Macondray and Co Inc v. Acting Commissioner of Customs

FACTS:

On November 2, 1962, the vessel S/S TAI PING, of which petitioner is the local agent, arrived at the port of Manila from San Francisco, California, U.S.A., conveying various shipments of merchandise, among which was a shipment of one (1) coil carbon steel, one (1 bundle carbon steel flat and one (1) carbon containing carbon tool holders carbide cutters, ground, all of which appeared in the Bill of Lading No. 22, consigned to Bogo Medellin Millings Co., Inc. The shipment, except the one (1) coil carbon steel was not reflected in the Inward Cargo Manifest as required by Section 1005 in relation to Section 2521 of the Tariff and Custom Code of the Philippines. Allied Brokerage Corporation, acting for and in behalf of Bogo Medellin Milling Co. requested petitioner Macondray & Co., agent of the vessel S/S TAI PING, to correct the manifest of the steamer so that it may take delivery of the goods at Customs House. Collector of Custom required petitioner to explain and show cause why no administrative fine should be imposed upon said vessel. The fine of 1,000.00 was paid by petitioner under protest. Hearing of the protest proceeded thereafter. Collector of Customs of the Port of Manila ordered the dismissal of said protest for lack of merit. On appeal to the Commissioner of Customs the latter sustained the Collector of Customs. Petitioner filed a petition for review with the Court of Tax Appeals. The CTA affirmed the decision of the Collector of Customs as affirmed by the Commissioner of Customs. ISSUE: Whether or not the Collector of Customs erred in imposing a fine on vessel, S/S TAI PING, for alleged violation of Section 1005 in relation to Section 2521 of the Tariff and Customs Code for landing unmanifested cargo at the port of Manila.

HELD: sThe inclusion of the unmanifested cargoes in the Bill of Lading does not satisfy the requirement of the aforequoted sections of the Tariff and Customs Code. It is to be noted that nowhere in the said sections is the presentation of a Bill of Lading required required, but only the presentation of a Manifest containing a true and accurate description of the cargoes. This is for the simple reason that while a manifest is a declaration of the entire cargo, a bill of lading is but a declaration of a specific part of the cargo and is a matter of business convenience based exclusively on a contract. The Court cannot accept or place an implied imprimatur on the contention of petitioner that the entries in the bill of lading adequately supplied the deficiency of the manifest and cured its infirmity. The mandate of the law is clear and Court cannot settle for less. The law imposes the absolute obligation, under penalty for failure, upon every vessel from a foreign port to have on board complete written or typewritten manifests of all her cargo, signed by the master. Where the law requires a manifest to be kept or delivered, it is not complied with unless the manifest is true and accurate. Amendment of cargo manifest even if later approved by customs authorities does not relieve carrying vessel of liability of fine incurred prior to its correction. The philosophy and purpose behind the law authorizing amendment, under paragraph 3 of Section 1005 of the Tariff and Customs Code, is to protect innocent importers or consignees from the mistake or unlawful acts of the master.

BILL OF LADING VS CARGO MANIFEST

Manifest It is a declaration of the entire cargo. OBJECTS:1.) Furnish the customs officers with a list to check against; 2.) Inform our revenue officers what goods are being brought into the country; and 3.) Provide a safeguard against goods being brought into this country on a vessel and then smuggled ashore.

Bill of Lading is but a declaration of a specific part of the cargo and is a matter of business convenience based exclusively on a contract. It is ordinarily merely a convenient commercial instrument designed to protect the importer or consignee, a manifest of the cargo is absolutely essential to the exportation or importation of property in all vessels, the evident intent and object of which is to impose upon the owners and officers of such vessel an imperative obligation to submit lists of the entire loading of the ship in the prescribed form, to facilitate the labors of the customs and immigration officers and to defeat any attempt to make use of such vessels to secure the unlawful entry of persons or things into the country.

Magellan Marketing Manufacturing vs CALessons Applicable: Bill of Lading (Transportation)Laws Applicable:

FACTS:

-Choju Co., Ltd purchased from Magellan Manufacturers Marketing Corp. (MMMC) 136,000 anahaw fans for $23,220. -through its president James Cu, MMMC contracted with F.E. Zuellig, a shipping agent of Orient Overseas Container Lines, Inc., (OOCL), through Mr. King, specifying that he needed an on-board bill of lading and that transhipment is not allowed under the letter of credit -MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of lading which was presented to Allied Bank. The bank then credited the amount of US$23,220 covered by the letter of credit to MMMC-When MMMC's President James Cu, went back to the bank later, he was informed that the payment was refused by the buying for lack of bill of lading and there was a transhipment of goods-The anahaw fans were shipped back to Manila through OOCL who are demanding from MMMC P246,043.43 (freight charges from Japan to Manila, demurrage incurred in Japan and Manila from October 22, 1980 up to May 20, 1981 and charges for stripping the container van of the Anahaw fans on May 20, 1981) this was due to the lack of an on-board bill of lading-MMMC abandoned the whole cargo and asked OOCL for damagesOOCL: bill of lading clearly shows that there will be a transhipment and that petitioner was well aware that MV (Pacific) Despatcher was only up to Hongkong where the subject cargo will be transferred to another vessel for JapanRTC: favored OOCL:consented because the bill of lading where it is clearly indicated that there will be transhipmentMMMC was the one who ordered the reshipment of the cargo from Japan to ManilaCA: Affirmed with modification of excluding demurrage in ManilaISSUE: W/N the bill of lading which reflected the transhipment against the letter of credit is consented by MMMC

HELD: YES. CA Affirmed with modification

TranshipmentWe find no fault on the part of private respondents. On the matter of transhipment, petitioner maintains that "... while the goods were transferred in Hongkong from MV Pacific Despatcher, the feeder vessel, to MV Oriental Researcher, a mother vessel, the same cannot be considered transhipment because both vessels belong to the same shipping company, the private respondent Orient Overseas Container Lines, Inc." 7 Petitioner emphatically goes on to say: "To be sure, there was no actual transhipment of the Anahaw fans. The private respondents have executed a certification to the effect that while the Anahaw fans were transferred from one vessel to another in Hong Kong, since the two vessels belong to one and the same company then there was no transhipment. 8Transhipment, in maritime law, is defined as "the act of taking cargo out of one ship and loading it in another," 9 or "the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached," 10 or "the transfer for further transportation from one ship or conveyance to another." 11 Clearly, either in its ordinary or its strictly legal acceptation, there is transhipment whether or not the same person, firm or entity owns the vessels. In other words, the fact of transhipment is not dependent upon the ownership of the transporting ships or conveyances or in the change of carriers, as the petitioner seems to suggest, but rather on the fact of actual physical transfer of cargo from one vessel to another.The terms of the contract as embodied in the bill of lading are clear and thus obviates the need for any interpretation. The intention of the parties which is the carriage of the cargo under the terms specified thereunder and the wordings of the bill of lading do not contradict each other. The terms of the contract being conclusive upon the parties and judging from the contemporaneous and subsequent actuations of petitioner, to wit, personally receiving and signing the bill of lading and paying the freight charges, there is no doubt that petitioner must necessarily be charged with full knowledge and unqualified acceptance of the terms of the bill of lading and that it intended to be bound thereby.

