Transportation Law Cases on Aviation Law

(1) Air France vs. Carasccoso, G.R. No. L-21438 September 28, 1966

Facts:
Rafael Carrascoso, a civil engineer, was a member of a group of 48 Filipino pilgrims that left
Manila for Lourdes on March 30, 1958.

On March 28, 1958, Air France, through its authorized agent, Philippine Air Lines, Inc., issued
to Carascoso a "first class" round trip airplane ticket from Manila to Rome. From Manila to
Bangkok, he travelled in "first class", but at Bangkok, the Manager of Air France forced him to
vacate the "first class" seat that he was occupying because there was a "white man”, who the
Manager alleged, had a "better right" to the seat. When asked to vacate his "first class" seat, a
commotion ensued, many of the Filipino passengers got nervous in the tourist class; when they
found out that Mr. Carrascoso was having a hot discussion with the white man, they came all
across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man"; and
respondent reluctantly gave his "first class" seat in the plane.

Because of the incident, respondent filed an action for damages for breach of contract.

Respondent contended that he paid to and received from petitioner a first class ticket. But
petitioner asserts the following:
1. That the said ticket did not represent the true and complete intent and agreement of the
parties;
2. That said respondent knew that he did not have confirmed reservations for first class on any
specific flight, although he had tourist class protection; and
3. That the issuance of a first class ticket was no guarantee that he would have a first class
ride, but that such would depend upon the availability of first class seats.

CFI/ RTC ruling:

Petitioner tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga
that although respondent paid for, and was issued a "first class" airplane ticket, the ticket was
subject to confirmation in Hongkong. The court cannot give credit to the testimony of said
witnesses. Oral evidence cannot prevail over written evidences presented by the plaintiff which
clearly show that the respondent was issued, and paid for, a first class ticket without any
reservation whatever. It cannot be believe that after such confirmation, petitioner had a verbal
understanding with respondent that the "first class" ticket issued to him by petitioner would be
subject to confirmation in Hongkong.

-CFI ruled in favor of Carrascoso. It sentenced petitioner to pay respondent P25,000.00 by way
of moral damages; P10,000.00 as exemplary damages; P393.20 representing the difference in
fare between first class and tourist class for the portion of the trip Bangkok-Rome plus
P3,000.00 for attorneys' fees; and the costs of suit

CA ruling:
CA slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to
P383.10, and voted to affirm the appealed decision "in all other respects", with costs against
petitioner.

Issues:
1. Whether or not Carrascoso was entitled to the first class seat
2. Whether or not he is entitled to damages

Ruling:

1. Yes. If airline companies would have the policy that a first-class-ticket holder is not
entitled to a first class seat, notwithstanding the fact that seat availability in specific flights
is therein confirmed, then an air passenger is placed in the hollow of the hands of an
airline. There is no security for the passengers. It will always be an easy matter for an
airline aided by its employees, to strike out the very stipulations in the ticket, and say that
there was a verbal agreement to the contrary. It is a rule that, a written document speaks
a uniform language. There must be adherence to the ticket issued by the airline company.
Since Carrascoso was given a “first class” airplane ticket, he is entitled to such.

2. Yes.

First, That there was a contract to furnish Carrascoso a first class passage covering, among
others, the Bangkok-Teheran leg;

Second, That said contract was breached when petitioner failed to furnish first class
transportation at Bangkok; and Third, that there was bad faith when petitioner's employee
compelled Carrascoso to leave his first class accommodation "after he was already,
seated" and to take a seat in the tourist class, by reason of which he suffered inconvenience,
embarrassments and humiliations, thereby causing him mental anguish, serious anxiety,
wounded feelings and social humiliation, resulting in moral damages.

A contract to transport passengers is quite different in kind and degree from any other
contractual obligation because of the relation which an air carrier sustains with the public.
The contract of air carriage, therefore, generates a relation attended with a public duty.
Neglect or malfeasance of the carrier's employees, could give ground for an action for
damages. Petitioner's contract with Carrascoso is one attended with public duty. The stress
of Carrascoso's action is placed upon his wrongful expulsion. This is a violation of public
duty by the petitioner air carrier — a case of quasi-delict. Damages are proper.

Article 21 of the Civil Code provides that, “any person who willfully causes loss or injury to
another in a manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage.”

Exemplary damages are also well awarded since the action of the respondent is based on
a contract. In addition, the plaintiff’s act of ejecting the respondent in his first class seat is
an act which was done in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
 SC affirmed the decision of CA.

(2) Alitalia vs. Court of Appeals, G.R. No. 77011 July 24, 1990

Facts:
Dr. Felipa Pablo, an associate professor in the University of the Philippines and a research
grantee of the Philippine Atomic Energy Agency, was invited to take part at a meeting of the
Department of Research and Isotopes in Italy in view of her specialized knowledge in “foreign
substances in food and the agriculture environment”. She would be the second speaker on the
first day of the meeting. Dr. Pablo booked passage on petitioner Alitalia. She arrived in Milan
on the day before the meeting, but was told that her luggage was delayed and was in a
succeeding flight from Rome to Milan. The luggage included her materials for the presentation.
The succeeding flights did not carry her luggage. Desperate, she went to Rome to try to locate
the luggage herself, but to no avail. She returned to Manila without attending the meeting. She
demanded reparation for the damages. She rejected Alitalia’s offer of free airline tickets and
commenced an action for damages. As it turned out, the luggage was actually forwarded to
Ispra, but only a day after the scheduled appearance. It was returned to her after 11 months.
The trial court ruled in favor of Dr. Pablo, and this was affirmed by the Court of Appeals.

Issues:
W/N (1) the Warsaw Convention should be applied to limit Alitalia’s liability;
(2) Dr. Pablo is entitled to nominal damages

RULING:

(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. The destruction or loss of, or damage to, any registered luggage or goods, if the
occurrence causing it took place during the carriage by air; and
c. Delay in the transportation by air of passengers, luggage or goods.

The convention however denies to the carrier availment of the provisions which exclude or limit
his liability, if the damage is caused by his willful misconduct, or by such default on his part as
is considered to be equivalent to willful misconduct. The Convention does not thus operate as
an exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the
extent of that liability. It should be deemed a limit of liability only in those cases where the cause
of the death or injury to person, or destruction, loss or damage to property or delay in its
transport is not attributable to or attended by any willful misconduct, bad faith, recklessness, or
otherwise improper conduct on the part of any official or employee for which the carrier is
responsible, and there is otherwise no special or extraordinary form of resulting injury.

In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the
employees of petitioner airline; and Dr. Pablo's luggage was eventually returned to her,
belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some
species of 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 its contract of carriage. Certainly,
the compensation for the injury suffered by Dr. Pablo cannot under the circumstances be
restricted to that prescribed by the Warsaw Convention for delay in the transport of baggage.

(2) YES.

She is not, of course, entitled to be compensated for loss or damage to her luggage. She is
however entitled to nominal damages which, as the law says, is adjudicated in order that a right
of the plaintiff, which has been violated or invaded by the defendant, may be vindicated and
recognized, and not for the purpose of indemnifying the plaintiff that for any loss suffered and
this Court agrees that the respondent Court of Appeals correctly set the amount thereof at PhP
40,000.00.

The Court also agrees that respondent Court of Appeals correctly awarded attorney’s fees to
Dr. Pablo and the amount of PhP 5,000.00 set by it is reasonable in the premises. The law
authorizes recovery of attorney’s fees inter alia where, as here, the defendant’s act or omission
has compelled the plaintiff to litigate with third persons or to incur expenses to protect his
interest or where the court deems it just and equitable.

(3) Cathay Pacific Airways vs. Fuentebella, GR. No. 188283, July 20, 2016

Doctrine: In Air France v. Gillego, the Court ruled that in an action based on a 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
he has to prove is the existence of the contract and the fact of its nonperformance by the carrier.
In this case, both the trial and appellate courts found that respondents were entitled to First
Class accommodations under the contract of carriage, and that petitioner failed to perform its
obligation.

However, the award of P5 million as moral damages is excessive, considering that the highest
amount ever awarded by this Court for moral damages in cases involving airlines is P500,000.
As said in Air France v. Gillego, "the mere fact that respondent was a Congressman should
not result in an automatic increase in the moral and exemplary damages." Upon the facts
established, the amount of P500,000 as moral damages is reasonable to obviate the moral
suffering that respondents have undergone. With regard to exemplary damages, jurisprudence
shows that P50,000 is sufficient to deter similar acts of bad faith attributable to airline
representatives.

Facts:
The case originated from a Complaint for damages filed by respondents Arnulfo and Evelyn
Fuentebella against petitioner Cathay Pacific Airways Ltd. Respondents prayed damages for
the alleged besmirched reputation and honor, as well as the public embarrassment they had
suffered as a result of a series of involuntary downgrades of their trip from Manila to Sydney
via Hong Kong. The RTC ruled in favor of respondents and awarded moral damages,
exemplary damages, and attorney’s fees. CA affirmed the decision of RTC.
In 1993, the Speaker of the House authorized Congressmen Arnulfo Fuentebella (respondent
Fuentebella), Alberto Lopez (Cong. Lopez) and Leonardo Fugoso (Cong. Fugoso) to travel on
official business to Sydney, Australia, to confer with their counterparts in the Australian
Parliament. On 22 October 1993, respondents bought Business Class tickets for Manila to
Sydney via Hong Kong and back. They changed their minds, however, and decided to upgrade
to First Class. From this point, the parties presented divergent versions of facts. The
overarching disagreement was on whether respondents should have been given First
Class seat accommodations for all the segments of their itinerary.

Petitioner admits that First Class tickets were issued to respondents, but clarifies that the
tickets were open-dated (waitlisted). There was no showing whether the First Class tickets
issued to Lopez and Fugoso were open-dated or otherwise, but it appears that they were able
to fly First Class on all the segments of the trip, while respondents were not.

On 25 October 1993, respondents queued in front of the First Class counter in the airport. They
were issued boarding passes for Business Class seats on board CX 902 bound for Hong Kong
from Manila and Economy Class seats on board CX 101 bound for Sydney from Hong Kong.
They only discovered that they had not been given First Class seats when they were
denied entry into the First Class lounge. Respondent Fuentebella went back to the check-in
counter to demand that they be given First Class seats or at the very least, access to the First
Class Lounge. He recalled that he was treated by the ground staff in a discourteous, arrogant
and rude manner. He was allegedly told that the plane would leave with or without them. Both
the trial court and the CA gave credence to the testimony of respondent Fuentebella.

