularinthisexpressionindicatestheunderstandingofthepartiesto theConventionthateverycontractofcarriagehasoneplaceof departure and one place of destination. An intermediate place where the carriage may be broken is not regarded as a "place of destination."WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.United Airlines vs UyG.R. No. 127768, Nov. 19, 1999INTERNATIONALLAW:ApplicabilityoftheWarsawConvention:the Convention'sprovisionsdonotregulateorexcludeliabilityforother breachesofcontractbythecarrierormisconductofitsofficersand employees, or for some particular or exceptional type of damage. Neither maytheConventionbeinvokedtojustifythedisregardofsome extraordinarysortofdamageresultingtoapassengerandpreclude recovery therefor beyond the limits set by said Convention. Likewise, we haveheldthattheConventiondoesnotprecludetheoperationofthe CivilCodeandotherpertinentlaws.Itdoesnotregulate,muchless exempt,thecarrierfromliabilityfordamagesforviolatingtherightsof itspassengersunderthecontractofcarriage,especiallyifwillful misconductonthepartofthecarrier'semployeesisfoundor established. FACTS:October13,1989RespondentWillieUyisapassengerof petitioner United Airlines, bound from SanFranciscotoManila.WhileinSanFrancisco,itwasfoundthatone piece of his luggage was over the maximum weight allowance of 70 kg. per bag. A United Airlines employee rebuked him and in a loud voice, in front of the milling crowd, ordered him to repack his things accordingly. Wishingnottocreateascene,Williedidasasked.Unfortunately,his luggage was still overweight so the airline billed him overweight charges. WillieofferedtopaythechargeswithaMiscellaneousChargeOrder (MCO)oranairlinepre-paidcreditbutthesameemployee,andan airlinesupervisor,refusedtohonorit,contendingthattherewere discrepanciesinthefigures.Thus,Williewasforcedtopaythecharges withhisAmericanExpresscreditcard.UponarrivalinManila,Willie discoveredthatoneofhisbagshadbeenslashedanditscontents, amounting to US$5,310.00, stolen.October 16, 1989 he sent his first letter of demand to United Airlines. TheairlinedidnotrefuteWilliesallegationsandmailedacheck representingpaymentofhislossbasedonthemaximumliabilityofUS$9.70 per pound. Willie, thinking the amount to be grossly inadequate to compensatehimforhislossesaswellasfortheindignitieshewas subjectedto,senttwomoreletterstopetitionerairline,onedated January 4, 1990 and the other dated October 28, 1991, demanding out-of-court settlement of P1,000,000.00.June 9, 1992 Willie filed a complaint for damages before the Philippine courts.Hehadtwocausesofaction:(1)theshabbyandhumiliating treatment he received from petitioners employees at the SanFranciscoAirportwhichcausedhimextremeembarrassmentand socialhumiliation;and(2)theslashingofhisluggageandthelossof personal effects amounting to US$5,310.00.Foritspart,UnitedAirlinesmovedtodismissthecomplaintonthe groundthatitwasfiledoutoftime.UnderArt.29oftheWarsaw Convention, the right to damages shall be extinguished if an action is not broughtwithin2years.However,thesecondparagraphofthesaid provisionstatedthatthemethodofcalculatingtheperiodoflimitation shallbedeterminedbythelawofthecourttowhichthecaseis submitted.ItisWilliespositionthatourrulesoninterruptionof prescriptive period should apply. When he sent his letters of demand, the 2-year period was tolled, giving him ample time to file his complaint.The trial court ordered the dismissal of the case, holding that Art. 29(2) refers not to the local forums rules in interrupting the prescriptive period butonlytotherulesofdeterminingthetimeinwhichtheactionwas deemedcommenced(meaningfiled).Williefiledhismotionfor reconsideration of the order of dismissal only on the 14th day. The trial court denied his motion and 2 days later Willie filed his notice of appeal. UnitedAirlinesthistimecontendedthatthenoticeofappealwasfiled beyondthe15-dayreglementaryperiodandshouldthereforebe dismissed. The CA, however, took cognizance of the case in the interest ofjusticeandruledinfavourofrespondent.Hence,thispetitionfor certiorari.ISSUE: Whether or not the action for damages is barred by the lapse of the 2-year prescriptive period under Art. 29 of the Warsaw ConventionHELD:SupremeCourtheldthatalthoughthe2-yearprescriptiveperiod undertheWarsawConventionhaslapsed,itdidnotprecludethe applicationofotherpertinentprovisionsoftheCivilCode.Thus,the actionfordamagescouldstillbefiledbasedontortwhichcanbefiled within 4 years from thetime cause of action accrued. As for the action pertaining to the loss of thecontentsoftheluggage,whileitwaswellwithintheboundsofthe WarsawConvention,theSupremeCourtfoundthattherewasan exceptiontotheapplicabilityofthe2-yearprescriptiveperiodthatis whentheairlineemployeddelayingtacticsandgavethepassengerthe run-around.ApplicabilityoftheWarsawConvention:Courtshavediscretionwhether to apply them or notWithin our jurisdiction we have held that the Warsaw Convention can be applied,orignored,dependingonthepeculiarfactspresentedbyeach case.Thus,wehaveruledthattheConvention'sprovisionsdonot regulate or exclude liability for other breaches of contract by the carrier ormisconductofitsofficersandemployees,orforsomeparticularor exceptionaltypeofdamage.NeithermaytheConventionbeinvokedto justify the disregard of some extraordinary sort of damage resulting to a passengerandprecluderecoverythereforbeyondthelimitssetbysaid Convention.Likewise,wehaveheldthattheConventiondoesnot preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violatingtherightsofitspassengersunderthecontractofcarriage, especiallyifwillfulmisconductonthepartofthecarrier'semployeesis found or established.Respondent'scomplaintrevealsthatheissuingontwo(2)causesof action:(a)theshabbyandhumiliatingtreatmenthereceivedfrom petitioner'semployeesattheSanFranciscoAirportwhichcausedhim extreme embarrassment and social humiliation; and, (b) the slashing of hisluggageandthelossofhispersonaleffectsamountingtoUS $5,310.00.Whilehissecondcauseofaction-anactionfordamagesarisingfrom