Transportation Law

LLB 4302 Case Digests Compilation

PLANTERS PRODUCTS, INC. v. COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA

G.R. NO. 101503

September 15, 1993

FACTS:

Planters Products, Inc. (PPI) purchased from Mitsubishi fertilizers which the latter shipped in bulk aboard the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Alaska to Pampanga. As evidenced by Bill of Lading No. KP-1 signed by the master of the vessel and issued on the date of departure. Prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General Charter was entered into between Mitsubishi as shipper/charterer and KKKK as ship-owner, in Japan. Before loading the fertilizer aboard the vessel, four of her holds  were all presumably inspected by the charterer's representative and found fit to take a load of urea in bulk. After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steel hatches were closed with heavy iron lids, covered with three layers of tarpaulin, and then tied with steel bonds. The hatches remained closed and tightly sealed throughout the entire voyage. Upon arrival, the steel pontoon hatches were opened with the use of the vessel's boom. Petitioner unloaded the cargo from the holds into its steel bodied dump trucks which were parked alongside the berth, using metal scoops attached to the ship. The hatches remained open throughout the duration of the discharge. Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it was transported to the consignee's warehouse located some fifty meters from the wharf. Midway to the warehouse, the trucks were made to pass through a weighing scale where they were individually weighed for the purpose of ascertaining the net weight of the cargo. The port area was windy, certain portions of the route to the warehouse were sandy and the weather was variable, raining occasionally while the discharge was in progress. The petitioner's warehouse was made of corrugated GI sheets, with an opening at the front where the dump trucks entered and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets were placed in-between and alongside the trucks to contain spillages of the fertilizer. It took eleven days for PPI to unload the cargo and Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped, by taking draft readings of the vessel prior to and after discharge. The report submitted by CSCI to the consignee PPI revealed a shortage in the cargo and that a portion of the Urea fertilizer was contaminated with dirt. The same results were contained in a Certificate of Shortage/Damaged Cargo prepared by PPI which showed that the cargo delivered was indeed short and a portion were rendered unfit for commerce, having been polluted with sand, rust and dirt.

PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for P245, 969.31 representing the cost of the alleged shortage in the goods shipped and the diminution in value of that portion said to have been contaminated with dirt. SSA explained that they were not able to respond to the consignee's claim for payment because what they received was just a request for shortlanded certificate and not a formal claim, and that this request was denied by them because they had nothing to do with the discharge of the shipment.

Hence, PPI filed an action for damages with CFI Manila. The defendant carrier argued that the strict public policy governing common carriers does not apply to them because they have become private carriers by reason of the provisions of the charter-party. The court sustained the claim of the plaintiff ruling that:

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

 Prescinding from the provision of the law that a common carrier is presumed negligent in case of loss or damage of the goods it contracts to transport, all that a shipper has to do in a suit to recover for loss or damage is to show receipt by the carrier of the goods and to delivery by it of less than what it received. After that, the burden of proving that the loss or damage was due to any of the causes which exempt him from liability is shipted to the carrier, common or private he may be. Even if the provisions of the charter-party aforequoted are deemed valid, and the defendants considered private carriers, it was still incumbent upon them to prove that the shortage or contamination sustained by the cargo is attributable to the fault or negligence on the part of the shipper or consignee in the loading, stowing, trimming and discharge of the cargo.

Court of Appeals reversed the ruling of CFI the appellate court ruled that the cargo vessel M/V "Sun Plum" owned by private respondent KKKK was a private carrier and not a common carrier by reason of the time charterer-party.

ISSUE:

Whether or not, a common carrier becomes a private carrier by reason of a charter-party.

RULING:

A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment by which the owner of a ship or other vessel lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. In both cases, the charter-party provides for the hire of vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship-owner to supply the ship's stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the ship. The distinction between a "common or public carrier" and a "private or special carrier" lies in the character of the business, such that if the undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for a fee, the person or corporation offering such service is a private carrier. Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their business, should observe extraordinary diligence in the vigilance over the goods they carry. In the case of private carriers, however, the exercise of ordinary diligence in the carriage of goods will suffice. Moreover, in the case of loss, destruction or deterioration of the goods, common carriers are presumed to have been at fault or to have acted negligently, and the burden of proving otherwise rests on them.  On the contrary, no such presumption applies to private carriers, for whosoever alleges damage to or deterioration of the goods carried has the onus of proving that the cause was the negligence of the carrier.

