Case Digest: Philippine Airlines, Inc. v. Lorenzana, G.R. No. 70481, December 11, 1992
Commercial Laws 2: Common Carriers
Melo, J.
Recit Ver:
On August 4, 1974, George and Veronica Lorenzana checked in two pieces of baggage for their trip from Manila to Honolulu via Tokyo. Upon arriving in Honolulu, only one of the two bags was delivered, and despite reporting the missing luggage, it was not returned to them during their stay in the U.S. and Canada. It was later discovered that the missing bag had not been turned over by PAL to Pan Am in Tokyo and had been sent back to Manila on September 16, 1974. The luggage was finally delivered to the Lorenzanas on December 5, 1975, more than a year after their trip.
The Lorenzanas filed a suit for breach of contract against PAL and Pan Am. Pan Am argued it never received the luggage, while PAL admitted its failure to deliver the baggage but claimed the Lorenzanas did not retrieve it after being notified. PAL further argued that their liability was limited under the Warsaw Convention. The courts rejected PAL's defense, ruling that the baggage was never delivered for the entire trip, and therefore, the limited liability under the Warsaw Convention did not apply. The court upheld damages of $5,000 to the Lorenzanas for their travel expenses.
Facts:
On August 4, 1974, private respondents George and Veronica Lorenzana checked in two pieces of baggage at the Manila International Airport for their trip from Manila to Honolulu via Tokyo.
One bag contained George's personal effects, while the other held Veronica's personal items and samples of women’s apparel for business purposes in America and Canada.
The Lorenzanas changed planes from Philippine Airlines (PAL) to Pan American World Airways (Pan Am) in Tokyo for the Tokyo-Honolulu leg of the journey.
Upon arrival in Honolulu, only one bag, containing George's personal effects, was delivered.
The couple reported the missing luggage but were asked to follow up during their stay in Honolulu.
After staying in Honolulu for three days, the Lorenzanas traveled to Los Angeles, Vancouver, and Toronto, Canada, without receiving the missing bag.
On September 24, 1974, the Lorenzanas returned to Manila without their missing luggage.
On September 16, 1974, it was discovered that the missing luggage was not turned over by the employees of the Philippines Airlines to the Pan Am Office in Tokyo and had been returned to Manila.
In April 1975, the Lorenzanas were informed that the luggage had been located.
On December 5, 1975, the missing luggage was finally delivered to the Lorenzanas.
Lorenzanas filed an action for breach of contract against PAL and Pan Am.
Pan Am claimed it never received the baggage from PAL.
PAL admitted it failed to deliver one of the pieces of luggage to the Lorenzanas during their entire trip.
However, PAL argued that the Lorenzanas did not retrieve the bag after being informed of its discovery and that its liability was limited under the Warsaw Convention without a higher value declaration from the passengers.
Trial Court: Held PAL accountable for the non-delivery, based on its own admission of breaching the contract.
Actual Damages: $5,000
IAC: Affirmed the trial court’s ruling with modification.
Ordering both defendants to pay $5,000 as actual damages, with 12% interest per annum from the filing date until full payment.
Issues:
Whether Philippine Airlines (PAL) and Pan Am can be held liable for the non-delivery of the baggage, despite PAL’s defense that the delay was due to private respondents not retrieving the luggage. YES
Whether PAL's limited liability under the Warsaw Convention applies in the case of non-delivery of baggage. NO
Whether private respondents are entitled to actual damages for the frustration of their trip, specifically the $5,000 claim for travel expenses and the loss of potential income from missed business opportunities. YES
Whether the award of attorney’s fees was appropriate. YES
Whether the award of $5,000 in damages violates the Uniform Currency Act, which requires payment in Philippine currency. YES
In the petition at bar, petitioner ascribes five errors which were supposedly committed by the appellate court yet, a serious study of the different angles for possible reversal fails to muster the desired conclusion.
Petitioner begins with the hypothesis that it is private respondents who should be faulted for the alleged "delay in delivery" because an appreciable length of time elapsed from the moment they were informed of the whereabouts of the bag until an effort was exerted to retrieve it. However, an argument of this nature, which springs from petitioner's incongruous interpretation of "delay", is far from persuasive, since it is designed to toss the onus probandi on the admitted fact of non-delivery by the carrier to the passenger's shoulders. To be sure, it was ingeniously crafted for the purpose of extricating petitioner from the fatal aftermath of its admission in judicio for it was explicitly stated in its Answer that petitioner failed to deliver the baggage to private respondents during the entire length of the trip. Indeed, petitioner is quite candid in conceding at this stage that "the baggage was meant to travel with respondents Lorenzanas all the way until their return to Manila" which stance is enough to negate petitioner's concept of delay. By parity of reasoning:
"Delay", as used in a contract exempting a telegraph company from all liability for any delay, error, or remissness in sending a message, implies that the message was or would be sent at some time, but not sent or delivered promptly, and the company is not exempt from liability for a total failure to send and deliver a message.
