Saludo vs. Court of Appeals

A common carrier's extraordinary responsibility for goods begins only upon actual physical delivery of the cargo to the carrier, and the issuance of a bill of lading or airway bill creates only a rebuttable presumption of receipt that may be overcome by evidence showing the bill was issued as a booking confirmation rather than as evidence of actual possession and control by the carrier.

Petitioners are the surviving children of Crispina Galdo Saludo, who died in Chicago, Illinois on October 23, 1976. The international shipment of her remains from Chicago to the Philippines involved a chain of service providers: Pomierski and Son Funeral Home prepared and embalmed the body; Continental Mortuary Air Services (CMAS), a national mortuary forwarding service hired by Pomierski, handled all shipping arrangements including flights, transfers, and delivery to the proper air freight terminal; Trans World Airlines (TWA) was designated to carry the remains from Chicago to San Francisco; and Philippine Airlines (PAL) was to carry them from San Francisco to Manila and onward to Cebu. The airway bill was issued by PAL through its agent Air Care International, with Pomierski Funeral Home as shipper and Maria Saludo as consignee. The routing specified TWA Flight 131 from Chicago to San Francisco on October 27, 1976, PAL Flight 107 from San Francisco to Manila on the same date, and PAL Flight 149 from Manila to Cebu on October 29, 1976.

After Crispina Galdo Saludo died in Chicago, Illinois on October 23, 1976, Pomierski and Son Funeral Home prepared her remains for shipment to the Philippines. The funeral home embalmed the body and secured a permit for the disposition of a dead human body on October 25, 1976. On October 26, 1976, at 3:00 p.m., Philippine Vice Consul Bienvenido M. Llaneta sealed the shipping case containing a hermetically sealed casket—airtight and waterproof—at the Pomierski funeral home. On the same date, Pomierski brought the remains to Continental Mortuary Air Services (CMAS) at the Chicago airport. CMAS, a national service used by undertakers throughout the United States, made all necessary arrangements including flights, transfers, and delivery to the proper air freight terminal, and furnished the air pouch in which the casket was enclosed. CMAS booked the shipment with PAL through the carrier's agent, Air Care International, with Pomierski Funeral Home as shipper and Maria Saludo as consignee. PAL Airway Bill No. 079-01180454 was issued, specifying the routing: Chicago to San Francisco on TWA Flight 131 of October 27, 1976, San Francisco to Manila on PAL Flight 107 of the same date, and Manila to Cebu on PAL Flight 149 of October 29, 1976.

Meanwhile, petitioners Maria Salvacion Saludo and Saturnino Saludo, through a travel agent, had been booked with United Airlines from Chicago to California and with PAL from California to Manila. When Maria Saludo learned from the funeral director that the remains were booked with TWA rather than United Airlines, she and her brother changed their reservations to the TWA flight. At the Chicago airport, they watched from the look-out area but saw no body being loaded. Upon inquiry at the TWA counter, they were told there was no body on that flight. Reluctantly, they took the TWA flight after receiving assurance from a cousin that he would look into the matter. Upon arrival in San Francisco at approximately 5:00 p.m., Maria Saludo went to the TWA counter to inquire about her mother's remains but was told the personnel knew nothing about it. She called Pomierski, who immediately contacted CMAS; within ten minutes, CMAS informed him that the remains were on a plane to Mexico City—that there were two bodies at the terminal and they had somehow been switched. CMAS later reported it was sending the remains back to California via Texas.

It emerged that TWA had carried a shipment under PAL Airway Bill No. 079-ORD-01180454 on TWA Flight 603 of October 27, 1976—a flight approximately ten hours earlier than the scheduled TWA Flight 131. TWA delivered or transferred the shipment to PAL at 2:00 p.m. on the same date. However, due to the switching in Chicago, this misshipped cargo was withdrawn from PAL by CMAS at 6:05 p.m. on October 27. The following day, October 28, 1976, the correct shipment containing the remains of Crispina Saludo arrived in San Francisco from Mexico City on board American Airlines. PAL received the body at 7:45 p.m. per the American Airlines Interline Freight Transfer Manifest. The casket, which had been opened in Mexico, was resealed by Crispin F. Patagas for shipment to the Philippines. PAL immediately loaded the remains on its flight for Manila that same evening, and the body arrived in Manila on October 30, 1976—one day after its expected arrival on October 29.