It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of the ship-owner and therefore continued to be under its direct supervision and control. Carrier has sufficiently overcome, by clear and convincing proof, the  prima facie presumption of negligence. The hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open without the use of the ship's boom. Bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. More so, with a variable weather condition prevalent during its unloading. This is a risk the shipper or the owner of the goods has to face. Clearly, KKKK has sufficiently proved the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed to the loss. On the other hand, no proof was adduced by the petitioner showing that the carrier was remise in the exercise of due diligence in order to minimize the loss or damage to the goods it carried.

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals, which reversed the trial court, is AFFIRMED. Consequently, Civil Case No. 98623 of the then Court of the First Instance, now Regional Trial Court, of Manila should be, as it is hereby DISMISSED.

REGIONAL CONTAINER LINES (RCL) OF SINGAPORE and EDSA SHIPPING AGENCY v.THE NETHERLANDS INSURANCE CO. (PHILIPPINES), INC.

G.R. NO. 168151

September 4, 2009

FACTS:

405 cartons of Epoxy Molding Compound were consigned to be shipped from Singapore to Manila for Temic. U-Freight Singapore, a forwarding agent based in Singapore, contracted the services of Pacific Eagle to transport the subject cargo.  The cargo was packed, stored, and sealed by Pacific Eagle in its Refrigerated Container. . As the cargo was highly perishable, the inside of the container had to be kept at a temperature of 0º Celsius. Pacific Eagle then loaded the refrigerated container on board the M/V Piya Bhum, a vessel owned by RCL, with which Pacific Eagle had a slot charter agreement. RCL duly issued its own Bill of Lading in favor of Pacific Eagle. To insure the cargo against loss and damage, Netherlands Insurance issued a Marine Open Policy in favor of Temic, to cover all losses/damages to the shipment. The M/V Piya Bhum docked in Manila. After unloading the refrigerated container, it was plugged to the power terminal of the pier to keep its temperature constant. Fidel Rocha, Vice-President for Operations of Marines Adjustment Corporation, accompanied by two surveyors, conducted a protective survey of the cargo. They found that based on the temperature chart, the temperature reading was constant from October 18, 1995 to October 25, 1995 at 0º Celsius. However, at midnight of October 25, 1995 – when the cargo had already been unloaded from the ship – the temperature fluctuated with a reading of 33º Celsius. Rocha believed the fluctuation was caused by the burnt condenser fan motor of the refrigerated container. Temic received the shipment. It found the cargo completely damaged. Temic filed a claim for cargo loss against Netherlands Insurance.  The Netherlands Insurance paid Temic the sum of P1, 036,497.00 under the terms of the Marine Open Policy. Temic then executed a loss and subrogation receipt in favor of Netherlands Insurance. Thereafter, Netherlands Insurance filed a complaint for subrogation of insurance settlement, against "the unknown owner of M/V Piya Bhum" and TMS, the latter thought to be the local agent of M/V Piya Bhum’s unknown owner. Netherlands Insurance impleaded EDSA Shipping, RCL, Eagle Liner Shipping Agencies, U-Freight Singapore, and U-Ocean (Phils.), Inc. (U-Ocean), as additional defendants. The defendants all disclaimed liability for the damage caused to the cargo. RCL and EDSA Shipping denied negligence in the transport of the cargo; they attributed any negligence that may have caused the loss of the shipment to their co-defendants. They likewise asserted that no valid subrogation exists, as the payment made by Netherlands Insurance to the consignee was invalid.

Trial court dismissed the case ruling that while there was valid subrogation, the defendants could not be held liable for the loss or damage, as their respective liabilities ended at the time of the discharge of the cargo from the ship at the Port of Manila. Court of Appeals reversed the ruling of the RTC dismissing the complaint against other defendants but found that RCL and EDSA liable for the damages to the cargo.

ISSUE:

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

Whether or not, the CA correctly held RCL and EDSA Shipping liable as common carriers under the theory of presumption of negligence.