Issue:
Whether or not the respondents are liable for the damages prayed for. (YES)

Ruling:
The respondents are entitled to moral damages, exemplary damages and attorney’s fees.

In Air France v. Gillego, the Court ruled that in an action based on a 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 he has to prove is the existence of the contract and the fact of its
nonperformance by the carrier. In this case, both the trial and appellate courts found that
respondents were entitled to First Class accommodations under the contract of carriage, and
that petitioner failed to perform its obligation.

According to the senior reservation supervisor of the petitioner, Nenita Montillana (Montillana),
a reservation is deemed confirmed when there is a seat available on the plane. When asked
how a passenger was informed of the confirmation, Montillana replied that computer records
were consulted upon inquiry. By its issuance of First Class tickets on the same day of the
flight in place of Business Class tickets that indicated the preferred and confirmed flight,
petitioner led respondents to believe that their request for an upgrade had been
approved.

Petitioner tries to downplay the factual finding that no explanation was given to respondents
with regard to the types of ticket that were issued to them. It ventured that respondents were
seasoned travelers and therefore familiar with the concept of open-dated tickets. Petitioner
attempts to draw a parallel with Sarreal, Jr. v. JAL, in which it was ruled that the airline could
not be faulted for the negligence of the passenger, because the latter was aware of the
restrictions carried by his ticket and the usual procedure for travel. In that case, though, records
showed that the plaintiff was a well travelled person who averaged two trips to Europe and two
trips to Bangkok every month for 34 years. In the present case, no evidence was presented to
show that respondents were indeed familiar with the concept of open-dated ticket. In fact, the
tickets do not even contain the term "open-dated."

Moral and exemplary damages are not ordinarily awarded in breach of contract cases. This
Court has held that damages may be awarded only when the breach is wanton and deliberately
injurious, or the one responsible had acted fraudulently or with malice or bad faith. Bad faith is
a question of fact that must be proven by clear and convincing evidence. Both the trial and the
appellate courts found that petitioner had acted in bad faith.

However, the award of P5 million as moral damages is excessive, considering that the highest
amount ever awarded by this Court for moral damages in cases involving airlines is P500,000.
As We said in Air France v. Gillego, "the mere fact that respondent was a Congressman
should not result in an automatic increase in the moral and exemplary damages." We
find that upon the facts established, the amount of P500,000 as moral damages is reasonable
to obviate the moral suffering that respondents have undergone. With regard to exemplary
damages, jurisprudence shows that P50,000 is sufficient to deter similar acts of bad faith
attributable to airline representatives.

(4) PAL vs. Civil Aeronautics Board, GR. No. 119528, March 26, 1997

Facts:
On November 24, 1994, GrandAir applied for a Certificate of Public Convenience and Necessity
with the Board. Accordingly, the Chief Hearing Officer of the CAB issued a Notice of Hearing
setting the application for initial hearing and directing GrandAir to serve a copy of the application
and corresponding notice to all scheduled Philippine Domestic operators.
GrandAir filed its Compliance, and requested for the issuance of a Temporary Operating Permit.
PAL, a holder of a legislative franchise to operate air transport services, filed an Opposition to
the application for a Certificate of Public Convenience and Necessity on December 16, 1995
on the following grounds: The CAB has no jurisdiction to hear the petitioner's application until
the latter has first obtained a franchise to operate from Congress.
At the initial hearing for the application, petitioner raised the issue of lack of jurisdiction of the
Board to hear the application because GrandAir did not possess a legislative franchise. Chief
Hearing Officer of CAB issued an Order denying petitioner's Opposition.
PAL alleges that the CAB has no jurisdiction to hear the petitioner's application until the latter
has first obtained a franchise to operate from Congress. The Civil Aeronautics Board has
jurisdiction to hear and resolve the application.
In Avia Filipina vs. CAB, CA G.R. No. 23365, it has been ruled that under Section 10 (c) (I) of
R.A. 776, the Board possesses this specific power and duty. In view thereof, the opposition of
PAL on this ground is hereby denied.
Issue:
Whether or not the Congress , in enacting Republic Act 776, has delegated the authority to
authorize the operation of domestic air transport services to the respondent Board, such that
Congressional mandate for the approval of such authority is no longer necessary.
Ruling:
Congress has granted certain administrative agencies the power to grant licenses for, or to
authorize the operation of certain public utilities.
With the growing complexity of modern life, the multiplication of the subjects of governmental
regulation, and the increased difficulty of administering the laws, there is a constantly growing
tendency towards the delegation of greater powers by the legislature, and towards the approval
of the practice by the courts.
It is generally recognized that a franchise may be derived indirectly from the state through a
duly designated agency, and to this extent, the power to grant franchises has frequently been
delegated, even to agencies other than those of a legislative nature. In pursuance of this, it has
been held that privileges conferred by grant by local authorities as agents for the state constitute
as much a legislative franchise as though the grant had been made by an act of the Legislature.
"The franchise is a legislative grant, whether made directly by the legislature itself, or by any
one of its properly constituted instrumentalities. The grant, when made, binds the public, and
is, directly or indirectly, the act of the state."
Congress, by giving the respondent Board the power to issue permits for the operation of
domestic transport services, has delegated to the said body the authority to determine the
capability and competence of a prospective domestic air transport operator to engage in such
venture. This is not an instance of transforming the respondent Board into a mini-legislative
body, with unbridled authority to choose who should be given authority to operate domestic air
transport services.
"To be valid, the delegation itself must be circumscribed by legislative restrictions, not a "roving
commission" that will give the delegate unlimited legislative authority. It must not be a
delegation "running riot" and "not canalized with banks that keep it from overflowing."
Otherwise, the delegation is in legal effect an abdication of legislative authority, a total surrender
by the legislature of its prerogatives in favor of the delegate."
Notes:

The use of the word “necessity”, in conjunction with “public convenience” in a certificate of
authorization to a public service entity to operate – Many and varied are the definitions of
certificates of public convenience which courts and legal writers have drafted. Some statutes
use the terms “convenience and necessity” while others use only the words “public
convenience.” The terms “convenience and necessity”, if used together in a statute, are usually
held not to be separable, but are construed together. Both words modify each other and must
be construed together. The word ‘necessity’ is so connected, not as an additional requirement
but to modify and qualify what might otherwise be taken as the strict significance of the word
necessity. Public convenience and necessity exists when the proposed facility will meet a
reasonable want of the public and supply a need which the existing facilities do not adequately
afford. It does not mean or require an actual physical necessity or an indispensable thing. “The
terms ‘convenience’ and ‘necessity’ are to be construed together, although they are not
synonymous, and effect must be given both. The convenience of the public must not be
circumscribed by according to the word ‘necessity’ its strict meaning or an essential requisites.”
The use of the word “necessity”, in conjunction with “public convenience” in a certificate of
authorization to a public service entity to operate, does not in any way modify the nature of such
certification, or the requirements for the issuance of the same. It is the law which determines
the requisites for the issuance of such certification, and not the title indicating the certificate.

(5) Royal Cargo vs. Civil Aeronautics Board, GR. Nos. 103055 - 56, January
6, 2004 (Please Bear with me, I made this in a rush)

Facts:

The petitioner Royal Cargo Corporation is a stock corporation duly organized and existing under
and by virtue of Philippine laws, seventy percent (70%) of which is owned by Filipino citizens
and thirty percent (30%) by foreigners. The President of the petitioner company is a foreigner
who is married to a Filipina, while the company officers, including the Chairman of the Board,
the Executive Vice-President and all the Vice- Presidents are all Filipinos.

On February 25, 1977, the petitioner, then operating under the name Royal Air Cargo, Inc., was
initially granted by the respondent Board an indefinite authority to engage in international air
freight forwarding. On October 11, 1983, the petitioner changed its corporate name to Royal
Cargo Corporation. Subsequently, it filed a petition with the respondent Board requesting for a
fixed duration of its authority. By way of Civil Aeronautics Board Resolution No. 140(85) dated
April 12, 1985, the petitioner’s permit was extended for a period of five years, or until April 11,
1990.

On the day that its permit to operate was to expire, or on April 11, 1990, the petitioner applied
for a renewal thereof for another five years. In its petition, it alleged, inter alia, that its president,
Michael K. Raeuber, was a German national. Acting thereon, the Air Carrier Accounts System
and Field Audit Division of the respondent Board recommended the granting of the petition,
provided that the position of president was transferred within thirty days from notice thereof,
otherwise the permit would be cancelled.

CAB Ruling: Based on the foregoing recommendation and after due hearing conducted
thereon, the respondent Board promulgated Resolution No. 209(90), dated June 1, 1990, which
IMPOSES upon Royal Cargo Corporation a fine of P10,000.00, as a penalty for operating with
expired permit, payable within 10 days. The Board Resolved further to direct Royal Cargo
Corporation to transfer its top position to a Filipino national.

CA Ruling: Aggrieved, the petitioner elevated the case to the Court of Appeals. In the assailed
Decision of September 30, 1991, the appellate court ruled that as a public utility, the petitioner
is covered by the restriction embodied in Section 11, Article XII of the Constitution which
provides in part that:

Section 11. ... The participation of foreign investors in the governing body of any public
utility enterprise shall be limited to their proportionate share in its capital, and all the
executive and managing officers of such corporation or association must be citizens of
the Philippines.5
The CA, thus, held that the respondent Board did not err in ordering the petitioner to transfer
its top position to a Filipino national.

Consequently, the CA dismissed the petitioner’s appeal for lack of merit. The petitioner sought
reconsideration of the aforesaid decision but the CA, in the assailed Resolution of November
27, 1991, denied the petitioner’s motion. Hence, the present recourse.

Issue:

Whether or not the CA committed a reversible error in rendering the assailed decision and
resolution. (NO)

Ruling:

The instant petition has become moot and academic. This is evident from the fact that the
permit to operate as an international airfreight forwarder the respondent Board sought to
withhold from the petitioner for failing to meet the constitutional Filipinization requirement had
already lapsed in 1995. Also, with the current renewal of the petitioner’s authority to operate, it
is to be assumed that it has finally decided to comply with the citizenship requirement mandated
by the constitution for its line of business. Under the circumstances, the dismissal of the case
is clearly warranted as the petitioner no longer has any legal interest in the present case.

