[Responsibility for acts of employees]
sufficient facts to establish such liability, and no negligence on appellant's party
G.R. No. L-8034 November 18, 1955
CORNELIA A. DE GILLACO, ET AL., plaintiffs-appellees,
vs.
MANILA RAILROAD COMPANY, defendant-appellant.
First Assistant Corporate Counsel Federico C. Alikpala and Attorney Higino R.
Francisco for appellant. Restituto Luna for appellees.
REYES, J.B.L., J.:
The Manila Railroad Company has appealed from a judgment of the Court of
First Instance of Laguna sentencing it to pay P4,000 damages to the appellees
herein, the widow and children of the late Tomas Gillaco, shot by an employee
of the Company in April, 1946.
The judgment was rendered upon the following stipulation of facts:
That at about 7:30 a.m., on the morning of April 1, 1946, Lieut. Tomas Gillaco,
husband of the plaintiff, was a passenger in the early morning train of the Manila
Railroad Company from Calamba, Laguna to Manila;
That when the train reached the Paco Railroad station, Emilio Devesa, a train
guard of the Manila Railroad Company assigned in the Manila-San Fernando,
La Union Line, happened to be in said station waiting for the same train which
would take him to Tutuban Station, where he was going to report for duty;
That Emilio Devesa had a long standing personal grudge against Tomas Gillaco,
same dating back during the Japanese occupation;
That because of this personal grudge, Devesa shot Gillaco with the carbine
furnished to him by the Manila Railroad Company for his use as such train
guard, upon seeing him inside the train coach;
That Tomas Gillaco died as a result of the would which he sustained from the
shot fired by Devesa.
It is also undisputed that Devesa was convicted with homicide by final judgment
of the Court of Appeals.
Appellant's contention is that, on the foregoing facts, no liability attaches to it as
employer of the killer, Emilio Devesa; that it is not responsible subsidiary ex
delicto, under Art. 103 of the Revised Penal Code, because the crime was not
committed while the slayer was in the actual performance of his ordinary duties
and service; nor is it responsible ex contractu, since the complaint did not aver
was shown. The Court below held the Railroad company responsible on the
ground that a contract of transportation implies protection of the passengers
against acts of personal violence by the agents or employees of the carrier.
There can be no quarrel with the principle that a passenger is entitled to
protection from personal violence by the carrier or its agents or employees,
since the contract of transportation obligates the carrier to transport a passenger
safely to his destination. But under the law of the case, this responsibility
extends only to those that the carrier could foresee or avoid through the exercise
of the degree of car and diligence required of it.
Discussing the basis of a carrier's liability under the old Civil Code of 1889
(which was in force in 1946, when Gillaco was shot) this Court said in Lasam vs.
Smith (45 Phil., 657):
In our opinion, the conclusions of the court below are entirely correct. That upon
the facts stated the defendant's liability, if any, is contractual, is well settled by
previous decisions of the court, beginning with the case of Rakes vs. Atlantic,
Gulf & Pacific Co. (7 Phil., 359), and the distinction between extra-contractual
liability and contractual liability has been so ably and exhaustively discussed in
various other cases that nothing further need here be said upon that subject.
(See Cangco vs. Manila Railroad Co., 38 Phil., 768; Manila Railroad vs.
Compañia Transatlantica and Atlantic, Gulf & Pacific Co., 38 Phil., 875; De Guia
vs. Manila Electric Railroad & Light Co., 40 Phil., 706). It is sufficient to reiterate
that the source of the defendant's legal liability is the contract of carriage; that by
entering into that contract he bound himself to carry the plaintiff safely and
securely to their destination; and that having failed to do so he is liable in
damages unless he shows that the failure to fulfill his obligation was due to
causes mentioned in article 1105 of the Civil Code, which reads as follows:
"No one shall be liable for events which could not be foreseen or which, even if
foreseen, were inevitable, with the exception of the cases in which the law
expressly provides otherwise and those in which the obligation itself imposes
such liability."
The act of guard Devesa in shooting passenger Gillaco (because of a personal
grudge nurtured against the latter since the Japanese occupation) was entirely
unforeseeable by the Manila Railroad Co. The latter had no means to ascertain
or anticipate that the two would meet, nor could it reasonably foresee every
personal rancor that might exist between each one of its many employees and
any one of the thousands of eventual passengers riding in its trains. The
shooting in question was therefore "caso fortuito" within the definition of article
105 of the old Civil Code, being both unforeseeable and inevitable under the The only good reason for making the carrier responsible for the misconduct of
given circumstances; and pursuant to established doctrine, the resulting breach the servant perpetrated in his own interest, and not in that of his employer, or
of appellant's contract of safe carriage with the late Tomas Gillaco was excused otherwise within the scope of his employment, is that the servant is clothed with
thereby. the delegated authority, and charge with the duty by the carrier, to execute his
undertaking with the passenger. And it cannot be said, we think, that there is
No doubt that a common carrier is held to a very high degree of care and any such delegation to the employees at a station with reference to passenger
diligence in the protection of its passengers; but, considering the vast and embarking at another or traveling on the train. Of course, we are speaking only
complex activities of modern rail transportation, to require of appellant that it of the principle which holds a carrier responsible for wrong done to passenger
should guard against all possible misunderstanding between each and every by servants acting in their own interest, and not in that of the employer. That
one of its employees and every passenger that might chance to ride in its principle is not the ordinary rule, respondent superior, by which the employer is
conveyances at any time, strikes us as demanding diligence beyond what held responsible only for act or omissions of the employee in the scope of his
human care and foresight can provide. employment; but the only reason in our opinion for a broader liability arises from
the fact that the servant, in mistreating the passenger wholly for some private
The lower Court and the appellees both relied on the American authorities that
purpose of his own, in the very act, violates the contractual obligation of the
particularly hold carriers to be insurers of the safety of their passengers against
employer for the performance of which he has put the employee in his place.
willful assault and intentional ill treatment on the part of their servants, it being
The reason does not exist where the employee who committed the assault was
immaterial that the act should be one of private retribution on the part of the
never in a position in which it became his duty to his employer to represent him
servant, impelled by personal malice toward the passenger (10 Am. Jur. 108;
in discharging any duty of the latter toward the passenger. The proposition that
Ed. Note to Gassenheimer vs. Wester R. Co. 40 LRA (NS), p. 999, et seq.) But
the carrier clothes every employee engaged in the transportation business with
as can be inferred from the previous jurisprudence of this Court , the Civil Code
the comprehensive duty of protecting every passenger with whom he may in any
of 1889 did not impose such absolute liability (Lasam vs. Smith, supra). The
way come in contact, and hereby makes himself liable for every assault
liability of a carrier as an insurer was not recognized in this jurisdiction
commited by such servant, without regard to the inquiry whether or not the
(Government vs. Inchausti & Co., 40 Phil., 219; Oriental Comm. Co. vs. Naviera
passenger has come within the sphere of duty of that servant as indicated by the
Filipina, 38 Off. Gaz., 1020).
employment, is regarded as not only not sustained by the authorities, but as
Another very important consideration that must be borne in mind is that, when being unsound and oppressive both to the employer and the employee.
the crime took place, the guard Devesa had no duties to discharge in connection (Houston & T. C. R. Co. vs. Bush, 32 LRA (NS), p. 1205.)
with the transportation of the deceased from Calamba to Manila. The stipulation
Wherefore, the judgment appealed from is reversed and the complaint ordered
of facts is clear that when Devesa shot and killed Gillaco, Devesa was assigned
dismissed, without cost. So ordered.
to guard the Manila-San Fernando (La Union) trains, and he was at Paco Station
awaiting transportation to Tutuban, the starting point of the train that he was
engaged to guard. In fact, his tour of duty was to start at 9:00 a.m., two hours
after the commission of the crime. Devesa was therefore under no obligation to
safeguard the passenger of the Calamba-Manila train, where the deceased was
riding; and the killing of Gillaco was not done in line of duty. The position of
Devesa at the time was that of another would be passenger, a stranger also
awaiting transportation, and not that of an employee assigned to discharge any
of the duties that the Railroad had assumed by its contract with the deceased.
As a result, Devesa's assault cannot be deemed in law a breach of Gillaco's
contract of transportation by a servant or employee of the carrier. We agree with
the position taken by the Supreme Court of Texas in a similar case, where it
held:
[Responsibility for acts of employees]
G.R. No. L-22272 June 26, 1967
ANTONIA MARANAN, plaintiff-appellant, vs.
PASCUAL PEREZ, ET AL., defendants. PASCUAL PEREZ, defendant
appellant.
Pedro Panganiban for plaintiff-appellant.
Magno T. Bueser for defendant-appellant.
BENGZON, J.P., J.:
Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned
and operated by Pascual Perez when he was stabbed and killed by the driver,
Simeon Valenzuela.
Valenzuela was prosecuted for homicide in the Court of First Instance of
Batangas. Found guilty, he was sentenced to suffer imprisonment and to
indemnify the heirs of the deceased in the sum of P6,000. Appeal from said
conviction was taken to the Court of Appeals.1äwphï1.ñët
On December 6 1961, while appeal was pending in the Court of Appeals,
Antonia Maranan, Rogelio's mother, filed an action in the Court of First Instance
of Batangas to recover damages from Perez and Valenzuela for the death of her
son. Defendants asserted that the deceased was killed in self-defense, since he
first assaulted the driver by stabbing him from behind. Defendant Perez further
claimed that the death was a caso fortuito for which the carrier was not liable.
The court a quo, after trial, found for the plaintiff and awarded her P3,000 as
damages against defendant Perez. The claim against defendant Valenzuela was
dismissed. From this ruling, both plaintiff and defendant Perez appealed to this
Court, the former asking for more damages and the latter insisting on non-
liability. Subsequently, the Court of Appeals affirmed the judgment of conviction
earlier mentioned, during the pendency of the herein appeal, and on May 19,
1964, final judgment was entered therein. (Rollo, p. 33).
Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila
Railroad Co., 97 Phil. 884, that the carrier is under no absolute liability for
assaults of its employees upon the passengers. The attendant facts and
controlling law of that case and the one at bar are very different however. In the
Gillaco case, the passenger was killed outside the scope and the course of duty
of the guilty employee. As this Court there found:
x x x when the crime took place, the guard Devesa had no duties to discharge in
connection with the transportation of the deceased from Calamba to Manila. The
stipulation of facts is clear that when Devesa shot and killed Gillaco, Devesa
was assigned to guard the Manila-San Fernando (La Union) trains, and he was
at Paco Station awaiting transportation to Tutuban, the starting point of the train
that he was engaged to guard. In fact, his tour of duty was to start at 9:00 two
hours after the commission of the crime. Devesa was therefore under no
obligation to safeguard the passengers of the Calamba-Manila train, where the
deceased was riding; and the killing of Gillaco was not done in line of duty. The
position of Devesa at the time was that of another would be passenger, a
stranger also awaiting transportation, and not that of an employee assigned to
discharge any of the duties that the Railroad had assumed by its contract with
the deceased. As a result, Devesa's assault can not be deemed in law a breach
of Gillaco's contract of transportation by a servant or employee of the carrier. . . .
(Emphasis supplied)
Now here, the killing was perpetrated by the driver of the very cab transporting
the passenger, in whose hands the carrier had entrusted the duty of executing
the contract of carriage. In other words, unlike the Gillaco case, the killing of the
passenger here took place in the course of duty of the guilty employee and
when the employee was acting within the scope of his duties.
Moreover, the Gillaco case was decided under the provisions of the Civil Code
of 1889 which, unlike the present Civil Code, did not impose upon common
carriers absolute liability for the safety of passengers against wilful assaults or
negligent acts committed by their employees. The death of the passenger in the
Gillaco case was truly a fortuitous event which exempted the carrier from
liability. It is true that Art. 1105 of the old Civil Code on fortuitous events has
been substantially reproduced in Art. 1174 of the Civil Code of the Philippines
but both articles clearly remove from their exempting effect the case where the
law expressly provides for liability in spite of the occurrence of force majeure.
And herein significantly lies the statutory difference between the old and present
Civil Codes, in the backdrop of the factual situation before Us, which further
accounts for a different result in the Gillaco case. Unlike the old Civil Code, the
new Civil Code of the Philippines expressly makes the common carrier liable for
intentional assaults committed by its employees upon its passengers, by the
wording of Art. 1759 which categorically states that
Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the former's employees, although such employees
may have acted beyond the scope of their authority or in violation of the orders
of the common carriers.
The Civil Code provisions on the subject of Common Carriers 1 are new and
were taken from Anglo-American Law.2 There, the basis of the carrier's liability
for assaults on passengers committed by its drivers rests either on (1) the
doctrine of respondeat superior or (2) the principle that it is the carrier's implied
duty to transport the passenger safely.3
Under the first, which is the minority view, the carrier is liable only when the act
of the employee is within the scope of his authority and duty. It is not sufficient
that the act be within the course of employment only.4
Under the second view, upheld by the majority and also by the later cases, it is
enough that the assault happens within the course of the employee's duty. It is
no defense for the carrier that the act was done in excess of authority or in
disobedience of the carrier's orders.5 The carrier's liability here is absolute in the
sense that it practically secures the passengers from assaults committed by its
own employees.6
As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently
follows the rule based on the second view. At least three very cogent reasons
underlie this rule. As explained in Texas Midland R.R. v. Monroe, 110 Tex. 97,
216 S.W. 388, 389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1)
the special undertaking of the carrier requires that it furnish its passenger that
full measure of protection afforded by the exercise of the high degree of care
prescribed by the law, inter alia from violence and insults at the hands of
strangers and other passengers, but above all, from the acts of the carrier's own
servants charged with the passenger's safety; (2) said liability of the carrier for
the servant's violation of duty to passengers, is the result of the formers
confiding in the servant's hands the performance of his contract to safely
transport the passenger, delegating therewith the duty of protecting the
passenger with the utmost care prescribed by law; and (3) as between the
carrier and the passenger, the former must bear the risk of wrongful acts or
negligence of the carrier's employees against passengers, since it, and not the
passengers, has power to select and remove them.
driver was not a party thereto. His civil liability is covered in the criminal case
wherein he was convicted by final judgment.
In connection with the award of damages, the court a quo granted only P3,000
to plaintiff-appellant. This is the minimum compensatory damages amount
recoverable under Art. 1764 in connection with Art. 2206 of the Civil Code when
a breach of contract results in the passenger's death. As has been the policy
followed by this Court, this minimal award should be increased to P6,000. As to
other alleged actual damages, the lower court's finding that plaintiff's evidence
thereon was not convincing,8 should not be disturbed. Still, Arts. 2206 and 1764
award moral damages in addition to compensatory damages, to the parents of
the passenger killed to compensate for the mental anguish they suffered. A
claim therefor, having been properly made, it becomes the court's duty to award
moral damages.9 Plaintiff demands P5,000 as moral damages; however, in the
circumstances, We consider P3,000 moral damages, in addition to the P6,000
damages afore-stated, as sufficient. Interest upon such damages are also due to
plaintiff-appellant. 10
Wherefore, with the modification increasing the award of actual damages in
plaintiff's favor to P6,000, plus P3,000.00 moral damages, with legal interest on
both from the filing of the complaint on December 6, 1961 until the whole
amount is paid, the judgment appealed from is affirmed in all other respects. No
costs. So ordered.

Accordingly, it is the carrier's strict obligation to select its drivers and similar
employees with due regard not only to their technical competence and physical
ability, but also, no less important, to their total personality, including their
patterns of behavior, moral fibers, and social attitude.

Applying this stringent norm to the facts in this case, therefore, the lower court
rightly adjudged the defendant carrier liable pursuant to Art. 1759 of the Civil
Code. The dismissal of the claim against the defendant driver was also correct.
Plaintiff's action was predicated on breach of contract of carriage7 and the cab
[Responsibility for acts of strangers and co-passengers]
G.R. No. 52159 December 22, 1989
JOSE PILAPIL, petitioner, vs.
HON. COURT OF APPEALS and ALATCO TRANSPORTATION COMPANY,
INC., respondents.
Martin Badong, Jr. for petitioner.
Eufronio K. Maristela for private respondent.
PADILLA, J.:
This is a petition to review on certiorari the decision* rendered by the Court of
Appeals dated 19 October 1979 in CA-G.R. No. 57354-R entitled "Jose Pilapil,
plaintiff-appellee versus Alatco Transportation Co., Inc., defendant-appellant,"
which reversed and set aside the judgment of the Court of First Instance of
Camarines Sur in Civil Case No. 7230 ordering respondent transportation
company to pay to petitioner damages in the total sum of sixteen thousand three
hundred pesos (P 16,300.00).
The record discloses the following facts:
Petitioner-plaintiff Jose Pilapil, a paying passenger, boarded respondent-
defendant's bus bearing No. 409 at San Nicolas, Iriga City on 16 September
1971 at about 6:00 P.M. While said bus No. 409 was in due course negotiating
the distance between Iriga City and Naga City, upon reaching the vicinity of the
cemetery of the Municipality of Baao, Camarines Sur, on the way to Naga City,
an unidentified man, a bystander along said national highway, hurled a stone at
the left side of the bus, which hit petitioner above his left eye. Private
respondent's personnel lost no time in bringing the petitioner to the provincial
hospital in Naga City where he was confined and treated.
Considering that the sight of his left eye was impaired, petitioner was taken to
Dr. Malabanan of Iriga City where he was treated for another week. Since there
was no improvement in his left eye's vision, petitioner went to V. Luna Hospital,
Quezon City where he was treated by Dr. Capulong. Despite the treatment
accorded to him by Dr. Capulong, petitioner lost partially his left eye's vision and
sustained a permanent scar above the left eye.
Thereupon, petitioner instituted before the Court of First Instance of Camarines
Sur, Branch I an action for recovery of damages sustained as a result of the
stone-throwing incident. After trial, the court a quo rendered judgment with the
following dispositive part:
Wherefore, judgment is hereby entered:
1. Ordering defendant transportation company to pay plaintiff Jose Pilapil the
sum of P 10,000.00, Philippine Currency, representing actual and material
damages for causing a permanent scar on the face and injuring the eye-sight of
the plaintiff;
2. Ordering further defendant transportation company to pay the sum of P
5,000.00, Philippine Currency, to the plaintiff as moral and exemplary damages;
3. Ordering furthermore, defendant transportation company to reimburse plaintiff
the sum of P 300.00 for his medical expenses and attorney's fees in the sum of
P 1,000.00, Philippine Currency; and
4. To pay the costs.
SO ORDERED 1
From the judgment, private respondent appealed to the Court of Appeals where
the appeal was docketed as CA-G.R. No. 57354R. On 19 October 1979, the
Court of Appeals, in a Special Division of Five, rendered judgment reversing and
setting aside the judgment of the court a quo.
Hence the present petition.
In seeking a reversal of the decision of the Court of Appeals, petitioner contends
that said court has decided the issue not in accord with law. Specifically,
petitioner argues that the nature of the business of a transportation company
requires the assumption of certain risks, and the stoning of the bus by a stranger
resulting in injury to petitioner-passenger is one such risk from which the
common carrier may not exempt itself from liability.
We do not agree.
In consideration of the right granted to it by the public to engage in the business
of transporting passengers and goods, a common carrier does not give its
consent to become an insurer of any and all risks to passengers and goods. It
merely undertakes to perform certain duties to the public as the law imposes,
and holds itself liable for any breach thereof.
Under Article 1733 of the Civil Code, common carriers are required to observe
extraordinary diligence for the safety of the passenger transported by them,
according to all the circumstances of each case. The requirement of
extraordinary diligence imposed upon common carriers is restated in Article
1755: "A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances." Further, in case of
death of or injuries to passengers, the law presumes said common carriers to be
at fault or to have acted negligently. 2
While the law requires the highest degree of diligence from common carriers in
the safe transport of their passengers and creates a presumption of negligence
against them, it does not, however, make the carrier an insurer of the absolute
safety of its passengers. 3
Article 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance
and precaution in the carriage of passengers by common carriers to only such
as human care and foresight can provide. what constitutes compliance with said
duty is adjudged with due regard to all the circumstances.
Article 1756 of the Civil Code, in creating a presumption of fault or negligence on
the part of the common carrier when its passenger is injured, merely relieves the
latter, for the time being, from introducing evidence to fasten the negligence on
the former, because the presumption stands in the place of evidence. Being a
mere presumption, however, the same is rebuttable by proof that the common
carrier had exercised extraordinary diligence as required by law in the
performance of its contractual obligation, or that the injury suffered by the
passenger was solely due to a fortuitous event. 4
In fine, we can only infer from the law the intention of the Code Commission and
Congress to curb the recklessness of drivers and operators of common carriers
in the conduct of their business.
Thus, it is clear that neither the law nor the nature of the business of a
transportation company makes it an insurer of the passenger's safety, but that
its liability for personal injuries sustained by its passenger rests upon its
negligence, its failure to exercise the degree of diligence that the law requires. 5
Petitioner contends that respondent common carrier failed to rebut the
presumption of negligence against it by proof on its part that it exercised
extraordinary diligence for the safety of its passengers.
We do not agree.
First, as stated earlier, the presumption of fault or negligence against the carrier
is only a disputable presumption. It gives in where contrary facts are established
proving either that the carrier had exercised the degree of diligence required by
law or the injury suffered by the passenger was due to a fortuitous event.
Where, as in the instant case, the injury sustained by the petitioner was in no
way due to any defect in the means of transport or in the method of transporting
or to the negligent or willful acts of private respondent's employees, and
therefore involving no issue of negligence in its duty to provide safe and suitable
cars as well as competent employees, with the injury arising wholly from causes
created by strangers over which the carrier had no control or even knowledge or
could not have prevented, the presumption is rebutted and the carrier is not and
ought not to be held liable. To rule otherwise would make the common carrier
the insurer of the absolute safety of its passengers which is not the intention of
the lawmakers.
Second, while as a general rule, common carriers are bound to exercise
extraordinary diligence in the safe transport of their passengers, it would seem
that this is not the standard by which its liability is to be determined when
intervening acts of strangers is to be determined directly cause the injury, while
the contract of carriage Article 1763 governs:
Article 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the wilful acts or negligence of other passengers or of
strangers, if the common carrier's employees through the exercise of the
diligence of a good father of a family could have prevented or stopped the act or
omission.
Clearly under the above provision, a tort committed by a stranger which causes
injury to a passenger does not accord the latter a cause of action against the
carrier. The negligence for which a common carrier is held responsible is the
negligent omission by the carrier's employees to prevent the tort from being
committed when the same could have been foreseen and prevented by them.
Further, under the same provision, it is to be noted that when the violation of the
contract is due to the willful acts of strangers, as in the instant case, the degree
of care essential to be exercised by the common carrier for the protection of its
passenger is only that of a good father of a family.
Petitioner has charged respondent carrier of negligence on the ground that the
injury complained of could have been prevented by the common carrier if
something like mesh-work grills had covered the windows of its bus.
We do not agree.
Although the suggested precaution could have prevented the injury complained
of, the rule of ordinary care and prudence is not so exacting as to require one
charged with its exercise to take doubtful or unreasonable precautions to guard
against unlawful acts of strangers. The carrier is not charged with the duty of
providing or maintaining vehicles as to absolutely prevent any and all injuries to
passengers. Where the carrier uses cars of the most approved type, in general
use by others engaged in the same occupation, and exercises a high degree of
care in maintaining them in suitable condition, the carrier cannot be charged with
negligence in this respect. 6

Finally, petitioner contends that it is to the greater interest of the State if a carrier
were made liable for such stone-throwing incidents rather than have the bus
riding public lose confidence in the transportation system.

Sad to say, we are not in a position to so hold; such a policy would be better left
to the consideration of Congress which is empowered to enact laws to protect
the public from the increasing risks and dangers of lawlessness in society.

WHEREFORE, the judgment appealed from is hereby AFFIRMED.

[Actual or compensatory]
G.R. No. L-11037 December 29, 1960
EDGARDO CARIAGA, ET AL., plaintiffs-appellants,
vs.
LAGUNA TAYABAS BUS COMPANY, defendant-appellant.
MANILA RAILROAD COMPANY, defendant-appellee.
Ozaeta, Lichauco and Picazo for defendant and appellant.
E.A. Fernandez and L.H. Fernandez for plaintiffs and appellants.
Gov't. Corp. Counsel A. Padilla and Atty. F.A. Umali for appellee.
DIZON, J.:
At about 1:00 p.m. on June 18, 1952, Bus No. 133 of the Laguna Tayabas Bus
Co. — hereinafter referred to as the LTB — driven by Alfredo Moncada, left its
station at Azcarraga St., Manila, for Lilio, Laguna, with Edgardo Cariaga, a
fourth-year medical student of the University of Santo Tomas, as one of its
passengers. At about 3:00 p.m., as the bus reached that part of the poblacion of
Bay, Laguna, where the national highway crossed a railroad track, it bumped
against the engine of a train then passing by with such terrific force that the first
six wheels of the latter were derailed, the engine and the front part of the body of
the bus was wrecked, the driver of the bus died instantly, while many of its
passengers, Edgardo among them, were severely injured. Edgardo was first
confined at the San Pablo City Hospital from 5:00 p.m., June 18, 1952, to 8:25
a.m., June 20 of the same year when he was taken to the De los Santos Clinic,
Quezon City. He left that clinic on October 14 to be transferred to the University
of Santo Tomas Hospital where he stayed up to November 15. On this last date
he was taken back to the De los Santos Clinic where he stayed until January 15,
1953. He was unconscious during the first 35 days after the accident; at the De
los Santos Clinic Dr. Gustilo removed the fractured bones which lacerated the
right frontal lobe of his brain and at the University of Santo Tomas Hospital Dr.
Gustilo performed another operation to cover a big hole on the right frontal part
of the head with a tantalum plate.
The LTB paid the sum of P16,964.45 for all the hospital, medical and
miscellaneous expenses incurred from June 18, 1952 to April, 1953. From
January 15, 1953 up to April of the same year Edgardo stayed in a private
house in Quezon, City, the LTB having agreed to give him a subsistence
allowance of P10.00 daily during his convalescence, having spent in this
connection the total sum of P775.30 in addition to the amount already referred
to.
On April 24, 1953 the present action was filed to recover for Edgardo Cariaga,
from the LTB and the MRR Co., and total sum of P312,000.00 as actual,
compensatory, moral and exemplary damages, and for his parents, the sum of
P18,00.00 in the same concepts. The LTB disclaimed liability claiming that the
accident was due to the negligence of its co-defendant, the Manila Railroad
Company, for not providing a crossing bar at the point where the national
highway crossed the railway track, and for this reason filed the corresponding
cross-claim against the latter company to recover the total sum of P18,194.75
representing the expenses paid to Edgardo Cariaga. The Manila Railroad
Company, in turn, denied liability upon the complaint and cross-claim alleging
that it was the reckless negligence of the bus driver that caused the accident.
The lower court held that it was the negligence of the bus driver that caused the
accident and, as a result, rendered judgment sentencing the LTB to pay
Edgardo Cariaga the sum of P10,490.00 as compensatory damages, with
interest at the legal rate from the filing of the complaint, and dismissing the
cross-claim against the Manila Railroad Company. From this decision the
Cariagas and the LTB appealed.
The Cariagas claim that the trial court erred: in awarding only P10,490.00 as
compensatory damages to Edgardo; in not awarding them actual and moral
damages, and in not sentencing appellant LTB to pay attorney's fees.
On the other hand, the LTB's principal contention in this appeal is that the trial
court should have held that the collision was due to the fault of both the
locomotive driver and the bus driver and erred, as a consequence, in not holding
the Manila Railroad Company liable upon the cross-claim filed against it.
We shall first dispose of the appeal of the bus company. Its first contention is
that the driver of the train locomotive, like the bus driver, violated the law, first, in
sounding the whistle only when the collision was about to take place instead of
at a distance at least 300 meters from the crossing, and second, in not ringing
the locomotive bell at all. Both contentions are without merits.
After considering the evidence presented by both parties the lower court
expressly found:
. . . While the train was approximately 300 meters from the crossing, the
engineer sounded two long and two short whistles and upon reaching a point
about 100 meters from the highway, he sounded a long whistle which lasted up
to the time the train was about to cross it. The bus proceeded on its way without
slackening its speed and it bumped against the train engine, causing the first six
wheels of the latter to be derailed.
xxx xxx xxx
. . . that the train whistle had been sounded several times before it reached the
crossing. All witnesses for the plaintiffs and the defendants are uniform in stating
that they heard the train whistle sometime before the impact and considering
that some of them were in the bus at the time, the driver thereof must have
heard it because he was seated on the left front part of the bus and it was his
duty and concern to observe such fact in connection with the safe operation of
the vehicle. The other L.T.B. bus which arrived ahead at the crossing, heeded
the warning by stopping and allowing the train to pass and so nothing happened
to said vehicle. On the other hand, the driver of the bus No. 133 totally ignored
the whistle and noise produced by the approaching train and instead he tried to
make the bus pass the crossing before the train by not stopping a few meters
from the railway track and in proceeding ahead.
The above findings of the lower court are predicated mainly upon the testimony
of Gregorio Ilusondo, a witness for the Manila Railroad Company.
Notwithstanding the efforts exerted by the LTB to assail his credibility, we do not
find in the record any fact or circumstance sufficient to discredit his testimony.
We have, therefore, no other alternative but to accept the findings of the trial
court to the effect, firstly, that the whistle of locomotive was sounded four times
— two long and two short — "as the train was approximately 300 meters from
the crossing"; secondly, that another LTB bus which arrived at the crossing
ahead of the one where Edgardo Cariaga was a passenger, paid heed to the
warning and stopped before the "crossing", while — as the LTB itself now
admits (Brief p. 5) — the driver of the bus in question totally disregarded the
warning.
But to charge the MRR Co. with contributory negligence, the LTB claims that the
engineer of the locomotive failed to ring the bell altogether, in violation of the
section 91 of Article 1459, incorporated in the charter of the said MRR Co. This
contention — as is obvious — is the very foundation of the cross-claim
interposed by the LTB against its
co-defendant. The former, therefore, had the burden of proving it affirmatively
because a violation of law is never presumed. The record discloses that this
burden has not been satisfactorily discharged.
The Cariagas, as appellants, claim that the award of P10,000.00 compensatory
damages to Eduardo is inadequate considering the nature and the after effects
of the physical injuries suffered by him. After a careful consideration of the
evidence on this point we find their contentions to be well-founded.
From the deposition of Dr. Romeo Gustilo, a neurosurgeon, it appears that, as a
result of the injuries suffered by Edgardo, his right forehead was fractured
necessitating the removal of practically all of the right frontal lobe of his brain.
From the testimony of Dr. Jose A. Fernandez, a psychiatrist, it may be gathered
that, because of the physical injuries suffered by Edgardo, his mentality has
been so reduced that he can no longer finish his studies as a medical student;
that he has become completely misfit for any kind of work; that he can hardly
walk around without someone helping him, and has to use a brace on his left leg
and feet.
Upon the whole evidence on the matter, the lower court found that the removal
of the right frontal lobe of the brain of Edgardo reduced his intelligence by about
50%; that due to the replacement of the right frontal bone of his head with a
tantalum plate Edgardo has to lead a quite and retired life because "if the
tantalum plate is pressed in or dented it would cause his death."
The impression one gathers from this evidence is that, as a result of the physical
injuries suffered by Edgardo Cariaga, he is now in a helpless condition, virtually
an invalid, both physically and mentally.
Appellant LTB admits that under Art. 2201 of the Civil Code the damages for
which the obligor, guilty of a breach of contract but who acted in good faith, is
liable shall be those that are the natural and probable consequences of the
breach and which the parties had forseen or could have reasonably forseen at
the time the obligation was constituted, provided such damages, according to
Art. 2199 of the same Code, have been duly proved. Upon this premise it claims
that only the actual damages suffered by Edgardo Cariaga consisting of
medical, hospital and other expenses in the total sum of P17,719.75 are within
this category. We are of the opinion, however, that the income which Edgardo
Cariaga could earn if he should finish the medical course and pass the
corresponding board examinations must be deemed to be within the same
category because they could have reasonably been foreseen by the parties at
the time he boarded the bus No. 133 owned and operated by the LTB. At that
time he was already a fourth-year student in medicine in a reputable university.
While his scholastic may not be first rate (Exhibits 4, 4-A to 4-C), it is,
nevertheless, sufficient to justify the assumption that he could have passed the
board test in due time. As regards the income that he could possibly earn as a
medical practitioner, it appears that, according to Dr. Amado Doria, a witness for
the LTB, the amount of P300.00 could easily be expected as the minimum
monthly income of Edgardo had he finished his studies.
Upon consideration of all the facts mentioned heretofore this Court is of the
opinion, and so holds, that the compensatory damages awarded to Edgardo
Cariaga should be increased to P25,000.00.
Edgardo Cariaga's claim for moral damages and attorney's fees was denied by
the trial court, the pertinent portion of its decision reading as follows:
Plaintiffs' claim for moral damages cannot also be granted. Article 2219 of the
Civil Code enumerates the instances when moral damages may be covered and
the case under consideration does not fall under any one of them. The present
action cannot come under paragraph 2 of said article because it is not one of the
quasi-delict and cannot be considered as such because of the pre-existing
contractual relation between the Laguna Tayabas Bus Company and Edgardo
Cariaga. Neither could defendant Laguna Tayabas Bus Company be held liable
to pay moral damages to Edgardo Cariaga under Article 2220 of the Civil Code
on account of breach of its contract of carriage because said defendant did not
act fraudulently or in bad faith in connection therewith. Defendant Laguna
Tayabas Bus Company had exercised due diligence in the selection and
supervision of its employees like the drivers of its buses in connection with the
discharge of their duties and so it must be considered an obligor in good faith.
The plaintiff Edgardo Cariaga is also not entitled to recover for attorney's fees,
because this case does not fall under any of the instances enumerated in Article
2208 of the Civil Code.
We agree with the trial court and, to the reason given above, we add those given
by this Court in Cachero vs. Manila Yellow Taxicab Co., Inc.(101 Phil., 523, 530,
533):
A mere perusal of plaintiff's complaint will show that this action against the
defendant is predicated on an alleged breach of contract of carriage, i.e., the
failure of the defendants to bring him "safely and without mishaps" to his
destination, and it is to be noted that the chauffeur of defendant's taxicab that
plaintiff used when he received the injuries involved herein, Gregorio Mira, has
not even made a party defendant to this case.
Considering, therefore, the nature of plaintiff's action in this case, is he entitled
to compensation for moral damages? Article 2219 of the Civil Code says the
following:
Art. 2219. Moral damages may be recovered in the following and analogous
cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and
35.
xxx xxx xxx
Of course enumerated in the just quoted Article 2219 only the first two may have
any bearing on the case at bar. We find, however, with regard to the first that the
defendant herein has not committed in connection with this case any "criminal
offense resulting in physical injuries". The one that committed the offense
against the plaintiff is Gregorio Mira, and that is why he has been already
prosecuted and punished therefor. Altho (a) owners and managers of an
establishment and enterprise are responsible for damages caused by their
employees in the service of the branches in which the latter are employed or on
the occasion of their functions; (b) employers are likewise liable for damages
caused by their employees and household helpers acting within the scope of
their assigned task (Article 218 of the Civil Code); and (c) employers and
corporations engaged in any kind of industry are subsidiary civilly liable for
felonies committed by their employees in the discharge of their duties (Art. 103,
Revised Penal Code), plaintiff herein does not maintain this action under the
provisions of any of the articles of the codes just mentioned and against all the
persons who might be liable for the damages caused, but as a result of an
admitted breach of contract of carriage and against the defendant employer
alone. We, therefore, hold that the case at bar does not come within the
exception of paragraph 1, Article 2219 of the Civil Code.
The present complaint is not based either on a "quasi-delict causing physical
injuries" (Art. 2219, par. 2 of the Civil Code). From the report of the Code
Commission on the new Civil Code. We copy the following:
A question of nomenclature confronted the Commission. After a careful
deliberation, it was agreed to use the term "quasi-delict" for those obligations
which do not arise from law, contracts, quasi-contracts, or criminal offenses.
They are known in Spanish legal treaties as "culpa aquiliana", "culpa-extra-
contractual" or "cuasi-delitos". The phrase "culpa-extra-contractual" or its
translation "extra-contractual-fault" was eliminated because it did not exclude
quasi-contractual or penal obligations. "Aquilian fault" might have been selected,
but it was thought inadvisable to refer to so ancient a law as the "Lex Aquilia".
So "quasi-delict" was chosen, which more nearly corresponds to the Roman
Law classification of the obligations and is in harmony with the nature of this
kind of liability.
In view of the foregoing the sum of P2,000 was awarded as moral damages by
the trial court has to be eliminated, for under the law it is not a compensation
awardable in a case like the one at bar.
What has been said heretofore relative to the moral damages claimed by
Edgardo Cariaga obviously applies with greater force to a similar claim (4th
assignment of error) made by his parents.

The Commission also thought of the possibility of adopting the word "tort" from
Anglo-American law. But "tort" under that system is much broader than the
Spanish-Philippine concept of obligations arising from non-contractual
negligence. "Tort" in Anglo-American jurisprudence includes not only
negligence, but also intentional criminal act, such as assault and battery, false
imprisonment and deceit. In the general plan of the Philippine legal system,
intentional and malicious acts are governed by the Penal Code, although certain
exceptions are made in the Project. (Report of the Code Commission, pp. 161-
162).
In the case of Cangco, vs. Manila Railroad, 38 Phil. 768, We established the
distinction between obligation derived from negligence and obligation as a result
of a breach of contract. Thus, we said:
The claim made by said spouses for actual and compensatory damages is
likewise without merits. As held by the trial court, in so far as the LTB is
concerned, the present action is based upon a breach of contract of carriage to
which said spouses were not a party, and neither can they premise their claim
upon the negligence or quasi-delict of the LTB for the simple reason that they
were not themselves injured as a result of the collision between the LTB bus and
train owned by the Manila Railroad Company.
Wherefore, modified as above indicated, the appealed judgement is hereby
affirmed in all other respects, with costs against appellant LTB.