theft or damage to property or goods - is well within the bounds of the WarsawConvention,hisfirstcauseofaction-anactionfordamages arising from the misconduct of the airline employees and the violation of respondent's rights as passenger - clearly is not.Action for damages arising from the misconduct of the airline employees andtheviolationoftherespondentsrightsaspassengersiscovered under the Civil CodeConsequently,insofarasthefirstcauseofactionisconcerned, respondent'sfailuretofilehiscomplaintwithinthetwo(2)-year limitationoftheWarsawConventiondoesnotbarhisactionsince petitioner airline may still be held liable for breach of other provisions of theCivilCodewhichprescribeadifferentperiodorprocedurefor instituting the action, specifically, Art. 1146 thereof which prescribes four (4) years for filing an action based on torts.ExceptiontotheApplicationofthe2-yearprescriptiveperiod:When airline employed delaying tacticsAsforrespondent'ssecondcauseofaction,indeedthetravaux preparatoriesoftheWarsawConventionrevealthatthedelegates thereto intended the two (2)-year limitation incorporated in Art. 29 as an absolutebartosuitandnottobemadesubjecttothevarioustolling provisionsofthelawsoftheforum.Thisthereforeforeclosesthe applicationofourownrulesoninterruptionofprescriptiveperiods. Article29,par.(2),wasintendedonlytoletlocallawsdetermine whether an action had been commenced within the two (2)-year period, andwithinourjurisdictionanactionshallbedeemedcommencedupon the filing of a complaint. Since it is indisputable that respondent filed the presentactionbeyondthetwo(2)-yeartimeframehissecondcauseof actionmustbebarred.Nonetheless,itcannotbedoubtedthat respondentexertedeffortstoimmediatelyconveyhislosstopetitioner, evenemployedtheservicesoftwo(2)lawyerstofollowuphisclaims, and that the filing of the action itself was delayed because of petitioner's evasion.Verily,respondentfiledhiscomplaintmorethantwo(2)yearslater, beyond the period of limitation prescribed by the Warsaw Convention for filingaclaimfordamages.However,itisobviousthatrespondentwas forestalledfromimmediatelyfilinganactionbecausepetitionerairline gavehimtherunaround,answeringhislettersbutnotgivingintohis demands.True,respondentshouldhavealreadyfiledanactionatthe firstinstancewhenhisclaimsweredeniedbypetitionerbutthesame couldonlybeduetohisdesiretomakeanout-of-courtsettlementfor which he cannot befaulted.Hence,despitetheexpressmandateofArt.29oftheWarsaw Conventionthatanactionfordamagesshouldbefiledwithintwo(2) years from the arrival at the place of destination, such rule shall not be appliedintheinstantcasebecauseofthedelayingtacticsemployedby petitioner airline itself.Thus,privaterespondent'ssecondcauseofactioncannotbe considered as time-barred under Art. 29 of the Warsaw Convention.WHEREFORE, the assailed Decision of the Court of Appeals reversing and setting aside the appealed order of the trial court granting the motion to dismiss the complaint, as well as its Resolution denying reconsideration, isAFFIRMED.Lettherecordsofthecaseberemandedtothecourtof origin for further proceedings taking its bearings from this disquisition.SO ORDERED.Keng Hua Paper Products vs. CAGR 116863, 12 February 1998Panganiban (J) Facts:Sea-LandService,ashippingcompany,isaforeigncorporation licensedtodobusinessinthePhilippines.On29June1982,SeaLand receivedatitsHongKongterminalasealedcontainer,ContainerSEAU 67523,containing76balesofunsortedwastepaperforshipmentto KengHuaPaperProducts,Co.inManila.Abillofladingtocoverthe shipment was issued by Sea-Land. On 9 July 1982,the shipment was discharged at the Manila International Container Port. NoticesofarrivalweretransmittedtoKengHuabutthelatterfailedto discharge the shipment from the container during the free time period orgraceperiod.ThesaidshipmentremainedinsidetheSea-Lands container from the moment the free time period expired on 29 July 1982 until the time when the shipment was unloaded from the container on 22 November1983,oratotalof481days.Duringthe481-dayperiod, demurrage charges accrued. Within the same period, letters demanding payment were sent by Sea-Land to Keng Hua who, however, refused to settle its obligation which eventually amounted to P67,340.00. Numerous demands were made on Keng Hua but the obligation remained unpaid.SeaLandthereaftercommencedthecivilactionforcollectionand damages. The RTC found Keng Hua liable for demurrage, attorneys fees and expenses of litigation.Keng Hua appealed to the Court of Appeals, which denied the appeal and affirmed the lower courts decision in toto. In a subsequent resolution, it also denied Keng Huas motion for reconsideration. Hence, the petition for review.The Supreme Court affirmed the assailed Decision with the modification thatthelegalinterestof6%perannumshallbecomputedfrom28 September1990untilitsfullpaymentbeforefinalityofjudgment.The rate of interest shall be adjusted to 12% per annum, computed from the time said judgment became final and executory until full satisfaction. The award of attorneys fees is deleted.1. Nature of bill of ladingAbillofladingservestwofunctions.First,itisareceiptforthegoods shipped.Second,itisacontractbywhichthreeparties,namely,the shipper, the carrier, and the consignee undertake specific responsibilities andassumestipulatedobligations.Abillofladingdeliveredand acceptedconstitutesthecontractofcarriageeventhoughnotsigned, because the (a)cceptance of a paper containing the terms of a proposed contract generally constitutes an acceptance of the contract and of all of its terms and conditions of which the acceptor has actual or constructive notice.Inanutshell,theacceptanceofabillofladingbytheshipper and the consignee, with full knowledge of its contents, gives rise to the presumption that the same was a perfected and binding contract.2. Shipper and consignee were liable for payment of demurrer charges; Section 17 of the bill of lading Section17ofthebillofladingprovidedthattheshipperandthe