ACTIONS AND DAMAGES

Case Digests

Construction Devt Corp. of the Phil. (CDCP) v. Estrella, Batangas Laguna

Tayabas Bus. Co. (BLTB), et.al
Owner of the other vehicle which collided with a common carrier is solidarily liable
to the injured passenger of the same; irrespective of whether liability arose from a
contract or a quasi-delict. It is settled therefore that the bus company, its driver,
the operator of the other vehicle and the driver of the vehicle are solidarily held
liable to the injured passenger or the latters heirs.
Facts:
A woman and her granddaughter boarded a BLTB bus from San Pablo City to
Pasay City. However, they never reached their destination because the bus was
rammed from behind by a tractor-truck of CDCP who was driving fast. The strong
impact pushed forward their seats and pinned their knees to the seats in front of
them. They regained consciousness only when the rescuers created a hole in the
bus and extricated their legs from under the seats. Thus, they filed a complaint for
damages against both BLTB and CDCP imputing gross negligence on BLTB and
CDCP on the supervision and selection of their employees. CDCP claims that only
BLTB should be held liable as the award for damages is based on culpa
contractual. RTC held BLTB and CDCP solidarily liable. CA affirmed with
modifications
Issue:
WON CDCP may be held solidarily liable.
Held:
CDCP and BLTB are solidarily liable as the injured did not stake out their
claim against only either the carrier or the third party but instead they held both
CDCP and BLTB liable.
It has been settled that the owner of the other vehicle which collided with a
common carrier is solidarily liable to the injured passenger of the same. The
injured may file a complaint against the bus company, its driver, the operator of the
other vehicle and the driver of the vehicle and hold them jointly and severally
liable. It does not make any difference that the liability of the bus owner springs
from contract while that of the owner of the other vehicle arises from quasi-delict.
Such is the case because one is permitted to allege alternative causes of action and
join as many parties as may be liable on such causes of action so long as there is
no double recovery.
One is held jointly liable when they are held liable for the whole amount and
not pro rata.
Thus, in the instant case, as the injured filed a claim against CDCP and
BLTB, they may be held jointly liable for the damage caused to the injured.

Loadmasters Customs Services, Inc. v. Glodel Brokerage Corp.

A tort may arise despite the absence of a contractual relationship; consequently,
the responsibility of two or more persons who are liable for a quasi-delict is
solidary.
Facts:
Columbia engaged the services of Glodel for the release and the withdrawal
of 132 bundles of electric copper cathodes (cargoes) from the pier and is
subsequent delivery to its warehouse/ plants. Glodel, in turn, engaged the services
of Loadmasters for the use of its delivery trucks to transport the cargoes to
Columbias warehouses. However, out of the 12 truckloads of cargoes, one did not
reach its destination because it was hijacked or robbed. R&B, being the insurer of
Columbia, indemnified the latter. Consequently, R&B filed the present claim for
damages against both Loadmasters and Glodel for the loss of the subject cargo, it
being subrogated to the rights of Columba.
RTC held Glodel liable; however, CA modified the decision and held
Loadmasters liable as well.
Loadmaster claims that it should not be held liable as it was never a privy to
the contract entered into by Glodel with the consignee Columbia or R&B
Insurance.
Issue:
Who bet. Loadmasters or Glodel is liable.
Held:
Loadmasters and Glodel are solidarily liable to R&B Insurance for the loss of
the subject cargo.
It is undisputed that R&B became subrogated to the rights of Columbia upon
payment by the former to the latter of the insurance proceeds. Further, as
Loadmaster and Glodel are considered as common carriers, they are obliged to
exercise extra-ordinary diligence in the transportation of the cargoes.
Loadmaster is considered as a common carrier as, other than the fact that it
admitted itself as one, it is engaged in the business of transporting goods by land
through its trucking service and it holds itself out to carry goods for the public.
Likewise, Glodel is a common carrier because being a company engaged in the
business of customs brokering, the transportation of goods is an integral part of its
business.
Nonetheless, despite the absence of a contract between Loadmaster and
Columbia/ R&B, it is still held liable as it is liable for tort. It is not disputed that the
subject cargo was lost while in the custody of Loadmasters whose employees were
instrumental in the hijacking or robbery of the shipment. As an employer,
Loadmasters should be made answerable for the damages caused by its employees
who acted within the scope of their assigned tasks.

Likewise, Glodel is liable because it failed to exercise extraordinary

diligence. It failed to ensure that Loadmasters would fully comply with the
undertaking to safely transport the subject cargo to the designated destination.

Phil. Charter Insurance Corp. v. Chemoil Lighterage Corporation (2005)

The filing of a claim with the carrier within the time limitation constitutes a
condition precedent to the accrual of a right of action against a carrier for loss of,
or damage to, the goods. Hence, the shipper or consignee must allege and prove
the fulfillment of the condition. If it fails to do so, no right of action against the
carrier can accrue in favor of the former.
Facts:
Samkyung Chemical Company, Ltd., based in South Korea, shipped 62.02
metric tons of liquid chemical DIOCTYL PHTHALATE (DOP) on board MT
Tachibana to the Philippines with Plastic Groups Phils. (PGP) as consignee. PGP
insured the cargo with Phil. Charter Insurance (PCIC) against all risks. MT
Tachibana unloaded the cargo to Tanker Barge of Chemoil Lighterage to
transport it to Pasig River in which the latter would unload the cargo to tanker
trucks still owned by Chemoil and haul it by land to PGPs storage tanks in Laguna.
However, during the process of unloading, PGP noticed that the DOP samples were
discolored from yellowish to amber. Hence, due to the contamination, PGP filed an
insurance claim for the loss against PCIC. Upon payment by PCIC to PGP, the
former instituted an action for damages against Chemoil.
Chemoil claims that it exercised extraordinary diligence in the handling of
the cargo. RTC then adjudged Chemoil liable. During appeal, Chemoil claimed that
PGP failed to file any notice, claim or protest within the period required by Art. 366
of the Code of Commerce, which is a condition precedent to the accrual of a right
to action against the carrier. Chemoil claims that the telephone call made by the
employee of PGP to the VP of Chemoil was not the notice required for in Art. 366.
Issue:
WON the claim was filed within the prescribed period and WON the damage
to the cargo was due to the negligence of Chemoil.
Held:
The claim was not filed within the prescribed period as though a telephone
call was made by an employee of PGP through telephone to a responsible official,
the VP, of the Chemoil there was no evidence to show that it was timely relayed or
filed within the requirements provided for in Art. 366 of the Code of Commerce.
For easy reference, Art. 366 of the Code of Commerce provides:
Art. 366. Within 24 hrs. following the receipt of the
merchandise a claim may be made against the carrier on
account of damage or average found upon opening the
packages, provided that the indications of the damage or
average giving rise to the claim cannot be ascertained from
exterior of said packages, in which case said claim shall only be
admitted at the time of the receipt of the packages.

After the periods mentioned have elapsed, or after the

transportation charges have been paid, no claim whatsoever
shall be admitted against the carrier with regard to the
condition in which the goods transported were delivered.

Aboitiz Shipping Corp. v. Insurance Corp. of North America

Stipulations requiring notice of loss or claim for damage as a condition precedent
to the right of recovery from a carrier must be given a reasonable and practical
construction, adapted to the circumstances of the case under adjudication, and
their application is limited to cases falling fairly within their object and purpose.
Facts:
MSAS Cargo International Limited and/or Associated and/or Subsidiary
Companies (MSAS) procured an all-risk marine insurance policy from Insurance
Company of North America (ICNA). The insurance was a transshipment of certain
wooden work tools and workbenches purchased for the consignee Science
Teaching Improvement Project (STIP). The cargo came from Germany wherein it
was issued a clean bill of lading. It was then off-loaded to Singapore and then to
Manila wherein it was received by Aboitiz with the bill of lading containing the
notation grounded outside warehouse. Upon arrival at STIP, it was found that
upon opening of the cargo, the tools which were stored inside the crate were
already corroded and the work tools and workbenches were found to have been
completely soaked in water with most of the packaging cartons already
disintegrating. STIP then claimed the insurance from ICNA. Consequently, the
latter filed a formal complaint against Aboitiz.
Aboitiz disavowed liability and asserted that the claim had no factual and
legal bases as the cause of action was barred and the suit was premature there
being no claim made upon Aboitiz. RTC held that ICNA is not entitled to the relief.
CA reversed the decision and ruled that ICNA is entitled to reimbursement by
reason of its right of subrogation.
Issue:
WON the claim was filed within the prescribed period required under Art.
366 of the Code of Commerce.
Held:
ICNAs cause of action is founded on it being subrogated to the rights of the
consignee of the damaged shipment. Likewise, there was a substantial compliance
with the filing of notice as required by law.
In the instant case, when Willig, the representative of STIP, received the
shipment, he relayed the information that the delivered goods were discovered to
have sustained water damage to the Claims head of Aboitiz who was then able to
investigate the claims himself and indeed confirmed that the goods were corroded.
Further, the call made 2 days from delivery to STIP was a reasonable period
considering that the goods could not have corroded instantly overnight such that it
could only have sustained the damage during transit. Hence, the substantial
compliance requirement was satisfied.