It is important to note that the foundation of the legal liability of the defendant is
the contract of carriage, and that the obligation to respond for the damage which
plaintiff has suffered arises, if at all, from the breach of that contract by reason of
the failure of defendant to exercise due care in its performance. That is to say,
its liability is direct and immediate, differing essentially in the legal viewpoint
from the presumptive responsibility for the negligence of its servants, imposed
by Article 1903 of the Civil Code (Art. 2180 of the new), which can be rebutted
by proof of the exercise of due care in their selection of supervision. Article 1903
is not applicable to obligations arising EX CONTRACTU, but only to extra-
contractual obligations — or to use the technical form of expression, that article
relates only to CULPA AQUILIANA' and not to CULPA
CONTRACTUAL.lawphil.net

The decisions in the cases of Castro vs. Acro Taxicab Co., (82 Phil., 359; 46 Off.
Gaz., No. 5, p. 2023); Lilius, et al. vs. Manila Railroad, 59 Phil., 758) and others,
wherein moral damages were awarded to the plaintiffs, are not applicable to the
case at bar because said decision were rendered before the effectivity of the
new Civil Code (August 30, 1950) and for the further reason that the complaints
filed therein were based on different causes of action.
[Actual or compensatory]
G.R. No. L-25499 February 18, 1970
VILLA REY TRANSIT, INC., petitioner,
vs.
THE COURT OF APPEALS, TRINIDAD A. QUINTOS, PRIMA A. QUINTOS,
AND JULITA A. QUINTOS, respondents.
Laurea and Pison for petitioner.
Bonifacio M. Abad, Jr. for respondents.
CONCEPCION, C.J.:
Petitioner, Villa Rey Transit, Inc., seeks the review by certiorari of a decision of
the Court of Appeals affirming that of the Court of First Instance of Pangasinan.
The basic facts are set forth in said decision of the Court of Appeals, from which
We quote:
At about 1:30 in the morning of March 17, 1960, an Izuzu First Class passenger
bus owned and operated by the defendant, bearing Plate No. TPU-14871-
Bulacan and driven by Laureano Casim, left Lingayen, Pangasinan, for Manila.
Among its paying passengers was the deceased, Policronio Quintos, Jr. who sat
on the first seat, second row, right side of the bus. At about 4:55 o'clock a.m.
when the vehicle was nearing the northern approach of the Sadsaran Bridge on
the national highway in barrio Sto. Domingo, municipality of Minalin, Pampanga,
it frontally hit the rear side of a bullcart filled with hay. As a result the end of a
bamboo pole placed on top of the hayload and tied to the cart to hold it in place,
hit the right side of the windshield of the bus. The protruding end of the bamboo
pole, about 8 feet long from the rear of the bullcart, penetrated through the glass
windshield and landed on the face of Policronio Quintos, Jr. who, because of the
impact, fell from his seat and was sprawled on the floor. The pole landed on his
left eye and the bone of the left side of his face was fractured. He suffered other
multiple wounds and was rendered unconscious due, among other causes to
severe cerebral concussion. A La Mallorca passenger bus going in the opposite
direction towards San Fernando, Pampanga, reached the scene of the mishap
and it was stopped by Patrolman Felino Bacani of the municipal police force of
Minalin who, in the meantime, had gone to the scene to investigate. Patrolman
Bacani placed Policronio Quintos, Jr. and three other injured men who rode on
the bullcart aboard the La Mallorca bus and brought them to the provincial
hospital of Pampanga at San Fernando for medical assistance. Notwithstanding
such assistance, Policronio Quintos, Jr. died at 3:15 p.m. on the same day,
March 17, 1960, due to traumatic shock due to cerebral injuries.
The private respondents, Trinidad, Prima and Julita, all surnamed Quintos, are
the sisters and only surviving heirs of Policronio Quintos Jr., who died single,
leaving no descendants nor ascendants. Said respondents herein brought this
action against herein petitioner, Villa Rey Transit, Inc., as owner and operator of
said passenger bus, bearing Plate No. TPU-14871-Bulacan, for breach of the
contract of carriage between said petitioner and the deceased Policronio
Quintos, Jr., to recover the aggregate sum of P63,750.00 as damages, including
attorney's fees. Said petitioner — defendant in the court of first instance —
contended that the mishap was due to a fortuitous event, but this pretense was
rejected by the trial court and the Court of Appeals, both of which found that the
accident and the death of Policronio had been due to the negligence of the bus
driver, for whom petitioner was liable under its contract of carriage with the
deceased. In the language of His Honor, the trial Judge:
The mishap was not the result of any unforeseeable fortuitous event or
emergency but was the direct result of the negligence of the driver of the
defendant. The defendant must, therefore, respond for damages resulting from
its breach of contract for carriage. As the complaint alleged a total damage of
only P63,750.00 although as elsewhere shown in this decision the damages for
wake and burial expenses, loss of income, death of the victim, and attorneys fee
reach the aggregate of P79,615.95, this Court finds it just that said damages be
assessed at total of only P63,750.00 as prayed for in plaintiffs' amended
complaint.
The despositive part of the decision of the trial Court reads:
WHEREFORE, judgment is hereby rendered ordering the defendant to pay to
the plaintiffs the amount of P63,750.00 as damages for breach of contract of
carriage resulting from the death of Policronio Quintos, Jr.
which, as above indicated, was affirmed by the Court of Appeals. Hence, the
present petition for review on certiorari, filed by Villa Rey Transit, Inc.
The only issue raised in this appeal is the amount of damages recoverable by
private respondents herein. The determination of such amount depends, mainly
upon two (2) factors, namely: (1) the number of years on the basis of which the
damages shall be computed and (2) the rate at which the losses sustained by
said respondents should be fixed.
The first factor was based by the trial court — the view of which was concurred
in by the Court of Appeals — upon the life expectancy of Policronio Quintos, Jr.,
which was placed at 33-1/3 years — he being over 29 years of age (or around
30 years for purposes of computation) at the time of his demise — by applying
the formula (2/3 x [80-301 = life expectancy) adopted in the American
Expectancy Table of Mortality or the actuarial of Combined Experience Table of
Mortality. Upon the other hand, petitioner maintains that the lower courts had
erred in adopting said formula and in not acting in accordance with Alcantara v.
Surro1 in which the damages were computed on a four (4) year basis, despite
the fact that the victim therein was 39 years old, at the time of his death, and
had a life expectancy of 28.90 years.
The case cited is not, however, controlling in the one at bar. In the Alcantara
case, none of the parties had questioned the propriety of the four-year basis
adopted by the trial court in making its award of damages. Both parties
appealed, but only as regards the amount thereof. The plaintiffs assailed the
non-inclusion, in its computation, of the bonus that the corporation, which was
the victim's employer, had awarded to deserving officers and employees, based
upon the profits earned less than two (2) months before the accident that
resulted in his death. The defendants, in turn, objected to the sum awarded for
the fourth year, which was treble that of the previous years, based upon the
increases given, in that fourth year, to other employees of the same corporation.
Neither this objection nor said claim for inclusion of the bonus was sustained by
this Court. Accordingly, the same had not thereby laid down any rule on the
length of time to be used in the computation of damages. On the contrary, it
declared:
The determination of the indemnity to be awarded to the heirs of a deceased
person has therefore no fixed basis. Much is left to the discretion of the court
considering the moral and material damages involved, and so it has been said
that "(t)here can be no exact or uniform rule for measuring the value of a human
life and the measure of damages cannot be arrived at by precise mathematical
calculation, but the amount recoverable depends on the particular facts and
circumstances of each case. The life expectancy of the deceased or of the
beneficiary, whichever is shorter, is an important factor.' (25 C.J.S. 1241.) Other
factors that are usually considered are: (1) pecuniary loss to plaintiff or
beneficiary (25 C.J.S. 1243-1250) ; (2) loss of support (25 C.J.S., 1250-1251);
(3) loss of service (25 C.J.S. 1251-1254); (4) loss of society (25 C.J.S. 1254-
1255); (5) mental suffering of beneficiaries (25 C.J.S., 1258-1259) ; and (6)
medical and funeral expenses (26 C.J.S., 1254-1260)."2
Thus, life expectancy is, not only relevant, but, also, an important element in
fixing the amount recoverable by private respondents herein. Although it is not
the sole element determinative of said amount, no cogent reason has been
given to warrant its disregard and the adoption, in the case at bar, of a purely
arbitrary standard, such as a four-year rule. In short, the Court of Appeals has
not erred in basing the computation of petitioner's liability upon the life
expectancy of Policronio Quintos, Jr.
With respect to the rate at which the damages shall be computed, petitioner
impugns the decision appealed from upon the ground that the damages
awarded therein will have to be paid now, whereas most of those sought to be
indemnified will be suffered years later. This argument is basically true, and this
is, perhaps, one of the reasons why the Alcantara case points out the absence
of a "fixed basis" for the ascertainment of the damages recoverable in litigations
like the one at bar. Just the same, the force of the said argument of petitioner
herein is offset by the fact that, although payment of the award in the case at bar
will have to take place upon the finality of the decision therein, the liability of
petitioner herein had been fixed at the rate only of P2,184.00 a year, which is
the annual salary of Policronio Quintos, Jr. at the time of his death, as a young
"training assistant" in the Bacnotan Cement Industries, Inc. In other words,
unlike the Alcantara case, on which petitioner relies, the lower courts did not
consider, in the present case, Policronio's potentiality and capacity to increase
his future income. Indeed, upon the conclusion of his training period, he was
supposed to have a better job and be promoted from time to time, and, hence, to
earn more, if not — considering the growing importance of trade, commerce and
industry and the concomitant rise in the income level of officers and employees
therein — much more.
At this juncture, it should be noted, also, that We are mainly concerned with the
determination of the losses or damages sustained by the private respondents,
as dependents and intestate heirs of the deceased, and that said damages
consist, not of the full amount of his earnings, but of the support, they received
or would have received from him had he not died in consequence of the
negligence of petitioner's agent. In fixing the amount of that support, We must
reckon with the "necessary expenses of his own living", which should be
deducted from his earnings. Thus, it has been consistently held that earning
capacity, as an element of damages to one's estate for his death by wrongful act
is necessarily his net earning capacity or his capacity to acquire money, "less
the necessary expense for his own living.3 Stated otherwise, the amount
recoverable is not loss of the entire earning, but rather the loss of that portion of
the earnings which the beneficiary would have received. 4 In other words, only
net earnings, not gross earning, are to be considered5 that is, the total of the
earnings less expenses necessary in the creation of such earnings or income 6
and less living and other incidental expenses.7
All things considered, We are of the opinion that it is fair and reasonable to fix
the deductible living and other expenses of the deceased at the sum of
P1,184.00 a year, or about P100.00 a month, and that, consequently, the loss
sustained by his sisters may be roughly estimated at P1,000.00 a year or
P33,333.33 for the 33-1/3 years of his life expectancy. To this sum of
P33,333.33, the following should be added: (a) P12,000.00, pursuant to Arts.
104 and 107 of the Revised Penal Code, in relation to Article 2206 of our Civil
Code, as construed and applied by this Court;8 (b) P1,727.95, actually spent by
private respondents for medical and burial expenses; and (c) attorney's fee,
which was fixed by the trial court, at P500.00, but which, in view of the appeal
taken by petitioner herein, first to the Court of Appeals and later to this Supreme
Court, should be increased to P2,500.00. In other words, the amount adjudged
in the decision appealed from should be reduced to the aggregate sum of
P49,561.28, with interest thereon, at the legal rate, from December 29, 1961,
date of the promulgation of the decision of the trial court.

Thus modified, said decision and that of the Court of Appeals are hereby
affirmed, in all other respects, with costs against petitioner, Villa Rey Transit,
Inc. It is so ordered.
[Actual or compensatory]
G.R. No. L-54470 May 8, 1990
PHILIPPINE AIRLINES, INC., petitioner,
vs.
HON. COURT OF APPEALS and NATIVIDAD VDA. DE PADILLA,
substituted by her legal heirs, namely: AUGUSTO A. PADILLA, ALBERTO
A. PADILLA, CRESENCIO R. ABES (representing the deceased Isabel
Padilla Abes) MIGUEL A. PADILLA and RAMON A. PADILLA, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Ambrosio Padilla, Mempin & Reyes Law Offices for private respondents.
GRIÑO-AQUINO, J.:
The only legal issue raised by the petitioner in this thirty-year-old case is
whether the indemnity for the death of private respondent's son, the late Nicanor
A. Padilla should be computed on the basis of his life expectancy, as the trial
court and the Court of Appeals did, rather than the life expectancy of private
respondent, his only legal heir, as the petitioner contends.
On November 23, 1960, at 5:30 P.M., Starlight Flight No. 26 of the Philippine Air
Lines (hereafter PAL) took off from the Manduriao Airport in Iloilo, on its way to
Manila, with 33 persons on board, including the plane's complement. The plane
did not reach its destination but crashed on Mt. Baco, Mindoro, one hour and
fifteen minutes after takeoff .The plane was Identified as PI-C133, a DC-3 type
aircraft manufactured in 1942 and acquired by PAL in 1948. It had flown almost
18,000 hours at the time of its illfated flight. It had been certified as airworthy by
the Civil Aeronautics Administration.
Among the fatalities was Nicanor Padilla who was a passenger on the star
crossed flight. He was 29 years old, single. His mother, Natividad A. Vda. de
Padilla, was his only legal heir.
As a result of her son's death, Mrs. Padilla filed a complaint (which was
amended twice) against PAL, demanding payment of P600,000 as actual and
compensatory damages, plus exemplary damages and P60,000 as attorney's
fees.
In its answer, PAL denied that the accident was caused by its negligence or that
of any of the plane's flight crew, and that, moreover, the damages sought were
excessive and speculative.
On November 23, 1964, the trial court issued a pre-trial order requiring the
parties to file on or before January 30, 1965 a stipulation of facts, or a negative
manifestation in case they failed to submit a stipulation.
On June 8, 1965, the parties submitted a partial stipulation of facts providing as
follows:
1.
Plaintiff is the widow of the late Alberto R. Padilla Filipino, of legal age, and a
resident of and with postal address at No. 970 (formerly No. 247) Gral. Solano
St., San Miguel, Manila, while defendant Philippine Air Lines, Inc. is a
corporation duly organized, registered and existing under and by virtue of the
laws of the Philippines, engaged, as a common carrier in the business of
carrying or transporting by air passengers and goods, offering its services to the
public as such for compensation, with offices at Makati Bldg., Makati, Rizal.
2.
Nicanor A. Padilla was born on January 10, 1931. He was a son by lawful
marriage of plaintiff and Alberto R. Padilla, who died on September 2, 1948.
3.
Nicanor A. Padilla finished the elementary grades in 1943, high school in 1947,
graduated the Reserve Officer's Course (Infantry Basic Course) Armed Forces
of the Philippines in 1949, and graduated with the degree of Bachelor of
Literature in 1951 and the degree of Bachelor of Laws in 1954, all in Ateneo de
Manila.
4.
He was admitted by the Supreme Court of the Philippines to practice law on
January 28, 1955, and from January 1958, to the time of his death on November
23, 1960, he was associated with the law offices of Senator Ambrosio Padilla,
brother of his father, Alberto R. Padilla.
5.
At the time of his death, he was the President and General Manager of the
Padilla Shipping Co., Inc. He was also Vice-President and Treasurer of the
Allied Overseas Trading Co., Inc.
6.
He was a member of the Board of Directors of the Junior Chamber of
Commerce (Jaycees) International and Chairman of its Committee on
Governmental Affairs for the term 1960-1961. This Committee on Governmental
Affairs published a pamphlet entitled "Good Government is our Business," for
which the deceased was named "Jaycee of the Month of January 1960."
7.
Nicanor A. Padilla, while travelling and being transported and flown as a paid
passenger on one [of] defendant's aircraft, a DC-3 with registry No. PI-C133, on
"Star Light Flight" No. 26 bound for Manila from the City of Iloilo on November
23, 1960, was killed when said plane crashed in the area of Mount Baco,
Oriental Mindoro
8.
Nicanor A. Padilla died single, leaving as his nearest of kin and sole heiress to
his estate his mother the plaintiff herein with whom he was residing at the time
of his death at 970 Gral. Solano St., Manila.
9.
The aircraft (PI-C133) that crashed on Mt. Baco, Oriental Mindoro on November
23, 1960, was a twin-engine passenger plane of the Philippine Air Lines of the
DC-3 type. It was manufactured by Douglas Aircraft Corporation of the United
States for the U.S. Army and was purchased from the latter by the Commercial
Air lines, Inc., on September 25, 1946. The defendant Philippine Air Lines
acquired the plane from the Commercial Air Lines, Inc., on October 15, 1948.
The aircraft was registered by Philippine Air Lines with the Civil Aeronautics
Administration as PI-C142 on May 10, 1949. On October 15, 1953, PI-C142 met
with a non-fatal accident at Piat, Tuguegarao, Cagayan. PAL requested the Civil
Aeronautics Administration for a change in the identification mark. Said request
was granted and the registration number was changed from PI-C142 to PI-C133
on July 29, 1954. As [ofl November 22, 1960, the day before the fatal crash on
Mt. Baco, PI-C133 had a total flying time of 17,996:33 hours.
10.
PI-C133 was issued a certificate of airworthiness by the Civil Aeronautics
Administration on September 13, 1960 which was to expire on September 12,
1961; a copy of which is attached hereto as Exhibit "I" and made a part of this
stipulation.
11.
Other facts on which the parties cannot agree will be subject to proof at the trial.
(pp. 34-39, Record on Appeal; p. 11 7, Rollo.)
On January 15, 1966, the parties submitted another partial stipulation of facts:
1.
That in the book written by Salvador B. Salvosa, M.S. University of Michigan and
member of the Actuarial Society of the Philippine, entitled; "Filipino Experience
Mortality Table," the complete life expectancy of Filipinos appear on page 3
thereof, a photostat of which is attached hereto as Exhibit "A."
2.
That in said Exhibit "A", the columns under the heading "Age x," refers to the
age of the individual, and the columns "oe x" refers to the corresponding number
of years the individuals expected to live. Thus, under the column "Age x," a
person aged 29, the corresponding life expectancy of said person under column
"oex" is "42.60" years; and under said column "Age x" a person aged 60,
corresponding life expec tancy of said person under column 'oex' is "17.90"
years;
3.
That Salvador B. Salvosa's "Filipino Experience Mortality Table," including the
table of life expectancy are used by the Philippine International life Insurance
Co., the Sterling Life Insurance Co., the Cardinal Life Insurance Co., and Star
life Insurance Co., and that the same has been approved by the Insurance
Commissioner for the use of life insurance companies doing business in the
Philippines as shown by a certificate issued by said Commissioner which is
attached hereto as Exhibit "B";
4.
That the book of Nelson and Warren, Consulting Actuaries of St. Luis and
Kansas cities, Missouri, entitled: "Principal Mortality Tables", contains a table of
comparison of complete life expectancy based on principal mortality tables used
by life insurance companies, a photostat of which is likewise attached hereto as
Exhibits "C", "C-l", "C-2", and "C-3";
5.
That of the life expectancy based on the different systems mentioned in said
Exhibits "C", "C-1", "C-2" and "C-3", the following are also used in the
Philippines for life insurance purposes: (a) the American Experience appearing
in Exhibit "B", 'fifth columns on both pages, the first column corresponding to the
age of the individual (pages 12 and 13 of the book); (b) the Standard Industrial,
appearing in the same Exhibit "B", "sixth column on both pages (pages 12 and
13 of the book); and (c) the 1941 Commissioner Standard Ordinary, or CSO
1941 for short, appearing in Exhibit "B-1", third column, on both pages (pages
14 and 15 of the book).
6.
That the materiality and applicability [sic] of the life expectancy tables shown in
Exhibit A or Exhibits "C", "C-1", "C-2" and "C-3" are left to the judgment of the
Honorable Court. (pp. 39-42, Record on Appeal; p. 117, Rollo.)
On March 19, 1970, a third joint partial stipulation of facts was submitted by the
parties to the trial court which reads, thus:
JOINT FIRST PARTIAL STIPULATION OF FACTS
Plaintiff and defendant through their respective counsel, respectfully submit the
following partial stipulation of facts:
1. Defendant in November, 1960 and even before was authorized and rated to
repair aircrafts of U.S. and foreign registries and as such holds the following:
Description Exhibit
a) US FAA Air Agency 1
Certificate
d) PI.-CAA Rating Grant to operate
a repair station with ratings on
(i) Aircraft of Composite Construction;
(ii) Aircraft of all Metal Construction;
(iii) Aircraft Instrument. 4
2. Defendant maintained and repaired aircrafts of the U.S. Air Force, U.S. Navy
and commercial carriers like PANAM Northwest Airways, KLM and other foreign
airlines.
3. Also in 1960 defendant was maintaining and following a CAA approved
system of aircraft maintenance control using worksheets and work card which
record the specific job on any particular aircraft. They are:
a) Preflight inspections consisting of the —
(i) Through Check: — the visual inspection of an aircraft prior to flight and
performed in stations where maintenance men are assigned.
(ii) Terminating Check: — the visual inspection of the aircraft performed in
stations were aircraft terminated a flight and where maintenance men are
assigned.
(iii) After Maintenance Check: — the visual inspection of an aircraft preparatory
to any flight following the completion of any check from Check No. 1 to Cheek
No. 6, to wit:

b) US FAA Repair Station (a) Check No. 1 known as daily inspection check;

Operations Specifications (b) Check No. 2 which is accomplished every 125 hours;

(2 pages) PI- 2 and 2-A (c) Check No. 3 which is accomplished every 250 flying hours;

c) CAA Rating Grant to operate (d) Check No. 4 which is accomplished every 500 flying hours;

Repair Station with ratings on (e) Check No. 5 which is accomplished every 1,250 flying hours;

[sic] (i) Aircraft Metal (f) Check No. 6 which is a series broken down into 6- A, 6-B, 6-C, 6-D, 6-E and
6-F;
propeller Hubs Overhaul Shop,
4. The Quality Control Division is the custodian of all worksheets for the checks
(ii) Aircraft Engine Overhaul Shop. 3 performed and under PI-CAA regulations, is required to keep the records for at
least 90 days.
5. The forms used and accomplished for the various checks were: k) Check No. 6-F consisting of 16,16-A to

Description Exhibit 118 work control cards 16-(M)

a) Preflight check sheet, The parties reserve their right to agree to additional stipulation of facts and/or to
adduce evidence on other matters not covered by this stipulation.
including DC-3C Daily
All exhibits mentioned and identified are attached to this stipulation. (pp. 42-46,
Airplane and Engine Record on Appeal; p. 117, Rollo.)

Routine and Cleaning Routine; 5,6 & 6-A
b) Check No. 2, consisting of
37 work control cards; 7-A to 7-KK
c) Check No. 3 consisting of
49 work control cards; 8, 8-A to 8-XX
During the hearing on September 4, 1972, the parties stipulated that they were
reproducing the testimonial and documentary evidence presented in Civil Cases
Nos. 5728 and 2790 of the Court of First Instance of Iloilo, arising out of the
same accident. Certified copy of said transcript of stenographic notes were then
submitted to the trial court.
A fourth partial stipulation of facts was submitted by the parties, reading as
follows:

d) Check No. 4 consisting of PARTIAL STIPULATION OF FACTS

a work control card; 9, 9-A to 9-F
e) Check No. 5 consisting of 00, 10-A to
9 work control cards; 10-H
f) Check No. 6-A consisting of 11, 11-A to
112 work control cards; 11-(G)
g) Check No. 6-B consisting of 12, 12-A to
114 work control cards; 12-(J)
Plaintiff and defendant respectfully submit the following partial stipulation of
facts:
1. For the convenience and brevity of these proceedings, considering that
defendant's evidence on the basic issues of fortuitous event and extraordinary
diligence of the carrier consists of the witnesses and documents presented in
Civil Case No. 5720 of the Court of First Instance of Iloilo entitled "Pedro R.
Davila vs. Preciosa C. Tirol," now pending appeal before the Supreme Court in
G.R. No. L-28512, defendant has proposed to reproduce in this case the
testimonies of same witnesses and documentary evidence Identified and
marked in the course of the same proceedings, as reflected in the corresponding
transcript of stenographic notes, to wit:

h) Check No. 6-C consisting of 13, 13-A to Transcript of

117 work control cards 13-(I) Witnesses Stenographic Notes At Pages Exhibit

i) Check No. 6-D consisting of 14,14-A to a Mario Rodriguez October 30, 1962 1 - 67 37

110 work control cards; 14-(E) October 31, 1962 67 - 153 38

j) Check No. 6-E consisting of 15,15-A to January 7, 1963 17 - 74 39

120 work control cards; 15-(E) October 14, 1963 6 - 11 40

b. Pedro N. Mallari March 19, 1963 17 - 39)
c. Arturo Camatoy March 19, 1963 39 - 75) 41
d. Ponciano Saldaña March 19, 1963 75 - 88)
e. Melecio Joson March 20, 1963 91 - 161) 42
f. Alfredo Subesa March 20, 1963 162 - 166)
g. Eduardo Estrella October 14, 1963 11 - 27)
h. Vicente Sison October 14, 1963 27 - 74)
i. Felipe Paculaba October 15, 1963 4 - 15
j. Antonio Lopez October 15, 1963 15 - 25) 43
k. Isaac Lamela October 15, 1963 26 - 55)
l. Ramon Pedrosa December 19, 1963 6 - 83 44
m. Cesar Mijares December 20, 1963 15 - 89 45
n. Jaime Manzano February 6, 1964 3 - 15) 46
o. Offer of documen-
tary evidence February 6, 1964 18 - 76)
2. The transcript of stenographic notes are attached hereto and marked as
above set forth.
3. If aforenamed witnesses were called to testify in this case, they would give
the same testimony as shown in the afore-mentioned transcript of stenographic
notes on direct examination, cross-examination and re-direct examination, as
the case may be plaintiffs counsel hereby adopting the manifestations,
objections, cross and recross examination by the plaintiff's counsels in Davila
vs. PAL, supra and so far as the joint hearings held on December 20, 1963 and
February 6, 1964, also of plaintiff's counsels in Abeto, et al. vs. PAL, Civil Case
No. 5790, also of the Court of First Instance of Iloilo.
4. All the documentary evidence marked in the course of the hearings shown in
the transcripts of stenographic notes attached hereto have already been marked
correspondingly before the Commissioner of this Honorable Court on a hearing
held on May 24, 1968 with the same exhibit identification.
5. Defendant reserves its right to present evidence on the question of damages.
6. Plaintiff reserves her right to present such further evidence as she may deem
proper in rebuttal. (pp. 47-50, Record on Appeal; p. 117, Rollo.)
In addition to the stipulations of facts, private respondent Padilla testified that
her son, Nicanor Padilla, prior to his death, was 29 years old, single, in good
health, President and General Manager of Padilla Shipping Company at Iloilo
City, and a legal assistant of the Padilla Law Office; that upon learning of the
death of her son in the plane crash, she suffered shock and mental anguish,
because her son who was still single was living with her; and that Nicanor had a
life insurance of P20,000, the proceeds of which were paid to his sister.
Eduardo Mate, manager of the Allied Overseas Trading Company, testified that
the deceased, Nicanor Padilla, was one of the incorporators of the company and
also its vice-president and treasurer, receiving a monthly salary of P455.
Isaac M. Reyes, auditor of the Padilla Shipping Company, declared that the
deceased was the President and General of the firm and received a salary of
P1,500 monthly.
The trial court in its decision stated that on March 19, 1970, it was manifested in
court that "the parties agreed that they will abide with whatever decision the
Supreme Court may have in similar cases involving the same airplane crash
accident then pending before other courts pending decision in Supreme Court"
(p. 51, Rec. on Appeal; p. 117, Rollo)
On August 31, 1973, the trial court promulgated a decision, the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered ordering the defendant Philippine
Air Lines, Inc. to pay the plaintiff Natividad A. Vda. de Padilla the sum of
P477,000.00 as award for the expected income of the deceased Nicanor;
P10,000.00 as moral damages; P10,000.00 as attorney's fees; and to pay the
costs. (pp. 59-60, Record on Appeal; p. 117, Rollo.)
On Appeal to the Court of Appeals (CA-G.R. No. 56079-R) dated July 17, 1980,
the decision of the trial court was affirmed in toto.
As pointed out at the outset, the lone issue is whether or not the respondent
court erred in computing the awarded indemnity on the basis of the life
expectancy of the late Nicanor A. Padilla rather than on the life expectancy of
private respondent, and thus erred in awarding what appears to the petitioner as
the excessive sum of P477,000 as indemnity for loss of earnings.
Petitioner relies on "the principle of law generally recognized and applied by the
courts in the United States" that "the controlling element in determining loss of
earnings arising from death is, as established by authorities, the life expectancy
of the deceased or of the beneficiary, whichever is shorter (p. 19, Brief for the
Defendant-Appellant; p. 119, Rollo).
However, resort to foreign jurisprudence would be proper only if no law or
jurisprudence is available locally to settle a controversy. Even in the absence of
local statute and case law, foreign jurisprudence is only persuasive.
For the settlement of the issue at hand, there are enough applicable local laws
and jurisprudence. Under Article 1764 and Article 2206(1) of the Civil Code, the
award of damages for death is computed on the basis of the life expectancy of
the deceased, not of his beneficiary. The articles provide:
Art. 1764. Damages in cases comprised in this Section shall be awarded in
accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall
also apply to the death of a passenger caused by the breach of contract by a
common carrier.
Art. 2206. The amount of damages for death caused by a crime or quasi- delict
shall be at least three thousand pesos, even though there may have been
mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter; such
indemnity shall in every case be assessed and awarded by the court, unless the
deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death; . . . (Emphasis
supplied.)
In the case of Davila vs. PAL, 49 SCRA 497 which involved the same tragic
plane crash, this Court determined not only PALs liability for negligence or
breach of contract, but also the manner of computing the damages due the
plaintiff therein which it based on the life expectancy of the deceased, Pedro
Davila, Jr. This Court held thus:
The deceased, Pedro Davila, Jr., was single and 30 years of age when he died.
At that age one's normal life expectancy is 33-1/3 years, according to the
formula (2/3 x [80-30]) adopted by this Court in the case of Villa Rey Transit, Inc.
vs. Court of Appeals on the basis of the American Expectancy Table of Mortality
or the Actuarial of Combined Experience Table of Mortality. However, although
the deceased was in relatively good health, his medical history shows that he
had complained of and been treated for such ailments as backaches, chest
pains and occasional feelings of tiredness. It is reasonable to make an
allowance for these circumstances and consider, for purposes of this case, a
reduction of his life expectancy to 25 years.
xxx xxx xxx
Considering the fact that the deceased was getting his income from three (3)
different sources, namely, from managing a radio station, from law practice and
from farming, the expenses incidental to the generation of such income were
necessarily more than if he had only one source. Together with his living
expenses, a deduction of P600.00 a month, or P7,200.00 a year, seems to Us
reasonable, leaving a net yearly income of P7,800.00. This amount, multiplied
by 25 years, or P195,000.00 is the amount which should be awarded to the
plaintiffs in this particular respect. (pp. 504-505, Rollo.)
The petitioner's recourse to our decision in Alcantara vs. Surro, 93 Phil. 472,
undermines instead of supporting its stand here, for the indemnity in that case
was also based on the life expectancy of the deceased and not of his
beneficiaries.
The petitioner's contention that actual damages under Article 2206 of the Civil
Code must be proven by clear and satisfactory evidence is correct, but its
perception that such evidence was not presented in this case, is error.
The witnesses Mate and Reyes, who were respectively the manager and auditor
of Allied Overseas Trading Company and Padilla Shipping Company, were
competent to testify on matters within their personal knowledge because of their
positions, such as the income and salary of the deceased, Nicanor A. Padilla
(Sec. 30, Rule 130, Rules of Court). As observed by the Court of Appeals, since
they were cross-examined by petitioner's counsel, any objections to their
competence and the admissibility of their testimonies, were deemed waived.
The payrolls of the companies and the decedent's income tax returns could, it is
true, have constituted the best evidence of his salaries, but there is no rule
disqualifying competent officers of the corporation from testifying on the
compensation of the deceased as an officer of the same corporation, and in any
event, no timely objection was made to their testimonies.
Following the procedure used by the Supreme Court in the case of Davila vs.
PAL, 49 SCRA 497, the trial court determined the victims gross annual income
to be P23,100 based on his yearly salaries of P18,000 from the Padilla Shipping
Company and P5,100 from the Allied Overseas Trading Corporation.
Considering that he was single, the court deducted P9,200 as yearly living
expenses, resulting in a net income of P13,900 (not P15,900 as erroneously
stated in the decision). Since Nicanor Padilla was only 29 years old and in good
health, the trial court allowed him a life expectancy of 30 years. Multiplying his
annual net income of P13,900 by his life expectancy of 30 years, the product is
P417,000 (not P477,000) which is the amount of death indemnity due his mother
and only forced heir (p. 58, Record on Appeal; p. 117, Rollo).

While as a general rule, an appellee who has not appealed is not entitled to
affirmative relief other than the ones granted in the decision of the court below
(Aparri vs. CA, 13 SCRA 611; Dy vs. Kuizon, 113 Phil. 592; Borromeo vs.
Zaballero, 109 Phil. 332), we nevertheless find merit in the private respondent's
plea for relief for the long delay this case has suffered on account of the
petitioner's multiple appeals. Indeed, because of the 16 year delay in the
disposition of this case, the private respondent herself has already joined her
son in the Great Beyond without being able to receive the indemnity she well
deserved. Considering how inflation has depleted the value of the judgment in
her favor, in the interest of justice, the petitioner should pay legal rate of interest
on the indemnity due her. The failure of the trial court to award such interest
amounts to a "plain error" which we may rectify on appeal although it was not
specified in the appellee's brief (Sec. 7, Rule 51, Rules of Court).