It is a rule of universal application that courts of justice constituted to pass upon substantial
rights will not consider questions where no actual interests are involved; they decline jurisdiction
of moot cases. And where the issue has become moot and academic, there is no justiciable
controversy, so that a declaration thereon would be of no practical use or value. There is no
actual substantial relief to which the petitioner would be entitled and which would be negated
by the dismissal of the petition. Thus, the Court will refrain from expressing its opinion in a case
where no practical relief may be granted in view of a supervening event.

(6) Air Transportation Office vs. Spouses Ramos, GR. No. 159402, February
11, 2011

Facts:
Spouses David and Elisea Ramos (respondents) discovered that a portion of their land
registered under Transfer Certificate of Title No. T-58894 of the Baguio City land was being
used as part of the runway and running shoulder of the Loakan Airport being operated by
petitioner Air Transportation Office (ATO). On August 11, 1995, the respondents agreed after
negotiations to convey the affected portion by deed of sale to the ATO in consideration of the
amount of P778,150.00. However, the ATO failed to pay despite repeated verbal and written
demands.

Thus, on April 29, 1998, the respondents filed an action for collection against the ATO and
some of its officials in the RTC.
In their answer, the ATO and its co-defendants invoked as an affirmative defense the issuance
of Proclamation No. 1358, whereby President Marcos had reserved certain parcels of land that
included the respondents' affected portion for use of the Loakan Airport. They asserted that the
RTC had no jurisdiction to entertain the action without the State's consent considering that the
deed of sale had been entered into in the performance of governmental functions.

On November 10, 1998, the RTC denied the ATO's motion for a preliminary hearing of the
affirmative defense.

After the RTC likewise denied the ATO's motion for reconsideration on December 10, 1998, the
ATO commenced a special civil action for certiorari in the CA to assail the RTC's orders. The
CA dismissed the petition for certiorari, however, upon its finding that the assailed orders were
not tainted with grave abuse of discretion.3

Issue:
Whether the ATO could be sued without the State's consent.

Ruling:
Yes. The immunity of the State from suit, known also as the doctrine of sovereign immunity or
non-suability of the State, is expressly provided in Article XVI of the 1987 Constitution, viz:

Section 3. The State may not be sued without its consent.

The immunity from suit is based on the political truism that the State, as a sovereign, can do
no wrong. Moreover, as the eminent Justice Holmes said in Kawananakoa v. Polyblank:6

A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but
on the logical and practical ground that there can be no legal right as against the authority that
makes the law on which the right depends.7

An unincorporated government agency without any separate juridical personality of its own
enjoys immunity from suit because it is invested with an inherent power of sovereignty.
Accordingly, a claim for damages against the agency cannot prosper; otherwise, the doctrine
of sovereign immunity is violated.11 However, the need to distinguish between an
unincorporated government agency performing governmental function and one performing
proprietary functions has arisen. The immunity has been upheld in favor of the former because
its function is governmental or incidental to such function;12 it has not been upheld in favor of
the latter whose function was not in pursuit of a necessary function of government but was
essentially a business.13

Should the doctrine of sovereignty immunity or non-suability of the State be extended

to the ATO?

Suits against State agencies with relation to matters in which they have assumed to act in
private or non-governmental capacity, and various suits against certain corporations created
by the state for public purposes, but to engage in matters partaking more of the nature of
ordinary business rather than functions of a governmental or political character, are not
regarded as suits against the state. The latter is true, although the state may own stock or
property of such a corporation for by engaging in business operations through a corporation,
the state divests itself so far of its sovereign character, and by implication consents to suits
against the corporation. (59 C.J., 313) [National Airports Corporation v. Teodoro, supra, pp.
206-207; Italics supplied.]

In our view, the CA thereby correctly appreciated the juridical character of the ATO as an
agency of the Government not performing a purely governmental or sovereign function, but was
instead involved in the management and maintenance of the Loakan Airport, an activity that
was not the exclusive prerogative of the State in its sovereign capacity. Hence, the ATO had
no claim to the State's immunity from suit.

(7) Korean Airlines Ltd. vs. Court of Appeals, G.R. No. 114061 August 3, 1994

Facts:

Sometime in 1980, Juanito C. Lapuz, an automotive electrician, was contracted for employment
in Jeddah, Saudi Arabia, for a period of one year through Pan Pacific Overseas Recruiting
Services, Inc. Lapuz was supposed to leave on November 8, 1980, via Korean Airlines. Initially,
he was “wait-listed,” which meant that he could only be accommodated if any of the confirmed
passengers failed to show up at the airport before departure. When two of such passengers did
not appear, Lapuz and another person by the name of Perico were given the two unclaimed
seats.

According to Lapuz, he was allowed to check in with one suitcase and one shoulder bag at the
check-in counter of KAL. He passed through the customs and immigration sections for routine
check-up and was cleared for departure as passenger of KAL. Together with the other
passengers, he rode in the shuttle bus and proceeded to the ramp of the KAL aircraft for
boarding. However, when he was at the third or fourth rung of the stairs, a KAL officer pointed
to him and shouted “Down! Down!” He was thus barred from taking the flight. When he later
asked for another booking, his ticket was canceled by KAL. Consequently, he was unable to
report for his work in Saudi Arabia within the stipulated 2-week period and so lost his
employment.

KAL alleged that the agent of Pan Pacific was informed that there are 2 seats possibly available.
He gave priority to Perico, while the other seat was won by Lapuz through lottery. But because
only 1 seat became available, it was given to Perico. The trial court adjudged KAL liable for
damages. The decision was affirmed by the Court of Appeals, with modification on the damages
awarded.

Issue:

(1) Whether there is already a contract of carriage between KAL and Lapuz to hold KAL liable
for breach of contract

(2) Whether moral and exemplary damages should be awarded, and to what extent

Ruling:
(1) The status of Lapuz as standby passenger was changed to that of a confirmed passenger
when his name was entered in the passenger manifest of KAL. His clearance through
immigration and customs clearly shows that he had indeed been confirmed as a passenger of
KAL in that flight. KAL thus committed a breach of the contract of carriage between them when
it failed to bring Lapuz to his destination.

This Court has held that a contract to transport passengers is different in kind and degree from
any other contractual relation. The business of the carrier is mainly with the traveling public. It
invites people to avail themselves of the comforts and advantages it offers. The contract of air
carriage generates a relation attended with a public duty. Passengers have the right to be
treated by the carrier’s employees with kindness, respect, courtesy and due consideration.
They are entitled to be protected against personal misconduct, injurious language, indignities
and abuses from such employees. So it is that any discourteous conduct on the part of these
employees toward a passenger gives the latter an action for damages against the carrier.

The breach of contract was aggravated in this case when, instead of courteously informing
Lapuz of his being a “wait-listed” passenger, a KAL officer rudely shouted “Down! Down!” while
pointing at him, thus causing him embarrassment and public humiliation.

The evidence presented by Lapuz shows that he had indeed checked in at the departure
counter, passed through customs and immigration, boarded the shuttle bus and proceeded to
the ramp of KAL’s aircraft. In fact, his baggage had already been loaded in KAL’s aircraft, to be
flown with him to Jeddah. The contract of carriage between him and KAL had already been
perfected when he was summarily and insolently prevented from boarding the aircraft.

(2) The Court of Appeals granted moral and exemplary damages because:
a.) The findings of the court a quo that the defendant-appellant has committed breach of
contract of carriage in bad faith and in wanton, disregard of plaintiff-appellant’s rights as
passenger laid the basis and justification of an award for moral damages.
b.) In the instant case, we find that defendant-appellant Korean Air Lines acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner when it “bumped off” plaintiff-appellant
on November 8, 1980, and in addition treated him rudely and arrogantly as a “patay gutom na
contract worker fighting Korean Air Lines,” which clearly shows malice and bad faith, thus
entitling plaintiff-appellant to moral damages.
c.) Considering that the plaintiff-appellant’s entitlement to moral damages has been fully
established by oral and documentary evidence, exemplary damages may be awarded. In fact,
exemplary damages may be awarded, even though not so expressly pleaded in the complaint.
By the same token, to provide an example for the public good, an award of exemplary damages
is also proper.

(8) Japan Airlines vs. Asuncion, G.R. NO. 161730 : January 28, 2005

Facts:
This petition for review seeks to reverse and set aside the October 9, 2002 decision of the Court
of Appeals and its January 12, 2004 resolution, which affirmed in toto the June 10, 1997
decision of the Regional Trial Court of Makati City, Branch 61 in Civil Case No. 92-3635.
On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board Japan
Airlines’ (JAL) Flight 742 bound for Los Angeles. Their itinerary included a stop-over in Narita
and an overnight stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs. Noriko Etou-Higuchi of
JAL endorsed their applications for shore pass and directed them to the Japanese immigration
official. A shore pass is required of a foreigner aboard a vessel or aircraft who desires to stay
in the neighborhood of the port of call for not more than 72 hours.

During their interview, the Japanese immigration official noted that Michael appeared shorter
than his height as indicated in his passport. Because of this inconsistency, respondents were
denied shore pass entries and were brought instead to the Narita Airport Rest House where
they were billeted overnight.

Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by Japan’s
Immigration Department to handle passengers who were denied shore pass entries, brought
respondents to the Narita Airport Rest House where they stayed overnight until their departure
the following day for Los Angeles. Respondents were charged US$400.00 each for their
accommodation, security service and meals.

On December 12, 1992, respondents filed a complaint for damages claiming that JAL did not
fully apprise them of their travel requirements and that they were rudely and forcibly detained
at Narita Airport.

Issue: Whether or not JAL is liable of breach of contract of carriage.

Side Issues:
· Whether or not JAL is liable for moral, exemplary damages,
· Whether or not the plaintiff is liable for attorney’s fee and cost of suit incurred (JAL
counterclaim)

Ruling:
The court finds that JAL did not breach its contract of carriage with respondents. It may be true
that JAL has the duty to inspect whether its passengers have the necessary travel documents,
however, such duty does not extend to checking the veracity of every entry in these documents.
JAL could not vouch for the authenticity of a passport and the correctness of the entries therein.
The power to admit or not an alien into the country is a sovereign act which cannot be interfered
with even by JAL. This is not within the ambit of the contract of carriage entered into by JAL
and herein respondents. As such, JAL should not be faulted for the denial of respondents’ shore
pass applications.

