PARMANAND SHEWARAM, 

vs. PAL, INC., (against PAL!!)

Facts:

- Parmanand Shewaram, a paying passenger, on defendant's aircraft flight from

Zamboanga City bound for Manila;

- he checked in three (3) pieces of baggages — a suitcase and two (2) other pieces; that the
suitcase was mistagged by defendant's personnel in Zamboanga City, as I.G.N. (for
Iligan), instead of MNL (for Manila).

- When Shewaram arrived in Manila, his suitcase did not arrive with his flight because it
was sent to Iligan.

- he made a claim

- another suitcase similar to his own which was the only baggage left for that flight, the
rest having been claimed, was given to the plaintiff for him to take delivery but he did not
and refused to take delivery of the same on the ground that it was not his, alleging that all
his clothes were white and the National transistor and a Rollflex camera were not found
inside the suitcase, and moreover, it contained a pistol which he did not have nor placed
inside his suitcase;

- after inquiries made by defendant's personnel in Manila from different airports where the
suitcase in question must have been sent, it was found to have reached Iligan and the
station agent of the PAL in Iligan caused the same to be sent to Manila for delivery to
Mr. Shewaram;

- the suitcase shown to and given to the plaintiff for delivery which he refused to take
delivery belonged to a certain Del Rosario who was bound for;

- when the plaintiff's suitcase arrived in Manila, he was informed of the arrival of his
suitcase but of course minus his Transistor Radio 7 and the Rollflex Camera; that
Shewaram made demand for these two (2) items or for the value thereof but the same was
not complied with by defendant.

- It is admitted by defendant that there was mistake in tagging the suitcase of plaintiff as
IGN. The tampering of the suitcase is more apparent when the suitcase arrived in Manila,
defendant's personnel could open the same in spite of the fact that plaintiff had it under
key

- There was no evidence on record sufficient to show that plaintiff's suitcase was never
opened during the time it was placed in defendant's possession and prior to its recovery
by the plaintiff.

- However, defendant had presented evidence that it had authority to open passengers'
baggage to verify and find its ownership or identity.

- Court believes that these two items were really in plaintiff's suitcase and defendant
should be held liable for the same by virtue of its contract of carriage.

- RTC: suitcase was tampered, and the transistor radio and the camera contained therein
were lost, and that the loss of those articles was due to the negligence of the employees of
the appellant. The evidence shows that the transistor radio cost P197.00 and the camera
cost P176.00, so the total value of the two articles was P373.00.

WON the liability should be limited to the amount stated in the conditions of carriage printed at
the back of the plane ticket stub which was issued to the appellee
 - appellant is a common carrier; bound to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by it according to the
circumstances of each case

Article 1750 of the New Civil Code which provides as follows:

- A contract fixing the sum that may be recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.

- the pecuniary liability of a common carrier may, by contract, be limited to a fixed amount

- It is required, however, that the contract must be "reasonable and just under the
circumstances and has been fairly and freely agreed upon."

- In the case before us it cannot be said that the appellee had actually entered into a
contract with the appellant, embodying the conditions as printed at the back of the ticket
stub that was issued by the appellant to the appellee.

- The fact that those conditions are printed at the back of the ticket stub in letters so small
that they are hard to read would not warrant the presumption that the appellee was aware
of those conditions such that he had "fairly and freely agreed" to those conditions.

- The trial court has categorically stated in its decision that the "Defendant admits that
passengers do not sign the ticket, much less did plaintiff herein sign his ticket when he
made the flight." We hold, therefore, that the appellee is not, and cannot be, bound by the
conditions of carriage found at the back of the ticket stub issued to him when he made the
flight

- The liability of the appellant in the present case should be governed by the provisions of
Articles 1734 and 1735 of the New Civil Code, which We quote as follows:

ART. 1734. Common carries are responsible for the loss, destruction, or deterioration of
the goods, unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, 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.