WHEREFORE, the petition is dismissed. The decision of the trial court is

affirmed with modification. The petitioner is ordered to pay the private
respondent or her heirs death indemnity in the sum of P417,000 (not P477,000),
with legal rate of interest of 6% per annum from the date of the judgment on
August 31, 1973, until it is fully paid. Costs against the petitioner.
[Actual or compensatory]
[G.R. No. 159636. November 25, 2004]
VICTORY LINER, INC., petitioner, vs. ROSALITO GAMMAD, APRIL
ROSSAN P. GAMMAD, ROI ROZANO P. GAMMAD and DIANA FRANCES P.
GAMMAD, respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review on certiorari is the April 11, 2003 decision[1] of
the Court of Appeals in CA-G.R. CV No. 63290 which affirmed with modification
the November 6, 1998 decision[2] of the Regional Trial Court of Tuguegarao,
Cagayan, Branch 5 finding petitioner Victory Liner, Inc. liable for breach of
contract of carriage in Civil Case No. 5023.
The facts as testified by respondent Rosalito Gammad show that on March 14,
1996, his wife Marie Grace Pagulayan-Gammad,[3] was on board an air-
conditioned Victory Liner bus bound for Tuguegarao, Cagayan from Manila. At
about 3:00 a.m., the bus while running at a high speed fell on a ravine
somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the
death of Marie Grace and physical injuries to other passengers.[4]
On May 14, 1996, respondent heirs of the deceased filed a complaint[5] for
damages arising from culpa contractual against petitioner. In its answer,[6] the
petitioner claimed that the incident was purely accidental and that it has always
exercised extraordinary diligence in its 50 years of operation.
After several re-settings,[7] pre-trial was set on April 10, 1997.[8] For failure to
appear on the said date, petitioner was declared as in default.[9] However, on
petitioners motion[10] to lift the order of default, the same was granted by the
trial court.[11]
At the pre-trial on May 6, 1997, petitioner did not want to admit the proposed
stipulation that the deceased was a passenger of the Victory Liner Bus which fell
on the ravine and that she was issued Passenger Ticket No. 977785.
Respondents, for their part, did not accept petitioners proposal to pay
P50,000.00.[12]
After respondent Rosalito Gammad completed his direct testimony, cross-
examination was scheduled for November 17, 1997[13] but moved to December
8, 1997,[14] because the parties and the counsel failed to appear. On December
8, 1997, counsel of petitioner was absent despite due notice and was deemed to
have waived right to cross-examine respondent Rosalito.[15]
Petitioners motion to reset the presentation of its evidence to March 25,
1998[16] was granted. However, on March 24, 1998, the counsel of petitioner
sent the court a telegram[17] requesting postponement but the telegram was
received by the trial court on March 25, 1998, after it had issued an order
considering the case submitted for decision for failure of petitioner and counsel
to appear.[18]
On November 6, 1998, the trial court rendered its decision in favor of
respondents, the dispositive portion of which reads:
WHEREFORE, premises considered and in the interest of justice, judgment is
hereby rendered in favor of the plaintiffs and against the defendant Victory Liner,
Incorporated, ordering the latter to pay the following:
1. Actual Damages -------------------- P 122,000.00
2. Death Indemnity --------------------- 50,000.00
3. Exemplary and Moral Damages----- 400,000.00
4. Compensatory Damages ---------- 1,500,000.00
5. Attorneys Fees ------------ 10% of the total amount granted
6. Cost of the Suit.
SO ORDERED.[19]
On appeal by petitioner, the Court of Appeals affirmed the decision of the trial
court with modification as follows:
[T]he Decision dated 06 November 1998 is hereby MODIFIED to reflect that the
following are hereby adjudged in favor of plaintiffs-appellees:
1. Actual Damages in the amount of P88,270.00;
2. Compensatory Damages in the amount of P1,135,536,10;
3. Moral and Exemplary Damages in the amount of P400,000.00; and
4. Attorneys fees equivalent to 10% of the sum of the actual, compensatory,
moral, and exemplary damages herein adjudged.
The court a quos judgment of the cost of the suit against defendant-appellant is
hereby AFFIRMED.
SO ORDERED.[20]
Represented by a new counsel, petitioner on May 21, 2003 filed a motion for
reconsideration praying that the case be remanded to the trial court for cross-
examination of respondents witness and for the presentation of its evidence; or
in the alternative, dismiss the respondents complaint.[21] Invoking APEX Mining,
Inc. v. Court of Appeals,[22] petitioner argues, inter alia, that the decision of the
trial court should be set aside because the negligence of its former counsel,
Atty. Antonio B. Paguirigan, in failing to appear at the scheduled hearings and
move for reconsideration of the orders declaring petitioner to have waived the
right to cross-examine respondents witness and right to present evidence,
deprived petitioner of its day in court.
On August 21, 2003, the Court of Appeals denied petitioners motion for
reconsideration.[23]
Hence, this petition for review principally based on the fact that the mistake or
gross negligence of its counsel deprived petitioner of due process of law.
Petitioner also argues that the trial courts award of damages were without basis
and should be deleted.
The issues for resolution are: (1) whether petitioners counsel was guilty of gross
negligence; (2) whether petitioner should be held liable for breach of contract of
carriage; and (3) whether the award of damages was proper.
It is settled that the negligence of counsel binds the client. This is based on the
rule that any act performed by a counsel within the scope of his general or
implied authority is regarded as an act of his client. Consequently, the mistake
or negligence of counsel may result in the rendition of an unfavorable judgment
against the client. However, the application of the general rule to a given case
should be looked into and adopted according to the surrounding circumstances
obtaining. Thus, exceptions to the foregoing have been recognized by the court
in cases where reckless or gross negligence of counsel deprives the client of
due process of law, or when its application will result in outright deprivation of
the clients liberty or property or where the interests of justice so require, and
accord relief to the client who suffered by reason of the lawyers gross or
palpable mistake or negligence.[24]
The exceptions, however, are not present in this case. The record shows that
Atty. Paguirigan filed an Answer and Pre-trial Brief for petitioner. Although
initially declared as in default, Atty. Paguirigan successfully moved for the
setting aside of the order of default. In fact, petitioner was represented by Atty.
Paguirigan at the pre-trial who proposed settlement for P50,000.00. Although
Atty. Paguirigan failed to file motions for reconsideration of the orders declaring
petitioner to have waived the right to cross-examine respondents witness and to
present evidence, he nevertheless, filed a timely appeal with the Court of
Appeals assailing the decision of the trial court. Hence, petitioners claim that it
was denied due process lacks basis.
Petitioner too is not entirely blameless. Prior to the issuance of the order
declaring it as in default for not appearing at the pre-trial, three notices (dated
October 23, 1996,[25] January 30, 1997,[26] and March 26, 1997,[27]) requiring
attendance at the pre-trial were sent and duly received by petitioner. However, it
was only on April 27, 1997, after the issuance of the April 10, 1997 order of
default for failure to appear at the pre-trial when petitioner, through its finance
and administrative manager, executed a special power of attorney[28]
authorizing Atty. Paguirigan or any member of his law firm to represent petitioner
at the pre-trial. Petitioner is guilty, at the least, of contributory negligence and
fault cannot be imputed solely on previous counsel.
The case of APEX Mining, Inc., invoked by petitioner is not on all fours with the
case at bar. In APEX, the negligent counsel not only allowed the adverse
decision against his client to become final and executory, but deliberately
misrepresented in the progress report that the case was still pending with the
Court of Appeals when the same was dismissed 16 months ago.[29] These
circumstances are absent in this case because Atty. Paguirigan timely filed an
appeal from the decision of the trial court with the Court of Appeals.
In Gold Line Transit, Inc. v. Ramos,[30] the Court was similarly confronted with
the issue of whether or not the client should bear the adverse consequences of
its counsels negligence. In that case, Gold Line Transit, Inc. (Gold Line) and its
lawyer failed to appear at the pre-trial despite notice and was declared as in
default. After the plaintiffs presentation of evidence ex parte, the trial court
rendered decision ordering Gold Line to pay damages to the heirs of its
deceased passenger. The decision became final and executory because
counsel of Gold Line did not file any appeal. Finding that Goldline was not
denied due process of law and is thus bound by the negligence of its lawyer, the
Court held as follows
This leads us to the question of whether the negligence of counsel was so gross
and reckless that petitioner was deprived of its right to due process of law. We
do not believe so. It cannot be denied that the requirements of due process were
observed in the instant case. Petitioner was never deprived of its day in court, as
in fact it was afforded every opportunity to be heard. Thus, it is of record that
notices were sent to petitioner and that its counsel was able to file a motion to
dismiss the complaint, an answer to the complaint, and even a pre-trial brief.
What was irretrievably lost by petitioner was its opportunity to participate in the
trial of the case and to adduce evidence in its behalf because of negligence.
In the application of the principle of due process, what is sought to be
safeguarded against is not the lack of previous notice but the denial of the
opportunity to be heard. The question is not whether petitioner succeeded in
defending its rights and interests, but simply, whether it had the opportunity to
present its side of the controversy. Verily, as petitioner retained the services of
counsel of its choice, it should, as far as this suit is concerned, bear the
consequences of its choice of a faulty option. Its plea that it was deprived of due
process echoes on hollow ground and certainly cannot elicit approval nor
sympathy.
To cater to petitioners arguments and reinstate its petition for relief from
judgment would put a premium on the negligence of its former counsel and
encourage the non-termination of this case by reason thereof. This is one case
where petitioner has to bear the adverse consequences of its counsels act, for a
client is bound by the action of his counsel in the conduct of a case and he
cannot thereafter be heard to complain that the result might have been different
had his counsel proceeded differently. The rationale for the rule is easily
discernible. If the negligence of counsel be admitted as a reason for opening
cases, there would never be an end to a suit so long as a new counsel could be
hired every time it is shown that the prior counsel had not been sufficiently
diligent, experienced or learned.[31]
Similarly, in Macalalag v. Ombudsman,[32] a Philippine Postal Corporation
employee charged with dishonesty was not able to file an answer and position
paper. He was found guilty solely on the basis of complainants evidence and
was dismissed with forfeiture of all benefits and disqualification from government
service. Challenging the decision of the Ombudsman, the employee contended
that the gross negligence of his counsel deprived him of due process of law. In
debunking his contention, the Court said
Neither can he claim that he is not bound by his lawyers actions; it is only in
case of gross or palpable negligence of counsel when the courts can step in and
accord relief to a client who would have suffered thereby. If every perceived
mistake, failure of diligence, lack of experience or insufficient legal knowledge of
the lawyer would be admitted as a reason for the reopening of a case, there
would be no end to controversy. Fundamental to our judicial system is the
principle that every litigation must come to an end. It would be a clear mockery if
it were otherwise. Access to the courts is guaranteed, but there must be a limit
to it.
Viewed vis--vis the foregoing jurisprudence, to sustain petitioners argument that
it was denied due process of law due to negligence of its counsel would set a
dangerous precedent. It would enable every party to render inutile any adverse
order or decision through the simple expedient of alleging gross negligence on
the part of its counsel. The Court will not countenance such a farce which
contradicts long-settled doctrines of trial and procedure.[33]
Anent the second issue, petitioner was correctly found liable for breach of
contract of carriage. A common carrier is bound to carry its passengers safely as
far as human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard to all the circumstances. In a contract of
carriage, it is presumed that the common carrier was at fault or was negligent
when a passenger dies or is injured. Unless the presumption is rebutted, the
court need not even make an express finding of fault or negligence on the
part of the common carrier. This statutory presumption may only be overcome
by evidence that the carrier exercised extraordinary diligence.[34]
In the instant case, there is no evidence to rebut the statutory presumption that
the proximate cause of Marie Graces death was the negligence of petitioner.
Hence, the courts below correctly ruled that petitioner was guilty of breach of
contract of carriage.
Nevertheless, the award of damages should be modified.
Article 1764[35] in relation to Article 2206[36] of the Civil Code, holds the
common carrier in breach of its contract of carriage that results in the death of a
passenger liable to pay the following: (1) indemnity for death, (2) indemnity for
loss of earning capacity, and (3) moral damages.
In the present case, respondent heirs of the deceased are entitled to indemnity
for the death of Marie Grace which under current jurisprudence is fixed at
P50,000.00.[37]
The award of compensatory damages for the loss of the deceaseds earning
capacity should be deleted for lack of basis. As a rule, documentary evidence
should be presented to substantiate the claim for damages for loss of earning
capacity. By way of 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 than the 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.[38]
In People v. Oco,[39] the evidence presented by the prosecution to recover
damages for loss of earning capacity was the bare testimony of the deceaseds
wife that her husband was earning P8,000.00 monthly as a legal researcher of a
private corporation. Finding that the deceased was neither self-employed nor
employed as a daily-wage worker earning less than the minimum wage under
the labor laws existing at the time of his death, the Court held that testimonial
evidence alone is insufficient to justify an award for loss of earning capacity.
Likewise, in People v. Caraig,[40] damages for loss of earning capacity was not
awarded because the circumstances of the 3 deceased did not fall within the
recognized exceptions, and except for the testimony of their wives, no
documentary proof about their income was presented by the prosecution. Thus
The testimonial evidence shows that Placido Agustin, Roberto Raagas, and
Melencio Castro Jr. were not self-employed or employed as daily-wage workers
earning less than the minimum wage under the labor laws existing at the time of
their death. Placido Agustin was a Social Security System employee who
received a monthly salary of P5,000. Roberto Raagas was the President of
Sinclair Security and Allied Services, a family owned corporation, with a
monthly compensation of P30,000. Melencio Castro Jr. was a taxi driver of
New Rocalex with an average daily earning of P500 or a monthly earning of
P7,500. Clearly, these cases do not fall under the exceptions where indemnity
for loss of earning capacity can be given despite lack of documentary evidence.
Therefore, for lack of documentary proof, no indemnity for loss of earning
capacity can be given in these cases. (Emphasis supplied)
Here, the trial court and the Court of Appeals computed the award of
compensatory damages for loss of earning capacity only on the basis of the
testimony of respondent Rosalito that the deceased was 39 years of age and a
Section Chief of the Bureau of Internal Revenue, Tuguergarao District Office
with a salary of P83,088.00 per annum when she died.[41] No other evidence
was presented. The award is clearly erroneous because the deceaseds
earnings does not fall within the exceptions.
However, the fact of loss having been established, temperate damages in the
amount of P500,000.00 should be awarded to respondents. Under Article 2224
of the Civil Code, 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 can not,
from the nature of the case, be proved with certainty.
In Pleno v. Court of Appeals,[42] the Court sustained the trial courts award of
P200,000.00 as temperate damages in lieu of actual damages for loss of
earning capacity because the income of the victim was not sufficiently proven,
thus
The trial court based the amounts of damages awarded to the petitioner on the
following circumstances:
As to the loss or impairment of earning capacity, there is no doubt that Pleno is
an ent[re]preneur and the founder of his own corporation, the Mayon Ceramics
Corporation. It appears also that he is an industrious and resourceful person
with several projects in line, and were it not for the incident, might have pushed
them through. On the day of the incident, Pleno was driving homeward with
geologist Longley after an ocular inspection of the site of the Mayon Ceramics
Corporation. His actual income however has not been sufficiently established so
that this Court cannot award actual damages, but, an award of temperate or
moderate damages may still be made on loss or impairment of earning capacity.
That Pleno sustained a permanent deformity due to a shortened left leg and that
he also suffers from double vision in his left eye is also established. Because of
this, he suffers from some inferiority complex and is no longer active in business
as well as in social life. In similar cases as in Borromeo v. Manila Electric
Railroad Co., 44 Phil 165; Coriage, et al. v. LTB Co., et al., L-11037, Dec. 29,
1960, and in Araneta, et al. v. Arreglado, et al., L-11394, Sept. 9, 1958, the
proper award of damages were given.
We rule that the lower courts awards of damages are more consonant with the
factual circumstances of the instant case. The trial courts findings of facts are
clear and well-developed. Each item of damages is adequately supported by
evidence on record.
Article 2224 of the Civil Code was likewise applied in the recent cases of People
v. Singh[43] and People v. Almedilla,[44] to justify the award of temperate
damages in lieu of damages for loss of earning capacity which was not
substantiated by the required documentary proof.
Anent the award of moral damages, the same cannot be lumped with exemplary
damages because they are based on different jural foundations.[45] These
damages are different in nature and require separate determination.[46] In culpa
contractual or breach of contract, moral damages may be recovered when the
defendant acted in bad faith or was guilty of gross negligence (amounting to bad
faith) or in wanton disregard of contractual obligations and, as in this case, when
the act of breach of contract itself constitutes the tort that results in physical
injuries. By special rule in Article 1764 in relation to Article 2206 of the Civil
Code, moral damages may also be awarded in case the death of a passenger
results from a breach of carriage.[47] On the other hand, exemplary damages,
which are awarded by way of example or correction for the public good may be
recovered in contractual obligations if the defendant acted in wanton, fraudulent,
reckless, oppressive, or malevolent manner.[48]
Respondents in the instant case should be awarded moral damages to
compensate for the grief caused by the death of the deceased resulting from the
petitioners breach of contract of carriage. Furthermore, the petitioner failed to
prove that it exercised the extraordinary diligence required for common carriers,
it is presumed to have acted recklessly.[49] Thus, the award of exemplary
damages is proper. Under the circumstances, we find it reasonable to award
respondents the amount of P100,000.00 as moral damages and P100,000.00 as
exemplary damages. These amounts are not excessive.[50]
The actual damages awarded by the trial court reduced by the Court of Appeals
should be further reduced. In People v. Duban,[51] it was held that only
substantiated and proven expenses or those that appear to have been genuinely
incurred in connection with the death, wake or burial of the victim will be
recognized. A list of expenses (Exhibit J),[52] and the contract/receipt for the
construction of the tomb (Exhibit F)[53] in this case, cannot be considered
competent proof and cannot replace the official receipts necessary to justify the
award. Hence, actual damages should be further reduced to P78,160.00,[54]
which was the amount supported by official receipts.
Pursuant to Article 2208[55] of the Civil Code, attorneys fees may also be
recovered in the case at bar where exemplary damages are awarded. The Court
finds the award of attorneys fees equivalent to 10% of the total amount adjudged
against petitioner reasonable.
Finally, in Eastern Shipping Lines, Inc. v. Court of Appeals,[56] it was held that
when an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for
payment of interest in the concept of actual and compensatory damages,
subject to the following rules, to wit
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 12% 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 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit. (Emphasis supplied).
In the instant case, petitioner should be held liable for payment of interest as
damages for breach of contract of carriage. Considering that the amounts
payable by petitioner has been determined with certainty only in the instant
petition, the interest due shall be computed upon the finality of this decision at
the rate of 12% per annum until satisfaction, per paragraph 3 of the aforecited
rule.[57]
WHEREFORE, in view of all the foregoing, the petition is partially granted. The
April 11, 2003 decision of the Court of Appeals in CA-G.R. CV No. 63290, which
modified the decision of the Regional Trial Court of Tuguegarao, Cagayan in
Civil Case No. 5023, is AFFIRMED with MODIFICATION. As modified, petitioner
Victory Liner, Inc., is ordered to pay respondents the following: (1) P50,000.00
as indemnity for the death of Marie Grace Pagulayan-Gammad; (2) P100,000.00
as moral damages; (3) P100,000.00 as exemplary damages; (4) P78,160.00 as
actual damages; (5) P500,000.00 as temperate damages; (6) 10% of the total
amount as attorneys fees; and the costs of suit.
Furthermore, the total amount adjudged against petitioner shall earn interest at
the rate of 12% per annum computed from the finality of this decision until fully
paid.
[Moral]
G.R. No. L-12163 March 4, 1959
PAZ FORES, petitioner, vs.
IRENEO MIRANDA, respondent.
Alberto O. Villaraza for petitioner.
Almazan and Ereneta for respondent.
REYES, J.B.L., J.:
Defendant-petitioner Paz Fores brings this petition for review of the decision of
the Court of Appeals (C.A. Case No. 1437-R) awarding to the plaintiff-
respondent Ireneo Miranda the sums of P5,000 by way of actual damages and
counsel fees, and P10,000 as moral damages, with costs.
Respondent was one of the passengers on a jeepney driven by Eugenio Luga.
While the vehicle was descending the Sta. Mesa bridge at an excessive rate of
speed, the driver lost control thereof, causing it to swerve and to his the bridge
wall. The accident occurred on the morning of March 22, 1953. Five of the
passengers were injured, including the respondent who suffered a fracture of the
upper right humerus. He was taken to the National Orthopedic Hospital for
treatment, and later was subjected to a series of operations; the first on May 23,
1953, when wire loops were wound around the broken bones and screwed into
place; a second, effected to insert a metal splint, and a third one to remove such
splint. At the time of the trial, it appears that respondent had not yet recovered
the use of his right arm.
The driver was charged with serious physical injuries through reckless
imprudence, and upon interposing a plea of guilty was sentenced accordingly.
The contention that the evidence did not sufficiently establish the identity of the
vehicle as the belonging to the petitioner was rejected by the appellate court
which found, among other things, that is carried plate No. TPU-1163, SERIES
OF 1952, Quezon City, registered in the name of Paz Fores, (appellant herein)
and that the vehicle even had the name of "Doña Paz" painted below its wind
shield. No evidence to the contrary was introduced by the petitioner, who relied
on an attack upon the credibility of the two policemen who went to the scene of
the incident.
A point to be further remarked is petitioner's contention that on March 21, 1953,
or one day before the accident happened, she allegedly sold the passenger jeep
that was involved therein to a certain Carmen Sackerman.
The initial problem raised by the petitioner in this appeal may be formulated thus
— "Is the approval of the Public Service Commission necessary for the sale of a
public service vehicle even without conveying therewith the authority to operate
the same?" Assuming the dubious sale to be a fact, the court of Appeals
answered the query in the affirmative. The ruling should be upheld.
Section 20 of the Public Service Act (Commonwealth Act No. 146) provides:
Sec. 20. Subject to established limitations and exceptions and saving provisions
to the contrary, it shall be unlawful for any public service or for the owner, lessee
or operator thereof, without the previous approval and authority of the
Commission previously had —
xxx xxx xxx
(g) To sell, alienate, mortgage, encumber or lease its property, franchises,
certificates, privileges, or rights, or any part thereof; or merge or consolidate its
property, franchises, privileges or rights, or any part thereof, with those of any
other public service. The approval herein required shall be given, after notice to
the public and after hearing the persons interested at a public hearing, if it be
shown that there are just and reasonable grounds for making the mortgage or
encumbrance, for liabilities of more than one year maturity, or the sale,
alienation, lease, merger, or consolidation to be approved and that the same are
not detrimental to the public interest, and in case of a sale, the date on which the
same is to be consummated shall be fixed in the order of approval: Provided,
however, That nothing herein contained shall be construed to prevent the
transaction from being negotiated or completed before its approval or to prevent
the sale, alienation, or lease by any public service of any of its property in the
ordinary course of its business.
Interpreting the effects of this particular provision of law, we have held in the
recent cases of Montoya vs. Ignacio, * 50 Off. Gaz. No. 1, p. 108; Timbol vs.
Osias, et al., G. R. No. L-7547, April 30, 1955, and Medina vs. Cresencia, 99
Phil., 506; 52 Off. Gaz. No. 10, p. 4606, that a transfer contemplated by the law,
if made without the requisite approval of the Public Service Commission, is not
effective and binding in so far as the responsibility of the grantee under the
franchise in relation to the public is concerned. Petitioner assails, however, the
applicability of these rulings to the instant case, contending that in those cases,
the operator did not convey, by lease or by sale, the vehicle independently of his
rights under the franchise. This line of reasoning does not find support in the
law. The provisions of the statute are clear and prohibit the sale, alienation,
lease, or encumbrance of the property, franchise, certificate, privileges or rights,
or any part thereof of the owner or operator of the public service Commission.
The law was designed primarily for the protection of the public interest; and until
the approval of the public Service Commission is obtained the vehicle is, in
contemplation of law, still under the service of the owner or operator standing in
the records of the Commission which the public has a right to rely upon.
The proviso contained in the aforequoted law, to the effect that nothing therein
shall be construed "to prevent the transaction from being negotiated or complete
before its approval", means only that the sale without the required approval is
still valid and binding between the parties (Montoya vs. Ignacio, supra). The
phrase "in the ordinary course of its business" found in the other proviso" or to
prevent the sale, alienation, or lease by any public service of any of its property".
As correctly observed by the lower court, could not have been intended to
include the sale of the vehicle itself, but at most may refer only to such property
that may be conceivably disposed or by the carrier in the ordinary course of its
business, like junked equipment or spare parts.
The case of Indalecio de Torres vs. Vicente Ona (63 Phil., 594, 597) is
enlightening; and there, it was held:
Under the law, the Public Service Commission has not only general supervision
and regulation of, but also full jurisdiction and control over all public utilities
including the property, equipment and facilities used, and the property rights and
franchise enjoyed by every individual and company engaged i the performance
of a public service in the sense this phrase is used in the Public Service Act or
Act No. 3108). By virtue of the provisions of said Act, motor vehicles used in the
performance of a service, as the transportation of freight from one point to
another, have to this date been considered — and they cannot but be so
considered-public service property; and, by reason of its own nature, a TH truck,
which means that the operator thereof places it at the disposal of anybody who
is willing to pay a rental of its use, when he desires to transfer or carry his
effects, merchandise or any other cargo from one place to another, is
necessarily a public service property. (Emphasis supplied)
Of course, this court has held in the case of Bachrach Motor co. vs. Zamboanga
Transportation Co., 52 Phil., 244, that there may be a nunc pro tunc
authorization which has the effect of having the approval retroact to the date of
the transfer; but such outcome cannot prejudice rights intervening in the
meantime. It appears that no such approval was given by the Commission
before the accident occurred.
The P10,000 actual damages awarded by the Court of First Instance of Manila
were reduced by the Court of Appeals to only P2,000, on the ground that a
review of the records failed to disclose a sufficient basis for the trial court's
appraisal, since the only evidence presented on this point consisted of
respondent's bare statement that his expenses and loss of income amounted to
P20,000. On the other hand, "it cannot be denied," the lower court said, "that
appellee (respondent) did incur expenses"' It is well to note further that
respondent was a painter by profession and a professor of Fine Arts, so that the
amount of P2,000 awarded cannot be said to be excessive (see Arts. 2224 and
2225, Civil Code of the Philippines). The attorney's fees in the sum of P3,000
also awarded to the respondent are assailed on the ground that the Court of
First Instance did not provided for the same, and since no appeal was
interposed by said respondent, it was allegedly error for the Court of Appeals to
award them motu proprio. Petitioner fails to note that attorney's fees are
included in the concept of actual damages under the Civil Code and may be
awarded whenever the court deems it is just and equitable (Art. 2208, Civil Code
of the Philippines). We see no reason to alter these awards.
Anent the moral damages ordered to be paid to the respondent, the same must
be discarded. We have repeatedly ruled (Cachero vs. Manila Yellow Taxicab
Co. Inc., 101 Phil., 523; 54 Off. Gaz., [26], 6599; Necesito, et al vs. Paras, 104
Phil., 75; 56 Off. Gaz., [23] 4023, that moral damages are not recoverable in
damage actions predicted on a breach of the contract of transportation, in view
of Articles 2219 and 2220 of the new Civil Code, which provide as follows:
Art. 2219. Moral damages may be recovered in the following and analogous
cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
xxx xxx xxx
Art. 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under circumstances, such damages are
justify due. The same rule applies to breaches of contract where the defendant
acted fraudulently or in bad faith.
By contrasting the provisions of these two article it immediately becomes
apparent that:
(a) In case of breach of contract (including one of transportation) proof of bad
faith or fraud (dolus), i.e., wanton or deliberately injurious conduct, is essential to
justify an award of moral damages; and
(b) That a breach of contract can not be considered included in the descriptive
term "analogous cases" used in Art. 2219; not only because Art. 2220
specifically provides for the damages that are caused by contractual breach, but
because the definition of quasi-delict in Art. 2176 of the Code expressly
excludes the cases where there is a "preexisting contractual relation between
the parties."
Art. 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage dome. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter.
The exception to the basic rule of damages now under consideration is a mishap
resulting in the death of a passenger, in which case Article 1764 makes the
common carrier expressly subject to the rule of Art. 2206, that entitles the
deceased passenger to "demand moral damages for mental anguish by reason
of the death of the deceased" (Necesito vs. Paras, 104 Phil., 84, Resolution on
motion to reconsider, September 11, 1958). But the exceptional rule of Art. 1764
makes it all the more evident that where the injured passenger does not die,
moral damages are not recoverable unless it is proved that the carrier was guilty
of malice or bad faith. We think it is clear that the mere carelessness of the
carrier's driver does not per se constitute of justify an inference of malice or bad
faith on the part of the carrier; and in the case at bar there is no other evidence
of such malice to support the award of moral damages by the Court of Appeals.
To award moral damages for breach of contract, therefore, without proof of bad
faith or malice on the part of the defendant, as required by Art. 220, would be to
violate the clear provisions of the law, and constitute unwarranted judicial
legislation.
The Court of Appeals has invoked our rulings in Castro vs. Acro Taxicab Co.,
G.R. No. 49155, December 14, 1948 and Layda vs. Court of Appeals, 90 Phil.,
724; but these doctrines were predicated upon our former law of damages,
before judicial discretion in fixing them became limited by the express provisions
of the new Civil Code (previously quoted). Hence, the aforesaid rulings are now
inapplicable.
Upon the other hand, the advantageous position of a party suing a carrier for
breach of the contract of transportations explains, to some extent, the limitations
imposed by the new Code on the amount of the recovery. The action for breach
of contract imposes on the defendant carrier a presumption of liability upon mere
proof of injury to the passenger; that latter is relieved from the duty to
established the fault of the carrier, or of his employees, and the burden is placed
on the carrier to prove that it was due to an unforseen event or to force majeure
(Cangco vs. Manila Railroad Co., 38 Phil., 768, 777). Moreover, the carrier,
unlike in suits for quasi-delict, may not escape liability by proving that it has
exercised due diligence in the selection and supervision of its employees (Art.
1759, new civil code; Cangco vs. Manila Railroad Co., supra; Prado vs. Manila
Electric Co., 51 Phil., 900).
The difference in conditions, defenses and proof, as well as the codal concept of
quasi-delict as essentially extra contractual negligence, compel us to
differentiate between action ex contractu, and actions quasi ex delicto, and
prevent us from viewing the action for breach of contract as simultaneously
embodying an action on tort. Neither can this action be taken as one to enforce
on employee's liability under Art. 103 of the Revised Penal Code, since the
responsibility is not alleged to be subsidiary, nor is there on record any averment
or proof that the driver of appellant was insolvent. In fact, he is not even made a
party to the suit.
It is also suggested that a carrier's violation of its engagement to safety transport
the passenger involves a breach of the passenger's confidence, and therefore
should be regarded as a breach of contract in bad faith, justifying recovery of
moral damages under Art. 2220. This theory is untenable, for under it the carrier
would always be deemed in bad faith, in every case its obligation to the
passenger is infringed, and it would be never accountable for simple negligence;
while under the law (Art. 1756). the presumption is that common carriers acted
negligently (and not maliciously), and Art. 1762 speaks of negligence of the
common carrier.
ART. 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as prescribed in article 1733 and
1755.
ART. 1762. The contributory negligence of the passenger does not bar recovery
of damages for his death or injuries, if the proximate cause thereof is the
negligence of the common carrier, but the amount of damages shall be equitably
reduced.
The distinction between fraud, bad faith or malice in the sense of deliberate or
wanton wrong doing and negligence (as mere carelessness) is too fundamental
in our law to be ignored (Arts. 1170-1172); their consequences being clearly
differentiated by the Code.
ART. 2201. In contracts and quasi-contracts, the damages for which the obligor
who acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have
foreseen or could have reasonably foreseen at the time the obligation was
constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-
performance of the obligation.
It is to be presumed, in the absence of statutory provision to the contrary, that
this difference was in the mind of the lawmakers when in Art. 2220 they limited
recovery of moral damages to breaches of contract in bad faith. It is true that
negligence may be occasionally so gross as to amount to malice; but that fact
must be shown in evidence, and a carrier's bad faith is not to be lightly inferred
from a mere finding that the contract was breached through negligence of the
carrier's employees.

In view of the foregoing considerations, the decision of the Court of Appeals is

modified by eliminating the award of P5,000.00 by way of moral damages.
(Court of Appeals Resolution of May 5, 1957). In all other respects, the judgment
is affirmed. No costs in this instance. So ordered.
[Moral]
G.R. No. L-21438 September 28, 1966
AIR FRANCE, petitioner, vs.
RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS,
respondents.
Lichauco, Picazo and Agcaoili for petitioner.
Bengzon Villegas and Zarraga for respondent R. Carrascoso.
SANCHEZ, J.:
The Court of First Instance of Manila 1 sentenced petitioner to pay respondent
Rafael Carrascoso P25,000.00 by way of moral damages; P10,000.00 as
exemplary damages; P393.20 representing the difference in fare between first
class and tourist class for the portion of the trip Bangkok-Rome, these various
amounts with interest at the legal rate, from the date of the filing of the complaint
until paid; plus P3,000.00 for attorneys' fees; and the costs of suit.
On appeal,2 the Court of Appeals slightly reduced the amount of refund on
Carrascoso's plane ticket from P393.20 to P383.10, and voted to affirm the
appealed decision "in all other respects", with costs against petitioner.
The case is now before us for review on certiorari.
The facts declared by the Court of Appeals as " fully supported by the evidence
of record", are:
Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left
Manila for Lourdes on March 30, 1958.
On March 28, 1958, the defendant, Air France, through its authorized agent,
Philippine Air Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket
from Manila to Rome. From Manila to Bangkok, plaintiff travelled in "first class",
but at Bangkok, the Manager of the defendant airline forced plaintiff to vacate
the "first class" seat that he was occupying because, in the words of the witness
Ernesto G. Cuento, there was a "white man", who, the Manager alleged, had a
"better right" to the seat. When asked to vacate his "first class" seat, the plaintiff,
as was to be expected, refused, and told defendant's Manager that his seat
would be taken over his dead body; a commotion ensued, and, according to said
Ernesto G. Cuento, "many of the Filipino passengers got nervous in the tourist
class; when they found out that Mr. Carrascoso was having a hot discussion
with the white man [manager], they came all across to Mr. Carrascoso and
pacified Mr. Carrascoso to give his seat to the white man" (Transcript, p. 12,
Hearing of May 26, 1959); and plaintiff reluctantly gave his "first class" seat in
the plane.3
1. The trust of the relief petitioner now seeks is that we review "all the findings" 4
of respondent Court of Appeals. Petitioner charges that respondent court failed
to make complete findings of fact on all the issues properly laid before it. We are
asked to consider facts favorable to petitioner, and then, to overturn the
appellate court's decision.
Coming into focus is the constitutional mandate that "No decision shall be
rendered by any court of record without expressing therein clearly and distinctly
the facts and the law on which it is based". 5 This is echoed in the statutory
demand that a judgment determining the merits of the case shall state "clearly
and distinctly the facts and the law on which it is based"; 6 and that "Every
decision of the Court of Appeals shall contain complete findings of fact on all
issues properly raised before it". 7
A decision with absolutely nothing to support it is a nullity. It is open to direct
attack. 8 The law, however, solely insists that a decision state the "essential
ultimate facts" upon which the court's conclusion is drawn. 9 A court of justice is
not hidebound to write in its decision every bit and piece of evidence 10
presented by one party and the other upon the issues raised. Neither is it to be
burdened with the obligation "to specify in the sentence the facts" which a party
"considered as proved". 11 This is but a part of the mental process from which
the Court draws the essential ultimate facts. A decision is not to be so clogged
with details such that prolixity, if not confusion, may result. So long as the
decision of the Court of Appeals contains the necessary facts to warrant its
conclusions, it is no error for said court to withhold therefrom "any specific
finding of facts with respect to the evidence for the defense". Because as this
Court well observed, "There is no law that so requires". 12 Indeed, "the mere
failure to specify (in the decision) the contentions of the appellant and the
reasons for refusing to believe them is not sufficient to hold the same contrary to
the requirements of the provisions of law and the Constitution". It is in this
setting that in Manigque, it was held that the mere fact that the findings "were
based entirely on the evidence for the prosecution without taking into
consideration or even mentioning the appellant's side in the controversy as
shown by his own testimony", would not vitiate the judgment. 13 If the court did
not recite in the decision the testimony of each witness for, or each item of
evidence presented by, the defeated party, it does not mean that the court has
overlooked such testimony or such item of evidence. 14 At any rate, the legal
presumptions are that official duty has been regularly performed, and that all the
matters within an issue in a case were laid before the court and passed upon by
it. 15
Findings of fact, which the Court of Appeals is required to make, maybe defined
as "the written statement of the ultimate facts as found by the court ... and
essential to support the decision and judgment rendered thereon". 16 They
consist of the court's "conclusions" with respect to the determinative facts in
issue". 17 A question of law, upon the other hand, has been declared as "one
which does not call for an examination of the probative value of the evidence
presented by the parties." 18
2. By statute, "only questions of law may be raised" in an appeal by certiorari
from a judgment of the Court of Appeals. 19 That judgment is conclusive as to
the facts. It is not appropriately the business of this Court to alter the facts or to
review the questions of fact. 20
With these guideposts, we now face the problem of whether the findings of fact
of the Court of Appeals support its judgment.
3. Was Carrascoso entitled to the first class seat he claims?
It is conceded in all quarters that on March 28, 1958 he paid to and received
from petitioner a first class ticket. But petitioner asserts that said ticket did not
represent the true and complete intent and agreement of the parties; that said
respondent knew that he did not have confirmed reservations for first class on
any specific flight, although he had tourist class protection; that, accordingly, the
issuance of a first class ticket was no guarantee that he would have a first class
ride, but that such would depend upon the availability of first class seats.
These are matters which petitioner has thoroughly presented and discussed in
its brief before the Court of Appeals under its third assignment of error, which
reads: "The trial court erred in finding that plaintiff had confirmed reservations
for, and a right to, first class seats on the "definite" segments of his journey,
particularly that from Saigon to Beirut". 21
And, the Court of Appeals disposed of this contention thus:
Defendant seems to capitalize on the argument that the issuance of a first-class
ticket was no guarantee that the passenger to whom the same had been issued,
would be accommodated in the first-class compartment, for as in the case of
plaintiff he had yet to make arrangements upon arrival at every station for the
necessary first-class reservation. We are not impressed by such a reasoning.
We cannot understand how a reputable firm like defendant airplane company
could have the indiscretion to give out tickets it never meant to honor at all. It
received the corresponding amount in payment of first-class tickets and yet it
allowed the passenger to be at the mercy of its employees. It is more in keeping
with the ordinary course of business that the company should know whether or
riot the tickets it issues are to be honored or not.22
Not that the Court of Appeals is alone. The trial court similarly disposed of
petitioner's contention, thus:
On the fact that plaintiff paid for, and was issued a "First class" ticket, there can
be no question. Apart from his testimony, see plaintiff's Exhibits "A", "A-1", "B",
"B-1," "B-2", "C" and "C-1", and defendant's own witness, Rafael Altonaga,
confirmed plaintiff's testimony and testified as follows:
Q. In these tickets there are marks "O.K." From what you know, what does this
OK mean?
A. That the space is confirmed.
Q. Confirmed for first class?
A. Yes, "first class". (Transcript, p. 169)
xxx xxx xxx
Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and
Rafael Altonaga that although plaintiff paid for, and was issued a "first class"
airplane ticket, the ticket was subject to confirmation in Hongkong. The court
cannot give credit to the testimony of said witnesses. Oral evidence cannot
prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l", "C" and
"C-1" belie the testimony of said witnesses, and clearly show that the plaintiff
was issued, and paid for, a first class ticket without any reservation whatever.
Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga
testified that the reservation for a "first class" accommodation for the plaintiff
was confirmed. The court cannot believe that after such confirmation defendant
had a verbal understanding with plaintiff that the "first class" ticket issued to him
by defendant would be subject to confirmation in Hongkong. 23
We have heretofore adverted to the fact that except for a slight difference of a
few pesos in the amount refunded on Carrascoso's ticket, the decision of the
Court of First Instance was affirmed by the Court of Appeals in all other
respects. We hold the view that such a judgment of affirmance has merged the
judgment of the lower court. 24 Implicit in that affirmance is a determination by
the Court of Appeals that the proceeding in the Court of First Instance was free
from prejudicial error and "all questions raised by the assignments of error and
all questions that might have been raised are to be regarded as finally
adjudicated against the appellant". So also, the judgment affirmed "must be
regarded as free from all error". 25 We reached this policy construction because
nothing in the decision of the Court of Appeals on this point would suggest that
its findings of fact are in any way at war with those of the trial court. Nor was
said affirmance by the Court of Appeals upon a ground or grounds different from
those which were made the basis of the conclusions of the trial court. 26
If, as petitioner underscores, a first-class-ticket holder is not entitled to a first
class seat, notwithstanding the fact that seat availability in specific flights is
therein confirmed, then an air passenger is placed in the hollow of the hands of
an airline. What security then can a passenger have? It will always be an easy
matter for an airline aided by its employees, to strike out the very stipulations in
the ticket, and say that there was a verbal agreement to the contrary. What if the
passenger had a schedule to fulfill? We have long learned that, as a rule, a
written document speaks a uniform language; that spoken word could be
notoriously unreliable. If only to achieve stability in the relations between
passenger and air carrier, adherence to the ticket so issued is desirable. Such is
the case here. The lower courts refused to believe the oral evidence intended to
defeat the covenants in the ticket.
The foregoing are the considerations which point to the conclusion that there are
facts upon which the Court of Appeals predicated the finding that respondent
Carrascoso had a first class ticket and was entitled to a first class seat at
Bangkok, which is a stopover in the Saigon to Beirut leg of the flight. 27 We
perceive no "welter of distortions by the Court of Appeals of petitioner's
statement of its position", as charged by petitioner. 28 Nor do we subscribe to
petitioner's accusation that respondent Carrascoso "surreptitiously took a first
class seat to provoke an issue". 29 And this because, as petitioner states,
Carrascoso went to see the Manager at his office in Bangkok "to confirm my
seat and because from Saigon I was told again to see the Manager". 30 Why,
then, was he allowed to take a first class seat in the plane at Bangkok, if he had
no seat? Or, if another had a better right to the seat?
4. Petitioner assails respondent court's award of moral damages. Petitioner's
trenchant claim is that Carrascoso's action is planted upon breach of contract;
that to authorize an award for moral damages there must be an averment of
fraud or bad faith;31 and that the decision of the Court of Appeals fails to make a
finding of bad faith. The pivotal allegations in the complaint bearing on this issue
are:
3. That ... plaintiff entered into a contract of air carriage with the Philippine Air
Lines for a valuable consideration, the latter acting as general agents for and in
behalf of the defendant, under which said contract, plaintiff was entitled to, as
defendant agreed to furnish plaintiff, First Class passage on defendant's plane
during the entire duration of plaintiff's tour of Europe with Hongkong as starting
point up to and until plaintiff's return trip to Manila, ... .
4. That, during the first two legs of the trip from Hongkong to Saigon and from
Saigon to Bangkok, defendant furnished to the plaintiff First Class
accommodation but only after protestations, arguments and/or insistence were
made by the plaintiff with defendant's employees.
5. That finally, defendant failed to provide First Class passage, but instead
furnished plaintiff only Tourist Class accommodations from Bangkok to Teheran
and/or Casablanca, ... the plaintiff has been compelled by defendant's
employees to leave the First Class accommodation berths at Bangkok after he
was already seated.
6. That consequently, the plaintiff, desiring no repetition of the inconvenience
and embarrassments brought by defendant's breach of contract was forced to
take a Pan American World Airways plane on his return trip from Madrid to
Manila.32
xxx xxx xxx
2. That likewise, as a result of defendant's failure to furnish First Class
accommodations aforesaid, plaintiff suffered inconveniences, embarrassments,
and humiliations, thereby causing plaintiff mental anguish, serious anxiety,
wounded feelings, social humiliation, and the like injury, resulting in moral
damages in the amount of P30,000.00. 33
xxx xxx xxx
The foregoing, in our opinion, substantially aver: First, That there was a contract
to furnish plaintiff a first class passage covering, amongst others, the Bangkok-
Teheran leg; Second, That said contract was breached when petitioner failed to
furnish first class transportation at Bangkok; and Third, that there was bad faith
when petitioner's employee compelled Carrascoso to leave his first class
accommodation berth "after he was already, seated" and to take a seat in the
tourist class, by reason of which he suffered inconvenience, embarrassments
and humiliations, thereby causing him mental anguish, serious anxiety, wounded
feelings and social humiliation, resulting in moral damages. It is true that there is
no specific mention of the term bad faith in the complaint. But, the inference of
bad faith is there, it may be drawn from the facts and circumstances set forth
therein. 34 The contract was averred to establish the relation between the
parties. But the stress of the action is put on wrongful expulsion.
Quite apart from the foregoing is that (a) right the start of the trial, respondent's
counsel placed petitioner on guard on what Carrascoso intended to prove: That
while sitting in the plane in Bangkok, Carrascoso was ousted by petitioner's
manager who gave his seat to a white man; 35 and (b) evidence of bad faith in
the fulfillment of the contract was presented without objection on the part of the
petitioner. It is, therefore, unnecessary to inquire as to whether or not there is
sufficient averment in the complaint to justify an award for moral damages.
Deficiency in the complaint, if any, was cured by the evidence. An amendment
thereof to conform to the evidence is not even required. 36 On the question of
bad faith, the Court of Appeals declared:
That the plaintiff was forced out of his seat in the first class compartment of the
plane belonging to the defendant Air France while at Bangkok, and was
transferred to the tourist class not only without his consent but against his will,
has been sufficiently established by plaintiff in his testimony before the court,
corroborated by the corresponding entry made by the purser of the plane in his
notebook which notation reads as follows:
"First-class passenger was forced to go to the tourist class against his will, and
that the captain refused to intervene",
and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-
passenger. The captain of the plane who was asked by the manager of
defendant company at Bangkok to intervene even refused to do so. It is
noteworthy that no one on behalf of defendant ever contradicted or denied this
evidence for the plaintiff. It could have been easy for defendant to present its
manager at Bangkok to testify at the trial of the case, or yet to secure his
disposition; but defendant did neither. 37
The Court of appeals further stated —
Neither is there evidence as to whether or not a prior reservation was made by
the white man. Hence, if the employees of the defendant at Bangkok sold a first-
class ticket to him when all the seats had already been taken, surely the plaintiff
should not have been picked out as the one to suffer the consequences and to
be subjected to the humiliation and indignity of being ejected from his seat in the
presence of others. Instead of explaining to the white man the improvidence
committed by defendant's employees, the manager adopted the more drastic
step of ousting the plaintiff who was then safely ensconsced in his rightful seat.
We are strengthened in our belief that this probably was what happened there,
by the testimony of defendant's witness Rafael Altonaga who, when asked to
explain the meaning of the letters "O.K." appearing on the tickets of plaintiff, said
"that the space is confirmed for first class. Likewise, Zenaida Faustino, another
witness for defendant, who was the chief of the Reservation Office of defendant,
testified as follows:
"Q How does the person in the ticket-issuing office know what reservation the
passenger has arranged with you?
A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June
19, 1959)
In this connection, we quote with approval what the trial Judge has said on this
point:
Why did the, using the words of witness Ernesto G. Cuento, "white man" have a
"better right" to the seat occupied by Mr. Carrascoso? The record is silent. The
defendant airline did not prove "any better", nay, any right on the part of the
"white man" to the "First class" seat that the plaintiff was occupying and for
which he paid and was issued a corresponding "first class" ticket.
If there was a justified reason for the action of the defendant's Manager in
Bangkok, the defendant could have easily proven it by having taken the
testimony of the said Manager by deposition, but defendant did not do so; the
presumption is that evidence willfully suppressed would be adverse if produced
[Sec. 69, par (e), Rules of Court]; and, under the circumstances, the Court is
constrained to find, as it does find, that the Manager of the defendant airline in
Bangkok not merely asked but threatened the plaintiff to throw him out of the
plane if he did not give up his "first class" seat because the said Manager
wanted to accommodate, using the words of the witness Ernesto G. Cuento, the
"white man".38
It is really correct to say that the Court of Appeals in the quoted portion first
transcribed did not use the term "bad faith". But can it be doubted that the recital
of facts therein points to bad faith? The manager not only prevented Carrascoso
from enjoying his right to a first class seat; worse, he imposed his arbitrary will;
he forcibly ejected him from his seat, made him suffer the humiliation of having
to go to the tourist class compartment - just to give way to another passenger
whose right thereto has not been established. Certainly, this is bad faith. Unless,
of course, bad faith has assumed a meaning different from what is understood in
law. For, "bad faith" contemplates a "state of mind affirmatively operating with
furtive design or with some motive of self-interest or will or for ulterior purpose."
39
And if the foregoing were not yet sufficient, there is the express finding of bad
faith in the judgment of the Court of First Instance, thus:
The evidence shows that the defendant violated its contract of transportation
with plaintiff in bad faith, with the aggravating circumstances that defendant's
Manager in Bangkok went to the extent of threatening the plaintiff in the
presence of many passengers to have him thrown out of the airplane to give the
"first class" seat that he was occupying to, again using the words of the witness
Ernesto G. Cuento, a "white man" whom he (defendant's Manager) wished to
accommodate, and the defendant has not proven that this "white man" had any
"better right" to occupy the "first class" seat that the plaintiff was occupying, duly
paid for, and for which the corresponding "first class" ticket was issued by the
defendant to him.40
5. The responsibility of an employer for the tortious act of its employees need
not be essayed. It is well settled in law. 41 For the willful malevolent act of
petitioner's manager, petitioner, his employer, must answer. Article 21 of the
Civil Code says:
ART. 21. Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.
In parallel circumstances, we applied the foregoing legal precept; and, we held
that upon the provisions of Article 2219 (10), Civil Code, moral damages are
recoverable. 42
6. A contract to transport passengers is quite different in kind and degree from
any other contractual relation. 43 And this, because of the relation which an air-
carrier sustains with the public. Its business is mainly with the travelling public. It
invites people to avail of the comforts and advantages it offers. The contract of
air carriage, therefore, generates a relation attended with a public duty. Neglect
or malfeasance of the carrier's employees, naturally, could give ground for an
action for damages.
Passengers do not contract merely for transportation. They have a right to be
treated by the carrier's employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against personal misconduct,
injurious language, indignities and abuses from such employees. So it is, that
any rule or discourteous conduct on the part of employees towards a passenger
gives the latter an action for damages against the carrier. 44
Thus, "Where a steamship company 45 had accepted a passenger's check, it
was a breach of contract and a tort, giving a right of action for its agent in the
presence of third persons to falsely notify her that the check was worthless and
demand payment under threat of ejection, though the language used was not
insulting and she was not ejected." 46 And this, because, although the relation of
passenger and carrier is "contractual both in origin and nature" nevertheless
"the act that breaks the contract may be also a tort". 47 And in another case,
"Where a passenger on a railroad train, when the conductor came to collect his
fare tendered him the cash fare to a point where the train was scheduled not to
stop, and told him that as soon as the train reached such point he would pay the
cash fare from that point to destination, there was nothing in the conduct of the
passenger which justified the conductor in using insulting language to him, as by
calling him a lunatic," 48 and the Supreme Court of South Carolina there held the
carrier liable for the mental suffering of said passenger.1awphîl.nèt
Petitioner's contract with Carrascoso is one attended with public duty. The
stress of Carrascoso's action as we have said, is placed upon his wrongful
expulsion. This is a violation of public duty by the petitioner air carrier — a case
of quasi-delict. Damages are proper.
7. Petitioner draws our attention to respondent Carrascoso's testimony, thus —
Q You mentioned about an attendant. Who is that attendant and purser?
A When we left already — that was already in the trip — I could not help it. So
one of the flight attendants approached me and requested from me my ticket
and I said, What for? and she said, "We will note that you transferred to the
tourist class". I said, "Nothing of that kind. That is tantamount to accepting my
transfer." And I also said, "You are not going to note anything there because I
am protesting to this transfer".
Q Was she able to note it?
A No, because I did not give my ticket.
Q About that purser?
A Well, the seats there are so close that you feel uncomfortable and you don't
have enough leg room, I stood up and I went to the pantry that was next to me
and the purser was there. He told me, "I have recorded the incident in my
notebook." He read it and translated it to me — because it was recorded in
French — "First class passenger was forced to go to the tourist class against his
will, and that the captain refused to intervene."
Mr. VALTE —
I move to strike out the last part of the testimony of the witness because the best
evidence would be the notes. Your Honor.
COURT —
I will allow that as part of his testimony. 49
Petitioner charges that the finding of the Court of Appeals that the purser made
an entry in his notebook reading "First class passenger was forced to go to the
tourist class against his will, and that the captain refused to intervene" is
predicated upon evidence [Carrascoso's testimony above] which is incompetent.
We do not think so. The subject of inquiry is not the entry, but the ouster
incident. Testimony on the entry does not come within the proscription of the
best evidence rule. Such testimony is admissible. 49a
imprimatur thereto. Because, the facts and circumstances point to the
reasonableness thereof.57
On balance, we say that the judgment of the Court of Appeals does not suffer
from reversible error. We accordingly vote to affirm the same. Costs against
petitioner. So ordered.