RULING:

RCL and EDSA contends that the cause of the damage to the cargo was the "fluctuation of the temperature in the reefer van," which fluctuation occurred after the cargo had already been discharged from the vessel; no fluctuation, they point out, arose when the cargo was still on board M/V Piya Bhum. As the cause of the damage to the cargo occurred after the same was already discharged from the vessel and was under the custody of the arrastre operator, RCL and EDSA Shipping posit that the presumption of negligence provided in Article 1735 of the Civil Code should not apply. What applies in this case is Article 1734, which exempts the carrier from liability for loss or damage to the cargo when it is caused either by an act or omission of the shipper or by the character of the goods or defects in the packing or in the containers. Thus, RCL and EDSA Shipping seek to lay the blame at the feet of other parties. Such contention is unmeritorious.

A common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported. When the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than merely show that some other party could be responsible for the damage.

In the present case, RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law over the goods they transported. There is sufficient evidence showing that the fluctuation of the temperature in the refrigerated container van, as recorded in the temperature chart, occurred after the cargo had been discharged from the vessel and was already under the custody of the arrastre operator. This evidence, however, does not disprove that the condenser fan – which caused the fluctuation of the temperature in the refrigerated container – was not damaged while the cargo was being unloaded from the ship. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier; RCL and EDSA Shipping failed to dispute this.

RCL and EDSA Shipping could have offered evidence before the trial court to show that the damage to the condenser fan did not occur: (1) while the cargo was in transit; (2) while they were in the act of discharging it from the vessel; or (3) while they were delivering it actually or constructively to the consignee. They could have presented proof to show that they exercised extraordinary care and diligence in the handling of the goods, but they opted to file a demurrer to evidence.

It is for this reason as well that we find RCL and EDSA Shipping’s claim that the loss or damage to the cargo was caused by a defect in the packing or in the containers. To exculpate itself from liability for the loss/damage to the cargo under any of the causes, the common carrier is burdened to prove any of the causes in Article 1734 of the Civil Code claimed by it by a preponderance of evidence. If the carrier succeeds, the burden of evidence is shifted to the shipper to prove that the carrier is negligent. RCL and EDSA Shipping, however, failed to satisfy this standard of evidence and in fact offered no evidence at all on this point; a reversal of a dismissal based on a demurrer to evidence bars the defendant from presenting evidence supporting its allegations.

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

WHEREFORE, we DENY the petition for review on certiorari filed by the Regional Container Lines of Singapore and EDSA Shipping Agency. The decision of the Court of Appeals dated May 26, 2004 in CA-G.R. CV No. 76690 is AFFIRMED IN TOTO. Costs against the petitioners.

AGUSTINO B. ONG YIU v. HONORABLE COURT OF APPEALS and PHILIPPINE AIR LINES, INC.

G.R. No. L-40597

June 29, 1979

FACTS:

Petitioner was a passenger of PAL, on board from Mactan Cebu, bound for Butuan City. He was scheduled to attend several trial in CFI of Butuan. He checked in one piece of luggage, a blue "maleta" for which he was issued Claim Check. Upon arrival, petitioner claimed his luggage but it could not be found. According to petitioner, it was only after reacting indignantly to the loss that the matter was attended to by a porter clerk, which, however, the latter denies. An hour after arrival, PAL Butuan, sent a message to PAL Cebu, inquiring about the missing luggage, which message was, in turn relayed in full to the Mactan Airport teletype operator that same afternoon. It was also transmitted to PAL Manila that same afternoon. PAL Manila wired PAL Cebu advising that the luggage had been over carried to Manila and that it would be forwarded to Cebu on the same day. Instructions were also given that the luggage be immediately forwarded to Butuan City on the first available flight. PAL Cebu sent a message to PAL Butuan that the luggae shall be forwarded on the next day. However, since it was already late, the employees of PAL Butuan had already left, so it was not received. Petitioner was worried about the missing luggage because it contained vital documents needed for trial the next day. He wired PAL Cebu that he would hold them liable for damages stating that it was PAL’s gross negligence that had caused him undue inconvenience, worry and embarrassment. PAL Cebu’s supervisor received the telegram but he did not reply reasoning that by the time the telegram arrived, the luggage would have arrived also. When the petitioner went to the airport the next day, the first flight of PAL had not yet arrived and he was not able to wait for it. He was paged by the porter clerk but he already left. A driver of a car, who also used to drive for Yiu, volunteered to take the luggage to the latter. The porter clerk knew Dagorro to be the same driver used by petitioner whenever the latter was in Butuan City, Gomez took the luggage and placed it on the counter. Dagorro examined the lock, pressed it, and it opened. After calling the attention of Maximo Gomez, the "maleta" was opened, Gomez took a look at its contents, but did not touch them. Dagorro then delivered the "maleta" to petitioner, with the information that the lock was open. Upon inspection, petitioner found that a folder containing certain exhibits, transcripts and private documents for the trial were missing, aside from two gift items for his parents-in-law. Petitioner refused to accept the luggage. Dagorro returned it to the porter clerk, Maximo Gomez, who sealed it and forwarded the same to PAL Cebu. When Yiu returned to Cebu City, he wrote a letter to PAL Cebu that his luggage be produced and be compensated for the actual and moral damages within five days from receipt of such. Otherwise, he would file a suit. Messengers of PAL Cebu delivered the luggage and upon checking, all the items are intact. However, PAL Cebu was not able to find the person who opened the luggage so Yiu filed a civil case against PAL.