To bring the case within the ambit of the limited liability clause for loss, damage, or delay under Article 22 in conjunction with the second paragraph of Article 26 of the Warsaw Convention, petitioner is inclined to construe its accountability by arguing that the missing bag was merely delayed. Petitioner is categorical in its disputation that since the bag was neither lost nor damaged, the baggage was merely delayed, hence the caveat must perforce apply. This process of exclusion typifies the classic fallacy of non-sequitur because the fact of the matter is that the missing luggage was not turned over by the employees of petitioner to the Pan Am Office in Tokyo and was returned to Manila on September 16, 1974. Still worse, the luggage was not forthwith delivered to private respondents who returned from their trip to the U.S. and Canada on September 24, 1974. It was not until more than a year thereafter, or on December 5, 1975, when the luggage was finally delivered to private respondents. There is thus no occasion to speak of delay since the baggage was not delivered at all to the passenger for purposes of the trip in contravention of a common carrier's undertaking to transport the goods from the place of embarkation to the ultimate point of destination. In point of law, petitioner cannot therefore ascribe an alleged reversible error on the part of respondent court for adhering to the pronouncement of this Court in Northwest Airlines, Inc. vs. Cuenca (14 SCRA 1063 [1965]) when the exculpatory clauses raised by the common carrier therein, predicated on the limited liability provisions under the Warsaw Pact, were brushed aside in this manner:
Petitioner argues that pursuant to those provisions, an air "carrier is liable only" in the event of death of a passenger or injury suffered by him, or of destruction or loss of, or damage to any checked baggage or any goods, or of delay in the transportation by air of passengers, baggage or goods. This pretense is not borne out by the language of said Articles. The same merely declare the carrier liable for damages in the enumerated cases, if conditions therein specified are present. Neither said provisions nor others in the aforementioned Convention regulate or exclude liability for other breaches of contract by the carrier. Under petitioner's theory, an air carrier would be exempt from any liability for damages in the event of its absolute refusal, in bad faith, to comply with a contract of carriage, which is absurd. (at p. 1065).
Petitioner argues next that the award of damages is bereft of factual foundation. But the record in the court of origin, as synthesized by respondent court, reflects the bases for entitlement thereto:
Plaintiffs' stand on actual damages is sustained by the law and the evidence. Because of the non-delivery of the luggage during the entire length of plaintiffs' stay abroad, the entire purpose of their trip was frustrated. This conclusion is borne by the testimonies of plaintiffs who declared without contradiction that plaintiff Veronica G. Lorenzana was not able to promote the sale of her ready made dresses through outlets in the United States and Canada to whom plaintiffs have been supplying Philippine food products (pp. 19-20, tsn., Feb. 16, 1977; pp. 4 and 11, tsn., March 4, 1977), resulting in loss to plaintiff of an expected profit estimated at US $14,000.00 (p. 26, tsn., Dec. 10, 1976). It has been proven, too, by the declaration of plaintiff George Lorenzana that they spent US $5,000.00 for their round trip tickets and other travelling expenses (p. 26, Id.). Computed at the exchange rate of P7.43 to US $1.00, which appears to be accepted by the parties as the prevailing rate when the loss of business income occurred, the actual damages sustained by plaintiffs would amount to P141,170.00 in Philippine Currency. (Page 9, Decision; Page 48, Rollo)
The belated notion advanced by petitioner relative to the absence of credibility on the part of private respondents along this line is also devoid of substance because the conclusion drawn by the trial court as a result of assigning values to narrations at the witness stand command great respect. It has been repeatedly emphasized in adjective law that a factual query similar to the challenge posed by petitioner is proscribed by and is anathema to the second paragraph of Section 2, Rule 45 of the Revised Rules of Court, absent any convincing demonstration from petitioner of an exceptional circumstance that could have justified deviation from the rule. And because of these precepts, petitioners may not likewise assail the award of attorney's fees which respondent court deemed appropriate to uphold.
Lastly, contrary to the opinion expressed by petitioner concerning the pronouncement made by respondent court in requiring petitioner to pay damages in the sum of $5,000.00, We believe and so hold that there was no transgression of the Uniform Currency Act since, assuming that Republic Act No. 529, as amended, applies, the obligation itself is still valid to be discharged by payment in legal tender (Vitug, Pandect of Commercial Law and Jurisprudence, Revised Edition, 1990, page 72) which was what respondent court did in requiring petitioner to pay the $5,000.00 or its equivalent in Philippine Currency.
WHEREFORE, the petition is hereby DISMISSED, and decision of the respondent court AFFIRMED, with costs against petitioner.
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