consigneewereliableforthepaymentofdemurragechargesforthe failure to discharge the containerized shipment beyond the grace period allowedbytariffrules.Section17ofthebillofladingprovided CooperageFines.Theshipperandconsigneeshallbeliablefor, indemnify the carrier and ship and hold them harmless against, and the carriershallhavealienonthegoodsfor,allexpensesandchargesfor mending cooperage, baling,repairing or reconditioning the goods, or the van, trailers or containers, and all expenses incurred in protecting, caring for or otherwise made for the benefit of the goods, whether the goods be damaged or not, and for anypayment,expense,penaltyfine,dues,duty,taxorimpost,loss, damage,detention,demurrage,orliabilityofwhatsoevernature, sustainedorincurredbyorlevieduponthecarrierortheshipin connectionwiththegoodsorbyreasonofthegoodsbeingorhaving beenonboard,orbecauseofshippersfailuretoprocureconsularor other proper permits, certificates or any papers that may be required at any port or place or shippers failure to supply information or otherwise tocomplywithalllaws,regulationsandrequirementsoflawin connectionwiththegoodsoffromanyotheractoromissionofthe shipperorconsignee.KengHuasprolongedfailuretoreceiveand discharge the cargo from the Sea-Lands vessel constitutes a violation of the terms of the bill of lading. It should thus be liable for demurrage to the former.3. Keng Huas letter proved refusal to pick up cargo and not rejection of bill of lading; Implied acceptance Keng Hua received the bill of lading immediately after the arrival of the shipmenton8July1982.Havingbeenaffordedanopportunityto examinethesaiddocument,itdidnotimmediatelyobjecttoordissent from any term or stipulation therein. It was only six months later, on 24 January1983,thatitsentalettertoprivaterespondentsayingthatit couldnotaccepttheshipment.Itsinactionforsuchalongperiod conveys the clear inference that it accepted the terms and conditions of the bill of lading. Moreover, said letter spoke only of petitioners inability to use the delivery permit, i.e. to pick up the cargo, due to the shippers failure to comply with the terms and conditions of the letter of credit, for whichreasonthebillofladingandothershippingdocumentswere returnedbythebankstotheshipper.Thelettermerelyprovedits refusal to pick up the cargo, not its rejection of the bill of lading.4.Apprehensionofviolatinglawscannotdefeatcontractualobligation and liabilityKengHuasattempttoevadeitsobligationtoreceivetheshipmenton thepretextthatthismaycauseittoviolatecustoms,tariffandcentral bank laws must fail. Mere apprehension of violating said laws, without a cleardemonstrationthattakingdeliveryoftheshipmenthasbecome legallyimpossible,cannotdefeatthepetitionerscontractualobligation and liability under the bill of lading.5. Issue raised for first time on appeal cannot be entertainedAn issue raised for the first time on appeal and not raised timely in the proceedings in the lower court is barred by estoppel. Questions raised on appealmustbewithintheissuesframedbythepartiesand, consequently, issues not raised in the trial court cannot be raised for the firsttimeonappeal.Herein,theissueofwhetherornotKengHua acceptedthebillofladingwasraisedforthefirsttimeonlyinits memorandum before the Supreme Court.6. Nature of demurrageDemurrageismerelyanallowanceorcompensationforthedelayor detention of a vessel. It is often a matter of contract, but not necessarily so.Theverycircumstancethatinordinarycommercialvoyages,a particular sum is deemed by the parties a fair compensation for delays, is the very reason why it is, and ought to be, adopted as a measure of compensation, in cases ex delicto. What fairer rule can be adopted than that which founds itself upon mercantile usage as to indemnity, and fixes a recompenseupon the deliberate consideration of all the circumstances attending the usualearningsandexpendituresincommonvoyages?Itappearstous that an allowance, by way of demurrage, is the true measure of damages inallcasesofmeredetention,forthatallowancehasreferencetothe ships expenses, wear and tear, and common employment.7. Amount of Demurrage Charges supported by extant evidenceTheamountofdemurragechargesinthesumofP67,340isafactual conclusionofthetrialcourtthatwasaffirmedbytheCourtofAppeals and, thus, binding on the Supreme Court. Besides, such factual finding is supported by the extant evidence. The apparent discrepancy was a result ofthevarianceofthedateswhenthetwodemandsweremade. Necessarily,thelongerthecargoremainedunclaimed,thehigherthe demurrage.Thus,whileinhisletterdated24April1983,Sea-Lands counseldemandedpaymentofonlyP37,800,theadditionaldemurrage incurred by Keng Hua due to its continued refusal to receive delivery of the cargo ballooned to P67,340 by 22 November 1983.8. Three contracts in a letter of creditIn a letter of credit, there are three distinct and independent contracts: (1)thecontractofsalebetweenthebuyerandtheseller,(2)the contractofthebuyerwiththeissuingbank,and(3)theletterofcredit properinwhichthebankpromisestopaythesellerpursuanttothe terms and conditions stated therein. Few things are more clearly settled inlawthanthatthethreecontractswhichmakeuptheletterofcredit arrangement are to be maintained in a state of perpetual separation. A transaction involving the purchase of goods may also require, apart from aletterofcredit,acontractoftransportationspeciallywhentheseller andthebuyerarenotinthesamelocaleorcountry,andthegoods purchased have to be transported to the latter.9.Contractofcarriageinbillofladingtobetreatedindependentlyof contract of sale and the contract for the issuance of creditThe contract of carriage, as stipulated in the bill of lading in the present case, must be treated independently of the contract of sale between the seller and the buyer, and the contract for the issuance of a letter of credit betweenthebuyerandtheissuingbank.Anydiscrepancybetweenthe amount of the goods described in the commercial invoice in the