Bill of ladingAn on board bill of lading is one in which it is stated that the goods have been received on board the vessel which is to carry the goods, whereas a received for shipment bill of lading is one in which it is stated that the goods have been received for shipment with or without specifying the vessel by which the goods are to be shipped. Received for shipment bills of lading are issued whenever conditions are not normal and there is insufficiency of shipping space. 29 An on board bill of lading is issued when the goods have been actually placed aboard the ship with every reasonable expectation that the shipment is as good as on its way. 30 It is, therefore, understandable that a party to a maritime contract would require an on board bill of lading because of its apparent guaranty of certainty of shipping as well as the seaworthiness of the vessel which is to carry the goods. petitioner had full knowledge that the bill issued to it contained terms and conditions clearly violative of the requirements of the letter of credit. Nonetheless, perhaps in its eagerness to conclude the transaction with its Japanese buyer and in a race to beat the expiry date of the letter of credit, petitioner took the risk of accepting the bill of lading even if it did not conform with the indicated specifications, possibly entertaining a glimmer of hope and imbued with a touch of daring that such violations may be overlooked, if not disregarded, so long as the cargo is delivered on time. Unfortunately, the risk did not pull through as hoped for. Any violation of the terms and conditions of the letter of credit as would defeat its right to collect the proceeds thereof was, therefore, entirely of the petitioner's making for which it must bear the consequences. As finally averred by private respondents, and with which we agree, "... the questions of whether or not there was a violation of the terms and conditions of the letter of credit, or whether or not such violation was the cause or motive for the rejection by petitioner's Japanese buyer should not affect private respondents therein since they were not privies to the terms and conditions of petitioner's letter of credit and cannot therefore be held liable for any violation thereof by any of the parties thereto." 34DmurrageDemurrage, in its strict sense, is the compensation provided for in the contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading. Essentially, demurrage is the claim for damages for failure to accept delivery. In a broad sense, every improper detention of a vessel may be considered a demurrage. Liability for demurrage, using the word in its strictly technical sense, exists only when expressly stipulated in the contract. Using the term in its broader sense, damages in the nature of demurrage are recoverable for a breach of the implied obligation to load or unload the cargo with reasonable dispatch, but only by the party to whom the duty is owed and only against one who is a party to the shipping contract. 36 Notice of arrival of vessels or conveyances, or of their placement for purposes of unloading is often a condition precedent to the right to collect demurrage charge

Now, there is no dispute that private respondents expressly and on their own volition granted petitioner an option with respect to the satisfaction of freightage and demurrage charges. Having given such option, especially since it was accepted by petitioner, private respondents are estopped from reneging thereon. Petitioner, on its part, was well within its right to exercise said option. Private respondents, in giving the option, and petitioner, in exercising that option, are concluded by their respective actions. To allow either of them to unilaterally back out on the offer and on the exercise of the option would be to countenance abuse of rights as an order of the day, doing violence to the long entrenched principle of mutuality of contracts.

It will be remembered that in overland transportation, an unreasonable delay in the delivery of transported goods is sufficient ground for the abandonment of goods. By analogy, this can also apply to maritime transportation. Further, with much more reason can petitioner in the instant case properly abandon the goods, not only because of the unreasonable delay in its delivery but because of the option which was categorically granted to and exercised by it as a means of settling its liability for the cost and expenses of reshipment. And, said choice having been duly communicated, the same is binding upon the parties on legal and equitable considerations of estoppel.

G.R. No. L-28028 November 25, 1927JUAN YSMAEL & CO., INC. vs. GABINO BARRETTO & CO., LTD., ET AL., defendants. ANDRES H. LIMGENGCO and VICENTE JAVIER

Facts: A domestic corporation, seeks to recover from the defendants P9,940.95 the alleged value of four cases of merchandise which it delivered to the steamship Andres on October 25, 1922, at Manila to be shipped to Surigao, but which were never delivered to Salomon Sharuff, the consignee, or returned to the plaintiff. Defendants make a specific denial of all of the material allegations of the complaint, and as special defense allege that the four cases of merchandise in question were never delivered to them, and that under the provisions of paragraph the provisions of paragraph 7 of the printed conditions appearing on the back of the bill of lading, plaintiff's right of action is barred for the reason that it was not brought within sixty days from the time the cause of action accrued. Defendants further alleged that under and by virtue of provision 12 of the bill of lading referred to in plaintiff's amended complaint, the defendants are not liable in excess of three hundred pesos (P300) for any package of silk unless the value and contents of such packages are correctly declared in the bill of lading at the time of shipment, etc.Lower court: Judgment in favor of plaintiff for the full amount of its claim

Issue: Whether or not the lower court erred in ruling in favor of plaintiff and disregarding the stipulation limiting the value of defendants liability under clause 12 printed in the Bill of lading.

Ruling:The SC upheld the findings of the trial court that the defendants received from the plaintiff corporation 164 cases of merchandise, and delivered at Surigao only 160 cases of such merchandise, and that defendants failed to deliver the said four cases in Surigao when plaintiff's representative took delivery of the cargo at that port, and that the original figure "1" and the word "bulto" appearing on the back of Exhibit 1 were changed by Galleros to read "5" and "bultos." The testimony of Claro Galleros to the effect that, according to the tallies made by him on the back of Exhibit 1 during the course of loading, only 160 cases were loaded, on board the steamer Andres stands uncorroborated, and it is not supported by the tallies themselves, as these tallies give a total of 161 cases. Appellants rely on clause 12 of the bill of lading, which is as follows:It is expressly understood that carrier shall not be liable for loss or damage from any cause or for any reason to an amount exceeding three hundred pesos (P300) Philippine currency for any single package of silk or other valuable cargo, nor for an amount exceeding one hundred pesos (P100) Philippine currency for any single package of other cargo, unless the value and contents of such packages are correctly declared in this bill of lading at the time of shipment and freight paid in accord with the actual measurement or weight of the cargo shipped.That condition is printed on the back of the bill of lading. The ship in question was a common carrier and, as such, must have been operated as a public utility. It is a matter of common knowledge that large quantities of silk are imported in the Philippine Islands, and that after being imported, they are sold by the merchants in Manila and other large seaports, and then shipped to different points and places in the Islands. Hence, there is nothing unusual about the shipment of silk. In truth and in fact, it is a matter of usual and ordinary business. There was no fraud or concealment in the shipment in question. Clause 12 above quoted places a limit of P300 "for any single package of silk." The evidence shows that 164 "cases" were shipped, and that the value of each case was very near P2,500. In this situation, the limit of defendants' liability for each case of silk "for loss or damage from any cause or for any reason" would put it in the power of the defendants to have taken the whole cargo of 164 cases of silk at a valuation of P300 for each case, or less than one-eight of its actual value. If that rule of law should be sustained, no silk would ever be shipped from one island to another in the Philippines. Such a limitation of value is unconscionable and void as against public policy.

Citing case law:PAR. 194. 6. Reasonable of Limitation. The validity of stipulations limiting the carriers 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.PAR. 195. 7. What Limitations of Liability Permissible. a.Negligence (1) Rule in America (a) In Absence of Organic or Statutory Provisions Regulating Subject aa. Majority Rule. 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. 196. bb. Considerations on Which Rule Based. The rule, it is said, rests on considerations of public policy. The undertaking is to carry the goods, and to relieve the shipper from all liability for loss or damage arising from negligence in performing its contract is to ignore the contract itself. The natural effect of a limitation of liability against negligence is to induce want of care on the part of the carrier in the performance of its duty. The shipper and the common carrier are not on equal terms; the shipper must send his freight by the common carrier, or not at all; he is therefore entirely at the mercy of the carrier, unless protected by the higher power of the law against being forced into contracts limiting the carrier's liability. Such contracts are wanting in the element of voluntary assent.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 employees.

Based upon the findings of fact of the trial court which are sustained by the evidence, the plaintiff delivered to the defendants 164 cases of silk consigned and to be delivered by the defendants to Salomon Sharuff in Surigao. Four of such cases were never delivered, and the evidence shows that their value is the alleged in the complaint.There is no merit in the appeal. The judgment of the lower court is affirmed, with costs.

