Ong Yiu v. CA Digest

21 Ong Yiu v.
CA
No. L-40597 (29 June 1979)
Melencio-Herrera, J. / tita K
Subject Matter: Common Carrier; Common Carriage of Goods; Agreement Limiting Liability; As to amount of liability
Summary:
Ong Yiu’s boarded PAL Cebu bound for Butuan. Upon reaching Butuan, his checked-in luggage cannot be located. PAL
Butuan reported the loss to PAL Cebu within one hour from discovery. It was then communicated to PAL Manila which
discovered that the said baggage was overcarried to Manila. The luggage was delivered to Ong Yiu the next day,
however it was already opened and some documents were missing. He filed a complaint for damages. CA did not award
moral nor exemplary damages. CA however awarded Ong Yiu P100 which was the limited liability indicated in the claim
ticket. THE SC affirmed CA and ruled that the provision in a ticket providing limited liability is a contract of adhesion
which Ong Yiu consented to by adhereing to it.
Doctrines:
 A Contracts of adhesion where one party imposes a ready made form of contract on the other, as the plane ticket in
the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject
it entirely; if he adheres, he gives his consent.
Parties:
Petitioner Agustino B. Ong Yiu (Ong Yiu/Petitioner)
Respondent Court of Appeals and Philippine Air Lines, Inc. (PAL)
Facts:
August 26, 1967 Petitioner took a PAL flight (1:00PM) from Mactan Cebu bound for Butuan City. He was scheduled to
attend trials on August 28-31, 1967 in the said City.
Ong Yiu checked in one piece of luggage, a blue “maleta” for which he was issued a claim check.
However, when the plane arrived at Bancasi Airport, Butuan City at past 2:00 PM, his luggage could
not be found.
At 3:00 PM, PAL Butuan sent a message to PAL Cebu inquiring about the missing baggage, then PAL
Cebu Transmitted the message to PAL Manila.
PAL Manila advised PAL Cebu that the luggage had been overcarried to Manila and that it would be
forwarded to Cebu on the same day. PAL Cebu then sent a message to PAL Butuan that the luggage
will be forwarded the following day.
August 27, 1967 Ong Yiu went to Bancasi Airport to inquire about the missing baggage. However, he did not wait and
so when the flight carrying the missing luggage arrived, Ong Yiu had already left.
A certain Dagorro, a colorum car driver who use d to drive for Ong Yiu, volunteered to take the
luggage to Ong Yiu. When the porter clerk gave the luggage to him, Dagorro then examined the
lock, pressed it and it opened.
When Dagorro delivered the “maleta” to petitioner, he informed the latter that the lock was open.
Petitioner found that a folder containing certain exhibits, transcripts and private documents for his
case (yung for trial) were missing, aside from two gift items for his parents-in-law.
Meanwhile, petitioner asked for postponement of the hearing of the civil case due to the said loss of
his documents.
August 28, 1967 Petitioner returned to Cebu. He demanded that his luggage be produced intact, and that he be
compensated P250k for actual and moral damages.
Sept. 13, 1967 Petitioner filed a complaint against PAL for damages of breach of contract of carriage.
CFI – found PAL to have acted in bad faith and with malice; petitioner is entitiled to P80k moral damages and P30k
exemplary damages.
CA – found PAL guilty of SIMPLE NEGLIGENCE ONLY, reversed CFI; ordered PAL to pay Ong Yiu P100, the baggage
liability assumed by it under the condition of carriage printed at the back of the ticket.
Issue/s:
1. WON there was gross negligence on the part of PAL . (NO)

2. WON Ong Yiu is entitled to moral and exemplary damages. (NO)
3. WON PAL should pay P100 only to compensate Ong Yiu. (YES)
Ratio:
No – There was NO gross negligence on the part of PAL.
 Bad faith means a breach of a known duty through some motive of interest or ill will.
o It was PAL’s duty to look for petitioner’s luggage which had been done. PAL exerted due diligence in
complying with such duty.
o SC agreed with CA’s finding that no bad faith on PAL’s part because:
 PAL Butuan communicated the loss to PAL Cebu in less than an hour after Ong Yiu’s luggage
cannot be located.
 Cebu also immediately relayed the information to PAL Manila.
 Upon discovery that the luggage was overcarried to Manila, it was sent bag to Cebu in the
afternoon of the same day.
Yes – Petitioner is not entitled to moral and exemplary damages, but is entitled to P100
 In absence of a wrongful act or ommission or of fraud or bad faith, petitioner is not entitled to moral damages.
 Petitioner is neither entitiled to exemplary damages.
 In contracts, as provided for in Article 2232 of the Civil Code, exemplary damages can be granted if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner, which has not been
proven in this case.
Yes – PAL should pay Ong Yiu P100.
Petitioner’s Argument:
Petitioner contends that respondent Court committed grave error when it limited PAL’s carriage liability to the amount
of P100.00 as stipulated at the back of the ticket. In this connection, respondent Court opined:
Ratio:
 SC agreed with CA that:

“As a general proposition, the plaintiff’s maleta having been pilfered while in the custody of the defendant, it is
presumed that the defendant had been negligent. The liability, however, of PAL for the loss, in accordance with
the stipulation written on the back of the ticket, is limited to P100.00 per baggage plaintiff not having declared
a greater value, and not having called the attention of the defendant on its true value and paid the tariff
therefor. The validity of this stipulation is not questioned by the plaintiff. They are printed in reasonably and
fairly big letters, and are easily readable. Moreover, plaintiff had been a frequent passenger of PAL from Cebu to
Butuan City and back, and he, being a lawyer and businessman, must be fully aware of these conditions.”
o The pertinent Condition of Carriage printed at the back of the plane ticket reads:
“8. BAGGAGE LIABILITY . . . The total liability of the Carrier for lost or damaged baggage of the
passenger is LIMITED TO P100.00 for each ticket unless a passenger declares a higher valuation in
excess of P100.00, but not in excess, however, of a total valuation of P 1,000.00 and additional
charges are paid pursuant to Carrier’s tariffs.”
o Petitioner did not declare any higher value for his luggage, much less did he pay any additional
transportation charge.
o While it may be true that petitioner had not signed the plane ticket, he is nevertheless bound by the
provisions thereof. The provision is valid and binding regardless of Ong Yiu’s lack of knowledge or
assent.
 It is a contract of “adhesion”. Contracts of adhesion where one party imposes a ready made form of contract on
the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to
the contract is in reality free to reject it entirely; if he adheres, he gives his consent. A contract limiting liability
upon an agreed valuation does not offend against the policy of the law forbidding one from contracting against
his own negligence.”
o Considering, therefore, that petitioner had failed to declare a higher value for his baggage, he cannot be
permitted a recovery in excess of P100.00.
WHEREFORE, for lack of merit, the instant Petition is hereby denied, and the judgment sought to be reviewed hereby
affirmed in toto.

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21 Ong Yiu v.

1. WON there was gross negligence on the part of PAL . (NO)

No – There was NO gross negligence on the part of PAL.

Yes – PAL should pay Ong Yiu P100.

 SC agreed with CA that:

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