PAL vs CA

Facts: At about 5:30 a.m. on 17 April 1985, Isidro Co, accompanied by his wife and son, arrived
at the Manila International Airport aboard the airlines PAL Flight 107 from San Francisco,
California, U.S.A. Soon after embarking, Co proceeded to the baggage retrieval area to claim his
9 pieces of checked- in luggage with the corresponding claim checks in his possession. Co found
eight of his luggage, but despite diligent search, he failed to locate the 9th luggage, with claim
check number 729113. Cos lost luggage was a Samsonite suitcase measuring about 62 inches in
length, worth about US $200.00 and containing various personal effects purchased by Co and
his wife during their stay in the United States and similar other items sent by their friends
abroad to be given as presents to relatives in the Philippines. Cos invoices evidencing their
purchases show their missing personal effects to be worth US $1,243.01, in addition to the
presents entrusted to them by their friends which Co testified to be worth about US $500.00 to
US $600.00. Co then immediately notified PAL through its employee, Willy Guevarra, who was
then in charge of the PAL claim counter at the airport. Willy Guevarra filled up a printed form
known as a Property Irregularity Report, acknowledging one of the

Cos luggages to be missing, and signed it after asking Co himself to sign the same document. In
accordance with his procedure in cases of this nature, Willy Guevarra asked Co to surrender to
him the nine claim checks corresponding to the nine luggages, i.e., including the one that was
missing. Co, on several occasions, unrelentingly called at PALs office in order to pursue his
complaint about his missing luggage but to no avail. Thus, on 15 April 1985, Co through his
lawyer wrote a demand letter to PA: through Rebecca V. Santos, its manager for Central
Baggage Services. On 17 April 1985, Rebecca Santos replied to the demand letter
acknowledging that to date we have been unable to locate your clients baggage despite our
careful search and requesting Cos counsel to please extend to him our sincere apologies for
the inconvenience he was caused by this unfortunate incident. Despite the letter, however,
PAL never found Cos missing luggage or paid its corresponding value.

On 3 May 1985, Co filed a complaint against PAL for damages. The Regional Trial Court of Pasay
City found PAL liable, and rendered judgment on 3 June 1986, sentencing PAL to pay Co the
amounts of (1) P42,766.02 by way of actual damages; (2) P20,000.00 by way of exemplary
damages; (3) P10,000.00 as attorneys fees; all in addition to the costs or the suit. The court
also dismissed PALs counterclaim for lack of merit.

On appeal, and on 19 July 1989, the Court of Appeals affirmed in toto the trial courts award.
Hence, the petition for review.
The Supreme Court denied the petition for review for lack of merit; with costs against PAL.
Issue: Whether or not PAL is negligent?
Held: Yes. Probative value of PALs retrieval report

The probative value of PALs retrieval report was passed upon by the Regional Trial
Court of Pasay City, whose finding was affirmed by the Court of Appeals. Although the
passenger should produce his claim tag if he had not surrendered it because there was no
baggage received; it would appear that the passenger surrendered all the 9 claim checks
corresponding to the 9 luggages, including the one that was missing, to the PAL officer after
accomplishing the Property Irregularity Report, and thus, it could not be possible for the
passenger to produce the same in court. It is now for the carrier to produce the veracity of their
Baggage Retrieval Report by corroborating evidence other than testimonies of their employees.
Such document is within the control of PAL and necessarily requires other corroborative
evidence.

Herein, since the passengers destination was the Philippines, Philippine law governs the
liability of the carrier for the loss of the passengers luggage.

Article 1733 NCC

Article 1733 provides that Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them, according to all the
circumstances of each case.

No error in disregarding limits of liability under Warsaw Convention

Herein, PAL failed to overcome, not only the presumption, but more importantly, Cos
evidence, proving that the carriers negligence was the proximate cause of the loss of his
baggage. Furthermore, PAL acted in bad faith in faking a retrieval receipt to bail itself
out of having to pay Cos claim. The appellate cout therefore did not err in disregarding
the limits of liability under the Warsaw Convention.