In the Respondents claim that petitioner breached its contract of carriage when it failed to
explain to the immigration authorities that they had overnight vouchers at the Hotel Nikko Narita.
They imputed that JAL did not exhaust all means to prevent the denial of their shore pass entry
applications. JAL or any of its representatives have no authority to interfere with or influence
the immigration authorities. The most that could be expected of JAL is to endorse respondents’
applications, which Mrs. Higuchi did immediately upon their arrival in Narita.

Moral damages may be recovered in cases where one willfully causes injury to property, or in
cases of breach of contract where the other party acts fraudulently or in bad faith. Exemplary
damages are imposed by way of example or correction for the public good, when the party to
a contract acts in wanton, fraudulent, oppressive or malevolent manner. Attorney’s fees are
allowed when exemplary damages are awarded and when the party to a suit is compelled to
incur expenses to protect his interest.[17] There being no breach of contract nor proof that JAL
acted in wanton, fraudulent or malevolent manner, there is no basis for the award of any form
of damages.

Neither should JAL be held liable to reimburse respondents the amount of US$800.00. It has
been sufficiently proven that the amount pertained to ISC, an agency separate and distinct from
JAL, in payment for the accommodations provided to respondents. The payments did not in
any manner accrue to the benefit of JAL.

However, we find that the Court of Appeals correctly dismissed JAL’s counterclaim for litigation
expenses, exemplary damages and attorney’s fees. The action was filed by respondents in
utmost good faith and not manifestly frivolous. Respondents honestly believed that JAL
breached its contract. A person’s right to litigate should not be penalized by holding him liable
for damages. This is especially true when the filing of the case is to enforce what he believes
to be his rightful claim against another although found to be erroneous.[

WHEREFORE, in view of the foregoing, the instant petition is PARTLY GRANTED. The
October 9, 2002 decision of the Court of Appeals and its January 12, 2004 resolution in CA-
G.R. CV No. 57440, are REVERSED and SET ASIDE insofar as the finding of breach on the
part of petitioner and the award of damages, attorney’s fees and costs of the suit in favor of
respondents is concerned. Accordingly, there being no breach of contract on the part of
petitioner, the award of actual, moral and exemplary damages, as well as attorney’s fees and
costs of the suit in favor of respondents Michael and Jeanette Asuncion, is DELETED for lack
of basis. However, the dismissal for lack of merit of petitioner’s counterclaim for litigation
expenses, exemplary damages and attorney’s fees, is SUSTAINED. No pronouncement as to
costs.

(9) Ong Yiu vs. Court of Appeals, G.R. No. L-40597 June 29, 1979

Facts:
Ong Yiu, a practicing lawyer, the herein petitioner, engaged on the service of PAL as a paying
passenger. On August 26, 1967, Ong Yiu was bound for Butuan City from Cebu City, for a
scheduled trial. As a passenger, he checked in one piece of luggage which he was issued a
Claim Check. Upon arrival at Butuan City, he found out that his luggage was missing. He then
approached the porter clerk about the matter. It was then found out that the said luggage was
transported to Manila, instead of doing so to Butuan City. The porter clerk informed Ong Yiu
that the said luggage will be transported from Manila to Cebu to Butuan City on the following
day. The next day, Ong Yiu went back to Butuan City airport to check if the luggage has already
arrived. Knowing that the same was not yet delivered at the Butuan City airport, Ong Yiu left
the premises. After few hours, the luggage arrived but since the latter has already left, the driver
who used to drive the petitioner delivered the luggage to the latter with the notification that the
luggage has arrived with its lock opened. Upon inspection, Ong Yiu noticed that a folder
containing documents was missing.
As a consequence, Ong Yiu requested for the postponement of the trial he was supposed to
attend in Butuan City. Petitioner asked for the investigation of his missing folder but the PAL
failed to trace where the folder is. Petitioner then demanded for damages for breach of contract
of transportation against PAL. The trail court awarded the sum of P80,000 for moral damages
and P30,000 for exemplary damages. Both parties appealed on the CA which the latter, on its
decision,found out that PAL did not act in bad faith, hence, removed the moral and exemplary
damages in favor of Ong Yiu and ordered PAL to pay the latter with P100, in pursuance to the
stipulation written on the ticket issued by PAL to Ong Yiu; thus, this appeal.

Issue:
Whether or not PAL acted in bad faith and Ong Yiu should be paid for moral and exemplary
damages due to breach of contract of transportation.

Ruling:
NO. Although PAL is guilty of negligence, the SC found out that the latter is guilty of simple
negligence only. The efforts of PAL on locating the luggage proved that it acted in good faith
and with due diligence of duty. Moreover, it was stated that Ong Yiu should have received and
checked his luggage upon the latter’s arrival on the airport if the former waited a little longer.

Furthermore, petitioner is not entitled of the moral and exemplary damages due to following
findings:
(a) Ong Yiu failed to declare a higher value of the luggage;
(b) Ong Yiu did not pay for any additional transportation charge;
(c) while it may be true that petitioner had not signed the plane ticket, he is bound by the
provisions thereof.

The plane ticket is regarded as a contract. Nevertheless, it is a contract of adhesion. A contract

of adhesion is that where one party imposes a ready- made form of contact on the other. It is
not entirely prohibited by the law. The one who adhered to the contract is in reality free to reject
it entirely; if he adheres, he gives his consent. Therefore, the Supreme Court ruled that Ong
Yiu cannot claim damages higher than P100 because of his failure to declare a greater value
of the luggage and in accordance with the stipulation of the contract of adhesion, in which he
consented, as in this case, the place ticket which was issued to him.

(10) Sabena Belgian World Airlines vs. Court of Appeals, G.R. No. 104685. March 14, 1996

Doctrine:
– Art. 1733 of the [Civil] Code provides that from the very nature of their business and by
reasons of public policy, common carriers are bound to observe extraordinary diligence in
the vigilance over the goods transported by them.
– Art. 1735 establishes the presumption that if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they had observed extraordinary diligence as required in Article 1733.
– The Warsaw Convention denies to the carrier availment ‘of the provisions which exclude
or limit his liability, if the damage is caused by his wilful misconduct or by such
default on his part as, in accordance with the law of the court seized of the case, is considered
to be equivalent to wilful misconduct,’ or ‘if the damage is (similarly) caused x x x by any agent
of the carrier acting within the scope of his employment.’

Facts:
1. Plaintiff Ma. Paula San Agustin, herein private respondent, was a passenger on board
Flight SN 284 of defendant airline originating from Casablanca to Brussels, Belgium on
her way back to Manila. She checked in her luggage which contained her valuables,
namely: jewelries valued at $2,350.00; clothes $1,500.00; shoes/bag $150;
accessories $75; luggage itself $10.00; or a total of $4,265.00, for which she was issued
Tag No. 71423. She stayed overnight in Brussels and her luggage was left on board
Flight SN 284.
2. She arrived at Manila International Airport and immediately submitted her Tag No. 71423
but her luggage was missing. She was advised to accomplish and submit a property
Irregularity Report which she submitted and filed on the same day but when her luggage
could not be found, she filed a formal complaint with defendant’s Local Manager.
3. Subsequently, plaintiff was furnished copies of telexes of defendant’s Brussel’s Office
that the latter found her luggage and that they have broken the locks for
identification. Plaintiff was assured by the defendant that it has notified its Manila Office
that the luggage will be shipped to Manila. But unfortunately plaintiff was informed that
the luggage was lost for the second time.
4. Plaintiff demanded from the defendant the money value of the luggage and its contents
or its exchange value, but defendant refused to settle the claim. Defendant asserts in its
Answer and its evidence tend to show that while it admits that the plaintiff was a
passenger with a piece of checked in luggage, the loss of the luggage was due to
plaintiff’s sole if not contributory negligence.
5. Petitioner airline company, in contending that the alleged negligence of private
respondent should be considered the primary cause for the loss of her luggage, avers
that, despite her awareness that the flight ticket had been confirmed only for Casablanca
and Brussels, and that her flight from Brussels to Manila had yet to be confirmed, she did
not retrieve the luggage upon arrival in Brussels. Petitioner insists that private
respondent, being a seasoned international traveler, must have likewise been familiar
with the standard provisions contained in her flight ticket that items of value are required
to be hand-carried by the passenger and that the liability of the airline or loss, delay or
damage to baggage would be limited, in any event, to only US$20.00 per kilo unless a
higher value is declared in advance and corresponding additional charges are paid
thereon. At the Casablanca International Airport, private respondent, in checking in her
luggage, evidently did not declare its contents or value, pursuant to Section 5(c), Article
IX, of the General Conditions of Carriage, which states that: “Passengers shall not
include in his checked baggage, and the carrier may refuse to carry as checked baggage,
fragile or perishable articles, money, jewelry, precious metals, negotiable papers,
securities or other valuables.”
6. The trial court rendered judgment ordering Sabena Belgian World Airlines to pay private
respondent. Sabena appealed but the CA affirmed in toto the trial court’s judgment,
hence the present petition for review.

Issue:
W/N the airline is liable for the lost luggage.

Ruling:
Yes. Fault or negligence consists in the omission of that diligence which is demanded by the
nature of an obligation and corresponds with the circumstances of the person, of the time, and
of the place. When the source of an obligation is derived from a contract, the mere breach or
non-fulfillment of the prestation gives rise to the presumption of fault on the part of the obligor.
This rule is not different in the case of common carriers in the carriage of goods which, indeed,
are bound to observe not just the due diligence of a good father of a family but that of
“extraordinary” care in the vigilance over the goods.

The only exceptions to the foregoing extraordinary responsibility of the common carrier is when
the loss, destruction, or deterioration of the goods is due to any of the following causes:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority.’

Not one of the above excepted causes obtains in this case.

The airline cannot invoke the tort doctrine of proximate cause because the private respondent’s
luggage was lost while it was in the custody of petitioner. The “loss of said baggage not only
once by twice,” said the appellate court, “underscores the wanton negligence and lack of care”
on the part of the carrier. The above findings foreclose whatever rights petitioner might have
had to the possible limitation of liabilities enjoyed by international air carriers under the Warsaw
Convention.

In Alitalia vs. Intermediate Appellate Court, the Court held that “the Warsaw Convention
however denies to the carrier availment ‘of the provisions which exclude or limit his liability, if
the damage is caused by his wilful misconduct or by such default on his part as, in accordance
with the law of the court seized of the case, is considered to be equivalent to wilful misconduct,’
or ‘if the damage is (similarly) caused x x x by any agent of the carrier acting within the scope
of his employment.’