By letter dated December 15, 1976, petitioners' counsel informed TWA of the misshipment, delay, and discourtesy of its employees. A separate letter dated June 10, 1977 was sent to PAL holding it liable for the delay. Both airlines denied liability, prompting petitioners to file a damage suit before the then Court of First Instance of Southern Leyte, praying for actual damages of ₱50,000, moral damages of ₱1,000,000, exemplary damages, attorney's fees, and costs. The trial court dismissed the complaint for lack of evidence, a disposition affirmed in toto by the Court of Appeals, which also denied petitioners' motion for reconsideration. The trial court and appellate court both found that CMAS—not the airline carriers—was responsible for the switching of the caskets at the Chicago airport terminal, and that the airlines could not have detected the error because the casket was hermetically sealed and sealed by the Philippine Vice Consul, giving them no authority or reason to open it for verification.

• Extraordinary Diligence: Petitioners maintained that private respondents received the casketed remains on October 26, 1976, as evidenced by the issuance of PAL Airway Bill No. 079-01180454, and that from that date the carriers were charged with the responsibility to exercise extraordinary diligence, making them liable for the switching of caskets on October 27, 1976.
• Presumption of Negligence: Petitioners argued that since there was no clear evidence establishing CMAS's fault for the mix-up, private respondents were presumably negligent under Article 1735 of the Civil Code and, for failure to rebut such presumption, must be held liable; alternatively, even if CMAS was at fault, whoever brought the cargo to the airport or loaded it on the plane did so as agent of the carriers.
• Contractual Breach: Petitioners contended that TWA, by agreeing to transport the remains on Flight 131, made itself a party to the contract of carriage and violated the express agreement when it shipped the remains on Flight 603, ten hours earlier than scheduled, which compounded or directly caused the switching of the caskets.
• Interpretation of Contracts: Petitioners invoked the rule that written words control printed words in documents, arguing that the typewritten provisions regarding routing and flight schedule on the face of the airway bill should prevail over the printed conditions on the reverse side.
• Tort Liability: Petitioners asserted that since the remains were transported ten hours earlier than scheduled, there was no reason for the carriers' personnel to disclaim knowledge of the arrival or whereabouts of the remains other than sheer arrogance, indifference, and extreme insensitivity, and that as passengers they had the right to be treated with courtesy, respect, kindness, and due consideration.
• Damages: Petitioners insisted on entitlement to actual, moral, and exemplary damages as well as attorney's fees, litigation expenses, and legal interest as a consequence of the delay allegedly caused by wilful contractual breach.

• No Delivery on October 26: Respondent PAL countered that the airway bill was issued on October 26, 1976 merely as a confirmation of the booking for the San Francisco-Manila flight scheduled on October 27, 1976, not as evidence of receipt of the cargo, and that PAL received physical delivery of the body only on October 28, 1976 at 7:45 p.m. in San Francisco.
• No Contractual Breach: Respondent TWA argued that having duly delivered or transferred the cargo to PAL on October 27, 1976 at 2:00 p.m., it faithfully complied with its obligation under the airway bill, and that the airway bill's Condition No. 5 expressly provided that no time was fixed for completion of carriage and that the carrier may without notice substitute alternate carriers or aircraft.
• Reliance on Shipper's Representations: Respondents maintained that TWA had no way of determining the actual contents of the casket since it was hermetically sealed by the Philippine Vice Consul and enclosed in CMAS's air pouch, and that TWA had to rely on the information furnished by the shipper regarding the cargo's content.
• CMAS as Forwarder/Agent of Shipper: Respondents argued that CMAS was hired by the funeral home as a forwarder—an agent of the shipper and not of the carrier—and that the entire fault for the switching lay exclusively with CMAS.
• Courtesy of Personnel: TWA claimed its employees had always dealt politely with all clients and the public, while PAL declared it had always acted with justice, honesty, courtesy, and good faith in performing its obligations.