UCPB Gen. insurance Co., Inc. v. Aboitiz Shipping Corp.

Claim for damage must be made within 24 hrs. from receipt of the merchandise if
the damage cannot be ascertained from the outside packaging. However, a written
notice may be dispensed with if the state of the goods has at the time of their
receipt subject to a joint investigation.
Facts:
3 units of waste water treatment plant with accessories were purchased by
San Miguel Corp. (SMC) from Super Max Engineering Enterprises of Taiwan. The
goods came from USA and arrived at the port of Manila. It was then transported to
Cebu where it was delivered to SMC at is plant site. It was, however, discovered
that one electrical motor of DBS Drive was damaged even prior to its arrival in
Manila. Pursuant to an insurance agreement, UCPB paid SMC. UCPB then filed a
complaint from East Asia (EAST), DAMCO (ship owner), Pimentel Brokerage and
Aboitiz.
The trial court declared the defendants liable. However, on appeal, CA
reversed the decision and ruled that UCPBs right of action did not accrue because
UCPB failed to file a formal complaint within 24 hrs. from SMCs receipt of the
damaged merchandise under Art. 366 of the Code of Commerce. UCPB, however,
contended that such Article does not apply because the damage to the cargo had
already been known to the carrier; hence UCPB claims that this knowledge
dispenses with the need to give the carrier a formal notice of claim as provided for
under Carriage of Goods by Sea Act (COGSA) which states that notice of loss need
not be given if the condition of the cargo has been the subject of joint inspection,
in this case in the presence of Eagle Express.
Issue:
WON UCPB may recover from defendants.
Held:
No, UCPB may not recover having failed to file the claim within the
prescribed period.
Art. 366 of the Code of Commerce requires that the claim for damage or
average must be made within 24 hrs. from receipt of the merchandise if, as in this
case, damage cannot be ascertained merely from the outside packaging of the
cargo.
Herein, the shipment was received by SMC on August 2, 1991. However, the
claims were dated October 30, 1991, more than 3 months from receipt of the
shipment. Hence, the claim was clearly filed beyond the 24-hr time frame
prescribed by Art. 366 of the Code of Commerce.
Likewise, Sec. 3 (6) of COGSA provides that notice in writing need not be
given if the state of the goods has at the time of their receipt been the subject of
joint survey or inspection. Herein, Eagle Express did not act as an agent of
DAMCO but East Asiatic. Thus, Eagle Expresss knowledge of the damage to the
cargo does not serve to preclude or dispense with the 24-hr notice to the carrier

required by Art. 366 CC because Eagle Express acted as an agent of the freight
consolidator and not that of the carrier to whom the notice should have been
made.

Victory Liner v. Rosalito Gammad

Art. 1764 in rel. to Art. 2206 NCC: In a breach of contract of carriage by a common
carrier that results to the death of a passenger is liable for the ff.: 1) Indemnity for
death (P50k); 2) Indemnity for loss of earning capacity; and 3) moral damages.
Exemplary damages, on the other hand, are awarded by example or correction for
the public good and may be recovered in contractual obligations if the defendant
acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. Further,
attorneys fees may be recovered where exemplary damages are awarded pursuant
to Art. 2208 NCC.
The award of compensatory damages, as a general rule, must be substantiated by
documentary evidence. However, as an exception, damages for loss of earning
capacity may be awarded despite the absence of documentary evidence when: 1)
the deceased is self-employed earning less that minimum wage under current labor
laws, and judicial notice may be taken of the fact that in the deceaseds line of
work no documentary evidence is available; or 2) the deceased is employed as a
daily wage worker earning less than the minimum wage under current labor laws.
Temperate or Moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be proved with certainty.
Only substantiated and proven expenses or those that appear to have genuinely
incurred in connection with the death, wake or burial of the victim will be
recognized as actual damages.
Facts:
A certain Marie Grace Paguluyan-Gammad (Grace) was on board an airconditioned Victory Liner bus bound for Cagayan from Manila. However, at around
3AM the bus while running at a high speed fell on a ravine which resulted to the
death of Grace and physical injuries to other passengers. Hence, the heirs of Grace
filed this instant case for damages arising from culpa contractual against Victory
Liner. After a period of constant failure by Victory Liner and its counsel to appear,
the court rendered a decision which granted actial, exemplary, moral and
compensatory damages and death indemnity, attorneys fees and cost of the suit.
CA affirmed but modified the decision granting only actual, compensatory, moral
and exemplary damages as well as attorneys fees.
Victory Liner claims that he was deprived his day in court because of the
gross negligence of its counsel and that the award of damages were without basis
and should be deleted.
Issue:
WON Victory Liner should be held liable for breach of contract of carriage
and WON the award of damages was proper.

Held:
Yes, Victory Liner is liable for breach of contract of carriage; consequently,
the award of damages though proper must be modified. Further, it is held that the
acts of the counsel of Victory Liner bound him. There is no gross negligence
imputed upon the counsel as he in fact filed certain pleadings; in addition, there
was contributory negligence on the part of Victory Liner when it failed to appear in
court despite notices.
Herein, the statutory presumption of negligence of the common carrier
remained unrebutted. Such presumption was shown when passengers died and
was injured. Thus, Victory Liner is without doubt guilty of breach of contract of
carriage.
However, the award of damages must be modified:
1. Indemnity for damages P50K
2. Compensatory damages deleted because respondent Rosalito merely
testified that the deceased was 39 y.o. and a Section Chief of the BIR;
hence, such testimonial evidence alone is insufficient to justify an award
for loss of earning capacity, especially if such does not fall within the
exception.
3. Temperate Damages P50K as the fact of loss has been established and
in lieu of damages for loss of earning capacity which was not
substantiated by the required documentary proof.
4. Moral P100K due to breach of contract of carriage and failure of
common carrier to exercise extraordinary diligence
5. Exemplary P100K
6. Attorneys fees 10% of the total amount adjudged against Victory Liner
7. Interest as damages for breach of contract of carriage computed upon
finality of this decision at 12% per annum upon satisfaction.

Sps. Ong v. CA (GR 117103)

Article 2199 of the Civil Code expressly mandates that "[e]xcept as provided by law
or by stipulation, one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved.
Physical injury is not a pecuniary loss as it is not susceptible of exact monetary
estimation; hence an award for moral damages may instead be given. Further, in
some instances, the Court may award the cost of medical procedures to restore the
injured person to his or her former condition ONLY when there is the presence of
an expert testimony on the cost of possible restorative medical procedure.
Facts:
Sps. Ong boarded Inland bus which was owned and operated by Inland
Trailways with Philtranco. It was driven by Calvin Coronel. At around 3:50am, the
Inland bus slowed down to avoid a stalled cargo truck but it was bumped from the
rear by another bus owned and operated by Philtranco. Sps. Ong were injured
hence they filed the instant action for damages and presented evidence such as
their payroll, medical certificates, etc. Philtranco claimed that it was not liable as it
exercised diligence and that the proximate cause of the accident was the
negligence of either the cargo truck or Inland bus. Inland, however, contends that
the it was the driver of the Philtranco bus which was at fault as shown by the
Police report which was merely annexed to the answer without formally offering it
as evidence. RTC held Philtranco liable on the basis of the said report. CA,
however, resolved Philtrancos liability for the damages and held Inland liable
instead with modifications on the award for damages.
Issue:
WON the Police Report was formally offered in evidence to establish a claim
against Philtranco based on cupla acquiliana and WON the reduction of damages
awarded was proper.
Held:
CA was correct in not considering the Police Report as evidence as it was
not formally offered; consequently, the reduction of damages awarded was proper.
Section 34, Rule 132 of the Rules of Court, provides that " [t]he court shall
consider no evidence which has not been formally offered." A formal offer is
necessary, since judges are required to base their findings of fact and their
judgment solely and strictly upon the evidence offered by the parties at the trial.
To allow parties to attach any document to their pleadings and then expect the
court to consider it as evidence, even without formal offer and admission, may
draw unwarranted consequences. Opposing parties will be deprived of their
chance to examine the document and to object to its admissibility. On the other
hand, the appellate court will have difficulty reviewing documents not previously
scrutinized by the court below. Hence, the mere annexation of Inland of the Police

