G.R. No. 156087               May 8, 2009 [Philippine Airlines] and to assist each other to develop traffic on the route.

d to assist each other to develop traffic on the route."8 The Agreement

DECISION Kuwait Airways sectors, special prorates for use by Philippine Airlines to specified Kuwait
Airways sectors, joint advertising by both carriers in each other’s timetables and other general
advertising, and mutual assistance to each other with respect to the development of traffic on
TINGA, J.:
the route.10
This petition for review1 filed by the duly designated air carrier of the Kuwait Government
Most pertinently for our purposes, under Article 2.1 of the Commercial Agreement, Kuwait
assails a decision2 dated 25 October 2002 of the Makati Regional Trial Court (RTC), Branch
Airways obligated itself to "share with Philippine Airlines revenue earned from the uplift of
60, ordering Kuwait Airways to pay respondent Philippine Airlines the amount of
passengers between Kuwait and Manila and vice versa."11 The succeeding paragraphs of
US$1,092,690.00, plus interest, attorney’s fees, and cost of suit. 3 The principal liability
Article 2 stipulated the basis for the shared revenue earned from the uplift of passengers.
represents the share to Philippine Airlines in the revenues the foreign carrier had earned for
the uplift of passengers and cargo in its flights to and from Kuwait and Manila which the
foreign carrier committed to remit as a contractual obligation. The Commercial Agreement and the annexed Joint Services Agreement was subsequently
amended by the parties six times between 1981 and 1994. At one point, in 1988, the
agreement was amended to authorize Philippine Airlines to operate provisional services,
On 21 October 1981, Kuwait Airways and Philippine Airlines entered into a Commercial
referred to as "ad hoc joint services," on the Manila-Kuwait (and vice versa) route for the
Agreement,4 annexed to which was a Joint Services Agreement5 between the two airlines.
period between April to June 1988.12 In 1989, another amendment was agreed to by the
The Commercial Agreement covered a twice weekly Kuwait Airways flight on the route
parties, subjecting the uplift of cargo between Kuwait and Manila to the same revenue
Kuwait-Bangkok-Manila and vice versa.6 The agreement stipulated that "only 3rd and 4th
sharing arrangement as the uplift of passengers.13 From 1981 until when the present
freedom traffic rights between Kuwait and Manila and vice versa will be exercised. No 5th
incidents arose in 1995, there seems to have been no serious disagreements relating to the
freedom traffic rights will be exercised between Manila on the one hand and Bangkok on the
contract.
other."7

In April of 1995, delegations from the Philippines and Kuwait (Philippine Panel and Kuwait
The "freedom traffic rights" referred to in the Agreement are the so-called "five freedoms"
Panel) met in Kuwait. The talks culminated in a Confidential Memorandum of Understanding
contained in the International Air Transport Agreement (IATA) signed in Chicago on 7
(CMU) entered into in Kuwait on 12 April 1995. Among the members of the Philippine Panel
December 1944. Under the IATA, each contracting State agreed to grant to the other
were officials of the Civil Aeronautics Board (CAB), the Department of Foreign Affairs (DFA),
contracting states, five "freedoms of air." Among these freedoms were "[t]he privilege to put
and four officials of Philippine Airlines: namely its Vice-President for Marketing, Director for
down passengers, mail and cargo taken on in
International Relations, Legal Counsel, and a Senior International Relations Specialist. Dr.
Victor S. Linlingan, the Head of the Delegation and Executive Director of the CAB, signed the
the territory of the State whose nationality the aircraft possesses" (Third Freedom); "[t]he CMU in behalf of the Government of the Republic of the Philippines.
privilege to take on passengers, mail or cargo destined for the territory of the State whose
nationality the aircraft possesses" (Fourth Freedom); and the right to carry passengers from
The present controversy stems from the fourth paragraph of the CMU, which read:
one's own country to a second country, and from that country to a third country (Fifth
Freedom). In essence, the Kuwait Airways flight was authorized to board passengers in
Kuwait and deplane them in Manila, as well as to board passengers in Manila and deplane 4. The two delegations agreed that the unilateral operation and the exercise of third and
them in Kuwait. At the same time, with the limitation in the exercise of Fifth Freedom traffic fourth freedom traffic rights shall not be subject to any royalty payment or commercial
rights, the flight was barred from boarding passengers in Bangkok and deplaning them in arrangements, as from the date of signing of this [CMU].
Manila, or boarding passengers in Manila and deplaning them in Bangkok.
The aeronautical authorities of the two Contracting Parties will bless and encourage any
The Commercial Agreement likewise adverted to the annexed Joint Services Agreement cooperation between the two designated airlines.
covering the Kuwait-Manila (and vice versa) route, which both airlines had entered into "[i]n
order to reflect the high level of friendly relationships between [Kuwait Airways] and
The designated airlines shall enter into commercial arrangements for the unilateral exercise terms of the Commercial Agreement. The RTC also considered as a corollary issue whether
of fifth freedom traffic rights. Such arrangements will be subject to the approval of the Kuwait Airways "validly terminated the Commercial Agreement x x x, plaintiff’s contention
aeronautical authorities of both contracting parties.14 being that [Kuwait Airways] had not complied with the terms of termination provided for in the
Commercial Agreement."
On 15 May 1995, Philippine Airlines received a letter from Dawoud M. Al-Dawoud, the Deputy
Marketing & Sales Director for International Affairs of Kuwait Airways, addressed to Ms. The bulk of the RTC’s discussion centered on the Philippine Airlines’ claim that the execution
Socorro Gonzaga, the Director for International Relations of Philippine Airlines.15 Both Al- of the CMU could not prejudice its existing rights under the Commercial Agreement, and that
Dawoud and Gonzaga were members of their country’s respective delegations that had met the CMU could only be deemed effective only after 31 October 1995, the purported effectivity
in Kuwait the previous month. The letter stated in part: date of termination under the Commercial Agreement. The rationale for this position of
Philippine Airlines was that the execution of the CMU could not divest its proprietary rights
Regarding the [Kuwait Airways/Philippine Airlines] Commercial Agreement, pursuant to item 4 under the Commercial Agreement.
of the new MOU[,] we will advise our Finance Department that the Agreement concerning
royalty for 3rd/4th freedom traffic will be terminated effective April 12, 1995. Although the On this crucial point, the RTC agreed with Philippine Airlines. It asserted the obligatory force
royalty agreement will no longer be valid, we are very keen on seeing that [Philippine Airlines] of contracts between contracting parties as the source of vested rights which may not be
continues to enjoy direct participation in the Kuwait/Philippines market through the Block modified or impaired. After recasting Kuwait Airway’s arguments on this point as being that
Space Agreement and to that extent we would like to maintain the Jt. Venture (Block Space) "the Confidential Memorandum of Understanding is superior to the Commercial Agreement[,]
Agreement, although with some minor modifications.16 the same having been supposedly executed by virtue of the state’s sovereign power," the
RTC rejected the argument, holding that "[t]he fact that the [CMU] may have been executed
To this, Gonzaga replied to Kuwait Airways in behalf of Philippine Airlines in a letter dated 22 by a Philippine Panel consisting of representative [sic] of CAB, DFA, etc. does not necessarily
June 1995.17 Philippine Airlines called attention to Section 6.5 of the Commercial Agreement, give rise to the conclusion that the [CMU] is a superior contract[,] for the exercise of the
which read: State’s sovereign power cannot be arbitrarily and indiscriminately utilized specifically to impair
contractual vested rights."25
This agreement may be terminated by either party by giving ninety (90) days notice in writing
to the other party. However, any termination date must be the last day of any traffic period, Instead, the RTC held that "[t]he Commercial Agreement and its specific provisions on
e.g.[,] 31st March or 31st October.18 revenue sharing having been freely and voluntarily agreed upon by the affected parties x x x
has the force of law between the parties and they are bound to the fulfillment of what has
been expressly stipulated therein."26 Accordingly, "the provision of the [CMU] must be applied
Pursuant to this clause, Philippine Airlines acknowledged the 15 May 1995 letter as the
in such a manner that it does not impair the vested rights of the parties."
requisite notice of termination. However, it also pointed out that the agreement could only be
effectively terminated on 31 October 1995, or the last day of the then current traffic period.
Thus, Philippine Airlines insisted that the provisions of the Commercial Agreement "shall From this Decision, Kuwait Airways directly filed with this Court the present Petition for
continue to be enforced until such date."19 Review, raising pure questions of law. Kuwait Airways poses three questions of law for
resolution: whether the designated air carrier of the Republic of the Philippines can have
better rights than the government itself; whether the bilateral agreement between the
Subsequently, Philippine Airlines insisted that Kuwait Airways pay it the principal sum of
Republic of the Philippines and the State of Kuwait is superior to the Commercial Agreement;
US$1,092,690.00 as revenue for the uplift of passengers and cargo for the period 13 April
and whether the enforcement of the CMU violates the non-impairment clause of the
1995 until 28 October 1995.20 When Kuwait Airways refused to pay, Philippine Airlines filed a
Constitution.
Complaint21 against the foreign airline with the Regional Trial Court (RTC) of Makati City,
seeking the payment of the aforementioned sum with interest, attorney’s fees, and costs of
suit. In its Answer,22 Kuwait Airways invoked the CMU and argued that its obligations under Let us review the factual backdrop to appreciate the underlying context behind the
the Commercial Agreement were terminated as of the effectivity date of the CMU, or on 12 Commercial Agreement and the CMU. The Commercial Agreement was entered into in 1981
April 1995. Philippine Airlines countered in its Reply that it was "not privy to the at a time when Philippine Airlines had not provided a route to Kuwait while Kuwait Airways
[CMU],"23 though it would eventually concede the existence of the CMU.24 had a route to Manila. The Commercial Agreement established a joint commercial
arrangement whereby Philippine Airlines and Kuwait Airways were to jointly operate the
Manila-Kuwait (and vice versa) route, utilizing the planes and services of Kuwait Airways.
An exhaustive trial on the merits was had. On 25 October 2002, the RTC rendered a Decision
Based on the preambular paragraphs of the Joint Services Agreement, as of 1981, Kuwait
in favor of Philippine Airlines. The RTC noted that "the only issue to resolve in this case is a
Airways was interested in establishing a "second frequency" (or an increase of its Manila
legal one," particularly whether Philippine Airlines is entitled to the sums claimed under the
flights to two) and that "as a result of cordial and frank discussions the concept of a joint One line of argument raised by Kuwait Airways can be dismissed outright. Kuwait Airways
service emerged as the most desirable alternative option."27 points out that the third Whereas clause of the 1981 Commercial Agreement stated: "NOW, it
is hereby agreed, subject to and without prejudice to any existing or future agreements
As a result, the revenue-sharing agreement was reached between the two airlines, an between the Government Authorities of the Contracting Parties hereto …" That clause, it is
agreement which stood as an alternative to both carriers offering competing flights servicing argued, evinces acknowledgement that from the beginning Philippine Airlines had known fully
the Manila-Kuwait route. An apparent concession though by Philippine Airlines was the well that its rights under the Commercial Agreement would be limited by whatever
preclusion of the exercise of one of the fundamental air traffic rights, the Fifth Freedom traffic agreements the Philippine and Kuwait governments may enter into later.
rights with respect to the Manila-Bangkok-Kuwait, thereby precluding the deplaning of
passengers from Manila in Bangkok and the boarding in Bangkok of passengers bound for But can a perambulatory clause, which is what the adverted "Whereas" clause is, impose a
Manila. binding obligation or limitation on the contracting parties? In the case of statutes, while a
preamble manifests the reasons for the passage of the statute and aids in the interpretation
The CMU effectively sought to end the 1981 agreement between Philippine Airlines and of any ambiguities within the statute to which it is prefixed, it nonetheless is not an essential
Kuwait Airways, by precluding any commercial arrangements in the exercise of the Third and part of an act, and it neither enlarges nor confers powers. 29 Philippine Airlines submits that
Fourth freedom traffic rights. As a result, both Kuwait and the Philippines had the respective the same holds true as to the preambular whereas clauses of a contract.
right to board passengers from their respective countries and deplane them in the other
country, without having to share any revenue or enter into any commercial arrangements to What was the intention of the parties in forging the "Whereas" clause and the contexts the
exercise such rights. In exchange, the designated airline or airlines of each country was parties understood it in 1981? In order to judge the intention of the contracting parties, their
entitled to operate six frequencies per week in each direction. In addition, the designated contemporaneous and subsequent acts shall be principally considered,30 and in doing so, the
airlines were allowed to enter into commercial arrangements for the unilateral exercise of the courts may consider the relations existing between the parties and the purpose of the
Fifth Freedom traffic rights. contract.31 In 1981, Philippine Airlines was still owned by the Philippine government. In that
context, it is evident that the Philippine government, as owner Philippine Airlines, could enter
Another notable point, one not touched upon by the parties or the trial court. It is well known into agreements with the Kuwait government that would supersede the Commercial
that at the time of the execution of the 1981 agreements, Philippine Airlines was controlled by Agreement entered into by one of its GOCCs, a scenario that changed once Philippine
the Philippine government, with the Government Service Insurance System (GSIS) holding Airlines fell to private ownership. Philippine Airlines argues before us that the cited
the majority of shares. However, in 1992, Philippine Airlines was privatized, with a private preambular stipulation is in fact superfluous, and we can agree in the sense that as of the
consortium acquiring 67% of the shares of the carrier.28 Thus, at the time of the signing of the time of the execution of the Commercial Agreement, it was evident, without need of
CMU, Philippine Airlines was a private corporation no longer controlled by the Government. stipulation, that the Philippine government could enter into an agreement with the Kuwait
This fact is significant. Had Philippine Airlines remained a government owned or controlled government that would prejudice the terms of the commercial arrangements between the two
corporation at the time the CMU was executed in 1995, its status as such would have bound airlines. After all, Philippine Airlines then would not have been in a position to challenge the
Philippine Airlines to the commitments made in the document by no less than the Philippine wishes of its then majority stockholder – the Philippine government.
government. However, since Philippine Airlines had already become a private corporation at
that juncture, the question of impairment of private rights may come into consideration. Yet by the time ownership of Philippine Airlines was transferred into private hands, the
controverted "Whereas" clause had taken on a different complexion, for it was newly evident
In this regard, we observe that the RTC appears to have been under the impression that the that an act of the Philippine government negating the commercial arrangement between the
CMU was brought about by machinations of the Philippine Panel and the Kuwait Panel of two airlines would infringe the vested rights of a private individual. The original intention of the
which Philippine Airlines was not aware or in which it had a part. This impression is not "Whereas" clause was to reflect what was then a given fact relative to the nationalized status
exactly borne by the record since no less than four of the nine members of the Philippine of Philippine Airlines. With the change of ownership of Philippine Airlines, the "Whereas"
Panel were officials of Philippine Airlines. It should be noted though that one of these officials, clause had ceased to be reflective of the current situation as it now stands as a seeming
Senior International Relations Specialist Arnel Vibar, testified for Philippine Airlines that the invitation to the Philippine government to erode private vested rights. We would have no
airline voiced its opposition to the withdrawal of the commercial agreements under the CMU problem according the interpretation preferred by Kuwait Airways of the "Whereas" clause
even months before the signing of the CMU, but the objections were overruled. had it been still reflective of the original intent to waive vested rights of private persons, rather
than the rights in favor of the government by a GOCC. That is not the case, and we are not
inclined to give effect to the "Whereas" clause in a manner that does not reflect the original
Now, the arguments raised in the petition.
intention of the contracting parties.
Thusly, the proper focus of our deliberation should be whether the execution of the CMU As with all regulatory subjects of the government, infringement of property rights can only
between the Philippine and Kuwait governments could have automatically terminated the avail with due process of law. Legislative regulation of public utilities must not have the effect
Commercial Agreement, as well as the Joint Services Agreement between Philippine Airlines of depriving an owner of his property without due process of law, nor of confiscating or
and Kuwait Airways. NO appropriating private property without due process of law, nor of confiscating or appropriating
private property without just compensation, nor of limiting or prescribing irrevocably vested
Philippine Airlines is the grantee of a legislative franchise authorizing it to provide domestic rights or privileges lawfully acquired under a charter or franchise. The power to regulate is
and international air services.32 Its initial franchise was granted in 1935 through Act No. 4271, subject to these constitutional limits.34
which underwent substantial amendments in 1959 through Republic Act No. 2360.33 It was
granted a new franchise in 1979 through Presidential Decree No. 1590, wherein statutory We can deem that the CAB has ample power under its organizing charter, to compel
recognition was accorded to Philippine Airlines as the "national flag carrier." P.D. No. 1590 Philippine Airlines to terminate whatever commercial agreements the carrier may have. After
also recognized that the "ownership, control, and management" of Philippine Airlines had all, Section 10 of R.A. No. 776 grants to the CAB the "general supervision and regulation of,
been reacquired by the Government. Section 19 of P.D. No. 1590 authorized Philippine and jurisdiction and control over, air carriers as well as their property, property rights,
Airlines to contract loans, credits and indebtedness from foreign sources, including foreign equipment, facilities and franchise," and this power correlates to Section 4(c) of the same law,
governments, with the unconditional guarantee of the Republic of the Philippines. which mandates that the Board consider in the exercise of its functions "the regulation of air
transportation in such manner as to recognize and preserve the inherent advantages of,
At the same time, Section 8 of P.D. No. 1590 subjects Philippine Airlines "to the laws of the assure the highest degree of safety in, and foster sound economic condition in, such
Philippines now existing or hereafter enacted." After pointing to this provision, Kuwait Airways transportation, and to improve the relations between, and coordinate transportation by air
correlates it to Republic Act (R.A.) No. 776, or the Civil Aeronautics Act of the Philippines, carriers."
which grants the Civil Aeronautics Board (CAB) "the power to regulate the economic aspect
of air transportation, [its] general supervision and regulation of, and jurisdiction and control We do not doubt that the CAB, in the exercise of its statutory mandate, has the power to
over, air carriers as well as their property, property rights, equipment, facilities, and compel Philippine Airlines to immediately terminate its Commercial Agreement with Kuwait
franchise." R.A. No. 776 also mandates that the CAB "shall take into consideration the Airways pursuant to the CMU. Considering that it is the Philippine government that has the
obligation assumed by the Republic of the Philippines in any treaty, convention or agreement sole authority to charter air policy and negotiate with foreign governments with respect to air
with foreign countries on matters affecting civil aviation." traffic rights, the government through the CAB has the indispensable authority to compel local
air carriers to comply with government determined policies, even at the expense of economic
There is no doubt that Philippine Airlines forebears under several regulatory perspectives. rights. The airline industry is a sector where government abjuration is least desired.
First, its authority to operate air services in the Philippines derives from its legislative
franchise and is accordingly bound by whatever limitations that are presently in place or may However, this is not a case where the CAB had duly exercised its regulatory authority over a
be subsequently incorporated in its franchise. Second, Philippine Airlines is subject to the local airline in order to implement or further government air policy. What happened instead
other laws of the Philippines, including R.A. No. 776, which grants regulatory power to the was an officer of the CAB, acting in behalf not of the Board but of the Philippine government,
CAB over the economic aspect of air transportation. Third, there is a very significant public had committed to a foreign nation the immediate abrogation of Philippine Airlines’s
interest in state regulation of air travel in view of considerations of public safety, domestic and commercial agreement with Kuwait Airways. And while we do not question that ability of that
international commerce, as well as the fact that air travel necessitates steady traversal of member of the CAB to represent the Philippine government in signing the CMU, we do
international boundaries, the amity between nations. question whether such member could have bound Philippine Airlines in a manner that can be
accorded legal recognition by our courts.
At the same time, especially since Philippine Airlines was already under private ownership at
the time the CMU was entered into, we cannot presume that any and all commitments made Imagine if the President of the Philippines, or one of his alter egos, acceded to the demands
by the Philippine government are unilaterally binding on the carrier even if this comes at the of a foreign counterpart and agreed to shut down a particular Filipino business or enterprise,
expense of diplomatic embarrassment. While it may have been, prior to the privatization of going as far as to co-sign a document averring that the business "will be shut down
Philippine Airlines, that the Philippine Government had the authority to bind the airline in its immediately." Granting that there is basis in Philippine law for the closure of such business,
capacity as owner of the airline, under the post-privatization era, however, whatever authority could the mere declaration of the President have the legal effect of immediately rendering
of the Philippine Government to bind Philippine Airlines can only come in its capacity as business operations illegal? We, as magistrates in a functioning democratic State with a fully
regulator.1awphi1 fleshed Bill of Rights and a Constitution that emphatically rejects "l’etat cest moi" as the
governing philosophy, think not. There is nothing to prevent the Philippine government from
utilizing all the proper channels under law to enforce such closure, but unless and until due
process is observed, it does not have legal effect in this jurisdiction. Even granting that the
"agreement" between the two governments or their representatives creates a binding SO ORDERED.
obligation under international law, it remains incumbent for each contracting party to adhere
to its own internal law in the process of complying with its obligations. G.R. No. 122308 July 8, 1997

