G.R. No. 70462 - Pan American World Airways, Inc. vs. Intermediate Appellate Court

Petitioner: Pan American World Airways, Inc., an international air carrier.
Respondents: Rene V. Pangan (plaintiff), president and general manager of Sotang Bastos and Archer Productions.
Several agreements were entered into by Pangan for the exhibition of three films—*Ang Mabait, Masungit at ang Pangit*, *Big Happening with Chikiting and Iking*, and *Kambal Dragon*—in the United States and Guam.

On April 25, 1978, Pangan and Primo Quesada (of Prime Films, San Francisco) agreed that Pangan would supply three films for US $2,500 each, with promotional and advertising materials to be delivered on or before May 30, 1978.
Pangan also entered a verbal agreement with Leo Slutchnick of the Hafa Adai Organization in Guam for the exhibition of two films at the Hafa Adai Theater on May 30, 1978, for P7,000 each, with promotional materials also due on or before that date.

Pangan prepared promotional and advertising materials costing P12,900, and purchased fourteen clutch bags, four capiz lamps, and four barong tagalogs worth a total of P4,400.
On May 18, 1978, Pangan obtained an economy class airplane ticket from Manila to Guam via Pan Am, for Flight No. 842 on May 27, 1978.
On the day of the flight, Pangan checked in two luggages containing the promotional materials, personal belongings, and other items; he was given baggage claim tickets.

Pangan was informed that his name was not in the economy class manifest; consequently, he took the first class after paying an additional US $112.00 to ensure timely arrival.
Upon arrival in Guam on May 27, 1978, Pangan discovered that his two luggages did not arrive with him.
Due to the loss, the contracts for the exhibition of the films in Guam and the United States were cancelled.

Pangan filed a written claim with Pan Am for the missing luggages.
After no satisfactory response, Pangan filed a complaint against Pan Am for damages.
The trial court found Pan Am liable and awarded damages totaling over P100,000 plus attorney’s fees.
The Intermediate Appellate Court affirmed the trial court’s decision.
Pan Am filed a petition to the Supreme Court assailing the awards made.

Whether the liability of Pan Am for the lost baggage is limited by the provisions on liability stated in the Warsaw Convention and the contract of carriage.
Whether the award of actual damages including lost profits and cancellation of contracts is proper, given the rules on the limitation of liability and consequential damages under Philippine law and precedent.
Whether the award of attorney’s fees is justified under the circumstances.