Prohibited and Limiting StipulationsShewaram vs. PALG.R. No. L-200999, July 7, 1966

Facts:

On November 23, 1959, Paramanand (plaintiff), a paying passenger with ticket No. 4-30976, on defendant's aircraft flight No. 976/910 from Zamboanga City bound for Manila; that defendant is a common carrier engaged in air line transportation in the Philippines, offering its services to the public to carry and transport passengers and cargoes from and to different points in the Philippines; that on the above-mentioned date of November 23, 1959, 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) with claim check No. B-3883, instead of MNL (for Manila). When plaintiff Parmanand Shewaram arrived in Manila on the date of November 23, 1959, his suitcase did not arrive with his flight because it was sent to Iligan. So, he made a claim with defendant's personnel in Manila airport and another suitcase similar to his own which was the only baggage left for that flight, the rest having been claimed and released to the other passengers of said flight, 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 7 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; that 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 and which suitcase belonging to the plaintiff herein arrived in Manila airport on November 24, 1959; that it was also found out that 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 Iligan in the same flight with Mr. Shewaram; that when the plaintiff's suitcase arrived in Manila as stated above on November 24, 1959, he was informed by Mr. Tomas Blanco, Jr., the acting station agent of the Manila airport 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 on November 24, 1959, when the suitcase arrived in Manila, defendant's personnel could open the same in spite of the fact that plaintiff had it under key when he delivered the suitcase to defendant's personnel in Zamboanga City. Moreover, it was established during the hearing that there was space in the suitcase where the two items in question could have been placed. It was also shown that as early as November 24, 1959, when plaintiff was notified by phone of the arrival of the suitcase, plaintiff asked that check of the things inside his suitcase be made and defendant admitted that the two items could not be found inside the suitcase. 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. Exhibit "1" of the defendant would show that the baggage that was offered to plaintiff as his own was opened and the plaintiff denied ownership of the contents of the baggage. This proven fact that baggage may and could be opened without the necessary authorization and presence of its owner, applied too, to the suitcase of plaintiff which was mis-sent to Iligan City because of mistagging. The possibility of what happened in the baggage of Mr. Del Rosario at the Manila Airport in his absence could have also happened to plaintiffs suitcase at Iligan City in the absence of plaintiff. Hence, the 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.

Issue:

Whether the limited liability rule shall apply in the case at bar?

Held:

No.

The law that may be invoked, in this connection is 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.In accordance with the above-quoted provision of Article 1750 of the New Civil Code, 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."The requirements provided in Article 1750 of the New Civil Code must be complied with before a common carrier can claim a limitation of its pecuniary liability in case of loss, destruction or deterioration of the goods it has undertaken to transport. In the case before us We believe that the requirements of said article have not been met. It can not 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 on November 23, 1959." We hold, therefore, that the appellee is not, and can not be, bound by the conditions of carriage found at the back of the ticket stub issued to him when he made the flight on appellant's plane on November 23, 1959.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.1wph1.tART. 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.In the case ofYsmael and Co. vs. Barreto, 51 Phil. 90, cited by the trial court in support of its decision, this Court had laid down the rule that the carrier can not limit its liability for injury to or loss of goods shipped where such injury or loss was caused by its own negligence.Corpus Juris, volume 10, p. 154, says:"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."Par. 195. 7. What Limitations of Liability Permissible. a. Negligence (1) Rule in America (a) In Absence of Organic or Statutory Provisions Regulating Subject aa. Majority Rule. 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. 196. bb.Considerations on which Rule Based. The rule, it is said, rests on considerations of public policy. The undertaking is to carry the goods, and to relieve the shipper from all liability for loss or damage arising from negligence in performing its contract is to ignore the contract itself. The natural effect of a limitation of liability against negligence is to induce want of care on the part of the carrier in the performance of its duty. The shipper and the common carrier are not on equal terms; the shipper must send his freight by the common carrier, or not at all; he is therefore entirely at the mercy of the carrier unless protected by the higher power of the law against being forced into contracts limiting the carrier's liability. Such contracts are wanting in the element of voluntary assent."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." (Cited in Ysmael and Co. vs. Barreto, 51 Phil. 90, 98, 99).

Ong Yiu vs. CAG.R. No. L-40597, June 29, 1979J. Melencio-Herrera:

FACTS:Ong Yiu was a fare paying passenger of respondent PAL on board a flight from Mactan Cebu, bound for Butuan City. He was scheduled to attend the trial of a civil case and a special proceeding. He checked in one piece of luggage, a blue "maleta" for which he was issued a Claim Check. The plane left Mactan Airport, Cebu, at about 1:00 o'clock P.M., and arrived at Bancasi airport, Butuan City, at past 2:00 o'clock P.M., of the same day. Upon arrival, petitioner claimed his luggage but it could not be found. According to petitioner, it was only after reacting indignantly to the loss that the matter was attended to by the porter clerk, Maximo Gomez, which, however, the latter denies, At about 3:00 o'clock P.M., PAL Butuan, sent a message to PAL, Cebu, inquiring about the missing luggage, which message was, in turn relayed in full to the Mactan Airport teletype operator at 3:45 P.M that same afternoon. It must have been transmitted to Manila immediately, for at 3:59 that same afternoon, PAL Manila wired PAL Cebu advising that the luggage had been over carried to Manila and that it would be forwarded to Cebu on the same day. Instructions were also given that the luggage be immediately forwarded to Butuan City on the first available flight. At 5:00 P.M. of the same afternoon, PAL Cebu sent a message to PAL Butuan that the luggage would be forwarded on a flight the following day. However, this message was not received by PAL Butuan as all the personnel had already left since there were no more incoming flights that afternoon.In the meantime, petitioner was worried about the missing luggage because it contained vital documents needed for trial the next day. At 10:00 o'clock that evening, petitioner wired PAL Cebu demanding the delivery of his baggage before noon the next day, otherwise, he would hold PAL liable for damages, and stating that PAL's gross negligence had caused him undue inconvenience, worry, anxiety and extreme embarrassment. This telegram was received by the Cebu PAL supervisor but the latter felt no need to wire petitioner that his luggage had already been forwarded on the assumption that by the time the message reached Butuan City, the luggage would have arrived.Early in the morning of the next day, petitioner went to the Bancasi Airport to inquire about his luggage. He did not wait, however, for the morning flight which arrived at 10:00 o'clock that morning. This flight carried the missing luggage. The porter clerk, Maximo Gomez, paged petitioner, but the latter had already left. A certain Emilio Dagorro a driver of a "colorum" car, who also used to drive for petitioner, volunteered to take the luggage to petitioner. As Maximo Gomez knew Dagorro to be the same driver used by petitioner whenever the latter was in Butuan City, Gomez took the luggage and placed it on the counter. Dagorro examined the lock, pressed it, and it opened. After calling the attention of Maximo Gomez, the "maleta" was opened, Gomez took a look at its contents, but did not touch them. Dagorro then delivered the "maleta" to petitioner, with the information that the lock was open. Upon inspection, petitioner found that a folder containing certain exhibits, transcripts and private documents was missing, aside from two gift items for his parents-in-law. Petitioner refused to accept the luggage. Dagorro returned it to the porter clerk, Maximo Gomez, who sealed it and forwarded the same to PAL Cebu. Meanwhile, petitioner asked for postponement of the hearing of Civil Case No. 1005 due to loss of his documents, which was granted. Petitioner returned to Cebu City and in a letter demanded that his luggage be produced intact, and that he be compensated for actual and moral damages within five days from receipt of the letter, otherwise, he would be left with no alternative but to file suit.Messrs. de Leon, Navarsi, and Agustin, all of PAL Cebu, went to petitioner's office to deliver the "maleta". In the presence of Mr. Jose Yap and Atty. Manuel Maranga the contents were listed and receipted for by petitioner. Petitioner then sent a tracer letter to PAL Cebu inquiring about the results of the investigation which Messrs. de Leon, Navarsi, and Agustin had promised to conduct to pinpoint responsibility for the unauthorized opening of the "maleta.The following day, PAL sent its reply containing the latters apology for the delay in informing petitioner of the result of the investigation and that they still have not found the supposedly lost folder of papers nor have they been able to pinpoint the personnel who allegedly pilferred his baggage. Thus, petitioner filed a Complaint against PAL for damages for breach of contract of transportation.

