PHILIPPINE AIRLINES, INC., PETITIONER, VS. THE INTERMEDIATE APPELLATE COURT, GEORGE LORENZANA AND VERONICA G. LORENZANA, RESPONDENTS.

According to the court of origin, petitioner’s liability for the
missing luggage owned by private respondent can be attributed to the
non-delivery thereof to the Pan Am Office in Tokyo after it was received by
petitioner’s office at the Manila International Airport (Page 11, Record on
Appeal; Page 38, Rollo). Both
petitioner and Pan American World Airways, Inc. appealed the adverse finding
but the First Civil Cases Division of the then Intermediate Appellate Court, (P.J.
Gaviola, Caguioa (P), Quetulio­-Losa, Ines-Luciano, JJ.), was far from
persuaded.

The decretal portion rendered by the appellate court which
petitioner impugns via the petition for certiorari before Us
reads:

“WHEREFORE, No. 1 of the dispositive portion of the judgment
of the trial court, dated January 31, 1979 is hereby modified so as to read:

1) Ordering
defendants, jointly and severally, to pay plaintiffs as actual damages the sum
of $5,000 or its equivalent in Philippine currency computed according to the
rate of exchange of the date of the promulgation of this decision, with
interest thereon at the legal rate of 12% per annum from the date of the filing
of the complaint until the amount of this judgment is fully paid.

The rest of the dispositive portion from pars. 2 to par. 5 are
hereby affirmed.” (Page 14,
Decision; Page 53, Rollo)

Before boarding petitioner’s airplane on August 4, 1974 for their
business sojourn from Manila to Honolulu via Tokyo, private respondents,
the spouses George and Veronica Lorenzana, checked in two pieces of baggage for
which they were given baggage claim tickets. George’s personal effects and some of Veronica’s things were in one
baggage while the other luggage contained Veonica’s other personal items and
samples of women’s apparel intended to be shown to prospective customers in
America and Canada. On the
Tokyo-Honolulu leg, they changed planes from PAL to Pan Am. When they arrived in Honolulu, only the
luggage containing George’s personal effects was located. Efforts exerted to report and claim the
missing bag were futile and instead, private respondents were requested to
follow-up the matter during their stay in Honolulu.

After staying in Honolulu for three days, without the missing
luggage being delivered to them, George and Veronica decided to fly to Los
Angeles where they stayed for more than a week before leaving for San Francisco
where they spent two days. Thereafter,
the couple proceeded to Vancouver and Toronto, Canada and returned to Manila on
September 24, 1974.

It was sometime in April, 1975 when the couple was informed that
the luggage was located and on December 5, 1975, the luggage was finally
delivered to them. It turned out that
the missing luggage was not turned over by the employees of the Philippines
Airlines to the Pan Am Office in Tokyo and that the baggage was returned to
Manila on September 16, 1974.

In the suit for breach of contract, Pan Am interposed the defense
that it did not receive the baggage from the Philippine Airlines. For its part, PAL admitted that it failed to
deliver one of the pieces of luggage at the destination of private respondents
in the United States and during the entire trip (paragraph 6, Answer). Nevertheless, it proferred the excuse that
private respondents omitted to retrieve the bag after George was informed of
its discovery and that at any rate, the carrier’s liability under the Warsaw
Convention is limited, in the absence of a declaration from the passenger, of a
higher value (paragraph 15, Answer).

After due hearing, the trial court pronounced petitioner
accountable for the non-delivery mainly due to its frank representation that it
breached the contract with private respondents (Page 4, Decision; page 38,
Record on Appeal). On the other hand,
the appellate court relied more on the presumption of culpa which
neither PAL nor Pan Am was able to overcome by the requisite quantum of
evidence. Regarding the exculpation
raised by petitioner premised on the caveat under the Warsaw Convention,
respondent court expressed the view that the proviso which concerns limited
culpability for damage, loss or delay in transportation of the goods is
inapplicable since the bag was not delivered to private respondent during the
whole trip.

On the expenses incurred by private respondents, the appellate
court sustained the claim of $5,000 asserted by private respondent George
Lorenzana on the witness stand representing the cost of the tickets and
travelling expenses, in default of any evidence to the contrary. The so-called unrealized income was
perceived as speculative while the trial court’s refusal to grant moral and
exemplary damages was affirmed by the reviewing authority.

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 (paragraph 6, Answer; Article
1431, new Civil Code; Section 4, Rule 129; Section
2(a), Rule 131, Revised Rules on Evidence). 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” (Page 12,
Petition; Page 23, Rollo) 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 to send
and deliver a message.” (Balduin vs. U.S., Tel.
Co., N.Y., 54 Barb. 505, 512, 6 Abb. Prac. N.S., 405, 423; 11-A
Words and Phrases, Permanent Edition, 1971, page 414).

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. (Page 10, Memorandum; Page 133, Rollo). This process of exclusion typifies the
classic fallacy of non-sequitur because the fact of the matter is that
the missing luggage was not over by the employees of petitioner to the Pan Am
Office in Tokyo and was returned to Manila on September 16, 1974 (Page 3,
Decision in Civil Case No. 103684; Page 38, Record on Appeal). 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 the 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
traveling 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 (2
Regalado, Remedial Law Compendium, Sixth Revised Edition, 1989, page
553). 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 (1 Regalado, Remedial Law Compendium, Fifth
Revised Edition, 1988, page 53; Universal Motors Corporation
vs. Court of Appeals (205 SCRA 448; 455
[1992]). 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 the
decision of the respondent court AFFIRMED, with costs against petitioner.

SO ORDERED.

Gutierrez, Jr., (Chairman), Bidin, Davide, Jr., and Romero, JJ., concur.