G.R. No.

92501 March 6, 1992

PHILIPPINE AIR LINES, petitioner,

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 embarking (sic), plaintiff proceeded to the baggage retrieval area to
claim his checks in his possession. Plaintiff found eight of his luggage, but despite diligent search,
he failed to locate 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 the 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
after asking plaintiff himself to sign the same document (Exh. "A-2"). In accordance with this
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 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 plaintiffs 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 no avail. Thus, on April 15, 1985, plaintiff through his
lawyer wrote a demand letter to defendant company though 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;

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.

1. in affirming the conclusion of the trial court that the petitioner's retrieval baggage report was a
fabrication;
2. in not applying the limit of liability under the Warsaw Convention which limits the liability of an
air carrier of 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 traditional 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 Ins. Co., Inc. vs.
Royal Oil Products, 102 Phil. 326, this Court justified the grant of exemplary damages and attorney's fees to 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.