ISSUE:Whether or not the court erred in limiting the carriers carriage liability to the amount of P100.00 as printed at the back of the ticket.

HELD:As a general proposition, the plaintiff's maleta having been pilfered while in the custody of the defendant, it is presumed that the defendant had been negligent. The liability, however, of PAL for the loss, in accordance with the stipulation written on the back of the ticket, Exhibit 12, is limited to P100.00 per baggage, plaintiff not having declared a greater value, and not having called the attention of the defendant on its true value and paid the tariff therefor. The validity of this stipulation is not questioned by the plaintiff. They are printed in reasonably and fairly big letters, and are easily readable. Moreover, plaintiff had been a frequent passenger of PAL from Cebu to Butuan City and back, and he, being a lawyer and businessman, must be fully aware of these conditions. The pertinent Condition of Carriage printed at the back of the plane ticket reads:8. BAGGAGE LIABILITY ... The total liability of the Carrier for lost or damaged baggage of the passenger is LIMITED TO P100.00 for each ticket unless a passenger declares a higher valuation in excess of P100.00, but not in excess, however, of a total valuation of P1,000.00 and additional charges are paid pursuant to Carrier's tariffs.There is no dispute that petitioner did not declare any higher value for his luggage, much less did he pay any additional transportation charge. But petitioner argues that there is nothing in the evidence to show that he had actually entered into a contract with PAL limiting the latter's liability for loss or delay of the baggage of its passengers, and that Article 1750* of the Civil Code has not been complied with.While it may be true that petitioner had not signed the plane ticket, he is nevertheless bound by the provisions thereof. "Such provisions have been held to be a part of the contract of carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the regulation".It is what is known as a contract of "adhesion", in regards which it has been said that contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent.Considering, therefore, that petitioner had failed to declare a higher value for his baggage, he cannot be permitted a recovery in excess of P100.00.Besides, passengers are advised not to place valuable items inside their baggage but "to avail of our V-cargo service." I t is likewise to be noted that there is nothing in the evidence to show the actual value of the goods allegedly lost by petitioner.

G.R. No. 88092 April 25, 1990CITADEL LINES, INC.,petitioner,vs.COURT OF APPEALS and MANILA WINE MERCHANTS, INC.,respondents.FACTS: Petitioner Citadel Lines, (CARRIER) Inc. is the general agent of the vessel "Cardigan Bay/Strait Enterprise," Respondent Manila Wine Merchants, (IMPORTER) Inc. is the importer of the subject shipment of Dunhill cigarettes from England. The vessel "Cardigan Bay/Strait Enterprise" loaded on board at Southampton, England, for carriage to Manila, 180 Filbrite cartons of mixed British manufactured cigarettes called "Dunhill International Filter" and "Dunhill International Menthol," as evidenced by Bill of Lading No. 706213742and Bill of Lading No. 706086803of the Ben Line Containers Ltd. The shipment arrived at the Port of Manila Pier 13, on April 18, 1979 in container van No. BENU 204850-9. The said container was received by E. Razon, Inc. (later known as Metro Port Service, Inc. and ARRASTRE). The container van, which contained two shipments was stripped. One shipment was delivered and the other shipment consisting of the imported British manufactured cigarettes was palletized. (Due to lack of space at the Special Cargo Coral, the aforesaid cigarettes were placed in two containers with two pallets) The CARRIER'S headchecker discovered that container van had a different padlock and the seal was tampered with. It was reported to Jose G. Sibucao, Pier Superintendent, Pier 13, and upon verification, it was found that 90 cases of imported British manufactured cigarettes were missing. Per investigation conducted by the ARRASTRE, it was revealed that the cargo in question was not formally turned over to it by the CARRIER but was kept inside container van which was padlocked and sealed by the representatives of the CARRIER without any participation of the ARRASTRE.TRIAL COURT When the CONSIGNEE learned that 90 cases were missing, it filed a formal claim with the CARRIER, demanding the payment of P315,000.00 representing the market value of the missing cargoes. The CARRIER, in admitted the loss but alleged that the same occurred at Pier 13, an area absolutely under the control of the ARRASTRE. In view thereof, the CONSIGNEE filed a formal claim,with the ARRASTRE, demanding payment of the value of the goods but said claim was denied. DECISION: Exonerating the ARRASTRE of any liability on the ground that the subject container van was not formally turned over to its custody, and adjudging the CARRIER liable for the principal amount of P312,480.00 representing the market value of the lost shipment, and the sum of P30,000.00 as and for attorney's fees and the costs of suitCOURT OF APPEALS The CA affirmed the decision of the courta quobut deleted the award of attorney's fees and costs of suit.ISSUES:1. Whether the loss occurred while the cargo in question was in the custody of E. Razon, Inc. or of Citadel Lines, Inc; and2. Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on the consignee.RULING:1. The subject shipment was lost while it was still in the custody of the CARRIER, and considering further that it failed to prove that the loss was occasioned by an excepted cause, the inescapable conclusion is that the CARRIER was negligent and should be held liable. 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. 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 extra ordinary diligence as required in Article 1733 of the Civil Code. The duty of the consignee is to prove merely that the goods were lost. Thereafter, the burden is shifted to the carrier to prove that it has exercised the extraordinary diligence required by law.2. The Court find the award of damages in the amount of P312,800.00 for the value of the goods lost, based on the alleged market value, to be erroneous. It is clearly and expressly provided under Clause 6 of the aforementioned bills of lading issued by the CARRIER that its liability is limited to $2.00 per kilo. A stipulation limiting the liability of the carrier to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. 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 CONSIGNEE itself admits in its memorandum that the value of the goods shipped does not appear in the bills of lading. Hence, the stipulation on the carrier's limited liability applies. There is no question that the stipulation is just and reasonable under the circumstances and has been fairly and freely agreed upon. Art. 1750 itself in providing a limit to liability only if a greater value is not declared for the shipment in the bill of lading.The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per carton. Since 90 cartons were lost and the weight of said cartons is 2,233.80 kilos, at $2.00 per kilo the CARRIER's liability amounts to only US$4,467.60.