Besides, from a reading of the transcript just quoted, when the dialogue
happened, the impact of the startling occurrence was still fresh and continued to
be felt. The excitement had not as yet died down. Statements then, in this
environment, are admissible as part of the res gestae. 50 For, they grow "out of
the nervous excitement and mental and physical condition of the declarant". 51
The utterance of the purser regarding his entry in the notebook was
spontaneous, and related to the circumstances of the ouster incident. Its
trustworthiness has been guaranteed. 52 It thus escapes the operation of the
hearsay rule. It forms part of the res gestae.

At all events, the entry was made outside the Philippines. And, by an employee
of petitioner. It would have been an easy matter for petitioner to have
contradicted Carrascoso's testimony. If it were really true that no such entry was
made, the deposition of the purser could have cleared up the matter.

We, therefore, hold that the transcribed testimony of Carrascoso is admissible in

evidence.

8. Exemplary damages are well awarded. The Civil Code gives the court ample
power to grant exemplary damages — in contracts and quasi- contracts. The
only condition is that defendant should have "acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner." 53 The manner of ejectment of
respondent Carrascoso from his first class seat fits into this legal precept. And
this, in addition to moral damages.54

9. The right to attorney's fees is fully established. The grant of exemplary

damages justifies a similar judgment for attorneys' fees. The least that can be
said is that the courts below felt that it is but just and equitable that attorneys'
fees be given. 55 We do not intend to break faith with the tradition that discretion
well exercised — as it was here — should not be disturbed.