The Hague Protocol amended the Warsaw Convention by removing the provision that if the
airline took all necessary steps to avoid the damage, it could exculpate itself completely, and
declaring the stated limits of liability not applicable ‘if it is proved that the damage resulted from
an act or omission of the carrier, its servants or agents, done with intent to cause damage or
recklessly and with knowledge that damage would probably result.’ The same deletion was
effected by the Montreal Agreement of 1966, with the result that a passenger could recover
unlimited damages upon proof of wilful misconduct.

The Convention does not thus operate as an exclusive enumeration of the instances of an
airline’s liability, or as an absolute limit of the extent of that liability. It should be deemed a limit
of liability only in those cases where the cause of the death or injury to person, or destruction,
loss or damage to property or delay in its transport is not attributable to or attended by any wilful
misconduct, bad faith, recklessness or otherwise improper conduct on the part of any official or
employee for which the carrier is responsible, and there is otherwise no special or extraordinary
form of resulting injury. Decision appealed from AFFIRMED.

(11) Mapa vs. Court of Appeals, G.R. No. 122308 July 8, 1997

Summary for Emergency Recitation:

Sps. Mapa entered into a contract of air transportation with TWA evidenced by tickets
purchased in Thailand (place of destination: Chicago, USA). Domicile of TWA (carrier) and its
place of business are Kansas, Missouri, USA. Mrs. Purita Mapa and their daughter left Manila
on board PAL flight for Los Angeles. Upon arrival at LA, they stayed their until they left for New
York. They deported for Boston, taking a connecting flight on TWAs carrier from JFK Airport,
NY, to Bostons Logan Airport, checking in seven (7) pieces of luggage at the TWA counter in
the JFK Airport. After they had presented their confirmed TWA tickets at TWA’s ticket counter,
they were issued their boarding passes.

However, due to an error in the boarding gate (as they were wrongly instructed by TWA
personnel), they were not able to board the plane. Upon arriving in Boston, they proceeded to
the carousel to claim their baggages and found only three out of the seven they checked in.
They immediately reported the loss of their 4 baggages to the TWA Baggage Office at Logan
Airport. Despite repeated demands, they were still unable to recover the lost baggages so, Sps
Mapa and their daughter then filed with RTC-QC, a complaint for damages.

TWA countered raising, as special and affirmative defense, lack of jurisdiction of PH courts over
the action for damages in that pursuant to Article 28(1) of the Warsaw Convention, the action
could only be brought either in Bangkok where the contract was entered into, or in Boston which
was the place of destination, or in Kansas City which is the carrier's domicile and principal place
of business. RTC dismissed the case for lack of JD.

The issue in this case is whether or not the contracts of transportation between Purita and
Carmina Mapa and TWA were contracts of international transportation under the Warsaw
Convention. SC ruled that it is not a contract of international transportation under Warsaw
Convention. The contracts of transportation in this case are evidenced by the two TWA tickets
both purchased and issued in Bangkok, Thailand.

On the basis alone of the provisions therein, it is obvious that the place of departure and the
place of destination are all in the territory of the United States, or of a single High Contracting
Party. The contracts, therefore, cannot come within the purview of the first category of
international transportation. Neither can it be under the second category since there was NO
agreed stopping place within a territory subject to the sovereignty, mandate, or authority of
another power. (please full ratio for better understanding. Juicecolored, ang jirap isumarize neto
talaga).

Facts:
• Sps. Mapa entered into contract of air transportation with TWA as evidenced by TWA tickets
purchased in Bangkok, Thailand. Said TWA tickets are for Los Angeles-New York-Boston-St.
LouisChicago. o Domicile of carrier TWA and its principal place of business is Kansas City,
Missouri, USA. The place of destination is Chicago, USA.
• Mrs. Purita Mapa and Carmina (Sps Mapa’s dughter) left Manila on board PAL flight No. 104
for Los Angeles. Carmina was to commence schooling at Boston University and thus was
accompanied by Purita to assist her in settling down at the University.
• They arrived in Los Angeles on the same date and stayed there until they left for New York
City. Purita and Carmina arrived at the John F. Kennedy (JFK) Airport, New York, on TWA
Flight No. 904.
• They departed for Boston, taking a connecting flight on TWAs carrier from JFK Airport, NY, to
Boston Logan Airport, checking in seven (7) pieces of luggage at the TWA counter in the JFK
Airport. TWA baggage receipts were issued therefor.
• After they had presented their confirmed TWA tickets (with departure at 3 pm) at TWA’s ticket
counter, they were issued their boarding passes and were instructed to proceed to gate 35 for
boarding. However, upon plaintiffs’ inquiry, they were informed that they were at the wrong gate
(gate 1 dapat). At gate 1, they were told that their flight had just departed. They were able to
board in the next plane.
• Upon arriving in Boston, they proceeded to the carousel to claim their baggages and found
only three out of the seven they checked in. They immediately reported the loss of their 4
baggages to TWA.
• Plaintiffs received a letter from TWA apologizing for TWAs failure to locate the missing
luggage and requesting plaintiffs to accomplish a passenger property questionnaire to facilitate
a further intensive and computerized search for the lost luggage. Plaintiffs duly accomplished
the passenger property questionnaire.
• TWA was still unable to locate the missing baggages. Despite demands by Sps. Mapa, TWA
failed and refused to indemnify and redress plaintiffs for the grave injury and damages they
have suffered.
• Sps Mapa and their daughter then filed with RTC-QC, a complaint for damages.
• TWA filed its Answer raising, as special and affirmative defense, lack of jurisdiction of
Philippine courts over the action for damages in that pursuant to Article 28(1) of the Warsaw
Convention, the action could only be brought either in Bangkok where the contract was entered
into, or in Boston which was the place of destination, or in Kansas City which is the carrier's
domicile and principal place of business.
• TC issued an Order dismissing the case for lack of jurisdiction in light of Article 28(1) of the
Warsaw Convention. TC held that page 2 of Passenger Property Questionnaire accomplished
by plaintiffs under the heading "Your Complete Itinerary" shows that the TWA tickets issued to
the plaintiffs form part of the contract of transportation to be performed from Manila to the United
States. Since the Philippines and the United States are parties to the convention, plaintiffs'
contracts of transportation come within the meaning of International Transportation.
• Sps. Mapa appealed to CA, contending that:
o RTC erred in not holding that it has jurisdiction over the instant case and that the Warsaw
Convention is inapplicable because the contracts they had with TWA did not involve an
international transportation; and
o Their cause of action could be based on brach of contract of air carriage founded on Arts.
1733-1735, 1755, and 1756 of the New Civil Code governing common carriers or Art. 2176 of
the same code governing torts/quasi-delict.
• CA affirmed RTC.
Issue:
1. Whether the contracts of transportation between Purita and Carmina Mapa and TWA were
contracts of international transportation under the Warsaw Convention. NO! HENCE,
WARSAW CONVENTION IS NOT APPLICABLE.

Ruling:

Petition is GRANTED and RTC-QC is DIRECTED to hear the case.

1. Contracts of transportation between Purita and Carmina, and TWA were not contracts of
international transportation under Warsaw Convention. Hence, the Philippine Court has
jurisdiction to hear the case.

As provided in Article I(2) of the Warsaw Convention, a contract is one of international

transportation only if according to the contract made by the parties, the place of departure and
the place of destination, whether or not there be a break in the transportation or a
transshipment, are situated either within the territories of two High Contracting Parties
(signatories to the Convention and those w/c subsequently adhered thereto), or within the
territory of a single High Contracting Party, if there is an agreed stopping place within a territory
subject to the sovereignty, mandate or authority of another power, even though that power is
not a party to this convention.

Two categories of international transportation: (1) where the place of departure and the place
of destination are situated within the territories of two High Contracting Parties regardless of
whether or not there be a break in the transportation or a transshipment; and (2) where the
place of departure and the place of destination are within the territory of a single High
Contracting Party if there is an agreed stopping place within a territory subject to the
sovereignty, mandate, or authority of another power, even though the power is not a party to
the Convention.

The contracts of transportation in this case are evidenced by the two TWA tickets both
purchased and issued in Bangkok, Thailand. On the basis alone of the provisions therein, it is
obvious that the place of departure and the place of destination are all in the territory of the
United States, or of a single High Contracting Party. The contracts, therefore, cannot come
within the purview of the first category of international transportation. Neither can it be under
the second category since there was NO agreed stopping place within a territory subject to the
sovereignty, mandate, or authority of another power. The only way to bring the contracts
between Purita and Carmina Mapa and TWA, within the first category of international
transportation is to link them with, or to make them an integral part of, the Manila-Los Angeles
travel of Purita and Carmina through PAL aircraft.

The alleged linkages are:

(1) the handwritten notations on the two TWA tickets; and
(2) the entries made by petitioners Purita and Carmina Mapa in column YOUR COMPLETE
ITINERARY in TWAs Passenger Property Questionnaire, wherein they mentioned their travel
from Manila to Los Angeles.
NO LINKAGE WERE ESTABLISHED:
(1) The international tickets mentioned in the notations in conjunction with which the two TWA
tickets were issued were not presented. Hence, no factual basis of the finding that the TWA
tickets were issued in conjunction with the international tickets, which are even, at least as of
now, non-existent.
(2) As regards the petitioners entry in YOUR COMPLETE ITINERARY column of the Passenger
Property Questionnaire wherein they included the Manila-Los Angeles travel, it must be pointed
out that this was made by Purita and Carmina Mapa only in connection with their claim for their
lost pieces of baggage. The loss occurred much earlier. The entry can by no means be
considered as a part of, or supplement to, their contracts of transportation evidenced by the
TWA tickets which covered transportation within the United States only.

It must be underscored that the first category of international transportation under the Warsaw
Convention is based on the contract made by the parties. TWA does not claim that the
ManilaLos Angeles contracts of transportation which brought Purita and Carmina to Los
Angeles were also its contracts. TWA does not deny the assertion of the petitioners that those
contracts were independent of the TWA tickets issued in Bangkok, Thailand. No evidence was
offered that TWA and PAL had an agreement concerning transportation of passengers from
points of departures not served with aircrafts of one or the other.

TWA relies on Article I(3) of the Convention: A carriage to be performed by several successive
air carriers is deemed, for the purposes of this Convention, to be one undivided carriage, if it
has been regarded by the parties as a single operation, whether it had been agreed upon under
the form of a single contract or of a series of contracts, and it shall not lose its international
character merely because one contract or a series of contracts is to be performed entirely within
a territory subject to the sovereignty, suzerainty, mandate, or authority of the same High
Contracting Party.

