G.R. No. L-40597 - Ong Yiu vs. Court of Appeals

Petitioner Agustino B. Ong Yiu, a lawyer and businessman, was a fare-paying passenger of respondent Philippine Air Lines, Inc. (PAL).
The flight involved was PAL Flight No. 463-R from Mactan, Cebu to Butuan City on August 26, 1967.
Petitioner was scheduled to attend trials at the Court of First Instance, Branch II in Butuan set for August 28-31, 1967.

Petitioner checked in one piece of luggage (a blue "maleta"), for which he was issued Claim Check No. 2106-R.
Upon arrival at Bancasi Airport, Butuan City, after the flight, petitioner’s luggage was missing and could not be found.
PAL personnel, including porter clerk Maximo Gomez, initially did not attend to the matter until petitioner’s complaints.
PAL Butuan sent message to PAL Cebu inquiring about the missing luggage at about 3:00 PM; message relayed to Mactan Airport at 3:45 PM.
PAL Manila responded at 3:59 PM that luggage was overcarried to Manila on Flight No. 156 and would be forwarded to Cebu on Flight No. 345, then to Butuan on first available flight.
PAL Cebu informed PAL Butuan by message at 5:00 PM that luggage to be forwarded on Flight No. 963 the next day, but this message was not received by PAL Butuan due to personnel having left.

Petitioner wired PAL Cebu at 10:00 PM demanding delivery before noon next day or threatened damages claim. This telegram was received but not replied to by PAL Cebu supervisor, who assumed luggage would arrive timely.
On the morning of August 27, petitioner went to Bancasi Airport to inquire but did not wait for morning flight which arrived at 10:00 AM carrying the luggage.
Porter clerk Gomez paged petitioner, but petitioner had left; a driver known to petitioner, Emilio Dagorro, accepted delivery.
The luggage lock was found opened; Gomez inspected but did not touch contents. Dagorro delivered the maleta to petitioner but petitioner refused it because a folder with vital trial documents and two gift items were missing.
The luggage was sealed and sent back to PAL Cebu.

Petitioner successfully requested trial postponement due to lost documents.
On August 29, petitioner sent letter to PAL demanding intact luggage and claiming damages of P250,000.00.
On August 31, 1967, PAL Cebu officials delivered the maleta to petitioner, who listed and receipted the contents.
Petitioner sent letter on September 5 requesting investigation results about pilferage and unauthorized opening; PAL replied on September 6 apologizing for delay and admitted failure to locate lost folder or identify culprit but denied knowledge of cargo contents upon loading.

Petitioner filed complaint for damages against PAL on September 13, 1967, docketed as Civil Case No. R-10188 before Court of First Instance, Cebu, Branch V.
Trial court found PAL liable in bad faith and malice, awarding moral damages of P80,000, exemplary damages of P30,000, attorney’s fees of P5,000, and costs.
Both parties appealed to Court of Appeals.
On August 22, 1974, Court of Appeals reversed trial court, finding only simple negligence and no bad faith; moral and exemplary damages were set aside, and only P100.00 liability was imposed consistent with PAL’s baggage limit clause printed on ticket.
Petitioner filed a Petition for Review by Certiorari before the Supreme Court.

Whether PAL acted in bad faith or gross negligence in the breach of its contract of transportation, thereby justifying an award of moral and exemplary damages to petitioner.
Whether the limitation of PAL’s liability to P100.00 under the stipulation printed on the ticket is valid and binding on petitioner, notwithstanding petitioner’s claim for a greater amount of damages.
Whether petitioner or his widow’s motion for substitution and reconsideration, filed after petitioner’s death and outside appeal periods, should be allowed in the interest of substantial justice.