Report without formal offer as evidence cannot be the basis of the judgment of the
trial court.
Likewise, the award for moral and exemplary damages is proper as Mrs.
Ongs arm could not function in a normal manner and that, as a result, she suffered
mental anguish and anxiety. However, as petitioner failed to present expert
testimonial evidence regarding the feasibility or practicability and the cost of a
restorative medical operation on her arm, there is no basis to grant her P48,000
for such expense. Likewise, the actual damages cannot be given as her bare and
unsubstantiated assertion that she usually earned P200 a day from her market stall
is not the best evidence to prove her claim of unrealized income for the eightmonth period that her arm was in plaster cast. Lastly, the award for attorneys fees
is without basis as such is an indemnity for damages ordered by a court to be paid
by the losing party to the prevailing party, based on any of the cases authorized by
law. It is payable not to the lawyer but to the client, unless the two have agreed
that the award shall pertain to the lawyer as additional compensation or as part
thereof. Herein, as the counsels performance does not justify the award of
damages, such must likewise be denied.

Northwest Airlines Inc. v. Steven Choing

Moreover, attorney's fees may be awarded when defendant's act or omission has
compelled plaintiff to litigate with third persons or to incur expenses to protect his
interest or where the defendant acted in gross and evident bad faith in refusing to
satisfy the plantiffs plainly valid, just and demandable claim.
Facts:
Philimare Shipping and Seagull Maritime Corp. (Philimare), as the
authorized Philippine agent of TransOcean Lines (TransOcean) hired Steven
Chiong (Chiong) as 3rd Engineer of TransOceans vessel at San Diego, California.
Hence, Philimare purchased for Chiong a Northwest plane ticket. 10 days before
his scheduled departure, Chiong fetched his entire family from Samar and brought
them to Manila to see him off at the airport. He arrived 3 hours before the
scheduled time of departure. Marilyn Calvo, Philimares Liaison officer met with
him and proceeded to the Philippine Coast Guard (PCG) Counter to present
Choings seaman service record book for clearance. His passport was duly
stamped. However, Chiong remained at queue at the Northwest check-in counter.
When it was his turn, the Northwest personnel informed him that his name did not
appear in the computers list of confirmed departing passengers thus he was
directed to speak to a man in barong who demanded US$100.00 in exchange for
him to board. Ultimately, Chiong was not allowed to board the flight and was
unable to work. It appeared thereafter that Chiongs name was crossed out and
substituted with W.Costine Hence, Chiong filed the instant case for damages.
RTC rendered a decision awarding him with compensatory, exemplary, moral,
incurred and punitive damages and attorneys fees plus costs of suit. CA affirmed
in toto.
Northwest claims that it was not liable as in truth and in fact Choing was a
no show.
Issue:
WON Northwest may be held liable and WON the award for damages was
proper.
Held:
Yes, Northwest is liable as it breached its contract of carriage; consequently,
the award for exemplary, moral, actual, compensatory damages and attorneys fees
and cost of suit is proper.
Chiong was sufficiently able to prove through evidence that a contract has
been entered into by him and Northwest upon the purchasing of the tickets.
Further, the stamp on the book of records, the testimony of the Liaison officer as
well as of the PCG officers showed that Chiong was at the airport at the said
departure date contrary to the claims of Northwest Airlines. Hence, having failed
to comply with its obligations, Northwest Airlines breached its contract of carriage
with Chiong. Consequently, as Chiong was able to prove the existence of the

contract and the fact of its non-performance by Northwest, it is thus entitled to the
award of compensatory and actual damages.
In the instant case, it moral and exemplary damages is likewise proper as
the evidence given show that Northwest acted in an oppressive manner towards
Chiong when it gave him a run-around at the Northwest Check-in counter and
eventually barred him from boarding the flight to accommodate an American
whose name was merely inserted in the Flight Manifest. Attorneys fees is likewise
proper.

Japan Airlines (JAL) v. Jesus Simangan

As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract for it is not one of the items enumerated under
Article 2219 of the Civil Code. As an exception, such damages are recoverable: (1)
in cases in which the mishap results in the death of a passenger, as provided in
Article 1764, in relation to Article 2206 (3) of the Civil Code; and (2) in the cases in
which the carrier is guilty of fraud or bad faith, as provided in Article 2220.
Exemplary damages, which are awarded by way of example or correction for the
public good, may be recovered in contractual obligations if defendant acted in
wanton, fraudulent, reckless, oppressive, or malevolent manner. Moreover,
attorney's fees may be awarded when defendant's act or omission has compelled
plaintiff to litigate with third persons or to incur expenses to protect his. There are
two kinds of attorneys fees: 1) ordinary which is the compensation paid to the
lawyer by his client for the legal services he has rendered to the latter; and 2)
extraordinary concept which is an indemnity for damages ordered by the court to
be paid by the losing party in litigation which is payable to the client unless
otherwise agreed upon.
Facts:
Jesus Simangan decided to donate a kidney to his ailing cousin, Loreto, in
UCLA School of Medicine in Los Angeles. Upon request of UCLA, Jesus undertook
a series of laboratory tests to which fortunately matched Loretos. Jesus then
needed to go to the US to complete his preliminary work-up and donation surgery.
Hence, to facilitate Jesus travel to US, UCLA wrote a letter to American Consulate
to arrange for his visa. Hence, he was issued an emergency US visa by the
American Embassy. He then bought a round-trip ticket to US via Japan aboard JAL.
On the day of his departure, he was able to pass through rigid immigration and
safety routines. Upon being seated in his assigned seat, however, Jesus was asked
to show his travel documents and consequently leave the plane on the alleged
ground that there was a need to verify his travel documents as they never
encountered a parole visa before. Hence, Jesus was unable to board the plane as
he was haughtily ejected the flight. Thus, this instant suit by Jesus. RTC granted
exemplary and moral damages and attorneys fees. CA modified and reduced the
award to merely moral and exemplary damages.
Issue:
WON JAL is guilty of breach of contract of carriage and WON Jesus is
entitled to moral and exemplary damages.
Held:
Yes JAL guilty of breach of contract of carriage consequently Jesus is entitled
to moral and exemplary damages.

It is without doubt that there exists a contract of carriage between JAL and
Jesus as the latter bought a ticket from the former who consequently allowed Jesus
to enter its plane. Hence, JALs act of subsequently disallowing Jesus to fly the said
plane constituted a breach of contract of carriage.
Therefore, the award for damages is sufficiently in order. It is proved that
JALs acts amounted to bad faith when its personnel summarily and insolently
shouted ordered Jesus to disembark the plane in the presence of numerous
passengers without the least courtesy while the latter was already settled in his
assigned seat. In summary, there was bad faith in securing the contract and in the
execution thereof, as well as in the enforcement of its terms. Hence, JAL is liable
for moral damages. Likewise, it is liable for exemplary damages as its abovementioned acts constitute wanton, oppressive and malevolent acts against Jesus.

