G.R. No. 165266 - Air France vs. Gillego

In April 1993, respondent Bonifacio H. Gillego—then the incumbent Congressman of the Second District of Sorsogon and Chairman of the House Committee on Civil, Political and Human Rights—was invited to serve as one of the keynote speakers at the 89th Inter-Parliamentary Conference Symposium on Parliament Guardian of Human Rights, scheduled to be held in Budapest, Hungary, and Tokyo, Japan from May 19 to 22, 1993.
The Philippines, being a member of the Inter-Parliamentary Union, participated in the event organized by the said body.

On May 16, 1993, respondent departed Manila aboard petitioner Air France’s aircraft destined for Paris, France.
Arriving in Paris on the early morning of May 17, 1993, respondent discovered that an earlier Budapest-bound flight (Flight No. 2024 with a departure time of 10:00 a.m.) was available.
Respondent approached the airline’s counter, arranged for a change in his booking, and was issued a new ticket/boarding pass along with a revised baggage claim stub for his checked-in luggage.

Upon arriving in Budapest, respondent was unable to locate his checked-in luggage at the designated claiming section.
He sought assistance at the airline’s counter where a representative confirmed the existence of his checked-in luggage in the computer system.
Despite assurances that the luggage would be delivered to his hotel later that day and his repeated follow-ups, the luggage was never delivered.

On returning to the Philippines, respondent’s lawyer sent a letter to the airline’s Station Manager complaining about the lost luggage and the resulting damages.
Respondent’s single piece of luggage contained essential personal effects such as clothes, toiletries, medicines for his hypertension, and prepared speeches with its notes and reference materials.
The loss compelled respondent to incur additional expenditures (approximate value of US$1,000) to replace personal items and reconstruct his speech, which adversely affected his preparation for the conference.
On July 13, 1993, respondent filed a complaint for damages against petitioner, alleging negligence and breach of the duty to transport and deliver his luggage on time, which caused physical suffering, anxiety, and forced medical treatment abroad.

The Regional Trial Court of Makati City (Branch 137) determined that petitioner's conduct amounted to gross negligence and willful misconduct due to the failure to retrieve or deliver the luggage despite respondent’s repeated inquiries.
The trial court ruled in favor of respondent, awarding:

The court found that petitioner’s actions could not be excused by the limited liability provisions under the Warsaw Convention, particularly as the airline had failed to exercise the extraordinary diligence required of a common carrier.

Petitioner appealed the trial court’s decision to the Court of Appeals, which affirmed the lower court’s findings.
The appellate court reiterated that:

The airline’s breach of contract was evident in its failure to deliver the luggage on time,
The airline’s reliance on the Warsaw Convention was misplaced, and
The lack of any apology or adequate explanation by petitioner underscored its bad faith.

Despite acknowledging that respondent eventually recovered his baggage (albeit long after the trial), the courts maintained that the persistent delay and the negligent attitude owed respondent justified the award of moral and exemplary damages.

The amounts awarded as moral and exemplary damages were excessive, unconscionable, and not supported by the facts.
There was no adequate legal or factual basis to establish that the airline’s actions were accompanied by gross negligence, bad faith, or willful misconduct sufficient to warrant said damages.

The loss of the baggage was not attributable to its negligence, but rather to force majeure or other factors beyond its control,
The “admission” in its answer was a mere inadvertence, and
The discrepancies relating to the preparation and handling of the Property Irregularity Report (PIR) did not substantiate a finding of bad faith.

Ultimately, while conceding some merit in the claim for damages, petitioner contended that the award should be scaled down in light of the available evidence that the respondent was able to perform despite the setback.

Whether the petitioner (Air France) committed gross negligence and exhibited bad faith in handling the respondent’s checked-in luggage under its contract of carriage.
Whether the airline’s reliance on the limited liability provisions under the Warsaw Convention is tenable given the circumstances, particularly its failure to deliver the checked-in baggage in a timely manner.
Whether the trial court’s award of moral and exemplary damages, along with attorney’s fees, was supported by clear and convincing evidence of the petitioner’s wanton disregard for the contractual obligations.
Whether the damages awarded were excessive and disproportionate in light of the actual inconveniences and losses suffered by the respondent, and thus subject to modification.