Trial court ruled in favor of Yiu stating that PAL had acted in bad faith and malice. Court of Appeals found PAL guilty of simple negligence but reversed the ruling of RTC granting petitioner of moral and exemplary damages but ordered PAL to pay plaintiff the sum of P100.00, the baggage liability assumed by it under the condition of carriage printed at the back of the ticket.

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

ISSUE:

Whether or not, the court of appeals erred in holding respondent pal guilty only of simple negligence and not bad faith in the breach of its contract of transportation with petitioner.

RULING:

PAL had not acted in bad faith. Bad faith means a breach of a known duty through some motive of interest or ill will. It was the duty of PAL to look for petitioner's luggage which had been miscarried. PAL exerted due diligence in complying with such duty. Neither was the failure of PAL Cebu to reply to petitioner's rush telegram indicative of bad faith. There was no bad faith, therefore, in the assumption made by said supervisor that the plane carrying the bag would arrive at Butuan earlier than a reply telegram. Had petitioner waited or caused someone to wait at the airport for the arrival of the morning flight, he would have been able to retrieve his luggage sooner. Absence of a bad faith, petitioner is not entitled to moral damages. Petitioner is neither entitled to exemplary damages. In contracts, as provided for in Article 2232 of the Civil Code, exemplary damages can be granted if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner, which has not been proven in this case.

Petitioner further contends that respondent Court committed grave error when it limited PAL's carriage liability to the amount of P100.00 as stipulated at the back of the ticket.  The plaintiff's maleta having been pilfered while in the custody of the defendant, it is presumed that the defendant had been negligent. The liability, however, of PAL for the loss, in accordance with the stipulation written on the back of the ticket, is limited to P100.00 per baggage, plaintiff not having declared a greater value, and not having called the attention of the defendant on its true value and paid the tariff therefor.

Petitioner, further argues, that there is nothing in the evidence to show that he had actually entered into a contract with PAL limiting the latter's liability for loss or delay of the baggage of its passengers, and that Article 1750 of the Civil Code has not been complied with. While it may be true that petitioner had not signed the plane ticket, he is nevertheless bound by the provisions thereof. Such provisions have been held to be a part of the contract of carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the regulation. It is what is known as a contract of "adhesion", in regards which it has been said that contracts of adhesion wherein one party imposes a ready-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. Considering, therefore, that petitioner had failed to declare a higher value for his baggage, he cannot be permitted a recovery in excess of P100.00.

WHEREFORE, for lack of merit, the instant Petition is hereby denied, and the judgment sought to be reviewed hereby affirmed in toto.

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

PHILIPPINE AIRLINES, INC. v. HON. ADRIANO SAVILLO, Presiding Judge of RTC Branch 30 , Iloilo City, and SIMPLICIO GRIÑO

G.R. No. 149547

July 4, 2008

FACTS:

Private respondent was invited to participate in a golf tournament in Jakarta, Indonesia. He purchased ticket from PAL with the following passage points: MANILA-SINGAPORE-JAKARTA-SINGAPORE-MANILA. When they arrived at Singapore at about 6 pm, they went to Singapore Airlines to check-in for their flight to Jakarta. Singapore Airlines rejected their tickets as it was not endorsed by PAL. They reasoned that if they accepted the tickets prior PAL’s endorsement, PAL would not pay them for their passage. When they called PAL’s office, they found out that it was closed. They were stranded at the airport left with no recourse. Respondent was subjected to humiliation, embarrassment and distress. Eventually, they decided to purchase a ticket going to Jakarta from Garuda Airlines. When they arrived at midnight, the person who was supposed to pick them up already left and they had to arrange transportation at a very late hour.