Phil. Airlines Inc. v. CA (GR 123238)

In breach of contract of air carriage, moral damages may be recovered
where: 1) mishap results in the death of a passenger; or 2) where the carrier is
guilty of fraud or bad faith; or 3) where the negligence of the carrier is so gross
and reckless as to virtually amount to bad faith. Moreover, exemplary damages
may be awarded only if it is proven that plaintiff is entitled to moral damages.
However, for an attorneys fees to be awarded, the trial court must state the
factual, legal, or equitable justification for awarding the same and hence must not
only be dealt with in the dispositive portion of the decision. Nonetheless, it must be
kept in mind that the award of damages must be fair, reasonable and proportionate
to the injury suffered and not palpably excessive as to indicate that it was the
result of prejudice or corruption on the part of the trial court.
Gross negligence implies a want or absence of or failure to exercise even
slight care or diligence, or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them.
Facts:
Manuel and Aurora Buncio (Sps. Buncio) purchased from PAL 2 plane tickets
for their minor children Deanna (9 yrs. Old) and Nikolai (8 yrs. Old) from Manila to
San Francisco, California, USA with a connecting flight to Los Angeles where their
grandmother, Mrs. Regalado will meet them. Since Deanna and Nikolai will travel
as unaccompanied minors, PAL required Sps. Buncio to accomplish, sign and
submit an indemnity bond.
However, when they arrived at San Francisco Airport, the staff of United
Airways refused to take aboard Deanna and Nikolai for their connecting flight to
Los Angeles because PALs personnel in San Francisco could not produce the
indemnity bond accomplished and submitted by Sps. Buncio. The said indemnity
bond was lost by PALs personnel during the previous stop-over flight in Hawaii.
Thus, the children were left stranded at San Francisco where Mr. Strigl (Strigl),
the Lead Traffic Agent of PAL in San Francisco, took them to his residence in San
Francisco where they stayed overnight.
Meanwhile, while Mrs. Regalado and several relatives waited for the arrival
of the kids, and were not subsequently able to find them in their designated flight,
they asked the stewardess if there were any minor passengers aboard, and the
latter said no. Upon inquiry with PALs personnel, they merely said they were
verifying their whereabouts. The next morning, Strigl took Deanna and Nikolai to
the airport where the two were boarded a Western Airlines plane bound for Los
Angeles. They were subsequently met by Mrs. Regalado.
Thus, Sps. Buncio filed the instant case for damages on the ground that
there was gross negligence and malevolent conduct of PALs personnel when it lost
the required indemnity bond. PAL contends, however, that: 1) it exercised diligence
of a good father of a family in the selection, supervision and control of its
employees; 2) that moral damages may only be awarded in breach of contract of
air carriage when death or injury results or if there is a finding of ill will; 3) there
was no liability on its part because mere carelessness does not result to malice or

bad faith; 4) exemplary damages may not be awarded because there was no
showing that plaintiff was entitled to moral damages; and 5) no premium should be
placed on the right to litigate. RTC granted the petition of Sps. Buncio and ordered
PAL to pay moral and exemplary damages, attorneys fees and costs of the suit. CA
affirmed in toto.
Issue:
WON PAL may be held liable for damages.
Held:
Yes, as the contract of carriage was breached; PAL must be held liable for
the consequent damages of moral and exemplary damages. However, attorneys
fees is not proper as such was merely cited by the dispositive portion of the
decision.
PAL and Sps. Buncio entered into a contract of air carriage when the former
purchased two plane tickets from the latter. Hence, PAL obligated itself to
transport the passengers according to the tenor of the agreement. However, as the
kids herein were unable to board their connecting flights and were subsequently
left stranded and was only able to arrive at Los Angeles via another airline,
Western Airlines, PAL clearly breached its contract of carriage with respondents.
Herein, gross negligence was attributed to PAL that it amounted to bad faith
when: 1) there was utter lack of care for and inattention to the welfare of Deanna
and Nikolai as unaccompanied minor passengers; 2) it failed to exercise slight care
and diligence in handling the indemnity bond; and 3) it was unable to prevent the
inconveniences of delay in the transportation. Thus, such act constituted radical
departure from the extraordinary standard of care required of common carriers.
Consequently, an award of exemplary damages is warranted because it is
ascertained that respondents are entitled to moral damages. However, as the trial
court only placed the attorneys fees in the dispositive portion without factual and
legal basis, the same must be deleted. Moreover, the court finds that the amount
awarded to Deanna, Nikolai, Mrs. Buncio and Mrs. Regalado was proper.

Canada v. All Commodities

Actual damages, to be properly awarded, must be duly substantiated. In case it
cannot be substantiated, but the court is certain that pecuniary damages have
been sustained by the plaintiff, it can award temperate damages in lieu of the
actual damages.
Facts:
Ernesto Canada (Canada) operates a trucking and hauling operation under
the name of Hi-Ball Freight Services. One of its valued clients was a corporation
known as All Commodities Marketing Corporation (All Commodities).
In one of their transactions, which involved the transport of 1,000 bags of
sugar (as covered by the Way Bills and the Delivery Receipt which purported to
have been issued by All Star Transport [All Star] but was duly signed by Canadas
driver) from the port of Manila to the manufacturing plant of Pepsi Cola (Pepsi),
the two parties encountered a problem. The bags of sugar, together with the
drivers, haulers and helpers, disappeared. Thus, All Commodities demanded from
Canada the value of the sugar he purportedly lost, but Canada did not heed the
demand.
Thus, a complaint for sum of money and damages was filed by All
Commodities against Canada with the Regional Trial Court (RTC). In his defense,
he argued that (a) the sugar was delivered to Pepsi, or in the alternative, if the
same was lost, it was due to (b) the fault of All Commodities or (c) due to fortuitous
event. The RTC rendered a judgment against Canada, ordering him to pay
Php350,000 as actual damages. On appeal, the Court of Appeals (CA) affirmed the
decision of the RTC. The CA likewise rejected the new theory advanced by Canada
on appeal: that he was not the common carrier and that it was All Star who was
the carrier, as evidenced by the way bills and the delivery receipt. Thus, Canada
appealed to the Supreme Court (SC).
Issue:
Are the RTC and CA correct in finding fault in Canada regarding the
transport of the sugar and is the CA correct in rejecting the new theory advanced
by Canada on appeal?
Ruling and Discussion:
The RTC and CA are correct in finding fault in Canada regarding the
transport and the CA is correcting in rejecting Canadas new theory on appeal.
As regards the rejection by the CA of Canadas new theory on appeal, the CA
was correct in rejecting it, because it cannot now change his theory on the matter
after the promulgation of the adverse decision. His failure to advance this theory

that he was not the common carrier engaged by All Commodities was fatal to his
cause. Generally, points of law, theories, issues and arguments not brought to the
attention of the lower court ordinarily will not be considered on appeal. This is
consistent with due process, because if this would be permitted, a party would be
deprived of his opportunity to controvert the theory of the adverse party.
Moreover, Canada could not now adopt this theory, because he already
admitted the existence of a contract of carriage. As a rule, judicial admissions,
written or verbal, made by a party in the course of the proceedings in the same
case, does not require proof. It may only be contradicted if shown that it was made
through palpable mistake or that no such admission was made. Neither was shown
in this case.
In the trial court, Canadas first defenses were that the goods arrived at
their destination, or in the alternative, if there was really loss, it was due to either
the fault of All-Commodities or due to fortuitous event. None of these defenses
were proven. The fact that the goods did not arrive at their destination was duly
established. The alternative defenses, however, were not duly established. There
was no finding of fault on the part of All Commodities, nor was there fortuitous
event.
In order to plead fortuitous event, it must be shown that: (a) the cause of the
unforeseen or unexpected occurrence was independent of human will, (b) it was
impossible to foresee such occurrence and it was impossible to avoid, (c) the
occurrence of the unforeseen or unexpected occurrence rendered the performance
of the obligation impossible in a normal manner, and (d) the person tasked to
perform must not have participated in any course or conduct that aggravated the
incident. In the case, none of these were shown by Canada.
Lastly, however, the award of Php 350,000 as actual damages was
erroneous, because based on the records, the amount was not duly substantiated.
In lieu thereof, the Court may award temperate damages, which can only be
awarded if actual damages cannot be substantiated but the Court is convinced that
there was pecuniary loss. The temperate damages of Php 250,000 was awarded.