TWA also points to Article 15 of the IATA Recommend Practice 1724, which provides: Carriage
to be performed by several successive carriers under one ticket, or under a ticket and any
conjunction ticket issued in connection therewith, is regarded as a single operation. The flaw of
TWA’s position is their presumption that the parties have regarded as an undivided carriage or
as a single operation the carriage from Manila to Los Angeles through PAL then to New York-
Boston- St. Louis-Chicago through TWA. TWA should have offered evidence for its affirmative
defenses at the preliminary hearing therefor. Without any further evidence as earlier discussed,
the trial court should have denied the affirmative defense of lack of jurisdiction because it did
not appear to be indubitable. NOTE: In the case of the Philippines, the Convention was
concurred in by the Senate. The Convention became applicable to the Philippines in 1951.
Then, in 1955, Pres. Magsaysay issued Proclamation No. 201, declaring the Philippines 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.

SORRY MAHABA. Natatakot ako magedit out kasi relevant talaga sila eh. Sorry. L- AKI

(12) PAL vs. Buncio, GR. No. 123328, September 22, 2008
Facts:

Sometime before 2 May 1980, private respondents spouses Buncio purchased from petitioner
Philippine Airlines, Incorporated, two plane tickets for their two minor children, (Deanna), then
9 years of age, and (Nikolai), then 8 years old. Since Deanna and Nikolai will travel as
unaccompanied minors, petitioner required private respondents to accomplish, sign and
submit to it an indemnity bond. Private respondents complied with this requirement. For the
purchase of the said two plane tickets, petitioner agreed to transport Deanna and Nikolai on
2 May 1980 from Manila to San Francisco, California, through one of its planes. Petitioner
also agreed that upon the arrival of Deanna and Nikolai in San Francisco Airport on 3 May
1980, it would again transport the two on that same day through a connecting flight from San
Francisco to Los Angeles, via another airline, United Airways. Deanna and Nikolai then will
be met by their grandmother, Mrs. Regalado, at the Los Angeles Airport on their scheduled
arrival on 3 May 1980.

On 2 May 1980, Deanna and Nikolai boarded Flight 106 in Manila.

On 3 May 1980, Deanna and Nikolai arrived at the San Francisco Airport. However, the staff
of United Airways refused to take aboard Deanna and Nikolai for their connecting flight to Los
Angeles because petitioner’s personnel in San Francisco could not produce the indemnity
bond accomplished and submitted by private respondents. The said indemnity bond was lost
by petitioner’s personnel during the previous stop-over in Honolulu, Hawaii. Deanna and
Nikolai were then left stranded at the San Francisco Airport. Subsequently, Mr. Strigl, then the
Lead Traffic Agent of petitioner in San Francisco took Deanna and Nikolai to his residence
where they stayed overnight.

Meanwhile, Mrs. Regalado and several relatives waited for the arrival of Deanna and Nikolai
at the Los Angeles Airport (LAX). When United Airways landed at the LAX and its passengers
disembarked, Mrs. Regalado sought Deanna and Nikolai but she failed to find them. Mrs.
Regalado called private respondents and informed them that Deanna and Nikolai did not
arrive at LAX. Private respondents inquired about the location of Deanna and Nikolai from
petitioner’s personnel, but the latter replied that they were still verifying their whereabouts.On
the morning of 4 May 1980, Strigl took the kids to San Francisco Airport where the two boarded
a Western Airlines plane bound for Los Angeles. Later that day, Deanna and Nikolai arrived
at the Los Angeles Airport where they were met by Mrs. Regalado.

On July 1980, private respondents, through their lawyer, sent a letter to petitioner demanding
payment of 1 million pesos as damages for the gross negligence and inefficiency of its
employees in transporting Deanna and Nikolai. Petitioner did not heed the demand.

On November 1981, private respondents filed a complaint for damages against petitioner
before the RTC. Private respondents alleged that Deanna and Nikolai were not able to take
their connecting flight from San Francisco to Los Angeles as scheduled because the required
indemnity bond was lost on account of the gross negligence and malevolent conduct of
petitioner’s personnel. As a consequence thereof, Deanna and Nikolai were stranded in San
Francisco overnight, thereby exposing them to grave danger. This dilemma caused Deanna,
Nikolai, Mrs. Regalado and private respondents to suffer serious anxiety, mental anguish,
wounded feelings, and sleepless nights.

After trial, the RTC rendered a decision holding petitioner liable for damages for breach of
contract of carriage. It also held that petitioner should pay exemplary damages by way of
example or correction for the public good under Article 2229 and 2232 of the Civil Code, plus
attorney’s fees and costs of suit.

Petitioner filed the instant petition. Petitioner maintains that moral damages may be awarded
in a breach of contract of air carriage only if the mishap results in death of a passenger or if
the carrier acted fraudulently or in bad faith, that is, by breach of a known duty through some
motive of interest or ill will, some dishonest purpose or conscious doing of wrong; if there was
no finding of fraud or bad faith on its part; if, although it lost the indemnity bond, there was no
finding that such loss was attended by ill will, or some motive of interest, or any dishonest
purpose; and if there was no finding that the loss was deliberate, intentional or consciously
done.

Issue:

Whether or not petitioner is correct that it should not pay moral damages.

Ruling:

No. When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain
date, a contract of carriage arises. The passenger has every right to expect that he be
transported on that flight and on that date, and it becomes the airline’s obligation to carry him
and his luggage safely to the agreed destination without delay. If the passenger is not so
transported or if in the process of transporting, he dies or is injured, the carrier may be held
liable for a breach of contract of carriage.

In breach of contract of air carriage, moral damages may be recovered where (1) the mishap
results in the death of a passenger; or (2) where the carrier is guilty of fraud or bad faith; or
(3) where the negligence of the carrier is so gross and reckless as to virtually amount to bad
faith.

It was established in the instant case that since Deanna and Nikolai would travel as
unaccompanied minors, petitioner required private respondents to accomplish, sign and
submit to it an indemnity bond. Evidently, petitioner was fully aware that Deanna and Nikolai
would travel as unaccompanied minors and, therefore, should be specially taken care of
considering their tender age and delicate situation.

The foregoing circumstances reflect petitioner’s utter lack of care for and inattention to the
welfare of Deanna and Nikolai as unaccompanied minor passengers. They also indicate
petitioner’s failure to exercise even slight care and diligence in handling the indemnity bond.
Clearly, the negligence of petitioner was so gross and reckless that it amounted to bad faith.

It is worth emphasizing that petitioner, as a common carrier, is bound by law to exercise

extraordinary diligence and utmost care in ensuring for the safety and welfare of its
passengers with due regard for all the circumstances. The negligent acts of petitioner signified
more than inadvertence or inattention and thus constituted a radical departure from the
extraordinary standard of care required of common carriers.

As we have earlier found, petitioner breached its contract of carriage with private respondents,
and it acted recklessly and malevolently in transporting Deanna and Nikolai as
unaccompanied minors and in handling their indemnity bond. We have also ascertained that
private respondents are entitled to moral damages because they have sufficiently established
petitioner’s gross negligence which amounted to bad faith. This being the case, the award of
exemplary damages is warranted. The records show that Mrs. Regalado died in 1995 at the
age of 74, while Deanna passed away in 2003 at the age of 32. This being the case, the
foregoing award of damages plus interests in their favor should be given to their respective
heirs.

(13) Cathay Pacific vs. Reyes GR. No. 185891, June 26, 2013

Facts:
 Wilfredo made a travel reservation with Sampaguita Travel for his family’s trip to Adelaide,
Australia. Upon confirmation of their flight schedule, Wilfredo paid for the airfare and was
issued 4 Cathay Pacific roundtrip airplane tickets for Manila-Hong Kong-Adelaide-Hong
Kong-Manila.
 One week before they were scheduled to fly back home, Wilfredo re-confirmed his family’s
return flight with the Cathay Pacific office in Adelaide. They were advised that the reservation
was “still okay as scheduled”.
 On the day of their scheduled departure from Adelaide, Wilfredo and his family arrived at
the airport on time. When the airport check-in opened, Wilfredo was informed by a staff from
Cathay Pacific that Wilfredo’s family did not have confirmed reservations, and only Sixta’s
flight booking was confirmed.
 Although, they were allowed to board the flight to Hong Kong, not all of them were allowed
to board the flight to Manila as it was fully booked. Only Wilfredo’s mother-in-law, Sixta, was
allowed to proceed to Manila from Hong Kong.
 On the following day, the Reyeses were finally allowed to board the next flight bound for
Manila.
 Upon arriving in the Philippines, Wilfredo went Sampaguita Travel to report the incident. He
was informed by Sampaguita Travel that it was actually Cathay Pacific which cancelled their
bookings.

Issue:
 Whether Cathay Pacific breached its contract of carriage with the Wilfredo’s family? Yes
 Whether Sampaguita breached its contract of services with Wilfredo’s family? Yes

Ruling:
 Cathay Pacific breached its contract of carriage with the Reyeses when it disallowed them
to board the plane in Hong Kong going to Manila on the date reflected on their tickets. Thus,
 Cathay Pacific opened itself to claims for compensatory, actual, moral and exemplary
damages, attorney’s fees and costs of suit.
 In contrast, the contractual relation between Sampaguita Travel and respondents is a
contract for services. The object of the contract is arranging and facilitating the latter’s
booking and ticketing. It was even Sampaguita Travel which issued the tickets.
 Since the contract between the parties is an ordinary one for services, the standard of care
required of respondent is that of a good father of a family under Article 1173 of the Civil
Code. This connotes reasonable care consistent with that which an ordinarily prudent person
would have observed when confronted with a similar situation. The test to determine whether
negligence attended the performance of an obligation is: did the defendant in doing the
alleged negligent act use that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then he is guilty of negligence.
 There was indeed failure on the part of Sampaguita Travel to exercise due diligence in
performing its obligations under the contract of services. It was established by Cathay
Pacific, through the generation of the PNRs, that Sampaguita Travel failed to input the
correct ticket number for Wilfredo’s ticket. Cathay Pacific even asserted that Sampaguita
Travel made two fictitious bookings for Juanita and Michael.
 The negligence of Sampaguita Travel renders it also liable for damages.