F. PROHIBITED AND LIMITING STIPULATIONSG.R. No. L-16598 October 3, 1921H. E. HEACOCK COMPANY,plaintiff-appellant,vs.MACONDRAY & COMPANY, INC.,defendant-appellant.FACTS: On or about the 5th day of June, 1919, the plaintiff (Heacock) caused to be delivered on board of steamship Bolton Castle, then in the harbor of New York, four cases of merchandise one of which contained twelve (12) 8-day Edmond clocks properly boxed and marked for transportation to Manila, and paid freight on said clocks from New York to Manila in advance. The said steampship arrived in the port of Manila on or about the 10th day of September, 1919, consigned to the defendant (Macondray) as agent and representative of said vessel in said port. Neither the master of said vessel nor the defendant herein, as its agent, delivered to the plaintiff the aforesaid twelve 8-day Edmond clocks, although demand was made upon them for their delivery.The invoice value of the said twelve 8-day Edmond clocks in the city of New York was P22 and the market value of the same in the City of Manila at the time when they should have been delivered to the plaintiff was P420.The bill of lading issued and delivered to the plaintiff by the master of the said steamshipBolton Castle contained, among others, the following clauses:1. It is mutually agreedthat the value of the goods receipted for above does not exceed $500 per freight ton, or, in proportion for any part of a ton, unless the value be expressly stated herein and ad valorem freight paid thereon.9. Also, that in the event of claims for short delivery of, or damage to, cargo being made, the carrier shall not be liable for more than the net invoice price plus freight and insurance less all charges saved, and any loss or damage for which the carrier may be liable shall be adjusted pro rata on the said basis.No greater value than $500, U. S. currency, per freight ton was declared by the plaintiff on the aforesaid clocks, and no ad valorem freight was paid thereon.On or about October 9, 1919, the defendant tendered to the plaintiff P76.36, the proportionate freight ton value of the aforesaid twelve 8-day Edmond clocks, in payment of plaintiff's claim, which tender plaintiff rejected.The lower court, in accordance with clause 9 of the bill of lading above quoted, rendered judgment in favor of the plaintiff against the defendant for the sum of P226.02, this being the invoice value of the clocks in question plus the freight and insurance thereon, with legal interest thereon from November 20, 1919, the date of the complaint, together with costs. From that judgment both parties appealed to this court.The plaintiff-appellant (Heacock) insists that it is entitled to recover from the defendant the market value of the clocks in question, to wit: the sum of P420. The defendant-appellant (Macondray), on the other hand, contends that, in accordance with clause 1 of the bill of lading, the plaintiff is entitled to recover only the sum of P76.36, the proportionate freight ton value of the said clocks. The claim of the plaintiff is based upon the argument that the two clause in the bill of lading above quoted, limiting the liability of the carrier, are contrary to public order and, therefore, null and void. The defendant, on the other hand, contends that both of said clauses are valid, and the clause 1 should have been applied by the lower court instead of clause 9.ISSUES:1. May a common carrier, by stipulations inserted in the bill of lading, limit its liability for the loss of or damage to the cargo to an agreed valuation of the latter?2. Whether clause 1 or clause 9 of the bill of lading is to be adopted as the measure of defendant's liability. HELD:1. Yes, it may do so.Three kinds of stipulations have often been made in a bill of lading. Thefirstis one exempting the carrier from any and all liability for loss or damage occasioned by its own negligence. Thesecondis one providing for an unqualified limitation of such liability to an agreed valuation. And thethirdis one limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight.According to an almost uniform weight of authority, the first and second kinds of stipulations are invalid as being contrary to public policy, but the third is valid and enforceable.The authorities relied upon by the plaintiff-appellant (Heacock) support the proposition that the first and second stipulations in a bill of lading are invalid which either exempt the carrier from liability for loss or damage occasioned by itsnegligence, or provide for an unqualified limitation of such liability to an agreed valuation.A reading of clauses 1 and 9 of the bill of lading, however, clearly shows that the present case falls within the third stipulation, to wit: That a clause in a bill of lading limiting the liability of the carrier to a certain amount unless the shipper declares a higher value and pays a higher rate of freight, is valid and enforceable. A limitation of liability based upon an agreed value to obtain a lower rate does not conflict with any sound principle of public policy; and it is not conformable to plain principles of justice that a shipper may understate value in order to reduce the rate and then recover a larger value in case of loss.It seems clear from the foregoing authorities that the clauses (1 and 9) of the bill of lading here in question are not contrary to public order. Article 1255 of the Civil Code provides that "the contracting parties may establish any agreements, terms and conditions they may deem advisable, provided they are not contrary to law, morals or public order." Said clauses of the bill of lading are, therefore, valid and binding upon the parties thereto.2. It will be noted, however, that whereas clause 1 contains only animpliedundertaking to settle in case of loss on the basis of not exceeding $500 per freight ton, clause 9 contains anexpressundertaking to settle on the basis of the net invoice price plus freight and insurance less all charges saved. "Any loss or damage for which the carrier may be liableshallbe adjustedpro rataon the said basis," clause 9 expressly provides. It seems to the Court that there is an irreconcilable conflict between the two clauses with regard to the measure of defendant's liability. It is difficult to reconcile them without doing violence to the language used and reading exceptions and conditions into the undertaking contained in clause 9 that are not there. This being the case, the bill of lading in question should be interpreted against the defendant carrier, which drew said contract. "A written contract should, in case of doubt, be interpreted against the party who has drawn the contract. It is a well-known principle of construction that ambiguity or uncertainty in an agreement must be construed most strongly against the party causing it. These rules as applicable to contracts contained in bills of lading. "In construing a bill of lading given by the carrier for the safe transportation and delivery of goods shipped by a consignor, the contract will be construed most strongly against the carrier, and favorably to the consignor, in case of doubt in any matter of construction."It follows from all of the foregoing that the judgment appealed from should be affirmed.

ALITALIA v. INTERMEDIATE APPELLATE COURT and FELIPA E. PABLO

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 Alitalias 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:WON the Warsaw Convention should be applied to limit Alitalias liability.WON Dr. Pablo is entitled to nominal damages.

Held: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; andc. 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 wilful misconduct, or by such default on his part as is considered to be equivalent to 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.

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.

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 attorneys 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 attorneys fees inter alia where, as here, the defendants 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.

The opportunity to claim the honor or distinction was irretrievably lost by Dr.Pablo because ofAlitalia's breach of its contract. Apart from this, there can be no doubt thatDr. Pablo underwent profound distress and anxiety, which gradually turned to panic and finallydespair, from the time she learned that her suitcases were missing up to the time when, having gone to Rome, shefinally realized that she would no longerbe able to take part in the conference. As she herself put it, she was really shocked anddistraught and confused. Certainly, the compensation for the injurysuffered by Dr. Pablocannot under the circumstances berestricted to that prescribed by the Warsaw Convention for delay in thetransport of baggage.

