Case Summary (G.R. No. 215305)
Key Dates
Travel: May–June 1988 (travel to and from U.S.).
Confirmed bookings obtained: June 19, 1988.
Flight PR 101 San Francisco–Manoa via Honolulu: June 21, 1988 (arrived Manila June 23, 1988).
Baggage delayed/arrived in Manila: June 24, 1988 (causing missed connections).
Mirandas reached Surigao: June 26, 1988.
Trial court judgment and subsequent appeal: record shows trial and appellate proceedings; final Supreme Court decision: May 17, 1996.
Applicable Law and Legal Framework
Constitutional framework: 1987 Philippine Constitution (decision rendered in 1996).
Civil Code provisions invoked by the courts: Articles 2208, 2220 and 2232 (as applied by the lower courts and the Court of Appeals in awarding moral/exemplary damages and attorney’s fees).
International instrument invoked by petitioner: Warsaw Convention (treaty limiting carrier liability for international carriage) and the contract of carriage (ticket terms limiting baggage liability to US$20.00 per kilo unless higher declared).
Relevant judicial principles cited in the record: contractual carriage imposes a public duty on carriers; bad faith by carrier or employees justifies moral and exemplary damages and attorney’s fees; factual findings on bad faith are ordinarily binding on appellate and supreme courts.
Factual Chronology Relevant to Liability
Drs. Miranda traveled on PAL with confirmed bookings for a multi-leg itinerary. On PR 101 the Mirandas’ five pieces of baggage were loaded in San Francisco but were off‑loaded in Honolulu allegedly for “weight limitations.” The off‑loading caused the Mirandas to miss their Manila–Cebu and Cebu–Surigao connections. Their baggage arrived later and then, while in Cebu, their onward flight was cancelled twice (one due to mechanical problems). PAL initially refused accommodation at the Mirandas’ preferred hotel, later agreed to hotel and standard meals, and offered P150 for transportation; Mirandas requested an additional P150 justified by multiple pieces of luggage and tipping needs, and declined PAL’s offer when it refused. PAL later loaded the Mirandas’ baggage on an earlier PAL flight to Surigao while the Mirandas were still in Cebu, so they reached Surigao without their baggage until later. The Mirandas sued for damages; the trial court awarded moral damages (P100,000), exemplary damages (P30,000), attorney’s fees (P10,000), and costs. The Court of Appeals affirmed; PAL sought review.
Issues Presented on Review
- Whether the awards for moral and exemplary damages and attorney’s fees were proper in the absence of bad faith on PAL’s part.
- Whether the Warsaw Convention and the ticket’s stipulated baggage-liability limitation (US$20 per kilo) precluded recovery beyond that limit for the Mirandas’ claims arising from delayed delivery and other treatment.
PAL’s Principal Defenses and Explanations
PAL accepted delay but justified off‑loading by weight limitations, asserting operational and safety considerations (flight distance, weather, fuel, runway conditions). PAL characterized subsequent mishandling as inadvertent negligence caused by multiple disruptions. PAL also relied on the contract of carriage and the Warsaw Convention to limit liability for delayed baggage to the monetary cap stated on the tickets, and argued absence of bad faith precluded moral/exemplary damages and attorney’s fees.
Trial Court and Court of Appeals Findings on Facts and Bad Faith
Both the trial court and the Court of Appeals found that the Mirandas’ baggage were properly loaded in San Francisco and were off‑loaded in Honolulu in preference to newly loaded containers there—an act established by the testimony of PAL’s baggage representative. The courts regarded this preferential treatment and the manner of execution (lack of timely notice, mishandling in Cebu, misleading responses about hotel accommodations, and loading baggage ahead of the passengers) as arbitrary, oppressive and indicative of bad faith on the part of the carrier or its employees. The courts found the cumulative conduct caused humiliation, frustration and mental anguish to the Mirandas, and justified awards for moral and exemplary damages and attorney’s fees.