Sulpicio v. Curso
Brothers and sisters, while being legal heirs of a deceased passenger, cannot claim
moral damages from the death, arising from an incident in breach of the contract
of carriage, because the law explicitly excludes them from those persons who have
legal personality to sue for moral damages.
Facts:
Dr. Curso (Curso) is a passenger of ill-fated vessel called MV Doa Marilyn
(Doa), owned by Sulpicio Lines, Inc. (Sulpicio). Doa was in voyage when it was
hurled by the strong waves and heavy rains caused by typhoon Unsang. It
capsized, killing hundreds of passengers including Curso.
Having no widow or issue, his alleged brothers and sisters sued Sulpicio for
moral damages for the loss of Curso. They filed a complaint for damages with the
Regional Trial Court (RTC), which dismissed the complaint, because the incident
was caused by fortuitous event. On appeal, the Court of Appeals (CA) reversed the
RTC on the ground that Sulpicio failed to show proof of exercise of extraordinary
diligence as a common carrier, awarding, among others, moral damages. Sulpicio
appealed to the Supreme Court, asking whether the brothers and sisters of Curso
have the legal personality to sue for moral damages predicated on the death of
Curso.
Issue:
Do the brothers and sisters of Curso have the legal personality to sue for
moral damages on the death of Curso?
Ruling and Discussion:
No, they do not have the legal personality to sue for moral damages on the
death of Curso.
As a rule, moral damages are not recoverable in actions for damages
predicated on breach of contract, unless there is fraud or bad faith. However,
where there is breach of contract of carriage and that breach results in the death
of a passenger, moral damages may be recovered.
The law applicable here is Art. 1764, in relation to Art. 2206. Provided in
these laws are the different circumstances from which moral damages may be
predicated and the persons who can recoverable if such circumstances exist.
Therein, only the spouse, legitimate and illegitimate descendants and ascendants
can recover moral damages. Basic is the rule that where the law deliberately
excludes a class or a person, the legislative intent is that they should be excluded.
Inclusio unius est exclusio alterius. And the Court does not have the power to fill in
the words of the law as its authority is to interpret it. Brothers and sisters are

deliberately excluded from the enumeration. And the fact that, in succession, they
are considered legal heirs in default of a spouse, descendant or ascendant
(whether legitimate or illegitimate), cannot qualify them to be the person who have
been given legal personality to sue for damages in case of death of a passenger in
a common carrier.
Therefore, they cannot claim for moral damages on the death of Curso.

Sps. Cruz v. Sun Holidays

Regarding damages for potential loss of income, the net earning capacity is
computed by multiplying life expectancy against the net annual income. Life
expectancy is computed by getting 2/3 of the difference between 80 (the standard
number according to the American Expectancy Table) and the age of the deceased
when he died. Net annual income is derived from the difference between the gross
annual income of the deceased and his reasonable and necessary living expenses,
because the loss is not equivalent to the entire earnings of the deceased, but only
such portion as he would have used to support his dependents or heirs.
Facts:
Ruelito, the son of Sps. Cruz, just wedded his fianc when they met their
tragic end. After their wedding, Ruelito and his wife spent their honeymoon in
Coco Beach Resort (Coco), which offered tour packages, including motor boat
services in island hopping. One of Cocos motor boats was named M/B Coco Beach
III.
Ruelito and his wife were scheduled to do the island-hopping tour when the
wind was strong at the side of the island where they were staying. They were told
that they could proceed with their island-hopping tour if they leave from the other
side, where allegedly the wind could not penetrate because of the mountainous
terrain. M/C Coco Beach III was waiting there to be boarded. Some 16 other
persons were with Ruelito and his wife during the tour. They complied and
proceeded with their tour. It was unfortunate, however, that when they were at
sea, the wind blew and the waves grew bigger. The motorboat finally gave in and
capsized, killing some of the passengers, including Ruelito and his wife.
Sps. Cruz now sued Coco for breach of contract of carriage with the
Regional Trial Court (RTC). Ruelito was 28 and was earning $900 a month as a
contractor worker in Saudi Arabia.
In Cocos defense, it argued that (a) it is not a common carrier, because (i) it
does not offer the services of the motor boat to the public and (ii) no additional fee
is charged for those who opt to avail of the tour package; nevertheless, (b) it
exercise utmost diligence in the operation of the motorboat and (c) it was caused
by fortuitous event.
The RTC dismissed the Complaint, ruling that Coco was a private carrier.
This was affirmed by the Court of Appeals (CA). Thus, the case was filed with the
Supreme Court (SC).
Issue:
Are the RTC and CA correct in dismissing the complaint against Coco?

Ruling and Discussion:

No, the RTC and CA are not correct in dismissing the complaint against
Coco.
First, Coco is a common carrier. As held in De Guzman v. Court of Appeals,
the law does not distinguish whether the carrier does its transport activity as its
main business or merely incidental to his legitimate business. In fact, the
regularity in the transport function is immaterial. Also, the fact that no additional
fee is added cannot exculpate Coco from its liability, because it is absurd for a
business owner to not include in the cost of each and every aspect of the service.
Where the customer does not opt to avail of the tour service, he would only be
considered to have overpaid. Consequently, when Coco offers its tour package to
the public included therein is the use of the motor boat, in an all-inclusive fee
arrangement it is deemed to have been offering its services to the public. Thus, it
is not a private carrier.
In regard to the exercise of utmost diligence, Coco was not able to exercise
extraordinary diligence. For one, PAGASA issued a 24-hour public weather forecast
concerning a tropical cyclone for shipping one day before and on the day of the
tour package. A very cautious person would not run the risk of sailing where there
is such warning from the government arm on weather forecast.
Also, regarding the defense of fortuitous event, Cocos argument is
untenable. The defense of fortuitous event can only be raised if: (a) the cause is
unforeseen and unexpected, independent of the human will, (b) that it must be
impossible to avoid it, (c) the occurrence of this unforeseen and unexpected event
rendered the performance of the obligation to be done not in a normal way, and (d)
the obligor must not have aggravated the damage. In the case, the squall could not
be said to have been unforeseen or unexpected by feigning ignorance of the public
warning by PAGASA. As a common carrier, he is charged with such knowledge.
Thus, a squall which is a concomitant occurrence of a weather disturbance
cannot be said to be unforeseen or unexpected.
Regarding damages for potential loss of income, the net earning capacity is
computed by multiplying life expectancy against the net annual income. Life
expectancy is computed by getting 2/3 of the difference between 80 (the standard
number according to the American Expectancy Table) and the age of the deceased
when he died. Net annual income is derived from the difference between the gross
annual income of the deceased and his reasonable and necessary living expenses,
because the loss is not equivalent to the entire earnings of the deceased, but only
such portion as he would have used to support his dependents or heirs.
Reduced in formula:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and
necessary
living expenses).
Where:
Life expectancy = 2/3 x [80 age of deceased at the time of death]
Calculation omitted.

Heirs of Ochoa v. G&S Transport

An award of loss of earning capacity must be based on an unbiased, not selfserving piece of evidence, though there is no particular document that is deemed
to be the only evidence to base the award. As long as the document is found
unbiased and not self-serving, it may be the basis of an award of loss of earning
capacity.
Facts:
Jose Marcial Ochoa (Ochoa) is a Division Head for Human Resources of
USAID. Upon arriving in the Philippines, he boarded a taxi with the trade name
Avis, owned by G&S Transport. (G&S) The taxi on which boarded was driven by
one Bibiano Padilla, Jr. (Padilla). While the taxi was cruising through a flyover,
Padilla was driving at high speed and attempted to overtake a delivery van, but
failed. Instead, the taxi he was driving rubbed at the left-side gutter of the flyover,
which tossed it into the air. It dropped at the left side of EDSA where it split into
two. The driver sustained major injuries and lived, but Ochoa was declared dead on
arrival.
Because of this, the widow and the children of Ochoa demanded for
indemnification from G&S. The demand left unheeded, they filed a complaint with
the Regional Trial Court (RTC), which found G&S liable for the death of Ochoa, for
being a common carrier and for failure to exercise extraordinary diligence. Among
others, loss of earning capacity was awarded by it. The award was based on the
certification issued by USAID that Ochoa, being a division head, earned
Php450,000 plus annually. On appeal, the Court of Appeals likewise found liability
of G&S, but deleted the award of loss earning capacity, reasoning that the award
does not have a basis, as there was no income tax presented. The certification
could not be sufficient.
Both parties filed their petition for review with the Supreme Court (SC).
Issue:
Is the CA correct in deleting the award of loss of earning capacity?
Ruling and Discussion:
The CA is not correct in deleting the award of loss of earning capacity.
The general rule is that an award for loss of earning capacity must be duly
substantiated. The rule, however, on proper substantiation has exceptions: (1) selfemployed earning less than the minimum wage under current labor laws, and
judicial notice may be taken of the fact that in the victim's line of work no
documentary evidence is available; or (2) employed as a daily-wage worker earning
less than the minimum wage under current labor laws. Admittedly, the case does