Pan American Airways vs. IAC. GR L-70462, 11 August 1988

FACTS: On 25 April 1978, Rene V. Pangan, president and general manager of the Sotang Bastos and Archer Productions, while in San Francisco, California and Primo Quesada of Prime Films, San Francisco, California, entered into an agreement whereby the former, for and in consideration of the amount of US $2,500.00 per picture, bound himself to supply the latter with three films. Ang Mabait, Masungit at ang Pangit, Big Happening with Chikiting and Iking, and Kambal Dragon for exhibition in the United States. It was also their agreement that Pangan, et. al. would provide the necessary promotional and advertising materials for said films on or before 30 May 1978. On his way home to the Philippines, Pangan visited Guam where he contacted Leo Slutchnick of the Hafa Adai Organization. Pangan likewise entered into a verbal agreement with Slutchnick for the exhibition of two of the films a at the Hafa Adai Theater in Guam on 30 May 1978 for the consideration of P7,000.00 per picture. Pangan undertook to provide the necessary promotional and advertising materials for said films on or before the exhibition date on 30 May 1978. By virtue of the agreements, Pangan caused the preparation of the requisite promotional handbills and still pictures for which he paid the total sum of P12,900.00. Likewise in preparation for his trip abroad to comply with his contracts, Pangan purchased 14 clutch bags, 4 capiz lamps and 4 barong tagalog, with a total value of P4,400.00. On 18 May 1978, Pangan obtained from Pan Ams Manila Office, through the Your Travel Guide, an economy class airplane ticket 0269207406324 for passage from Manila to Guam on Pan Ams Flight 842 of 27 May 1978, upon payment by Pangan of the regular fare. The Your Travel Guide is a tour and travel office owned and managed by plaintiffs witness Mila de la Rama. On 27 May 1978, two hours before departure time Pangan was at Pan Ams ticket counter at the Manila International Airport and presented his ticket and checked in his two luggages, for which he was given baggage claim tickets 963633 and 963649. The two luggages contained the promotional and advertising materials, the clutch bags, barong tagalog and his personal belongings. Subsequently, Pangan was informed that his name was not in the manifest and so he could not take Flight 842 in the economy class. Since there was no space in the economy class, Pangan took the first class because he wanted to be on time in Guam to comply with his commitment, paying an additional sum of $112.00. When Pangan arrived in Guam on the date of 27 May 1978, his two luggages did not arrive with his flight, as a consequence of which his agreements with Slutchnick and Quesada for the exhibition of the films in Guam and in the United States were cancelled. Thereafter, he filed a written claim for his missing luggages. Upon arrival in the Philippines, Pangan contacted his lawyer, who made the necessary representations to protest as to the treatment which he received from the employees of PanAm and the loss of his two luggages. Pan Am assured Pangan that his grievances would be investigated and given its immediate consideration. Due to Pan Ams failure to communicate with Pangan about the action taken on his protests, a complaint was filed by Pangan. The CFI found Pan Am liable and (1) ordered Pan Am to pay Pangan, et. al. the sum of P83,000.00, for actual damages, with interest thereon at the rate of 14% per annum from 6 December 1978, when the complaint was filed, until the same is fully paid, plus the further sum of P10,000.00 as attorneys fees; (2) ordered Pan Am to pay Pangan the sum of P8,123.34, for additional actual damages, with interest thereon at the rate of 14% per annum from 6 December 1978, until the same is fully paid; (3) dismissed the counterclaim interposed by Pan-Am; and (4) ordered Pan-Am to pay the costs of suit. On appeal, the then Intermediate Appellate Court affirmed the trial court decision. Hence, the petition for review.ISSUES: 1. Whether or not the respondent court erred as a matter of law in affirming the trial court's award of actual damages beyond the limitation of liability set forth in the Warsaw Convention and the contract of carriage.2. Whether or not the respondent court erred as a matter of law in affirming the trial court's award of actual damages consisting of alleged lost profits in the face of this Court's ruling concerning special or consequential damages as set forth in Mendoza v. PhilippineAirlines[90 Phil. 836 (1952).

HELD: 1. The Supreme Court granted the Petition, set aside the Decision of the Intermediate Appellate Court, and rendered a new judgment ordering Pan Am to pay Pangan damages in the amount of US$600.00 or its equivalent in Philippine currency at the time of actual payment. - Pertinent Condition of Carriage printed at the back of the ticketThe pertinent Condition of Carriage printed at the back of the plane ticket reads: (8) BAGGAGE LIABILITY . . . The total liability of the Carrier for lost or damage baggage of the passenger is LIMITED TO P100.00 for each ticket unless a passenger declares a higher valuation in excess of P100.00, but not in excess, however, of a total valuation of P1,000.00 and additional charges are paid pursuant to Carriers tariffs.

-Ong Yiu case applicableIn the case of Ong Yiu v. Court of Appeals [G.R. No. L-40597, June 29, 1979, 91 SCRA 223), the Court sustained the validity of a printed stipulation at the back of an airline ticket limiting the liability of the carrier for lost baggage to a specified amount and ruled that the carriers liability was limited to said amount since the passenger did not declare a higher value, much less pay additional charges. The ruling in Ong Yiu squarely applicable to the instant case. Herein, on the basis of the stipulations printed at the back of the ticket, Pan Ams liability for the lost baggage of Pangan is limited to $600.00 ($20.00 x 30 kilos) as the latter did not declare a higher value for his baggage and pay the corresponding additional charges.

-Provisions in plane ticket a contract of adhesion; Contracts of adhesion not entirely prohibited.While it may be true that Pangan had not signed the plane ticket (Article 1750), he is nevertheless bound by the provisions thereof. Such provisions have been held to be a part of the contract of carriage and valid and binding upon the passenger regardless of the latters lack of knowledge or assent to the regulation. It is what is known as a contract of adhesion, in regards which it has been said that contracts of adhesion wherein one party imposes a ready-made form of contract on the other, as the plane ticket, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent.

-Shewaram case not applicableThe ruling in Shewaram v. Philippine Air Lines, Inc. where the Court held that the stipulation limiting the carriers liability to a specified amount was invalid, finds no application in the instant case, as the ruling in said case was premised on the finding that the conditions printed at the back of the ticket were so small and hard to read that they would not warrant the presumption that the passenger was aware of the conditions and that he had freely and fairly agreed thereto. Herein, similar facts that would make the case fall under the exception have not been alleged, much less shown to exist.

2. Pan Am not liable for lost profits when film showing contracts were cancelled; Mendoza vs. PAL-The Court finds itself unable to agree with the decision of the trial court, and affirmed by the Court of Appeals, awarding Pangan damages as and for lost profits when their contracts to show the films in Guam and San Francisco, California were cancelled. The rule laid down in Mendoza v. Philippine Air Lines, Inc. [90 Phil. 836 (1952)] cannot be any clearer: Under Art. 1107 of the Civil Code, a debtor in good faith may be held liable only for damages that were foreseen or might have been foreseen at the time the contract of transportation was entered into. Herein, in the absence of a showing that Pan Ams attention was called to the special circumstances requiring prompt delivery of Pangans luggages, Pan Am cannot be held liable for the cancellation of Pangans contracts as it could not have foreseen such an eventuality when it accepted the luggages for transit.

Requisite for liability for special damages; Chapman vs. Fargo, L.R.A. (1918 F, p. 1049)-Before defendant could be held to special damages such as the present alleged loss of profits on account of delay or failure of delivery it must have appeared that he had notice at the time of delivery to him of the particular circumstances attending the shipment and which probably would lead to such special loss if he defaulted. Or, as the rule has been stated in another form in order to impose on the defaulting party further liability than for damages naturally and directly i.e., in the ordinary course of things arising from a breach of contract such unusual or extraordinary damages must have been brought within the contemplation of the parties as the probable result of breach at the time of or prior to contracting. Generally notice then of any special circumstances which will show that the damages to be anticipated from a breach would be enhanced has been held sufficient far this effect. The attention of the common carrier must be called to the nature of the articles shipped, the purpose of shipment, and the desire to rush the shipment.

CHINA AIRLINES, petitioner v DANIEL CHIOK, respondentG.R. No. 152122 July 30, 2003