Standard of Review Applied by the Supreme Court
The Supreme Court adhered to the settled rule that findings on factual issues—such as whether bad faith exists—are questions of fact and are entitled to great weight; the Court will not disturb the factual findings of the trial court and the Court of Appeals unless exceptional grounds appear. The Court therefore accepted the lower courts’ factual conclusions regarding bad faith and mistreatment.
Legal Basis for Moral and Exemplary Damages and Attorney’s Fees
The Court relied on established doctrine (as reflected in the record) that a contract of air carriage imposes a public duty; discourteous or unfaithful conduct by carrier employees toward passengers supports damages claims, and moral damages are recoverable when bad faith, fraud or willful misconduct is proved. Exemplary damages may be awarded where the defendant acted wantonly, recklessly, oppressively or fraudulently. Attorney’s fees may be awarded in damages where bad faith is found. The courts concluded that the acts here—arbitrary off‑loading giving preference to Honolulu cargo, misleading or withholding information about hotel accommodations, negligent rerouting of baggage and the inadequate and parsimonious cash assistance—collectively amounted to bad faith or willful misconduct that justified the awards.
Warsaw Convention and Contract Limitations: Applicability and Limits
PAL asserted the Warsaw Convention and ticket conditions limiting baggage liability to US$20 per kilo. The trial court and the Court of Appeals rejected the idea that those instruments barred recovery for the Mirandas’ claims arising from discriminatory off‑loading, bad faith and attendant mental anguish. The courts reasoned that Articles 17–19 of the Warsaw Convention declare carrier liability for enumerated cases and under specified limitations, but they do not purport to be an exhaustive or exclusive regime that excludes liability for other breaches of the contract of carriage under local law—particularly where willful misconduct or bad faith by carrier employees is established. The Supreme Court affirmed that view a
...continue readingCase Syllabus (G.R. No. 215305)
Procedural History and Relief Sought
- Petition for review on certiorari filed by Philippine Airlines, Inc. (PAL) challenging the decision of the Court of Appeals in CA-G.R. CV No. 29147.
- The Court of Appeals had affirmed the trial court judgment in Civil Case No. 105 (Regional Trial Court, Branch 32, Surigao City, per Judge Diomedes M. Eviota).
- Trial court judgment ordered PAL to pay: P100,000.00 as moral damages; P30,000.00 as exemplary or corrective damages; P10,000.00 as attorney's fees; and costs.
- PAL’s petition raised two principal questions: (1) whether the Court of Appeals erred in applying Articles 2220, 2232 and 2208 of the Civil Code to sustain awards for moral and exemplary damages and attorney’s fees despite absence of bad faith; and (2) whether the Court of Appeals erred in not applying the express provisions of the contract of carriage and the Warsaw Convention limiting liability to US$20.00 per kilo of baggage.
Facts — Travel itinerary, baggage, delays and accommodations
- In May 1988 Dr. Josefino Miranda and his wife Luisa, residents of Surigao City, travelled to the United States on a regular PAL flight.
- On June 19, 1988 they obtained confirmed bookings from PAL’s San Francisco office for the following flights and dates:
- PR 101 San Francisco to Manila via Honolulu on June 21, 1988;
- PR 851 Manila to Cebu on June 24, 1988;
- PR 905 Cebu to Surigao on June 24, 1988.
- On June 21, 1988 the Mirandas boarded PR 101 in San Francisco with five pieces of baggage: two balikbayan boxes, two pieces of luggage, and one fishing rod case.
- After a stopover in Honolulu and upon arrival in Manila on June 23, 1988 PAL personnel informed the Mirandas that their baggage had been off‑loaded at Honolulu due to weight limitations.
- As a result of baggage off‑loading in Honolulu, the Mirandas missed their scheduled Manila–Cebu connecting flight and consequently their Cebu–Surigao connecting flight; their baggage arrived the following day, June 24, 1988.
- The Mirandas departed for Cebu on June 25, 1988 and transferred to PAL Flight 471 for Surigao City; en route the pilot announced return to Mactan Airport due to mechanical problem; passengers were given lunch and rebooked for an afternoon flight which was subsequently canceled.