The promises made by a Philippine president or his alter egos to a foreign monarch are not PURITA S. MAPA, CARMINA S. MAPA and CORNELIO P. MAPA, petitioners,
transubstantiated by divine right so as to ipso facto render legal rights of private persons vs.
obviated. Had Philippine Airlines remained a government-owned or controlled corporation, it COURT OF APPEALS and TRANS-WORLD AIRLINES INC., respondents.
would have been bound, as part of the executive branch, to comply with the dictates of the
President or his alter egos since the President has executive control and supervision over the
components of the executive branch. Yet Philippine Airlines has become, by this time, a
private corporation – one that may have labored under the conditions of its legislative
franchise that allowed it to conduct air services, but private in character nonetheless. The DAVIDE, JR., J.:
President or his alter egos do not have the legal capacity to dictate insuperable commands to
private persons. And that undesirable trait would be refuted on the President had petitioner’s The main issue in this petition for review under Rule 45 of the Rules of Court is the
position prevailed, since it is imbued with the presumption that the commitment made to a applicability of Article 28(1) of the Warsaw Convention,1 which provides as follows:
foreign government becomes operative without complying with the internal processes for the
divestiture of private rights. Art. 28. (1) An action for damages 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
Herein, we do not see why the Philippine government could not have observed due process of the carrier or of his principal place of business, or where he has a place of
of law, should it have desired to see the Commercial Agreement immediately terminated in business through which the contract has been made, or before the court at the place
order to adhere to its apparent commitment to the Kuwait government. The CAB, with its of destination.
ample regulatory power over the economic affairs of local airliners, could have been called
upon to exercise its jurisdiction to make it so. A remedy even exists in civil law–the judicial We are urged by the petitioners to reverse the 31 May 1995 Decision of the Court of Appeals
annulment or reformation of contracts–which could have been availed of to effect the in CA-G.R. CV No. 398962 affirming the 24 July 1992 Order of the Regional Trial Court of
immediate termination of the Commercial Agreement. No such remedy was attempted by the Quezon City, Branch 102, which dismissed Civil Case No. Q-91-96203 on the ground of lack
government. of jurisdiction in view of the aforementioned Article 28(1) of the Warsaw Convention.

Nor can we presume, simply because Dr. Linlingan, Executive Director of the CAB had The antecedent facts, as summarized by the Court of Appeals, are as follows:
signed the CMU in behalf of the Philippine Panel, that he could have done so bearing the
authority of the Board, in the exercise of regulatory jurisdiction over Philippine Airlines. For Plaintiffs Cornelio P. Mapa and Purita S. Mapa are respectable members of the
one, the CAB is a collegial body composed of five members,35 and no one member–even the society. Mr. Mapa is an established businessman and currently the Regional General
chairman–can act in behalf of the entire Board. The Board is disabled from performing as Manager of Akerlund and Rausing, a multinational packaging material manufacturer
such without a quorum. For another, the Executive Director of the CAB is not even a member based in Manila. He was previously the Senior Vice President of Phimco Industries,
of the Board, per R.A. No. 776, as amended. an affiliate company of Swedish Match Company. Mrs. Mapa is a successful
businesswoman engaged in the commercial transactions of high value antique and
Even granting that the police power of the State, as given flesh in the various laws governing oriental arts decor items originating from Asian countries. Carmina S. Mapa is the
the regulation of the airline industry in the Philippines, may be exercised to impair the vested daughter of plaintiffs Purita and Cornelio and is a graduate of the International School
rights of privately-owned airlines, the deprivation of property still requires due process of law. in Bangkok, Thailand, now presently enrolled at the Boston University where she is
In order to validate petitioner’s position, we will have to concede that the right to due process majoring in communication.
may be extinguished by executive command. While we sympathize with petitioner, who
reasonably could rely on the commitment made to it by the Philippine government, we still Plaintiffs Mapa entered into contract of air transportation with defendant TWA as
have to respect the segregate identity of the government and that of a private corporation and evidence by TWA ticket Nos. 015:9475:153:304 and 015:9475:153:305, purchased in
give due meaning to that segregation, vital as it is to the very notion of democracy. Bangkok, Thailand. Said TWA tickets are for Los Angeles-New York-Boston-St.
Louis-Chicago. . . .
WHEREFORE, the petition is DENIED. No pronouncement as to costs.
Domicile of carrier TWA is Kansas City, Missouri, USA. Its principal place of business On September 2, 1990, plaintiffs received a letter from TWA, signed by Mr. J.A.
is Kansas City, Missouri, USA. TWA's place of business through which the contracts Butler, Customer Relations-Baggage Service, apologizing for TWA's failure to locate
were made is Bangkok, Thailand. The place of destination is Chicago, USA. the missing luggage and requesting plaintiffs to accomplish a passenger property
questionnaire to facilitate a further intensive and computerized search for the lost
On August 10, 1990, plaintiffs Carmina and Purita left Manila on board PAL flight No. luggage. Plaintiffs duly accomplished the passenger property questionnaire, taking
104 for Los Angeles. Carmina was to commence schooling and thus was pains to write down in detail the contents of each missing baggage. The total value of
accompanied by Purita to assist her in settling down at the University. the lost items amounted to $11,283.79.

They arrived Los Angeles on the same date and stayed there until August 14, 1990 On September 20, 1990, plaintiff's counsel wrote TWA thru its General Sales
when they left for New York City. Manager in the Philippines, Daniel Tuason, with office address at Ground Floor,
Saville Building, Sen. Gil. J. Puyat Avenue corner Paseo de Roxas, Makati, Metro
Manila demanding indemnification for the grave damage and injury suffered by the
On August 14, 1990, plaintiffs Purita and Carmina S. Mapa arrived at the John F.
plaintiffs.
Kennedy (JFK) Airport, New York, on TWA Flight No. 904.

TWA again assured plaintiffs that intensive search was being conducted.
On August 27, 1990, plaintiffs Purita and Carmina S. Mapa departed for Boston,
taking a connecting flight on TWA's carrier, TW 0901, from JFK Airport, New York, to
Boston's Logan Airport, checking in seven (7) pieces of luggage at the TWA counter On October 8, 1990, TWA offered to amicably settle the case by giving plaintiffs-
in the JFK Airport. The seven baggages were received by a porter who issued seven appellants two options: (a) transportation credit for future TWA travel or (b) cash
TWA baggage receipts numbered 17-8270, 71, 72, 73, 74, 75, and 76 therefor. settlement. Five months lapsed without any result on TWA's intensive search.

