PHILIPPINE AIR LINES, PETITIONER, VS. HON. COURT OF APPEALS AND ISIDRO CO., RESPONDENTS.

This is a petition for review of the decision dated July 19, 1989
of the Court of Appeals affirming the decision of the Regional Trial Court of
Pasay City which awarded P72,766.02 as damages and attorney’s fees to private
respondent Isidro Co for the loss of his checked-in baggage as a passenger of
petitioner airline.

The findings of the trial court, which were adopted by the
appellate court, are:

“At about 5:30 a.m. on April 17, 1985, plaintiff [Co],
accompanied by his wife and son, arrived at the Manila International
Airport aboard defendant airline’s PAL Flight No. 107 from San Francisco,
California, U.S.A. Soon after his
enbarking (sic), plaintiff proceeded to the baggage retrieval area to claim his
nine pieces of checked-in luggage with the corresponding claim checks in his possession. Plaintiff found eight of his luggage, but
despite diligent search, he failed to locate the ninth luggage, with claim
check number 729113 which is the one in question in this case.

“Plaintiff then immediately notified defendant company through
its employee, Willy Guevarra, who was then in charge of the PAL claim counter
at the airport. Willy Guevarra, who
testified during the trial court on April 11, 1986, filled up a printed
form known as a Property Irregularity Report (Exh. ‘A’), acknowledging one of
the plaintiff’s luggages to be missing (Exh. ‘A-1’), and signed it after asking
plaintiff himself to sign the same document (Exh. ‘A-2’). In accordance with his procedure in cases of
this nature, Willy Guevarra asked plaintiff to surrender to him the nine claim
checks corresponding to the nine luggages, i.e., including the one that was
missing.

“The incontestable evidence further shows that plaintiff’s
lost luggage was a Samsonite suitcase measuring about 62 inches in length,
worth about US$200.00 and containing various personal effects purchased by
plaintiff and his wife during their stay in the United States and similar other
items sent by their friends abroad to be given as presents to relatives in the
Philippines. Plaintiff’s invoices
evidencing their purchases show their missing personal effects to be worth
US$1,243.01, in addition to the presents entrusted to them by their friends
which plaintiff testified to be worth about US $500.00 to US$600.00 (Exhs. ‘D,’
‘D-1,’ to ‘D-17;’ tsn, p. 4, July 11, 1985; pp. 5-14, March 7, 1986).

“Plaintiff on several occasions unrelentingly called at
defendant’s office in order to pursue his complaint about his missing luggage
but to no avail. Thus, on April 15,
1985, plaintiff through his lawyer wrote a demand letter to defendant company
through Rebecca V. Santos, its manager, Central Baggage Services (Exhs. ‘B’
& ‘B-1’). On April 17, 1985,
Rebecca Santos replied to the demand letter (Exh. ‘B’) acknowledging ‘that to
date we have been unable to locate your client’s (plaintiff’s) baggage despite
our careful search’ and requesting plaintiff’s counsel to ‘please extend to him
our sincere apologies for the inconvenience he was caused by this unfortunate
incident’ (Exh. ‘C’). Despite the
letter (Exh. ‘C’), however, defendants never found plaintiff’s missing luggage
or paid its corresponding value. Consequently, on May 3, 1985, plaintiff filed his present complaint
against said defendants.” (pp. 38-40, Rollo.)

Co sued the airline for damages. The Regional Trial Court of Pasay City found the defendant airline (now
petitioner) liable, and rendered judgment on June 3, 1986, the dispositive
portion of which reads:

“WHEREFORE, judgment
is hereby rendered sentencing defendant Philippine Airlines, Inc. to pay
plaintiff Isidro Co:

“1) P42,766.02 by way of
actual damages;

“2) P20,000.00 by way of
exemplary damages;

“3) P10,000.00 as
attorney’s fees;

all in addition to the
costs of the suit.

“Defendants’ counterclaim is hereby dismissed for lack of
merit.” (p. 40, Rollo.)

On appeal, the Court of Appeals affirmed in toto
the trial court’s award.

In his petition for review of the Court of Appeals’s decision,
petitioner alleges that the appellate court erred:

1. in affirming the
conclusion of the trial court that petitioner’s retrieval baggage report was a
fabrication;

2. in not applying the
limits of liability under the Warsaw Convention which limits the liability of
an air carrier for loss, delay or damage to checked-in baggage to US$20.00
based on weight; and

3. in awarding private
respondent Isidro Co actual and exemplary damages, attorney’s fees, and costs.