Facts:On September 18, 1981, Daniel Chiok purchased from China Airlines, Ltd. (CAL for brevity) a passenger ticket for air transportation covering Manila-Taipei-Hongkong-Manila.Said ticket was exclusively endorsable to Philippine Airlines, Ltd. (PAL for brevity)Subsequently, on November 21, 1981, Chiok took his trip from Manila to Taipei using the CAL ticket.Before he left for said trip, the trips covered by the ticket were pre-scheduled and confirmed by the former.When he arrived in Taipei, he went to the CAL office and confirmed his Hongkong to Manila trip on board PAL Flight No. PR 311.The CAL office attached a yellow sticker indicating that his flight status was OK.When Chiok reached Hongkong, he went to the PAL office and sought to reconfirm his flight back to Manila.The PAL office also confirmed his return trip on board Flight No. PR 311 and attached its own sticker.On November 24, 1981, Chiok proceeded to Hongkong International Airport for his return trip to Manila.However, upon reaching the PAL counter, Chiok saw a poster stating that PAL Flight No. PR 311 was cancelled due to typhoon in Manila.He was then informed that all the confirmed ticket holders of PAL Flight No. PR 311 were automatically booked for the next flight the following day.On November 25, 1981, Chiok was not able to board the plane because his name did not appear in PALs computer list of passengers. Chiok then sought to recover his luggage but found only two and realized that his new Samsonite luggage was missing which contained cosmetics worth HK$14,128.80He then proceeded to PAL and confronted the reservation officer who previously confirmed his flight back to Manila. However, the reservation officer showed him that his name was on the list.Chiok then decided to use his CAL ticket and asked PALs reservation officer if he could use the ticket to book him for the said flight; The latter, once again, booked and confirmed the formers trip on a flight scheduled to depart that eveningLater, Chiok went to the PAL check-in counter and it was Carmen Chan, PALs terminal supervisor who attended to him.As this juncture, Chiok had already placed his travel documents, including his clutch bag, on top of the PAL check-in counter.Thereafter, Carmen directed PAL personnel to transfer counters.In the ensuing commotion, Chiok lost his clutch bag containing the following, to wit:(a) $2,000.00;(b) HK$2,000.00;(c) Taipei $8,000.00; (d)P2,000.00;(e) a three-piece set of gold (18 carats) cross pens valued atP3,500;(f) a Cartier watch worth aboutP7,500.00;(g) a tie clip with a garnet birthstone and diamond worthP1,800.00; and (h) a [pair of] Christian Dior reading glasses.Subsequently, he was placed on stand-by and at around 7:30 p.m., PAL personnel informed him that he could now check-inConsequently, Chiok as plaintiff, filed aComplainton November 9, 1982 for damages, against PAL and CAL, as defendants, docketed as Civil Case No. 82-13690, with Branch 31, Regional Trial Court, National Capital Judicial Region, Manila.RTC: held CAL and PAL jointly and severally liable to respondent but didnt rule on respective cross-claimsCA: affirmed RTCs decision and debunked petitioners claim that it had merely acted as an issuing agent for the ticket covering HK-Manila leg; Cited the decision in KLM Royal Dutch Airlines v CA:Article 30 of the Warsaw providing that in case of transportation to be performed by various successive carriers, the passenger can take action only against the carrier who performed the transportation during which the accident or the delay occurred presupposes the occurrence of either an accident or delay in the course of the air trip, and does not apply if the damage is caused by the willful misconduct on the part of the carriers employee or agent acting within the scope of his employment.On PALs appeal, CA ruled that the airlines negligence was the proximate cause of the incident since in spite of the confirmations he had secured, his name didnt appear in the list of passengersIssues:(1) W/N CA committed judicial misconduct in finding liability against CAL on the basis of misquotation from KLM Royal Dutch v CA and in magnifying its misconduct by denying CALs motion for reconsideration on a mere syllabus, unofficial at that;(2) W/N CAL is liable for damages;Ruling: (1) Yes, CA committed a lapse when it relied merely on the unofficial syllabus of our ruling inKLM v. C.A Indeed, lawyers and litigants are mandated to quote decisions of this Court accurately. However, since this case is not administrative in nature, we cannot rule on the CA justices administrative liability, if any, for this lapse.In the case at bar, we can only determine whether the error in quotation would be sufficient to reverse or modify the CA Decision.

In the instant case, the CA ruled that under the contract of transportation, petitioner -- as the ticket-issuing carrier (like KLM) -- was liable regardless of the fact that PAL was to perform or had performed the actual carriage. It elucidated on this point as follows:By the very nature of their contract, defendant-appellantCAL is clearly liable under the contract of carriage with [respondent] and remains to be so, regardless of those instances when actual carriage was to be performed by another carrier.The issuance of a confirmed CAL ticket in favor of [respondent] covering his entire trip abroad concretely attests to this.This also serves as proof that defendant-appellant CAL, in effect guaranteed that the carrier, such as defendant-appellant PAL would honor his ticket, assure him of a space therein and transport him on a particular segment of his trip.Notwithstanding the errant quotation, we have found after careful deliberation that the assailed Decision is supported in substance byKLM v. CA.The misquotation by the CA cannot serve as basis for the reversal of its ruling.(2) Yes, CAL is liable for damages; It is significant to note that the contract of air transportation was between petitioner and respondent, with the former endorsing to PAL the Hong Kong-to-Manila segment of the journey.Such contract of carriage has always been treated in this jurisdiction as a single operation. This jurisprudential rule is supported by the Warsaw Convention, to which the Philippines is a party, and by the existing practices of the International Air Transport Association (IATA).Article 1, Section 3 of the Warsaw Convention states:Transportation to be performed by several successive air carriers shall be deemed, for the purposes of this Convention, to be one undivided transportation, if it has been regarded by the parties as a single operation, whether it has been agreed upon under the form of a single contract or 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.Article 15 of IATA-Recommended Practice similarly provides:Carriage to be performed by several successive carriers under one ticket, or under a ticket and any conjunction ticket issued therewith, is regarded as a single operation.InAmerican Airlines v. Court of Appeals, we have noted that under a general pool partnership agreement, the ticket-issuing airline is the principal in a contract of carriage, while the endorsee-airline is the agent.Likewise, as the principal in the contract of carriage, the petitioner inBritish Airwaysv. Court of Appeals was held liable, even when the breach of contract had occurred, not on its own flight, but on that of another airline.The Decision followed our ruling inLufthansa German Airlines v. Court of Appeals, in which we had held that the obligation of the ticket-issuing airline remained and did not cease, regardless of the fact that another airline had undertaken to carry the passengers to one of their destinations.In the instant case, following the jurisprudence cited above, PAL acted as the carrying agent of CAL. In the same way that we ruled against British Airways and Lufthansa in the aforementioned cases, we also rule that CAL cannot evade liability to respondent, even though it may have been only a ticket issuer for the Hong Kong-Manila sector.

G.R. No. 101538 June 23, 1992AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, Augusto Benedicto Santos vs.NORTHWEST ORIENT AIRLINES and COURT OF APPEALSArticle 28(1) of the Warsaw ConventionArt. 28. (1) An action for damage must be brought at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the contract has been made, or before the court at the place of destination.FACTS The petitioner is a minor and a resident of the Philippines. Private respondent Northwest Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A. and licensed to do business and maintain a branch office in the Philippines. October 21, 1986: Santos III purchased NOA a round-trip ticket in San Francisco. U.S.A., Flight departures Dec 19 SF Tokyo MNL Tokyo SF. Flight: Tokyo to MNL departure date Dec 20. No date was specified for his return to San Francisco. Dec 19: Petitioner checked in at NOA Counter in SF Airport. Was informed that he had no reservation for his flight from Tokyo to Manila; was waitlisted. March 12, 1987: the petitioner sued NOA for damages in the RTC of Makati. April 13, 1987: Respondent NOA moved to dismiss the complaint on the ground of lack of jurisdiction. Citing the above-quoted article, it contended that the complaint could be instituted only in the territory of one of the High Contracting Parties, before:1. the court of the domicile of the carrier;2. the court of its principal place of business;3. the court where it has a place of business through which the contract had been made;4. the court of the place of destination. Northwest avers files MOTION TO DISMISS that the ground thereof is "the Court has no subject matter jurisdiction to entertain the Complaint" (filing of in improper venue) Philippines was not its domicile nor was this its principal place of business. Neither was the petitioner's ticket issued in this country nor was his destination Manila but San Francisco in the United States RTC dismissed the case (Feb 1, 1988) CA affirmed RTC decision; motion for recon by Santos also denied Petitioner Santos III contends: Article 28(1) is unconstitutional. that there is no substantial distinction between a person who purchases a ticket in Manila and a person who purchases his ticket in San Francisco. The classification of the places in which actions for damages may be brought is arbitrary and irrational and thus violates the due process and equal protection clauses. Also, petitioner claims that the lower court erred in ruling that the plaintiff must sue in the United States, because this would deny him the right to access to our courts.