• Carrier's Extraordinary Responsibility: Whether the delay in the delivery of the casketed remains was due to the fault of respondent airline companies, specifically whether the carriers' extraordinary responsibility had commenced when the switching of caskets occurred.
• Contractual Breach: Whether the one-day delay in delivery and the use of an earlier flight constituted a contractual breach as would entitle petitioners to damages.
• Tort Liability for Employee Conduct: Whether damages are recoverable for the humiliating, arrogant, and indifferent acts of the employees of TWA and PAL.
• Entitlement to Damages: Whether private respondents should be held liable for actual, moral, and exemplary damages, aside from attorney's fees and litigation expenses.

• Carrier's Extraordinary Responsibility: No. The switching occurred while the cargo was still with CMAS, before physical delivery to the carriers; the airway bill was merely a booking confirmation, not evidence of receipt, and the carriers' extraordinary responsibility under Article 1736 had not yet commenced.
• Contractual Breach: No. The airway bill's Condition No. 5 expressly authorized the carrier to substitute alternate aircraft or routes without notice and without assuming any obligation to carry on any specified flight, and no special contract for delivery within a specified time was shown.
• Tort Liability for Employee Conduct: Partially. TWA's employees' conduct did not amount to fraud, malice, or bad faith sufficient for moral or exemplary damages, but it violated petitioners' right to courteous treatment, warranting an award of nominal damages; no similar attribution was made against PAL.
• Entitlement to Damages: No as to actual, moral, and exemplary damages and attorney's fees; however, ₱40,000 as nominal damages was awarded against TWA alone for the violation of petitioners' right to be treated with courtesy.

• Carrier's Extraordinary Responsibility: The extraordinary responsibility of a common carrier under Article 1736 of the Civil Code begins from the time the goods are delivered to the carrier, meaning when the goods are ready for and have been placed in the exclusive possession, custody, and control of the carrier for the purpose of immediate transportation and the carrier has accepted them. While a bill of lading is prima facie evidence of receipt of goods by the carrier, this presumption is rebuttable. The evidence showed that on October 26, 1976, the airway bill was issued merely as a confirmation of the booking for the San Francisco-Manila flight, not as evidence that PAL had received the cargo. CMAS, acting on instructions from Pomierski Funeral Home, had requested the booking and PAL confirmed it on the representation that the cargo would arrive in San Francisco from Chicago on a United Airlines flight. PAL received physical delivery of the correct body only on October 28, 1976 at 7:45 p.m. in San Francisco, as evidenced by the American Airlines Interline Freight Transfer Manifest. The switching of caskets occurred on October 27, 1976 while the cargo was still with CMAS at the Chicago airport terminal—well before the same was placed in the custody of the carriers. CMAS was properly classified as a forwarder, which by accepted commercial practice is regarded as an agent of the shipper and not of the carrier; it contracts for the transportation of goods by carriers and receives compensation from the shipper. The carriers could not have detected the error because the casket was hermetically sealed and sealed by the Philippine Vice Consul, giving them no authority to open it. A common carrier is entitled to fair representation of the nature and value of goods to be carried, with the concomitant right to rely thereon, and has no obligation to inquire into the correctness of such information absent reasonable ground to suspect misrepresentation. No such ground existed here. Petitioners' own letter to CMAS alluded to CMAS as the party at fault, tantamount to an admission that they considered the carriers without fault.