From the entrance gate of the terminal building, plaintiffs Purita and Carmina On January 3, 1991, plaintiffs-appellant opted for transportation credit for future TWA
proceeded to TWA's ticket counter and presented their confirmed TWA tickets travel.
numbered 015:9475:153:304 and 015:9475:153:305 with a 3:00 p.m. departure time.
They were issued their boarding passes and were instructed to proceed to gate 35 On January 11, 1991, TWA disregarded plaintiffs' option and unilaterally declared the
for boarding. At about 2:40 p.m., plaintiffs noticed that there was still no instruction to payment of $2,560.00 as constituting full satisfaction of the plaintiffs' claim.
board the aircraft so they made inquiries. The TWA ground stewardess informed
plaintiffs that they were at the wrong gate because their flight was boarding at gate 1. On July 19, 1991, plaintiffs accepted the check for $2,560.00, as partial payment for
Upon hearing this, plaintiffs rushed to gate 1 which was in another building terminal. the actual cost of their lost baggages and their contents.
At gate 1, they were told by a TWA ground stewardess that flight 901 had just
departed. However, they were consoled that another TWA flight was leaving for Despite demands by plaintiffs, TWA failed and refused without just cause to
Boston after 30 minutes and plaintiffs could use the same boarding pass for the next indemnify and redress plaintiffs for the grave injury and damages they have suffered.4
flight. At around 3:15 p.m., plaintiffs Purita and Carmina were able to board the next
flight. However, the plane was not immediately cleared for take off on account of a
thunderstorm. The passengers were instructed to stay inside the aircraft until 6:00 Purita S. Mapa, Carmina S. Mapa, and Cornelio P. Mapa (herein petitioners) then filed with
p.m. when the plane finally left for Boston. the trial court on 1 August 1991 a complaint5 for damages,6 which was docketed as Civil Case
No. Q-91-9620. Before a responsive pleading was filed, the petitioners filed an Amended
Complaint.7 They prayed that after due trial private respondent Trans-World Airlines, Inc.
Upon arriving in Boston, plaintiffs Purita and Carmina proceeded to the carousel to (hereafter, TWA), be ordered to pay them the following amounts: (1) US$8,723.79, or its
claim their baggages and found only three out of the seven they checked in, to wit: equivalent in Philippine currency, representing the cost of the lost luggage and its contents;
one Samsonite on the carousel, another Samsonite lying on the floor near the (2) US$2,949.50, or its equivalent in Philippine currency, representing the cost of hotel, board
carousel and a third baggage, an American Tourister, inside the unclaimed baggage and lodging, and communication expenses; (3) P1 million, by way of moral damages; (4) P1
office. Plaintiffs immediately reported the loss of their four baggages to the TWA million, by way of exemplary damages, with legal interest on said amounts from the date of
Baggage Office at Logan Airport. TWA's representative confidently assured them that extrajudicial demand thereof; and (5) P500,000.00 as attorney's fees, costs of the suit, and
their baggages would be located within 24 hours and not more than 48 hours. other expenses of litigation.8
On 26 February 1992, TWA filed its Answer to the Amended Complaint raising, as special On the basis of the foregoing, the Court holds that the Warsaw Convention is
and affirmative defense, lack of jurisdiction of Philippine courts over the action for damages in applicable to the case at bar, even if the basis of plaintiffs' present action is breach of
the pursuant to Article 28(1) of the Warsaw Convention, the action could only be brought contract of carriage under the New Civil Code.
either in Bangkok where the contract was entered into, or in Boston which was the place of
destination, or in Kansas City which is the carrier's domicile and principal place of business. The next question to be resolved is whether or not the Court has jurisdiction to try the
present case in the light of the provision of Art. 28(1) above-quoted.
TWA further alleged that pursuant to the Warsaw Convention and the Notice of Baggage
Limitations at the back of the tickets, its liability to the petitioners is limited to US$9.07 per Under Art. 28(1) supra, a complaint for damages against an air carrier can be
pound, or US$20.00 per kilo, which is in lieu of actual and compensatory damages. Even instituted only in any of the following places/courts:
assuming that petitioners' bag weighed the maximum acceptable weight of 70 pounds, TWA's
maximum liability is $640.00 per bag or $2,560.00 for the four pieces of baggage, which the (1) The court of the domicile of the carrier;
petitioners have been offered and have accepted. TWA also submitted that it could not be
liable for moral and exemplary damages and attorney's fees because it did not act in a
wanton, fraudulent, reckless, oppressive, or malevolent manner.9 (2) The court of its principal place of business;

On 7 February 1992, the petitioners filed their second Amended Complaint 10 to include a (3) The court where it has a place of business
claim of US$2,500, or its equivalent in Philippine Currency, representing the additional through which the contract had been made;
replacement cost of the items and personal effects contained in their lost luggage; and
US$4,500 representing the travel expenses, hotel, lodging, food and other expenses of (4) The court of the place of destination.
petitioner Cornelio Mapa, who was constrained to join his family in Boston to extend the
necessary assistance in connection with the lost luggage. In interpreting the provision of Art. 28(1) of the Warsaw Convention, the Supreme
Court in the same case of Augusto Benedicto Santos vs. Northwest Airlines held:
After the filing of TWA's Answer to the second Amended Complaint, 11 and petitioners' Reply
thereto, the trial court gave TWA ten days within which to submit a memorandum in support Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
of its affirmative defenses; after which the incident would be deemed submitted for authorities are sharply divided. While the petitioner cites several cases holding that
resolution.12 However, after TWA filed its Memorandum,13 the trial court gave the petitioners Article 28(1) refers to venue rather that jurisdiction, there are later cases cited by the
five days within which to file a reply memorandum; and TWA, two days from receipt of the private respondent supporting the conclusion that the provision is jurisdictional.
latter to file its comment thereon.14 The petitioners then filed their Opposition (by way of Reply
Memorandum)15 to which TWA filed a Reply.16 Thereafter, the petitioners submitted a Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred
Rejoinder17; TWA, a Surrejoinder.18 by consent or waiver upon a court which otherwise would have no jurisdiction over
the subject-matter of an action; but the venue of an action as fixed by statute may be
On 24 July 1992, the trial court issued an Order19 dismissing the case for lack of jurisdiction in changed by the consent of the parties and an objection that the plaintiff brought his
light of Article 28(1) of the Warsaw Convention. Thus: suit in the wrong country may be waived by the failure of the defendant to make a
timely objection. In either case, the court may render a valid judgment. Rules as to
It is plaintiffs' theory that the Warsaw Convention does not apply to the instant case jurisdiction can never be left to the consent or agreement of the parties, whether or
because plaintiffs' contract of transportation does not constitute "international not prohibition exists against their alteration.
transportation" as defined in said convention. This however is belied by the
Passenger Property Questionnaire which is Annex C of plaintiffs' amended complaint. A number of reasons tends to support the characterization of Article 28(1) as a
Page two of said questionnaire accomplished by plaintiffs under the heading "Your jurisdiction and not a venue provision. First, the wording of Article 32, which indicates
Complete Itinerary" shows that the TWA tickets issued to the plaintiffs form part of the the places where the action for damages "must" be brought, underscores the
contract of transportation to be performed from Manila to the United States. Since the mandatory nature of Article 28(1). Second, this characterization is consistent with one
Philippines and the United States are parties to the convention, plaintiffs' contracts of of the objectives of the Convention, which is to "regulate in a uniform manner the
transportation come within the meaning of International Transportation. conditions of international transportation by air." Third, the Convention does not
contain any provision prescribing rules of jurisdiction other than Article 28(1), which
xxx xxx xxx means that the phrase "rules as to jurisdiction" used in Article 32 must refer only to
 Article 28(1). In fact, the last sentence of Article 32 specifically deals with the Respondent Court of Appeals likewise held that the petitioners could not claim application of
exclusive enumeration in Article 28(1) as "jurisdictions," which, as such, cannot be Articles 1733, 1734, 1735, 1755, and 1756 of the New Civil Code on common carriers without
left to the will of the parties regardless of the time when the damage occurred. taking into consideration Article 1753 of the same Code, which provides that the law of the
country to which the goods are to be transported shall govern the liability of the common
xxx xxx xxx carrier for their loss, destruction, or deterioration. Since the country of ultimate destination is
Chicago, the law of Chicago shall govern the liability of TWA for the loss of the four pieces of
baggage. Neither is Article 2176 of the New Civil Code on torts or quasi-delicts applicable in
It has been shown by the defendant that the domicile of the defendant Trans World
view of the private international law principle of lex loci delicti commissi.22 In addition,
Airlines, Inc. is Kansas City, Missouri, its principal place of business is also in Kansas
comformably with Santos III v. Northwest Orient Airlines,23 mere allegation of willful
City, Missouri, the carrier's place of business through which the contracts were made
misconduct resulting in a tort is insufficient to exclude the case from the comprehension of
is Bangkok (Annexes A and A-1, Amended Complaint), and the place of destination
the Warsaw Convention.
was Boston.

Failing in their bid to reconsider the decision, the petitioners filed this petition. They aver that
The Philippines not being one of the places specified in Art. 28(1) abovequoted
respondent Court of Appeals gravely erred (1) in holding that the Warsaw Convention is
where the complaint may be instituted, this Court therefore, does not have jurisdiction
applicable to this case and (2) in applying Article 1753 of the Civil Code and the principle
over the present case.
of lex loci delicti commissi.24
Evidently discontented with the trial court's order, the petitioners appealed to the Court of
We resolved to give due course to the petitioner after the filing by TWA of its Comment on the
Appeals, contending that the lower court erred in not holding that (1) it has jurisdiction over
petition and noted without action for the reasons stated in the resolution of 25 September
the instant case and (2) the Warsaw Convention is inapplicable in the instant case because
1996 petitioners' Reply and Rejoinder. We then required the parties to submit their respective
the subject matter of the case is not included within the coverage of the said
memoranda. They did in due time.
convention.20 They claimed that their cause of action could be based on breach of contract of
air carriage founded on Articles 1733, 1734, 1735, 1755, and 1756 of the New Civil Code
governing common carriers or Article 2176 of the same Code governing tort or quasi-delict. The petitioners insist that the Warsaw Convention is not applicable to their case because the
contracts they had with TWA did not involve an international transportation. Whether the
contracts were of international transportation is to be solely determined from the TWA tickets
The appellate court disagreed with the petitioners and affirmed the order of the trial court. It
issued to them in Bangkok, Thailand, which showed that their itinerary was Los Angeles-New
held that the Warsaw Convention is the law which governs the dispute between the
York-Boston-St.  Louis-Chicago. Accordingly, since the place of departure (Los Angeles) and
petitioners and TWA because what is involved is international transportation defined by said
the place of destination (Chicago) are both within the territory of one High Contracting Party,
Convention in Article I(2). This holding is founded on its determination that the two TWA
with no agreed stopping place in a territory subject to the sovereignty, mandate, suzerainty or
tickets for Los Angeles-New York-Boston-St. Louis-Chicago purchased in Bangkok, Thailand,
authority of another Power, the contracts did not constitute 'international transportation' as
were issued in conjunction with, and therefore formed part of, the contract of transportation
defined by the convention. They also claim to be without legal basis the contention of TWA
performed from Manila, Philippines, to the United States.
that their transportation contracts were of international character because of the handwritten
notations in the tickets re "INT'S TKT #079-4402956821-2" and "INT'L TKT #079-
The respondent court further held that the cause of action of the petitioners arose from the 4402956819." Notwithstanding such notations, the TWA tickets, viz., (a) No.
loss of the four checked pieces of baggage, which then falls under Article 18(1), Chapter III 015.9475:153:304 and (b) No. 015:9475:153:305 did not cease to be for the itinerary therein
(Liability of the Carrier) of the Warsaw Conventions.21 Pursuant to Article 24(1) of the designated. Besides, it is a fact that petitioners Purita and Carmina Mapa traveled from
Convention, all actions for damages, whether based on tort, code law or common law, arising Manila to Los Angeles via Philippine Airlines (PAL) by virtue of PAL tickets issued
from loss of baggage under Article 18 of the Warsaw Convention, can only be brought subject independently of the TWA tickets.
to the conditions and limits set forth in the Warsaw Convention. Article 28(1) thereof sets forth
conditions and limits in that the action for damages may be instituted only in the territory of
The pitch issue to be resolved under the petitioner's first assigned error is whether the
one of the High Contracting Parties, before the court of (1) the domicile of the carrier, (2) the
contracts of transportation between Purita and Carmina Mapa, on the one hand, and TWA,
carrier's principal place of business, (3) the place of business through which the contract has
on the other, were contracts of "international transportation" under the Warsaw Convention.
been made, or (4) the place of destination. Since the Philippines is not one of these places, a
NO
Philippine Court, like the RTC, has no jurisdiction over the complaint for damages.
If they were, then we should sustain the trial court and the Court of Appeals in light of our and the Court of Appeals are (1) the handwritten notations, viz., INT'L TKT # 079-
ruling in Santos v. Northwest Orient Airlines.25 It appears clear to us that TWA itself, the trial 4402956821-2 and INT'L TKT # 079-4402956819, on the two TWA tickets; and (2) the entries
court, and the Court of Appeals impliedly admit that if the sole basis were the two TWA tickets made by petitioners Purita and Carmina Mapa in column YOUR COMPLETE ITINERARY in
for Los Angeles-New York-Boston-St. Louis-Chicago, the contracts cannot be brought within TWA's Passenger Property Questionnaire, wherein they mentioned their travel from Manila to
the term "international transportation," as defined in Article I(2) of the Warsaw Convention. As Los Angeles in flight PR 102.
provided therein, a contract is one of international transportation only if
The alleged "international tickets" mentioned in the notations in conjunction with which the
according to the contract made by the parties, the place of departure and the place of two TWA tickets were issued were not presented. Clearly then, there is at all no factual basis
destination, whether or not there be a break in the transportation or a transshipment, of the finding that the TWA tickets were issued in conjunction with the international tickets,
are situated either within the territories of two High Contracting Parties, or within the which are even, at least as of now, non-existent.
territory of a single High Contracting Party, if there is an agreed stopping place within
a territory subject to the sovereignty, mandate or authority of another power, even As regards the petitioner's entry in YOUR COMPLETE ITINERARY column of the Passenger
though that power is not a party to this convention. Property Questionnaire wherein they included the Manila-Los Angeles travel, it must be
pointed out that this was made on 4 September 199027 by petitioners Purita and Carmina
There are then two categories of international transportation, viz., (1) that where the place of Mapa, and only in connection with their claim for their lost pieces of baggage. The loss
departure and the place of destination are situated within the territories of two High occurred much earlier, or on 27 August 1990. The entry can by no means be considered as a
Contracting Parties regardless of whether or not there be a break in the transportation or a part of, or supplement to, their contracts of transportation evidenced by the TWA tickets
transshipment; and (2) that where the place of departure and the place of destination are which covered transportation within the United States only.
within the territory of a single High Contracting Party if there is an agreed stopping place
within a territory subject to the sovereignty, mandate, or authority of another power, even It must be underscored that the first category of international transportation under the
though the power is not a party of the Convention. Warsaw Convention is based on "the contract made by the parties." TWA does not claim that
the Manila-Los Angeles contracts of transportation which brought Purita and Carmina to Los
The High Contracting Parties referred to in the Convention are the signatories thereto and Angeles were also its contracts. It does not deny the assertion of the petitioners that those
those which subsequently adhered to it. In the case of the Philippines, the Convention was contracts were independent of the TWA tickets issued in Bangkok, Thailand. No evidence
concurred in by the Senate, through Resolution No. 19, on 16 May 1950. The Philippine was offered that TWA and PAL had an agreement concerning transportation of passengers
instrument of accession was signed by President Elpidio Quirino on 13 October 1950 and from points of departures not served with aircrafts of one or the other. There could have been
was deposited with the Polish Government on 9 November 1950. The Convention became no difficulty for such agreement, since TWA admitted without qualification in paragraph 1 of
applicable to the Philippines on 9 February 1951. Then, on 23 September 1955, President its Answer28 to the second Amended Complaint the allegation in paragraph 1.1 of the
Ramon Magsaysay issued Proclamation No. 201, declaring the Philippines' formal adherence latter29 that TWA "is a foreign corporation licensed to do business in the Philippines with office
thereto, "to the end that the same and every article and clause thereof may be observed and address at Ground Floor, Saville Building, Sen. Gil. J. Puyat Avenue, corner Paseo de Roxas,
fulfilled in good faith by the Republic of the Philippines and the citizens thereof.26 Makati, Metro Manila."