contract of sale and the amount allowed in the letter of credit will not affect the validity and enforceability of the contract of carriage as embodied in the billoflading.Asthebankcannotbeexpectedtolookbeyondthe documents presented to it by the seller pursuant to the letter of credit, neither can the carrier be expected to go beyond the representations of the shipper in the bill of lading and to verify their accuracy vis-a-vis the commercialinvoiceandtheletterofcredit.Thus,thediscrepancy between the amount of goods indicated in the invoice and the amount in thebillofladingcannotnegateKengHuasobligationtoprivate respondent arising from the contract of transportation.10.Remedyofallegedovershipmentliesagainsttheshipperandnot against the carrierThe contract of carriage was under the arrangement known as Shippers Load And Count, and the shipper was solely responsible for the loading ofthecontainerwhilethecarrierwasoblivioustothecontentsofthe shipment.KengHuasremedyincaseofovershipmentliesagainstthe seller/shipper, not against the carrier.11. Computation of legal interesta. When an obligation, not constituting a loan or forbearance of money, isbreached,aninterestontheamountofdamagesawardedmaybe imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages exceptwhenoruntilthedemandcanbeestablishedwithreasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judiciallyorextrajudicially(Art.1169,CivilCode)butwhensuch certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemedtohavebeenreasonablyascertained).Theactualbaseforthe computation of legal interest shall, in any case, be on the amount finally adjudged.b.Whenthejudgmentofthecourtawardingasumofmoneybecomes finalandexecutory,therateoflegalinterest,whetherthecasefalls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.12. Obligation one not arising from loan or forbearance of money; Legal interest in the present caseThe case involves an obligation not arising from a loan or forbearance of money;thus,pursuanttoArticle2209oftheCivilCode,theapplicable interest rate is 6% per annum. Since the bill of lading did not specify the amountofdemurrage,andthesumclaimedbySea-Landincreasedas thedayswentby,thetotalamountdemandedcannotbedeemedto havebeenestablishedwithreasonablecertaintyuntilthetrialcourt rendereditsjudgment.Indeed,unliquidateddamagesorclaims,itis said,arethosewhicharenotorcannotbeknownuntildefinitely ascertained, assessed and determined by the courts after presentation of proof. Consequently, the legal interest rate is 6%, to be computed from 28September1990,thedateofthetrialcourtsdecision.Andin accordance with the cases of PNB and Eastern Shipping, the rate of 12% per annum shall be charged on the total then outstanding, from the time the judgment becomes final and executory until its satisfaction.13. Attorneys fees denied due to lack of justificationThe matter of attorneys fees was taken up only in the dispositive portion ofthetrialcourtsdecision.Thisfallsshortofthesettledrequirement thatthetextofthedecisionshouldstatethereasonfortheawardof attorneysfees,forwithoutsuchjustification,itsawardwouldbea conclusionwithoutapremise,itsbasisbeingimproperlyleftto speculation and conjecture.SEA-LAND SERVICE, INC. vs. IACFacts:Sea-land,aforeignshippingandforwardingcompanylicensedto do business in the Philippines, received from Seaborne Trading Company inCaliforniaashipmentconsignedtoSenHiapHing.Theshippernot having declared the value of the shipment, no value was indicated in the BOL.TheshipmentwasdischargedinManila,andwhileawaiting transshipment to Cebu the cargo was stolen and neverrecovered.ThelowercourtsentencesSea-landtopayCuethevalueof the lost cargo, the unrealized profit and attorneys fees. The CA affirmed the decision, hence the petition.Issue:Whetherornottheconsigneeofseabornefreightisboundby stipulationsinthecoveringbillofladinglimitingtoafixedamountthe liability of the carrier for loss or damage to the cargo where its value is not declared in the bill.Held:Yes.Thereisnoquestionoftherightofaconsigneeinabillof ladingtorecoverfromthecarrierorshipperforlossof,ordamageto, goodsbeingtransportedundersaidbill,althoughthatdocumentmay havebeendrawnuponlybytheconsignorandthecarrierwithoutthe intervention of the consignee.Sincetheliabilityofacommoncarrierforlossofordamagetogoods transported by it under a contract of carriage so governed by the laws of the country of destination and the goods in question were shipped from the United States to the Philippines, the liability of Sea-Land has Cue is governed primarily by the Civil Code, and as ordained by the said Code, supplementary,inallmattersnotclutteredthereby,bytheCodeof Commerce and special laws. One of these supplementary special laws is theCarriageofgoodsbySeaAct(COGSA),madeapplicabletoall contractsforthecarriagebyseatoandfromthePhilippinesPortsin Foreign Trade by Comm. Act. 65.Even if Section 4(5) of COGSA did not list the validity and binding effect oftheliabilitylimitationclauseinthebillofladingherearefully substantial on the basis alone of Article 1749 and 1750 of the Civil Code. Thejusticesofsuchstipulationisimplicitinitsgivingtheowneror shipper the option of avoiding accrual of liability limitation by the simple expedient of declaring the value of the shipment in the bill of lading.ThestipulationinthebillofladinglimitingtheliabilityofSea-Landfor lossordamagestotheshipmentcoveredbysaidruletoUS$500per package unless the shipper declares the value of the shipment and pays additional charges is valid and binding on Cue.PHILAMGEN vs. SWEET LINESFACTS:Atotal7,000bagsoflowdensitypolyethylene(600bagsof polyethylene641and6,400bagsofpolyethylene647)wereshipped fromBatonRouge,LAtoManilaonboardSSVishvaYash,avessel belongingtotheShippingCorporationofIndia(SCI).FromManila,the cargoes were shipped to Davao on board MV Sweet Love, a vessel owned bySweetLines.TheconsigneewasFarEastBankwitharrivalnoticeto TagumPlastics,Inc.,Tagum,DavaoCity.Thecargoeswereinsuredby Far