Cathay Pacific v. CA

FACTS: Respondent Alcantara was a first class passenger of a Cathay Pacific flight to Jakarta to
attend a business conference with the Director General of Trade of Indonesia. Upon his arrival
in Jakarta, he discovered that his luggage was missing. He was informed that his luggage was
left behind in Hongkong and was offered $20.00 as "inconvenience money" to buy his
immediate personal needs. He had to seek postponement of his pre-arranged conference. And
when his luggage finally reached Jakarta after a day, it was required to be picked up by an
official of the Philippine Embassy. The trial court ordered Cathay to pay. The CA affirmed but
increased the award of damages. SC affirmed but modified the award of damages. Cathay
argues that the one-day delay was not made in bad faith because it had a mechanical trouble
wherein all pieces of luggage on board the first aircraft bound for Jakarta were unloaded and
transferred to the second aircraft which departed an hour and a half later. Cathay also argues
that he was not treated rudely and arrogantly by its employees. Also, that the CA erred in
failing to apply the Warsaw Convention on the liability of a carrier to its passengers.

ISSUE: W/N Cathay breached its contract of carriage with Alcantara and acted in bad faith?

HELD: YES. Cathay failed to deliver his luggage at the designated place and time, it being the
obligation of a common carrier to carry its passengers and their luggage safely to their
destination, which includes the duty not to delay their transportation. It was not even aware
that the luggage was left behind until its attention was called by the Hongkong Customs
authorities. It also refused to deliver the luggage at his hotel and required him to pick it up with
an official of the Philippine Embassy The Cathay employees were also discourteous, rude, and
insulting. He was simply advised to buy anything he wanted with only $20.00 which was
certainly not enough to purchase comfortable clothing appropriate for an executive
conference. Cathays agents only replied, "What can we do, the baggage is missing. I cannot do
anything . . . Anyhow, you can buy anything you need, charged to Cathay Pacific." Moral and
exemplary damages are proper where in breaching the contract of carriage bad faith or fraud is
shown. In the absence of fraud or bad faith, liability is limited to the natural and probable
consequences of the breach of obligation which the parties had foreseen or could have
reasonably foreseen. Further, Cathay contends that the extent of its liability should be limited
absolutely to that set forth in the Warsaw Convention. The said treaty does not operate as an
exclusive enumeration of the instances for declaring a carrier liable for breach of contract of
carriage or as an absolute limit of the extent of that liability. The Warsaw Convention declares
the carrier liable for damages in the enumerated cases and under certain limitations. However,
it must not be construed to preclude the operation of the Civil Code and other pertinent laws. It
does not regulate, much less exempt, the carrier from liability for damages for violating the
rights of its passengers under the contract of carriage, especially if wilfull misconduct on the
part of the carrier's employees is found or established, as in this case.

Trans-Asia Shipping Lines vs. CA

FACTS: Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein
petitioner for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on
November 12, 1991. At around 5:30 in the evening of November 12, 1991, respondent boarded
the M/V Asia Thailand vessel during which he noticed that some repairs were being undertaken
on the engine of the vessel. The vessel departed at around 11:00 in the evening with only one
(1) engine running. After an hour of slow voyage, the vessel stopped near Kawit Island and
dropped its anchor thereat. After half an hour of stillness, some passengers demanded that
they should be allowed to return to Cebu City for they were no longer willing to continue their
voyage to Cagayan de Oro City. The captain acceded to their request and thus the vessel
headed back to Cebu City. In Cebu City, plaintiff together with the other passengers who
requested to be brought back to Cebu City, were allowed to disembark. Thereafter, the vessel
proceeded to Cagayan de Oro City. Petitioner, the next day, boarded the M/V Asia Japan for its
voyage to Cagayan de Oro City, likewise a vessel of defendant. On account of this failure of
defendant to transport him to the place of destination on November 12, 1991, respondent
Arroyo filed before the trial court an action for damage arising from bad faith, breach of
contract and from tort, against petitioner. The trial court ruled only for breach of contract. The
CA reversed and set aside said decision on appeal.

ISSUE: Whether or not the petitioner Trans-Asia was negligent?

HELD: Yes. Before commencing the contracted voyage, the petitioner undertook some repairs
on the cylinder head of one of the vessels engines. But even before it could finish these repairs,
it allowed the vessel to leave the port of origin on only one functioning engine, instead of two.
Moreover, even the lone functioning engine was not in perfect condition as sometime after it
had run its course, it conked out. This caused the vessel to stop and remain adrift at sea, thus in
order to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was
unseaworthy even before the voyage began. For a vessel to be seaworthy, it must be
adequately equipped for the voyage and manned with a sufficient number of competent
officers and crew.[21] The failure of a common carrier to maintain in seaworthy condition its
vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755 of
the Civil Code.