- Finding no more flights to Surigao that day, the Mirandas requested billeting at Cebu Plaza Hotel (their usual hotel in Cebu), but PAL employees initially told them the hotel was fully booked; Dr. Miranda called the hotel and was informed they could be accommodated.
- After insistence PAL agreed to an overnight stay at Cebu Plaza Hotel, with Oscar Jereza, PAL duty manager, approving hotel authority with standard meals; the Mirandas were eventually allowed a la carte meals provided they sign for orders.
- PAL offered P150.00 to include return fare to airport because the shuttle bus had left; Dr. Miranda requested an additional P150.00 because two persons with all their baggage could not be accommodated in just one taxi and for tipping; PAL refused the additional P150.00 and the Mirandas decided not to avail themselves of the offered amenities, voiding the P150.00 voucher and hotel authority.
- When the Mirandas tried to retrieve their baggage they were told it had been loaded on another earlier PAL flight to Surigao City; they proceeded to the hotel without their baggage and remained deprived of their baggage for the rest of the trip.
- The Mirandas finally left on the first PAL flight to Surigao City on June 26, 1988.
- Thereafter they instituted an action for damages which at trial and on appeal was decided in their favor.
Trial Court Findings — bad faith, treatment and proximate cause (quoted and paraphrased)
- The trial court found the off‑loading of the Mirandas’ baggage in Honolulu was the proximate cause of their subsequent inconveniences, including missed connections, social humiliation, wounded feelings, frustration and mental anguish.
- The trial court expressly concluded there was a breach of contract committed in bad faith by PAL:
- It held that the Mirandas had confirmed booking and an assured passage for themselves and their baggage.
- Evidence showed the Mirandas’ baggage were properly loaded and stowed when the plane left San Francisco; the off‑loading to give way to other passengers or cargo was arbitrary and oppressive and amounted to bad faith and malice.
- The trial court quoted and relied on testimony by Edgar Mondejar indicating that preference was given to cargo newly loaded at Honolulu instead of cargo already from mainland USA; the court treated Mondejar’s testimony as an admission of discriminatory off‑loading.
- The trial court found aggravating incidents:
- Poor treatment of the Mirandas by PAL employees during stopover at Mactan Airport;
- PAL’s dubious denial that Cebu Plaza Hotel could accommodate them, contradicted by Dr. Miranda’s phone call;
- The negligent act of sending the Mirandas’ baggage to Surigao while the Mirandas were still in Cebu without adequate explanation.
Relevant testimony from record (Edgar Mondejar Q&A cited by trial court)
- The trial court reproduced the following excerpt from the testimony of Edgar Mondejar (TSN, Feb. 28, 1990, pp. 26–28):
- Q: Before a plane departs, your office will see to it the plane loads the exact weight limitation insofar as the cargoes (sic) and passengers are concerned, is that correct?
- A: Yes.
- Q: And so with the PR 101 flight starting mainland USA, it complied with the weight limitation, passengers and baggages (sic) limitation, is that correct?
- A: Yes.
- Q: In other words the trip from the mainland USA started in Hawaii to off‑load cargoes (sic), you complied with the weight limitation and so on?
- A: Yes.
- Q: But you are saying upon arriving in Honolulu certain containers were off‑loaded?
- A: Yes.
- Q: That would be therefore some containers were off‑loaded to give way to some other containers starting from Honolulu towards Manila?
- A: Yes.
- Q: In other words Mr. Mondejar, preference was given to cargoes (sic) newly loaded at Honolulu instead of the cargoes (sic) already from mainland USA, is that correct?
- A: Yes.
- The trial court treated this testimony as a clear admission by PAL’s witness of facts amounting to a breach of contract in bad faith.
Court of Appeals Findings and Rationale
- The Court of Appeals affirmed the trial court’s factual findings and its conclusions on bad faith and damages.
- The Court of Appeals acknowledged an airline’s prerogative to off‑load baggage to conform with weight limitations for safety, but refused to sanction the motion and manner in which it was carried out in this case.
- It emphasized: it was uncontroverted t