• Contractual Breach: The airway bill's Condition No. 5 expressly provided that no time was fixed for completion of carriage, that the carrier may without notice substitute alternate carriers or aircraft, and that the carrier assumes no obligation to carry the goods by any specified aircraft or over any particular route, notwithstanding that the same may be stated on the face thereof. The terms of the contract were clear and explicit, precluding the need to probe beyond the apparent intendment of the contractual provisions. Petitioners' invocation of the rule that written words control printed words was unavailing because there was no inconsistency between the typewritten and printed provisions—the contract itself explicitly stated that the condition remained effective notwithstanding that routing details appeared on the face. The typewritten specifications of flights and dates did not constitute a special contract modifying the printed conditions; to hold otherwise would unduly burden carriers by unilaterally transforming every bill of lading into a special contract. The acceptance of a bill of lading without dissent raises a presumption that all terms were brought to the knowledge of the shipper and agreed to. Even assuming Condition No. 5 was a contract of adhesion, contracts of adhesion are not entirely prohibited; the adhering party is free to reject the contract entirely, and petitioners were not without choices among carriers in Chicago. TWA's decision to ship the remains on an earlier flight was exercised in sound discretion and with reasonable prudence, as it was aware of the urgency of the shipment through the notation on the airway bill requesting return on the first available flight to San Francisco, and it did so to assure sufficient time for transfer to PAL. The one-day delay, while undeniable and regrettable, could not be attributed to the fault, negligence, or malice of the carriers.

• Tort Liability for Employee Conduct: The evidence did not show any humiliating or arrogant manner in which the personnel of both carriers treated the petitioners. The initial inability of TWA counter personnel to inform petitioners of the whereabouts of the remains could not be said to constitute total or complete indifference. An action for damages against a carrier for employee conduct requires rude or discourteous conduct, malfeasance or neglect, abusive or insulting language calculated to humiliate, or bad faith—none of which was clearly established. However, the Court found that TWA's employees' conduct left much to be desired, particularly given petitioners' grief and the anxiety wrought by the confusion. Airline companies owe a duty not merely to cursorily instruct but to strictly require their personnel to be more accommodating toward customers, passengers, and the public, because common carriers are in the business of rendering public service. Passengers contract not merely for transportation but have a right to be treated with kindness, respect, courtesy, and consideration. The apathetic stance of TWA's personnel, while not legally reprehensible, was morally deplorable. No attribution of discourtesy was made against PAL; petitioners themselves testified that it was to PAL they repaired after failing to receive proper attention from TWA, and PAL provided confirmation that their mother's remains would be on the same flight.

• Entitlement to Damages: Moral damages may be awarded only for wilful or fraudulent breach of contract or when such breach is attended by malice or bad faith; in the absence of strong and positive evidence of fraud, malice, or bad faith, such damages cannot be awarded. Neither can exemplary damages nor attorney's fees be awarded absent proof that the defendant acted with malice, fraud, or bad faith. The censurable conduct of TWA's employees could not be said to have approximated the dimensions of fraud, malice, or bad faith. However, the facts showed that petitioners' right to be treated with due courtesy in accordance with the degree of diligence required by law was violated by TWA, entitling them to nominal damages under Articles 2221 and 2222 of the Civil Code, which provide that nominal damages are recoverable for the vindication or recognition of a right violated or invaded. In the exercise of discretion, ₱40,000 was found to be a reasonable amount.

• Commencement of Carrier's Extraordinary Responsibility — The extraordinary responsibility of a common carrier begins from the time the goods are delivered to the carrier, meaning when the goods are ready for and have been placed in the exclusive possession, custody, and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. Only when the fact of delivery has been unequivocally established can liability for loss, destruction, or deterioration attach and the presumption of fault under Article 1735 be invoked. In this case, the airway bill was merely a booking confirmation, not evidence of physical delivery, so the carriers' responsibility had not commenced when the casket switching occurred.

• Rebuttable Presumption from Bill of Lading — A bill of lading, when properly executed and delivered to a shipper, is prima facie but not conclusive evidence that the carrier has received the goods described therein for shipment. As between the consignor and the receiving carrier, recitals in a bill of lading raise only a rebuttable presumption that goods were delivered for shipment; the fact must outweigh the recital. The presumption was here overcome by evidence that the airway bill was issued as a booking confirmation and that PAL received the body only on October 28, 1976.