The contracts of transportation in this case are evidenced by the two TWA tickets, No. TWA relies on Article I(3) of the Convention, which provides as follows:
015:9475:153:304 and No. 015:9475:153:305, both purchased and issued in Bangkok,
Thailand. On the basis alone of the provisions therein, it is obvious that the place of departure 3. A carriage to be performed by several successive air carriers is
and the place of destination are all in the territory of the United States, or of a single High deemed, for the purposes of this Convention, to be one undivided
Contracting Party. The contracts, therefore, cannot come within the purview of the first carriage, if it has been regarded by the parties as a single operation,
category of international transportation. Neither can it be under the second category since whether it had been agreed upon under the form of a single contract
there was NO agreed stopping place within a territory subject to the sovereignty, mandate, or or of a series of contracts, and it shall not lose its international
authority of another power. character merely because one contract or a series of contracts is to
be performed entirely within a territory subject to the sovereignty,
The only way to bring the contracts between Purita and Carmina Mapa, on the one hand, and suzerainty, mandate, or authority of the same High Contracting
TWA, on the other, within the first category of "international transportation" is to link them Party.
with, or to make them an integral part of, the Manila-Los Angeles travel of Purita and Carmina
through PAL aircraft. The "linkages" which have been pointed out by the TWA, the trial court,
It also points to Article 15 of the IATA Recommend Practice 1724, which provides: Carriage A common carrier has a peculiar relationship with and an exacting responsibility to its
to be performed by a several successive carriers under one ticket, or under a ticket and any passengers. For reasons of public interest and policy, the ticket-issuing airline acts as
conjunction ticket issued in connection therewith, is regarded as a single operation."30 principal in a contract of carriage and is thus liable for the acts and the omissions of any
errant carrier to which it may have endorsed any sector of the entire, continuous trip.
The flaw of respondent's position is the presumption that the parties have "regarded" as an
"undivided carriage" or as a "single operation" the carriage from Manila to Los Angeles The Case
through PAL then to New York-Boston-St. Louis-Chicago through TWA. The dismissal then of
the second Amended Complaint by the trial court and the Court of Appeals' affirmance of the Before the Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court,
dismissal were not based on indubitable facts or grounds, but no inferences without seeking to reverse the August 7, 2001 Decision2 and the February 7, 2002 Resolution3 of the
established factual basis. Court of Appeals (CA) in CA-GR CV No. 45832. The challenged Decision disposed as
follows:
TWA should have offered evidence for its affirmative defenses at the preliminary hearing
therefor. Section 5 of Rule 16 of the Rules of Court expressly provides: "WHEREFORE, premises considered, the assailed Decision dated July 5, 1991 of Branch 31,
Regional Trial Court, National Capital Judicial Region, Manila, in Civil Case No. 82-13690, is
Sec. 5. Pleading grounds as affirmative defenses. — Any of the grounds for dismissal hereby MODIFIED by deleting that portion regarding defendants-appellants liabilities for the
provided for in this rule, except improper venue, may be pleaded as an affirmative payment of the actual damages amounting to HK$14,128.80 and US$2,000.00 while all other
defense, and a preliminary hearing may be had thereon as if a motion to dismiss had respects are AFFIRMED. Costs against defendants-appellants."4
been filed.
The assailed Resolution denied Petitioners Motion for Partial Reconsideration.
Without any further evidence as earlier discussed, the trial court should have denied the
affirmative defense of lack of jurisdiction because it did not appear to be indubitable. Section The Facts
3 of Rule 16 of the Rules of Court provides:
The facts are narrated by the CA5 as follows:
Sec. 3. Hearing and order. — After hearing the court may deny or grant the motion or
allow amendment of pleading, or may defer the hearing and determination of the "On September 18, 1981, Daniel Chiok (hereafter referred to as Chiok) purchased from China
motion until the trial if the ground alleged therein does not appear to be indubitable. Airlines, Ltd. (CAL for brevity) airline passenger ticket number 297:4402:004:278:5 for air
transportation covering Manila-Taipei-Hongkong-Manila. Said ticket was exclusively
WHEREFORE, the instant petition is GRANTED and the challenged decision of 31 May 1995 endorseable to Philippine Airlines, Ltd. (PAL for brevity).
of respondent Court of Appeals in CA-G.R. CV No. 39896, as well as the Order of 24 July
1992 of the Regional Trial Court of Quezon City, Branch 102, in Civil Case No. Q-91-9620, is "Subsequently, on November 21, 1981, Chiok took his trip from Manila to Taipei using [the]
REVERSED and SET ASIDE. 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
The Regional Trial Court of Quezon City, Branch 102, is hereby DIRECTED to proceed with his Hongkong to Manila trip on board PAL Flight No. PR 311. The CAL office attached a
the pre-trial, if it has not been terminated, and with the trial on the merits of the case and then yellow sticker appropriately indicating that his flight status was OK.
to render judgment thereon, taking into account the foregoing observations on the issue of
jurisdiction. "When Chiok reached Hongkong, he went to the PAL office and sought to reconfirm his flight
back to Manila. The PAL office confirmed his return trip on board Flight No. PR 311 and
SO ORDERED. 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
G. R. No. 152122 - July 30, 2003 poster stating that PAL Flight No. PR 311 was cancelled because of a typhoon in Manila. He
was then informed that all the confirmed ticket holders of PAL Flight No. PR 311 were
CHINA AIRLINES, Petitioner, v. DANIEL CHIOK, respondent. automatically booked for its next flight, which was to leave the next day. He then informed
PAL personnel that, being the founding director of the Philippine Polysterene Paper
Corporation, he ha[d] to reach Manila on November 25, 1981 because of a business option
PANGANIBAN, J.:
which he ha[d] to execute on said date.
"On November 25, 1981, Chiok went to the airport. Cathay Pacific stewardess Lok Chan The Regional Trial Court (RTC) of Manila held CAL and PAL jointly and severally liable to
(hereafter referred to as Lok) ha[d] taken and received Chioks plane ticket and his luggage. respondent. It did not, however, rule on their respective cross-claims. It disposed as follows:
Lok called the attention of Carmen Chan (hereafter referred to as Carmen), PALs terminal
supervisor, and informed the latter that Chioks name was not in the computer list of "WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendants
passengers. Subsequently, Carmen informed Chiok that his name did not appear in PALs to jointly and severally pay:
computer list of passengers and therefore could not be permitted to board PAL Flight No. PR
307. 1. Actual damages in the amount of HK$14,128.80 or its equivalent in Philippine Currency at
the time of the loss of the luggage consisting of cosmetic products;
"Meanwhile, Chiok requested Carmen to put into writing the alleged reason why he was not
allowed to take his flight. The latter then wrote the following, to wit: PAL STAFF CARMEN 2. US$2,000.00 or its equivalent at the time of the loss of the clutch bag containing the
CHAN CHKD WITH R/C KENNY AT 1005H NO SUCH NAME IN COMPUTER FOR 311/24 money;
NOV AND 307/25 NOV. The latter sought to recover his luggage but found only 2 which were
placed at the end of the passengers line. Realizing that his new Samsonite luggage was
missing, which contained cosmetics worth HK$14,128.80, he complained to Carmen. 3. P200,000.00 by way of moral damages;

"Thereafter, Chiok proceeded to PALs Hongkong office and confronted PALs reservation 4. P50,000.00 by way of exemplary damages or corrective damages;
officer, Carie Chao (hereafter referred to as Chao), who previously confirmed his flight back
to Manila. Chao told Chiok that his name was on the list and pointed to the latter his computer 5. Attorney[]s fees equivalent to 10% of the amounts due and demandable and awarded in
number listed on the PAL confirmation sticker attached to his plane ticket, which number was favor of the plaintiff; and
R/MN62.
6. The costs of this proceedings."7
"Chiok then decided to use another CAL ticket with No. 297:4402:004:370:5 and asked Chao
if this ticket could be used to book him for the said flight. The latter, once again, booked and The two carriers appealed the RTC Decision to the CA.
confirmed the formers trip, this time on board PAL Flight No. PR 311 scheduled to depart that
evening. Later, Chiok went to the PAL check-in counter and it was Carmen who attended to Ruling of the Court of Appeals
him. As this juncture, Chiok had already placed his travel documents, including his clutch
bag, on top of the PAL check-in counter.
Affirming the RTC, the Court of Appeals debunked petitioners claim that it had merely acted
as an issuing agent for the ticket covering the Hong Kong-Manila leg of respondents journey.
"Thereafter, Carmen directed PAL personnel to transfer counters. In the ensuing commotion, In support of its Decision, the CA quoted a purported ruling of this Court in KLM Royal Dutch
Chiok lost his clutch bag containing the following, to wit: (a) $2,000.00; (b) HK$2,000.00; (c) Airlines v. Court of Appeals8 as follows:
Taipei $8,000.00; (d) P2,000.00; (e) a three-piece set of gold (18 carats) cross pens valued at
P3,500; (f) a Cartier watch worth about P7,500.00; (g) a tie clip with a garnet birthstone and
"Article 30 of the Warsaw providing that in case of transportation to be performed by various
diamond worth P1,800.00; and (h) a [pair of] Christian Dior reading glasses. Subsequently,
successive carriers, the passenger can take action only against the carrier who performed the
he was placed on stand-by and at around 7:30 p.m., PAL personnel informed him that he
transportation during which the accident or the delay occurred presupposes the occurrence of
could now check-in.
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
"Consequently, Chiok as plaintiff, filed a Complaint on November 9, 1982 for damages, the scope of his employment.
against PAL and CAL, as defendants, docketed as Civil Case No. 82-13690, with Branch 31,
Regional Trial Court, National Capital Judicial Region, Manila.
"It would be unfair and inequitable to charge a passenger with automatic knowledge or notice
of a condition which purportedly would excuse the carrier from liability, where the notice is
"He alleged therein that despite several confirmations of his flight, defendant PAL refused to written at the back of the ticket in letters so small that one has to use a magnifying glass to
accommodate him in Flight No. 307, for which reason he lost the business option read the words. To preclude any doubt that the contract was fairly and freely agreed upon
aforementioned. He also alleged that PALs personnel, specifically Carmen, ridiculed and when the passenger accepted the passage ticket, the carrier who issued the ticket must
humiliated him in the presence of so many people. Further, he alleged that defendants are inform the passenger of the conditions prescribed in the ticket or, in the very least, ascertain
solidarily liable for the damages he suffered, since one is the agent of the other."6 that the passenger read them before he accepted the passage ticket. Absent any showing
that the carriers officials or employees discharged this responsibility to the passenger, the Issues
latter cannot be bound by the conditions by which the carrier assumed the role of a mere
ticket-issuing agent for other airlines and limited its liability only to untoward occurrences in its In its Memorandum, petitioner raises the following issues for the Courts consideration:
own lines.
"1. The Court of Appeals committed judicial misconduct in finding liability against the
"Where the passage tickets provide that the carriage to be performed thereunder by several petitioner on the basis of a misquotation from KLM Royal Dutch Airlines vs. Court of Appeals,
successive carriers is to be regarded as a single operation, the carrier which issued the et al., 65 SCRA 237 and in magnifying its misconduct by denying the petitioners Motion for
tickets for the entire trip in effect guaranteed to the passenger that the latter shall have sure Reconsideration on a mere syllabus, unofficial at that.
space in the various carriers which would ferry him through the various segments of the trip,
and the ticket-issuing carrier assumes full responsibility for the entire trip and shall be held "2. The Court of Appeals committed an error of law when it did not apply applicable
accountable for the breach of that guaranty whether the breach occurred in its own lines or in precedents on the case before it.
those of the other carriers."9
"3. The Court of Appeals committed a non sequitur when it did not rule on the cross-claim of
On PALs appeal, the appellate court held that the carrier had reneged on its obligation to the petitioner."12
transport respondent when, in spite of the confirmations he had secured for Flight PR 311, his
name did not appear in the computerized list of passengers. Ruling that the airlines
negligence was the proximate cause of his excoriating experience, the appellate court The Courts Ruling
sustained the award of moral and exemplary damages.
The Petition is not meritorious.
The CA, however, deleted the RTCs award of actual damages amounting to HK$14,128.80
and US$2,000.00, because the lost piece of luggage and clutch bag had not actually been First Issue:
"checked in" or delivered to PAL for transportation to Manila.
Alleged Judicial Misconduct
On August 28, 2001, petitioner filed a Motion for Partial Reconsideration, contending that the
appellate court had erroneously relied on a mere syllabus of KLM v. CA, not on the actual Petitioner charges the CA with judicial misconduct for quoting from and basing its ruling
ruling therein. Moreover, it argued that respondent was fully aware that the booking for the against the two airlines on an unofficial syllabus of this Courts ruling in KLM v. CA. Moreover,
PAL sector had been made only upon his request; and that only PAL, not CAL, was liable for such misconduct was allegedly aggravated when the CA, in an attempt to justify its action,
the actual carriage of that segment. Petitioner likewise prayed for a ruling on its cross-claim held that the difference between the actual ruling and the syllabus was "more apparent than
against PAL, inasmuch as the latters employees had acted negligently, as found by the trial real."13
court.
We agree with petitioner that the CA committed a lapse when it relied merely on the unofficial
Denying the Motion, the appellate court ruled that petitioner had failed to raise any new syllabus of our ruling in KLM v. CA. Indeed, lawyers and litigants are mandated to quote
matter or issue that would warrant a modification or a reversal of the Decision. As to the decisions of this Court accurately.14 By the same token, judges should do no less by strictly
alleged misquotation, the CA held that while the portion it had cited appeared to be different abiding by this rule when they quote cases that support their judgments and decisions. Canon
from the wording of the actual ruling, the variance was "more apparent than real since the 3 of the Code of Judicial Conduct enjoins them to perform official duties diligently by being
difference [was] only in form and not in substance."10 faithful to the law and maintaining their professional competence.

CAL and PAL filed separate Petitions to assail the CA Decision. In its October 3, 2001 However, since this case is not administrative in nature, we cannot rule on the CA justices
Resolution, this Court denied PALs appeal, docketed as GR No. 149544, for failure to serve administrative liability, if any, for this lapse. First, due process requires that in administrative
the CA a copy of the Petition as required by Section 3, Rule 45, in relation to Section 5(d) of proceedings, the respondents must first be given an opportunity to be heard before sanctions
Rule 56 and paragraph 2 of Revised Circular No. 1-88 of this Court. PALs Motion for can be imposed. Second, the present action is an appeal from the CAs Decision, not an
Reconsideration was denied with finality on January 21, 2002. administrative case against the magistrates concerned. These two suits are independent of
and separate from each other and cannot be mixed in the same proceedings.
Only the appeal of CAL11 remains in this Court.
By merely including the lapse as an assigned error here without any adequate and proper cannot be bound by the provision in question by which KLM unilaterally assumed the role of a
administrative case therefor, petitioner cannot expect the imposition of an administrative mere ticket-issuing agent for other airlines and limited its liability only to untoward
sanction. occurrences on its own lines.