East Bank with thePhilippine American General Insurance Co (Philamgen) and were covered bybillsofladingwhichcontainedthefollowingstipulationinparagraph 5:Claimsforshortage,damage,mustbemadeatthetimeofdeliveryto consigneeoragent,ifcontainershowsexteriorsignsofdamageor shortage.Claimsfornon-delivery,misdelivery,lossordamagemustbe filed within 30 days from accrual. Suits arising from shortage, damage or loss, non-delivery or misdelivery shall be instituted within 60 days from date of accrual of right of action. Failure to file claims or institute judicial proceedingsashereinprovidedconstituteswaiverofclaimorrightof action.Innocaseshallcarrierbeliableforanydelay,non-delivery, misdelivery, loss of damage to cargo while cargo is not in actual custody of carrier.On May 15, 1977, the shipment(s) were discharged from the interisland carrier into the custody of the consignee. A survey conducted on July 8, 1977showedthatoftheshipmenttotalling7,000bags,originally contained in 175 pallets, only a total of 5,820 bags were delivered to the consigneeingoodordercondition,leavingabalanceof1,080bags. Some of the 1,080 bags were either MISSING OR DAMAGED beyond the point of being useful for the intended purpose.FEBTCandTagumPlasticssuedtheinternationalcarrier,SCI,theinter-islandcarriers,SweetLines,thearrastrecompany,DavaoArrastreand FEZuellig(whichIassumeistheshipper).Beforetrial,acompromise agreement was entered into between the complainants and SCI and F.E. Zuellig,thus,onlySweetLinesandDavaoArrastreremainedas defendants.The trial court ruled in favour of Philamgen and Tagum Plastics. The CA reversedonthegroundofprescriptionanddeniedthemotionfor reconsideration.ISSUES : (1) Wasthereaprescriptiveperiod?(2)If yes, was the prescriptive period valid and legal? (3)Ifitwasvalidandlegal,didPhilamgenactwithintheprescriptive period?RULING: (1) Yes. There was a prescriptive period. When the complaint was filed, prescriptionasanaffirmativedefensewasseasonablyraisedbySweet Linesinitsanswer.Thoughthebillsofladingwerenotpresentedin evidence,theSCsaidthat:AspetitionersaresuinguponSLI's contractual obligation under the contract of carriage as contained in the billsoflading,suchbillsofladingcanbecategorizedasactionable documentswhichundertheRulesmustbeproperlypleadedeitheras c a u s e so fa c t i o no rd e f e n s e s , andthegenuinenessanddueexecutionofwhicharedeemedadmittedunlessspecifically denied under oath by the adverse party. The rules on actionable documentscoverandapplytobothacauseofactionordefensebased onsaiddocuments.Intheiranswer,SweetLinesincludedthe prescriptiveperiodunderparagraph5ofthebillsoflading.Philamgen did not deny the existence of the bill of lading under oath. Instead, in its replytotheanswer,Philamgenassertedthatthebillsofladingwere contracts of adhesion and that such provisions were contrary to law and publicpolicyandthus,SweetLinescannotavailofsuchprescriptive periodasavaliddefense.TheSCsaidthatPhilamgensfailuretodeny underoaththeexistenceofthebillsofladingwastantamounttoan admissionofitsexistence,togetherwithparagraph5containingthe prescriptiveperiod.Thus,theexistenceoftheprescriptiveperiodwas duly proved even if the bills of lading were not presented in court.(2) Yes. The prescriptive periods were valid and legal. Philamgen insists thatthebillsofladingwerecontractsofadhesionandthatthe prescriptiveperiodsstatedthereinwerevoidforbeingcontrarytolaw andpublicpolicy.TheSC,citingOngYuvsCA,saidthatcontractsof adhesionarenotentirelyprohibited.Theonewhoadherestothe contract is in reality free to reject it entirely; if he adheres he gives his consent. Philamgen, thus, gave its consent to the contracts the bills of ladingincludingconsenttotheprescriptiveperiodstherein.TheSC also agreed with the CA that parties can stipulate a shorter prescriptive period for the filing of suits. The SC quoted the CA, It must be noted, at thisjuncture,thattheaforestatedtimelimitation(paragraph5)inthe presentation of claim for loss or damage, is but a restatement of the rule prescribedunderArt.366oftheCodeofCommerce...TheSCsaid that, ... the validity of a contractual limitation of time for filing the suit itselfagainstacarriershorterthanthestatutoryperiodthereforhas generallybeenupheldassuchstipulationmerelyaffectstheshipper's remedy and does not affect the liability of the carrier. In the absence of anystatutorylimitationandsubjectonlytotherequirementonthe reasonablenessofthestipulatedlimitationperiod,thepartiestoa contract of carriage may fix by agreement a shorter time for the bringing ofsuitonaclaimforthelossofordamagetotheshipmentthanthat providedbythestatuteoflimitations.Suchlimitationisnotcontraryto public policy for it does not in any way defeat the complete vestiture of therighttorecover,butmerelyrequirestheassertionofthatrightby action at an earlier period than would be necessary to defeat it through theoperationoftheordinarystatuteoflimitations.TheSCalsosaid that, ..., the shortened period for filing suit is not unreasonable and has infactbeengenerallyrecognizedtobeavalidbusinesspracticeinthe shippingindustry.Thisisinrecognitionoftheinherentdangersof carriage by sea.