10. Questioned as excessive are the amounts decreed by both the trial court
and the Court of Appeals, thus: P25,000.00 as moral damages; P10,000.00, by
way of exemplary damages, and P3,000.00 as attorneys' fees. The task of fixing
these amounts is primarily with the trial court. 56 The Court of Appeals did not
interfere with the same. The dictates of good sense suggest that we give our
[Moral]
G.R. No. L-22415 March 30, 1966
FERNANDO LOPEZ, ET AL., plaintiffs-appellants,
vs.
PAN AMERICAN WORLD AIRWAYS, defendant-appellant.
Ross, Selph and Carrascoso for the defendant-appellant.
Vicente J. Francisco for the plaintiffs-appellants.
BENGZON, J.P., J.:
Plaintiffs and defendant appeal from a decision of the Court of First Instance of
Rizal. Since the value in controversy exceeds P200,000 the appeals were taken
directly to this Court upon all questions involved (Sec. 17, par. 3[5], Judiciary
Act).
Stated briefly the facts not in dispute are as follows: Reservations for first class
accommodations in Flight No. 2 of Pan American World Airways — hereinafter
otherwise called PAN-AM — from Tokyo to San Francisco on May 24, 1960
were made with
PAN-AM on March 29, 1960, by "Your Travel Guide" agency, specifically, by
Delfin Faustino, for then Senator Fernando Lopez, his wife Maria J. Lopez, his
son-in-law Alfredo Montelibano, Jr., and his daughter, Mrs. Alfredo Montelibano,
Jr., (Milagros Lopez Montelibano). PAN-AM's San Francisco head office
confirmed the reservations on March 31, 1960.
First class tickets for the abovementioned flight were subsequently issued by
PAN-AM on May 21 and 23, 1960, in favor of Senator Lopez and his party. The
total fare of P9,444 for all of them was fully paid before the tickets were issued.
As scheduled Senator Lopez and party left Manila by Northwest Airlines on May
24, 1960, arriving in Tokyo at 5:30 P.M. of that day. As soon as they arrived
Senator Lopez requested Minister Busuego of the Philippine Embassy to contact
PAN-AM's Tokyo office regarding their first class accommodations for that
evening's flight. For the given reason that the first class seats therein were all
booked up, however, PAN-AM's Tokyo office informed Minister Busuego that
PAN-AM could not accommodate Senator Lopez and party in that trip as first
class passengers. Senator Lopez thereupon gave their first class tickets to
Minister Busuego for him to show the same to PAN-AM's Tokyo office, but the
latter firmly reiterated that there was no accommodation for them in the first
class, stating that they could not go in that flight unless they took the tourist
class therein.
Due to pressing engagements awaiting Senator Lopez and his wife, in the
United States — he had to attend a business conference in San Francisco the
next day and she had to undergo a medical check-up in Mayo Clinic, Rochester,
Minnesota, on May 28, 1960 and needed three days rest before that in San
Francisco — Senator Lopez and party were constrained to take PAN-AM's flight
from Tokyo to San Francisco as tourist passengers. Senator Lopez however
made it clear, as indicated in his letter to PAN-AM's Tokyo office on that date
(Exh. A), that they did so "under protest" and without prejudice to further action
against the airline.1äwphï1.ñët
Suit for damages was thereafter filed by Senator Lopez and party against PAN-
AM on June 2, 1960 in the Court of First Instance of Rizal. Alleging breach of
contracts in bad faith by defendant, plaintiffs asked for P500,000 actual and
moral damages, P100,000 exemplary damages, P25,000 attorney's fees plus
costs. PAN-AM filed its answer on June 22, 1960, asserting that its failure to
provide first class accommodations to plaintiffs was due to honest error of its
employees. It also interposed a counterclaim for attorney's fees of P25,000.
Subsequently, further pleadings were filed, thus: plaintiffs' answer to the
counterclaim, on July 25, 1960; plaintiffs' reply attached to motion for its
admittance, on December 2, 1961; defendant's supplemental answer, on March
8, 1962; plaintiffs' reply to supplemental answer, on March 10, 1962; and
defendant's amended supplemental answer, on July 10, 1962.
After trial — which took twenty-two (22) days ranging from November 25, 1960
to January 5, 1963 — the Court of First Instance rendered its decision on
November 13, 1963, the dispositive portion stating:
In view of the foregoing considerations, judgment is hereby rendered in favor of
the plaintiffs and against the defendant, which is accordingly ordered to pay the
plaintiffs the following: (a) P100,000.00 as moral damages; (b) P20,000.00 as
exemplary damages; (c) P25,000.00 as attorney's fees, and the costs of this
action.
So ordered.
Plaintiffs, however, on November 21, 1963, moved for reconsideration of said
judgment, asking that moral damages be increased to P400,000 and that six per
cent (6%) interest per annum on the amount of the award be granted. And
defendant opposed the same. Acting thereon the trial court issued an order on
December 14, 1963, reconsidering the dispositive part of its decision to read as
follows:
In view of the foregoing considerations, judgment is hereby rendered in favor of
the plaintiffs and against the defendant, which is accordingly ordered to pay the
plaintiffs the following: (a) P150,000.00 as moral damages; (b) P25,000.00 as
exemplary damages; with legal interest on both from the date of the filing of the
complaint until paid; and (c) P25,000.00 as attorney's fees; and the costs of this
action.
So ordered.
It is from said judgment, as thus reconsidered, that both parties have appealed.
Defendant, as stated, has from the start admitted that it breached its contracts
with plaintiffs to provide them with first class accommodations in its Tokyo-San
Francisco flight of May 24, 1960. In its appeal, however, it takes issue with the
finding of the court a quo that it acted in bad faith in the branch of said contracts.
Plaintiffs, on the other hand, raise questions on the amount of damages
awarded in their favor, seeking that the same be increased to a total of
P650,000.
Anent the issue of bad faith the records show the respective contentions of the
parties as follows.
According to plaintiffs, defendant acted in bad faith because it deliberately
refused to comply with its contract to provide first class accommodations to
plaintiffs, out of racial prejudice against Orientals. And in support of its
contention that what was done to plaintiffs is an oftrepeated practice of
defendant, evidence was adduced relating to two previous instances of alleged
racial discrimination by defendant against Filipinos in favor of "white"
passengers. Said previous occasions are what allegedly happened to (1) Benito
Jalbuena and (2) Cenon S. Cervantes and his wife.
And from plaintiffs' evidence this is what allegedly happened; Jalbuena bought a
first class ticket from PAN-AM on April 13, 1960; he confirmed it on April 15,
1960 as to the Tokyo-Hongkong flight of April 20, 1960; PAN-AM similarly
confirmed it on April 20, 1960. At the airport he and another Oriental — Mr. Tung
— were asked to step aside while other passengers - including "white"
passengers — boarded PAN-AM's plane. Then PAN-AM officials told them that
one of them had to stay behind. Since Mr. Tung was going all the way to
London, Jalbuena was chosen to be left behind. PAN-AM's officials could only
explain by saying there was "some mistake". Jalbuena thereafter wrote PAN-AM
to protest the incident (Exh. B).
As to Cenon S. Cervantes it would appear that in Flight No. 6 of PAN-AM on
September 29, 1958 from Bangkok to Hongkong, he and his wife had to take
tourist class, although they had first class tickets, which they had previously
confirmed, because their seats in first class were given to "passengers from
London."
Against the foregoing, however, defendant's evidence would seek to establish
its theory of honest mistake, thus:
The first class reservations of Senator Lopez and party were made on March 29,
1960 together with those of four members of the Rufino family, for a total of eight
(8) seats, as shown in their joint reservation card (Exh. 1). Subsequently on
March 30, 1960, two other Rufinos secured reservations and were given a
separate reservation card (Exh. 2). A new reservation card consisting of two
pages (Exhs. 3 and 4) was then made for the original of eight passengers,
namely, Senator Lopez and party and four members of the Rufino family, the
first page (Exh. 3) referring to 2 Lopezes, 2 Montelibanos and 1 Rufino and the
second page (Exh. 4) referring to 3 Rufinos. On April 18, 1960 "Your Travel
Guide" agency cancelled the reservations of the Rufinos. A telex message was
thereupon sent on that date to PAN-AM's head office at San Francisco by
Mariano Herranz, PAN-AM's reservations employee at its office in Escolta,
Manila. (Annex A-Acker's to Exh. 6.) In said message, however, Herranz
mistakenly cancelled all the seats that had been reserved, that is, including
those of Senator Lopez and party.
The next day — April 1960 — Herranz discovered his mistake, upon seeing the
reservation card newly prepared by his co-employee Pedro Asensi for Sen.
Lopez and party to the exclusion of the Rufinos (Exh. 5). It was then that
Herranz sent another telex wire to the San Francisco head office, stating his
error and asking for the reinstatement of the four (4) first class seats reserved
for Senator Lopez and party (Annex A-Velasco's to Exh. 6). San Francisco head
office replied on April 22, 1960 that Senator Lopez and party are waitlisted and
that said office is unable to reinstate them (Annex B-Velasco's to Exh. 6).
Since the flight involved was still more than a month away and confident that
reinstatement would be made, Herranz forgot the matter and told no one about it
except his co-employee, either Armando Davila or Pedro Asensi or both of them
(Tsn., 123-124, 127, Nov. 17, 1961).
Subsequently, on April 27, 1960, Armando Davila, PAN-AM's reservations
employee working in the same Escolta office as Herranz, phoned PAN-AM's
ticket sellers at its other office in the Manila Hotel, and confirmed the
reservations of Senator Lopez and party.
PAN-AM's reservations supervisor Alberto Jose, discovered Herranz's mistake
after "Your Travel Guide" phone on May 18, 1960 to state that Senator Lopez
and party were going to depart as scheduled. Accordingly, Jose sent a telex wire
on that date to PAN-AM's head office at San Francisco to report the error and
asked said office to continue holding the reservations of Senator Lopez and
party (Annex B-Acker's to Exh. 6). Said message was reiterated by Jose in his
telex wire of May 19, 1960 (Annex C-Acker's to Exh. 6). San Francisco head
office replied on May 19, 1960 that it regrets being unable to confirm Senator
Lopez and party for the reason that the flight was solidly booked (Exh. 7). Jose
sent a third telex wire on May 20, 1960 addressed to PAN-AM's offices at San
Francisco, New York (Idlewild Airport), Tokyo and Hongkong, asking all-out
assistance towards restoring the cancelled spaces and for report of
cancellations at their end (Annex D-Acker's to Exh. 6). San Francisco head
office reiterated on May 20, 1960 that it could not reinstate the spaces and
referred Jose to the Tokyo and Hongkong offices (Exh. 8). Also on May 20, the
Tokyo office of PAN-AM wired Jose stating it will do everything possible (Exh.
9).
Expecting that some cancellations of bookings would be made before the flight
time, Jose decided to withhold from Senator Lopez and party, or their agent, the
information that their reservations had been cancelled.
Armando Davila having previously confirmed Senator Lopez and party's first
class reservations to PAN-AM's ticket sellers at its Manila Hotel office, the latter
sold and issued in their favor the corresponding first class tickets on the 21st
and 23rd of May, 1960.
From the foregoing evidence of defendant it is in effect admitted that defendant
— through its agents — first cancelled plaintiffs, reservations by mistake and
thereafter deliberately and intentionally withheld from plaintiffs or their travel
agent the fact of said cancellation, letting them go on believing that their first
class reservations stood valid and confirmed. In so misleading plaintiffs into
purchasing first class tickets in the conviction that they had confirmed
reservations for the same, when in fact they had none, defendant wilfully and
knowingly placed itself into the position of having to breach its a foresaid
contracts with plaintiffs should there be no last-minute cancellation by other
passengers before flight time, as it turned out in this case. Such actuation of
defendant may indeed have been prompted by nothing more than the promotion
of its self-interest in holding on to Senator Lopez and party as passengers in its
flight and foreclosing on their chances to seek the services of other airlines that
may have been able to afford them first class accommodations. All the time, in
legal contemplation such conduct already amounts to action in bad faith. For
bad faith means a breach of a known duty through some motive of interest or ill-
will (Spiegel vs. Beacon Participations, 8 NE 2d 895, 907). As stated in Kamm v.
Flink, 113 N.J.L. 582, 175 A. 62, 99 A.L.R. 1, 7: "Self-enrichment or fraternal
interest, and not personal ill-will, may well have been the motive; but it is malice
nevertheless."
As of May 18, 1960 defendant's reservations supervisor, Alberto Jose knew that
plaintiffs' reservations had been cancelled. As of May 20 he knew that the San
Francisco head office stated with finality that it could not reinstate plaintiffs'
cancelled reservations. And yet said reservations supervisor made the
"decision" — to use his own, word — to withhold the information from the
plaintiffs. Said Alberto Jose in his testimony:
Q Why did you not notify them?
A Well, you see, sir, in my fifteen (15) years of service with the air lines business
my experience is that even if the flights are solidly booked months in advance,
usually the flight departs with plenty of empty seats both on the first class and
tourist class. This is due to late cancellation of passengers, or because
passengers do not show up in the airport, and it was our hope others come in
from another flight and, therefore, are delayed and, therefore, missed their
connections. This experience of mine, coupled with that wire from Tokyo that
they would do everything possible prompted me to withhold the information, but
unfortunately, instead of the first class seat that I was hoping for and which I
anticipated only the tourists class was open on which Senator and Mrs. Lopez,
Mr. and Mrs. Montelibano were accommodated. Well, I fully realize now the
gravity of my decision in not advising Senator and Mrs. Lopez, Mr. and Mrs.
Montelibano nor their agents about the erroneous cancellation and for which I
would like them to know that I am very sorry.
xxx xxx xxx
Q So it was not your duty to notify Sen. Lopez and parties that their reservations
had been cancelled since May 18, 1960?
A As I said before it was my duty. It was my duty but as I said again with respect
to that duty I have the power to make a decision or use my discretion and
judgment whether I should go ahead and tell the passenger about the
cancellation. (Tsn., pp. 17-19, 28-29, March 15, 1962.)
At the time plaintiffs bought their tickets, defendant, therefore, in breach of its
known duty, made plaintiffs believe that their reservation had not been
cancelled. An additional indication of this is the fact that upon the face of the two
tickets of record, namely, the ticket issued to Alfredo Montelibano, Jr. on May
21, 1960 (Exh. 22) and that issued to Mrs. Alfredo Montelibano, Jr., on May 23,
1960 (Exh. 23), the reservation status is stated as "OK". Such willful-non-
disclosure of the cancellation or pretense that the reservations for plaintiffs stood
— and not simply the erroneous cancellation itself — is the factor to which is
attributable the breach of the resulting contracts. And, as above-stated, in this
respect defendant clearly acted in bad faith.
As if to further emphasize its bad faith on the matter, defendant subsequently
promoted the employee who cancelled plaintiffs' reservations and told them
nothing about it. The record shows that said employee — Mariano Herranz —
was not subjected to investigation and suspension by defendant but instead was
given a reward in the form of an increase of salary in June of the following year
(Tsn., 86-88, Nov. 20, 1961).
At any rate, granting all the mistakes advanced by the defendant, there would at
least be negligence so gross and reckless as to amount to malice or bad faith
(Fores vs. Miranda, L-12163, March 4, 1959; Necesito v. Paras, L-10605-06,
June 30, 1958). Firstly, notwithstanding the entries in the reservation cards
(Exhs. 1 & 3) that the reservations cancelled are those of the Rufinos only,
Herranz made the mistake, after reading said entries, of sending a wire
cancelling all the reservations, including those of Senator Lopez and party (Tsn.,
pp. 108-109, Nov. 17, 1961). Secondly, after sending a wire to San Francisco
head office on April 19, 1960 stating his error and asking for reinstatement,
Herranz simply forgot about the matter. Notwithstanding the reply of San
Francisco head Office on April 22, 1960 that it cannot reinstate Senator Lopez
and party (Annex B-Velasco's to Exh. 6), it was assumed and taken for granted
that reinstatement would be made. Thirdly, Armando Davila confirmed plaintiff's
reservations in a phone call on April 27, 1960 to defendant's ticket sellers, when
at the time it appeared in plaintiffs' reservation card (Exh. 5) that they were only
waitlisted passengers. Fourthly, defendant's ticket sellers issued plaintiffs' tickets
on May 21 and 23, 1960, without first checking their reservations just before
issuing said tickets. And, finally, no one among defendant's agents notified
Senator Lopez and party that their reservations had been cancelled, a
precaution that could have averted their entering with defendant into contracts
that the latter had already placed beyond its power to perform.
Accordingly, there being a clear admission in defendant's evidence of facts
amounting to a bad faith on its part in regard to the breach of its contracts with
plaintiffs, it becomes unnecessary to further discuss the evidence adduced by
plaintiffs to establish defendant's bad faith. For what is admitted in the course of
the trial does not need to be proved (Sec. 2, Rule 129, Rules of Court).
Addressing ourselves now to the question of damages, it is well to state at the
outset those rules and principles. First, moral damages are recoverable in
breach of contracts where the defendant acted fraudulently or in bad faith (Art.
2220, New Civil Code). Second, in addition to moral damages, exemplary or
corrective damages may be imposed by way of example or correction for the
public good, in breach of contract where the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner (Articles 2229, 2232,
New Civil Code). And, third, a written contract for an attorney's services shall
control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable (Sec. 24, Rule 138, Rules of Court).
First, then, as to moral damages. As a proximate result of defendant's breach in
bad faith of its contracts with plaintiffs, the latter suffered social humiliation,
wounded feelings, serious anxiety and mental anguish. For plaintiffs were
travelling with first class tickets issued by defendant and yet they were given
only the tourist class. At stop-overs, they were expected to be among the first-
class passengers by those awaiting to welcome them, only to be found among
the tourist passengers. It may not be humiliating to travel as tourist passengers;
it is humiliating to be compelled to travel as such, contrary to what is rightfully to
be expected from the contractual undertaking.
Senator Lopez was then Senate President Pro Tempore. International carriers
like defendant know the prestige of such an office. For the Senate is not only the
Upper Chamber of the Philippine Congress, but the nation's treaty-ratifying
body. It may also be mentioned that in his aforesaid office Senator Lopez was in
a position to preside in impeachment cases should the Senate sit as
Impeachment Tribunal. And he was former Vice-President of the Philippines.
Senator Lopez was going to the United States to attend a private business
conference of the Binalbagan-Isabela Sugar Company; but his aforesaid rank
and position were by no means left behind, and in fact he had a second
engagement awaiting him in the United States: a banquet tendered by Filipino
friends in his honor as Senate President Pro Tempore (Tsn., pp. 14-15, Nov. 25,
1960). For the moral damages sustained by him, therefore, an award of
P100,000.00 is appropriate.
Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige and therefore
his humiliation. In addition she suffered physical discomfort during the 13-hour
trip,(5 hours from Tokyo to Honolulu and 8 hours from Honolulu to San
Francisco). Although Senator Lopez stated that "she was quite well" (Tsn., p. 22,
Nov. 25, 1960) — he obviously meant relatively well, since the rest of his
statement is that two months before, she was attackedby severe flu and lost 10
pounds of weight and that she was advised by Dr. Sison to go to the United
States as soon as possible for medical check-up and relaxation, (Ibid). In fact,
Senator Lopez stated, as shown a few pages after in the transcript of his
testimony, that Mrs. Lopez was sick when she left the Philippines:
A. Well, my wife really felt very bad during the entire trip from Tokyo to San
Francisco. In the first place, she was sick when we left the Philippines, and then
with that discomfort which she [experienced] or suffered during that evening, it
was her worst experience. I myself, who was not sick, could not sleep because
of the discomfort. (Tsn., pp. 27-28, Nov. 25, 1960).
It is not hard to see that in her condition then a physical discomfort sustained for
thirteen hours may well be considered a physical suffering. And even without
regard to the noise and trepidation inside the plane — which defendant
contends, upon the strengh of expert testimony, to be practically the same in
first class and tourist class — the fact that the seating spaces in the tourist class
are quite narrower than in first class, there beingsix seats to a row in the former
as against four to a row in the latter, and that in tourist class there is very little
space for reclining in view of the closer distance between rows (Tsn., p. 24, Nov.
25, 1960), will suffice to show that the aforesaid passenger indeed experienced
physical suffering during the trip. Added to this, of course, was the painfull
thought that she was deprived by defendant — after having paid for and
expected the same — of the most suitable, place for her, the first class, where
evidently the best of everything would have been given her, the best seat,
service, food and treatment. Such difference in comfort between first class and
tourist class is too obvious to be recounted, is in fact the reason for the former's
existence, and is recognized by the airline in charging a higher fare for it and by
the passengers in paying said higher rate Accordingly, considering the totality of
her suffering and humiliation, an award to Mrs. Maria J. Lopez of P50,000.00 for
moral damages will be reasonable.
Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as immediate members of
the family of Senator Lopez. They formed part of the Senator's party as shown
also by the reservation cards of PAN-AM. As such they likewise shared his
prestige and humiliation. Although defendant contends that a few weeks before
the flight they had asked their reservations to be charged from first class to
tourist class — which did not materialize due to alleged full booking in the tourist
class — the same does not mean they suffered no shared in having to take
tourist class during the flight. For by that time they had already been made to
pay for first class seats and therefore to expect first class accommodations. As
stated, it is one thing to take the tourist class by free choice; a far different thing
to be compelled to take it notwithstanding having paid for first class seats.
Plaintiffs-appellants now ask P37,500.00 each for the two but we note that in
their motion for reconsideration filed in the court a quo, they were satisfied with
P25,000.00 each for said persons. (Record on Appeal, p. 102). For their social
humiliation, therefore, the award to them of P25,000.00 each is reasonable.
The rationale behind exemplary or corrective damages is, as the name implies,
to provide an example or correction for public good. Defendant having breached
its contracts in bad faith, the court, as stated earlier, may award exemplary
damages in addition to moral damages (Articles 2229, 2232, New Civil Code).
In view of its nature, it should be imposed in such an amount as to sufficiently
and effectively deter similar breach of contracts in the future by defendant or
other airlines. In this light, we find it just to award P75,000.00 as exemplary or
corrective damages.
Now, as to attorney's fees, the record shows a written contract of services
executed on June 1, 1960 (Exh. F) whereunder plaintiffs-appellants engaged the
services of their counsel — Atty. Vicente J. Francisco — and agreedto pay the
sum of P25,000.00 as attorney's fees upon the termination of the case in the
Court of First Instance, and an additional sum of P25,000.00 in the event the
case is appealed to the Supreme Court. As said earlier, a written contract for
attorney's services shall control the amount to be paid therefor unless found by
the court to be unconscionable or unreasonable. A consideration of the subject
matter of the present controversy, of the professional standing of the attorney for
plaintiffs-appellants, and of the extent of the service rendered by him, shows that
said amount provided for in the written agreement is reasonable. Said lawyer —
whose prominence in the legal profession is well known — studied the case,
prepared and filed the complaint, conferred with witnesses, analyzed
documentary evidence, personally appeared at the trial of the case in twenty-two
days, during a period of three years, prepared four sets of cross-interrogatories
for deposition taking, prepared several memoranda and the motion for
reconsideration, filed a joint record on appeal with defendant, filed a brief for
plaintiffs as appellants consisting of 45 printed pages and a brief for plaintiffs as
appellees consisting of 265 printed pages. And we are further convinced of its
reasonableness because defendant's counsel likewise valued at P50,000.00 the
proper compensation for his services rendered to defendant in the trial court and
on appeal.
In concluding, let it be stressed that the amount of damages awarded in this
appeal has been determined by adequately considering the official, political,
social, and financial standing of the offended parties on one hand, and the
business and financial position of the offender on the other (Domingding v. Ng,
55 O.G. 10). And further considering the present rate of exchange and the terms
at which the amount of damages awarded would approximately be in U.S.
dollars, this Court is all the more of the view that said award is proper and
reasonable.
Wherefore, the judgment appealed from is hereby modified so as to award in
favor of plaintiffs and against defendant, the following: (1) P200,000.00 as moral
damages, divided among plaintiffs, thus: P100,000.00 for Senate President Pro
Tempore Fernando Lopez; P50,000.00 for his wife Maria J. Lopez; P25,000.00
for his son-in-law Alfredo Montelibano, Jr.; and P25,000.00 for his daughter Mrs.
Alfredo Montelibano, Jr.; (2) P75,000.00 as exemplary or corrective damages;
(3) interest at the legal rate of 6% per annum on the moral and exemplary
damages aforestated, from December 14, 1963, the date of the amended
decision of the court a quo, until said damages are fully paid; (4) P50,000.00 as
attorney's fees; and (5) the costs. Counterclaim dismissed.So ordered.
[Moral]
G.R. No. L-28773 June 30, 1975
FRANCISCO ORTIGAS, JR., plaintiff-appellant-appellee,
vs.
LUFTHANSA GERMAN AIRLINES, defendant-appellant-appellee.
Baizas, Alberto and Associates for appellant Lufthansa German Airlines.
Pelaez, Jalandoni and Jamir for appellant Francisco Ortigas, Jr.
BARREDO, J.:
Direct appeals of both parties plaintiff, Francisco Ortigas, and defendant
Lufthansa German Airlines, from the decision of the Court of First Instance of
Manila, Branch X, "condemning the defendant to pay plaintiff the amount of
P100,000 as moral damages, P30,000 as exemplary or corrective damages,
with interest on both sums at the legal rate from the commencement of this suit
until fully paid, P20,000 as attorney's fees and the costs" for the former's failure
to "comply with its obligation to give first class accommodation to (the latter) a
(Filipino) passenger holding a first class ticket," aggravated by the giving of the
space instead to a Belgian and the improper conduct of its agents in dealing with
him during the occasion of such discriminatory violation of its contract of
carriage.
Defendant buttresses its appeal on the following:
ASSIGNMENT OF ERRORS
I
THE LOWER COURT ACTED WITH GRAVE ABUSE OF DISCRETION IN
DENYING THE DEFENDANT'S URGENT MOTION FOR POSTPONEMENT
DATED SEPTEMBER 24, 1966.
II
THE LOWER COURT CONSEQUENTLY ERRED IN ORDERING THE
STRIKING FROM THE RECORDS THE TESTIMONY OF WITNESS IVO
LAZZARI AND IN DEEMING THE CASE SUBMITTED FOR DECISION ON THE
EVIDENCE OF THE PLAINTIFF ALONE.
III
THE LOWER COURT ERRED IN CONDEMNING DEFENDANT TO PAY THE
PLAINTIFF THE AMOUNT OF P100,000.00 AS MORAL DAMAGES,
P30,000.00 AS EXEMPLARY OR CORRECTIVE DAMAGES, WITH INTEREST
ON BOTH SUMS AT THE LEGAL RATE FROM THE COMMENCEMENT OF
THIS SUIT UNTIL FULLY PAID, P20,000.00 AS ATTORNEY'S FEES, AND
COSTS. (Pp. 12-13, p. 118, Record.)
On the other hand, plaintiff's sole ground for his appeal is that "the trial court
erred in ordering Lufthansa to pay Ortigas only P100,000 as moral damages,
P20,000 as exemplary or corrective damages, and P20,000 as attorney's fees."
(Plaintiff-Appellant's Brief, p. a.) Thus, apart from the contention of defendant
that it has been denied its full day in court, the only issue raised by both
appellants relate to the amount of the damages awarded by the trial court,
plaintiff claiming it is less than he is entitled to and the defendant insisting on the
opposite.
Lufthansa maintains it has not had its full day in court because the trial court
abruptly ended the trial by denying its last motion for postponement
notwithstanding it was well founded and forthwith ordering the striking out of the
testimony of its absent witness whose cross-examination had not been finished
and then declaring the case submitted for decision. In this connection, the
record reveals the following facts:
Plaintiff's complaint was filed with the court below on December 24, 1963 and
after issues were joined, a pre-trial was held, the parties submitted a partial
stipulation of facts and thereafter went to trial, the last day of which was on
September 28, 1966. As to what happened in between, a detailed account is
made in the brief of Ortigas as plaintiff-appellee as follows:
... Thereafter the case was set for hearing twenty four (24) times, or on April 27,
1964, July 9, 1964, August 20, 1964, October 1, 1964, November 11, 1964,
December 22, 1964, February 3, 1965, March 18, 1965, May 5, 1965, June 11,
1965, July 22, 1965, August 26, 1965 and September 8, 1965, September 22,
1965, November 3, 1965, November 24, 1965, December 17, 1965, December
29, 1965, January 14, 1966, February 2, 1966, April 19, 1966, April 20, 1966,
July 5, 6 and 7, 1966, August 25, 1966 and September 28, 1966.
One (1) hearing, or that of August 25, 1966, was cancelled because the trial
judge, Hon. Jose L. Moya, was then sick. Other postponements were as follows:
Postponements at instance of plaintiff
Three (3) settings were cancelled upon motion of plaintiff on grounds that
defendant's counsel (Atty. Crispin Baizas) himself must have found sufficient, for
he gave his conformity thereto. These were the hearings set for:
July 9, 1964 — postponed upon plaintiff's motion, dated June 27, 1964, or 12
days before the hearing, on the ground that he had to attend an important
business matter in Mindanao, which was so urgent that "for plaintiff to even
make a flying trip to Manila for the scheduled hearing might jeopardize and
render to naught a project to which plaintiff has already expended considerable
time, money and effort" (RA— pp. 28-29. Note: All reference herein will be to
plaintiff's Record on Appeal).
August 26, 1965 — postpone upon plaintiff's motion, dated August 23, 1965, for
the reason that he was in London for business reasons and could not return to
the Philippines on time for the hearing. This motion is not reproduced in any
Record on Appeal but is admitted.
July 5-7, 1966 — 18 days before the dates set for the hearing, counsel for
plaintiff filed a motion, dated June 17, 1966, for Postponement on the ground
that Atty. Rodegelio M. Jalandoni, who had been personally handling this case
was then in Washington, D.C. on business and would not be back until the
middle part of August, 1966. Considering that the trial of the case was far
advanced, it would be difficult for another lawyer to substitute for Atty. Jalandoni.
Defendant's counsel agreed to the motion (RA — pp. 50-51).
Postponement at instance of both parties
Four (4) settings, or those of August 20, 1964, October 1, 1964, November 11,
1964 and December 22, 1964, were cancelled upon the joint motion of the
parties on the ground that negotiations for the possible settlement of this case
were pending (RA — pp. 31-34).
While both attorneys for plaintiff and defendant signed the joint motions for
postponement, the initiative to have the hearings cancelled actually came from
defendant's counsel who claimed that he needed time to consult with his client.
Plaintiff welcomed the possibility of compromise and acceded to join the
requests for postponement but became impatient at and suspicious of the
attempt to delay so that in the motion to postpone the December 22, 1964
hearing, plaintiff insisted on the insertion of the phrase "be postponed for the last
time" (RA — p. 34).1äwphï1.ñët These took place after the pre-trial but before
plaintiff had started presenting his evidence.
Postponement at instance of defendant
Of the remaining 16 settings, at least TEN (10) were postponed or could not
proceed except for a few minutes because either Atty. Crispin Baizas, counsel
for defendant, was not available or needed time to prepare or had to attend a
meeting somewhere else, or, as in the case of September 28, 1966, defendants
witnesses wanted to avoid the inconvenience of coming to the Philippines. The
situation became such that on two (2) occasions the court a quo warned the
defendant and/or its counsel that it was postponing the trial "for the last time"
and "definitely for the last time." Thus:
February 3, 1965 — On this date, although plaintiff was ready to present his
evidence and the Court to hear the parties, Atty. Baizas asked for postponement
for the reason that he had to be somewhere else. The undersigned graciously
obliged by not objecting, albeit the motion was made without warning and in
open court.
March 18, 1965 — Once again the hearing scheduled for this date was
postponed on motion of Atty. Baizas in open court. The undersigned did not
object because, as far as he can now recall, the excuse given was that opposite
counsel had another appointment.
June 11, 1965 — The Court was free the whole morning of this day and plaintiff
actually took the witness stand. After plaintiff was through with his direct
testimony, Atty. Zaida R. Alberto, who appeared for the defendant, asked that
the cross-examination be postponed for the next hearing, on the ground that
Atty. Baizas knew more of the defense. The following appears of record:
"ATTY. ALBERTO:
If Your Honor please, may I request to allow the cross examination at the next
hearing.
COURT:
You can handle the cross examination now.
ATTY. ALBERTO:
The defense are more in the knowledge of Atty. Baizas.
COURT:
If you postpone the cross-examination we will forget the testimony and will be
spending much time referring to his testimony, so you better cross-examine him
while his testimony is still fresh.
ATTY. ALBERTO:
May I ask for a reconsideration, Your Honor, anyway it is past 11:00 o'clock I do
not think there will be enough time.
COURT:
We still have one hour.
ATTY. ALBERTO:
I ask for a reconsideration, Your Honor.
COURT:
On motion of the defendant's counsel, the continuation of the trial is postponed
to July 22, 1965, at 8:30 a.m. The parties were notified in open court of this new
assignment." (t.s.n. pp. 43-44, June 11, 1965)
Notwithstanding there was an hour left, which was precious considering the
crowded calendar of the Court, and Judge Moya wanted to hear the cross-
examination because plaintiff's testimony was fresh, the Court pleased counsel
for the defendant and postponed the hearing to July 22, 1965.
September 22, 1965 — At this hearing the undersigned requested that Dr. Isidro
Pertiera be permitted to take the witness stand. He is a heart specialist and it
was difficult to bring him to court because of his many patients. His direct
testimony did not take long, after which Atty. Baizas asked for postponement, for
the reason that he did not expect Dr. Pertiera to testify and, since the subject of
the testimony was important and technical, he needed time to be able to cross-
examine. The undersigned, understanding the predicament of Atty. Baizas, did
not offer any objection.
November 3, 1965 — This scheduled hearing was postponed upon motion
dated October 7, 1965, of Atty. Baizas on the ground that he was leaving on a
business trip abroad. The undersigned again did not object.
November 24, 1965 — It will be recalled that the hearing of September 22,
1965, supra, was postponed to enable Atty. Baizas to prepare for his cross-
examination of Dr. Pertiera. On this date, November 24, 1965, Atty. Baizas
cross-examined briefly the doctor, but announced:
"ATTY. BAIZAS:
May I announce, your Honor, that after I cross-examine the Doctor I will ask for
a postponement of my cross examination of Atty. Ortigas because I will have to
attend a meeting of the PAL Board of Directors this morning. My cross
examination will not be very long." (t.s.n., pp. 34, November 24, 1965)
The PAL Board of Directors' meeting was certainly not more important than the
occupation of the Court, and it was still early, but counsel was insistent. The
Court was beginning to be perturbed by the dilatory motions; yet it granted
counsel's requested postponement but "for the last time." Thus:
"ATTY. BAIZAS:
That is all. May I make that request, Your Honor, that it is simply that I have to
be present at the meeting. I wish to finish my cross examination on Atty. Ortigas
but it is merely that the meeting is held for today at 10:00 o'clock and I would like
to ask for a postponement to continue the cross examination.
COURT:
I will grant this for the last time. On motion of Atty. Baizas, the continuation of
the hearing is postponed for the last time to December 17, 1965, at 8:30 a.m.,
by agreement between him and Atty. Jalandoni." (t.s.n., p. 17, November 24,
1965)
December 17, 1965 — Although at the hearing of November 24, 1965 trial was
postponed for the last time to December 17, 1965, the Court's warning did not
seem to register because on December 7, 1965 defendant's counsel filed
another motion for postponement alleging that he had received a telegram to the
effect that the meeting of the Legal Committee of IATA that he was attending,
originally scheduled for December 10-15, had been deferred and would begin on
December 13 and as it was for 5 days, it would not be possible for him to return
for the December 17 hearing; hence, he requested that said hearing be reset for
December 27 and 29. In his undated motion filed on December 7,1965 counsel
averred that:
"There is no intention whatever to delay the case but because of the
circumstances above-stated, undersigned counsel is constrained to ask, for the
last time, for the cancellation of the hearing on December 17 and for its resetting
on such dates as may be convenient to this Honorable Court, preferably
December 27 and 29." (RA — p. 41)
The undersigned opposed said motion and alleged:
"That this case has been pending since December 24, 1963, or almost two
years now, and trial thereof has been repeatedly suspended and/or postponed;
That at the hearing of November 24, 1965, this Honorable Court precisely
postponed continuation of the trial thereof for the last time to December 17, a
date which was fixed by agreement of the parties;
That when counsel for defendant left, as alleged, on December 6, 1965 he did
so with full knowledge of the intransferable character of the trial set for
December 17;
That defendant can well be represented by Atty. Baizas' associate, Atty. Alberto,
who, as a matter of fact, handled this case when trial started on June 11, 1965
and has been actively collaborating with Atty. Baizas since then;
That when plaintiff testified on direct examination on June 11, 1965 said Atty.
Alberto appeared for defendant and that plaintiff is now merely due for further
cross-examination." (RA — p. 43)
In spite of said opposition, the Trial Court once more granted defendant's
request but was more categorical this time with its admonition against further
postponements and used the word "definitely" in its order which read:
"ORDER
For the reasons stated in the defendant's motion for postponement and in view
of the fact that it seeks a deferment of the hearing for only a few days, the
continuation of the trial is postponed definitely for the last time to December 29,
1965, at 8:30 a.m.
"SO ORDERED.
"Manila, Philippines, December 11, 1965.
JOSE L. MOYA
Judge"
(RA — p. 46)
March 10, 1966 — The hearing on this date lasted for only a few minutes, with
the undersigned offering the documentary evidence for the plaintiff. Thereupon,
defendant's counsel again asked for postponement so he could go over said
evidence. Since he had no witnesses to present, the Court once more
postponed the trial to April 19, 1966 without any objection on the part of the
undersigned.
April 19, 1966 — The hearing for this day was cancelled upon motion of
defendant's counsel (RA — p. 49) on his representation that defendant's witness
Ivo Lazzari had arrived from Italy at midnight of April 18, 1.966 and was not in a
condition to take the witness stand. The Court again accommodatingly
transferred the hearing to the following day, April 20, 1966, although it had other
cases scheduled for that date and the case at bar was not among them, just so
Lazzari's trip would not be useless. The undersigned likewise did not oppose the
transfer of hearing. (Pp. 2-13 — Brief, p. 132 — Record.)
Defendant does not seriously deny these facts. Seemingly, the controversy
between the parties revolves around defendant's motion for postponement of
the hearing set for September 28, 1966 which was denied by the trial court. It is
this denial that is the subject of the first above-quoted alleged errors assigned by
Lufthansa in its brief as defendant-appellant.
At the time this incident of postponement arose, plaintiff had already closed his
evidence, and so it was the turn of the defendant to prove its defenses. The
starting date for this was April 19, 1966, but, upon motion of defendant's
counsel, it was deferred to the next day, April 20, 1966, on which date
defendant's first witness, Ivo Lazzari, took the witness stand. His testimony,
however, was not finished in the morning and afternoon of that day nor during
the whole day of April 22, 1966. Atty. Rodegelio M. Jalandoni was still cross-
examining him when the hearing was continued "to the first available date in the
calendar". Eventually, the next continuation of the trial was set at first for July 5,
6 and 7, 1966, but upon motion of plaintiff's counsel, it was reset for August 25,
1966, on which date, in spite of the presence of Lazzari who came from Rome
purposely for the trial together with another expected witness, Severino Caselli,
and still another witness, C.H. Dehio, who came from Hongkong, no trial could
be held because of the absence of the judge. Hence, another date, September
28, 1966 was fixed with notice to the parties received by them respectively the
month previous.
On September 24, 1966, defendant's counsel filed a motion for postponement
thus:
COMES NOW the defendant by undersigned counsel and to this Honorable
Court respectfully states:
1
The above-entitled case is set for hearing on September 28, 1966 at 8:30
o'clock in the morning.
2
The witnesses who are scheduled to testify for the defendant at said hearing are
to come from Rome, Italy;
3
Word has been received from the defendant that said witn will not be able to
come for the hearing aforementioned.
WHEREFORE, it is respectfully prayed that the hearing of this case scheduled
for September 28 be postponed to some other date most convenient to this
Honorable Court, preferably on any of the following dates: October 21, 17;
Novembers, 3, 8, 9 or 11, 1966.
... . (Page 53, Record on Appeal, p. 29, Rec.)
On September 27, 1966, plaintiff's counsel filed the following opposition to the
above motion:
COMES NOW plaintiff, through undersigned counsel and, in opposition to
defendant's urgent motion for postponement, dated September 24, 1966, to this
Honorable Court respectfully states:
That this case has been pending since December, 1963;
That defendant's aforesaid motion does not give any valid reason for postponing
the hearing, since it does not state why defendant's witnesses cannot come to
Manila on the scheduled dates of continuation of trial;
That the convenience and motive of defendant and its witnesses in not exerting
every effort to testify are not the concern of the plaintiff, and more so of this
Honorable Court, and that the speedy and proper administration of justice
dictates that the hearing proceed irrespective of defendant's obvious disregard
of the need thereofl;
That defendant's attitude is aggravated by the fact that, being an airline
company, it has all facilities to have its employees available as witnesses at any
time it desires.
WHEREFORE, it is respectfully prayed that defendant's aforesaid motion for
postponement be denied.
... . (Pp. 55-56, id.)
In view of this opposition, on the same day, His Honor issued an order of denial:
No reason whatsoever having been alleged or shown why the defendant's
witnesses will not be able to come from Rome to Manila on the day of the
hearing, and this case having been pending since December, 1963, the motion
for postponement is denied. (Pp. 56-57, id.)
On the day set for the hearing, September 28, 1966, Atty. Zaida Ruby S. Alberto
appeared for defendant and verbally moved for reconsideration of the foregoing
order of denial. She argued that:
Actually, it is not intended to delay the termination of this case. As a matter of
fact, on August 15, 1966, the date set for the hearing of this case, we were
ready with the presentation of our evidence as our two witnesses from Rome
were here. But unfortunately, Your Honor was indisposed, so the hearing was
postponed to this date. I really do not know why our witness failed to come.
However, I intend to make an inquiry about the matter so that I could file the
corresponding explanation for their failure to appear in Court today. May I,
therefore, reiterate my motion for reconsideration, with the reservation that I be
allowed to file my explanation for the failure of these two witnesses coming from
Rome to appear for today's hearing. (Page 2, t.s.n., Sept. 28/66.)
But as counsel could not give the exact reason why defendant's witness
scheduled to testify were absent, the trial court denied the motion; ruling that "no
ground has been alleged in support thereof." (p. 6, t.s.n., September 28, 1966.)
This order was immediately followed by a motion of plaintiff's counsel for the
striking out of the entire testimony of the witness, Ivo Lazzari, upon the ground
that counsel had not yet finished his cross-examination of him and his absence
was unexplained. No objection appears to have been made to such motion,
albeit counsel for defendant tried to point out that Atty. Jalandoni had already
finished his cross-examination of the witness. After verifying from the records
that such was not the case, His Honor issued the following order:
The witness Ivo Lazzari not having appeared at the hearing set for today, for
which reason his cross-examination cannot be continued, on motion of the
plaintiff's counsel, his testimony is striken from the record, and this case is
deemed submitted for decision on the evidence already presented. (Pp. 57-58,
Rec. on Ap., id.)
Thus the trial ended and parties were allowed to submit their respective
memoranda.
On October 19, 1966, however, defendant's counsel filed the following motion
for reconsideration:
MOTION FOR RECONSIDERATION .
COMES NOW defendant by undersigned counsel this Honorable Court moving
for a reconsideration of the orders dated September 27 and September 28,
1966, respectively, respectfully states:
1 was also here to testify. Unfortunately, the Presiding (Judge) of this Honorable
On September 26, 1966 a motion for postponement of the hearing on
September 28, 1966 was filed by undersigned counsel for the reason that word
had just been received from the defendant that the witnesses who were
scheduled to testify at the said hearing and who were to come from Rome, Italy,
would not be able to come to the Philippines for said hearing. This motion was
denied in the order of September 27, 1966;
2 rendered their coming over virtually impossible. Both witnesses, Ivo Lazzari and
No reason could be stated in the aforesaid motion for postponement because at
the time it was prepared, counsel for defendant did not really know the specific
reasons for the inability of said witnesses to come. A simple telex message had
been sent by the Far East Manager of the defendant company to defendant's
representatives in Manila advising the latter that the witnesses in question could
not come. Copy of said telex message is attached to and made part of this
motion for reconsideration as Annex "I";
3
For this reason on September 28, 1966, when the case was called, counsel for
the defendant reiterated the motion for postponement and requested this
Honorable Court for time to submit an explanation on the failure of defendant's
witnesses to come as a letter elaborating on the matter would surely follow the
telex' message. This request was however denied by the Honorable Court and
upon motion of plaintiff's counsel, another order was issued striking out from the
record the testimony of defendant's only witness so far, Ivo Lazzari, whose
cross-examination was to be continued that date, for the latter's failure to appear
at the hearing, and deeming the case submitted for decision;
4
It is alleged by opposing counsel that the witnesses did not come for the hearing
of September 28, 1966 because it was inconvenient for them and for defendant.
This accusation is absolutely without basis and malicious;
5 8
If inconvenience were the only reason for the witnesses' failure to come, then
they would not also have come previously because it was just as inconvenient
for them then. It will be recalled that Ivo Lazzari had been here in April 1966
when he was presented on direct examination and partly on cross-examination.
On August 25, 1966, the case was also scheduled for hearing. All of defendant's
witnesses came here from Rome, Italy for said hearing. Even Mr. C. H. Dehio
Court was indisposed on that particular morning and so the hearing on said date
was cancelled. We mention this only to show that the failure of the witnesses to
come for the hearing on September 28 was not caused by mere inconvenience;
6
Defendant had and had no intention to delay the proceedings whatsoever. The
witnesses in question could not come because of certain circumstances that
Saverino Casilli are employees of defendant company at the Rome office. The
air traffic in Rome has been particularly heavy this season. Some of the
personnel of the Lufthansa Rome office were on leave and these two employees
had to assume some of the duties of those employees who were on leave, aside
from performing their own regular duties, If they were to leave their posts to
come for the hearing on September 28, there would be grave disruption to the
public service and for this reason they were not able to come. These facts are
contained in a letter dated September 29, 1966 written to undersigned counsel
by C. H. Dehio, IATA Agency Manager, Far East and Australasia, Lufthansa
German Air Lines, copy of which is attached to and made part of this motion for
reconsideration as Annex "2";. The envelope in which said letter contained is
likewise attached to and made part of this motion as Annex "2-A";
7
Witness Ivo Lazzari had first shed his testimony on direct examination and on
September 28, 1966, opposing counsel was to continue cross-examination of
said witness. The other witness Saverino Casilli was to be presented after Ivo
Lazzari would have finished testifying. Both witnesses are material for the
defense and no other person could testify on the facts that are the subject of
their testimony. The inability of said witnesses to come for the hearing on
September 28 was not due to any fault or neglect on the part of defendant who
in fact had exerted every effort to have them come, but because of the
supervening circumstances above-described, their coming over could not have
been possible without seriously disrupting public service;
There is no question that the granting or denial of a motion for postponement
rests upon the sound discretion of the court. We submit however that under the
circumstances, the ends of justice would have been better served by granting
the motion on question. The reason for defendant's motion for postponement is
valid and meritorious, and the grant of a postponement based on such ground
would not have adversely affected the substantial rights of plaintiffs.
"Continuances and postponements of trial are part and parcel of our judicial
system of justice, and where no substantial rights are affected and the intention
to delay is not manifest, it is sound judicial discretion to allow them. (Rexwell vs.
Canlas, No. L-16746, Dec. 30, 1961)
"There is even authority for the view that the right to a speedy trial is not violated
by granting a continuance on the ground of absence of material witness. (People
vs. Romero, G.R. No. L-4517-20, May 25, 1953)
The lower court erred in denying a motion for postponement filed by defense to
await arrival of a material witness." (People vs. Narsolis, et al. G.R. No. L-2764,
March 24, 1950)
"A miscarriage of justice may result from the accidental or excusable absence of
a material witness, where presence can be secured by the grant of a reasonable
continuance." (Luna vs. Arcenas, 34 Phil. 80, 98-99)
8
Defendant has a valid and meritorious defense, and if given opportunity to
present its side of the case, it would certainly diminish, if not altogether disprove
plaintiffs claim.
... court litigations are primarily for the search of truth. ... A trial by which both
parties are given the chance to adduce truth is the best way to find out such
truth. A denial of this chance would be too technical. The dispensation of justice
and the vindication of grievances should not be barred by technicalities."
(Ronquillo vs. Marasigan, L-11621, May 21, 1962; Santiago vs. Joaquin, L-
15237, May 31, 1963, emphasis ours.)
"Judicial experience dictates that it is better that cases are tried on the merits
even with a little delay than that substantial rights of a party litigant be sacrificed
on the altar of technicality." (Uy vs. Demetillo, CA-G.R. No. 32665-R, Jan. 14,
1964.)
9 I have prepared the foregoing motion for reconsideration and all the allegations
An affidavit of merit by Clarita C. de la Riva, Manager, Rocha & Cua., Inc.,
General Sales Agents, Lufthansa German Airlines is likewise attached to and
made an integral part of this motion for reconsideration as Annex "3";
10
The order dated September 27, denying defendant's motion for postponement
and the order of September 28, 1966 striking off from the records the testimony
on direct examination of the witness Ivo Lazzari and holding the case submitted
for decision on the evidence presented would unduly prejudice defendant's
stand, and would amount to a denial of due process to defendant.
"The paramount interests of justice demand such reasonable allowances as
would prevent, without doing an injustice to the opposing party, the loss by a
litigant of his chance to duly present his side of the case before the court. With a
view of avoiding a possible miscarriage of justice, the exercise of the court's
discretion ought to lean, in a reasonable degree toward bringing about a
presentation of evidence on both sides. ..." (Gerona vs. Calada, CA-G.R. No.
23955-R March 30, 1963, Tormes vs. Balzado, CA-G.R. No. 32019-R, April 17,
1964.)
WHEREFORE, it is respectfully prayed that the orders of the Honorable Court
dated September 27, and September 28, 1966, respectively, be reconsidered
and set aside; that the testimony of defendant's witness Ivo Lazzari be allowed
to remain on record and that a date be set for the continuation of defendant's
evidence.
Manila, Philippines, October 19, 1966.
CRISPIN D. BAIZAS & ASSOCIATES
By: s/t/ Crispin D. Baizas
Counsel for the defendant
Suite 305 Shurdut Building
Intramuros, Manila
VERIFICATION
I, CRISPIN D. BAIZAS, after having been sworn according to law, depose and
say:
I am the counsel for the defendant in the above-entitled case;
contained therein are true and correct of my own knowledge and to the best of
my information and belief.
s/t/ CRISPIN D. BAIZAS
SUBSCRIBED AND SWORN TO BEFORE ME this 19th day of October. 1966 in
the City of Manila, affiant exhibiting to me his Res. Cert. No. A- 5892423 issued
on January 28, 1966 at Makati, Rizal.
s/ (Illigible)
NOTARY PUBLIC
Until December 31, 1967
Doc. No. 1377
Page No. 77
Book No. III
Series of 1966.
(Pages 58-67, Record on Appeal, id.)
to which, plaintiff's counsel filed the following opposition:
COMES NOW plaintiff, through undersigned counsel, and, in opposition to
defendant's motion for reconsideration, dated October 19, 1966, to this
Honorable Court respectfully states that:
1. This is in effect the second motion for reconsideration that defendant has filed
against the order of September 27, 1966 denying its motion for postponement of
the hearing of September 28. The first motion for reconsideration was made in
open court by Atty. Zaida S. Alberto and denied on the same date.
2. Defendant now claims that it did not intend to delay the trial of this case and
seeks to justify the failure of its witnesses, Ivo Lazzari and Saverino Casilli, to
appear on September 28 on the ground that:
"... The air traffic in Rome has been particularly heavy this season. Some of the
personnel of the Lufthansa Rome office were on leave and these two employees
had to assume some of the duties of these employees who were on leave, aside
from performing their own regular duties. If they were to leave their posts to
come for the hearing on September 28, there would be grave disruption to the
public service and for this reason they were not able to come. ..." (p. 3,
Defendant's Motion for Reconsideration.)
3. Note that the above alleged facts are contained in a mere letter that was
written by a certain Mr. C.H. Dehio, an employee of defendant in Hongkong, to
its counsel on September 29, 1966, or one day after the hearing of September
28, when presumably defendant's aforesaid employee had already been
informed that this Honorable Court had denied the postponement and
considered this case as submitted for decision. Defendant is an airline company
and has all the telex facilities to communicate in a matter of minutes with its
various agencies. The ground for failure to appear, to wit, supposed pressure of
work of said employees, is as easy to conceive and gratuitously state as to flick
one's fingers. We wish to call attention to the significant fact that the statement
of Mr. Dehio in his letter is not under oath. Incorporating said statement in the
body of the motion for reconsideration that is sworn to by counsel merely `to the
best of his information and belief, or in an affidavit of Mrs. Clarita C. de la Riva
(Annex 3) who was only referring to hearsay information derived from Mr.
Dehio's aforesaid letter, is insufficient verification of the motion for
reconsideration under Section 6, Rule 7 of the Rules of Court. Even Mr. Dehio
had he executed the affidavit himself, would have been disqualified to swear to
the facts because he is stationed in Hongkong. So that, when defendant's
counsel and Mrs. de la Riva verified the motion on "information and belief"
derived from Mr. Dehio's letter, their statements were hearsay thrice removed.
4. But assuming said facts to be true, did this justify the failure of defendant's
witnesses to appear at the scheduled hearing or constitute a valid excuse for
defendant's inability to present evidence. We respectfully submit that they do
not. The September 28 hearing was set as early as August 25, 1966, or more
than one (1) month previous, to suit the schedules not only of this Honorable
Court but of the parties as well. Surely, it was incumbent on defendant, if it has
deference to this Honorable Court and our administration of justice to see to it
that its witnesses, particularly Ivo Lazzari who was on the witness stand and due
for cross-examination, would be available, rather than granting leave to its other
employees and burdening the two needed witnesses with additional work.
Defendant is not a neophyte in the airline business. Assuming arguendo that it is
true that the volume of air traffic in Europe was high in "September and early
October", it should have foreseen the situation and taken appropriate measures
to assure compliance with its obligation to this Honorable Court. The witnesses
are defendant's employees and subject to its exclusive control. Instead,
defendant allegedly rendered itself short handed by granting leave to its other
employees, and now comes to court with a lame excuse requesting that it be
extricated from a predicament that it has deliberatedly brought upon itself. For
the execuse that with the workload for Mr. Lazzari and Mr. Casilli becoming
heavier than usual "it would seriously disrupt our service to the travelling public
if, during this time, they were to leave their jobs for several days" (Please see
Mr. Dehio's letter, Annex "2") is lame, by any standard. The local newspapers
are constantly carrying news articles of how large and expanded is the
Lufthansa as an airline outfit. Surely, of its hundred (if not thousands) of
available employees, two like Lazzari and Casilli could have been dispensed
from their work temporarily to defend the company against the just grievance
asserted by an injured passenger before a court of justice. At the most,
defendant was after the promotion of its own interest in holding the two
employees to their jobs, and is not avoiding "grave disruption to the public
service" as counsel exaggerates Mr. Dehio's expression "seriously disrupt our
service to the travelling public" two distinct ideas, the latter signifying self-
interest as distinguished from public necessity. This Honorable Court can take
judicial notice that there are many other airlines-operating in the same areas as
doe, Lufthansa and competing with it.
5. As we explained at the September 28 hearing, the truth of the matter is that,
contrary to the unverified representations of defendant, the reason for the non-
attendance of defendant's witnesses was to avoid the inconvenience of coming