Due to the nerve-wracking events that has transpired, respondent became ill and was not able to join the tournament. Upon his return to Philippines, he sent demand letters to both PAL and Singapore Airline. However, both denied liability and blamed one another for the fiasco. 3 years later, Respondent then filed a complaint for Damages. PAL filed a Motion to Dismiss on the ground of prescription. PAL argued that Warsaw Convention applies in this case. It provides that any claim for damages in connection with international transportation of persons is subject to a prescriptive period of two years. Trial court denied the Motion to Dismiss. It maintained that the provisions of the Civil Code and other pertinent Philippine Laws apply and not the Warsaw Convention. The Court of Appeals affirmed the decision of the lower court. Article 1144 of the Code states that the prescription period for claims for damages is 10 years.

ISSUE:

Whether or not, the Court of Appeals erred in not applying the provisions of the Warsaw Convention.

RULING:

The Warsaw Convention applies to "all international transportation of persons, baggage or goods performed by any aircraft for hire." It seeks to accommodate or balance the interests of passengers seeking recovery for personal injuries and the interests of air carriers seeking to limit potential liability. It employs a scheme of strict

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

liability favoring passengers and imposing damage caps to benefit air carriers. The cardinal purpose of the Warsaw Convention is to provide uniformity of rules governing claims arising from international air travel; thus, it precludes a passenger from maintaining an action for personal injury damages under local law when his or her claim does not satisfy the conditions of liability under the Convention.

Article 19 of the Warsaw Convention provides for liability on the part of a carrier for "damages occasioned by delay in the transportation by air of passengers, baggage or goods." Article 24 excludes other remedies by further providing that "(1) in the cases covered by articles 18 and 19, any action for damages, however founded, can only be brought subject to the conditions and limits set out in this convention." Therefore, a claim covered by the Warsaw Convention can no longer be recovered under local law, if the statute of limitations of two years has already lapsed.

In the case at hand, Singapore Airlines barred private respondent from boarding the Singapore Airlines flight because PAL allegedly failed to endorse the tickets of private respondent and his companions, despite PAL’s assurances to respondent that Singapore Airlines had already confirmed their passage. While this fact still needs to be heard and established by adequate proof before the RTC, an action based on these allegations will not fall under the Warsaw Convention, since the purported negligence on the part of PAL did not occur during the performance of the contract of carriage but days before the scheduled flight. Thus, the present action cannot be dismissed based on the statute of limitations provided under Article 29 of the Warsaw Convention.

Had the present case merely consisted of claims incidental to the airlines’ delay in transporting their passengers, the private respondent’s Complaint would have been time-barred under Article 29 of the Warsaw Convention. However, the present case involves a special species of injury resulting from the failure of PAL and/or Singapore Airlines to transport private respondent from Singapore to Jakarta – the profound distress, fear, anxiety and humiliation that private respondent experienced when, despite PAL’s earlier assurance that Singapore Airlines confirmed his passage, he was prevented from boarding the plane and he faced the daunting possibility that he would be stranded in Singapore Airport because the PAL office was already closed.

These claims are covered by the Civil Code provisions on tort, and not within the purview of the Warsaw Convention. 

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 48664, promulgated on 17 August 2001 is AFFIRMED. Costs against the petitioner.