ART. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4 and 5 of the
preceding article, 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
observed extraordinary diligence as required in Article 1733.

- It having been clearly found by the trial court that the transistor radio and the camera of
the appellee were lost as a result of the negligence of the appellant as a common carrier,
the liability of the appellant is clear — it must pay the appellee the value of those two
articles.

"Par. 194, 6. Reasonableness of Limitations. — The validity of stipulations limiting the

carrier's liability is to be determined by their reasonableness and their conformity to the
sound public policy, in accordance with which the obligations of the carrier to the public
are settled. It cannot lawfully stipulate for exemption from liability, unless such
exemption is just and reasonable, and unless the contract is freely and fairly made. No
contractual limitation is reasonable which is subversive of public policy.
 - In the absence of statute, it is settled by the weight of authority in the United States, that
whatever limitations against its common-law liability are permissible to a carrier, it
cannot limit its liability for injury to or loss of goods shipped, where such injury or loss is
caused by its own negligence. This is the common law doctrine and it makes no
difference that there is no statutory prohibition against contracts of this character.

"Par. 197. cc. Application and Extent of Rule — (aa) Negligence of Servants. — The rule
prohibiting limitation of liability for negligence is often stated as a prohibition of any
contract relieving the carrier from loss or damage caused by its own negligence or
misfeasance, or that of its servants; and it has been specifically decided in many cases
that no contract limitation will relieve the carrier from responsibility for the negligence,
unskillfulness, or carelessness of its employer."

AMPARO C. SERVANDO, CLARA UY BICO, vs. PHILIPPINE STEAM NAVIGATION

CO. 

Facts:

- appellees Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel,
FS-176, for carriage from Manila to Pulupandan, Negros Occidental, the following
cargoes, to wit: Clara Uy Bico —1,528 cavans of rice valued at P40,907.50; Amparo
Servando —44 cartons of colored paper, toys and general merchandise valued at
P1,070.50; as evidenced by the corresponding bills of lading issued by the appellant. 
- Upon arrival, the cargoes were discharged, complete and in good order, unto the
warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day,
said warehouse was razed by a fire of unknown origin, destroying appellees' cargoes.
Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of
rice 
- Appellees' claims for the value of said goods were rejected by the appellant.

Extent of liability

- Article 1736 of the Civil Code imposes upon common carriers the duty to observe
extraordinary diligence from the moment the goods are unconditionally placed in their
possession "until the same are delivered, actually or constructively, by the carrier to the
consignee or to the person who has a right to receive them, without prejudice to the
provisions of Article 1738. "
- It should be pointed out, however, that in the bills of lading issued for the cargoes in
question, the parties agreed to limit the responsibility of the carrier for the loss or damage
that may be caused to the shipment by inserting therein the following stipulation:

Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's
risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be
responsible for loss or damage caused by force majeure, dangers or accidents of the sea or
other waters; war; public enemies; . . . fire . ...

- We sustain the validity of the above stipulation; there is nothing therein that is contrary to
law, morals or public policy.
- Besides, the agreement contained in the above quoted Clause 14 is a mere iteration of the
basic principle of law written in Article 1 1 7 4 of the Civil Code:

Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared
by stipulation, or when the nature of the obligation requires the assumption of risk, no
 person shall be responsible for those events which could not be foreseen, or which, though
foreseen, were inevitable.

- Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss,
the obligor is exempt from liability for non-performance.
- 'caso fortuito' essential characteristics: (1) the cause of the unforeseen and unexpected occurrence,
or of the failure of the debtor to comply with his obligation, must be independent of the human
will; (2) it must be impossible to foresee the event which constitutes the 'caso fortuito', or if it can
be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be
free from any participation in the aggravation of the injury resulting to the creditor."
- In the case at bar, the burning of the customs warehouse was an extraordinary event which
happened independently of the will of the appellant. The latter could not have foreseen the
event.
- There is nothing in the record to show that appellant carrier, incurred in delay in the performance
of its obligation. It appears that appellant had not only notified appellees of the arrival of their
shipment, but had demanded that the same be withdrawn. In fact, pursuant to such demand,
appellee Uy Bico had taken delivery of 907 cavans of rice before the burning of the warehouse.
- Nor can the appellant or its employees be charged with negligence. The storage of the goods in
the Customs warehouse pending withdrawal thereof by the appellees was undoubtedly made with
their knowledge and consent. Since the warehouse belonged to and was maintained by the
government, it would be unfair to impute negligence to the appellant, the latter having no control
whatsoever over the same.

NORBERTO QUISUMBING, SR., and GUNTHER LOEFFLER 

vs.
COURT OF APPEALS and PHILIPPINE AIR LINES, INC

Facts:

- Norberto Quisumbing, Sr. and Gunther Leoffler were among the of ... (PAL's) Fokker
'Friendship' flight left Mactan City with Manila for its destination.

- After the plane had taken off, Florencio O. Villarin, a Senior NBI Agent who was also a
passenger of the said plane, noticed a certain 'Zaldy,' a suspect in the killing of Judge Valdez,
seated at the front seat near the door leading to the cockpit of the plane. A check by Villarin with
the passenger's ticket in the possession of flight Stewardess, revealed that 'Zaldy' had used the
name 'Cardente,' one of his aliases. 'Zaldy' had three companions on board the plane."

- Villarin then scribbled a note addressed to the pilot of the plane requesting the latter to contact
NBI duty agents in Manila

- Soon thereafter an exchange of gunshots ensued between Villarin and 'Zaldy' and the latter's
companions. 'Zaldy' announced to the passengers and the pilots in the cockpit that it was a hold-
up and ordered the pilot not to send any SOS. The hold-uppers divested passengers of their
belongings.

- Upon landing at the Manila International Airport. 'Zaldy' and his three companions succeeded
in escaping.

- Demands were thereafter made on PAL by Quisumbing and Loeffler "to indemnify ... (them)
on their aforesaid loss, but ... (PAL) refused ... (averring that) it is not liable to (them) in law or
in fact."

- Quisumbing and Loeffler brought suit against PAL in the Court of First Instance of Rizal, to
recover the value of the property lost by them to the robbers as well as moral and exemplary
damages, attorney's fees and expenses of litigation. 

- The plaintiffs declared that their suit was instituted "... pursuant to Civil Code articles 1754,
998, 2000 and 2001 and on the ground that in relation to said Civil Code article 2001 the
complained-of act of the armed robbers is not a force majeure, as the 'use of arms' or 'irresistible
force' was not taken advantage of by said armed robbers in gaining entrance to defendant's ill-
fated plane in questions. And, with respect to said Civil Code article 1998, it is not essential that
the lost effects and belongings of plaintiffs were actually delivered to defendant's plane
personnel or that the latter were notified

- PAL filed answer denying liability, alleging inter alia that the robbery during the flight and
after the aircraft was forcibly landed at the Manila Airport did indeed constitute force majeure,

-CFI: dismissing plaintiffs' complaint. The Court opined that since the plaintiffs "did not notify
defendant or its employees that they were in possession of the cash, jewelries, and the wallet they
are now claiming,"

- CA:"the hijacking-robbery was force majeure," observing-- hijackers do not board an airplane
through a blatant display of firepower and violent fury.

- Under the circumstance of the instant case, the acts of the airline and its crew cannot be faulted
as negligence. The hijackers had already shown their willingness to kill. One passenger was in
fact killed and another survived gunshot wounds. The lives of the rest of the passengers and crew
were more important than their properties. Cooperation with the hijackers until they released
their hostages at the runway end near the South Superhighway was dictated by the
circumstances.