• Forwarder as Agent of Shipper — A forwarder, by accepted commercial practice, is regarded as an agent of the shipper and not of the carrier. It merely contracts for the transportation of goods by carriers, has no interest in the freight, and receives compensation from the shipper as his agent. CMAS was held to be a forwarder engaged by the funeral home, not an agent of the carriers, so its fault could not be imputed to the airlines.

• Carrier's Right to Rely on Shipper's Representations — A common carrier is entitled to fair representation of the nature and value of goods to be carried, with the concomitant right to rely thereon, and has no obligation to inquire into the correctness or sufficiency of such information. The duty to conduct further inspection arises only when there is reason to doubt the veracity of the representations or reasonable ground to suspect that the goods are of a dangerous or illegal character. The carriers had no reason to doubt CMAS's representations and no authority to open the hermetically sealed casket.

• Binding Effect of Printed Conditions in Bill of Lading — Acceptance of a bill of lading without dissent raises a presumption that all terms therein were brought to the knowledge of the shipper and agreed to. A stipulation printed on the back of a bill of lading is as effective as if printed on its face if it is shown that the consignor knew of its terms. Where a shipper accepts a receipt stating that conditions are found on the back, the shipper is bound by those conditions. The airway bill's face bore sufficient indications alerting parties to the presence of additional conditions.

• Contracts of Adhesion — Contracts of adhesion are not entirely prohibited; the one who adheres is free to reject it entirely, and if he adheres, he gives his consent. A contract of adhesion may be struck down only when the weaker party is imposed upon in dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it, completely deprived of the opportunity to bargain on equal footing. Petitioners were not the weaker party, having several carrier choices in Chicago.

• Nominal Damages for Violation of Right — Under Articles 2221 and 2222 of the Civil Code, nominal damages are not intended for indemnification of loss suffered but for the vindication or recognition of a right violated or invaded. They are recoverable where some injury has been done but the amount of which the evidence fails to show. Petitioners' right to courteous treatment was violated by TWA's employees, warranting ₱40,000 in nominal damages.

• Carrier's Duty of Courtesy to Passengers — A contract to transport passengers is different in kind and degree from any other contractual relation and generates a relation attended with public duty. Common carriers are in the business of rendering public service, which is the primary reason for their enfranchisement. Passengers do not contract merely for transportation; they have a right to be treated with kindness, respect, courtesy, and consideration, and should not be treated as mere numbers or statistics for revenue.

• "Only when such fact of delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be invoked." — This passage articulates the ratio decidendi on the first issue: that the carrier's extraordinary responsibility and the statutory presumption of fault cannot arise absent unequivocal proof of actual delivery of goods to the carrier.

• "As between the consignor and a receiving carrier, the fact must outweigh the recital." — This formulation, quoted from authority on bills of lading, defines the rebuttable nature of the presumption arising from a bill of lading's recitals and was central to the Court's holding that the airway bill did not conclusively establish delivery.

• "a common carrier is entitled to fair representation of the nature and value of the goods to be carried, with the concomitant right to rely thereon, and further noting at this juncture that a carrier has no obligation to inquire into the correctness or sufficiency of such information." — This passage defines the scope of a carrier's duty to inspect cargo and its right to rely on the shipper's declarations, a principle applied to exonerate the airlines for failing to detect the casket switching.

• "Passengers are human beings with human feelings and emotions; they should not be treated as mere numbers or statistics for revenue." — This statement, while not itself the dispositive ruling, articulates the doctrinal basis for the award of nominal damages and the Court's admonition to airline companies regarding their duty of courtesy to passengers.