(14) Spouses Fernando vs. Northwest Airlines, GR. No. 212308, February 8, 2017

Facts:
Sometime on December 20, 2001, Jesus Fernando arrived at the LA Airport via Northwest
Airlines Flight No. NW02 to join his family who flew earlier to the said place for a reunion for the
Christmas holidays. He was asked by the Immigration Officer to have his return ticket verified
and validated since the date reflected thereon. Instead the personnel of the respondent merely
glanced at his ticket without checking its status with the computer and peremptorily said that
the ticket has been used and could not be considered as valid. He presented his Elite Platinum
World Perks Card but the personnel refused to check the validity of the ticket in the computer,
instead, looked at Jesus Fernando with contempt, then informed the Immigration Officer that
the ticket is not valid.

The Immigration Officer brought Jesus Fernando to the interrogation room of the Immigration
and Naturalization Services (INS) where he was asked humiliating questions for more than two
(2) hours. When he was finally cleared by the Immigration Officer, he was granted only a twelve
(12)-day stay in the United States (US), instead of the usual six (6) months. He further incurred
other expenses due to the said incident.

The second incident happened on January 29, 2002, the Fernandos were on their way back to
the Philippines. When the Fernandos reached the gate area where boarding passes need to
be presented, Northwest supervisor Linda Tang stopped them and demanded for the
presentation of their paper tickets. They failed to present the same since Northwest issued
electronic tickets (attached to the boarding passes) which they showed to the supervisor. The
personnel rudely pulled them out of the queue. Elizabeth Fernando explained to Linda Tang
that the matter could be sorted out by simply verifying their electronic tickets in her computer
and all she had to do was click and punch in their Elite Platinum World Perks Card number. But
Linda Tang arrogantly told them that if they wanted to board the plane, they should produce
their credit cards and pay for their new tickets, otherwise Northwest would order their luggage
off-loaded from the plane. The Fernandos printed coupon tickets and rushe back to the
boarding gates since the plane was about to depart. But when the Fernandos reached the
boarding gate, the plane had already departed. Hence this petition.

Issue: Whether there is a breach of contract of carriage in the case at bar

Ruling:
Yes. The Fernandos' cause of action against Northwest stemmed from a breach of contract of
carriage. A contract is a meeting of minds between two persons whereby one agrees to give
something or render some service to another for a consideration. There is no contract unless
the following requisites concur: (1) consent of the contracting parties; (2) an object certain which
is the subject of the contract; and (3) the cause of the obligation which is established.

A contract of carriage is defined as one whereby a certain person or association of persons

obligate themselves to transport persons, things, or goods from one place to another for a fixed
price. Under Article 1732 of the Civil Code, this "persons, corporations, firms, or associations
engaged in the business of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public" is called a common
carrier.Undoubtedly, a contract of carriage existed between Northwest and the Fernandos.
They voluntarily and freely gave their consent to an agreement whose object was the
transportation of the Fernandos from LA to Manila, and whose cause or consideration was the
fare paid by the Fernandos to Northwest.

In Alitalia Airways v. CA, et al.,We held that when an airline issues a ticket to a passenger
confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger
then has every right to expect that he would fly on that flight and on that date. If he does not,
then the carrier opens itself to a suit for breach of contract of carnage

When Northwest confirmed the reservations of the Fernandos, it bound itself to transport the
Fernandos on their flight on 29 January 2002. We note that the witness of Northwest admitted
on cross-examination that based on the documents submitted by the Fernandos, they were
confirmed passengers on the January 29, 2002 flight.

In an action based on a 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 he has to prove is the
existence of the contract and the fact of its non-performance by the carrier. As the aggrieved
party, the Fernandos only had to prove the existence of the contract and the fact of its non-
performance by Northwest, as carrier, in order to be awarded compensatory and actual
damages.

Therefore, having proven the existence of a contract of carriage between Northwest and the
Fernandos, and the fact of non-performance by Northwest of its obligation as a common carrier,
it is clear that Northwest breached its contract of carriage with the Fernandos. Thus, Northwest
opened itself to claims for compensatory, actual, moral and exemplary damages, attorney's
fees and costs of suit.
(15) Yrasuegi vs. Philippine Airlines, GR. No 168081

Facts:

Petitioner Armando G. Yrasuegui was a former international flight steward of respondent

Philippine Airlines, Inc. (PAL). He stands five feet and eight inches (5’8”) with a large body
frame. The proper weight for a man of his height and body structure is from 147 to 166 pounds,
the ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration Manual
of PAL.

The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on an
extended vacation leave from December 29, 1984 to March 4, 1985 to address his weight
concerns. Apparently, petitioner failed to meet the company’s weight standards, prompting
another leave without pay from March 5, 1985 to November 1985.

After meeting the required weight, petitioner was allowed to return to work, but his weight
problem recurred which prompted another leave without pay from October 17, 1988 to February
1989. On April 26, 1989, petitioner weighed 209 pounds. In line with company policy, he was
removed from flight duty effective May 6, 1989 to July 3, 1989. He was formally requested to
trim down to his ideal weight and report for weight checks on several dates. He was also told
that he may avail of the services of the company physician should he wish to do so. He was
advised that his case will be evaluated on July 3, 1989.

Several times during his weight checks, it was discovered that instead of losing, he gained
weight. Consequently, his off-duty status was retained. After PAL Line Administrator Gloria
Dizon’s visit at this residence, petitioner made a commitment to reduce weight until December
31, 1989, in a letter addressed to Cabin Crew Group Manager Augusto Barrios.

Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner remained
overweight. PAL decided for him to remain grounded until such time that he satisfactorily
complies with the weight standards. Again, he was directed to report every two weeks for weight
checks to which petitioner failed to adhere. Despite that, he was given one more month to
comply with the weight requirement. He was reminded that his grounding would continue
pending satisfactory compliance with the weight standards. Again, he failed to report for weight
checks, although he was seen submitting his passport for processing at the PAL Staff Service
Division.

On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight
check would be dealt with accordingly. Again, petitioner ignored the directive and did not report
for weight checks. On June 26, 1990, petitioner was required to explain his refusal to undergo
weight checks.

When petitioner tipped the scale on July 30, 1990, he was still way over his ideal weight of 166
pounds. From then on, nothing was heard from petitioner until he followed up his case
requesting for leniency on the latter part of 1992. He still was overweight when he weighed on
August 20, 1992 and November 5, 1992.
On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for
violation of company standards on weight requirements, and he was given ten (10) days from
receipt to file his answer and submit controverting evidence. On December 7, 1992, petitioner
submitted his answer where he did not deny being overweight. What he claimed, instead, is
that his violation, if any, had already been condoned by PAL since “no action has been taken
by the company” regarding his case “since 1988”. He also claimed that PAL discriminated
against him because “the company has not been fair in treating the cabin crew members who
are similarly situated”.

On December 8, 1992, a clarificatory hearing was held where petitioner manifested that he was
undergoing a weight reduction program to lose at least two (2) pounds per week so as to attain
his ideal weight. On June 15, 1993, petitioner was formally informed by PAL that due to his
inability to attain his ideal weight, “and considering the utmost leniency” extended to him “which
spanned a period covering a total of almost five (5) years”, his services were considered
terminated “effective immediately”. His motion for reconsideration having been denied,
petitioner filed a complaint for illegal dismissal against PAL.

On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled that petitioner was illegally
dismissed. Both parties appealed to the National Labor Relations Commission (NLRC). On
October 8, 1999, the Labor Arbiter issued a writ directing the reinstatement of petitioner without
the loss of seniority rights and other benefits. On February 1, 2000, the Labor Arbiter denied
the Motion to Quash Writ of Execution of PAL. On March 6, 2000, PAL appealed the denial of
its motion to quash to the NLRC. On June 23, 2000, the NLRC affirmed the Decision of the
Arbiter PAL moved for the reconsideration to no avail.

Thus, PAL elevated the matter to the Court of Appeals (CA) via a petition for certiorari. The CA
reversed the NLRC and opined that there was grave abuse of discretion on the part of the
NLRC because it “looked at wrong and irrelevant considerations” in evaluating the evidence of
the parties. On May 10, 2005, the CA denied petitioner’s motion for reconsideration. Hence,
this petition for review on certiorari claiming that he was illegally dismissed.

Issue:
Whether or not the Court of Appeals erred in holding that petitioner was not unduly
discriminated against when he was dismissed while other overweight cabin attendants were
either given flying duties or promoted

Ruling:
No. The Court agreed with the CA that “the element of discrimination came into play in this case
as a secondary position for the private respondent in order to escape the consequence of
dismissal that being overweight entailed. It is a confession-and-avoidance position that
impliedly admitted the cause of dismissal, including the reasonableness of the applicable
standard and the private respondent’s failure to comply”.

Petitioner cannot establish discrimination by simply naming the supposed cabin attendants who
are allegedly similarly situated with him. Substantial proof must be shown as to how and why
they are similarly situated and the differential treatment petitioner got from PAL despite the
similarity of his situation with other employees.
Indeed, except for pointing out the names of the supposed overweight cabin attendants,
petitioner miserably failed to indicate their respective ideal weights; weights over their ideal
weights; the periods they were allowed to fly despite their being overweight; the particular flights
assigned to them; the discriminating treatment they got from PAL; and other relevant data that
could have adequately established a case of discriminatory treatment by PAL. In the words of
the CA, “PAL really had no substantial case of discrimination to meet”.

Normally, a legally dismissed employee is not entitled to separation pay. Exceptionally,

separation pay is granted to a legally dismissed employee as an act of “social justice”, or based
on “equity”. In both instances, it is required that the dismissal (1) was not for serious misconduct;
and (2) does not reflect on the moral character of the employee. The Court is not blind to the
fact that he was not dismissed, however, for any serious misconduct or to any act which would
reflect on his moral character. The Court also recognize that his employment with PAL lasted
for more or less a decade.

Wherefore, the appealed Decision of the Court of Appeals is AFFIRMED but modified in that
petitioner Armando G. Yrasuegi is entitled to separation pay in an amount equivalent to one-
half (1/2) month’s pay for every years of service, which should include his regular allowances.