not fall in any of the exceptions. However, it is ruled that there is proper
substantiation in this case.
The Court of Appeals deleted the award because it found the certification by
USAID to be self-serving, and thus according to jurisprudence, it cannot be a
sufficient basis for the award of loss of earning capacity. A self-serving evidence is
one refers only to acts or declarations made by a party in his own interest at some
place and time out of court, from which he stands to benefit from it.
First, the certification is not self-serving because it does not refer to acts or
declarations made by the heirs, but made by the USAID, the employer of Ochoa.
Second, there is no way that USAID stands to benefit from such declaration, where
it is an organization presumably fully funded by the governments of the United
States. Moreover, no jurisprudence requires that the proof be in a particular form
or government document, like an income tax return. They may be best pieces of
evidence, but they are not the sole evidence to prove it. At the very least, what is
required is an unbiased declaration from an entity or party credible to testify about
the income of the deceased. Clearly, the certification by USAID in this case
satisfies this requirement.

Therefore, the award of loss of earning capacity must be reinstated. Note,

however, that the Court found it necessary to adjust the computation of the RTC.

Philtranco v. Paras
In an action for breach of contract of carriage commenced by a passenger against
his common carrier, the plaintiff can recover damages from a third-party defendant
brought into the suit by the common carrier upon a claim based on tort or quasidelict. The liability of the third-party defendant is independent from the liability of
the common carrier to the passenger.
While generally, moral damages cannot be awarded in case of breach of contract,
by way of exception, they can be awarded where: (a) there is bad faith on the part
of the erring party or (b) the contract is a contract of carriage. Additionally, in this
case another exception is given by the Court, that is, when under the
circumstances, it is warranted.
Facts:
Felix Paras (Paras) is engaged in the buying and selling of fish. He rode a
bus owned by one Inland Trailways (Inland) and while the bus was traversing a
highway, its rear was bumped by another bus owned by Philtranco Service
Enterprises (Philtranco). Because of the accident, Paras sustained major injuries,
which caused him to be operated and admitted in the hospital. It also made him
incapable of doing his business for some time.
Because of this, Paras filed a complaint for damages against Inland for
breach of contract of carriage with the Regional Trial Court (RTC). Inland, in turn,
with leave of court, filed a third-party complaint against Philitranco. The RTC ruled
in favor of Paras and ordered Philtranco to pay him, being adjudged as the
tortfeasor. Moral damages were awarded. This was objected to by Philtransco,
arguing that the award of moral damages is not proper because he did not die.
This was affirmed by the Court of Appeals (CA), reducing however the actual
damages to only Php 1k, the extent of the amount substantiate by receipts.
Temperate damages, however, were awarded. Inland was also granted temperate
damages as to its damaged bus. Philtranco, subsequently appealed the case, to the
Supreme Court (SC).
Issue:
Is the CA correct in affirming the RTC decision, modifying however the
actual damages?
Ruling and Discussion:
Yes, the CA is correct.
In an action for breach of contract of carriage commenced by a passenger
against his common carrier, the plaintiff can recover damages from a third-party
defendant brought into the suit by the common carrier upon a claim based on tort

or quasi-delict. The liability of the third-party defendant is independent from the

liability of the common carrier to the passenger.
Thus, Paras can recover damages from the third-party tortfeasor in this
case, Philtranco.
Regarding the award of damages, as a general rule, indeed, moral damages
are not recoverable in an action predicated on a breach of contract. This is
because such action is not included in Article 2219 of the Civil Code as one of the
actions in which moral damages may be recovered. By way of exception, moral
damages are recoverable in an action predicated on a breach of contract: (a)
where the mishap results in the death of a passenger, and (b) where the common
carrier has been guilty of fraud or bad faith.
Although this action does not fall under either of the exceptions, the award
of moral damages to Paras was nonetheless proper and valid, in view of the
circumstances attendant to this case.
Also, the award of temperate damages is correct. Even though there has
already been an award of actual damages, the award of temperate damages is still
warranted, because the receipts only covered the expenses of the medicine.
However, the Court is convinced that Paras suffered pecuniary loss when he was
operated and hospitalized because of the injuries caused by the accident.
Lastly, loss of earning capacity is also warranted because he was
incapacitated from engaging in his trade due to the injuries suffered. Attorneys
fees also were proper, because Paras incurred the expense when he was forced to
litigate to enforce his right under the law and circumstances.

Malayan Insurance v. First Philippines Insurance Company

In a contract of carriage undertaken by a private carrier, it is best not to stipulate
that the carrier shall be liable for any loss or damage, even those caused by force
majeure, because the action is on the contract accion contractual and as such
the stipulation is generally binding upon the parties, the provisions of ordinary
contracts being the governing law between/among the parties.
Facts:
Reputable Forwarding (Reputable) is engaged the business of forwarding of
goods of Wyeth. It caters to Wyeth alone. As a requirement in their contracts, it
was customary that each procure insurance over their interests in the goods
transported. Reputable insured its interest as the carrier with Malayan Insurance
(Malayan), while Wyeth insured its interest with First Philippine Insurance
Company (First Phil.). In the contract of carriage, Reputable undertook to be held
liable for any damage or loss of the goods resulting from external causes, including
force majeure.
While the goods were transported through a delivery truck, hijackers
successfully stopped the truck and took control over the truck. Days after the
hijacking, the truck was found without the goods now. Wyeth filed a claim for the
insurance proceeds with First Phil., which paid the same after proper inspection
and adjustment. First Phil. now as a subrogee filed a complaint for sum of money
against Reputable, which maintained that Reputable is a common carrier. In the
case, Reputable filed a third-party complaint against Malayan Insurance, its
insurer. Malayan raises as its defense that Reputable is not a common carrier, thus
First Phil. does not have a cause of action against it, because being a common
carrier, it could not be held liable for damage or loss caused by force majeure.
The Regional Trial Court (RTC) found Reputable to be a private carrier but
still liable for the loss, because it is bound by the contract it executed with Wyeth.
Thus, Malayan should pay the insurance proceeds to First Phil., being the claimant
against Reputable. This was affirmed by the Court of Appeals (CA). Now before the
Supreme Court (SC), Malayan contends that First Phil.s stance that Reputable is a
common carrier should be binding on First Phil., and as such the RTCs and CAs
holding that Reputable is a private carrier is erroneous. Being a common carrier, it
cannot be bound by the terms of the contract with Wyeth, it being contrary to law,
because a common carrier cannot be held liable for loss or damage caused by force
majeure.
Issue:
Are the RTC and CA correct in finding that Reputable is a private carrier and
for holding Malayan liable for the insurance proceeds?

Ruling and Discussion:

Yes, the RTC and CA are correct in finding
A common carrier is an individual, corporation, partnership or association
engaged in the business of the transporting goods or passengers, or both, for
compensation, by land, water or air, offering its services to the public. In this case,
Reputable was correctly found to be a private carrier, not a common carrier,
because it does not offer its services to the public it only had Wyeth as its client.
The argument that the stance of First Phil. is binding to it for being a judicial
admission is untenable, because the stance of First Phil. cannot be considered as
conclusive against Reputable, most especially because the nature of its business is
questioned, because it is not Reputable who pleaded that it is a common carrier.
As a private carrier, therefore, it is bound by the terms of the contract it
executed with Wyeth. The suit is upon the contract between Wyeth and Reputable,
brought by the First Phil., as a subrogee of Wyeth. In the contract, it was
uncontroverted that Reputable undertook to be held liable for any damage or loss
arising from causes including force majeure. Because there was no dispute that the
hijacking was a force majeure, Reputable is clearly liable for the loss or damage
arising from it. Malayan, as the insurer, should be held liable for the loss to the
extent of the insurance coverage.