• Mendoza vs. PAL, 90 Phil. 836 — Cited for the proposition that common carriers are not obligated by law to carry and deliver merchandise within a specified time unless they previously assume such obligation by special contract, and that such special contract should call the carrier's attention to the circumstances and the approximate amount of damages to be suffered in case of delay. Applied to hold that no special contract for prompt delivery was entered into.
• Ong Yiu vs. Court of Appeals, et al., 91 SCRA 223 (1979) — Cited for the principle that contracts of adhesion are not entirely prohibited and that the adhering party's consent is given if he adheres. Applied to uphold the binding effect of Condition No. 5 of the airway bill.
• Air France vs. Carrascoso, et al., 18 SCRA 155 (1966) — Cited as authority that rude or discourteous conduct, malfeasance or neglect, or the use of abusive or insulting language calculated to humiliate by employees of a carrier gives a passenger an action for damages. Distinguished on the facts, as none of those elements were clearly established.
• Northwest Airlines, Inc. vs. Cuenca, et al., 14 SCRA 1063 (1965) — Cited both as authority for the standard of employee conduct giving rise to a damages action and for the award of nominal damages where a right has been violated but the amount of loss is not shown.
• Zulueta vs. Pan American World Airways, 43 SCRA 397 — Cited as authority for the proposition that rude or discourteous conduct or bad faith by carrier employees gives a passenger an action for damages, applied to determine that the threshold for such liability was not met.

• Article 1736, Civil Code — Provides that the extraordinary responsibility of the common carrier begins from the time the goods are delivered to the carrier. Applied to determine that the carriers' responsibility had not commenced because the cargo had not yet been physically delivered to them when the switching occurred.
• Article 1735, Civil Code — Establishes the presumption of fault or negligence on the part of the common carrier for loss, destruction, or deterioration of goods. The Court held this presumption could not be invoked because the fact of delivery to the carrier had not been established.
• Article 1734, Civil Code — Lists the excepting causes that relieve the common carrier of responsibility for loss, destruction, or deterioration of goods. Referenced in connection with the conditions under which carrier liability attaches.
• Article 1737, Civil Code — Provides that the carrier's responsibility remains in full force even when goods are temporarily unloaded or stored in transit, unless the shipper exercises the right of stoppage in transitu. Cited in the discussion of the duration of carrier responsibility.
• Article 1370, Civil Code — Governs interpretation of contracts when the terms are clear and explicit, requiring that they be understood literally as they appear on the face of the contract. Applied to hold that the airway bill's conditions were clear and required no interpretive construction.
• Article 1374, Civil Code — Provides that various stipulations of a contract shall be interpreted together. Applied to hold that the typewritten and printed provisions of the airway bill must be read together and reconciled.
• Article 2220, Civil Code — Allows moral damages for wilful or fraudulent breach of contract. Applied to deny moral damages because no wilful breach, fraud, malice, or bad faith was proven.
• Article 2221, Civil Code — Defines nominal damages as those adjudicated for the vindication or recognition of a right violated or invaded, not for indemnification of loss. Applied as basis for the ₱40,000 award against TWA.
• Article 2222, Civil Code — Provides that nominal damages are recoverable where some injury has been done but the amount of which the evidence fails to show, with assessment left to the discretion of the court. Applied to justify the discretionary award.
• Article 2232, Civil Code — Governs exemplary damages, requiring proof that defendant acted with malice, fraud, or bad faith. Applied to deny exemplary damages.
• Article 2208, Civil Code — Governs attorney's fees as an item of damages, requiring proof of malice, fraud, or bad faith. Applied to deny attorney's fees.
• Section 2, Rule 45, Rules of Court — Limits petitions for review on certiorari to questions of law. Discussed in determining the scope of review, though the Court found the issues warranted a second look due to disputed inferences from the factual record.
• Section 13, Rule 130, Rules of Court — Provides that written words control printed words in documents. Petitioners' invocation of this rule was rejected for lack of inconsistency between the typewritten and printed provisions.

Melencio-Herrera, Paras, Padilla, and Nocon, JJ., concurred.