to the Philippines to testify. In other words, after Ivo Lazzari and Saverino Casilli
were unable to testify last August 25, 1966, defendant thought of avoiding
having said witnesses come again to Manila. We say this because sometime on
September 20, 1966, Atty. Leonardo P. Valmonte (an assistant attorney of
plaintiff who is helping in this case) had a telephone conversation with
defendant's counsel, Atty. Zaida S. Alberto in connection with the former's
request for a copy of a certain exhibit, and in the course of their conversation
Atty. Alberto informed Atty. Valmonte that the trial scheduled for September 28,
1966 would not proceed because they were intending "to secure the permission
of the court to take the testimonies of their witnesses by way of deposition". In
short, even before the receipt of the alleged telex (Annex "1" of Motion) by
defendant's counsel on September 22, 1966, said counsel announcing that the
trial could not proceed because they were going to resort to depositions of their
witnesses in Rome, rather than have said witnesses come to Manila. The
decision to take depositions having been made on or before September 20, it
was an easy matter to have Lufthansa's Hongkong office send the telex of
September 22 stating that they would be unable to provide witnesses on
September 28. No reason was given why witnesses could not be provided 6 or 7
days thence. If in truth there was unexpected increase in air traffic, surely 6 or 7
days were more than sufficient to make the necessary arrangements so that the
work of Lazzari and Casilli could be taken over temporarily just so these
witnesses could appear before this Honorable Court at the appointed date.
Attached hereto as Annex "A" is the affidavit of Atty. Leonardo P. Valmonte on
his aforesaid conversation with Atty. Alberto.
6. At the hearing on September 28, when we made reference to the above-
referred to conversation between Attys. Valmonte and Alberto, the latter did not
deny that she had in truth spoken to Atty. Valmonte in the tenor above related.
As a matter of fact, she admitted that defendant was intending to take the
depositions of its witnesses in Rome.
7. When this honorable Court denied the motion for postponement on
September 28, 1966, it did so in the exercise of its sound judicial discretion, for
no valid reason was given why the witnesses could not appear, whereas this
case had been pending for about three (3) years and had been postponed
several times with repeated warnings on defendant that said postponements
were for the last time. And now, in its motion for reconsideration, defendant has
failed to effectively allege the ground for the failure of said witnesses to come,
and even if said ground be admitted as true for argument's sake, it merely
showed "inofficiousness, lack of resourcefulness and diligence, if not total
indifference" on the part of defendant to protect in court its interests and to
prevent needless delays in the discharge of judicial business.
"Postponement not based on valid reasons. — Where a party seeks
postponement of the hearing of this case for reasons caused by his own
inofficiousness, lack of resourcefulness and diligence if not total indifference to
his own interests or to the interests of those he represents, thereby resulting in
his failure to present his own evidence, the court would not extend to him its
mantle of protection. If it was he who created the situation that brought about the
resulting adverse consequences, he cannot plead for his day in court nor claim
that he was so denied of it." (De Leon vs. People's Homesite and Housing
Corporation, CA-G.R. No. 31169-R, Aug. 31,1963.)
8. In the case of Hap Hong Hardware Co. vs. Philippine Company, GR. No. L-
16773 (May 23, 1961), the Supreme Court, in sustaining the trial court's denial
of a motion for postponement and on the ground that the defendant's witnesses,
officers of the company, had not come because it was the beginning of the
milling season in the municipality of San Jose, Mindoro Occidental and their
presence in the Central was very, necessary, held that the trial court was
perfectly justified in denying said motion for postponement because the reason
adduced was "not unavoidable and one that could not have been foreseen."
Said the Supreme Court:
"The reason adduced in support of the motion for postponement is not
unavoidable and one that could not have been foreseen. Defendant ought to
have known long before the date of trial that the milling season would start when
the trial of the case would be held. The motion should have been presented long
in advance of the hearing, so that the court could have taken steps to postpone
the trial without inconvenience to the adverse party. As it is, however, the motion
was presented on the day of the trial. Knowing as it should have known that
postponements lie in the court's discretion and there being no apparent reason
why the defendant could not have presented the motion earlier, thus avoiding
inconvenience to the adverse party, the appellant cannot claim that the trial
court erred in denying postponement. Under all the circumstances we hold that
the Court was perfectly justified in denying the motion for postponement."
In the case at bar, the same unjustified excuse is adduced — that the witnesses,
who are employees (not even officers) of defendant, had work to do, albeit date
of trial was set one month previous.
9. The cases cited by defendant are not in point, the facts involved therein being
very different from those attending the case at bar. For example, in the cited
case of Lino Luna vs. Arcenas, 34 Phil. 93, the trial judge declined to grant a
continuance of a few hours to give counsel an opportunity to secure the
presence of the defendant. The Supreme Court held that considering that it did
not appear that defendant was indulging in dilatory tactics, the denial of the
motion for short Postponement was improper. Again, in the case of People vs.
Romero, G.R. No. L-4517, May 25, 1953, the prosecution witnesses, although
subpoenaed, failed to appear; whereupon the fiscal asked that they be ordered
arrested and that in the meantime the trial be postponed. The Supreme Court
likewise held that the denial of the postponement was improper. These fact
situations, however, as can immediately be seen are completely different from
that of Lufthansa whose non-presentation of its employees-witnesses was
motivated by the desire to avoid inconvenience to them, hence its frustrated plan
to have their depositions taken in Rome.
10. Complaints regarding delays in the disposition of court cases are prevalent
and have recently found expression not only in executive pronouncements but in
judicial admonitions. The unclogging of court dockets remains a pressing
problem to the despair of litigants. As the Court of Appeals put it:
"The records reveals that the trial of the case was postponed five times at the
instance of appellants themselves, and for this reason the trial was delayed for
more than one year and three months. In granting these several postponements,
the trial judge was over liberal already, and to have allowed another
postponement would have been to jeopardize plaintiff's interest. Obviously
courts cannot unduly protect the interests of one party to the detriment of the
other. Already, there are complaints regarding delays in the disposition of court
cases. The unclogging of our court dockets still remains a pressing problem in
the despair of many a litigant. However to eliminate, at least minimize, these
delays is as much our concern and any act of trial courts conducive towards this
purposeful end will be encouraged by appellate court's." (Rosario vs. De Leon,
CA-G.R. No. 6495-R, April 25, 1941; 40 O.G. 752.)
11. Prejudice will be occasioned plaintiff if defendant's belated motion for
reconsideration is granted. Notwithstanding defendant's counsel's receipt of Mr.
Dehio's letter, dated September 25, 1966, a few days after said date, defendant
delayed the filing of its motion for reconsideration until after about three (3)
weeks later. In the meantime, it knew as of September 28 that this Honorable
Court had striken out the testimony of Ivo Lazzari, considered the case
submitted for decision on the evidence on record, and given plaintiff's counsel 7
days to present his memorandum. Plaintiff and his counsel exerted all efforts
and worked overtime just so to be able to submit his memorandum within the
short period allowed. Said memorandum was finished on time, and has been
served on defendant's counsel and submitted to Court. In other words,
defendant purposely waited until the submission of plaintiffs memorandum
before presenting its motion for reconsideration based on alleged information
received three (3) weeks previous. To grant defendant's instant motion for
reconsideration would place plaintiff at a great disadvantage, because defendant
is now fully aware of every facet of plaintiff's cause and can simply tailor its
defenses and evidence in refutation thereof.
12. Defendant claims that plaintiff is taking undue advantage of a technicality
and it should not be deprived of its day in court on this ground. Suffice it to state
that it is never technical to invoke one's rights, and that while the Rules of Court
should be liberally construed, their strict observance has been considered
indispensable to the prevention of needless delays and the orderly and speedy
discharge of judicial business. Thus:
"Although the Rules of Court should be liberally construed, however their strict
observance which have been considered indispensable to the prevention of
needless delays and to the orderly and speedy discharge of judicial business, is
as imperative necessity. Thus, the rules prescribing the time within which certain
act must be done, or certain proceedings taken, are considered absolutely
indispensable to the prevention of needless delays and to the orderly and
speedy discharge of judicial business, is as imperative necessity. Thus, the rules
prescribing the time within which certain act must be done, or certain
proceedings taken, are considered absolutely indispensable to the prevention of
needless delays and to the orderly and speedy discharge of judicial business
and therefore must be strictly complied with." (Alvero vs. De la Rosa, 76 Phil.
428, cited in Francisco on Civil Procedure, Vol. 1, P. 89)
"Rules of Courts, promulgated by authority of law, have the force and effect of
law; and rules of court prescribing the time within which certain acts must be
done, or certain proceedings taken are considered absolutely indispensable to
the prevention of needless delays and to the orderly and speedy discharge of
judicial business. "Conlu vs. Court of Appeals, et al., G.R. No. L-14027, January
29, 1960, citing Shioji vs. Harvey, 43 Phil. 333; Alvero vs. De la Rosa, et al., 42
Off. Gaz., p. 316, (Supra.)
WHEREFORE, it is respectfully prayed that defendant's motion for
reconsideration, dated October 19, 1966, be denied.
Manila, October 31, 1966. (Pages 74-88, Record on Appeal, id.)
By way of reply to the above opposition, defendant's counsel alleged:
Defendant could have from the beginning taken depositions in Rome, but so as
to avoid any inconvenience to plaintiff and that the court may see and hear the
witnesses testify to better determine the credibility of their testimony defendant
had been bringing the witnesses here. As a matter of fact, defendant even
without leave of court may take the depositions of its witness by merely giving
the Court notice of its intention to do so.
"After answer has been filed no leave at court is required as a prerequisite to
taking depositions ... (Marzo vs. Moore McCormick Line, Inc. 8 Feb. Rules of
Service, p. 560; cited in Moran Comments on Rules of Court Vol. II, p. 18)
"After issue is joined, depositions may be taken without leave of court. (Lyons
vs. Bronx Towing Line, Inc., 1 Fed. Service p. 341)
"After answer is served, depositions may be taken as of course and application
should not be made to the court for leave. (Schultz vs. State Mutual Life
Assurance Company, 1 Fed. Rules of Service, p. 340, US Dist. Ct. Dist. of
Oregon, Oct. 14, 1938)
"The statements made by Atty. Valmonte are false and malicious. An affidavit
executed by Atty. Zaida Ruby Alberto is attached to and made part of this Reply
as Annex "1". (Pages 92-93, Record on Appeal, id.)
On October 24, 1966, the trial court resolved the incident in a brief order holding
that "(f)or the reasons stated in the plaintiff's opposition to the motion for
reconsideration, it is denied."
In its appeal, defendant reiterates insistently its position that the denial of its
motion for postponement as well as the order striking out the testimony of Ivo
Lazzari were issued in grave abuse of discretion and should be set aside.
Before going any further, however, it may be mentioned that since defendant
has not assigned as error, although it discusses in its brief, the denial of its last
motion for reconsideration, plaintiff contends that such failure constitutes a bar
to any further consideration of the merits of the arguments of defendant relative
to the main denial-of-postponement and striking-out orders. To be sure, there is
technical plausibility in such pose of plaintiff, but considering the importance of
the other matters involved in this case, it would serve the interests of justice
more if We passed on the merits of the substantial issues in this controversy.
After all, "this Court is clothed with ample authority to review matters, even if
they are not assigned as errors in the appeal, if it finds that their consideration is
necessary in arriving at a just decision of the case." (Saura Import & Export Co.,
Inc. vs. Philippine International Surety Co., Inc., L-15184, May 31, 1963, 8
SCRA 143.) And considering the inter-relation between the omitted assignment
of error and those actually assigned and discussed by defendant's counsel, We
can apply here the ruling in Hernandez vs. Andal, 78 Phil. 196, to the effect that
"an unassigned error closely related to an error properly assigned or upon which
the determination of the question raised by the error properly assigned is
dependent, will be considered by the appellate court notwithstanding the failure
to assign it as an error." (at pp. 209-210.)
Now, with respect to defendant's first assignment of error, We feel that the
rather extended recital We have made above of the incidents and proceedings
related to the trial court's order denying defendant's motion for postponement of
the hearing set for September 28, 1966 is self-revealing. It argues against the
charge that His Honor's order of denial was improper and unjustified.
The case had been pending for about three years and had actually suffered
during that period even more than the usually permissible number of
continuances, quite often to suit the convenience of defendant's counsel. Notice
of the September 28, 1966 schedule had been served on counsel the month
previous. It must be assumed that due preparations and arrangements were to
be made since the receipt of that notice to insure the presence in Manila for the
expected witnesses on the date set. Under the circumstances, the excuse given
by defendant that the witnesses could not leave their respective stations and
places of work to attend the trial is plainly unacceptable. There was enough time
and opportunity for defendant to have made the corresponding adjustments in
the assignments of its personnel so as to enable its witnesses to be in court.
The trouble is that defendant relied on the assumption that the court could be
made to wait until the volume and other conditions of its business would permit it
to comply with the schedule of the court. For an airline company engaged in
international transportation and presumably having all the facilities to have any
of its employees available practically anywhere in the world at a moment's
notice, if it only took due care to do this, defendant's attitude cannot be
countenanced.
What is more, the motion of September 24, 1966 gave no reason at all why
defendant's witnesses supposed to come from Rome would be unable to be at
the trial. Even as late as the day of the hearing, September 28, 1966, the court
could not be told the reason for such inability. All that counsel could say was that
she "intend(ed) to inquire and file the explanation" later. This was not as it
should have been, for the telex advising the Manila office that the witnesses
would not be available was received on September 22nd yet, and certainly there
was enough time to investigate and find out the reason for such unavailability.
And as no justifiable reason could be advanced in support of the verbal motion
for reconsideration. We cannot say that His Honor acted improperly when he
denied the same.
We reiterate, the case had been pending for more than three years, with so
many postponements, and the least that defendant should have done to merit
favorable action on the part of the trial judge was to be ready with an
explanation of its inability to proceed with the trial, giving the detailed and good
reasons therefor. As it is, there was actually no basis at all for the exercise of
discretion on the part of the trial judge in a manner favorable to it. Trials may be
postponed because of the absence of evidence only when such absence is
justified. Mere absence is not a justification in itself. Section 4 of Rule 22 is
sufficiently clear on this point. It provides that "A motion to postpone a trial on
the ground of absence of evidence can be granted only upon affidavit showing
the materiality of evidence expected to be obtained, and that due diligence has
been used to procure it." This means that it must be shown to the court that due
diligence had been exercised in either securing the presence of the evidence
(witnesses) or preventing the absence thereof.
There is, of course, defendant's motion for reconsideration of October 19, 1966
praying for the setting aside of the court's order of denial as well as the other
order striking out the testimony of witness Lazzari. But, as already noted, the
only excuse given in said motion is that:
... The witnesses in question could not come because of certain circumstances
that rendered their coming over virtually impossible. Both witnesses, Ivo Lazzari
and Saverino Casilli are employees of defendant company at the Rome office.
The air traffic in Rome has been particularly heavy this season. Some of the
personnel of the Lufthansa Rome office were on leave and these two employees
had to assume some of the duties of those employees who were on leave aside
from performing their own regular duties. If they were to leave their posts to
come for the hearing on September 28, there would be grave disruption to the
public service and for this reason they were not able to come. ... (Page 47, Rec.
on Ap., p. 32, Record.)
Indeed, even if such reason were given earlier on September 24, 1966 the court
would have been as well justified in denying the requested postponement. We
cannot see any reason why, despite its having knowledge of the date of the
hearing about a month before, defendant did not see to it that its expected
witnesses were not assigned to do duty on the day they were supposed to
appear in court. We cannot believe Lufthansa could be so undermanned that
such a simple adjustment of its personnel had to be "impossible."
Moreover, the Rome based witnesses were not the only possible witnesses of
defendant. To begin with, Mr. C.H. Dehio, the IATA Agency Manager, Far East
and Australasia, Lufthansa German Air Lines, who, according to the record, had
already attended previous hearings as a prospective witness could have been
made to go to court. There is nothing in the record to show that he was also
rendered incapable of doing so. Then there could still be local witnesses, it is no
excuse that presenting other witnesses would have disrupted the presentation of
defendant's case, for parties may be allowed to maintain their own way of
presenting their evidence only where this can be done without injury to the
expeditious disposition of the case and the best interests of the administration of
justice.
Coming now to the second assigned error regarding the striking out of the
unfinished testimony of Lazarri, the Court is also of the opinion and so holds that
the trial court's action cannot be categorized as arbitrary or oppressive or as
amounting to a grave abuse of discretion. To be sure, this second order was but
a logical consequence of the previous order denying defendant's motion for
postponement. With such denial, the next thing in order was to declare the
presentation of evidence of the defendant terminated. Accordingly, it was
necessary to determine what evidence could be considered to be for the
defendant. And so when counsel for plaintiff asked the court to strike out the
testimony so far given by Lazarri, there was practically no alternative for the
court but to grant the same. Indeed, defendant's counsel could not and did not
offer any objection thereto.
Oral testimony may be taken into account only when it is complete, that is, if the
witness has been wholly cross-examined by the adverse party or the right to
cross-examine is lost wholly or in part thru the fault of such adverse party. But
when cross-examination is not and cannot be done or completed due to causes
attributable to the party offering the witness, the uncompleted testimony is
thereby rendered incompetent.
The right of a party to cross-examine the witnesses of his adversary is
invaluable as it is inviolable in civil cases, no less than the right of the accused in
criminal cases. The express recognition of such right of the accused in the
Constitution does not render the right thereto of parties in civil cases less
constitutionally based, for it is an indispensable part of the due process
guaranteed by the fundamental law. Subject to appropriate supervision by the
judge in order to avoid unnecessary delays on account of its being unduly
protracted and to needed injunctions protective of the right of the witness
against self-incrimination and oppressive and unwarranted harrassment and
embarrassment, a party is absolutely entitled to a full cross-examination as
prescribed in Section 8 of Rule 132 thus: "Upon the termination of the direct
examination, the witness may be cross-examined by the adverse party as to any
matters stated in the direct examination, or connected therewith, with sufficient
fullness and freedom to test his accuracy and truthfulness and freedom from
interest or bias, or the reverse, and to elicit all important facts bearing upon the
issue." Until such cross-examination has been finished, the testimony of the
witness cannot be considered as complete and may not, therefore, be allowed to
form part of the evidence to be considered by the court in deciding the case.
In the case at bar, however, We have opted not to rely exclusively on the
foregoing considerations. In order to satisfy Ourselves as to whether or not
defendant stands to be irreparably prejudiced by the impugned action of the trial
court relative to the testimony of Lazzari, We have just the same gone over the
transcript thereof. After considering the same, however, We are of the
impression that even his direct testimony, without taking into account anymore
his answers to the cross-examination questions of counsel for plaintiff, cannot
be of much weight in establishing the defenses in defendant's answer. But it
would seem more appropriate to elaborate on this point when We come to the
discussion of the mutual accusation of the parties that the trial court erred in the
portion of its discretion awarding damages to plaintiff.
The last issue submitted for Our resolution relates to the award of damages
made by the trial court in favor of Ortigas against Lufthansa in the amounts
aforestated, as to which, as already noted at the outset, both parties have
appealed taking opposite positions. In this respect, the appealed decision made
the following findings and discussion of the material facts:
In October, 1963, the Sharp Travel Service, the travel department of C. F.
Sharp, Inc., the majority interest-in-which is held by Rocha y Cia., Inc., General
Agents of the defendant, Lufthansa German Airlines issued to the plaintiff First
Class Pan American Ticket No. 026492147076 to 81 which would take him from
Manila, the place of departure, to Hongkong, various cities in the United States,
Europe, Asia, the Far East, and then back to Manila, the place of destination.
Ortigas' ticket for all these different legs of his journey was first class.
He left Manila October 12, 1963, as scheduled. In New York, he decided to
leave out some cities, included in his original itinerary, to be in Hongkong on the
19th day of November, 1963, for several appointments he had there. He went to
the Trans World Airlines and had his Pan American ticket changed with First
Class TWA Ticket No. 115-460-451- 878 to 881. His TWA ticket was also first
class for the entire trip from New York to several European cities, including
Rome, and thence to the Far East, with Manila also as the place of destination.
Ortigas arrived in due course in Rome. To be sure he could fly first class to
Hongkong on November 18, 1963, for his appointments there the next day,
Ortigas repaired to the office of the Alitalia on Saturday, November 16, 1963, to
book passage. The man at the counter of the Alitalia office told him it had no
flight on Monday but the Lufthansa had. The man thereupon called up the office
of the Lufthansa and, after talking to an employee thereof, told Ortigas that the
Lufthansa had no first class, but only economy, seats available on its Monday
flight.
Ortigas answered that he was not willing to take an economy seat and
requested the employee to call up other airlines. Then the phone rang. The
employee answered and afterwards informed Ortigas that the Lufthansa had a
first class seat available for its Monday flight. Ortigas immediately asked him to
get the seat and to see to it that his ticket be confirmed and validated for the
flight and a first class seat. The man thereafter asked for Ortigas' passport and
other travel papers and attached a validating sticker (Exhibit "D-1") on flight
coupon No. 4 (Exhibit "B") which corresponded to the Rome-Hongkong leg of
his TWA Ticket No. 115-460-461-878 The sticker recites:
Flight Res.
Carrier No. Date Time Status
LH 646 18 Nov. 12:35 P.M. O.K.
Wishing to be doubly sure, Ortigas again requested the Alitalia employee to call
back the Lufthansa office to recheck whether his ticket was really confirmed and
validated. The man did so, after which he told Ortigas that his ticket had been
checked, validated, and confirmed as shown by the word "O.K." on the sticker.
The same employee later wrote on the cover of the plaintiff's ticket "10.15
Terminal-36, via Gioliti" (Exhibits "C" and "C-1") and told him to be in the air
terminal on Monday, November 18, at 10:00 A.M.
The following Monday, Ortigas checked out of his hotel and took a taxi to the
terminal, arriving there about 9:30 A.M. He unloaded his baggage and
proceeded to the counter in charge of the Lufthansa passengers. The lady at the
counter told him the Lufthansa had no space for him that day. Ortigas requested
her to check with her main office, which she did by calling it up. After calling, she
apologized and said the plaintiff's ticket was in order and would be confirmed
and validated. On her request, Ortigas had his luggage weighed and was given
the free luggage allowance of a first class passenger. He was furthermore asked
to pay 800 liras for bus fare and 700 liras as embarkation tax. Then Ortigas,
along with other passengers, one of whom was Amado Castro of the
Development Bank of the Philippines, boarded a bus for the airport.
At the airport, the plaintiff handed over his ticket to the man behind the
Lufthansa counter, who told him everything was all right. At that juncture, the
plaintiff heard his name called. He inquired if he was being called from an
employee of the Lufthansa and, on receiving an affirmative answer, said he was
Ortigas. The employee asked for his passport and other papers and, after
examining his passport, where his Filipino nationality appears, said he could not
board the plane that day because his seat would be given to a Belgian. Ortigas
asked the man why he was doing that to him when his ticket was confirmed and
validated first class. The Lufthansa employee replied he was sorry but Ortigas
could not leave.
Fearing he would have a recurrence of his heart ailment, Ortigas took a
nitroglycerin pill which his doctor advised him to take on occasions of stress.
The plaintiff then told the Lufthansa man to bring the Belgian over so that his
papers may be examined to determine whether he had a preferred right to
Ortigas' seat but the Lufthansa employee turned down the request, raised his
voice, and said if the plaintiff desired, he could take an economy seat and he
would be allowed a refund. Ortigas retorted he was not interested in a refund
and what he wanted was to travel first class in accordance with his ticket.
This argument occurred in the presence of the other passengers, one of whom
was Amado Castro, and the plaintiff felt embarrassed and humiliated because
the Lufthansa employee was shouting at him and treating him the way he did.
Ortigas made another request, namely, that the employee call other airlines to
inquire if they had flights to Hongkong that day but he once more turned down
the plea and insisted that Ortigas travel economy, with the promise that he will
be transferred to first class in Cairo and onward to Hongkong.
After promising to, the man went inside a room and, after a while, came out and
assured the plaintiff he would travel first class from Cairo to Hongkong because
he sent a communication that it should be done. He then jotted down some
letters on Ortigas' ticket. The plaintiff replied he was not satisfied with the
arrangement but was constrained to agree to it because he had to be in
Hongkong the next day, his luggage was in all probability already inside the
plane, he was not certain he could still secure a hotel reservation, the manager
of the hotel where he stayed having told him it would be hard for him to get
another reservation once he checks out, and he was assured he would be given
first class passage from Cairo onward.
Upon arrival in Cairo, the plaintiff requested the Lufthansa agent to transfer him
to first class but the agent said he could not and that he did not receive any
communication from Rome to that effect. Ortigas also requested the man to find
out if there were other airlines having planes leaving that day but his request
was likewise denied. The man, however, promised that at Dharham, Ortigas will
be transferred to first class. Ortigas had no alternative but to continue traveling
as before but he did so again under protest.
At Dharham, the plaintiff once more requested a transfer to first class but was
also told by the Lufthansa agent that he had not received any communication
about the change and the request could not be granted. The plaintiff had to
travel perforce economy from Dharham. In Calcutta, Ortigas once again
requested a transfer or that he be assisted in booking passage on other planes
but was also refused. It was only in Bangkok when the chief steward asked him
if he wanted to move over to first class but having been already embarrassed
and humiliated and the trip to Hongkong being only three hours, he said he
would not as a sign of protest.
In Hongkong, Ortigas protested against the treatment given him but was told by
the Lufthansa office he had to file his protest in Manila, it being the point of
destination. He did so by means of a letter, dated November 25, 1963 (Exhibit
"F"), followed by another letter, dated December 20, 1963 (Exhibit "C"), and not
having received any definite answer, he brought this suit.
Although Ortigas' ticket for the flight from Rome to Hongkong was validated and
confirmed by the Alitalia, its act bound and obligated the Lufthansa. The Alitalia
and Lufthansa are members of the International Air Transport Association
(IATA). It is admitted that as such member, the Alitalia can issue tickets for other
members of the association like the Lufthansa, Pan American World Airways,
and others. Par. 10, Order of April 29, 1964, and Exhibit "H", certification of the
manager of the Alitalia. Aside from being members of the IATA, the Alitalia and
Lufthansa are pool partners and conduct a joint service with interchangeable
flights for the European-Far East-and Australia sectors. Par. 11, Order of April
29, 1964. Under the pool agreement (Exhibit "DD") they undertake to adhere to
the appropriate IATA regulations and to take measures to provide district sales
offices with every possibility for close cooperation in the promotion of the pool
services covered by the agreement, including "reservation and booking". They
furthermore, in effect confirm in the agreement that tickets of one, other than
free and reduced tickets, may be validated by the other.
Finally, Manuel Otayza, general manager of Filital, Inc., which is the general
agent of the Alitalia in the Philippines, testified that space reservation through
telephone calls between airlines is permitted by IATA's, "Manual of Traffic
Conference Resolutions" and that telephone calls for reservation by one airline
to another is in fact accepted procedure in accordance with the official airline
guide of the Air Traffic Conference and International Air Transport Association
(Exhibit "W").
The placing by the Alitalia of a sticker on the plaintiff's ticket obligated the
Lufthansa to give him a first class seat on its flight from Rome to Hongkong on
November 18, 1963. The same witness, Manuel Otayza, testified that the
placing of a validating sticker on a ticket is standard airline procedure; that a
sticker changes are status of a reservation; that consequently while Ortigas'
ticket was "open", that is, it had no reservation for a particular flight between
Rome and Hongkong, the moment a validating sticker was placed thereon,
stating the flight number of the airline, the day and hour of departure, with the
letters "O-K", his ticket was changed from an "open" to a "confirmed" or
"validated" ticket; and that the sticker on Ortigas' ticket meant that first class
space was confirmed for him on Lufthansa flight 646 to Hongkong on November
18, 1963, at 12:35 P.M.
Aside from Otayza's testimony, it is admitted that in the stipulation of facts that
"the letters "O.K." (Exhibit D-2) appearing on the "Res. Status" box of the sticker
(Exhibit D-1) attached to Flight Coupon No. 4 of TWA Ticket No. 015-410:451-
880 (Exhibit "D") means space confirmed, per IATA Resolution 275, page 4,
Issue 2, a photostatic copy of which is attached hereto as Exhibit "O"; that
validate means to stamp or write on the passenger ticket an indication that the
passenger ticket has been officially issued by the carrier; that "the placing of a
sticker on a flight coupon is a revalidation thereof for the flight mentioned in said
sticker and is an alteration effected on said coupon, in accordance with the
procedure laid down in IATA Resolution 275d, Page 1, Issue 1, a photostatic
copy of which is attached thereto as Exhibit "S";. and that "prior endorsement
was not necessary for Alitalia to revalidate TWA Ticket No. 115-410-880 Exhibit
"D" because Alitalia is the carrier originally designated in the "Via carrier" box of
said ticket, in accordance with IATA Resolution No. 279, photostatic copy of
which is attached hereto as Exhibit 'T'."
There was, therefore, a valid and binding contract between Lufthansa and the
plaintiff to transport him as a first class passenger from Rome to Hongkong on
November 18, 1963, and this agreement the defendant violated by compelling
the plaintiff to travel as an economy passenger. It cannot be said the breach was
the result of an honest mistake or excusable negligence. There is evidence the
defendant acted with `bad faith and in wilful disregard of the plaintiffs rights.
Ortigas' ticket was confirmed on the early morning of November 16, 1963, more
than 48 hours before his departure on the afternoon of November 18. There
was, therefore, ample time to send a telex message from Rome to the
defendant's main office in Frankfurt, which is only about 2-1/2 flying hours away,
to reserve a first class seat for the plaintiff.
At the terminal on Via Gioliti, he was again told that he had a first class seat, his
luggage was checked in divesting him of control thereof, and transported to the
airport some 37 kilometers distant. He was in this manner deprived of the
opportunity of availing himself of the facilities of other airlines and compelled to
take the Lufthansa flight even against his will.
In the airport, although he, was found entitled to fly first class, he was told after
his Filipino passport was seen, that his seat would be given to a Belgian, without
any reason or explanation whatsoever. His simple request that the Belgian's
ticket be produced and examined to see who had a better right to a first class
seat was turned down. So was his equally simple request that other airlines be
called to find out if any of them could accept him as a first class passenger to
Hongkong that day. He was deceived into boarding the Lufthansa plane at
Rome by falsely assuring him he will be transferred to first class at Cairo, the
next stop in the flight. The same false and deceptive promise was given him at
Dharham and Calcutta.
Indubitable proof of the defendant's bad faith is found in the fact that while its
employee was assuring the plaintiff he would be transferred to first class in
Cairo, he was at the same time writing on his ticket the following notation:
"TRVLDY/c ROME HEG ROME ST", which means "Travelled economy class
Rome to Hongkong St", thereby barring Ortigas from asserting any right to
demand first class accommodation. The defendant's employee, therefore, knew
all along the plaintiff would not travel first class, and yet he deliberately made
him believe he would be transferred to first class from Cairo to Hongkong.
From the circumstances, it is clear that the defendant not only breached its duty
to the plaintiff but also did not want to release him as a passenger and wished to
hold on to him even if it would cause him inconvenience and embarrassment.
(Pages 97-109, Record on Appeal.) .
Disputing the foregoing conclusions, Lufthansa claims firstly that the Alitalia
employee who validated and confirmed Ortigas' reservation must have made a
mistake because actually, he was informed by the Lufthansa Rome office that
Ortigas could only be waitlisted. Assuming, however, there was such an error, it
has been indisputably proven that under the so-called pool arrangement among
different airline companies pursuant to the International Air Transport
Association (IATA) agreement of which Alitalia and Lufthansa are signatories,
both companies are constituted thereby as agents of each other in the issuing of
tickets and other matters pertaining to their relations with those who would need
their services, and since there can be no question that on its face, the
annotations made by Alitalia on the ticket here in dispute cannot have any (other
meaning than that the reservation of Ortigas for the Rome — Hongkong flight
was validated and confirmed, Lufthansa's disclaimer is unavailing. Besides, it
appears that when Ortigas checked in at the airport, the Lufthansa lady
employee thereat told him, after making the proper verification, that the
reservation was correct. What is more, in the unconcluded testimony of Ivo
Lazzari, the striking out of which is questioned by Lufthansa, he admitted that it
was a fact that the said reservation of plaintiff for first class was confirmed, albeit
he qualified that this was done already in the morning of November 18th, the
day of the flight, almost at the last hour. What seems to have happened was that
somehow the first class accommodations for that flight were overboard and
Lufthansa tried to solve the problem by downgrading Ortigas to the economy
class in favor of a Belgian, as Ortigas was told by the Lufthansa employee who
paged him over the public address system for the purpose just as he was about
to go to the departure area, with his luggage already checked and his
overweight fees duly paid, so much so that they were already loaded in the
plane. Verily, such treatment given to plaintiff was completely wrong and
absolutely unjustifiable. Nobody, much less a common carrier who is under
constant special obligation to give utmost consideration to the convenience of its
customers, may be permitted to relieve itself from any difficulty situation created
by its own lack of diligence in the conduct of its affairs in a manner prejudicial to
such customers. It is Our considered view that when it comes to contracts of
common carriage, inattention and lack of care on the part of the carrier resulting
in the failure of the passenger to be accommodated in the class contracted for
amounts to bad faith or fraud which entitles the passenger to the award of moral
damages in accordance with Article 2220 of the Civil Code. But in the instant
case, the breach appears to be of graver nature, since the preference given to
the Belgian passenger over plaintiff was done willfully and in wanton disregard
of plaintiff's rights and his dignity as a human being and as a Filipino, who may
not be discriminated against with impunity.
Lufthansa contends, however, that there could not have been any possible
discrimination by reason of race against Ortigas because from his appearance,
said plaintiff can easily be taken for a European or white more than his own
witness Amado Castro and besides, there were other orientals in the same flight
on that occasion. It is argued that any such policy would be self-defeating, since
it would certainly be damaging to its own business. Again, this ratiocination
cannot carry the day for Lufthansa, for what appears from the evidence in this
case is not really a case of a general policy of discriminating against orientals or
non-whites, but a specific act of Lufthansa employee at the airport of giving
preference to a Belgian after examining Ortigas passport wherein his Filipino
nationality is noted. Indeed, the fact that despite plaintiffs protestations and
demand that he be shown how it could happen that somebody else, particularly
that Belgian, should be given his place when his reservation was validated and
confirmed and actually, he had already checked in and his baggage was already
in the plane, nothing was done to satisfy him, merely infused bad faith into the
breach of contract already committed of depriving plaintiff of his reserved
accommodation. In other words, from the legal standpoint, such preference
given to a European surely aggravated the damage or injury suffered by plaintiff,
but the very act alone of deliberately downgrading him despite his confirmed
reservation for first class accommodation is sufficient ground for relief. And
considering that there are already recorded cases in this Court wherein Filipinos
have been similarly discriminated against by foreign airline company employees
in the treatment of passengers this new instance can easily be believed and
correspondingly dealt with in fixing and assessing the liability of herein
defendant.
As found by the court below what worsened the situation of Ortigas was that
Lufthansa succeeded in keeping him as its passenger by assuring him that he
would be given first class accommodation at Cairo, the next station, the proper
arrangements therefor having been made already, when in truth such was not
the case. Thus, instead of complying with the request of Ortigas that other
airlines be contacted to find out it they had first class space for him, the
Lufthansa employee who had indifferently told him about his downgrading paid
very little attention if ever to said request. And to keep him from giving the
business to another company, he was made to believe that he would be given
first class accommodation at Cairo. Although molested and embarrassed to the
point that he had to take nitroglycerine pills to ward off a possible heart attack,
Ortigas hardly had any choice, since his luggage was already in the plane. To
his disappointment, when the plane reached Cairo, he was told by the Lufthansa
office there that no word at all had been received from Rome and they had no
space for him in first class. Worse, similar false representations were made to
him at Dharham and Calcutta. It was only at Bangkok where for the first time,
Ortigas was at last informed that he could have a first class seat in that leg of
the flight, from Bangkok to Hongkong. This Ortigas rejected, if only to make
patent his displeasure and indignation at being so inconsiderately treated in the
earlier part of his journey.
Lufthansa insists in its brief that it could have proven that there was no such
"entrapment of a captive passenger" had it been allowed the postponement it
sought of the September 28, 1966 hearing. It is argued that there could have
been no way by which its Rome office could have assured Ortigas about what
he would be given in Cairo, the flight being fully booked as it was without any
assurance of any first class seat being vacated by then. We are not impressed.
In view of the insistence of plaintiff that he be given the first class
accommodation he had contracted and paid for, the least that the, Rome office
should have done was to communicate with Cairo and strongly urge that all
possible effort be made to comply with his well grounded request. As it
happened, however, the Cairo office informed Ortigas when he arrived there that
they had not received any word at all from Rome. On the contrary, as pointed
out by the trial court, contrary to the verbal assurance given Ortigas, the
Lufthansa employee made annotations on his ticket that he was travelling
economy class from Rome to Hongkong. If, as contended by Lufthansa, Ortigas
was duly advised to make arrangements for transfer to first class as soon as he
arrived at each station on the way, why was such notation made that he was
travelling up to Hongkong in economy class? All these only go to show that any
evidence of defendant tending to disprove the testimony of Ortigas would in any
event have been inconclusive or unreliable.
Likewise, Lufthansa maintains that it could have proven that Ortigas did not take
offense at being downgraded, as in fact, according to Lufthansa, he was in jovial
mood throughout the trip enjoying his conversation and exchange of amenities
with his seatmate, who by strange coincidence happened to be the Manager of
Lufthansa German Airlines for the district of Australia and New Zealand holding
said position since 1962.1 Moreover, it is argued, the economy class
accommodations are not much different from first class and Ortigas was not
delayed in his trip. We cannot see the point. A passenger contracts for first class
accommodations for many reasons peculiar to himself and pays a higher price
therefor, and it is certainly not for the airplane to say later, after it deprives him of
his space in order to favor another passenger, that economy class is anyway
just as good as first class. That Ortigas was rightfully indignant is not difficult to
imagine. No person in his normal senses and possessed of human dignity would
have been unperturbed and unruffled by the treatment he had received. More,
he was under express admonition of his doctor taking care of his ailing coronary
condition to travel only in first class. Indeed, that he complained and made
himself emphatically clear while still in Rome is sufficiently substantiated in the
record, as it was more or less admitted by defendant's witness Lazzari when he
testified that he heard about plaintiff's complaint that same day, November 18,
1963.
In the light of all the foregoing, there can be no doubt as to the right of Ortigas to
damages, both moral and exemplary. Precedents We have consistently adhered
to so dictate. Beginning with Cuenca,2 wherein the Court rejected the theory
that an air carrier is liable only in the event of death or injury suffered by a
passenger, because, according to the Court, to so hold would be tantamount to
declaring the carrier "exempt from any liability for damages in the event of its
absolute refusal, in bad faith, to comply with a contract of carriage, which is
absurd", We have uniformly upheld the right of a passenger to damages in all
cases wherein, after having contracted and paid for first class accommodations
duly confirmed and validated, he is transferred over his objection to economy,
class, which he has to take in order to be able to arrive at his destination on his
scheduled time.
In the case of Nicolas L. Cuenca, then Commissioner of Public Highways of the
Philippines, he boarded a Northwest plane in Manila with a first class ticket to
Tokyo, but upon arrival at Okinawa, an agent of the company rudely compelled
him, over his protest, to move over to the tourist class, which he had to do, so he
could reach the international conference he was attending on time. Under these
facts, the Court held that the P20,000 awarded by the lower court to Cuenca
"may well be considered as nominal and also as exemplary, the Court of
Appeals having modified the trial court's designation thereof as moral, saying it
should have been nominal.
In Lopez3 , Honorable Fernando Lopez, then an incumbent senator and former
Vice President of the Philippines, together with his wife and his daughter and
son-in-law, made first class reservations with the Pan American World Airways
in its Tokyo-San Francisco flight. The reservation having been confirmed, first
class tickets were subsequently issued in their favor. Mistakenly, however,
defendant's agent cancelled said reservation, but expecting some cancellations
before the flight scheduled about a month later, the reservations supervisor
decided to withhold the information from them, with the result that upon arrival in
Tokyo, the Lopezes discovered they had no first class accommodations and
were thus compelled to take the tourist class, just so the senator could be on
time for his pressing engagements in the United States. In the light of these
facts, the Court held there was a breach of the contract of carriage and viewed
as the element of bad faith entitling the plaintiffs to moral damages for such
contractual breach, the failure of the agents of the defendant to inform the
plaintiffs on time that their reservation for first class had long before been
cancelled by mistake. According to the Court, such omission placed plaintiffs in
a predicament that enabled the company to keep the plaintiffs as their
passengers in the tourist class, thereby retaining the business and promoting
the company's self-interest at the expense of, embarrassment, discomfort and
humiliation on the part of the plaintiffs.
In Air France vs. Carrascoso4 plaintiff Mr. Rafael Carrascoso, a civil engineer
who was going to Lourdes, France, as a member of a religious group of pilgrims
was issued by the Philippine Air Lines, as agent of the defendant Air France, a
ticket for first class round trip from Manila to Rome. From Manila, Carrascoso
travelled first class, as per said ticket, but at Bangkok, the Manager of the
defendant airline forced him to vacate the first class seat because there was a
white man who allegedly had a better right thereto, without, however, showing
him the basis for such preference. Upon these factual premises, the Court held:
It is really correct to say that the Court of Appeals in the quoted portion first
transcribed did not use the term `bad faith'. But can it be doubted that the recital
of facts therein points to bad faith? The manager not only prevented Carrascoso
from enjoying his right to a first class seat, worse, he imposed his arbitrary will;
he forcibly ejected him from his seat, made him suffer the humiliation of having
to go to the tourist class compartment — just to give way to another passenger
whose right thereto has not been established. Certainly, this is bad faith. Unless,
of course, bad faith has assumed a meaning different from what is understood in
law. For, bad faith, contemplates a "state of mind affirmatively operating with
furtive design or with some motive of self-interest or ill will or for ulterior
purpose." (Words & Phrases, Perm. Ed., Vol. 5, p. 13, citing Warfield Natural
Gas Co. vs. Allen, 59 S.W. (2d) 534, 538.)
And if the foregoing were not yet sufficient, there is the express finding of bad
faith in the judgment of the Court of First Instance, thus:
"The evidence shows that defendant violated its contract of transportation with
plaintiff in bad faith, with the aggravating circumstances that defendant's
Manager in Bangkok went to the extent of threatening the plaintiff in the
presence of many passengers to have him thrown out of the airplane to give the
"first class" seat that he was occupying to, again using the words of the witness
Ernesto G. Cuento, a "white man" whom he (defendant's Manager) wished to
accommodate, and the defendant has not proven that this "white man" had any
"better right" to occupy the "first class" seat that the plaintiff was occupying, duly
paid for, and for which the corresponding "first class" ticket was issued by the
defendant to him." (R.A., p. 74; emphasis supplied.) (at pp. 166-167.)
These precedents, as may be seen, apply four-square to herein plaintiffs case.
Defendant's liability for willful and wanton breach of its contract of carriage with
plaintiff is, therefore, indubitable.
Coming now to the amount that should be awarded by way of damages to the
plaintiff, it is also the teaching of the cases aforecited that defendant is liable not
only for moral but also for exemplary damages. As earlier stated, the court
below fixed the compensation for moral damages at P100,000 and the
exemplary at P30,000. The Court believes that these amounts are not enough.
According to the lower court:
Although the plaintiff has not held any elective public office, he has however, a
distinguished record as a private citizen, a lawyer, businessman, a civic and
religious leader, a member of numerous government boards and organizations
as well as of local and international bodies, and is the recipient of awards and
citations for outstanding services and achievements.
He was, and still is, moreover suffering from a heart ailment and has been
advised by his physician to travel first class because it is more relaxing and
comfortable. His position as chairman of the boards of directors of the
corporation he represented also required that he travel in that manner. He was,
furthermore, carrying a special passport issued by the Philippine Government to
represent it and business corporations abroad.
His sickness and the need for him to travel in the most comfortable manner
possible were made known to the defendant's employee, but he paid no heed to
them. Instead, he engaged Ortigas in a heated discussion, summarily brushed
off his protests and pleas, humiliated him, and tricked him into boarding his
employer's plane, endangering thereby his health and obliging him to take
medicine to forestall an attack.
There is, finally, evidence that he was discriminated against because of his
nationality for he was told to yield his first class seat to a Belgian only after his
passport was examined and his Filipino citizenship must have been noted. .
Under the circumstances and measured by the criterion, jurisprudence has
followed, the compensation the plaintiff should be entitled to receive must be
fixed at P100,000.00 as moral damages, P30,000.00 as exemplary damages or
corrective damages, and P20,000.00 as attorney's fees. (Pp. 111-113, Record
on Appeal.)
We have reviewed the evidence and We are convinced there is more than
ample basis for these findings. But under the circumstances revealed in the
record, it is Our considered opinion that the award of moral damages should be
increased to P150,000.
We cannot go along with defendant's pose that in Cuenca the amount awarded
was only P20,000, for the very obvious reason that in that case what was
involved was only one leg of the flight contracted for, namely, that from Okinawa
to Tokyo, whereas in the case not at bar, the offense was repeated four times, at
Rome, Cairo, Dharham and Calcutta, with apparent cold indifference of
defendant's agents to plaintiff's plight. Besides, it appears that Cuenca did not
appeal from the trial court's decision fixing said amount, hence there was no
occasion for the Supreme Court to award more. This was also what happened in
the Carrascoso case, where the plaintiff did not complain against the award of
only P25,000-moral-and P10,000-exemplary damages made by the trial court. It
was Air France who claimed that these were even excessive. Verily, however,
such, discriminatory acts of the defendants in those cases which were not only
violative of their contractual obligations but also offensive to human dignity and
national or racial pride constitute about the most justifiable ground for the award
of moral damages, for the resulting injury therefrom cannot but cause immense
mental anguish, besmirched reputation, wounded feelings, moral shock and
social humiliation. (See Article 2217 of the Civil Code.) We reiterate, they are to
be considered as infecting with bad faith the breach of contract committed,
under Article 2220 of the same Code. (Lopez vs. Pan Am., supra.)
Lufthansa suggests that compared to the P100,000 awarded to Vice President
Lopez in the case aforementioned, the P100,000 given by the trial court to
Ortigas are "grossly excessive". It does not appear to Us to be so. As pointed
out by His Honor, "although plaintiff has not held any elective public office, he
has, however, a distinguished record as a private citizen, a lawyer,
businessman, a civic and religious leader, a member of numerous boards and
organizations as well as local and international bodies, and is the recipient of
awards and citations for outstanding services and achievements." Indeed, under
the proven facts in the record, We cannot regard plaintiff in any inferior position
vis-a-vis Vice President Lopez in the highest circles of Philippine society and in
the business and religious world, not to speak of his standing in government
officialdom.
Beside there is again the disparity between then Lopez case and this one that
here the offense, which, as in Cuenca, is aggravated by the Lufthansa employee
at Rome having falsely noted on the ticket that Ortigas was travelling in
economy from Rome to Hongkong,5 was repeated four times in the same trip,
namely in Rome, Cairo, Dharham and Calcutta. More importantly, unlike in the
case of Lopez, Ortigas was suffering from a weak heart and under doctor's
advice to travel only in first class, hence, his being compelled to stay in economy
or tourist class during the major part of his trip, must have given him added
apprehensive feelings about his safety. And, moreover, it is to benoted that in
the Lopez case, which was decided in 1966, aside from taking into account the
personal circumstances of the plaintiff, the Court considered "the present rate of
exchange and the terms at which amount of damages awarded would
approximately be in U.S. dollars", hence, We may not justifiably do differently
here..
Furthermore, it may not be amiss to mention here that in Zulueta vs. Pan
American Airways Inc., 43 SCRA 397, the Court awarded the plaintiffs: Zulueta,
the husband, his wife and a minor daughter, a total of P775,000 as damages
consisting of P500,000 as moral, P200,000 as exemplary and P75,000 as
attorney's fees, apart from actual damages. In that case, the Zulueta's were
coming home to Manila from Honolulu in a Pan-American plane. At Wake,
however, where the plane arrived at 4:00 o'clock in the morning, Zulueta could
not be found at flight time because, without letting anyone know, not even his
wife or daughter, he had relieved himself, according to him, at the beach behind
the terminal. When at last, he was found, the Pan-Am employee who first met
him while walking back from the beach remonstrated him thus: "What in the hell
do you think you are! Get on that plane." This angered Zulueta who engaged the
said employee in an exchange of angry words. In the meanwhile, the pilot who
had been tipped by a "man from the State Department", also a passenger in that
flight, that there might be a bomb in the plane and expressed apprehension for
the safety of the flight unless Zulueta could be found, ordered the unloading of
the bags of the Zuluetas, and when three of the four of them had already been
unloaded, he ordered Zulueta to open them, but the latter refused. Another
exchange of angry words followed, in the course of which, according to
Zulueta's evidence, the pilot went to the extent of referring to him and his family
as "those monkeys". Ultimately, the plane left without Zulueta, albeit his wife and
daughter were on board, because the captain refused to allow Zulueta to board
until after his bags were opened and inspected, which Zulueta refused entirely to
do. Although, said decision is not yet final, because of the pendency of a second
motion for reconsideration the Court has not yet resolved, the Court has already
allowed the partial execution of the judgment, thus enabling Zuluetas to collect
already one-half of the amount or over P335,000, which amount, according to
the concurring and dissenting opinion there of the writer of the instant decision
could be the least that should anyway be allowed. Of course, the Court did not
itemize the award but granted the same to the family as a whole, but it is evident
that in the final distribution, Zulueta would get for himself from at least P150,000
to not more than P200,00.6
We hold that the foregoing considerations justify the increase of the award of
moral damages from P100,000 to P150,000.
Finally, We have the dispute regarding the amount of exemplary damages
awarded. In this respect, it is Our considered opinion that defendant should Pay
P100,000 instead of the P30,000 awarded by the trial court. The record of this
case taken together with what are revealed in the other similar cases decided by
this Court, those aforediscussed, convinces Us that defendant, as an airline,
should be made to pay an amount that can really serve as a deterrent against a
seeming pattern of indifference and unconcern, and what is worse, of
discrimination for racial reasons, discernible in the treatment of air passengers.
This is not the first case, and unless the proper sanctions are applied, it does not
appear it is going to be the last yet, of instances wherein Filipino passengers
having validated and confirmed tickets for first class would be shoved to the
economy class, over their valid objections and without any regard at all to their
feelings and convenience, only to favor other passengers presumed by the
airlines to be of superior race, hence, deserving preference. It is high time
everyone concerned were made to realize that the laws of the Philippines do not
permit any act of discrimination against its citizens, specially when this
accompanies a clear breach of contractual obligations of common carriers
whose business is affected with public interest and must be directed to serve the
convenience and comfort of the passengers. When any disregard of such laws
is committed, the Supreme Court, as the interpreter of such laws, must exact the
commensurate liability which they contemplate.
"Exemplary damages are required by public policy, for wanton acts must be
repressed. They are an antidote so that the poison of wickedness may not run
through the body politic." (Report of Code Commission, pp. 75-76) by authority
of the decided cases aforediscussed,7 acts of similar nature as those herein
involved fall within the category of those justifying the imposition of exemplary
damages pursuant to the codal concept just stated.

