FACTS

Isidro Co and his wife arrived at Manila International Airport (MIA) aboard PAL flight no. 107 from San Francisco with his 9th luggage missing. The luggage was a Samsonite suitcase worth about US$200.00, containing items worth more than $1,800. Co immediately notified PAL through its employee, Willy Guevarra. Co made several unsuccessful attempts to follow up with PAL’s office regarding his missing luggage. He then sent a demand letter to the manager of PAL’s Central Baggage Services, who apologized as the luggage could no longer be located but made no payment. Consequently, Co sued PAL for damages. The RTC of Pasay City awarded Co P72,766.02 in damages, a decision affirmed in toto by the Court of Appeals (CA). PAL argued that under the Warsaw Convention, its liability, if any, could not exceed US$20.00 based on weight since Co did not declare the contents or pay additional charges before the flight.

ISSUE

Which law shall govern the liability of the common carrier for the loss of goods transported from a foreign country to the Philippines?

RULING

The New Civil Code of the Philippines governs the liability of the common carrier for the loss of goods transported from a foreign country to the Philippines. The Supreme Court, citing Samar Mining Company, Inc. vs. Nordeutscher Lloyd (132 SCRA 529), ruled that the New Civil Code primarily governs such liability, supplemented by the Code of Commerce and special laws in matters not regulated by the Civil Code. Since Co’s destination was the Philippines, Philippine law applies. The Court found that PAL failed to rebut the presumption of negligence under Articles 1733, 1735, and 1753 of the Civil Code, and acted in bad faith by faking a retrieval receipt. Thus, PAL was liable beyond the Warsaw Convention’s limit due to its negligence and bad faith.