(1) With respect to damage resulting from the loss of or damage to checked baggage, a carrier shall be liable only when the facts underlying the cause of the damage occurred in an aircraft or while the checked baggage was in the custody of the carrier: Provided, That where the damage was caused by an inherent defect, extraordinary character, or hidden defect of the checked baggage, the carrier shall not be liable to such extent.
(2) With respect to damage caused by the loss of or damage to carry-on baggage, a carrier shall be liable only when the damage was caused by bad faith or negligence of the carrier, its employees or agents.[This Article Newly Inserted by Act No. 10696, May 23, 2011]