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

UNITED AIRLINES v. WILLIE J. UY

G.R. NO. 127768

November 19, 1999

FACTS:

Respondent is a revenue passenger on United Airlines from San Francisco bound to Manila. He checked-in his luggage, one piece of which was found to be overweight. The employee of United Airlines told him, in a loud voice in front of the other passengers, to repack his things and that he should have known the weight limit per bag. The airline then billed him for the overweight to which he paid with an airline pre-paid credit. However, the employee and the supervisor refused to accept such payment. After he explained his payment, the airline still refused to accept it. Refusing to further his humiliation, Uy paid the luggage using his credit card. Upon arrival at Manila, he discovered that one of his bags have been slashed and his belongings were missing. His losses reached up to $ 5,310.00. Respondent wrote a letter to United Airlines and asked for reimbursement, not only for the loss belongings but also for the humiliation, insult and embarrassment that had happened. The airline sent him a check based on the maximum liability of $9.70 per pound. Deciding that the check they sent was not enough, he wrote two more letters but the airline still, did not accede. 2 years after the first letter, respondent filed a complaint for damages against United Airlines. Petitioner then filed a Motion to Dismiss on the ground of prescription based on the Warsaw Convention. Respondent countered that paragraph 1 of Article 29 of the Warsaw Convention must be reconciled with paragraph 2 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. Respondent noted that according to Philippine laws the prescription of actions is interrupted "when they are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor. Since he made several demands upon United Airlines the two (2)-year period of limitation had not yet been exhausted.

The trial court dismissed the ruling that the words of the Warsaw Convention is clear. That although the second paragraph of Art. 29 speaks of deference to the law of the local court in "calculating the period of limitation," the same does not refer to the local forum's rules in interrupting the prescriptive period but only to the rules of determining the time in which the action may be deemed commenced, and within our jurisdiction the action shall be deemed "brought" or commenced by the filing of a complaint. Hence, the trial court concluded that Art. 29 excludes the application of our interruption rules.

The Court of Appeals ruled in favor of Uy stating that respondent's failure to file his complaint within the two (2)-year limitation provided in the Warsaw Convention did not bar his action since he could still hold petitioner liable for breach of other provisions of the Civil Code which prescribe a different period or procedure for instituting an action.

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

ISSUE:

Whether or not, the Article 29 of the Warsaw Convention applies in this case.

RULING:

The Convention's provisions do not regulate or exclude liability for other breaches of contract by the carrier or misconduct of its officers and employees, or for some particular or exceptional type of damage. Neither may the Convention be invoked to justify the disregard of some extraordinary sort of damage resulting to a passenger and preclude recovery therefor beyond the limits set by said Convention. The Convention does not preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if willful misconduct on the part of the carrier's employees is found or established.

Respondent's complaint reveals that he is suing on two (2) causes of action: (a) the shabby and humiliating treatment he received from petitioner's employees at the San Francisco Airport which caused him extreme embarrassment and social humiliation; and, (b) the slashing of his luggage and the loss of his personal effects amounting to US $5,310.00.

While his second cause of action is well within the bounds of the Warsaw Convention, his first cause of action clearly is not. Respondent’s failure to file his complaint within the two year limitation of the Warsaw Convention does not bar his action since petitioner airline may still be held liable for breach of other provisions of the Civil Code which prescribe a different period or procedure for instituting the action, specifically, Article 1146 which prescribes four years for filing an action based on torts.

As for respondent’s second cause of action, indeed the travaux preparatories of the Warsaw Convention reveal that the delegates thereto intended the two year limitation incorporated in Art. 29 as an absolute bar to suit. This therefore forecloses the application of our own rules on interruption of prescriptive periods. Article 29, par. (2), was intended only to let local laws determine whether an action had been commenced within the two year period, and within our jurisdiction an action shall be deemed commenced upon the filing of a complaint. Since it is indisputable that respondent filed the present action beyond the two year time frame his second cause of action must be barred. Nonetheless, it cannot be doubted that respondent exerted efforts to immediately convey his loss to petitioner, even employed the services of two lawyers to follow up his claims, and that the filing of the action itself was delayed because of petitioner's evasion.

Respondent filed his complaint more than two 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 runaround, answering his letters but not giving in to his demands. True, respondent should have already filed an action at the first instance when his claims were denied by petitioner but the same could only be due to his desire to make an out-of-court settlement for which he 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 years from the arrival at the place of destination, such rule shall not be applied in the instant case because of the delaying tactics employed by petitioner airline itself. Thus, private respondent's second cause of action cannot be considered as time-barred under Art. 29 of the Warsaw Convention.

LUBAY, ANGELA A.

Transportation Law

LLB 4302 Case Digests Compilation

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.

LUBAY, ANGELA A.