Sps. Perena v. Sps. Zarate

Despite the actions being distinct from each other, the common carrier and the
tortfeasor may be held solidarily liable for the damages adjudged.
The award of loss of earning capacity is still correct, even though the deceased is
not yet actually earning income, because what is compensated is not the loss of
income, but the loss of earning capacity.
Facts:
Sps. Perena operate a school service van, which caters to those who wish to
avail of their services. One of their clients are Sps. Zarate, whose son was named
Aaron. On one fateful morning, Aaron rode the school van at the rear. There were
about 14 others all children who were with him. The van was air-conditioned
and loud music was played during the trip. Because they were running late and
because the traffic was really heavy, the driver decided to take a shortcut by
crossing a railroad. At that time, the van was running at high speed, aiming to
overtake a bus which was also crossing the railroad. The van, however, failed to
overtake the bus, and its rear was hit by the train crossing the railroad. The hit
threw the children-passengers away from the van. Aaron, however, was caught by
the train, which severed his head, causing instantaneous death.
Aggrieved by the death of their son, Sps. Zarate filed a complaint for
damages against Sps. Perena, the driver and the Philippine National Railways
(PNR). Sps. Perena deny liability because they are not a common carrier. As such,
they are only charged to exercise due diligence in the selection of its employees.
The Regional Trial Court (RTC) ruled that Sps. Perena should be held liable for the
death of Aaron. Also, it held PNR solidarily liable with them. Moral and exemplary
damages were awarded, as well as loss of earning capacity. Only Sps. Perena
appealed with the Court of Appeals (Ca), which affirmed in toto the RTC decision.
Thus, Sps. Perena filed a petition for review with the Supreme Court (SC),
assailing the findings of the RTC and CA, arguing that it is not a common carrier
and that there was no basis in adjudging the loss of earning capacity, Aaron being
a high school student and earning no income.
Issue:
Are the RTC and CA correct in their finding that Sps. Perena should be held
liable for the death of Aaron and in computing the amount award for loss of
earning capacity?
Ruling and Discussion:
Yes, they are correct in finding that Sps. Perena should be held liable for the
death of Aaron. Also, the award of loss of earning is correct.

A common carrier is an individual, corporation, partnership or association,

engaged in the transport of goods or passengers, or both, for compensation, by
land, water or air, offering its services to the public. Sps. Perena in this case are
considered common carrier, because they offer their services to the public. The
fact that they only had limited clientele does not make them a private carrier. They
cater to anyone interested to avail of their services. Thus, no matter how limited
their clientele is, the fact that they offer their services of transport of passengers
to the public, they are still considered as common carrier.
As a common carrier it is charged to exercise extraordinary diligence, such
that where there is loss or damage or injury, it is presumed to be negligent. It is
burdened therefore to rebut the presumption. In the case, however, it failed to
rebut the presumption. In fact, there was finding that the driver was negligent in
that it allowed that a loud music be played inside the air-conditioned van. This
most probably made the driver imperceptive to the bell warnings of an
approaching train. Also, the speed at which it is running is also beyond the speed
limit, considering that it was taking a crowded road. Lastly, it was in violation of
traffic rules when the accident occurred, because it failed to stop or slow down
upon approaching a railway. These are findings pointing to the negligence of the
driver of the common carrier. The common carrier is bound by the acts of its
employees.
Sps. Perena are adjuged to be solidarily liable with PNR, which did not
appeal the judgment of liability against, even though the causes of action against
them are distinct. Sps. Perenas liability springs from the breach of contract of
carriage, while that of PNR is based on quasi-delict.
Lastly, the award of loss of earning capacity is still correct, even though the
deceased is not yet actually earning income, because what is compensated is not
the loss of income, but the loss of earning capacity. The RTC and CA correctly
applied the possible income of Aaron based on the minimum wage, despite him
being a high school student and not earning actual income.

PAL v. Lim
In an action based on a breach of contract of carriage, the aggrieved party
does not have to prove that the common carrier was at fault or was negligent. All
that he has to prove is the existence of the contract and the fact of its
nonperformance by the carrier.
In the award of moral damages, there must be evidence on record, mostly
testimonial, that the plaintiff suffered moral suffering, to base the award. Also,
exemplary damages may properly be awarded, where moral, temperate, liquidated
or compensatory damages are awarded.
Facts:
Francisco Lao Lim (Lim), Henry Go (Go) and Manuel Limtong (Limtong)
were partners in a business venture with a German buyer and Chinese client. They
were given a deadline and a place where to close the deal, by reason of which they
scheduled with Rainbow Tours (Rainbow) connecting flights from Cebu to Manila,
and Manila to Hong Kong and back.
On the day of the scheduled flight, however, Lim and Go were not permitted
to board their designated flights, because it was said that their tickets were
cancelled. However, they were not informed of such cancellation. Limtong,
however, was able to board the designated flight. It was only the next day that Lim
and Go were able to fly to Hong Kong. However, their arrival was in vain, as the
German buyer already left for Germany, while the Chinese client pulled off the
deal, because she wanted to meet the three of them, and engaged with another
seller.
When they got back, they filed a complaint for damages against PAL for their
besmirched reputation, wounded feelings and the unrealized deal, predicated upon
PALs failure to carry them according to their contract of carriage. The Regional
Trial Court (RTC) ruled in favor of Lim and Go, stating however that Limtong did
not entitled to damages from PAL because he was carried and transported
according to their contract. The Court of Appeals (CA) affirmed the RTC decision
with modifications as to the award of damages. Thus, PAL filed a petition for
review with the Supreme Court (SC).
Issue:
Are the RTC and CA correct in finding liability in PAL?
Ruling and Discussion:
Yes, they are correct in finding liability in PAL.

In an action based on a breach of contract of carriage, the aggrieved party

does not have to prove that the common carrier was at fault or was negligent. All
that he has to prove is the existence of the contract and the fact of its
nonperformance by the carrier.
In the case, there was really non-performance on the part of PAL when it did
not permit Lim and Go to board the plane, despite them having confirmed tickets.
It was argued that there was instruction from the travel agency their tickets, but
the same, as found by the RTC and CA, were not proven. Damages were proper.
However, the Court deleted the award of moral damages to Go, because he
failed to testify as to his moral suffering. Even though he was dead already, his
heirs could have testified to that effect, but they did not. Moral damages must be
backed up by evidence on record that the plaintiff suffered moral sufferings.
Temperate damages, however, were properly awarded in lieu of this. Moral
damages awarded to Lim were proper. However, Limtong, as correctly held, is not
entitled to damages, even though he suffered in the consequences of the
unrealized deal, because he was carried by PAL according to their contract of
carriage.
The award of exemplary damages was also proper, because it may be
awarded where moral, temperate, liquidated or compensatory damages are
awarded. Since moral and temperate damages were awarded in this case,
exemplary damages were warranted.
Lastly, PAL should be solidarily liable with Rainbow because thy caused the
confusion together which led to the damage suffered by Go and Lim.

Cathay Pacific v. Reyes

Nominal damages are recoverable where a legal right is technically violated and
must be vindicated against an invasion that has produced no actual present loss of
any kind or where there has been a breach of contract and no substantial injury or
actual damages whatsoever have been or can be shown.
Facts:
The Reyes family arranged with Sampaguita Travel (Sampaguita) a travel
reservation for their family trip to Australia. Upon booking, Sampaguita confirmed
their round-trip tickets with Cathay Pacific (Cathay).
They were safely transported from the Philippines to Australia. One week
before their scheduled flight back to the Philippines, they confirmed with Cathay
Pacific their booking which said that it was still okay as scheduled. However, on
the date of the flight, they were informed that their bookings were unconfirmed,
except for one. Due to their adamant pleas, they were allowed to board the plane
to Hong Kong. In Hong Kong, however, they were unfortunately not permitted to
board, except one. The next day, they were allowed to board and got back to the
Philippines safely.
In the Philippines, they filed complaint for damages against Cathay and
Sampaguita with the Regional Trial Court (RTC). In its defense, Cathay argued that
they only based their decision not to permit them to board on their computerized
booking system, which showed that their bookings were unconfirmed. It also said
that they had every reason to cancel the bookings, because there was no correct
ticket number inputted within the prescribed period. It had the right, as per
standard operating procedure, to assume that there was no ticket sold. It filed a
cross-claim against Sampaguita, which tried to exonerate itself from liability
arguing that the complaint for damages was predicated on a contract of carriage
between the Reyes family and Cathay, to which contract it is not privy. The RTC
dismissed the complaint, which dismissal was reversed by the Court of Appeals
(CA), awarding them nominal damages. Cathay appealed the case to the Supreme
Court (SC).
Issue:
Was the CA correct in reversing the RTC dismissal and awarding nominal
damages to the Reyeses?
Ruling and Discussion:
Yes, the CA is correct.
The determination of whether or not the award of damages is correct
depends on the nature of the respondents' contractual relations with Cathay Pacific
and Sampaguita Travel.
On Cathays Liability
While Cathay blames Sampaguita for the cancellation, because there was no
valid ticket number inputted, it cannot be exonerated from liability. The Reyeses
are not privy to whatever misunderstanding and confusion that may have

