August 11, 1988
Ponente: Cortes, J.
Topic: Actual
or compensatory damages
FACTS:
·
Rene Pangan, president and general manager of
Sotang Bastos and Archer Production, entered into two agreements:
o
The first agreement, signed on April 25, 1978,
with Primo Quesada of Prime Films, was for the exhibition of three films in San
Francisco, CA at US$2,500 per picture. The three movies were: "Ang Mabait,
Masungit at ang Pangit," "Big Happening with Chikiting and
Iking," and "Kambal Dragon." Part of the agreement was that
Sotang Bastos and Archer Production (through Pangan) would be providing the
necessary promotional and advertising materials for said films on or before May
30, 1978.
o
The second agreement (verbal agreement) was
made in Guam with Leo Slutchnick of the Hafa Adai Organization. The agreement
provided for the exhibition of two of the three films in the previous contract
at the Hafa Adai Theater in Guam on May 30, 1978 at P7,000 per picture. Pangan
also undertook to provide the necessary promotional and advertising materials
for said films on or before the exhibition date on May 30, 1978.
·
By virtue of the two agreements, Pangan caused
the preparation of the required promotional handbills and still pictures for
which he paid the total sum of P12,900.00. In preparation for his trip and to
comply with his contracts, he also bought fourteen clutch bags, four capiz lamps
and four barong tagalog, with a total value of P4,400.00.
·
On May 18, 1978, Pangan obtained from Pan Am's
Manila Office, through a travel agency called Your Travel Guide, an economy
class airplane ticket for passage from Manila to Guam.
·
On May 27, 1978, two hours before departure
time, Pangan was at the Pan Am's ticket counter at the Manila International
Airport and presented his ticket and checked in his two luggages, for which he
was given baggage claim tickets. The two luggages contained the promotional and
advertising materials, the clutch bags, barong tagalog and his personal
belongings.
·
Subsequently, Pangan was informed that his
name was not in the manifest and so he could not take Flight No. 842 in the
economy class. Since there was no space in the economy class, he took the first
class because he wanted to be on time in Guam to comply with his commitment,
paying an additional sum of $112.00.
·
Upon arrival in Guam on May 27, Pangan discovered that his luggages did not
arrive with his flight. Consequently, his agreements with Slutchnick and
Quesada for the exhibition of the films in Guam and in San Francisco were
cancelled.
·
Upon his return to the Philippines, Pangan
contacted his lawyer, who made the necessary representations to protest as to
the treatment which he received from the employees Pan Am and the loss of his
two luggages. After Pan Am's failure to take action, Pangan filed an action for
damages against the airline.
·
CFI: Ordered Pan Am to pay P83,000.00
with interest, for actual damages incurred by Pangan's production companies;
P10,000 for attorney's fees; P8,123.34, for additional actual damages with
interest, for damages incurred by Pangan; and costs of the suit. Pan Am's
counterclaim was likewise dismissed.
·
IAC: Affirmed CFI ruling.
·
Hence, the instant petition.
RULING:
Whether
Pan Am is liable for the loss of profits sustained by Pangan as a result of the
cancelled agreements. – NO.
·
The ruling in Mendoza v. PAL stands: "Under Art.1107 of the Civil Code, a
debtor in good faith may be held liable only for damages that were foreseen or
might have been foreseen at the time the contract of transportation was entered
into."
·
In the instant case, Pan Am was neither privy
to Pangan's agreements nor was its attention called to the condition requiring
delivery of the promotional and advertising materials contained in the luggage
on or before May 30, 1978.
·
The US case of Chapman v. Fargo, L.R.A. (1918) is on all fours with the present
case: In Troy, New York, Chapman delivered motion picture films to the
defendant Fargo, an express company, consigned and to be delivered to him in
Utica. At the time of shipment the attention of the express company was called
to the fact that the shipment involved motion picture films to be exhibited in
Utica, and that they should be sent to their destination, rush. There was delay
in their delivery and it was found that Chapman, because of his failure to
exhibit the film in Utica due to the delay, suffered damages or loss of
profits. But the highest court in the State of New York refused to award him
special damages. The Court held:
But before defendant could be held to special damages, such as the present alleged loss of profits on account of delay or failure of delivery, it must have appeared that he had notice at the time of delivery to him of the particular circumstances attending the shipment, and which probably would lead to such special loss if he defaulted. Or, as the rule has been stated in another form, in order to purpose on the defaulting party further liability than for damages naturally and directly, i.e., in the ordinary course of things, arising from a breach of contract, such unusual or extraordinary damages must have been brought within the contemplation of the parties as the probable result of breach at the time of or prior to contracting. Generally, notice then of any special circumstances which will show that the damages to be anticipated from a breach would be enhanced has been held sufficient for this effect.
·
As applied in the instant case, in the absence
of a showing that Pan Am's attention was called to the special circumstances
requiring prompt delivery of Pangan's luggages, Pan Am cannot be held liable
for the cancellation of Pangan's contracts as it could not have foreseen such
an eventuality when it accepted the luggages for transit. In fact, the evidence
reveals that the proximate cause of the cancellation of the contracts was
Pangan's failure to deliver the promotional and advertising materials on the
dates agreed upon. For this Pan Am cannot be held liable.
Whether
Pan Am is liable for the value of Pangan's missing luggages beyond the baggage
liability limitation stipulated in the airline ticket. – NO.
·
The back of the ticket provides a baggage
liability limitation clause, which states that:
Liability for loss, delay, or damage
to baggage is limited as follows unless a higher value is declared in advance
and additional charges are paid: (1)for most international travel (including
domestic portions of international journeys) to approximately $9.07 per pound
($20.00 per kilo) for checked baggage and $400 per passenger for unchecked
baggage: (2) for travel wholly between U.S. points, to $750 per passenger on
most carriers (a few have lower limits). Excess valuation may not be declared
on certain types of valuable articles. Carriers assume no liability for fragile
or perishable articles. Further information may be obtained from the carrier.
·
On the basis of such stipulation, Pan Am's
liability for the lost baggage of Pangan is limited to $600.00 ($20.00 x 30
kilos) as the latter did not declare a higher value for his baggage and pay the
corresponding additional charges.
·
Court's ruling in Ong Yiu v. CA is applicable in the present case. "Considering
that petitioner had failed to declare a higher value for his baggage, he cannot
be permitted a recovery in excess of [the limited liability of PAL]."
·
Court's ruling in Shewaram v. PAL is not applicable in the present case: "The
ruling in [Shewaram] was premised on
the finding that the conditions printed at the back of the ticket were so small
and hard to read that they would not warrant the presumption that the passenger
was aware of the conditions and that he had freely and fairly agreed thereto.
In the instant case, similar facts that would make the case fall under the
exception have not been alleged, much less shown to exist."
·
The IAC also misread SC's ruling in Northwest Airlines, Inc. v. Cuenca:
" the Court never intended to, and in fact never did, rule against the
validity of provisions of the Warsaw Convention. Consequently, by no stretch of
the imagination may said quotation (re: the limited liability of Northwest
Airlines for lost baggage is against public policy) from the case be considered
as supportive of the appellate court's statement that the provisions of the
Warsaw Convention limited a carrier's liability are against public
policy."