In the case at bar, we can only determine whether the error in quotation would be sufficient to "3. Moreover, as maintained by the respondents and the Court of Appeals, the passage
reverse or modify the CA Decision. tickets of the respondents provide that the carriage to be performed thereunder by several
successive carriers is to be regarded as a single operation, which is diametrically
Applicability  of KLM v. CA incompatible with the theory of the KLM that the respondents entered into a series of
independent contracts with the carriers which took them on the various segments of their trip.
This position of KLM we reject. The respondents dealt exclusively with the KLM which issued
In KLM v. CA, the petitioner therein issued tickets to the Mendoza spouses for their world
them tickets for their entire trip and which in effect guaranteed to them that they would have
tour. The tour included a Barcelona-Lourdes route, which was serviced by the Irish airline Aer
sure space in Aer Lingus flight 861. The respondents, under that assurance of the
Lingus. At the KLM office in Frankfurt, Germany, they obtained a confirmation from Aer
internationally prestigious KLM, naturally had the right to expect that their tickets would be
Lingus of their seat reservations on its Flight 861. On the day of their departure, however, the
honored by Aer Lingus to which, in the legal sense, the KLM had indorsed and in effect
airline rudely off-loaded them.
guaranteed the performance of its principal engagement to carry out the respondents'
scheduled itinerary previously and mutually agreed upon between the parties.
When sued for breach of contract, KLM sought to be excused for the wrongful conduct of Aer
Lingus by arguing that its liability for damages was limited only to occurrences on its own
"4. The breach of that guarantee was aggravated by the discourteous and highly arbitrary
sectors. To support its argument, it cited Article 30 of the Warsaw Convention, stating that
conduct of an official of the Aer Lingus which the KLM had engaged to transport the
when transportation was to be performed by various successive carriers, the passenger could
respondents on the Barcelona-Lourdes segment of their itinerary. It is but just and in full
take action only against the carrier that had performed the transportation when the accident
accord with the policy expressly embodied in our civil law which enjoins courts to be more
or delay occurred.
vigilant for the protection of a contracting party who occupies an inferior position with respect
to the other contracting party, that the KLM should be held responsible for the abuse, injury
In holding KLM liable for damages, we ruled as follows: and embarrassment suffered by the respondents at the hands of a supercilious boor of the
Aer Lingus."15
"1. The applicability insisted upon by the KLM of article 30 of the Warsaw Convention cannot
be sustained. That article presupposes the occurrence of either an accident or a delay, In the instant case, the CA ruled that under the contract of transportation, petitioner -- as the
neither of which took place at the Barcelona airport; what is here manifest, instead, is that the ticket-issuing carrier (like KLM) -- was liable regardless of the fact that PAL was to perform or
Aer Lingus, through its manager there, refused to transport the respondents to their planned had performed the actual carriage. It elucidated on this point as follows:
and contracted destination.
"By the very nature of their contract, defendant-appellant CAL is clearly liable under the
"2. The argument that the KLM should not be held accountable for the tortious conduct of Aer contract of carriage with [respondent] and remains to be so, regardless of those instances
Lingus because of the provision printed on the respondents' tickets expressly limiting the when actual carriage was to be performed by another carrier. The issuance of a confirmed
KLM's liability for damages only to occurrences on its own lines is unacceptable. As noted by CAL ticket in favor of [respondent] covering his entire trip abroad concretely attests to this.
the Court of Appeals that condition was printed in letters so small that one would have to use This also serves as proof that defendant-appellant CAL, in effect guaranteed that the carrier,
a magnifying glass to read the words. Under the circumstances, it would be unfair and such as defendant-appellant PAL would honor his ticket, assure him of a space therein and
inequitable to charge the respondents with automatic knowledge or notice of the said transport him on a particular segment of his trip."16
condition so as to preclude any doubt that it was fairly and freely agreed upon by the
respondents when they accepted the passage tickets issued to them by the KLM. As the
Notwithstanding the errant quotation, we have found after careful deliberation that the
airline which issued those tickets with the knowledge that the respondents would be flown on
assailed Decision is supported in substance by KLM v. CA. The misquotation by the CA
the various legs of their journey by different air carriers, the KLM was chargeable with the
cannot serve as basis for the reversal of its ruling.
duty and responsibility of specifically informing the respondents of conditions prescribed in
their tickets or, in the very least, to ascertain that the respondents read them before they
accepted their passage tickets. A thorough search of the record, however, inexplicably fails to Nonetheless, to avert similar incidents in the future, this Court hereby exhorts members of the
show that any effort was exerted by the KLM officials or employees to discharge in a proper bar and the bench to refer to and quote from the official repository of our decisions,
manner this responsibility to the respondents. Consequently, we hold that the respondents the Philippine Reports, whenever practicable.17 In the absence of this primary source, which
is still being updated, they may resort to unofficial sources like the SCRA.18 We remind them sales worldwide and at the same time provide passengers easy access to airlines which are
that the Courts ponencia, when used to support a judgment or ruling, should be quoted otherwise inaccessible in some parts of the world. Booking and reservation among airline
accurately.19 members are allowed even by telephone and it has become an accepted practice among
them. A member airline which enters into a contract of carriage consisting of a series of trips
Second Issue: to be performed by different carriers is authorized to receive the fare for the whole trip and
through the required process of interline settlement of accounts by way of the IATA clearing
house an airline is duly compensated for the segment of the trip serviced. Thus, when the
Liability of the Ticket-Issuing Airline
petitioner accepted the unused portion of the conjunction tickets, entered it in the IATA
clearing house and undertook to transport the private respondent over the route covered by
We now come to the main issue of whether CAL is liable for damages. YES the unused portion of the conjunction tickets, i.e., Geneva to New York, the petitioner tacitly
recognized its commitment under the IATA pool arrangement to act as agent of the principal
Petitioner posits that the CA Decision must be annulled, not only because it was rooted on an contracting airline, Singapore Airlines, as to the segment of the trip the petitioner agreed to
erroneous quotation, but also because it disregarded jurisprudence, notably China Airlines v. undertake. As such, the petitioner thereby assumed the obligation to take the place of the
Intermediate Appellate Court20 and China Airlines v. Court of Appeals.21 carrier originally designated in the original conjunction ticket. The petitioners argument that it
is not a designated carrier in the original conjunction tickets and that it issued its own ticket is
Jurisprudence Supports CA Decision not decisive of its liability. The new ticket was simply a replacement for the unused portion of
the conjunction ticket, both tickets being for the same amount of US$ 2,760 and having the
It is significant to note that the contract of air transportation was between petitioner and same points of departure and destination. By constituting itself as an agent of the principal
respondent, with the former endorsing to PAL the Hong Kong-to-Manila segment of the carrier the petitioners undertaking should be taken as part of a single operation under the
journey. Such contract of carriage has always been treated in this jurisdiction as a single contract of carriage executed by the private respondent and Singapore Airlines in Manila."25
operation. This jurisprudential rule is supported by the Warsaw Convention,22 to which the
Philippines is a party, and by the existing practices of the International Air Transport Likewise, as the principal in the contract of carriage, the petitioner in British Airways v. Court
Association (IATA). of Appeals26 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 in Lufthansa German
Article 1, Section 3 of the Warsaw Convention states: Airlines v. Court of Appeals,27 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.
"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 In the instant case, following the jurisprudence cited above, PAL acted as the carrying agent
contract or of a series of contracts, and it shall not lose its international character merely of CAL. In the same way that we ruled against British Airways and Lufthansa in the
because one contract or a series of contracts is to be performed entirely within a territory aforementioned cases, we also rule that CAL cannot evade liability to respondent, even
subject to the sovereignty, suzerainty, mandate, or authority of the same High Contracting though it may have been only a ticket issuer for the Hong Kong-Manila sector.
Party."23
Moral and Exemplary Damages WON moral an exemplary damages may be awarded.
Article 15 of IATA-Recommended Practice similarly provides: YES

"Carriage to be performed by several successive carriers under one ticket, or under a ticket Both the trial and the appellate courts found that respondent had satisfactorily proven the
and any conjunction ticket issued therewith, is regarded as a single operation." existence of the factual basis for the damages adjudged against petitioner and PAL. As a
rule, the findings of fact of the CA affirming those of the RTC will not be disturbed by this
Court.28 Indeed, the Supreme Court is not a trier of facts. As a rule also, only questions of law
In American Airlines v. Court of Appeals,24 we have noted that under a general pool
-- as in the present recourse -- may be raised in petitions for review under Rule 45.
partnership agreement, the ticket-issuing airline is the principal in a contract of carriage, while
the endorsee-airline is the agent.
Moral damages cannot be awarded in breaches of carriage contracts, except in the two
instances contemplated in Articles 1764 and 2220 of the Civil Code, which we quote:
"x x x Members of the IATA are under a general pool partnership agreement wherein they act
as agent of each other in the issuance of tickets to contracted passengers to boost ticket
"Article 1764. Damages in cases comprised in this Section shall be awarded in accordance Time and time again, this Court has stressed that the business of common carriers is imbued
with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death with public interest and duty; therefore, the law governing them imposes an exacting
of a passenger caused by the breach of contract by a common carrier. standard.34 In Singson v. Court of Appeals,35 we said:

xxx-xxx-xxx "x x x [T]he carrier's utter lack of care and sensitivity to the needs of its passengers, clearly
constitutive of gross negligence, recklessness and wanton disregard of the rights of the latter,
"Article 2220. Willful injury to property may be a legal ground for awarding moral damages if [are] acts evidently indistinguishable or no different from fraud, malice and bad faith. As the
the court should find that, under the circumstances, such damages are justly due. The same rule now stands, where in breaching the contract of carriage the defendant airline is shown to
rule applies to breaches of contract where the defendant acted fraudulently or in bad faith." have acted fraudulently, with malice or in bad faith, the award of moral and exemplary
(Italics supplied) damages, in addition to actual damages, is proper."36 (Italics supplied)

There is no occasion for us to invoke Article 1764 here. We must therefore determine if CAL In Saludo v. Court of Appeals,37 the Court reminded airline companies that due to the nature
or its agent (PAL) is guilty of bad faith that would entitle respondent to moral damages. of their business, they must not merely give cursory instructions to their personnel to be more
accommodating towards customers, passengers and the general public; they must require
them to be so.
In Lopez v. Pan American World Airways,29 we defined bad faith as a breach of a known duty
through some motive of interest or ill will.
The acts of PALs employees, particularly Chan, clearly fell short of the extraordinary standard
of care that the law requires of common carriers.38 As narrated in Chans oral deposition,39 the
In the case at bar, the known duty of PAL was to transport herein respondent from Hong
manner in which the airline discharged its responsibility to respondent and its other
Kong to Manila. That duty arose when its agent confirmed his reservation for Flight PR
passengers manifested a lack of the requisite diligence and due regard for their welfare. The
311,30 and it became demandable when he presented himself for the trip on November 24,
pertinent portions of the Oral Deposition are reproduced as follows:
1981.

"Q         Now you said that flight PR 311 on 24th November was cancelled due to [a] typhoon
It is true that due to a typhoon, PAL was unable to transport respondent on Flight PR 311 on
and naturally the passengers on said flight had to be accommodated on the first flight the
November 24, 1981. This fact, however, did not terminate the carriers responsibility to its
following day or the first flight subsequently. [W]ill you tell the Honorable Deposition Officer
passengers. PAL voluntarily obligated itself to automatically transfer all confirmed passengers
the procedure followed by Philippine Airlines in the handling of passengers of cancelled
of PR 311 to the next available flight, PR 307, on the following day.31 That responsibility was
flight[s] like that of PR 311 which was cancelled due to [a] typhoon?
subsisting when respondent, holding a confirmed ticket for the former flight, presented himself
for the latter.
A         The procedure will be: all the confirmed passengers from [PR] 311 24th November
[are] automatically transfer[red] to [PR] 307, 25th November[,] as a protection for all
The records amply establish that he secured repeated confirmations of his PR 311 flight on
disconfirmed passengers.
November 24, 1981. Hence, he had every reason to expect that he would be put on the
replacement flight as a confirmed passenger. Instead, he was harangued and prevented from
boarding the original and the replacement flights. Thus, PAL breached its duty to transport Q         Aside from this procedure[,] what do you do with the passengers on the cancelled
him. After he had been directed to pay the terminal fee, his pieces of luggage were removed flight who are expected to check-in on the flights if this flight is cancelled or not operating due
from the weighing-in counter despite his protestations.32 to typhoon or other reasons[?] In other words, are they not notified of the cancellation?

It is relevant to point out that the employees of PAL were utterly insensitive to his need to be A         I think all these passengers were not notified because of a typhoon and Philippine
in Manila on November 25, 1981, and to the likelihood that his business affairs in the city Airlines Reservation were [sic] not able to call every passenger by phone.
would be jeopardized because of a mistake on their part. It was that mistake that had caused
the omission of his name from the passenger list despite his confirmed flight ticket. By merely Atty. Fruto:
looking at his ticket and validation sticker, it is evident that the glitch was the airlines fault.
However, no serious attempt was made by PAL to secure the all-important transportation of Q         Did you say were not notified?
respondent to Manila on the following day. To make matters worse, PAL allowed a group of
non-revenue passengers, who had no confirmed tickets or reservations, to board Flight PR A         I believe they were not, but believe me, I was on day-off.
307.33
Atty. Calica: A         Yes.

Q         Per procedure, what should have been done by Reservations Office when a flight is Q         Now you stated in your answer to the procedure taken, that all confirmed passengers
cancelled for one reason or another? on flight 311, 24 November[,] were automatically transferred to 307 as a protection for the
passengers, correct?
A         If there is enough time, of course, Reservations Office x x x call[s] up all the
passengers and tell[s] them the reason. But if there [is] no time[,] then the Reservations A         Correct.
Office will not be able to do that."40
Q         So that since following the O.K. status of Mr. Chioks reservation [on] flight 311, [he]
xxx-xxx-xxx was also automatically transferred to flight 307 the following day?