transpired in their bookings. On its face, the airplane ticket is a valid written
contract of carriage. When an airline issues a ticket to a passenger
confirmed on a particular flight, on a certain date, a contract of carriage
arises, and the passenger has every right to expect that he would fly on that flight
and on that date. If he does not, then the carrier opens itself to a suit for breach of
contract of carriage.
Clearly, Cathay breached its contract of carriage with respondents when it
disallowed them to board the plane in Hong Kong going to Manila on the date
reflected on their tickets.

On Sampaguitas Liability
Sampaguita, with whom the Reyes had a contract of service, was expected
to exercise due diligence which a reasonable man would exercise in his dealings.
However, when it failed to input the correct and valid ticket numbers in the online
booking system of Cathay, which caused the cancellation of the booking of the
tickets of the Reyeses, it failed to exercise such diligence. Because of that, it
also becomes liable for damages.
Actual damages, however, could not be awarded, because there was failure
on the part of the Reyeses, especially Wilfredo, who claimed actual damages for
the alleged unrealized deal, because the claim was not properly substantiated.
Moreover, the award of moral damages could not be given because there
was no bad faith on the part of Cathay when it did not permit them to board the
plane. In fact, the want of bad faith is seen when it allowed them to board the
plane from Australia to Hong Kong despite the absence of confirmation.
The award of nominal damages is correct. Nominal damages are recoverable
where a legal right is technically violated and must be vindicated against an
invasion that has produced no actual present loss of any kind or where there has
been a breach of contract and no substantial injury or actual damages whatsoever
have been or can be shown.

Nacar v. Gallery Frames

Where in Eastern Shipping Lines case, there was a distinction between breached
obligations from forbearance of money (in which case 12% per annum) and those
from others (in which case, only 6% per annum), in the present day however, the
legal interest is only 6% regardless of the nature of the obligation breached., by
virtue of the new BSP-MB Circular No. 976-2013.
Facts:
Nacar is one employee unjustly dismissed by Gallery Frames (Gallery).
Because of the illegal dismissal, he filed a complaint with the Labor Arbiter, which
awarded him backwages and reasonable separation pay, according to the law. The
NLRC sustained the decision of the Labor Arbited. The Court of Appeals (CA) also
affirmed the award. Thus, the case was appealed to the Supreme Court (SC), which
decided in favor of Nacar. An entry of judgment was made on May 27, 2002. The
case was referred back to the Labor Arbiter for execution.
Subsequently, Nacar filed a petition for the correction of computation of the
backwages, from the date of dismissal up to the finality of the Resolution of the SC.
Upon execution, Gallery sought to quash the writ of execution because the amount
to executed therein is contrary to the original award. An alias writ was
subsequently issued. Upon motion of Gallery, the award was recomputed and
reverted to the original amount. Nacar appealed to the NLRC and CA, which both
denied the appeal. Thus, Nacar appealed the denial of his appeal for recomputation with the SC, arguing that while there was an original award by the
Labor Arbiter, the same was never final until reinstatement or finality of decision.
Issue:
Are the NLRC and CA correct in the re-computation according to the motion
of Nacar?
Ruling and Discussion:
No, they are not correct.
The re-computation is necessary and correct. Under the terms of the
decision which is sought to be executed by the petitioner, no essential change is
made by a re-computation as this step is a necessary consequence that flows from
the nature of the illegality of dismissal declared by the Labor Arbiter in that
decision. The damage sustained is not finally repaired until reinstatement or the
finality of the judgment of the court. This is a necessary consequence from the
illegal act of Gallery.
That the amount respondents shall now pay has greatly increased is a
consequence that it cannot avoid as it is the risk that it ran when it continued to
seek recourses against the Labor Arbiter's decision.
On interest
The Court took cognizance of Bangko Sentral ng Pilipinas Monetary Board
circular no. 796-2013. Where in Eastern Shipping Lines case, there was a

distinction between breached obligations from forbearance of money (in which

case 12% per annum) and those from others (in which case, only 6% per annum),
in the present day however, the legal interest is only 6% regardless of the nature of
the obligation breached. Come July 1, 2013 the new rate of six percent (6%) per
annum shall be the prevailing rate of interest when applicable.
The rules are quoted here verbatim for future guidelines:
I.

When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is breached, the contravenor can be
held liable for damages. The provisions under Title XVIII on
"Damages" of the Civil Code govern in determining the measure of
recoverable damages.

II.
With regard particularly to an award of interest in the concept of
actual and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum
of money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing. Furthermore, the interest due shall
itself earn legal interest from the time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 6% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum. No interest, however, shall be
adjudged on unliquidated claims or damages, except when or until the demand can
be established with reasonable certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall begin to run from the time
the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when
such certainty cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the judgment of the court
is made (at which time the quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of legal interest
shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under paragraph 1
or paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.

Seven Brothers Shipping Corporation v. DMC Construction

Temperate or moderate damages may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be provided with certainty. The amount this kind of damage is generally left
to the discretion of the court, but the same must be reasonable.
Facts:
Seven Brothers Shipping Corporation (Seven Bros.) owns a vessel named
Diamond Rabbit (Diamond), which was about to dock in a port. The weather
condition was bad at that time, but the Master of the vessel insisted on docking the
ship. During docking, unfortunately, it became uncontrollable as the waves hit it.
Its main engine could not be used for maneuvering because the propeller was
tangled with the rope of which was supposedly attached to it during the docking
but snapped because of the vicissitudes of the sea. This caused it to maneuver
toward the port, causing damage to the port and some pieces of equipment
stationed therein. One of the damaged equipment was the coal conveyor owned by
DMC Construction (DMC). The conveyor was about 5 years old and had 10 years of
estimated useful life. It was worth Php7M.
A demand was sent by DMC to Seven Bros. for the damage. Its demand
being unheeded, DMC filed with the Regional Trial Court (RTC) a complaint for
damages against Seven Bros. The RTC ruled in favor of DMC and awarded actual
damages of half the value of the conveyor, because it was 5 years old at the time
of the damage with a 10-year reasonable useful life. The Court of Appeals (CA)
modified the damage into nominal damages, in lieu of actual damages, which
DMC failed to substantiate. Seven Bros. appealed the case to the Supreme Court
(SC).
Issue:
Was the CA correct in modifying the damages from actual damages to
nominal damages, when the latter could not be substantiated?
Ruling and Discussion:
No, the CA is not correct insofar as it modified to nominal damages. Instead
it should have awarded temperate damages.
Actual damages cannot be presumed and the court cannot rely on pure
speculation, conjecture or guesswork as to the amount of damages. It must be duly
substantiated duly supported by receipts. Nominal damages may be awarded in
order that the plaintiff's right, which has been violated or invaded by the
defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered.
Temperate or moderate damages may be recovered when the court finds
that some pecuniary loss has been suffered but its amount cannot, from the nature
of the case, be provided with certainty. The amount this kind of damage is
generally left to the discretion of the court, but the same must be reasonable.

In the case, the claim for actual damages was not duly substantiated,
because DMC could not produce the necessary documents on the actual value of
equipment. However, its testimony as to the value, being uncontroverted by
evidence, could be the basis of the court in awarding temperate damages.
The computation, therefore, is correct when it was computed at half the
value, because it was damaged at 5 years old, when it had the useful life of 10
years.