The first and third assignments of error raise purely factual
issues which are not reviewable by this Court (Sec. 2, Rule 45,
Rules of Court). The Court reviews only
questions of law which must be distinctly set forth in the petition. (Hodges vs. People, 68 Phil. 178.) The
probative value of petitioner’s retrieval report was passed upon by the
Regional Trial Court of Pasay City, whose finding was affirmed by the Court of
Appeals as follows:

“In this respect, it is further argued that appellee should
produce his claim tag if he had not surrendered it because there was no baggage
received. It appeared, however, that
appellee surrendered all the nine claim checks corresponding to the nine
luggages, including the one that was missing, to the PAL officer after
accomplishing the Property Irregularity Report. Therefore, it could not be possible for appellee to produce the
same in court. It is now for appellant
airlines to produce the veracity of their Baggage Retrieval Report by
corroborating evidence other than testimonies of their employees. Such document is within the control of
appellant and necessarily requires other corroborative evidence. Since there is no compelling reason to
reverse the factual findings of the lower court, this Court resolves not to
disturb the same.” (p. 41, Rollo.)

Whether or not the lost luggage was ever retrieved by the
passenger, and whether or not the actual and exemplary damages awarded by the
court to him are reasonable, are factual issues which we may not pass upon in
the absence of special circumstances requiring a review of the evidence.

In Alitalia vs. IAC (192 SCRA 9, 18, citing Pan American World
Airways, Inc. vs. IAC, 164 SCRA 268), the Warsaw Convention limiting the carrier’s
liability was applied because of a simple loss of baggage without any improper
conduct on the part of the officials or employees of the airline, or other
special injury sustained by the passengers. The petitioner therein did not declare a higher value for his luggage,
much less did he pay an additional transportation charge.

Petitioner contends that under the Warsaw Convention, its
liability, if any, cannot exceed US $20.00 based on weight as private
respondent Co did not declare the contents of his baggage nor pay additional
charges before the flight (p. 3, tsn, July 18, 1985).

We find no merit in that contention. In Samar Mining Company, Inc. vs. Nordeutscher Lloyd (132 SCRA
529), this Court ruled:

“The liability of the common carrier for the loss, destruction
or deterioration of goods transported from a foreign country to the Philippines
is governed primarily by the New Civil Code. In all matters not regulated by said Code, the rights and obligations of
common carriers shall be governed by the Code of Commerce and by Special
Laws.”

The provisions of the New Civil Code on common carriers are
Articles 1733, 1735 and 1753 which provide:

“Art. 1733. Common
carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods
and for the safety of the passengers transported by them, according to all the
circumstances of each case.”

“Art. 1735. In all
cases other than those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding
article if the goods are lost, destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as required in article 1733.

“Art. 1753. The law of
the country to which the goods are to be transported shall govern the
liability of the common carrier for their loss, destruction or
deterioration.”

Since the passenger’s destination in this case was the
Philippines, Philippine law governs the liability of the carrier for the loss
of the passenger’s luggage.

In this case, the petitioner failed to overcome, not only the
presumption, but more importantly, the private respondent’s evidence, proving
that the carrier’s negligence was the proximate cause of the loss of his
baggage. Furthermore, petitioner acted
in bad faith in faking a retrieval receipt to bail itself out of having to pay
Co’s claim.

The Court of Appeals therefore did not err in disregarding the
limits of liability under the Warsaw Convention.

The award of exemplary damages and attorney’s fees to the private
respondent was justified. In the cases
of Imperial Insurance, Inc. vs. Simon, 122 Phil. 189 and Bert Osmeña and
Associates vs. CA, 120 SCRA 396, the appellant was awarded attorney’s fees
because of appellee’s failure to satisfy the former’s just and valid demandable
claim which forced the appellant to litigate. Likewise, in the case of Phil. Surety and Ins. Co., Inc. vs. Royal Oil
Products, 102 Phil. 326, this Court justified the grant of exemplary damages
and attorney’s fees for the petitioner’s failure, even refusal, to pay the
private respondent’s valid claim.

WHEREFORE, the petition for review is DENIED for lack of
merit. Costs against the petitioner.

SO ORDERED.

Narvasa, C.J., and
Medialdea, J., concur.

Cruz, J., no part.