(16) Edna Diago Lhullier vs. British Airways, GR. No. 171092, March 15, 2010

Facts:
On February 28, 2005, petitioner Lhuillier took respondent British Airways’s flight 548 from
London, United Kingdom to Rome, Italy. Once on board, she allegedly requested Julian
Halliday, one of the respondent’s flight attendants, to assist her in placing her hand-carried
luggage in the overhead bin. However, Halliday allegedly refused to help and assist her, and
even sarcastically remarked that "If I were to help all 300 passengers in this flight, I would have
a broken back!" Petitioner further alleged that when the plane was about to land in Rome, Italy,
another flight attendant, Nickolas Kerrigan, singled her out from among all the passengers in
the business class section to lecture on plane safety. Allegedly, Kerrigan made her appear to
the other passengers to be ignorant, uneducated, stupid, and in need of lecturing on the safety
rules and regulations of the plane.

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;”
prompting petitioner to file herein complaint for damages. On April 28, 2005, petitioner filed a
Complaint for damages against respondent before the RTC of Makati City. Respondent filed a
Motion to Dismiss on grounds of lack of jurisdiction over the case and over the person of the
respondent. Respondent alleged that only the courts of London, United Kingdom or Rome, Italy,
have jurisdiction over the complaint for damages pursuant to the Warsaw Convention, Article
28(1) of which provides that: “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
where he has a place of business through which the contract has been made, or before the
court of the place of destination.”

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. 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. The RTC
dismissed the case hence this petition.

Issue:
Whether or not Philippine courts have jurisdiction over a tortious conduct committed against a
Filipino citizen and resident by an airlinepersonnel of a foreign carrier.

Ruling:

NO. It is settled that the Warsaw Convention has the force and effect of law in this country. In
Santos III v. NOA 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. The Warsaw
Convention applies because the air travel, where the alleged tortious conduct occurred, was
between the United Kingdom and Italy, which are both signatories 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.”

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 (UK and Italy) were the
signatories to the Warsaw Convention and those which subsequently adhered to it. 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;

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.

(17) Philippine Airlines vs. Savillo, GR. No. 149547, July 4, 2008

Facts:
Private respondent Simplicio 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.

Upon arrival in Singaore, Griño and his companions proceeded to the Singapore Airlines office
to check-in for their flight to Jakarta however Singapore Airlines rejected the tickets because
they were not endorsed by PAL. It was explained that if Singapore Airlines honored the tickets
without PAL’s endorsement, PAL would not pay Singapore Airlines for their passage. Griño
tried to contact PAL’s office at the airport but it was closed. Eventually, Griño and his
companions were forced to purchase tickets from Garuda Airlines and board its last flight bound
for Jakarta and they had to arrange for their transportation to the hotel at a very late hour.

Upon his return to the Philippines, Griño sent demand letters seeking compensation for moral
damages to PAL and to Singapore Airlines. However, both airlines disowned liability and
blamed each other for the fiasco. Later, Griño filed a Complaint for Damages before the RTC.
PAL filed a Motion to Dismiss arguing that the Warsaw Convention, particularly Article 29
thereof, governed this case, as it provides that any 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 more than three years after PAL received the demand letter on, it was
already barred by prescription. The RTC denied the Motion to Dismiss and 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 CA likewise dismissed the petition filed
by PAL and applied Article 1144 of the Civil Code, which allowed for a ten-year prescription
period.

Issue:
Whether or not the provisions of the Warsaw Convention are applicable in this case

Ruling: NO. The Warsaw Convention does not "exclusively regulate" the relationship between
passenger and carrier on an international flight.

In United Airlines v. Uy, 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.

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 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.

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.
Griño’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, Griño’s claims have
not yet prescribed and PAL’s Motion to Dismiss must be denied.

(18) Japan Airlines vs. Simangan, GR. No. 170141, April 22, 2008

Facts:

Respondent needed to go to the US to donate his kidney to his ailing cousin. Having obtained
an emergency US Visa, respondent purchased a round trip ticket from petitioner JAL. He was
scheduled to a flight bound for LA via Japan. On the date of his flight, respondent passed
through rigid immigration and security routines before being allowed to board a JAL plane.

While inside the plane, respondent was asked to show his travel documents. After which he
was ordered by the crew to leave the plane, imputing that respondent is carrying falsified travel
documents. Respondent pleaded but was ignored and under constraint he gets off the plane.
The plane took off and respondent was left behind.

Respondent was refunded with the cost of his ticket minus 500 USD, when JAL found out
eventually that his travel documents were not falsified and in order. Respondent filed an action
for damages against JAL.

RTC Ruling: JAL is liable for breach of contract of carriage. JAL appealed contending it is not
guilty of breach of contract of carriage and not liable for damages.

CA Ruling: Affirmed RTC decision with modification as to amount of damages for being
scandalously excessive.

Issues:
 WON JAL is guilty of breach of contract of carriage.
 WON Simangan is entitled to moral and exemplary damages.

Ruling:
JAL is guilty of breach of contract of carriage and is liable for damages. Petition of JAL was
denied. CA decision was affirmed with modification.

Breach of contract of carriage

In an action for breach of contract of carriage, all that is required of plaintiff is to prove the
existence of such contract and its non-performance by the carrier through the failure to carry
the passenger safely to his destination. Simangan complied with these requisites. Damage was
accrued by JAL when Simangan was bumped off despite his protestations and valid travel
documents and notwithstanding his contract of carriage with JAL.

Award of moral damages in breach of contract of carriage.

As a general rule, moral damages are not recoverable in actions for damages predicated on a
breach of contract for it is not enumerated under Art 2219 NCC. As an exception, such damages
are recoverable in:
1. Mishaps resulting to a death of a passenger (Art. 1764 NCC)
2. When carrier is guilty of fraud or bad faith (Art. 2220)

JAL breached its contract of carriage with respondent in bad faith, when its crew ordered
respondent to disembark while the latter is already settled in his assigned seat under the guise
of verifying the genuineness of his travel documents. Inattention to and lack of care for the
interest of its passengers who are entitled ot its utmost consideration, particularly as to their
convenience, amount to bad faith which entitles the passenger to award of moral damages.

Award of exemplary damages in breach of contract of carriage.

Exemplary damages maybe recovered in contractual obligations as a way of example or

correction for the public good. JAL is liable for exemplary damages as its acts constitute wanton,
oppressive and malevolent acts against respondent. Passengers have the right to be treated
by the carrier’s employees with kindness, respect, courtesy and due consideration and are
entitled to be protected against personal misconduct, injurious language, indignities and abuses
from such employees.

(19) Ramos vs. China Southern Airlines Co Ltd., GR. No. 213418, September 21, 2016

Doctrine: When an airline issues a ticket to a passenger confirmed on a particular flight, on a

certain date, a contract of carriage arises, and the passenger has every right to expect that he
would fly on that flight and on that date. If that does not happen, then the carrier opens itself to
a suit for breach of contract of carriage. In an action based on a breach of contract of carriage,
the aggrieved party does not have to prove that the common carrier was at fault or was
negligent. All he has to prove is the existence of the contract and the fact of its non-performance
by the carrier, through the latter's failure to carry the passenger to its destination.

Facts:
On 7 August 2003, petitioners purchased five China Southern Airlines roundtrip plane tickets
from Active Travel Agency. It is provided in their itineraries that petitioners will be leaving Manila
on 8 August 2003 and will be leaving Xiamen on 12 August 2003. On their way back to the
Manila, petitioners were prevented from taking their designated flight despite the fact that earlier
that day an agent from Active Tours informed them that their bookings for China Southern
Airlines 1920H are confirmed. The refusal came after petitioners already checked in all their
baggages and were given the corresponding claim stubs and after they had paid the terminal
fees.

According to the airlines' agent with whom they spoke at the airport, petitioners were merely
chance passengers but they may be allowed to join the flight if they are willing to pay an
additional 500 Renminbi (RMB) per person. When petitioners refused to defray the additional
cost, their baggages were offloaded from the plane and China Southern Airlines 1920H flight
then left Xiamen International Airport without them. Because they have business commitments
waiting for them in Manila, petitioners were constrained to rent a car that took them to Chuan
Chio Station where they boarded the train to Hongkong. Upon reaching Hong Kong, petitioners
purchased new plane tickets from Philippine Airlines (PAL) that flew them back to Manila.

Petitioners initiated an action for damages before the RTC of Manila against China Southern
Airlines and Active Travel for damages. RTC rendered a Decision in favor of the petitioners
awarding them actual, moral and exemplary damages as well as attorney’s fees. On appeal,
the CA delete award of moral and exemplary damages. According to the appellate court,
petitioners failed to prove that China Southern Airlines' breach of contractual obligation was
attended with bad faith.

Issue:
Whether or not the petitioner is entitled to actual, moral and exemplary damages.

Ruling:

The petitioner is entitled to actual, moral and exemplary damages.

When an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date,
a contract of carriage arises, and the passenger has every right to expect that he would fly on
that flight and on that date. If that does not happen, then the carrier opens itself to a suit for
breach of contract of carriage. In an action based on a breach of contract of carriage, the
aggrieved party does not have to prove that the common carrier was at fault or was negligent.
All he has to prove is the existence of the contract and the fact of its non-performance by the
carrier, through the latter's failure to carry the passenger to its destination.

There is no doubt that petitioners are entitled to actual or compensatory damages. Both the
RTC and the CA uniformly held that there was a breach of contract committed by China
Southern Airlines when it failed to deliver petitioners to their intended destination, a factual
finding that we do not intend to depart from in the absence of showing that it is unsupported by
evidence. As the aggrieved parties, petitioners had satisfactorily proven the existence of the
contract and the fact of its nonperformance by China Southern Airlines; the concurrence of
these elements called for the imposition of actual or compensatory damages.

With respect to moral damages, the same is awarded in cases of breaches of contract where
the defendant acted fraudulently or in bad faith. The Court finds that the airline company
acted in bad faith in insolently bumping petitioners off the flight after they have completed all
the predeparture routine. Bad faith is evident when the ground personnel of the airline company
unjustly and unreasonably refused to board petitioners to the plane which compelled them to
rent a car and take the train to the nearest airport where they bought new sets of plane tickets
from another airline that could fly them home. Petitioners have every reason to expect that they
would be transported to their intended destination after they had checked in their luggage and
had gone through all the security checks. Instead, China Southern Airlines offered to allow them
to join the flight if they are willing to pay additional cost; this amount is on top of the purchase
price of the plane tickets. The requirement to pay an additional fare was insult upon injury.

China Southern Airlines is also liable for exemplary damages as it acted in a wantonly
oppressive manner as succinctly discussed above against the petitioners. Exemplary damages
which are awarded by way of example or correction for the public good, may be recovered in
contractual obligations, as in this case, if defendant acted in wanton, fraudulent, reckless,
oppressive or malevolent manner.