The petitioner claims that the lower court erred in not ruling that Article 28(1) of the Warsaw Convention is a rule merely of venue and was waived by defendant when it did not move to dismiss on the ground of improper venue.ISSUES:(1) The constitutionality of Article 28(1) of the Warsaw Convention; and(2) The jurisdiction of Philippine courts over the case.HELD:The petition is DENIED(1) ART 28 (1), Warsaw Convention IT IS CONSTITUTIONAL The Convention is a treaty commitment, joint legislative-executive act, voluntarily assumed by the Philippine government and, as such, has the force and effect of law in this country. The petitioner's allegations are not convincing enough to overcome this presumption. Apparently, the Convention considered the four places designated in Article 28 the most convenient forums for the litigation of any claim that may arise between the airline and its passenger, as distinguished from all other places. The petitioner is invoking the doctrine ofrebus sic stantibus (things standing thus) key element of this doctrine: the vital change in the condition of the contracting parties that they could not have foreseen at the time the treaty was concluded.According to Jessup, "this doctrine constitutes an attempt to formulate a legal principle which would justify non-performance of a treaty obligation if the conditions with relation to which the parties contracted have changed so materially and so unexpectedly as to create a situation in which the exaction of performance would be unreasonable." The more important consideration is that the treaty has not been rejected by the Philippine government. The doctrine ofrebus sic stantibusdoes not operate automatically to render the treaty inoperative. There is a necessity for a formal act of rejection, usually made by the head of State, with a statement of the reasons why compliance with the treaty is no longer required. (Art 39 of the Treat provides for an authorized denunciation and the steps the High Contracting Party must take) Rejection of the treaty, whether on the ground ofrebus sic stantibusor pursuant to Article 39, is not a function of the courts but of the other branches of government. This is a political act. (2) US Courts have jurisdiction on this case (Not SC of the Phil) The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of the contract of carriage or, specifically in this case, the ticket between the passenger and the carrier. Examination of the petitioner's ticket shows that his ultimate destination is San Francisco. Although the date of the return flight was left open, the contract of carriage between the parties indicates that NOA was bound to transport the petitioner to San Francisco from Manila. Manila should therefore be considered merely an agreed stopping place and not the destination. Article 1(2), Warsaw Convention also draws a distinction between a "destination" and an "agreed stopping place." It is the "destination" and not an "agreed stopping place" that controls for purposes of ascertaining jurisdiction under the Convention. The contract is a single undivided operation, beginning with the place of departure and ending with the ultimate destination. The use of the singular in this expression indicates the understanding of the parties to the Convention that every contract of carriage has one place of departure and one place of destination. An intermediate place where the carriage may be broken is not regarded as a "place of destination."International transportation is defined in paragraph (2) of Article 1, Warsaw Convention as follows:(2) For the purposes of this convention, the expression "international transportation" shall mean any transportation 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 transportation or a transshipment, are situated [either] within the territories of two High Contracting Parties . . . Since the flight involved in the case at bar is international, it is subject to the provisions of the Warsaw Convention, including Article 28(1) Where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual concept. Jurisdiction in the international sense must be established in accordance with Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular court must be established pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is determined will the issue of venue be taken up. This second question shall be governed by the law of the court to which the case is submitted. [SEE NOTES BELOW]

NOTES:Whether Article 28(1) refers to jurisdiction or only to venue is a question over which authorities are sharply divided. While the petitioner cites several cases holding that Article 28(1) refers to venue rather than jurisdiction,there are later cases cited by the private respondent supporting the conclusion that the provision is jurisdictional.Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent or waiver upon d court which otherwise would have no jurisdiction over the subject-matter of an action; Rules as to jurisdiction can never be left to the consent or agreement of the parties, whether or not a prohibition exists against their alterationVenue of an action as fixed by statute may be changed by the consent of the parties and an objection that the plaintiff brought his suit in the wrong county may be waived by the failure of the defendant to make a timely objectionA number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a venue provision. (1) the wording of Article 32, which indicates the places where the action for damages "must" be brought, underscores the mandatory nature of Article 28(1).(2) this characterization is consistent with one of the objectives of the Convention, which is to "regulate in a uniform manner the conditions of international transportation by air." (3) the Convention does not contain any provision prescribing rules of jurisdiction other than Article 28(1), which means that the phrase "rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). Warsaw Convention brief historyThe 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."

UNITED AIRLINES,petitioner, vs. WILLIE J. UY,respondent.[G.R. No. 127768.November 19, 1999]

FACTS: On 13 October 1989 respondent Willie J. Uy, a revenue passenger on United Airlines Flight No. 819 for the San Francisco - Manila route, checked in together with his luggage one piece of which was found to be overweight at the airline counter. To his utter humiliation, an employee of petitioner rebuked him saying that he should have known the maximum weight allowance to be 70 kgs. per bag and that he should have packed his things accordingly. The airline then billed him overweight charges which he offered to pay with a miscellaneous charge order (MCO) or an airline pre-paid credit.However, the airlines employee, and later its airport supervisor, adamantly refused to honor the MCO pointing out that there were conflicting figures listed on it. Faced with the prospect of leaving without his luggage, respondent paid the overweight charges with his American Express credit card. Upon arrival in Manila, he discovered that one of his bags had been slashed and its contents stolen.He particularized his losses to be around US $5,310.00. In a letter dated 16 October 1989 respondent bewailed the insult, embarrassment and humiliating treatment he suffered in the hands of United Airlines employees, notified petitioner of his loss and requested reimbursement thereof. Petitioner United Airlines, through Central Baggage Specialist Joan Kroll, did not refute any of respondents allegations and mailed a check representing the payment of his loss based on the maximum liability of US $9.70 per pound. Consequently, on 9 June 1992 respondent filed a complaint for damages against United Airlines: moral damages of at leastP1,000,000.00, exemplary damages of at leastP500,000.00, plus attorney's fees of at leastP50,000.00.Similarly, he alleged that the damage to his luggage and its stolen contents amounted to around $5,310.00, and requested reimbursement therefor. United Airlines moved to dismiss the complaint on the ground that respondents cause of action had prescribed, invoking Art. 29 of the Warsaw Convention which provides - Art. 29 (1) The right to damages shall be extinguished if an action is not brought within two (2) years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the transportation stopped. (2) The method of calculating the period of limitation shall be determined by the law of the court to which the case is submitted.TRIAL COURT:On 2 August 1992 the trial court ordered the dismissal of the action holding that the language of Art. 29 is clear that the action must be brought within two (2) years from the date of arrival at the destination. Respondent countered that par. (1) of Art. 29 of the Warsaw Convention must be reconciled with par. (2) thereof which states that "the method of calculating the period of limitation shall be determined by the law of the court to which the case is submitted." Interpreting thus, respondent noted that according to Philippine laws the prescription of actions is interrupted "when they are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor." Court of Appeals reversed the 7 August 1992 order issued by the trial courtgranting petitioner's motion to dismiss based on prescription of cause of action. Petitioner likewise contends that the appellate court erred in ruling that respondent's cause of action has not prescribed since delegates to the Warsaw Convention clearly intended the two (2)-year limitation incorporated in Art. 29 as an absolute bar to suit and not to be made subject to the various tolling provisions of the laws of the forum.

ISSUE:WON Art. 29 of the Warsaw Convention must be applied in determining the prescriptive period for submitting the case for damages.HELD: Within our jurisdiction we have held that the Warsaw Convention can be applied, or ignored, depending on the peculiar facts presented by each case. Thus, we have ruled that the Convention's provisions do not regulate or exclude liability for other breaches of contract by the carrier or misconduct of its officers and employees, or for some particular or exceptional type of damage. Likewise, we have held that the Convention does not 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 willful misconduct on the part of the carrier's employees is found or established. Respondent's complaint reveals that he is suing on two (2) causes of action:(a) the shabby and humiliating treatment he received from petitioner's employees at the San Francisco Airport which caused him extreme embarrassment and social humiliation; and, (b) the slashing of his luggage an