(3)No.Philamgendidnotactwithintheprescriptiveperiod.The shipmentwasdischargedintothecustodyoftheconsigneeonMay15, 1977, and it was from this date that petitioners' cause of action accrued, withthirty(30)daystherefromwithinwhichtofileaclaimwiththe carrierforanylossordamagewhichmayhavebeensufferedbythe cargoandtherebyperfecttheirrightofaction.Claimwasfiledonlyon April 28, 1978, way beyond the period provided in the bills of lading and violativeofthecontractualprovision,theinevitableconsequenceof whichisthelossofpetitioners'remedyorrighttosue.TheSCsaid, EventhefilingofthecomplaintonMay12,1978isofnoremedialor practicalconsequence,sincethetimelimitsforthefilingthereof, whetherviewedasaconditionprecedentorasaprescriptiveperiod, wouldinthiscasebeproductiveofthesameresult,thatis,that petitioners had no right of action to begin with or, at any rate, their claim was time-barred.Other things discussed by the SC:1. ...where the contract of shipment contains a reasonable requirement of giving notice of loss of or injury to the goods, the giving of such notice isaconditionprecedenttotheactionforlossorinjuryortherightto enforcethecarrier'sliability.Suchrequirementisnotanempty formalism.Thefundamentalreasonorpurposeofsuchastipulationis nottorelievethecarrierfromjustliability,butreasonablytoinformit that the shipment has been damaged and that it is charged with liability therefor, and to give it an opportunity to examine the nature and extent oftheinjury.Thisprotectsthecarrierbyaffordingitanopportunityto makeaninvestigationofaclaimwhilethematterisfreshandeasily investigated so as to safeguard itself from false and fraudulent claims.2. Philamgen also asserted that since the purpose of the notice of claim or loss was to charge Sweet Lines with actual knowledge of the loss and damageinvolved,thentheissuanceofSweetLinesofaReporton Losses and Damage dated May 15, 1977, would obviate the need for or render superfluous the filing of a claim within the stipulated period. The SC said, The report on losses and damages is not the claim referred to and required by the bills of lading for it does not fix responsibility for the lossordamage,butmerelystatestheconditionofthegoodsshipped. Theclaimcontemplatedherein,inwhateverform,mustbesomething morethananoticethatthegoodshavebeenlostordamaged;itmust containaclaimforcompensationorindicateanintenttoclaim. Furthermore,thereportbearsanannotationatitslowerpartthatsays thisCopyshouldbesubmittedtogetherwithyourclaiminvoiceor receipt within 30 days from date of issue otherwise your claim will not be honored."3.Theclaimagainstthecarrier,SweetLines,hasprescribedbutwhat about the claim against Davao Arrastre. The SC said that there was not enough proof to pinpoint the party responsible for the lost and damaged bags.(WhatIfoundsurprisingwasthattheSCalsosaid,Unlikea commoncarrier,anarrastreoperatordoesnotlaborundera presumption of negligence in case of loss, destruction or deterioration of goodsdischargedintoitscustody.Inotherwords,toholdanarrastre operator liable for loss of and/or damage to goods entrusted to it there mustbepreponderantevidencethatitdidnotexerciseduediligencein the handling and care of the goods.DOLE PHILIPPINES, INC. v MARITIME COMPANY OF THE PHILIPPINESFacts: The cargo subject of the instant case was discharged in Dadiangas untothecustodyoftheconsignee,DolePhilippines.Thecorresponding claimforthedamagessustainedbythecargowasfiledbytheplaintiff with the defendant, Maritime Company on May 4, 1972.OnJune11,1973theplaintifffiledacomplaintintheCFIManila embodying3causesofactioninvolving3separateanddifferent shipments.Thethirdcauseofactionthereininvolvedthecargonow subject of this present litigation.OnDecember11,1974,JudgeSerafinCuevasissuedanOrder dismissing the first two causes of action. The third cause of action which coveredthecargosubjectofthiscasenowwaslikewisedismissedbut withoutprejudiceasitwasnotcoveredbythesettlement.Becauseof the dismissal of the complaint with respect to the third cause of action, DOLE instituted this present complaint on January 6, 1975.Maritimefiledananswerpleadinginteraliatheaffirmativedefenseof prescriptionundertheprovisionsoftheCarriageofGoodsbySeaAct. TheTrialCourtgrantedthemotion,schedulingthepreliminaryhearing on April 27, 1977. The record before the Court does not show whether or not that hearing was held, but under date of May 6, 1977, Maritime filed aformalmotiontodismissinvokingoncemorethegroundof prescription.TheTrialCourt,afterdueconsideration,resolvedthematterinfavorof Maritime and dismissed the complaint.Issue:Whether or not Article 1155 of the Civil Code applies in lieu of the COGSA.Held:No. Article 1155 of the Civil Code provides that the prescription of actionsisinterruptedbythemakingofanextrajudicialwrittendemand by the creditorSection 3, paragraph 6 of the COGSA provides that:the carrier and the ship shall be discharged from all liability in respect of lossordamageunlesssuitisbroughtwithinoneyearafterdeliveryof thegoodsorthedatewhenthegoodsshouldhavebeendelivered; Provided,That,ifanoticeoflossordamage,eitherapparentor conceded, is not given asprovidedforinthissection,thatfactshallnotaffectorprejudicethe right of the shipper to bring suit within one year after the delivery of the goods or the date when.the goods should have been delivered.1. Dole argues that since the provisions of the Civil Code are, by express mandateofsaidCode,suppletoryofdeficienciesintheCodeof Commerce and special laws in matters governed by the latter and there beingapatentdeficiencywithrespecttothetollingoftheprescriptive periodprovidedforintheCarriageofGoodsbySeaAct,prescription undersaidActissubjecttotheprovisionsofArticle1155oftheCivil Code on tolling. Since Dole's claim for loss or damage was filed on May 4, 1972 amounted to a written extrajudicial demand which would toll or interruptprescriptionunderArticle1155,itoperatedtotollprescription also in actions under the Carriage of Goods by Sea Act.These arguments might merit weightier consideration were it not for the factthatthequestionhasalreadyreceivedadefinitiveanswer,adverse tothepositiontakenbyDole,inTheYekTongLinFire&Marine Insurance Co., Ltd. vs. American President Lines, Inc.2. Dole argues that it was error for the court not to have considered the action of plaintiff-appellant suspended by the extrajudicial demand which tookplace,accordingtodefendant'sownmotiontodismissonAugust 22, 1952.Court noticed that while plaintiff avoids stating any date when the goods arrivedinManila,itreliesupontheallegationmadeinthemotionto dismissthataprotestwasfiledonAugust22,1952whichgoesto showthatplaintiff-appellant'scounselhasnotbeenlayingthefacts squarely before the court for the consideration of the merits of the case. WehavealreadydecidedthatinacasegovernedbytheCarriageof Goods by Sea Act, the general provisions of the Code of Civil Procedure onprescriptionshouldnotbemadetoapply.