- A careful analysis of the record in relation to the memoranda and other pleadings of the parties,
convinces this Court of the correctness of the essential conclusion of both the trial and appellate
courts that the evidence does indeed fail to prove any want of diligence on the part of PAL, or
that, more specifically, it had failed to comply with applicable regulations or universally
accepted and observed procedures to preclude hijacking; and that the particular acts singled out
by the petitioners as supposedly demonstrative of negligence were, in the light of the
circumstances of the case, not in truth negligent acts "sufficient to overcome the force majeure
nature of the armed robbery." The Court quite agrees, too, with the Appellate Tribunal's wry
observation that PAL's "failure to take certain steps that a passenger in hindsight believes should
have been taken is not the negligence or misconduct which mingles with force majeure as an
active and cooperative cause."

PAN AMERICAN WORLD AIRWAYS, INC. vs. JOSE K. RAPADAS and THE COURT
OF APPEALS

Facts:

- private respondent Jose K. Rapadas held Passenger Ticket and Baggage Claim Check for
petitioner's Flight with the route from Guam to Manila.
- While standing in line to board the flight at the Guam airport, Rapadas was ordered by
petitioner's handcarry control agent to check-in his Samsonite attache case.
- Rapadas protested pointing to the fact that other co-passengers were permitted to
handcarry bulkier baggages.
- For fear that he would miss the plane if he insisted and argued, he acceded to checking it
in. He then gave his attache case to his brother who happened to be around and who
checked it in for him, but without declaring its contents or the value of its contents.
- Upon arriving in Manila, Rapadas claimed and was given all his checked-in baggages
except the attache case. Since Rapadas felt ill on his arrival, he sent his son, Jorge
Rapadas to request for the search of the missing luggage.
- the petitioner required the private respondent to put the request in writing. The
respondent filled in a Baggage Claim Blank Form.
- Rapadas received a letter from the petitioner's counsel offering to settle the claim for the
sum of one hundred sixty dollars ($160.00) representing the petitioner's alleged limit of
liability for loss or damage to a passenger's personal property under the contract of
carriage between Rapadas and PAN AM.
- Rapadas filed the instant action for damages. Rapadas alleged that PAN AM
discriminated or singled him out in ordering that his luggage be checked in. He also
 alleged that PAN AM neglected its duty in the handling and safekeeping of his attache
case from the point of embarkation in Guam to his destination in Manila. He placed the
value of the lost attache case and its contents at US$42,403.90.
- PAN AM acknowledged responsibility for the loss of the attache case but asserted that
the claim was subject to the "Notice of Baggage Liability Limitations" allegedly attached
to and forming part of the passenger ticket. The petitioner argued that the same notice
was also conspicuously posted in its offices for the guidance of the passengers.
- The lower court ruled in favor of complainant Rapadas after finding no stipulation giving
notice to the baggage liability limitation. On appeal, the Court of Appeals affirmed the
trial court decision. Hence, this petition.

whether or not a passenger is bound by the terms of a passenger ticket declaring that the
limitations of liability set forth in the Warsaw Convention

- The petitioner maintains that its liability for the lost baggage of respondent Rapadas was
limited to $160.00 since the latter did not declare a higher value for his baggage and did
not pay the corresponding additional charges.
- There is no dispute, and the courts below admit, that there was such a Notice appearing
on page two (2) of the airline ticket stating that the Warsaw Convention governs in case
of death or injury to a passenger or of loss, damage or destruction to a passenger's
luggage.
- The original of the Passenger Ticket and Baggage Check itself was not presented as
evidence as it was among those returned to Mr. Faupula. Thus, apart from the evidence
offered by the defendant airline, the lower court had no other basis for determining
whether or not there was actually a stipulation on the specific amounts the petitioner had
expressed itself to be liable for loss of baggage.