The rationale behind exemplary or corrective damages is, as the name implies,
to provide an example or correction for public good. ... In view of its nature, it
should be imposed in such an amount as to sufficiently and effectively deter
similar breach of contracts by defendant or other airlines." (Lopez v. Pan-
American World Airways, supra; see also Rotea vs. Halili, 109 Phil. 495; People
vs. Medroso, Jr., G.R. No. L-37633, Jan. 31, 1975, 62 SCRA 245; Cotabato
Timberland Co. Inc. vs. Plaridel Lumber Co., Inc., 13 SCRA 235) Thus, all
relevant matters considered, P100,000 of exemplary damages, which practically
amounts only to not more than $15,000 U.S. under the present rate of
exchange, would serve the ends for which the liability has been conceived.

WHEREFORE, the judgment appealed from is modified by raising the award of

moral and exemplary damages to plaintiff Ortigas to P150,000.00 and
P100,000.00, respectively. In all other respects, including as to the payment of
interests on the said amounts, the same is affirmed.
[Moral]
[G.R. No. 150843. March 14, 2003]
CATHAY PACIFIC AIRWAYS, LTD., petitioner, vs. SPOUSES DANIEL
VAZQUEZ and MARIA LUISA MADRIGAL VAZQUEZ, respondents.
DECISION
DAVIDE, JR., C.J.:
Is an involuntary upgrading of an airline passengers accommodation from one
class to a more superior class at no extra cost a breach of contract of carriage
that would entitle the passenger to an award of damages? This is a novel
question that has to be resolved in this case.
The facts in this case, as found by the Court of Appeals and adopted by
petitioner Cathay Pacific Airways, Ltd., (hereinafter Cathay) are as follows:
Cathay is a common carrier engaged in the business of transporting passengers
and goods by air. Among the many routes it services is the Manila-Hongkong-
Manila course. As part of its marketing strategy, Cathay accords its frequent
flyers membership in its Marco Polo Club. The members enjoy several
privileges, such as priority for upgrading of booking without any extra charge
whenever an opportunity arises. Thus, a frequent flyer booked in the Business
Class has priority for upgrading to First Class if the Business Class Section is
fully booked.
Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal
Vazquez are frequent flyers of Cathay and are Gold Card members of its Marco
Polo Club. On 24 September 1996, the Vazquezes, together with their maid and
two friends Pacita Cruz and Josefina Vergel de Dios, went to Hongkong for
pleasure and business.
For their return flight to Manila on 28 September 1996, they were booked on
Cathays Flight CX-905, with departure time at 9:20 p.m. Two hours before their
time of departure, the Vazquezes and their companions checked in their
luggage at Cathays check-in counter at Kai Tak Airport and were given their
respective boarding passes, to wit, Business Class boarding passes for the
Vazquezes and their two friends, and Economy Class for their maid. They then
proceeded to the Business Class passenger lounge.
When boarding time was announced, the Vazquezes and their two friends went
to Departure Gate No. 28, which was designated for Business Class
passengers. Dr. Vazquez presented his boarding pass to the ground
stewardess, who in turn inserted it into an electronic machine reader or
computer at the gate. The ground stewardess was assisted by a ground
attendant by the name of Clara Lai Han Chiu. When Ms. Chiu glanced at the
computer monitor, she saw a message that there was a seat change from
Business Class to First Class for the Vazquezes.
Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes
accommodations were upgraded to First Class. Dr. Vazquez refused the
upgrade, reasoning that it would not look nice for them as hosts to travel in First
Class and their guests, in the Business Class; and moreover, they were going to
discuss business matters during the flight. He also told Ms. Chiu that she could
have other passengers instead transferred to the First Class Section. Taken
aback by the refusal for upgrading, Ms. Chiu consulted her supervisor, who told
her to handle the situation and convince the Vazquezes to accept the upgrading.
Ms. Chiu informed the latter that the Business Class was fully booked, and that
since they were Marco Polo Club members they had the priority to be upgraded
to the First Class. Dr. Vazquez continued to refuse, so Ms. Chiu told them that if
they would not avail themselves of the privilege, they would not be allowed to
take the flight. Eventually, after talking to his two friends, Dr. Vazquez gave in.
He and Mrs. Vazquez then proceeded to the First Class Cabin.
Upon their return to Manila, the Vazquezes, in a letter of 2 October 1996
addressed to Cathays Country Manager, demanded that they be indemnified in
the amount of P1million for the humiliation and embarrassment caused by its
employees. They also demanded a written apology from the management of
Cathay, preferably a responsible person with a rank of no less than the Country
Manager, as well as the apology from Ms. Chiu within fifteen days from receipt
of the letter.
In his reply of 14 October 1996, Mr. Larry Yuen, the assistant to Cathays
Country Manager Argus Guy Robson, informed the Vazquezes that Cathay
would investigate the incident and get back to them within a weeks time.
On 8 November 1996, after Cathays failure to give them any feedback within its
self-imposed deadline, the Vazquezes instituted before the Regional Trial Court
of Makati City an action for damages against Cathay, praying for the payment to
each of them the amounts of P250,000 as temperate damages; P500,000 as
moral damages; P500,000 as exemplary or corrective damages; and P250,000
as attorneys fees.
In their complaint, the Vazquezes alleged that when they informed Ms. Chiu that
they preferred to stay in Business Class, Ms. Chiu obstinately,
uncompromisingly and in a loud, discourteous and harsh voice threatened that
they could not board and leave with the flight unless they go to First Class, since
the Business Class was overbooked. Ms. Chius loud and stringent shouting
annoyed, embarrassed, and humiliated them because the incident was
witnessed by all the other passengers waiting for boarding. They also claimed
that they were unjustifiably delayed to board the plane, and when they were
finally permitted to get into the aircraft, the forward storage compartment was
already full. A flight stewardess instructed Dr. Vazquez to put his roll-on luggage
in the overhead storage compartment. Because he was not assisted by any of
the crew in putting up his luggage, his bilateral carpal tunnel syndrome was
aggravated, causing him extreme pain on his arm and wrist. The Vazquezes
also averred that they belong to the uppermost and absolutely top elite of both
Philippine Society and the Philippine financial community, [and that] they were
among the wealthiest persons in the Philippine[s].
In its answer, Cathay alleged that it is a practice among commercial airlines to
upgrade passengers to the next better class of accommodation, whenever an
opportunity arises, such as when a certain section is fully booked. Priority in
upgrading is given to its frequent flyers, who are considered favored passengers
like the Vazquezes. Thus, when the Business Class Section of Flight CX-905
was fully booked, Cathays computer sorted out the names of favored
passengers for involuntary upgrading to First Class. When Ms. Chiu informed
the Vazquezes that they were upgraded to First Class, Dr. Vazquez refused. He
then stood at the entrance of the boarding apron, blocking the queue of
passengers from boarding the plane, which inconvenienced other passengers.
He shouted that it was impossible for him and his wife to be upgraded without
his two friends who were traveling with them. Because of Dr. Vazquezs outburst,
Ms. Chiu thought of upgrading the traveling companions of the Vazquezes. But
when she checked the computer, she learned that the Vazquezes companions
did not have priority for upgrading. She then tried to book the Vazquezes again
to their original seats. However, since the Business Class Section was already
fully booked, she politely informed Dr. Vazquez of such fact and explained that
the upgrading was in recognition of their status as Cathays valued passengers.
Finally, after talking to their guests, the Vazquezes eventually decided to take
the First Class accommodation.
Cathay also asserted that its employees at the Hong Kong airport acted in good
faith in dealing with the Vazquezes; none of them shouted, humiliated,
embarrassed, or committed any act of disrespect against them (the Vazquezes).
Assuming that there was indeed a breach of contractual obligation, Cathay
acted in good faith, which negates any basis for their claim for temperate, moral,
and exemplary damages and attorneys fees. Hence, it prayed for the dismissal
of the complaint and for payment of P100,000 for exemplary damages and
P300,000 as attorneys fees and litigation expenses.
During the trial, Dr. Vazquez testified to support the allegations in the complaint.
His testimony was corroborated by his two friends who were with him at the time
of the incident, namely, Pacita G. Cruz and Josefina Vergel de Dios.
For its part, Cathay presented documentary evidence and the testimonies of Mr.
Yuen; Ms. Chiu; Norma Barrientos, Comptroller of its retained counsel; and Mr.
Robson. Yuen and Robson testified on Cathays policy of upgrading the seat
accommodation of its Marco Polo Club members when an opportunity arises.
The upgrading of the Vazquezes to First Class was done in good faith; in fact,
the First Class Section is definitely much better than the Business Class in terms
of comfort, quality of food, and service from the cabin crew. They also testified
that overbooking is a widely accepted practice in the airline industry and is in
accordance with the International Air Transport Association (IATA) regulations.
Airlines overbook because a lot of passengers do not show up for their flight.
With respect to Flight CX-905, there was no overall overbooking to a degree that
a passenger was bumped off or downgraded. Yuen and Robson also stated that
the demand letter of the Vazquezes was immediately acted upon. Reports were
gathered from their office in Hong Kong and immediately forwarded to their
counsel Atty. Remollo for legal advice. However, Atty. Remollo begged off
because his services were likewise retained by the Vazquezes; nonetheless, he
undertook to solve the problem in behalf of Cathay. But nothing happened until
Cathay received a copy of the complaint in this case. For her part, Ms. Chiu
denied that she shouted or used foul or impolite language against the
Vazquezes. Ms. Barrientos testified on the amount of attorneys fees and other
litigation expenses, such as those for the taking of the depositions of Yuen and
Chiu.
In its decision[1] of 19 October 1998, the trial court found for the Vazquezes and
decreed as follows:
WHEREFORE, finding preponderance of evidence to sustain the instant
complaint, judgment is hereby rendered in favor of plaintiffs Vazquez spouses
and against defendant Cathay Pacific Airways, Ltd., ordering the latter to pay
each plaintiff the following:
a) Nominal damages in the amount of P100,000.00 for each plaintiff;
b) Moral damages in the amount of P2,000,000.00 for each plaintiff;
c) Exemplary damages in the amount of P5,000,000.00 for each plaintiff;
d) Attorneys fees and expenses of litigation in the amount of
P1,000,000.00 for each plaintiff; and
e) Costs of suit.
SO ORDERED.
According to the trial court, Cathay offers various classes of seats from which
passengers are allowed to choose regardless of their reasons or motives,
whether it be due to budgetary constraints or whim. The choice imposes a clear
obligation on Cathay to transport the passengers in the class chosen by them.
The carrier cannot, without exposing itself to liability, force a passenger to
involuntarily change his choice. The upgrading of the Vazquezes
accommodation over and above their vehement objections was due to the
overbooking of the Business Class. It was a pretext to pack as many
passengers as possible into the plane to maximize Cathays revenues. Cathays
actuations in this case displayed deceit, gross negligence, and bad faith, which
entitled the Vazquezes to awards for damages.
On appeal by the petitioners, the Court of Appeals, in its decision of 24 July
2001,[2] deleted the award for exemplary damages; and it reduced the awards
for moral and nominal damages for each of the Vazquezes to P250,000 and
P50,000, respectively, and the attorneys fees and litigation expenses to P50,000
for both of them.
The Court of Appeals ratiocinated that by upgrading the Vazquezes to First
Class, Cathay novated the contract of carriage without the formers consent.
There was a breach of contract not because Cathay overbooked the Business
Class Section of Flight CX-905 but because the latter pushed through with the
upgrading despite the objections of the Vazquezes.
However, the Court of Appeals was not convinced that Ms. Chiu shouted at, or
meant to be discourteous to, Dr. Vazquez, although it might seemed that way to
the latter, who was a member of the elite in Philippine society and was not
therefore used to being harangued by anybody. Ms. Chiu was a Hong Kong
Chinese whose fractured Chinese was difficult to understand and whose manner
of speaking might sound harsh or shrill to Filipinos because of cultural
differences. But the Court of Appeals did not find her to have acted with
deliberate malice, deceit, gross negligence, or bad faith. If at all, she was
negligent in not offering the First Class accommodations to other passengers.
Neither can the flight stewardess in the First Class Cabin be said to have been
in bad faith when she failed to assist Dr. Vazquez in lifting his baggage into the
overhead storage bin. There is no proof that he asked for help and was refused
even after saying that he was suffering from bilateral carpal tunnel syndrome.
Anent the delay of Yuen in responding to the demand letter of the Vazquezes,
the Court of Appeals found it to have been sufficiently explained.
The Vazquezes and Cathay separately filed motions for a reconsideration of the
decision, both of which were denied by the Court of Appeals.
Cathay seasonably filed with us this petition in this case. Cathay maintains that
the award for moral damages has no basis, since the Court of Appeals found
that there was no wanton, fraudulent, reckless and oppressive display of
manners on the part of its personnel; and that the breach of contract was not
attended by fraud, malice, or bad faith. If any damage had been suffered by the
Vazquezes, it was damnum absque injuria, which is damage without injury,
damage or injury inflicted without injustice, loss or damage without violation of a
legal right, or a wrong done to a man for which the law provides no remedy.
Cathay also invokes our decision in United Airlines, Inc. v. Court of Appeals[3]
where we recognized that, in accordance with the Civil Aeronautics Boards
Economic Regulation No. 7, as amended, an overbooking that does not exceed
ten percent cannot be considered deliberate and done in bad faith. We thus
deleted in that case the awards for moral and exemplary damages, as well as
attorneys fees, for lack of proof of overbooking exceeding ten percent or of bad
faith on the part of the airline carrier.
On the other hand, the Vazquezes assert that the Court of Appeals was correct
in granting awards for moral and nominal damages and attorneys fees in view of
the breach of contract committed by Cathay for transferring them from the
Business Class to First Class Section without prior notice or consent and over
their vigorous objection. They likewise argue that the issuance of passenger
tickets more than the seating capacity of each section of the plane is in itself
fraudulent, malicious and tainted with bad faith.
The key issues for our consideration are whether (1) by upgrading the seat
accommodation of the Vazquezes from Business Class to First Class Cathay
breached its contract of carriage with the Vazquezes; (2) the upgrading was
tainted with fraud or bad faith; and (3) the Vazquezes are entitled to damages.
We resolve the first issue in the affirmative.
A contract is a meeting of minds between two persons whereby one agrees to
give something or render some service to another for a consideration. There is
no contract unless the following requisites concur: (1) consent of the contracting
parties; (2) an object certain which is the subject of the contract; and (3) the
cause of the obligation which is established.[4] Undoubtedly, a contract of
carriage existed between Cathay and the Vazquezes. They voluntarily and freely
gave their consent to an agreement whose object was the transportation of the
Vazquezes from Manila to Hong Kong and back to Manila, with seats in the
Business Class Section of the aircraft, and whose cause or consideration was
the fare paid by the Vazquezes to Cathay.
The only problem is the legal effect of the upgrading of the seat accommodation
of the Vazquezes. Did it constitute a breach of contract?
Breach of contract is defined as the failure without legal reason to comply with
the terms of a contract.[5] It is also defined as the [f]ailure, without legal excuse,
to perform any promise which forms the whole or part of the contract.[6]
In previous cases, the breach of contract of carriage consisted in either the
bumping off of a passenger with confirmed reservation or the downgrading of a
passengers seat accommodation from one class to a lower class. In this case,
what happened was the reverse. The contract between the parties was for
Cathay to transport the Vazquezes to Manila on a Business Class
accommodation in Flight CX-905. After checking-in their luggage at the Kai Tak
Airport in Hong Kong, the Vazquezes were given boarding cards indicating their
seat assignments in the Business Class Section. However, during the boarding
time, when the Vazquezes presented their boarding passes, they were informed
that they had a seat change from Business Class to First Class. It turned out
that the Business Class was overbooked in that there were more passengers
than the number of seats. Thus, the seat assignments of the Vazquezes were
given to waitlisted passengers, and the Vazquezes, being members of the
Marco Polo Club, were upgraded from Business Class to First Class.
We note that in all their pleadings, the Vazquezes never denied that they were
members of Cathays Marco Polo Club. They knew that as members of the Club,
they had priority for upgrading of their seat accommodation at no extra cost
when an opportunity arises. But, just like other privileges, such priority could be
waived. The Vazquezes should have been consulted first whether they wanted
to avail themselves of the privilege or would consent to a change of seat
accommodation before their seat assignments were given to other passengers.
Normally, one would appreciate and accept an upgrading, for it would mean a
better accommodation. But, whatever their reason was and however odd it might
be, the Vazquezes had every right to decline the upgrade and insist on the
Business Class accommodation they had booked for and which was designated
in their boarding passes. They clearly waived their priority or preference when
they asked that other passengers be given the upgrade. It should not have been
imposed on them over their vehement objection. By insisting on the upgrade,
Cathay breached its contract of carriage with the Vazquezes.
We are not, however, convinced that the upgrading or the breach of contract
was attended by fraud or bad faith. Thus, we resolve the second issue in the
negative.
Bad faith and fraud are allegations of fact that demand clear and convincing
proof. They are serious accusations that can be so conveniently and casually
invoked, and that is why they are never presumed. They amount to mere
slogans or mudslinging unless convincingly substantiated by whoever is alleging
them.
Fraud has been defined to include an inducement through insidious
machination. Insidious machination refers to a deceitful scheme or plot with an
evil or devious purpose. Deceit exists where the party, with intent to deceive,
conceals or omits to state material facts and, by reason of such omission or
concealment, the other party was induced to give consent that would not
otherwise have been given.[7]
Bad faith does not simply connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong, a
breach of a known duty through some motive or interest or ill will that partakes of
the nature of fraud.[8]
We find no persuasive proof of fraud or bad faith in this case. The Vazquezes
were not induced to agree to the upgrading through insidious words or deceitful
machination or through willful concealment of material facts. Upon boarding, Ms.
Chiu told the Vazquezes that their accommodations were upgraded to First
Class in view of their being Gold Card members of Cathays Marco Polo Club.
She was honest in telling them that their seats were already given to other
passengers and the Business Class Section was fully booked. Ms. Chiu might
have failed to consider the remedy of offering the First Class seats to other
passengers. But, we find no bad faith in her failure to do so, even if that
amounted to an exercise of poor judgment.
Neither was the transfer of the Vazquezes effected for some evil or devious
purpose. As testified to by Mr. Robson, the First Class Section is better than the
Business Class Section in terms of comfort, quality of food, and service from the
cabin crew; thus, the difference in fare between the First Class and Business
Class at that time was $250.[9] Needless to state, an upgrading is for the better
condition and, definitely, for the benefit of the passenger.
We are not persuaded by the Vazquezes argument that the overbooking of the
Business Class Section constituted bad faith on the part of Cathay. Section 3 of
the Economic Regulation No. 7 of the Civil Aeronautics Board, as amended,
provides:
Sec 3. Scope. This regulation shall apply to every Philippine and foreign air
carrier with respect to its operation of flights or portions of flights originating from
or terminating at, or serving a point within the territory of the Republic of the
Philippines insofar as it denies boarding to a passenger on a flight, or portion of
a flight inside or outside the Philippines, for which he holds confirmed reserved
space. Furthermore, this Regulation is designed to cover only honest mistakes
on the part of the carriers and excludes deliberate and willful acts of non-
accommodation. Provided, however, that overbooking not exceeding 10% of the
seating capacity of the aircraft shall not be considered as a deliberate and willful
act of non-accommodation.
It is clear from this section that an overbooking that does not exceed ten percent
is not considered deliberate and therefore does not amount to bad faith.[10]
Here, while there was admittedly an overbooking of the Business Class, there
was no evidence of overbooking of the plane beyond ten percent, and no
passenger was ever bumped off or was refused to board the aircraft.
Now we come to the third issue on damages.
The Court of Appeals awarded each of the Vazquezes moral damages in the
amount of P250,000. Article 2220 of the Civil Code provides:
Article 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages
are justly due. The same rule applies to breaches of contract where the
defendant acted fraudulently or in bad faith.
Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury. Although incapable of pecuniary computation,
moral damages may be recovered if they are the proximate result of the
defendants wrongful act or omission.[11] Thus, case law establishes the
following requisites for the award of moral damages: (1) there must be an injury
clearly sustained by the claimant, whether physical, mental or psychological; (2)
there must be a culpable act or omission factually established; (3) the wrongful
act or omission of the defendant is the proximate cause of the injury sustained
by the claimant; and (4) the award for damages is predicated on any of the
cases stated in Article 2219 of the Civil Code.[12]
Moral damages predicated upon a breach of contract of carriage may only be
recoverable in instances where the carrier is guilty of fraud or bad faith or where
the mishap resulted in the death of a passenger.[13] Where in breaching the
contract of carriage the airline is not shown to have acted fraudulently or in bad
faith, liability for damages is limited to the natural and probable consequences of
the breach of the obligation which the parties had foreseen or could have
reasonably foreseen. In such a case the liability does not include moral and
exemplary damages.[14]
In this case, we have ruled that the breach of contract of carriage, which
consisted in the involuntary upgrading of the Vazquezes seat accommodation,
was not attended by fraud or bad faith. The Court of Appeals award of moral
damages has, therefore, no leg to stand on.
The deletion of the award for exemplary damages by the Court of Appeals is
correct. It is a requisite in the grant of exemplary damages that the act of the
offender must be accompanied by bad faith or done in wanton, fraudulent or
malevolent manner.[15] Such requisite is absent in this case. Moreover, to be
entitled thereto the claimant must first establish his right to moral, temperate, or
compensatory damages.[16] Since the Vazquezes are not entitled to any of
these damages, the award for exemplary damages has no legal basis. And
where the awards for moral and exemplary damages are eliminated, so must the
award for attorneys fees.[17]
The most that can be adjudged in favor of the Vazquezes for Cathays breach of
contract is an award for nominal damages under Article 2221 of the Civil Code,
which reads as follows:
Article 2221 of the Civil Code provides:
Article 2221. Nominal damages are adjudicated in order that a right of the
plaintiff, 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 by him.
Worth noting is the fact that in Cathays Memorandum filed with this Court, it
prayed only for the deletion of the award for moral damages. It deferred to the
Court of Appeals discretion in awarding nominal damages; thus:
As far as the award of nominal damages is concerned, petitioner respectfully
defers to the Honorable Court of Appeals discretion. Aware as it is that
somehow, due to the resistance of respondents-spouses to the normally-
appreciated gesture of petitioner to upgrade their accommodations, petitioner
may have disturbed the respondents-spouses wish to be with their companions
(who traveled to Hong Kong with them) at the Business Class on their flight to
Manila. Petitioner regrets that in its desire to provide the respondents-spouses
with additional amenities for the one and one-half (1 1/2) hour flight to Manila,
unintended tension ensued.[18]
Nonetheless, considering that the breach was intended to give more benefit and
advantage to the Vazquezes by upgrading their Business Class accommodation
to First Class because of their valued status as Marco Polo members, we
reduce the award for nominal damages to P5,000.
Before writing finis to this decision, we find it well-worth to quote the apt
observation of the Court of Appeals regarding the awards adjudged by the trial
court:
We are not amused but alarmed at the lower courts unbelievable alacrity,
bordering on the scandalous, to award excessive amounts as damages. In their
complaint, appellees asked for P1 million as moral damages but the lower court
awarded P4 million; they asked for P500,000.00 as exemplary damages but the
lower court cavalierly awarded a whooping P10 million; they asked for
P250,000.00 as attorneys fees but were awarded P2 million; they did not ask for
nominal damages but were awarded P200,000.00. It is as if the lower court went
on a rampage, and why it acted that way is beyond all tests of reason. In fact the
excessiveness of the total award invites the suspicion that it was the result of
prejudice or corruption on the part of the trial court.

The presiding judge of the lower court is enjoined to hearken to the Supreme
Courts admonition in Singson vs. CA (282 SCRA 149 [1997]), where it said:

The well-entrenched principle is that the grant of moral damages depends upon
the discretion of the court based on the circumstances of each case. This
discretion is limited by the principle that the amount awarded should not be
palpably and scandalously excessive as to indicate that it was the result of
prejudice or corruption on the part of the trial court.

and in Alitalia Airways vs. CA (187 SCRA 763 [1990], where it was held:

Nonetheless, we agree with the injunction expressed by the Court of Appeals

that passengers must not prey on international airlines for damage awards, like
trophies in a safari. After all neither the social standing nor prestige of the
passenger should determine the extent to which he would suffer because of a
wrong done, since the dignity affronted in the individual is a quality inherent in
him and not conferred by these social indicators. [19]

We adopt as our own this observation of the Court of Appeals.

WHEREFORE, the instant petition is hereby partly GRANTED. The Decision of

the Court of Appeals of 24 July 2001 in CA-G.R. CV No. 63339 is hereby
MODIFIED, and as modified, the awards for moral damages and attorneys fees
are set aside and deleted, and the award for nominal damages is reduced to
P5,000.

No pronouncement on costs.

SO ORDERED.
[Moral] January 3, 1996 of the Regional Trial Court (RTC) of Makati City, Branch 137 in
Civil Case No. 93-2328.
AIR FRANCE, G.R. No. 165266
The facts follow:
Petitioner,
Sometime in April 1993, respondent Bonifacio H. Gillego,[3] then
Present: incumbent Congressman of the Second District of Sorsogon and Chairman of
the House of Representatives Committee on Civil, Political and Human Rights,
was invited to participate as one of the keynote speakers at the 89th Inter-
CARPIO MORALES, J., Parliamentary Conference Symposium on Parliament Guardian of Human
Rights to be held in Budapest, Hungary and Tokyo, Japan from May 19 to 22,
Chairperson, 1993. The Philippines is a member of the Inter-Parliamentary Union which
organized the event.[4]
- versus - BERSAMIN,
On May 16, 1993, respondent left Manila on board petitioner Air
MENDOZA, Frances aircraft bound for Paris, France. He arrived in Paris early morning of
May 17, 1993 (5:00 a.m.). While waiting at the De Gaulle International Airport for
VILLARAMA, JR., and
his connecting flight to Budapest scheduled at 3:15 p.m. that same day,
SERENO, JJ. respondent learned that petitioner had another aircraft bound for Budapest with
an earlier departure time (10:00 a.m.) than his scheduled flight. He then went to
petitioners counter at the airport and made arrangements for the change in his
booking. He was given a corresponding ticket and boarding pass for Flight No.
BONIFACIO H. GILLEGO, Promulgated: 2024 and also a new baggage claim stub for his checked-in luggage.[5]
substituted by his surviving heirs
represented by Dolores P. Gillego, However, upon arriving in Budapest, respondent was unable to locate his
luggage at the claiming section. He sought assistance from petitioners counter
Respondent. December 15, 2010 at the airport where petitioners representative verified from their computer that
he had indeed a checked-in luggage. He was advised to just wait for his luggage
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
at his hotel and that petitioners representatives would take charge of delivering
the same to him that same day. But said luggage was never delivered by
petitioners representatives despite follow-up inquiries by respondent.
DECISION
Upon his return to the Philippines, respondents lawyer immediately wrote
petitioners Station Manager complaining about the lost luggage and the resulting
damages he suffered while in Budapest. Respondent claimed that his single
VILLARAMA, JR., J.: luggage contained his personal effects such as clothes, toiletries, medicines for
his hypertension, and the speeches he had prepared, including the notes and
For review is the Decision[1] dated June 30, 2004 of the Court of reference materials he needed for the conference. He was thus left with only his
Appeals (CA) in CA-G.R. CV No. 56587 which affirmed the Decision[2] dated travel documents, pocket money and the clothes he was wearing. Because
petitioners representatives in Budapest failed to deliver his luggage despite their
assurances and his repeated follow-ups, respondent was forced to shop for
personal items including new clothes and his medicines. Aside from these
unnecessary expenditures of about $1,000, respondent had to prepare another
speech, in which he had difficulty due to lack of data and information.
Respondent thus demanded the sum of P1,000,000.00 from the petitioner as
compensation for his loss, inconvenience and moral damages.[6] Petitioner,
however, continued to ignore respondents repeated follow-ups regarding his lost
luggage.
On July 13, 1993, respondent filed a complaint[7] for damages against the
petitioner alleging that by reason of its negligence and breach of obligation to
transport and deliver his luggage, respondent suffered inconvenience, serious
anxiety, physical suffering and sleepless nights. It was further alleged that due to
the physical, mental and emotional strain resulting from the loss of his luggage,
aggravated by the fact that he failed to take his regular medication, respondent
had to be taken to a medical clinic in Tokyo, Japan for emergency treatment.
Respondent asserted that as a common carrier which advertises and offers its
services to the public, petitioner is under obligation to observe extraordinary
diligence in the vigilance over checked-in luggage and to see to it that
respondents luggage entrusted to petitioners custody would accompany him on
his flight and/or could be claimed by him upon arrival at his point of destination
or delivered to him without delay. Petitioner should therefore be held liable for
actual damages ($2,000.00 or P40,000.00), moral damages (P1,000,000.00),
exemplary damages (P500,000.00), attorneys fees (P50,000.00) and costs of
suit.
Petitioner filed its answer[8] admitting that respondent was issued tickets for the
flights mentioned, his subsequent request to be transferred to another flight
while at the Paris airport and the loss of his checked-in luggage upon arrival at
Budapest, which luggage has not been retrieved to date and the respondents
repeated follow-ups ignored. However, as to the rest of respondents allegations,
petitioner said it has no knowledge and information sufficient to form a belief as
to their truth. As special and affirmative defense, petitioner contended that its
liability for lost checked-in baggage is governed by the Warsaw Convention for
the Unification of Certain Rules Relating to International Carriage. Under the
said treaty, petitioners liability for lost or delayed registered baggage of
respondent is limited to 250 francs per kilogram or US$20.00, which constitutes
liquidated damages and hence respondent is not entitled to any further damage.
Petitioner averred that it has taken all necessary measures to avoid loss of
respondents baggage, the contents of which respondent did not declare, and
that it has no intent to cause such loss, much less knew that such loss could
occur. The loss of respondents luggage is due to or occasioned by force
majeure or fortuitous event or other causes beyond the carriers control. Diligent,
sincere and timely efforts were exerted by petitioner to locate respondents
missing luggage and attended to his problem with utmost courtesy, concern and
dispatch. Petitioner further asserted that it exercised due diligence in the
selection and supervision of its employees and acted in good faith in denying
respondents demand for damages. The claims for actual, moral and exemplary
damages and attorneys fees therefore have no basis in fact and in law, and are,
moreover speculative and unconscionable.
In his Reply,[9] respondent maintained that the loss of his luggage cannot be
attributed to anything other than petitioners simple negligence and its failure to
perform the diligence required of a common carrier.
On January 3, 1996, the trial court rendered its decision in favor of respondent
and against the petitioner, as follows:
WHEREFORE, premises considered, judgment is rendered ordering defendant
to pay plaintiff:
1. The sum of P1,000,000.00 as moral damages;
2. The sum of P500,000.00 as exemplary damages;
3. The sum of P50,000.00 as attorneys fees; and
4. The costs.
SO ORDERED.[10]
The trial court found there was gross negligence on the part of petitioner which
failed to retrieve respondents checked-in luggage up to the time of the filing of
the complaint and as admitted in its answer, ignored respondents repeated
follow-ups. It likewise found petitioner guilty of willful misconduct as it
persistently disregarded the rights of respondent who was no ordinary individual
but a high government official. As to the applicability of the limited liability for lost
baggage under the Warsaw Convention, the trial court rejected the argument of
petitioner citing the case of Alitalia v. Intermediate Appellate Court.[11]
Petitioner appealed to the CA, which affirmed the trial courts decision.
The CA noted that in the memorandum submitted by petitioner before the trial
court it was mentioned that respondents luggage was eventually found and
delivered to him, which was not denied by respondent and thus resulted in the
withdrawal of the claim for actual damages. As to the trial courts finding of gross
negligence, bad faith and willful misconduct which justified the award of moral
and exemplary damages, the CA sustained the same, stating thus:
It bears stressing that defendant-appellant committed a breach of contract by its
failure to deliver the luggage of plaintiff-appellee on time despite demand from
plaintiff-appellee. The unreasonable delay in the delivery of the luggage has
not been satisfactorily explained by defendant-appellant, either in its
memorandum or in its appellants brief. Instead of justifying the delay,
defendant-appellant took refuge under the provisions of the Warsaw Convention
to escape liability. Neither was there any showing of apology on the part of
defendant-appellant as to the delay. Furthermore, the unapologetic
defendant-appellant even faulted plaintiff-appellee for not leaving a local
address in Budapest in order for the defendant-appellant to contact him
(plaintiff-appellee) in the event the luggage is found. This actuation of
defendant-appellant is a clear showing of willful misconduct and a
deliberate design to avoid liability. It amounts to bad faith. As elucidated by
Chief Justice Hilario Davide, Jr., [b]ad faith does not simply connote bad
judgment or negligence; it imports a dishonest purpose or some moral obliquity
and conscious doing of a wrong, a breach of a known duty through some motive
or interest or ill will that partakes of the nature of fraud.[12] (Emphasis supplied.)
Its motion for reconsideration having been denied, petitioner filed the
present Rule 45 petition raising the following grounds:
I.
THE AMOUNTS AWARDED TO RESPONDENT AS MORAL AND
EXEMPLARY DAMAGES ARE EXCESSIVE, UNCONSCIONABLE AND
UNREASONABLE.
II.
THERE IS NO LEGAL AND FACTUAL BASIS TO THE FINDINGS OF THE
TRIAL COURT AND THE COURT OF APPEALS THAT PETITIONERS
ACTIONS WERE ATTENDED BY GROSS NEGLIGENCE, BAD FAITH AND
WILLFUL MISCONDUCT AND THAT IT ACTED IN A WANTON,
FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT MANNER, TO
JUSTIFY THE AWARD OF MORAL AND EXEMPLARY DAMAGES.[13]
Petitioner assails the trial and appellate courts for awarding extravagant
sums to respondent that already tend to punish the petitioner and enrich the
respondent, which is not the function at all of moral damages. Upon the facts
established, the damages awarded are definitely not proportionate or
commensurate to the wrong or injury supposedly inflicted. Without belittling the
problems respondent experienced in Budapest after losing his luggage,
petitioner points out that despite the unfortunate incident, respondent was able
to reconstruct the speeches, notes and study guides he had earlier prepared for
the conference in Budapest and Tokyo, and to attend, speak and participate
therein as scheduled. Since he prepared the research and wrote his speech,
considering his acknowledged and long-standing expertise in the field of human
rights in the Philippines, respondent should have had no difficulty delivering his
speech even without his notes. In addition, there is no evidence that members of
the Inter-Parliamentary Union made derogatory statements or even knew that he
was unprepared for the conference. Bearing in mind that the actual damages
sought by respondent was only $2,000.00, then clearly the trial court went way
beyond that amount in determining the appropriate damages, inspite of the fact
that the respondent eventually got back his baggage.[14]
Comparing the situation in this case to other cases awarding similar damages to
the aggrieved passenger as a result of breaches of contract by international
carriers, petitioner argues that even assuming that respondent was entitled to
moral and exemplary damages, the sums adjudged should be modified or
reduced. It is stressed that petitioner or its agents were never rude or
discourteous toward respondent; he was not subjected to humiliating treatment
or comments as in the case of Lopez, et al. v. Pan American World Airways,[15]
Ortigas, Jr. v. Lufthansa German Airlines[16] and Zulueta v. Pan American
World Airways, Inc.[17]. The mere fact that respondent was a Congressman
should not result in an automatic increase in the moral and exemplary damages
recoverable. As held in Kierulf v. Court of Appeals[18] the social and financial
standing of a claimant may be considered only if he or she was subjected to
contemptuous conduct despite the offenders knowledge of his or her social and
financial standing.[19]
In any event, petitioner invokes the application of the exception to the rule that
only questions of law may be entertained by this Court in a petition for review
under Rule 45 as to allow a factual review of the case. First, petitioner contends
that it has always maintained that the admission in its answer was only made
out of inadvertence, considering that it was inconsistent with the special and
affirmative defenses set forth in the same pleading. The trial court incorrectly
concluded that petitioner had not prepared a Property Irregularity Report (PIR)
but fabricated one only as an afterthought. A PIR can only be initiated upon the
instance of a passenger whose baggage had been lost, and in this case it was
prepared by the station where the loss was reported. The PIR in this case was
automatically and chronologically recorded in petitioners computerized system.
Respondent himself admitted in his testimony that he gave his Philippine
address and telephone number to the lady in charge of petitioners complaint
desk in Budapest. It was not necessary to furnish a passenger with a copy of the
PIR since its purpose is for the airline to trace a lost baggage. What respondent
ought to have done was to make a xerox copy thereof for himself.[20]
Petitioner reiterates that there was no bad faith or negligence on its part and the
burden is on the respondent to prove by clear and convincing evidence that it
acted in bad faith. Respondent in his testimony miserably failed to prove that
bad faith, fraud or ill will motivated or caused the delay of his baggage. This
Court will surely agree that mere failure of a carrier to deliver a passengers
baggage at the agreed place and time did not ipso facto amount to willful
misconduct as to make it liable for moral and exemplary damages. Petitioner
adduced evidence showing that it exerted diligent, sincere and timely efforts to
locate the missing baggage, eventually leading to its recovery. It attended to
respondents problem with utmost courtesy, concern and dispatch. Respondent,
moreover, never alleged that petitioners employees were at anytime rude,
mistreated him or in anyway showed improper behavior.[21]
The petition is partly meritorious.
A business intended to serve the travelling public primarily, a contract of
carriage is imbued with public interest.[22] The law governing common carriers
consequently imposes an exacting standard. Article 1735 of the Civil Code
provides that in case of lost or damaged goods, common carriers are presumed
to have been at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as required by Article 1733. Thus, 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 non-performance by the
carrier.[23]
That respondents checked-in luggage was not found upon arrival at his
destination and was not returned to him until about two years later[24] is not
disputed. The action filed by the respondent is founded on such breach of the
contract of carriage with petitioner who offered no satisfactory explanation for
the unreasonable delay in the delivery of respondents baggage. The
presumption of negligence was not overcome by the petitioner and hence its
liability for the delay was sufficiently established. However, upon receipt of the
said luggage during the pendency of the case in the trial court, respondent did
not anymore press on his claim for actual or compensatory damages and neither
did he adduce evidence of the actual amount of loss and damage incurred by
such delayed delivery of his luggage. Consequently, the trial court proceeded to
determine only the propriety of his claim for moral and exemplary damages, and
attorneys fees.
In awarding moral damages for breach of contract of carriage, the breach must
be wanton and deliberately injurious or the one responsible acted fraudulently or
with malice or bad faith.[25] Not every case of mental anguish, fright or serious
anxiety calls for the award of moral damages.[26] Where in breaching the
contract of carriage the airline is not shown to have acted fraudulently or in bad
faith, liability for damages is limited to the natural and probable consequences of
the breach of the obligation which the parties had foreseen or could have
reasonably foreseen. In such a case the liability does not include moral and
exemplary damages.[27]
Bad faith should be established by clear and convincing evidence. The settled
rule is that the law always presumes good faith such that any person who seeks
to be awarded damages due to the acts of another has the burden of proving
that the latter acted in bad faith or with ill motive.[28]
In the case of Tan v. Northwest Airlines, Inc.,[29] we sustained the CAs deletion
of moral and exemplary damages awarded to a passenger whose baggage were
loaded to another plane with the same expected date and time of arrival but
nevertheless not delivered to her on time. We found that respondent carrier was
not motivated by malice or bad faith in doing so due to weight and balance
restrictions as a safety measure. In another case involving the off-loading of
private respondents baggage to another destination, taken together with
petitioner airlines neglect in providing the necessary accommodations and
assistance to its stranded passengers, aggravated by the discourteous acts of
its employees, we upheld the CA in sustaining the trial courts decision awarding
moral and exemplary damages and attorneys fees. We pointed out that it is
PALs duty to provide assistance to private respondents and to any other
passenger similarly inconvenienced due to delay in the completion of the
transport and the receipt of their baggage.[30]
After a careful review, we find that petitioner is liable for moral damages.
Petitioners station manager, Ma. Lourdes Reyes, testified that upon receiving
the letter-complaint of respondents counsel, she immediately began working on
the PIR from their computerized data. Based on her testimony, a PIR is issued
at the airline station upon complaint by a passenger concerning missing
baggage. From the information obtained in the computer-printout, it appears that
a PIR[31] was initiated at petitioners Budapest counter. A search telex for the
missing luggage was sent out on the following dates: May 17, May 21 and May
23, 1993. As shown in the PIR printout, the information respondent supposedly
furnished to petitioner was only his Philippine address and telephone number,
and not the address and contact number of the hotel where he was billeted at
Budapest. According to the witness, PIR usually is printed in two originals, one
is kept by the station manager and the other copy given to the passenger. The
witness further claimed that there was no record or entry in the PIR of any
follow-up call made by the respondent while in Budapest.[32] Respondent, on
the other hand, claimed that he was not given a copy of this PIR and that his
repeated telephone calls to inquire about his lost luggage were ignored.
We hold that the trial and appellate courts did not err in finding that petitioner
acted in bad faith in repeatedly ignoring respondents follow-up calls. The alleged
entries in the PIR deserve scant consideration, as these have not been properly
identified or authenticated by the airline station representative in Budapest who
initiated and inputed the said entries. Furthermore, this Court cannot accept the
convenient excuse given by petitioner that respondent should be faulted in
allegedly not giving his hotel address and telephone number. It is difficult to
believe that respondent, who had just lost his single luggage containing all his
necessities for his stay in a foreign land and his reference materials for a
speaking engagement, would not give an information so vital such as his hotel
address and contact number to the airline counter where he had promptly and
frantically filed his complaint. And even assuming arguendo that his Philippine
address and contact number were the only details respondent had provided for
the PIR, still there was no explanation as to why petitioner never communicated
with respondents concerning his lost baggage long after respondent had already
returned to the Philippines. While the missing luggage was eventually
recovered, it was returned to respondent only after the trial of this case.
aggrieved passenger who is a lawyer and director of several companies, the
amount of P500,000.00 awarded by the trial court as moral damages was still
reduced to P300,000.00, the moral damages granted to herein respondent
should likewise be adjusted.
The purpose of awarding moral damages is to enable the injured party to obtain
means, diversion or amusement that will serve to alleviate the moral suffering he
has undergone by reason of defendant's culpable action. On the other hand, the
aim of awarding exemplary damages is to deter serious wrongdoings.[36]
Article 2216 of the Civil Code provides that assessment of damages is
left to the discretion of the court according to the circumstances of each case.
This discretion is limited by the principle that the amount awarded should not be
palpably excessive as to indicate that it was the result of prejudice or corruption
on the part of the trial court. Simply put, the amount of damages must be fair,
reasonable and proportionate to the injury suffered.[37]

Furthermore, the alleged copy of the PIR confirmed that the only action taken by Where as in this case the air carrier failed to act timely on the passengers
the petitioner to locate respondents luggage were telex searches allegedly made predicament caused by its employees mistake and more than ordinary
on May 17, 21 and 23, 1993. There was not even any attempt to explain the inadvertence or inattention, and the passenger failed to show any act of
reason for the loss of respondents luggage. Clearly, petitioner did not give the arrogance, discourtesy or rudeness committed by the air carriers employees, the
attention and care due to its passenger whose baggage was not transported and amounts of P200,000.00, P50,000.00 and P30,000.00 as moral damages,
delivered to him at his travel destination and scheduled time. Inattention to and exemplary damages and attorneys fees would be sufficient and justified.[38]
lack of care for the interest of its passengers who are entitled to its utmost
WHEREFORE, the petition is DENIED. The Decision dated June 30, 2004 of the
consideration, particularly as to their convenience, amount to bad faith which
Court of Appeals in CA-G.R. CV No. 56587 is hereby AFFIRMED with
entitles the passenger to an award of moral damages.[33] What the law
MODIFICATION in that the award of moral damages, exemplary damages and
considers as bad faith which may furnish the ground for an award of moral
attorneys fees are hereby reduced to P200,000.00, P50,000.00 and P30,000.00,
damages would be bad faith in securing the contract and in the execution
respectively.
thereof, as well as in the enforcement of its terms, or any other kind of
deceit.[34] With costs against the petitioner.
While respondent failed to cite any act of discourtesy, discrimination or rudeness
by petitioners employees, this did not make his loss and moral suffering
insignificant and less deserving of compensation. In repeatedly ignoring
respondents inquiries, petitioners employees exhibited an indifferent attitude
without due regard for the inconvenience and anxiety he experienced after
realizing that his luggage was missing. Petitioner was thus guilty of bad faith in
breaching its contract of carriage with the respondent, which entitles the latter to
the award of moral damages.