(ChuaKuyvs.Everett Steamship Corp., G.R. No. L-5554, May 27, 1953.) We hold that in such a case the general provisions of the new Civil Code (Art. 1155) cannot be madetoapply,assuchapplicationwouldhavetheeffectofextending theone-yearperiodofprescriptionfixedinthelaw.Itisdesirablethat matters affecting transportation of goods by sea be decided in as short a time as possible; the application of the provisions of Article 1155 of the new Civil Code would unnecessarily extend the period and permit delays inthesettlementofquestionsaffectingtransportation,contrarytothe clear intent and purpose of the law.Under Dole's theory, when its claim was received by Maritime, the one-yearprescriptiveperiodwasinterruptedandbegantorunanewfrom May4,1972,affordingDoleanotherperiodofoneyearcountedfrom thatdatewithinwhichtoinstituteactiononitsclaimfordamage. Unfortunately,Doleletthenewperiodlapsewithoutfilingaction.It institutedCivilCaseNo.91043onlyonJune11,1973,morethanone monthafterthatperiodhasexpiredanditsrightofactionhad prescribed.AIR FRANCE V. GILLEGO In Air France vs. Gillego, G.R. No 165266, December 15, 2010 TheSupremeCourtdiscussedtheliabilitythatairlineshaveforlost luggage,particularlyintermsofmoraldamagesduetoapassenger. Unfortunatelyfortheairline,thiswasnoordinarypassengerbuta Congressman on his way to deliver a speech.In 1993, Congressman Gillego was the keynote speaker at the 89th Inter -ParliamentaryConferenceSymposiumonParliament:Guardianof HumanRights.TheCongressmanleftforParisandwastotakea connecting flight to Budapest. He learned of an earlier flight to Budapest andmadearrangementsforthesame.Hewasgivenaticketanda boarding pass for this new flight as well as a new baggage claim stub for his checked-in luggage. Upon arrival at Budapest, his luggage was not at the claims section. He sought assistance and was advised to wait at the hotel. His luggage was never delivered despite inquiries. Upon his return home, his lawyer wrote Air France complaining about the loss and the damages he suffered while in Budapest arising from his loss ofpersonaleffects,medicinesandeventhespeecheshehadprepared, among others. He only had his travel documents, pocket money and the clothesonhisback.Hewasconstrainedtoshopforpersonalitems including clothes and medicines which amounted to $1,000. He even had to make another speech which was made more difficult due to the lack of dataandinformationthatwasinhisluggage.Heaskedfor P1,000,000.00fromthepetitionerascompensation.AirFranceignored hisrepeatedfollow-upsonhislostluggage.Hethereafterfileda complaint for damages against Air France.The trial court awarded P1,000,000.00 as moral damages; P500,000.00 as exemplary damages and P50,000.00 as attorneys fees to the plaintiff. This was affirmed by the Court of Appeals.AirFrancesoughtreliefbeforetheSupremeCourt,arguingthatthe awardofextravagantsumstorespondentthatalreadytendtopunish the petitioner and enrich the respondent, which is not the function at all ofmoraldamagesandthatthedamagesawardedaredefinitelynot proportionateorcommensuratetothewrongorinjurysupposedly inflicted. The plaintiff was after all an expert in the field of human rights who could have delivered his speech even without his notes.The petition was found to be partly meritorious. The Supreme Court held that being a business intended to serve the travelling public primarily, a contractofcarriageisimbuedwithpublicinterest.Article1735ofthe CivilCodeprovidesthatincaseoflostordamagedgoods,common carriers are presumed to have been at fault or to have acted negligently, unless they prove t hat they observed extraordinary diligence as required byArticle1733.Thus,inanactionbasedonabreachofcontractof carriage,theaggrievedpartydoesnothavetoprovethatthecommon carrierwasatfaultorwasnegligent.Allthathehastoproveisthe existenceofthecontractandthefactofitsnon-performancebythe carrier. [emphasis supplied]Thereisnodisputethatthechecked-inluggagewasnotfoundupon arrivalatplaintiffsdestinationandwasonlyreturnedtwoyearslater. The action is founded on the breach of the contract of carriage with Air France unable to offer any satisfactory explanation for the unreasonable delayinthedeliveryofthebaggage.Sincethepresumptionof negligencewasnotovercome,liabilityforthedelaywasestablished. Upon recovery of the baggage during trial, the plaintiff no longer pressed his claim for actual or compensatory damages.For moral damages to be awarded in the breach of contract of carriage, thebreachmustbewantonanddeliberatelyinjuriousortheone responsible acted fraudulently or with malice or bad faith. Not every case of mental anguish, fright or serious anxiety calls for the award of moral damages. Where there is no showing of fraud or bad faith, liability for damagesislimitedtothenaturalandprobableconsequencesofthe breachoftheobligationwhichthepartieshadforeseenorcouldhave reasonablyforeseen.Insuchacasetheliabilitydoesnotincludemoral and exemplary damages.AirFrancewasfoundliableformoraldamages.Petitionersstation managertestifiedthatuponreceivingtheletter-complaint,she immediatelybeganworkingonthePropertyIrregularityReport(PIR). Thisisissuedattheairlinestationuponcomplaintbyapassengeron missing baggage. From the computer-printout, a PIR was initiated at the Budapest counter. A search telex was sent out onthreesubsequentdates.BasedonthePIRprintout,theplaintiffonly gavehisPhilippineaddressandtelephonenumber,andnottheaddress and contact number of his Budapest hotel. The PIR usually is printed in two originals, one for the station manager and the other copy is for the passenger. There was no record or entry in the PIR of any follow-up call made by the plaintiff in Budapest. Plaintiff claimed that he was not given a copy of this PIR and that his repeated telephone calls were ignored.ItwasfoundthatAirFranceactedinbadfaithinrepeatedlyignoring respondents follow -up calls. The alleged entries in the PIR were not to beconsideredsincethesewerenotauthenticatedbytheairlinestation representative in Budapest. The Court did not accept as justification that plaintiffshouldbefaultedinallegedlynotgivinghishoteladdressand phone number. It found unbelievable that the plaintiff would not give his hotel and other information after he had promptly filed a complaint. And even assuming that only the Philippine details were given, this does not explain why Air France never communicated with plaintiff concerning the lostbaggagelongafterhehadreturnedtothePhilippines.Themissing luggage was returned only after the trial. In addition, the PIR only establishes that telex searches were made but there is no attempt to explain the loss of the luggage. Air France did not give the attention and care due to its passengerwhosebaggagewasnottransportedanddeliveredtohimat his travel destination and scheduled time. Inattention to and lack of care fortheinterestofitspassengerswhoareentitledtoitsutmost consideration,particularlyastotheirconvenience,amounttobadfaith whichentitlesthepassengertoanawardofmoraldamages.Badfaith may be in securing the contract and in the execution thereof, as well as in the enforcement of its terms, or any other kind of deceit. [emphasis supplied] Thefailuretociteanyactofdiscourtesyorrudenessdoesnotmake plaintiffslossandmoralsufferinginsignificantandlessdeservingof compensation.Inrepeatedlyignoringrespondentsinquiries, petitionersemployeesexhibitedanindifferentattitudewithoutdue regard for theinconvenienceandanxietyheexperiencedafterrealizingthathis luggage was missing. Petitioner was thus guilty of bad faith in breaching itscontractofcarriagewiththerespondent,whichentitlesthelatterto the award of moral damages. [emphasis supplied] However, the sum of P1,000,000.00 is excessive and not proportionate tothelossorsufferinginflictedonthepassengerunderthe circumstances. The Court cited Trans World Airlines v. Court of Appeals where it considered the social standing of the aggrieved passenger who was a lawyer and director of several companies but nonetheless reduced the award of moral damages.Moraldamagesareawardedtoenabletheinjuredpartytoobtain means,diversionoramusementthatwillservetoalleviatethemoral sufferinghehasundergonebyreasonofdefendant'sculpableaction. Exemplarydamagesaretodeterseriouswrongdoings.UnderArticle 2216oftheCivilCode,theassessmentofdamagesislefttothe discretion of the court according to the circumstances of each case. This islimitedbytheprinciplethattheamountawardedshouldnotbe palpablyexcessiveastoindicatethatitwastheresultofprejudiceor corruptiononthepartofthetrialcourt.Simplyput,theamountof damagesmustbefair,reasonableandproportionatetotheinjury suffered.SinceAirFrancefailedtoacttimelyonthepassengerspredicament causedbyitsemployeesmistakeandmorethanordinaryinadvertence orinattention,andthepassengerfailedtoshowanyactofarrogance, discourtesyorrudenesscommittedbytheaircarriersemployees,the amountsofP200,000.00,P50,000.00andP30,000.00asmoral damages,exemplarydamagesandattorneysfeeswouldbesufficient and justified." It is ironic that the award of damages, just like the luggage, comes too latesincetheplaintiffhasalreadypassedaway.Justice,justlike baggage, can be just as delayedSABENA BELGIAN WORLD AIRLINES vs. CA [G.R. No. 104685. March 14, 1996]Facts:OnAugust21,1987,plaintiff(MA.PAULASANAGUSTIN)wasa passengerondefendantairline(SABENABELGIANWORLDAIRLINES) fromCasablancatoBrussels,BelgiumonherwaybacktoManila. Herluggage with valuables was left on board Flight SN 284. Upon arrival shesubmitteddocumentstosupportherbaggageclaimbutluggage remainedtobemissing.Aformalcomplaintwasfiledbytheplaintiff withthemangeroftheairline.Plaintiffwasfurnishedcopiesoftelexes withaninformationthattheBrusselsOfficeofdefendantfoundthe luggageandthattheyhavebrokenthelocksforidentification(Exhibit B). Plaintiff was assured bythe defendant that it has notified its Manila OfficethattheluggagewillbeshippedtoManilaonOctober27,1987. But unfortunately plaintiff was informed that the luggage was lost for the secondtime.Atthetimeoffiingofcomplainttheluggageisstill missing.Plaintiffdemandedfromthedefendantthemoneyvalueofthe luggage and its contents or its exchangevalue, but defendant refused to settletheclaim,assertingthatthelossoftheluggagewasdue toplaintiffssoleifnotcontributorynegligence;non-declarationof valuableitemsinherchecked-inluggageattheflightcounterwhenshe checkedin.TrialcourtfavoredtheplaintiffandorderedtheSabena BelgianWorldAirlinestopayprivaterespondentMa.PaulaSanAgustin. Hence this appeal.Issue: WON the private respondent is at fault on the loss of the luggage by negligence. Ruling:Faultornegligenceconsistsintheomissionofthatdiligence whichisdemandedbythenatureofanobligationandcorrespondswith the circumstances of the person, of the time, and of the place. Whenthesource of an obligation is derived from a contract, the mere breach or non-fulfillment of the prestationgives rise to the presumption of fault on thepartoftheobligor.Thisruleisnotdifferentinthecaseofcommon carriers in the carriage of goods which, indeed, are bound to observe not justtheduediligenceofagoodfatherofafamilybutthatof extraordinarycareinthevigilanceoverthegoods.Itremained undisputed that private respondents luggage was lost while it was in the custodyofpetitioner.Whenitwasfoundmissingtherespondent, promptly processed all the necessary documentbut to no avail. The loss ofsaidbaggagenotonlyoncebytwice,saidtheappellatecourt, underscoresthe wanton negligence and lack of care on the part of the carrier.Underdomesticlawandjurisprudence(thePhilippinesbeingthe countryofdestination),theattendanceofgrossnegligence(giventhe equivalentoffraudorbadfaith)holdsthecommoncarrierliablefor alldamages which can be reasonably attributed, although unforeseen, to thenon-performanceoftheobligation,includingmoralandexemplary damages. WHEREFORE, the decision appealed from is AFFIRMED.