- The Warsaw Convention specifically provides that it is applicable to international carriage 

- "international carriage" means any carriage in which, according to the agreement between the parties,
the place of departure and the place of destination, whether or not there be a breach 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 the territory of
another State, even if that State is not a High Contracting Party. High Contracting Party" refers to a
state which has ratified or adhered to the Convention, or which has not effectively denounced the
Convention

- The Convention governs the availment of the liability limitations where the baggage check is
combined with or incorporated in the passenger ticket which complies with the provisions of
Article 3, par. l (c). (Article 4, par. 2) In the case at bar, the baggage check is combined with the
passenger ticket in one document of carriage. The passenger ticket complies with Article 3, par. l
(c) which provides: xxx the effect that, if the passenger's journey involves an ultimate destination
or stop in a country other than the country of departure, the Warsaw Convention may be
applicable and that the Convention governs and in most cases limits the liability of carriers for
death or personal injury and in respect of loss of or damage to baggage.

- "a contract limiting liability upon an agreed valuation does not offend against the policy of the
law forbidding one from contracting against his own negligence. Considering, therefore, that
petitioner had failed to declare a higher value for his baggage, he cannot be permitted a recovery
in excess of amount indicated therein

- The arguments of the petitioner do not belie the fact that it was indeed accountable for the loss
of the attache case. What the petitioner is concerned about is whether or not the notice, which it
did not fail to state in the plane ticket and which it deemed to have been read and accepted by the
private respondent will be considered by this Court as adequate under the circumstances of this
case. As earlier stated, the Court finds the provisions in the plane ticket sufficient to govern the
limitations of liabilities of the airline for loss of luggage. If the passenger fails to adduce
evidence to overcome the stipulations, he cannot avoid the application of the liability limitations.

- The facts show that the private respondent actually refused to register the attache case and
chose to take it with him despite having been ordered by the PAN-AM agent to check it in. In
attempting to avoid registering the luggage by going back to the line, private respondent
manifested a disregard of airline rules on allowable handcarried baggages.

- The alleged lack of enough time for him to make a declaration of a higher value and to pay the
corresponding supplementary charges cannot justify his failure to comply with the requirement
that will exclude the application of limited liability. Had he not wavered in his decision to
register his luggage, he could have had enough time to disclose the true worth of the articles in it
and to pay the extra charges or remove them from the checked-in-luggage. Moreover, an airplane
will not depart meantime that its own employee is asking a passenger to comply with a safety
regulation.

- We are not by any means suggesting that passengers are always bound to the stipulated
amounts printed on a ticket, found in a contract of adhesion, or printed elsewhere but referred to
in handouts or forms. We simply recognize that the reasons behind stipulations on liability
limitations arise from the difficulty, if not impossibility, of establishing with a clear
preponderance of evidence the contents of a lost valise or suitcase. Unless the contents are
declared, it will always be the word of a passenger against that of the airline. If the loss of life or
property is caused by the gross negligence or arbitrary acts of the airline or the contents of the
lost luggage are proved by satisfactory evidence other than the self-serving declarations of one
party, the Court will not hesitate to disregard the fine print in a contract of adhesion.

- The court had doubts as to the total claim.

The lost luggage was declared as weighing around 18 pounds or approximately 8 kilograms. At
$20.00 per kilogram, the petitioner offered to pay $160.00 as a higher value was not declared in
advance and additional charges were not paid. We note, however, that an amount of $400.00 per
passenger is allowed for unchecked luggage. Since the checking-in was against the will of the
respondent, we treat the lost bag as partaking of involuntarily and hurriedly checked-in luggage
and continuing its earlier status as unchecked luggage. The fair liability under the petitioner's
own printed terms is $400.00. Since the trial court ruled out discriminatory acts or bad faith on
the part of Pan Am or other reasons warranting damages, there is no factual basis for the grant of
P20,000.00 damages.

WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of
Appeals is REVERSED and SET ASIDE. The petitioner is ordered to pay the private respondent
damages in the amount of US$400.00 or its equivalent in Philippine Currency at the time of
actual payment, P10,000.00 in attorney's fees, and costs of the suit.