"Q         I see. Miss Chan, I [will] show you a ticket which has been marked as Exh. A and A- A         Should be.
1. Will you please go over this ticket and tell the court whether this is the ticket that was used
precisely by Mr. Chiok when he checked-in at [F]light 307, 25 November 81? Q         Should be. O.K. Now do you remember how many passengers x x x were transferred
from flight 311, 24 November to flight 307, 25 November 81?
A         [Are you] now asking me whether he used this ticket with this sticker?
A         I can only give you a very brief idea because that was supposed to be air bus so it
Q         No, no, no. That was the ticket he used. should be able to accommodate 246 people; but how many [exactly], I dont know."42

A         Yes, [are you] asking me whether I saw this ticket? xxx-xxx-xxx

Atty. Fruto: Yes. "Q         So, between six and eight oclock in the evening of 25 November 81, Mr. Chiok
already told you that he just [came] from the Swire Building where Philippine Airlines had [its]
A         I believe I saw it. offices and that he told you that his space for 311 25 November 81 was confirmed?

Q         You saw it, O.K. Now of course you will agree with me Miss Chan that this yellow stub A         Yes.
here which has been marked as Exh. A-1-A, show[s] that the status on flight 311, 24th
November, is O.K., correct? Q         That is what he told you. He insisted on that flight?

A         Yes. A         Yes.

Q         You agree with me. And you will also agree with me that in this ticket of flight 311, on Q         And did you not try to call up Swire Building-- Philippine Airlines and verify indeed if
this, another sticker Exh. A-1-B for 24 November is O.K.? Mr. Chiok was there?

A         May I x x x look at them. Yes, it says O.K. x x x, but [there is] no validation. A         Swire House building is not directly under Philippine Airlines. it is just an agency for
selling Philippine Airlines ticket. And besides around six o clock theyre close[d] in Central.
Q         O.K. Miss Chan what do you understand by these entries here R bar M N 6 V?41
Q         So this Swire Building is an agency authorized by Philippine Airlines to issue tickets
A         This is what we call a computer reference. for and on behalf of Philippine Airlines and also...

Q         I see. This is a computer reference showing that the name of Mr. Chiok has been A         Yes.
entered in Philippine Airlines computer, and this is his computer number.
Q         And also to confirm spaces for and on behalf of Philippine Airlines.
A         Yes."43 We now look into the propriety of the ruling on CALs cross-claim against PAL. Petitioner
submits that the CA should have ruled on the cross-claim, considering that the RTC had
Under the foregoing circumstances, we cannot apply our 1989 ruling in China Airlines v. found that it was PALs employees who had acted negligently.
Intermediate Appellate Court,44 which petitioner urges us to adopt. In that case, the breach of
contract and the negligence of the carrier in effecting the immediate flight connection for Section 8 of Rule 6 of the Rules of Court reads:
therein private respondent was incurred in good faith.45 Having found no gross negligence or
recklessness, we thereby deleted the award of moral and exemplary damages against it.46 "Sec. 8. Cross-claim. - A cross claim is any claim by one party against a co-party arising out
of the transaction or occurrence that is the subject matter either of the original action or of a
This Courts 1992 ruling in China Airlines v. Court of Appeals47 is likewise inapplicable. In that counterclaim therein. Such cross-claim may include a claim that the party against whom it is
case, we found no bad faith or malice in the airlines breach of its contractual obligation. 48 We asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the
held that, as shown by the flow of telexes from one of the airlines offices to the others, action against the cross-claimant."
petitioner therein had exercised diligent efforts in assisting the private respondent change his
flight schedule. In the instant case, petitioner failed to exhibit the same care and sensitivity to For purposes of a ruling on the cross-claim, PAL is an indispensable party. In BA Finance
respondents needs. Corporation v. CA,52 the Court stated:

In Singson v. Court of Appeals,49 we said: "x x x. An indispensable party is one whose interest will be affected by the courts action in the
litigation, and without whom no final determination of the case can be had. The partys interest
"x x x Although the rule is that moral damages predicated upon a breach of contract of in the subject matter of the suit and in the relief sought are so inextricably intertwined with the
carriage may only be recoverable in instances where the mishap results in the death of a other parties that his legal presence as a party to the proceeding is an absolute necessity. In
passenger, or where the carrier is guilty of fraud or bad faith, there are situations where the his absence there cannot be a resolution of the dispute of the parties before the court which
negligence of the carrier is so gross and reckless as to virtually amount to bad faith, in which is effective, complete, or equitable.
case, the passenger likewise becomes entitled to recover moral damages."
xxx-xxx-xxx
In the present case, we stress that respondent had repeatedly secured confirmations of his
PR 311 flight on November 24, 1981 -- initially from CAL and subsequently from the PAL "Without the presence of indispensable parties to a suit or proceeding, judgment of a court
office in Hong Kong. The status of this flight was marked "OK" on a validating sticker placed cannot attain real finality."
on his ticket. That sticker also contained the entry "RMN6V." Ms Chan explicitly
acknowledged that such entry was a computer reference that meant that respondents name PALs interest may be affected by any ruling of this Court on CALs cross-claim. Hence, it is
had been entered in PALs computer. imperative and in accordance with due process and fair play that PAL should have been
impleaded as a party in the present proceedings, before this Court can make a final ruling on
Since the status of respondent on Flight PR 311 was "OK," as a matter of right testified to by this matter.
PALs witness, he should have been automatically transferred to and allowed to board Flight
307 the following day. Clearly resulting from negligence on the part of PAL was its claim that Although PAL was petitioners co-party in the case before the RTC and the CA, petitioner
his name was not included in its list of passengers for the November 24, 1981 PR 311 flight failed to include the airline in the present recourse. Hence, the Court has no jurisdiction over
and, consequently, in the list of the replacement flight PR 307. Since he had secured it. Consequently, to make any ruling on the cross-claim in the present Petition would not be
confirmation of his flight -- not only once, but twice -- by personally going to the carriers legally feasible because PAL, not being a party in the present case, cannot be bound
offices where he was consistently assured of a seat thereon -- PALs negligence was so gross thereby.53
and reckless that it amounted to bad faith.
WHEREFORE, the Petition is DENIED. Costs against petitioner.
In view of the foregoing, we rule that moral and exemplary50 damages were properly awarded
by the lower courts.51
SO ORDERED.
Third Issue:
G.R. No. 101538 June 23, 1992
Propriety of the Cross-Claim
AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, 4. the court of the place of destination.
Augusto Benedicto Santos, petitioner,
vs. The private respondent contended that the Philippines was not its domicile nor was this its
NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, respondents. 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.

On February 1, 1988, the lower court granted the motion and dismissed the case. 2 The
CRUZ, J.: petitioner appealed to the Court of Appeals, which affirmed the decision of the lower
court. 3 On June 26, 1991, the petitioner filed a motion for reconsideration, but the same was
This case involves the Proper interpretation of Article 28(1) of the Warsaw Convention, denied. 4 The petitioner then came to this Court, raising substantially the same issues it
reading as follows: submitted in the Court of Appeals.

Art. 28. (1) An action for damage must be brought at the option of the The assignment of errors may be grouped into two major issues, viz:
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 (1) the constitutionality of Article 28(1) of the Warsaw Convention; CONSTITUTIONAL
where he has a place of business through which the contract has been (2) and
made, or before the court at the place of destination.
(2) the jurisdiction of Philippine courts over the case.
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 The petitioner also invokes Article 24 of the Civil Code on the protection of minors.
licensed to do business and maintain a branch office in the Philippines.
I
On October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San Francisco.
U.S.A., for his flight from San Francisco to Manila via Tokyo and back. The scheduled THE ISSUE OF CONSTITUTIONALITY
departure date from Tokyo was December 20, 1986. No date was specified for his return to
San Francisco. 1
A. The petitioner claims that the lower court erred in not ruling that Article
28(1) of the Warsaw Convention violates the constitutional guarantees of due
On December 19, 1986, the petitioner checked in at the NOA counter in the San Francisco process and equal protection.
airport for his scheduled departure to Manila. Despite a previous confirmation and re-
confirmation, he was informed that he had no reservation for his flight from Tokyo to Manila.
He therefore had to be wait-listed. The Republic of the Philippines is a party to the Convention for the Unification of Certain
Rules Relating to International Transportation by Air, otherwise known as the Warsaw
Convention. It took effect on February 13, 1933. The Convention was concurred in by the
On March 12, 1987, the petitioner sued NOA for damages in the Regional Trial Court of Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of
Makati. On April 13, 1987, NOA moved to dismiss the complaint on the ground of lack of accession was signed by President Elpidio Quirino on October 13, 1950, and was deposited
jurisdiction. Citing the above-quoted article, it contended that the complaint could be instituted with the Polish government on November 9, 1950. The Convention became applicable to the
only in the territory of one of the High Contracting Parties, before: 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
1. the court of the domicile of the carrier; 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." 5
2. the court of its principal place of business;
The Convention is thus a treaty commitment voluntarily assumed by the Philippine
3. the court where it has a place of business through which the contract had government and, as such, has the force and effect of law in this country.
been made;
The petitioner contends that Article 28(1) cannot be applied in the present case because it is The Court notes in this connection the following observation made in Day v. Trans World
unconstitutional. He argues that there is no substantial distinction between a person who Airlines, Inc.: 8
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 The Warsaw drafters wished to create a system of liability rules that would
irrational and thus violates the due process and equal protection clauses. cover all the hazards of air travel . . . The Warsaw delegates knew that, in the
years to come, civil aviation would change in ways that they could not
It is well-settled that courts will assume jurisdiction over a constitutional question only if it is foresee. They wished to design a system of air law that would be both
shown that the essential requisites of a judicial inquiry into such a question are first satisfied. durable and flexible enough to keep pace with these changes . . . The ever-
Thus, there must be an actual case or controversy involving a conflict of legal rights changing needs of the system of civil aviation can be served within the
susceptible of judicial determination; the constitutional question must have been opportunely framework they created.
raised by the proper party; and the resolution of the question is unavoidably necessary to the
decision of the case itself. 6 It is true that at the time the Warsaw Convention was drafted, the airline industry was still in
its infancy. However, that circumstance alone is not sufficient justification for the rejection of
Courts generally avoid having to decide a constitutional question. This attitude is based on the treaty at this time. The changes recited by the petitioner were, realistically, not entirely
the doctrine of separation of powers, which enjoins upon the departments of the government unforeseen although they were expected in a general sense only. In fact, the Convention
a becoming respect for each other's acts. itself, anticipating such developments, contains the following significant provision:

The treaty which is the subject matter of this petition was a joint legislative-executive act. The Article 41. Any High Contracting Party shall be entitled not earlier than two
presumption is that it was first carefully studied and determined to be constitutional before it years after the coming into force of this convention to call for the assembling
was adopted and given the force of law in this country. of a new international conference in order to consider any improvements
which may be made in this convention. To this end, it will communicate with
The petitioner's allegations are not convincing enough to overcome this presumption. the Government of the French Republic which will take the necessary
Apparently, the Convention considered the four places designated in Article 28 the most measures to make preparations for such conference.
convenient forums for the litigation of any claim that may arise between the airline and its
passenger, as distinguished from all other places. At any rate, we agree with the respondent But the more important consideration is that the treaty has not been rejected by the Philippine
court that this case can be decided on other grounds without the necessity of resolving the government. The doctrine of rebus sic stantibus does not operate automatically to render the
constitutional issue. 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
B. The petitioner claims that the lower court erred in not ruling that Art. 28(1) required.
of the Warsaw Convention is inapplicable because of a fundamental change
in the circumstances that served as its basis. In lieu thereof, the treaty may be denounced even without an expressed justification for this
action. Such denunciation is authorized under its Article 39, viz:
The petitioner goes at great lengths to show that the provisions in the Convention were
intended to protect airline companies under "the conditions prevailing then and which have Article 39. (1) Any one of the High Contracting Parties may denounce this
long ceased to exist." He argues that in view of the significant developments in the airline convention by a notification addressed to the Government of the Republic of
industry through the years, the treaty has become irrelevant. Hence, to the extent that it has Poland, which shall at once inform the Government of each of the High
lost its basis for approval, it has become unconstitutional. Contracting Parties.

The petitioner is invoking the doctrine of rebus sic stantibus. According to Jessup, "this (2) Denunciation shall take effect six months after the notification of
doctrine constitutes an attempt to formulate a legal principle which would justify non- denunciation, and shall operate only as regards the party which shall have
performance of a treaty obligation if the conditions with relation to which the parties proceeded to denunciation.
contracted have changed so materially and so unexpectedly as to create a situation in which
the exaction of performance would be unreasonable." 7 The key element of this doctrine is Obviously. rejection of the treaty, whether on the ground of rebus sic stantibus or pursuant to
the vital change in the condition of the contracting parties that they could not have foreseen at Article 39, is not a function of the courts but of the other branches of government. This is a
the time the treaty was concluded. political act. The conclusion and renunciation of treaties is the prerogative of the political
departments and may not be usurped by the judiciary. The courts are concerned only with the two High Contracting Parties," the provisions of the Convention automatically apply and
interpretation and application of laws and treaties in force and not with their wisdom or exclusively govern the rights and liabilities of the airline and its passenger.
efficacy.
Since the flight involved in the case at bar is international, the same being from the United
C. The petitioner claims that the lower court erred in ruling that the plaintiff States to the Philippines and back to the United States, it is subject to the provisions of the
must sue in the United States, because this would deny him the right to Warsaw Convention, including Article 28(1), which enumerates the four places where an
access to our courts. action for damages may be brought.

The petitioner alleges that the expenses and difficulties he will incur in filing a suit in the Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
United States would constitute a constructive denial of his right to access to our courts for the authorities are sharply divided. While the petitioner cites several cases holding that Article
protection of his rights. He would consequently be deprived of this vital guaranty as embodied 28(1) refers to venue rather than jurisdiction, 9 there are later cases cited by the private
in the Bill of Rights. respondent supporting the conclusion that the provision is jurisdictional. 10

Obviously, the constitutional guaranty of access to courts refers only to courts with Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by
appropriate jurisdiction as defined by law. It does not mean that a person can go to any  court consent or waiver upon d court which otherwise would have no jurisdiction over the subject-
for redress of his grievances regardless of the nature or value of his claim. If the petitioner is matter of an action; but the venue of an action as fixed by statute may be changed by the
barred from filing his complaint before our courts, it is because they are not vested with the consent of the parties and an objection that the plaintiff brought his suit in the wrong county
appropriate jurisdiction under the Warsaw Convention, which is part of the law of our land. may be waived by the failure of the defendant to make a timely objection. In either case, the
court may render a valid judgment. Rules as to jurisdiction can never be left to the consent or
II agreement of the parties, whether or not a prohibition exists against their alteration. 11

THE ISSUE OF JURISDICTION. A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction
and not a venue provision. First, 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).
A. The petitioner claims that the lower court erred in not ruling that Article
Second, this characterization is consistent with one of the objectives of the Convention, which
28(1) of the Warsaw Convention is a rule merely of venue and was waived
is to "regulate in a uniform manner the conditions of international transportation by air." Third,
by defendant when it did not move to dismiss on the ground of improper
the Convention does not contain any provision prescribing rules of jurisdiction other than
venue.
Article 28(1), which means that the phrase "rules as to jurisdiction" used in Article 32 must
refer only to Article 28(1). In fact, the last sentence of Article 32 specifically deals with the
By its own terms, the Convention applies to all international transportation of persons exclusive enumeration in Article 28(1) as "jurisdictions," which, as such, cannot be left to the
performed by aircraft for hire. will of the parties regardless of the time when the damage occurred.

International transportation is defined in paragraph (2) of Article 1 as follows: This issue was analyzed in the leading case of Smith v. Canadian Pacific Airways,
Ltd., 12 where it was held:
(2) For the purposes of this convention, the expression "international
transportation" shall mean any transportation in which, according to the . . . Of more, but still incomplete, assistance is the wording of Article 28(2),
contract made by the parties, the place of departure and the place of especially when considered in the light of Article 32. Article 28(2) provides
destination, whether or not there be a break in the transportation or a that "questions of  procedure shall be governed by the law of the court to
transshipment, are situated [either] within the territories of two High which the case is submitted" (Emphasis supplied). Section (2) thus may be
Contracting Parties . . . read to leave for domestic decision questions regarding the suitability and
location of a particular Warsaw Convention case.
Whether the transportation is "international" is determined by the contract of the parties,
which in the case of passengers is the ticket. When the contract of carriage provides for the In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on
transportation of the passenger between certain designated terminals "within the territories of 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 Legally, of course, the lack of proper venue was deemed waived by the
court has jurisdiction is determined will the issue of venue be taken up. This second question petitioners when they failed to invoke it in their original motion to dismiss.
shall be governed by the law of the court to which the case is submitted. Even so, the motivation of the private respondent should have been taken
into account by both the trial judge and the respondent court in arriving at
The petitioner submits that since Article 32 states that the parties are precluded "before the their decisions.
damages occurred" from amending the rules of Article 28(1) as to the place where the action
may be brought, it would follow that the Warsaw Convention was not intended to preclude The petitioner also invokes KLM Royal Dutch Airlines v. RTC, 14 a decision of our Court of
them from doing so "after the damages occurred." Appeals, where it was held that Article 28(1) is a venue provision. However, the private
respondent avers that this was in effect reversed by the case of Aranas v. United
Article 32 provides: Airlines, 15 where the same court held that Article 28(1) is a jurisdictional provision. Neither
of these cases is binding on this Court, of course, nor was either of them appealed to us.
Nevertheless, we here express our own preference for the later case of Aranas insofar as its
Art. 32. Any clause contained in the contract and all special agreements
pronouncements on jurisdiction conform to the judgment we now make in this petition.
entered into before the damage occurred by which the parties purport to
infringe the rules laid down by this convention, whether by deciding the law to
be applied, or by altering the rules as to jurisdiction, shall be null and void. B. The petitioner claims that the lower court erred in not ruling that under
Nevertheless for the transportation of goods, arbitration clauses shall be Article 28(1) of the Warsaw Convention, this case was properly filed in the
allowed, subject to this convention, if the arbitration is to take place within Philippines, because Manila was the destination of the plaintiff.
one of the jurisdictions referred to in the first paragraph of Article 28.
The Petitioner contends that the facts of this case are analogous to those in Aanestad v. Air
His point is that since the requirements of Article 28(1) can be waived "after the damages Canada. 16 In that case, Mrs. Silverberg purchased a round-trip ticket from Montreal to Los
(shall have) occurred," the article should be regarded as possessing the character of a Angeles and back to Montreal. The date and time of departure were specified but not of the
"venue" and not of a "jurisdiction" provision. Hence, in moving to dismiss on the ground of return flight. The plane crashed while on route from Montreal to Los Angeles, killing Mrs.
lack of jurisdiction, the private respondent has waived improper venue as a ground to Silverberg. Her administratrix filed an action for damages against Air Canada in the U.S.
dismiss. District Court of California. The defendant moved to dismiss for lack of jurisdiction but the
motion was denied thus:
The foregoing examination of Article 28(1) in relation to Article 32 does not support this
conclusion. In any event, we agree that even granting arguendo that Article 28(1) is a venue . . . It is evident that the contract entered into between Air Canada and Mrs.
and not a jurisdictional provision, dismissal of the case was still in order. The respondent Silverberg as evidenced by the ticket booklets and the Flight Coupon No. 1,
court was correct in affirming the ruling of the trial court on this matter, thus: was a contract for Air Canada to carry Mrs. Silverberg to Los Angeles on a
certain flight, a certain time and a certain class, but that the time for her to
return remained completely in her power. Coupon No. 2 was only a
Santos' claim that NOA waived venue as a ground of its motion to dismiss is
continuing offer by Air Canada to give her a ticket to return to Montreal
not correct. True it is that NOA averred in its MOTION TO DISMISS that the
between certain dates. . . .
ground thereof is "the Court has no subject matter jurisdiction to entertain the
Complaint" which SANTOS considers as equivalent to "lack of jurisdiction
over the subject matter . . ." However, the gist of NOA's argument in its The only conclusion that can be reached then, is that "the place of
motion is that the Philippines is not the proper place where SANTOS could destination" as used in the Warsaw Convention is considered by both the
file the action — meaning that the venue of the action is improperly laid. Even Canadian C.T.C. and the United States C.A.B. to describe at least two
assuming then that the specified ground of the motion is erroneous, the fact "places of destination," viz., the "place of destination" of a particular flight
is the proper ground of the motion — improper venue — has been discussed either an "outward destination" from the "point of origin" or from the "outward
therein. point of destination" to any place in Canada.

Waiver cannot be lightly inferred. In case of doubt, it must be resolved in favor of non-waiver Thus the place of destination under Art. 28 and Art. 1 of the Warsaw
if there are special circumstances justifying this conclusion, as in the petition at bar. As we Convention of the flight on which Mrs. Silverberg was killed, was Los Angeles
observed in Javier vs. Intermediate Court of Appeals: 13 according to the ticket, which was the contract between the parties and the
suit is properly filed in this Court which has jurisdiction.
The Petitioner avers that the present case falls squarely under the above ruling because the understanding of the parties to the Convention that every contract of carriage has one place
date and time of his return flight to San Francisco were, as in the Aanestad case, also left of departure and one place of destination. An intermediate place where the carriage may be
open. Consequently, Manila and not San Francisco should be considered the petitioner's broken is not regarded as a "place of destination."
destination.
C. The petitioner claims that the lower court erred in not ruling that under Art.
The private respondent for its part invokes the ruling in Butz v. British Airways, 17 where the 28(1) of the Warsaw Convention, this case was properly filed in the
United States District Court (Eastern District of Pennsylvania) said: Philippines because the defendant has its domicile in the Philippines.

. . . Although the authorities which addressed this precise issue are not The petitioner argues that the Warsaw Convention was originally written in French and that in
extensive, both the cases and the commentators are almost unanimous in interpreting its provisions, American courts have taken the broad view that the French legal
concluding that the "place of destination" referred to in the Warsaw meaning must govern. 18 In French, he says, the "domicile" of the carrier means every place
Convention "in a trip consisting of several parts . . . is the ultimate where it has a branch office.
destination that is accorded treaty jurisdiction." . . .
The private respondent notes, however, that in Compagnie Nationale Air France vs.
But apart from that distinguishing feature, I cannot agree with the Court's Giliberto, 19 it was held:
analysis in Aanestad; whether the return portion of the ticket is characterized
as an option or a contract, the carrier was legally bound to transport the The plaintiffs' first contention is that Air France is domiciled in the United
passenger back to the place of origin within the prescribed time and. the States. They say that the domicile of a corporation includes any country
passenger for her part agreed to pay the fare and, in fact, did pay the fare. where the airline carries on its business on "a regular and substantial basis,"
Thus there was mutuality of obligation and a binding contract of carriage, The and that the United States qualifies under such definition. The meaning of
fact that the passenger could forego her rights under the contract does not domicile cannot, however, be so extended. The domicile of a corporation is
make it any less a binding contract. Certainly, if the parties did not customarily regarded as the place where it is incorporated, and the courts
contemplate the return leg of the journey, the passenger would not have paid have given the meaning to the term as it is used in article 28(1) of the
for it and the carrier would not have issued a round trip ticket. Convention. (See Smith v. Canadian Pacific Airways, Ltd. (2d Cir. 1971), 452
F2d 798, 802; Nudo v. Societe Anonyme Belge d' Exploitation de la
We agree with the latter case. The place of destination, within the meaning of the Warsaw Navigation Aerienne Sabena Belgian World Airlines (E.D. pa. 1962). 207 F.
Convention, is determined by the terms of the contract of carriage or, specifically in this case, Supp, 191; Karfunkel v. Compagnie Nationale Air France (S.D.N.Y. 1977),
the ticket between the passenger and the carrier. Examination of the petitioner's ticket shows 427 F. Suppl. 971, 974). Moreover, the structure of article 28(1), viewed as a
that his ultimate destination is San Francisco. Although the date of the return flight was left whole, is also incompatible with the plaintiffs' claim. The article, in stating that
open, the contract of carriage between the parties indicates that NOA was bound to transport places of business are among the bases of the jurisdiction, sets out two
the petitioner to San Francisco from Manila. Manila should therefore be considered merely an places where an action for damages may be brought; the country where the
agreed stopping place and not the destination. carrier's principal place of business is located, and the country in which it has
a place of business through which the particular contract in question was
The petitioner submits that the Butz case could not have overruled the Aanestad case made, that is, where the ticket was bought, Adopting the plaintiffs' theory
because these decisions are from different jurisdictions. But that is neither here nor there. In would at a minimum blur these carefully drawn distinctions by creating a third
fact, neither of these cases is controlling on this Court. If we have preferred the Butz case, it intermediate category. It would obviously introduce uncertainty into litigation
is because, exercising our own freedom of choice, we have decided that it represents the under the article because of the necessity of having to determine, and
better, and correct, interpretation of Article 28(1). without standards or criteria, whether the amount of business done by a
carrier in a particular country was "regular" and "substantial." The plaintiff's
request to adopt this basis of jurisdiction is in effect a request to create a new
Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place." It
jurisdictional standard for the Convention.
is the "destination" and not an "agreed stopping place" that controls for purposes of
ascertaining jurisdiction under the Convention.
Furthermore, it was argued in another case 20 that:
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
 . . . In arriving at an interpretation of a treaty whose sole official language is . . . Assuming for the present that plaintiff's claim is "covered" by Article 17,
French, are we bound to apply French law? . . . We think this question and Article 24 clearly excludes any relief not provided for in the Convention as
the underlying choice of law issue warrant some discussion modified by the Montreal Agreement. It does not, however, limit the kind of
. . . We do not think this statement can be regarded as a conclusion that cause of action on which the relief may be founded; rather it provides that
internal French law is to be "applied" in the choice of law sense, to determine any action based on the injuries specified in Article 17 "however
the meaning and scope of the Convention's terms. Of course, French legal founded," i.e., regardless of the type of action on which relief is founded, can
usage must be considered in arriving at an accurate English translation of the only be brought subject to the conditions and limitations established by the
French. But when an accurate English translation is made and agreed upon, Warsaw System. Presumably, the reason for the use of the phrase "however
as here, the inquiry into meaning does not then revert to a quest for a past or founded," in two-fold: to accommodate all of the multifarious bases on which
present French law to be "applied" for revelation of the proper scope of the a claim might be founded in different countries, whether under code law or
terms. It does not follow from the fact that the treaty is written in French that common law, whether under contract or tort, etc.; and to include all bases on
in interpreting it, we are forever chained to French law, either as it existed which a claim seeking relief for an injury might be founded in any one
when the treaty was written or in its present state of development. There is country. In other words, if the injury occurs as described in Article 17, any
no suggestion in the treaty that French law was intended to govern the relief available is subject to the conditions and limitations established by the
meaning of Warsaw's terms, nor have we found any indication to this effect in Warsaw System, regardless of the particular cause of action which forms the
its legislative history or from our study of its application and interpretation by basis on which a plaintiff could seek
other courts. Indeed, analysis of the cases indicates that the courts, in relief . . .
interpreting and applying the Warsaw Convention, have, not considered
themselves bound to apply French law simply because the Convention is The private respondent correctly contends that the allegation of willful misconduct resulting in
written in French. . . . a tort is insufficient to exclude the case from the comprehension of the Warsaw Convention.
The petitioner has apparently misconstrued the import of Article 25(l) of the Convention,
We agree with these rulings. which reads as follows:

Notably, the domicile of the carrier is only one of the places where the complaint is allowed to Art. 25 (1). The carrier shall not be entitled to avail himself of the provisions
be filed under Article 28(1). By specifying the three other places, to wit, the principal place of of this Convention which exclude or limit his liability. if the damage is caused
business of the carrier, its place of business where the contract was made, and the place of by his willful misconduct or by such default on his part as, in accordance with
destination, the article clearly meant that these three other places were not comprehended in the law of the court to which the case is submitted, is considered to be
the term "domicile." equivalent to willful misconduct.

D. The petitioner claims that the lower court erred in not ruling that Art. 28(1) It is understood under this article that the court called upon to determine the applicability of
of the Warsaw Convention does not apply to actions based on tort. the limitation provision must first be vested with the appropriate jurisdiction. Article 28(1) is
the provision in the Convention which defines that jurisdiction. Article 22 23 merely fixes the
The petitioner alleges that the gravamen of the complaint is that private respondent acted monetary ceiling for the liability of the carrier in cases covered by the Convention. If the
arbitrarily and in bad faith, discriminated against the petitioner, and committed a willful carrier is indeed guilty of willful misconduct, it can avail itself of the limitations set forth in this
misconduct because it canceled his confirmed reservation and gave his reserved seat to article. But this can be done only if the action has first been commenced properly under the
someone who had no better right to it. In short. the private respondent committed a tort. rules on jurisdiction set forth in Article 28(1).

Such allegation, he submits, removes the present case from the coverage of the Warsaw III
Convention. He argues that in at least two American cases, 21 it was held that Article 28(1) of
the Warsaw Convention does not apply if the action is based on tort. THE ISSUE OF PROTECTION TO MINORS

This position is negated by Husserl v. Swiss Air Transport Company, 22 where the article in The petitioner calls our attention to Article 24 of the Civil Code, which states:
question was interpreted thus:
Art. 24. In all contractual property or other relations, when one of the parties
is at a disadvantage on account of his moral dependence, ignorance,
 indigence, mental weakness, tender age or other handicap, the courts must UNITED AIRLINES, petitioner,
be vigilant for his protection. vs.
WILLIE J. UY, respondent.
Application of this article to the present case is misplaced. The above provision assumes that
the court is vested with jurisdiction to rule in favor of the disadvantaged minor, As already  
explained, such jurisdiction is absent in the case at bar.
BELLOSILLO, J.:
CONCLUSION
UNITED AIRLINES assails in this petition for review on certiorari  under Rule 45 the 29
A number of countries have signified their concern over the problem of citizens being denied August 1995 Decision of the Court of Appeals in CA-G.R. CV No. 39761 which reversed the 7
access to their own courts because of the restrictive provision of Article 28(1) of the Warsaw August 1992 order issued by the trial court in Civil Case No. Q-92-12410 1 granting
Convention. Among these is the United States, which has proposed an amendment that petitioner's motion to dismiss based on prescription of cause of action. The issues sought to
would enable the passenger to sue in his own domicile if the carrier does business in that be resolved are whether the notice of appeal to the appellate court was timely filed, and
jurisdiction. The reason for this proposal is explained thus: whether Art. 29 of the Warsaw Convention 2 should apply to the case at bar.

In the event a US citizen temporarily residing abroad purchases a Rome to On 13 October 1989 respondent Willie J. Uy, a revenue passenger on United Airlines Flight
New York to Rome ticket on a foreign air carrier which is generally subject to No. 819 for the San Francisco — Manila route, checked in together with his luggage one
the jurisdiction of the US, Article 28 would prevent that person from suing the piece of which was found to be overweight at the airline counter. To his utter humiliation, an
carrier in the US in a "Warsaw Case" even though such a suit could be employee of petitioner rebuked him saying that he should have known the maximum weight
brought in the absence of the Convention. allowance to be 70 kgs. per bag and that he should have packed his things accordingly.
Then, in a loud voice in front of the milling crowd, she told respondent to repack his things
The proposal was incorporated in the Guatemala Protocol amending the Warsaw Convention, and transfer some of them from the overweight luggage to the lighter ones. Not wishing to
which was adopted at Guatemala City on March 8, create further scene, respondent acceded only to find his luggage still overweight. The airline
1971. 24 But it is still ineffective because it has not yet been ratified by the required minimum then billed him overweight charges which he offered to pay with a miscellaneous charge
number of contracting parties. Pending such ratification, the petitioner will still have to file his order (MCO) or an airline pre-paid credit. However, the airline's employee, and later its airport
complaint only in any of the four places designated by Article 28(1) of the Warsaw supervisor, adamantly refused to honor the MCO pointing out that there were conflicting
Convention. figures listed on it. Despite the explanation from respondent that the last figure written on the
MCO represented his balance, petitioner's employees did not accommodate him. Faced with
the prospect of leaving without his luggage, respondent paid the overweight charges with his
The proposed amendment bolsters the ruling of this Court that a citizen does not necessarily
American Express credit card.
have the right to sue in his own courts simply because the defendant airline has a place of
business in his country.
Respondent's troubles did not end there. 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
The Court can only sympathize with the petitioner, who must prosecute his claims in the
$5,310.00. In a letter dated 16 October 1989 respondent bewailed the insult, embarrassment
United States rather than in his own country at least inconvenience. But we are unable to
and humiliating treatment he suffered in the hands of United Airlines employees, notified
grant him the relief he seeks because we are limited by the provisions of the Warsaw
petitioner of his loss and requested reimbursement thereof. Petitioner United Airlines, through
Convention which continues to bind us. It may not be amiss to observe at this point that the
Central Baggage Specialist Joan Kroll, did not refute any of respondent's allegations and
mere fact that he will have to litigate in the American courts does not necessarily mean he will
mailed a check representing the payment of his loss based on the maximum liability of US
litigate in vain. The judicial system of that country in known for its sense of fairness and,
$9.70 per pound. Respondent, thinking the amount to be grossly inadequate to compensate
generally, its strict adherence to the rule of law.
him for his losses, as well as for the indignities he was subjected to, sent two (2) more letters
to petitioner airline, one dated 4 January 1990 through a certain Atty. Pesigan, and another
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered. dated 28 October 1991 through Atty. Ramon U. Ampil demanding an out-of-court settlement
of P1,000,000.00. Petitioner United Airlines did not accede to his demands.
G.R. No. 127768 November 19, 1999
Consequently, on 9 June 1992 respondent filed a complaint for damages against United United Airlines once again moved for the dismissal of the case this time pointing out that
Airlines alleging that he was a person of good station, sitting in the board of directors of respondent's fifteen (15)-day period to appeal had already elapsed. Petitioner argued that
several top 500 corporations and holding senior executive positions for such similar having used fourteen (14) days of the reglementary period for appeal, respondent Uy had
firms; 3 that petitioner airline accorded him ill and shabby treatment to his extreme only one (1) day remaining to perfect his appeal, and since he filed his notice of appeal two
embarrassment and humiliation; and, as such he should be paid moral damages of at least (2) days later, he failed to meet the deadline.
P1,000,000.00, exemplary damages of at least P500,000.00, plus attorney's fees of at least
P50,000.00. Similarly, he alleged that the damage to his luggage and its stolen contents In its questioned Decision dated 29 August 1995 5 the appellate court gave due course to the
amounted to around $5,310.00, and requested reimbursement therefor. appeal holding that respondent's delay of two (2) days in filing his notice of appeal did not
hinder it from reviewing the appealed order of dismissal since jurisprudence dictates that an
United Airlines moved to dismiss the complaint on the ground that respondent's cause of appeal may be entertained despite procedural lapses anchored on equity and justice.
action had prescribed, invoking Art. 29 of the Warsaw Convention which provides —
On the applicability of the Warsaw Convention, the appellate court ruled that the Warsaw
Art. 29 (1) The right to damages shall be extinguished if an action is not Convention did not preclude the operation of the Civil Code and other pertinent laws.
brought within two (2) years, reckoned from the date of arrival at the Respondent's failure to file his complaint within the two (2)-year limitation provided in the
destination, or from the date on which the aircraft ought to have arrived, or Warsaw Convention did not bar his action since he could still hold petitioner liable for breach
from the date on which the transportation stopped. of other provisions of the Civil Code which prescribe a different period or procedure for
instituting an action. Further, under Philippine laws, prescription of actions is interrupted
(2) The method of calculating the period of limitation shall be determined by where, among others, there is a written extrajudicial demand by the creditors, and since
the law of the court to which the case is submitted. respondent Uy sent several demand letters to petitioner United Airlines, the running of the
two (2)-year prescriptive period was in effect suspended. Hence, the appellate court ruled
that respondent's cause of action had not yet prescribed and ordered the records remanded
Respondent countered that par. (1) of Art. 29 of the Warsaw Convention must be reconciled
to the Quezon City trial court for further proceedings.
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 Petitioner now contends that the appellate court erred in assuming jurisdiction over
"when they are filed before the court, when there is a written extrajudicial demand by the respondent's appeal since it is clear that the notice of appeal was filed out of time. It argues
creditors, and when there is any written acknowledgment of the debt by the debtor." 4 Since that the courts relax the stringent rule on perfection of appeals only when there are
he made several demands upon United Airlines: first, through his personal letter dated 16 extraordinary circumstances, e.g., when the Republic stands to lose hundreds of hectares of
October 1989; second, through a letter dated 4 January 1990 from Atty. Pesigan; and,  finally, land already titled and used for educational purposes; when the counsel of record was
through a letter dated 28 October 1991 written for him by Atty. Ampil, the two (2)-year period already dead; and wherein appellant was the owner of the trademark for more than thirty (30)
of limitation had not yet been exhausted. years, and the circumstances of the present case do not compare to the above exceptional
cases. 6
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 Sec. 1 of Rule 45 of the 1997 Rules of Civil Procedure provides that "a party may appeal
at the destination. It held that although the second paragraph of Art. 29 speaks of deference by certiorari, from a judgment of the Court of Appeals, by filing with the Supreme Court a
to the law of the local court in "calculating the period of limitation," the same does not refer to petition for certiorari, within fifteen (15) days from notice of judgment or of the denial of his
the local forum's rules in interrupting the prescriptive period but only to the rules of motion for reconsideration filed in due time . . . ." This Rule however should not be interpreted
determining the time in which the action may be deemed commenced, and within our as "to sacrifice the substantial right of the appellant in the sophisticated altar of technicalities
jurisdiction the action shall be deemed "brought" or commenced by the filing of a complaint. with impairment of the sacred principles of justice." 7 It should be borne in mind that the real
Hence, the trial court concluded that Art. 29 excludes the application of our interruption rules. purpose behind the limitation of the period of appeal is to forestall or avoid an unreasonable
delay in the administration of justice. Thus, we have ruled that delay in the filing of a notice of
appeal does not justify the dismissal of the appeal where the circumstances of the case show
Respondent received a copy of the dismissal order on 17 August 1992. On 31 August 1992,
that there is no intent to delay the administration of justice on the part of appellant's
or fourteen (14) days later, he moved for the reconsideration of the trial court's order. The trial
counsel, 8 or when there are no substantial rights affected, 9 or when appellant's counsel
court denied the motion and respondent received copy of the denial order on 28 September
committed a mistake in the computation of the period of appeal, an error not attributable to
1992. Two (2) days later, on 1 October 1992 respondent filed his notice of appeal.
negligence or bad faith. 10
In the instant case, respondent filed his notice of appeal two (2) days later than the which prescribe a different period or procedure for instituting the action, specifically, Art. 1146
prescribed period. Although his counsel failed to give the reason for the delay, we are inclined thereof which prescribes four (4) years for filing an action based on torts.
to give due course to his appeal due to the unique and peculiar facts of the case and the
serious question of law it poses. In the now almost trite but still good principle, technicality, As for respondent's second cause of action, indeed the travaux preparatories  of the Warsaw
when it deserts its proper office as an aid to justice and becomes its great hindrance and Convention reveal that the delegates thereto intended the two (2)-year limitation incorporated
chief enemy, deserves scant consideration. 11 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. This therefore forecloses the application of our own rules
Petitioner likewise contends that the appellate court erred in ruling that respondent's cause of on interruption of prescriptive periods. Article 29, par. (2), was intended only to let local laws
action has not prescribed since delegates to the Warsaw Convention clearly intended the two determine whether an action had been commenced within the two (2)-year period, and within
(2)-year limitation incorporated in Art. 29 as an absolute bar to suit and not to be made our jurisdiction an action shall be deemed commenced upon the filing of a complaint. Since it
subject to the various tolling provisions of the laws of the forum. Petitioner argues that in is indisputable that respondent filed the present action beyond the two (2)-year time frame his
construing the second paragraph of Art. 29 private respondent cannot read into it Philippine second cause of action must be barred. Nonetheless, it cannot be doubted that respondent
rules on interruption of prescriptive periods and state that his extrajudicial demand has exerted efforts to immediately convey his loss to petitioner, even employed the services of
interrupted the period of prescription. 12 American jurisprudence has declared that "Art. 29 (2) two (2) lawyers to follow up his claims, and that the filing of the action itself was delayed
was not intended to permit forums to consider local limitation tolling provisions but only to let because of petitioner's evasion.
local law determine whether an action had been commenced within the two-year period,
since the method of commencing a suit varies from country to country." 13 In this regard, Philippine Airlines,  Inc.  v. Court of Appeals 19 is instructive. In this case of PAL,
private respondent filed an action for damages against petitioner airline for the breakage of
WON the suit has prescribed. NO the front glass of the microwave oven which she shipped under PAL Air Waybill No. 0-79-
1013008-3. Petitioner averred that, the action having been filed seven (7) months after her
Within our jurisdiction we have held that the Warsaw Convention can be applied, or ignored, arrival at her port of destination, she failed to comply with par. 12, subpar. (a) (1), of the Air
depending on the peculiar facts presented by each case. 14 Thus, we have ruled that the Waybill which expressly provided that the person entitled to delivery must make a complaint
Convention's provisions do not regulate or exclude liability for other breaches of contract by to the carrier in writing in case of visible damage to the goods, immediately after discovery of
the carrier or misconduct of its officers and employees, or for some particular or exceptional the damage and at the latest within 14 days from receipt of the goods. Despite non-
type of damage. 15 Neither may the Convention be invoked to justify the disregard of some compliance therewith the Court held that by private respondent's immediate submission of a
extraordinary sort of damage resulting to a passenger and preclude recovery therefor beyond formal claim to petitioner, which however was not immediately entertained as it was referred
the limits set by said Convention. 16 Likewise, we have held that the Convention does not from one employee to another, she was deemed to have substantially complied with the
preclude the operation of the Civil Code and other pertinent laws. 17 It does not regulate, requirement. The Court noted that with private respondent's own zealous efforts in pursuing
much less exempt, the carrier from liability for damages for violating the rights of its her claim it was clearly not her fault that the letter of demand for damages could only be filed,
passengers under the contract of carriage, especially if willful misconduct on the part of the after months of exasperating follow-up of the claim, on 13 August 1990, and that if there was
carrier's employees is found or established. 18 any failure at all to file the formal claim within the prescriptive period contemplated in the Air
Waybill, this was largely because of the carrier's own doing, the consequences of which could
not in all fairness be attributed to private respondent.
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 In the same vein must we rule upon the circumstances brought before us. Verily, respondent
slashing of his luggage and the loss of his personal effects amounting to US $5,310.00. filed his complaint more than two (2) years later, beyond the period of limitation prescribed by
the Warsaw Convention for filing a claim for damages. However, it is obvious that respondent
was forestalled from immediately filing an action because petitioner airline gave him the
While his second cause of action — an action for damages arising from theft or damage to
runaround, answering his letters but not giving in to his demands. True, respondent should
property or goods — is well within the bounds of the Warsaw Convention, his first cause of
have already filed an action at the first instance when his claims were denied by petitioner but
action — an action for damages arising from the misconduct of the airline employees and the
the same could only be due to his desire to make an out-of-court settlement for which he
violation of respondent's rights as passenger — clearly is not.
cannot be faulted. Hence, despite the express mandate of Art. 29 of the Warsaw Convention
that an action for damages should be filed within two (2) years from the arrival at the place of
Consequently, insofar as the first cause of action is concerned, respondent's failure to file his destination, such rule shall not be applied in the instant case because of the delaying tactics
complaint within the two (2)-year limitation of the Warsaw Convention does not bar his action employed by petitioner airline itself. Thus, private respondent's second cause of action cannot
since petitioner airline may still be held liable for breach of other provisions of the Civil Code be considered as time-barred under Art. 29 of the Warsaw Convention.
WHEREFORE, the assailed Decision of the Court of Appeals reversing and setting aside the
appealed order of the trial court granting the motion to dismiss the complaint, as well as its
Resolution denying reconsideration, is AFFIRMED. Let the records of the case be remanded
to the court of origin for further proceedings taking its bearings from this disquisition.

SO ORDERED.