However, we agree with petitioner that the sum of P1,000,000.00 awarded by

the trial court is excessive and not proportionate to the loss or suffering inflicted
on the passenger under the circumstances. As in Trans World Airlines v. Court
of Appeals[35] where this Court after considering the social standing of the
[Exemplary]
G.R. No. 88052 December 14, 1989
JOSE P. MECENAS, ROMEO P. MECENAS, LILIA P. MECENAS, ORLANDO
P. MECENAS, VIOLETA M. ACERVO, LUZVIMINDA P. MECENAS; and
OFELIA M. JAVIER, petitioners,
vs.
HON. COURT OF APPEALS, CAPT. ROGER SANTISTEBAN and NEGROS
NAVIGATION CO., INC., respondents.
Benito P. Favie and Jose Dario Magno for petitioners.
Hernandez, Velicaria, Vibar & Santiago for private respondents.
FELICIANO, J.:
At 6:20 o'clock in the morning of 22 April 1980, the M/T "Tacloban City," a
barge-type oil tanker of Philippine registry, with a gross tonnage of 1,241,68
tons, owned by the Philippine National Oil Company (PNOC) and operated by
the PNOC Shipping and Transport Corporation (PNOC Shipping), having
unloaded its cargo of petroleum products, left Amlan, Negros Occidental, and
headed towards Bataan. At about 1:00 o'clock in the afternoon of that same day,
the M/V "Don Juan," an interisland vessel, also of Philippine registry, of 2,391.31
tons gross weight, owned and operated by the Negros Navigation Co., Inc.
(Negros Navigation) left Manila bound for Bacolod with seven hundred fifty (750)
passengers listed in its manifest, and a complete set of officers and crew
members.
On the evening of that same day, 22 April 1980, at about 10:30 o'clock, the
"Tacloban City" and the "Don Juan" collided at the Talbas Strait near Maestra de
Ocampo Island in the vicinity of the island of Mindoro. When the collision
occurred, the sea was calm, the weather fair and visibility good. As a result of
this collision, the M/V "Don Juan" sank and hundreds of its passengers
perished. Among the ill-fated passengers were the parents of petitioners, the
spouses Perfecto Mecenas and Sofia Mecenas, whose bodies were never found
despite intensive search by petitioners.
On 29 December 1980, petitioners filed a complaint in the then Court- of First
Instance of Quezon City, docketed as Civil Case No. Q-31525, against private
respondents Negros Navigation and Capt. Roger Santisteban, the captain of the
"Don Juan" without, however, impleading either PNOC or PNOC Shipping. In
their complaint, petitioners alleged that they were the seven (7) surviving
legitimate children of Perfecto Mecenas and Sofia Mecenas and that the latter
spouses perished in the collision which had resulted from the negligence of
Negros Navigation and Capt. Santisteban. Petitioners prayed for actual
damages of not less than P100,000.00 as well as moral and exemplary
damages in such amount as the Court may deem reasonable to award to them.
Another complaint, docketed as Civil Case No. Q-33932, was filed in the same
court by Lilia Ciocon claiming damages against Negros Navigation, PNOC and
PNOC Shipping for the death of her husband Manuel Ciocon, another of the
luckless passengers of the "Don Juan." Manuel Ciocon's body, too, was never
found.
The two (2) cases were consolidated and heard jointly by the Regional Trial
Court of Quezon City, Branch 82. On 17 July 1986, after trial, the trial court
rendered a decision, the dispositive of which read as follows:
WHEREFORE, the Court hereby renders judgment ordering:
a) The defendant Negros Navigation Co., Inc. and Capt. Roger Santisteban
jointly and severally liable to pay plaintiffs in Civil Case No Q-31525, the sum of
P400,000.00 for the death of plaintiffs' parents, Perfecto A. Mecenas and Sofia
P. Mecenas; to pay said plaintiff's the sum of P15.000,00 as and for attorney's
fees; plus costs of the suit.
b) Each of the defendants Negros Navigation Co Inc. and Philippine National Oil
Company/PNOC Shipping and Transportation Company, to pay the plaintiff in
Civil Case No. Q-33932, the sum of P100,000.00 for the death of Manuel
Ciocon, to pay said plaintiff jointly and severally, the sum of P1 5,000.00 as and
for attorney's fees, plus costs of the suit. 1
Negros Navigation, Capt. Santisteban, PNOC and PNOC Shipping appealed the
trial court's decision to the Court of Appeals. Later, PNOC and PNOC Shipping
withdrew their appeal citing a compromise agreement reached by them with
Negros Navigation; the Court of Appeals granted the motion by a resolution
dated 5 September 1988, subject to the reservation made by Lilia Ciocon that
she could not be bound by the compromise agreement and would enforce the
award granted her by the trial court.
In time, the Court of Appeals rendered a decision dated 26 January 1989 which
decreed the following:
WHEREFORE, in view of the foregoing, the decision of the court a quo is hereby
affirmed as modified with respect to Civil Case No. 31525, wherein defendant
appellant Negros Navigation Co. Inc. and Capt. Roger Santisteban are held
jointly and severally liable to pay the plaintiffs the amount of P100,000. 00 as
actual and compensatory damages and P15,000.00 as attorney's fees and the
cost of the suit. 2
The issue to be resolved in this Petition for Review is whether or not the Court of
Appeals had erred in reducing the amount of the damages awarded by the trial
court to the petitioners from P400,000.00 to P100,000.00.
We note that the trial court had granted petitioners the sum of P400,000,00 "for
the death of [their parents]" plus P15,000.00 as attorney's fees, while the Court
of Appeals awarded them P100,000.00 "as actual and compensatory damages"
and P15,000.00 as attorney's fees. To determine whether such reduction of the
damages awarded was proper, we must first determine whether petitioners were
entitled to an award of damages other than actual or compensatory damages,
that is, whether they were entitled to award of moral and exemplary damages.
We begin by noting that both the trial court and the Court of Appeals considered
the action (Civil Case No. Q-31525) brought by the sons and daughters of the
deceased Mecenas spouses against Negros Navigation as based on quasi-
delict. We believed that action is more appropriately regarded as grounded on
contract, the contract of carriage between the Mecenas spouses as regular
passengers who paid for their boat tickets and Negros Navigation; the surviving
children while not themselves passengers are in effect suing the carrier in
representation of their deceased parents. 3 Thus, the suit (Civil Case No. Q-
33932) filed by the widow Lilia Ciocon was correctly treated by the trial and
appellate courts as based on contract (vis-a-vis Negros Navigation) and as well
on quasi-delict (vis-a-vis PNOC and PNOC Shipping). In an action based upon a
breach of the contract of carriage, the carrier under our civil law is liable for the
death of passengers arising from the negligence or willful act of the carrier's
employees although such employees may have acted beyond the scope of their
authority or even in violation of the instructions of the carrier, 4 which liability
may include liability for moral damages. 5 It follows that petitioners would be
entitled to moral damages so long as the collision with the "Tacloban City" and
the sinking of the "Don Juan" were caused or attended by negligence on the part
of private respondents.
In respect of the petitioners' claim for exemplary damages, it is only necessary
to refer to Article 2232 of the Civil Code:
Article 2332. In contracts and quasi-contracts, the court may exemplary
damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. 6
Thus, whether petitioners are entitled to exemplary damages as claimed must
depend upon whether or not private respondents acted recklessly, that is, with
gross negligence.
We turn, therefore, to a consideration of whether or not Negros Navigation and
Capt. Santisteban were grossly negligent during the events which culminated in
the collision with "Tacloban City" and the sinking of the "Don Juan" and the
resulting heavy loss of lives.
The then Commandant of the Philippine Coast Guard, Commodore B.C.
Ochoco, in a decision dated 2 March 1981, held that the "Tacloban City" was
"primarily and solely [sic] at fault and responsible for the collision." 7 Initially, the
Minister of National Defense upheld the decision of Commodore Ochoco. 8 On
Motion for Reconsideration, however, the Minister of National Defense reversed
himself and held that both vessels had been at fault:
It is therefore evident from a close and thorough review of the evidence that fault
is imputable to both vessels for the collision. Accordingly, the decision dated
March 12, 1982, subject of the Motion for Reconsideration filed by counsel of
M/T Tacloban City, is hereby reversed. However, the administrative penalties
imposed oil both vessels and their respective crew concerned are hereby
affirmed. 9
The trial court, after a review of the evidence submitted during the trial, arrived
at the same conclusion that the Minister of National Defense had reached that
both the "Tacloban City" and the "Don Juan" were at fault in the collision. The
trial court summarized the testimony and evidence of PNOC and PNOC
Shipping as well as of Negros Navigation in the following terms:
Defendant PNOC's version of the incident:
M/V Don Juan was first sighted at about 5 or 6 miles from Tacloban City (TSN,
January 21, 1985, p. 13); it was on the starboard (right) side of Tacloban City.
This was a visual contact; not picked up by radar (p. 15, Ibid). Tacloban City was
travelling 310 degrees with a speed of 6 knots, estimated speed of Don Juan of
16 knots (TSN, May 9, pp. 5-6). As Don Juan approached, Tacloban City gave a
leeway of 1 0 degrees to the left. 'The purpose was to enable Tacloban to see
the direction of Don Juan (p. 19, Ibid). Don Juan switched to green light,
signifying that it will pass Tacloban City's right side; it will be a starboard to
starboard passing (p. 21, Ibid) Tacloban City's purpose in giving a leeway of 10
degrees at this point, is to give Don Juan more space for her passage (p. 22,
Ibid). This was increased by Tacloban City to an additional 15 degrees towards
the left (p. 22, Ibid). The way was clear and Don Juan has not changed its
course (TSN, May 9,1985, p. 39).
When Tacloban City altered its course the second time, from 300 degrees to
285 degrees, Don Juan was about 4.5 miles away (TSN, May 9,1985, p. 7).
Despite executing a hardport maneuver, the collision nonetheless occurred. Don
Juan rammed the Tacloban City near the starboard bow (p. 7, Ibid)."
NENACO's [Negros Navigation] version.
Don Juan first sighted Tacloban City 4 miles away, as shown by radar (p. 13,
May 24, 1983). Tacloban City showed its red and green lights twice; it
proceeded to, and will cross, the path of Don Juan. Tacloban was on the left
side of Don Juan (TSN, April 20,1983, p. 4).
Upon seeing Tacloban's red and green lights, Don Juan executed hard
starboard (TSN, p. 4, Ibid.) This maneuver is in conformity with the rule that
'when both vessels are head on or nearly head on, each vessel must turn to the
right in order to avoid each other. (p. 5, Ibid). Nonetheless, Tacloban appeared
to be heading towards Don Juan (p. 6, Ibid),
When Don Juan executed hard starboard, Tacloban was about 1,500 feet away
(TSN, May 24,1983, p. 6). Don Juan, after execution of hard starboard, will
move forward 200 meters before the vessel will respond to such maneuver (p. 7,
Ibid). The speed of Don Juan at that time was 17 knits; Tacloban City 6.3 knots.
t "Between 9 to 15 seconds from execution of hard starboard, collision occurred
(p. 8, Ibid). (pp. 3-4 Decision). 10
The trial court concluded:
M/ V Don Juan and Tacloban City became aware of each other's presence in
the area by visual contact at a distance of something like 6 miles from each
other. They were fully aware that if they continued on their course, they will meet
head on. Don Juan - steered to the right; Tacloban City continued its course to
the left. There can be no excuse for them not to realize that, with such
maneuvers, they will collide. They executed maneuvers inadequate, and too
late, to avoid collision.
The Court is of the considered view that the defendants are equally negligent
and are liable for damages. (p. 4, decision). 11
The Court of Appeals, for its part, reached the same conclusion. 12
There is, therefore, no question that the "Don Juan" was at least as negligent as
the M/T "Tacloban City" in the events leading up to the collision and the sinking
of the "Don Juan." The remaining question is whether the negligence on the part
of the "Don Juan" reached that level of recklessness or gross negligence that
our Civil Code requires for the imposition of exemplary damages. Our own
review of the record in the case at bar requires us to answer this in the
affirmative.
In the first place, the report of the Philippine Coast Guard Commandant (Exhibit
"l 0"), while holding the "Tacloban City" as "primarily and solely [sic] at fault and
responsible for the collision," did itself set out that there had been fault or
negligence on the part of Capt. Santisteban and his officers and crew before the
collision and immediately after contact of the two (2) vessels. The decision of
Commodore Ochoco said:
xxxxxxxxx
M/S Don Juan's Master, Capt. Rogelio Santisteban, was playing mahjong before
and up to the time of collision. Moreover, after the collision, he failed to institute
appropriate measures to delay the sinking MS Don Juan and to supervise
properly the execution of his order of abandonship. As regards the officer on
watch, Senior 3rd Mate Rogelio Devera, he admitted that he failed or did not call
or inform Capt. Santisteban of the imminent danger of collision and of the actual
collision itself Also, he failed to assist his master to prevent the fast sinking of
the ship. The record also indicates that Auxiliary Chief Mate Antonio Labordo
displayed laxity in maintaining order among the passengers after the collision.
x x x x x x x x x. 13
We believe that the behaviour of the captain of the "Don Juan" in tills instance-
playing mahjong "before and up to the time of collision constitutes behaviour
that is simply unacceptable on the part of the master of a vessel to whose hands
the lives and welfare of at least seven hundred fifty (750) passengers had been
entrusted. Whether or not Capt. Santisteban was "off-duty" or "on-duty" at or
around the time of actual collision is quite immaterial; there is, both realistically
speaking and in contemplation of law, no such thing as "off-duty" hours for the
master of a vessel at sea that is a common carrier upon whom the law imposes
the duty of extraordinary diligence-
[t]he duty to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with a due regard
for all the circumstances. 14
The record does not show that was the first or only time that Capt. Santisteban
had entertained himself during a voyage by playing mahjong with his officers
and passengers; Negros Navigation in permitting, or in failing to discover and
correct such behaviour, must be deemed grossly negligent.
Capt. Santisteban was also faulted in the Philippine Coast Guard decision for
failing after the collision, "to institute appropriate measures to delay the sinking
of M/V Don Juan." This appears to us to be a euphemism for failure to maintain
the sea-worthiness or the water-tight integrity of the "Don Juan." The record
shows that the "Don Juan" sank within ten (10) to fifteen (15) minutes after initial
contact with the "Tacloban City. 15 While the failure of Capt. Santisteban to
supervise his officers and crew in the process of abandoning the ship and his
failure to avail of measures to prevent the too rapid sinking of his vessel after
collision, did not cause the collision by themselves, such failures doubtless
contributed materially to the consequent loss of life and, moreover, were
indicative of the kind and level of diligence exercised by Capt. Santisteban in
respect of his vessel and his officers and men prior to actual contact between
the two (2) vessels. The officer-on-watch in the "Don Juan" admitted that he had
failed to inform Capt. Santisteban not only of the "imminent danger of collision"
but even of "the actual collision itself "
There is also evidence that the "Don Juan" was carrying more passengers than
she had been certified as allowed to carry. The Certificate of Inspection 16 dated
27 August 1979, issued by the Philippine Coast Guard Commander at Iloilo City,
the Don Juan's home port, states:
Passengers allowed : 810
Total Persons Allowed : 864
The report of the Philippine Coast Guard (Exhibit "10") stated that the "Don
Juan" had been "officially cleared with 878 passengers on board when she
sailed from the port of Manila on April 22, 1980 at about 1:00 p.m." This head-
count of the passengers "did not include the 126 crew members, children below
three (3) years old and two (2) half-paying passengers" which had been counted
as one adult passenger. 17 Thus, the total number of persons on board the
"Don Juan" on that ill-starred night of 22 April 1 980 was 1,004, or 140 persons
more than the maximum lumber that could be safely carried by the "Don Juan,"
per its own Certificate of Inspection. 18 We note in addition, that only 750
passengers had been listed in its manifest for its final voyage; in other words, at
least 128 passengers on board had not even been entered into the "Don Juan's"
manifest. The "Don Juan's" Certificate of Inspection showed that she carried life
boat and life raft accommodations for only 864 persons, the maximum number
of persons she was permitted to carry; in other words, she did not carry enough
boats and life rafts for all the persons actually on board that tragic night of 22
April 1980.
We hold that under these circumstances, a presumption of gross negligence on
the part of the vessel (her officers and crew) and of its ship-owner arises; this
presumption was never rebutted by Negros Navigation.
The grossness of the negligence of the "Don Juan" is underscored when one
considers the foregoing circumstances in the context of the following facts:
Firstly, the "Don Juan" was more than twice as fast as the "Tacloban City." The
"Don Juan's" top speed was 17 knots; while that of the "Tacloban City" was 6.3.
knots. 19 Secondly, the "Don Juan" carried the full complement of officers and
crew members specified for a passenger vessel of her class. Thirdly, the "Don
Juan" was equipped with radar which was functioning that night. Fourthly, the
"Don Juan's" officer on-watch had sighted the "Tacloban City" on his radar
screen while the latter was still four (4) nautical miles away. Visual confirmation
of radar contact was established by the "Don Juan" while the "Tacloban City"
was still 2.7 miles away. 20 In the total set of circumstances which existed in the
instant case, the "Don Juan," had it taken seriously its duty of extraordinary
diligence, could have easily avoided the collision with the "Tacloban City,"
Indeed, the "Don Juan" might well have avoided the collision even if it had
exercised ordinary diligence merely.
It is true that the "Tacloban City" failed to follow Rule 18 of the International
Rules of the Road which requires two (2) power- driven vessels meeting end on
or nearly end on each to alter her course to starboard (right) so that each vessel
may pass on the port side (left) of the other.21 The "Tacloban City," when the
two (2) vessels were only three-tenths (0.3) of a mile apart, turned (for the
second time) 150 to port side while the "Don Juan" veered hard to starboard.
This circumstance, while it may have made the collision immediately inevitable,
cannot, however, be viewed in isolation from the rest of the factual
circumstances obtaining before and up to the collision. In any case, Rule 18 like
all other International Rules of the Road, are not to be obeyed and construed
without regard to all the circumstances surrounding a particular encounter
between two (2) vessels. 22 In ordinary circumstances, a vessel discharges her
duty to another by a faithful and literal observance of the Rules of Navigation, 23
and she cannot be held at fault for so doing even though a different course
would have prevented the collision. This rule, however, is not to be applied
where it is apparent, as in the instant case, that her captain was guilty of
negligence or of a want of seamanship in not perceiving the necessity for, or in
so acting as to create such necessity for, a departure from the rule and acting
accordingly. 24 In other words, "route observance" of the International Rules of
the Road will not relieve a vessel from responsibility if the collision could have
been avoided by proper care and skill on her part or even by a departure from
the rules. 25
In the petition at bar, the "Don Juan" having sighted the "Tacloban City" when it
was still a long way off was negligent in failing to take early preventive action
and in allowing the two (2) vessels to come to such close quarters as to render
the collision inevitable when there was no necessity for passing so near to the
"Tacloban City" as to create that hazard or inevitability, for the "Don Juan" could
choose its own distance. 26, It is noteworthy that the "Tacloban City," upon
turning hard to port shortly before the moment of collision, signalled its intention
to do so by giving two (2) short blasts with horn. 26A The "Don Juan " gave no
answering horn blast to signal its own intention and proceeded to turn hatd to
starboard. 26B
We conclude that Capt. Santisteban and Negros Navigation are properly held
liable for gross negligence in connection with the collision of the "Don Juan" and
"Tacloban City" and the sinking of the "Don Juan" leading to the death of
hundreds of passengers. We find no necessity for passing upon the degree of
negligence or culpability properly attributable to PNOC and PNOC Shipping or
the master of the "Tacloban City," since they were never impleaded here.
It will be recalled that the trial court had rendered a lump sum of P400,000.00 to
petitioners for the death of their parents in the "Don Juan" tragedy. Clearly, the
trial court should have included a breakdown of the lump sum award into its
component parts: compensatory damages, moral damages and exemplary
damages. On appeal, the Court of Appeals could have and should have itself
broken down the lump sum award of the trial court into its constituent parts;
perhaps, it did, in its own mind. In any case, the Court of Appeals apparently
relying upon Manchester Development Corporation V. Court of Appeals 27
reduced the P400,000.00 lump sum award into a P100,000.00 for actual and
compensatory damages only.
We believe that the Court of Appeals erred in doing so, It is true that the
petitioners' complaint before the trial court had in the body indicated that the
petitioner-plaintiffs believed that moral damages in the amount of at least
P1,400,000.00 were properly due to them (not P12,000,000.00 as the Court of
Appeals erroneously stated) as well as exemplary damages in the sum of
P100,000.00 and that in the prayer of their complaint, they did not specify the
amount of moral and exemplary damages sought from the trial court. We do not
believe, however, that the Manchester doctrine, which has been modified and
clarified in subsequent decision by the Court in Sun Insurance Office, Ltd.
(SIOL), et al. v. Asuncion, et al. 28 can be applied in the instant case so as to
work a striking out of that portion of the trial court's award which could be
deemed nationally to constitute an award of moral and exemplary damages.
Manchester was promulgated by the Court on 7 May 1987. Circular No. 7 of this
Court, which embodied the doctrine in Manchester, is dated 24 March 1988.
Upon the other hand, the complaint in the case at bar was filed on 29 December
1980, that is, long before either Manchester or Circular No. 7 of 24 March 1988
emerged. The decision of the trial court was itself promulgated on 17 July 1986,
again, before Manchester and Circular No. 7 were promulgated. We do not
believe that Manchester should have been applied retroactively to this case
where a decision on the merits had already been rendered by the trial court,
even though such decision was then under appeal and had not yet reached
finality. There is no indication at all that petitioners here sought simply to evade
payment of the court's filing fees or to mislead the court in the assessment of the
filing fees. In any event, we apply Manchester as clarified and amplified by Sun
Insurance Office Ltd. (SIOL), by holding that the petitioners shall pay the
additional filing fee that is properly payable given the award specified below, and
that such additional filing fee shall constitute a lien upon the judgment.
We consider, finally, the amount of damages-compensatory, moral and
exemplary-properly imposable upon private respondents in this case. The
original award of the trial court of P400,000.00 could well have been
disaggregated by the trial court and the Court of Appeals in the following
manner:
1. actual or compensatory damages proved in the course of trial
consisting of actual expenses
incurred by petitioners
in their search for their
parents' bodies- -P126,000.00
2. actual or compensatory
damages in case of
wrongful death
(P30,000.00 x 2) -P60,000.00 29
(3) moral damages -P107,000.00
(4) exemplary damages -P107,000.00
Total -P400,000.00
Considering that petitioners, legitimate children of the deceased spouses
Mecenas, are seven (7) in number and that they lost both father and mothe in
one fell blow of fate, and considering the pain and anxiety they doubtless
experienced while searching for their parents among the survivors and the (b) P 60,000.00 as compensatory damages for wrongful death;
corpses recovered from the sea or washed ashore, we believe that an additional
amount of P200,000.00 for moral damages, making a total of P307,000.00 for (c) P 307,000.00 as moral damages;
moral damages, making a total of P307,000.00 as moral damages, would be
(d) P 307,000.00 as exemplary damages making a total of P 800,000.00; and
quite reasonable.
(e) P 15,000.00 as attorney's fees.
Exemplary damages are designed by our civil law to permit the courts to
reshape behaviour that is socially deleterious in its consequence by creating Petitioners shall pay the additional filing fees properly due and payable in view
negative incentives or deterrents against such behaviour. In requiring of the award here made, which fees shall be computed by the Clerks of Court of
compliance with the standard which is in fact that of the highest possible degree the trial court, and shall constitute a lien upon the judgment here awarded. Cost
of diligence, from common carriers and in creating a presumption of negligence against private respondents.
against them, the law seels to compel them to control their employees, to tame
their reckless instincts and to force them to take adequate care of human beings
and their property. The Court will take judicial notive of the dreadful regularity
with which grievous maritime disasters occur in our waters with massive loss of
life. The bulk of our population is too poor to afford domestic air transportation.
So it is that notwithstanding the frequent sinking of passenger vessels in our
waters, crowds of people continue to travel by sea. This Court is prepared to use
the instruments given to it by the law for securing the ends of law and public
policy. One of those instruments is the institution of exemplary damages; one of
those ends, of special importance in an archipelagic state like the Philippines, is
the safe and reliable carriage of people and goods by sea. Considering the
foregoing, we believe that an additional award in the amount of P200,000.00 as
exmplary damages, is quite modest.

The Court is aware that petitioners here merely asked for the restoration of the P
400.000.00 award of the trial court. We underscore once more, however, the
firmly settled doctrine that this Court may consider and resolved all issues which
must be decided in order to render substantial justice to the parties, including
issues not explicity raised by the party affected. In the case at bar, as in
Kapalaran Bus Line v. Coronado, et al., 30 both the demands of sustantial
justice and the imperious requirements of public policy compel us to the
conclusion that the trial court's implicit award of moral and exemplary damages
was erronoeusly deledted and must be restored and augmented and brought
more nearely to the level required by public policy and substantial justice.

WHEREFORE, the Petition for Review on certiorari is hereby GRANTED and

the Decision of the Court of Appeals insofar as it redurce the amount of
damages awarded to petitioners to P100,000.00 is hereby REVERSED and SET
ASIDE. The award granted by the trial court is hereby RESTORED and
AUGMENTED as follows:

(a) P 126,000.00 for actual damages;

[Nominal, Temperate and Liquidated]
[G.R. No. 71929 : December 4, 1990.]
192 SCRA 9
ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA
E. PABLO, Respondents.
DECISION
NARVASA, J.:
Dr. Felipa Pablo — an associate professor in the University of the Philippines, 1
and a research grantee of the Philippine Atomic Energy Agency — was invited
to take part at a meeting of the Department of Research and Isotopes of the
Joint FAO-IAEA Division of Atomic Energy in Food and Agriculture of the United
Nations in Ispra, Italy. 2 She was invited in view of her specialized knowledge in
"foreign substances in food and the agriculture environment." She accepted the
invitation, and was then scheduled by the organizers, to read a paper on "The
Fate of Radioactive Fusion Products Contaminating Vegetable Crops." 3 The
program announced that she would be the second speaker on the first day of
the meeting. 4 To fulfill this engagement, Dr. Pablo booked passage on
petitioner airline, ALITALIA.
She arrived in Milan on the day before the meeting in accordance with the
itinerary and time table set for her by ALITALIA. She was however told by the
ALITALIA personnel there at Milan that her luggage was "delayed inasmuch as
the same . . . (was) in one of the succeeding flights from Rome to Milan." 5 Her
luggage consisted of two (2) suitcases: one contained her clothing and other
personal items; the other, her scientific papers, slides and other research
material. But the other flights arriving from Rome did not have her baggage on
board.
By then feeling desperate, she went to Rome to try to locate her bags herself.
There, she inquired about her suitcases in the domestic and international
airports, and filled out the forms prescribed by ALITALIA for people in her
predicament. However, her baggage could not be found. Completely distraught
and discouraged, she returned to Manila without attending the meeting in Ispra,
Italy. : nad
Once back in Manila she demanded that ALITALIA make reparation for the
damages thus suffered by her. ALITALIA offered her "free airline tickets to
compensate her for any alleged damages. . . ." She rejected the offer, and
forthwith commenced the action 6 which has given rise to the present appellate
proceedings.
As it turned out, Prof. Pablo's suitcases were in fact located and forwarded to
Ispra, 7 Italy, but only on the day after her scheduled appearance and
participation at the U.N. meeting there. 8 Of course Dr. Pablo was no longer
there to accept delivery; she was already on her way home to Manila. And for
some reason or other, the suitcases were not actually restored to Prof. Pablo by
ALITALIA until eleven (11) months later, and four (4) months after institution of
her action. 9
After appropriate proceedings and trial, the Court of First Instance rendered
judgment in Dr. Pablo's favor: 10
"(1) Ordering the defendant (ALITALIA) to pay . . . (her) the sum of TWENTY
THOUSAND PESOS (P20,000.00), Philippine Currency, by way of nominal
damages;
(2) Ordering the defendant to pay . . . (her) the sum of FIVE THOUSAND
PESOS (P5,000.00), Philippine Currency, as and for attorney's fees; (and)
(3) Ordering the defendant to pay the costs of the suit."
ALITALIA appealed to the Intermediate Appellate Court but failed to obtain a
reversal of the judgment. 11 Indeed, the Appellate Court not only affirmed the
Trial Court's decision but also increased the award of nominal damages payable
by ALITALIA to P40,000.00. 12 That increase it justified as follows: 13
"Considering the circumstances, as found by the Trial Court and the negligence
committed by defendant, the amount of P20,000.00 under present inflationary
conditions as awarded . . . to the plaintiff as nominal damages, is too little to
make up for the plaintiff's frustration and disappointment in not being able to
appear at said conference; and for the embarrassment and humiliation she
suffered from the academic community for failure to carry out an official mission
for which she was singled out by the faculty to represent her institution and the
country. After weighing carefully all the considerations, the amount awarded to
the plaintiff for nominal damages and attorney's fees should be increased to the
cost of her round trip air fare or at the present rate of peso to the dollar at
P40,000,00."
ALITALIA has appealed to this Court on Certiorari. Here, it seeks to make
basically the same points it tried to make before the Trial Court and the
Intermediate Appellate Court, i.e.:
1) that the Warsaw Convention should have been applied to limit ALITALIA'S
liability; and
2) that there is no warrant in fact or in law for the award to Dr. Pablo of nominal
damages and attorney's fees. 14
In addition, ALITALIA postulates that it was error for the Intermediate Appellate
Court to have refused to pass on all the assigned errors and in not stating the
facts and the law on which its decision is based. 15
Under the Warsaw Convention, 16 an air carrier is made liable for damages for:
1) the death, wounding or other bodily injury of a passenger if the accident
causing it took place on board the aircraft or in the course of its operations of
embarking or disembarking; 17
2) the destruction or loss of, or damage to, any registered luggage or goods, if
the occurrence causing it took place during the carriage by air;" 18 and
3) delay in the transportation by air of passengers, luggage or goods. 19
In these cases, it is provided in the Convention that the "action for damages,
however, founded, can only be brought subject to conditions and limits set out"
therein. 20
The Convention also purports to limit the liability of the carriers in the following
manner: 21
1. In the carriage of passengers the liability of the carrier for each passenger is
limited to the sum of 250,000 francs . . . Nevertheless, by special contract, the
carrier and the passenger may agree to a higher limit of liability.: nad
2. a) In the carriage of registered baggage and of cargo, the liability of the carrier
is limited to a sum of 250 francs per kilogramme, unless the passenger or
consignor has made, at the time when the package was handed over to the
carrier, a special declaration of interest in delivery at destination and has paid a
supplementary sum if the case so requires. In that case the carrier will be liable
to pay a sum not exceeding the declared sum, unless he proves that sum is
greater than the actual value to the consignor at delivery.
b) In the case of loss, damage or delay of part of registered baggage or cargo,
or of any object contained therein, the weight to be taken into consideration in
determining the amount to which the carrier's liability is limited shall be only the
total weight of the package or packages concerned. Nevertheless, when the
loss, damage or delay of a part of the registered baggage or cargo, or of an
object contained therein, affects the value of other packages covered by the
same baggage check or the same air way bill, the total weight of such package
or packages shall also be taken into consideration in determining the limit of
liability.
3. As regards objects of which the passenger takes charge himself the liability of
the carrier is limited to 5000 francs per passenger.
4. The limits prescribed . . shall not prevent the court from awarding, in
accordance with its own law, in addition, the whole or part of the court costs and
of the other expenses of litigation incurred by the plaintiff. The foregoing
provision shall not apply if the amount of the damages awarded, excluding court
costs and other expenses of the litigation, does not exceed the sum which the
carrier has offered in writing to the plaintiff within a period of six months from the
date of the occurrence causing the damage, or before the commencement of the
action, if that is later.
The Warsaw Convention however denies to the carrier availment "of the
provisions which exclude or limit his liability, if the damage is caused by his wilful
misconduct or by such default on his part as, in accordance with the law of the
court seized of the case, is considered to be equivalent to wilful misconduct," or
"if the damage is (similarly) caused . . by any agent of the carrier acting within
the scope of his employment." 22 The Hague Protocol amended the Warsaw
Convention by removing the provision that if the airline took all necessary steps
to avoid the damage, it could exculpate itself completely, 23 and declaring the
stated limits of liability not applicable "if it is proved that the damage resulted
from an act or omission of the carrier, its servants or agents, done with intent to
cause damage or recklessly and with knowledge that damage would probably
result." The same deletion was effected by the Montreal Agreement of 1966,
with the result that a passenger could recover unlimited damages upon proof of
wilful misconduct. 24
The Convention does not thus operate as an exclusive enumeration of the
instances of an airline's liability, or as an absolute limit of the extent of that
liability. Such a proposition is not borne out by the language of the Convention,
as this Court has now, and at an earlier time, pointed out. 25 Moreover, slight
reflection readily leads to the conclusion that it should be deemed a limit of
liability only in those cases where the cause of the death or injury to person, or
destruction, loss or damage to property or delay in its transport is not attributable
to or attended by any wilful misconduct, bad faith, recklessness, or otherwise
improper conduct on the part of any official or employee for which the carrier is
responsible, and there is otherwise no special or extraordinary form of resulting
injury. The Convention's provisions, in short, do not "regulate or exclude liability
for other breaches of contract by the carrier" 26 or misconduct of its officers and
employees, or for some particular or exceptional type of damage. Otherwise, "an
air carrier would be exempt from any liability for damages in the event of its
absolute refusal, in bad faith, to comply with a contract of carriage, which is
absurd." 27 Nor may it for a moment be supposed that if a member of the
aircraft complement should inflict some physical injury on a passenger, or
maliciously destroy or damage the latter's property, the Convention might
successfully be pleaded as the sole gauge to determine the carrier's liability to
the passenger. Neither may the Convention be invoked to justify the disregard of
some extraordinary sort of damage resulting to a passenger and preclude
recovery therefor beyond the limits set by said Convention. It is in this sense that
the Convention has been applied, or ignored, depending on the peculiar facts
presented by each case.:-cralaw
In Pan American World Airways, Inc. v. I.A.C., 28 for example, the Warsaw
Convention was applied as regards the limitation on the carrier's liability, there
being a simple loss of baggage without any otherwise improper conduct on the
part of the officials or employees of the airline or other special injury sustained
by the passenger.
On the other hand, the Warsaw Convention has invariably been held
inapplicable, or as not restrictive of the carrier's liability, where there was
satisfactory evidence of malice or bad faith attributable to its officers and
employees. 29 Thus, an air carrier was sentenced to pay not only
compensatory but also moral and exemplary damages, and attorney's fees, for
instance, where its employees rudely put a passenger holding a first-class ticket
in the tourist or economy section, 30 or ousted a brown Asiatic from the plane to
give his seat to a white man, 31 or gave the seat of a passenger with a
confirmed reservation to another, 32 or subjected a passenger to extremely
rude, even barbaric treatment, as by calling him a "monkey." 33
In the case at bar, no bad faith or otherwise improper conduct may be ascribed
to the employees of petitioner airline; and Dr. Pablo's luggage was eventually
returned to her, belatedly, it is true, but without appreciable damage. The fact is,
nevertheless, that some special species of injury was caused to Dr. Pablo
because petitioner ALITALIA misplaced her baggage and failed to deliver it to
her at the time appointed — a breach of its contract of carriage, to be sure —
with the result that she was unable to read the paper and make the scientific
presentation (consisting of slides, autoradiograms or films, tables and
tabulations) that she had painstakingly labored over, at the prestigious
international conference, to attend which she had traveled hundreds of miles, to
her chagrin and embarrassment and the disappointment and annoyance of the
organizers. She felt, not unreasonably, that the invitation for her to participate at
the conference, extended by the Joint FAO/IAEA Division of Atomic Energy in
Food and Agriculture of the United Nations, was a singular honor not only to
herself, but to the University of the Philippines and the country as well, an
opportunity to make some sort of impression among her colleagues in that field
of scientific activity. The opportunity to claim this honor or distinction was
irretrievably lost to her because of Alitalia's breach of its contract.
Apart from this, there can be no doubt that Dr. Pablo underwent profound
distress and anxiety, which gradually turned to panic and finally despair, from
the time she learned that her suitcases were missing up to the time when,
having gone to Rome, she finally realized that she would no longer be able to
take part in the conference. As she herself put it, she "was really shocked and
distraught and confused."
Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the
circumstances be restricted to that prescribed by the Warsaw Convention for
delay in the transport of baggage.
She is not, of course, entitled to be compensated for loss or damage to her
luggage. As already mentioned, her baggage was ultimately delivered to her in
Manila, tardily but safely. She is however entitled to nominal damages — which,
as the law says, is adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated and recognized,
and not for the purpose of indemnifying the plaintiff for any loss suffered — and
this Court agrees that the respondent Court of Appeals correctly set the amount
thereof at P40,000.00. As to the purely technical argument that the award to her
of such nominal damages is precluded by her omission to include a specific
claim therefor in her complaint, it suffices to draw attention to her general prayer,
following her plea for moral and exemplary damages and attorney's fees, "for
such other and further just and equitable relief in the premises," which certainly
is broad enough to comprehend an application as well for nominal damages.
Besides, petitioner should have realized that the explicit assertion, and proof,
that Dr. Pablo's right had been violated or invaded by it — absent any claim for
actual or compensatory damages, the prayer thereof having been voluntarily
deleted by Dr. Pablo upon the return to her of her baggage — necessarily raised
the issue of nominal damages.: rd
This Court also agrees that respondent Court of Appeals correctly awarded
attorney's fees to Dr. Pablo, and the amount of P5,000.00 set by it is reasonable
in the premises. The law authorizes recovery of attorney's fees inter alia where,
as here, "the defendant's act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest," 34 or "where the
court deems it just and equitable." 35

WHEREFORE, no error being perceived in the challenged decision of the Court

of Appeals, it appearing on the contrary to be entirely in accord with the facts
and the law, said decision is hereby AFFIRMED, with costs against the
petitioner.
[Nominal, Temperate and Liquidated]
G.R. No. 95536 March 23, 1992
ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO, LEOPOLDO G.
SALUDO and SATURNINO G. SALUDO, petitioners,
vs.
HON. COURT OF APPEALS, TRANS WORLD AIRLINES, INC., and
PHILIPPINE AIRLINES, INC., respondents.
REGALADO, J.:
Assailed in this petition for review on certiorari is the decision in CA-G.R. CV No.
20951 of respondent Court of Appeals1 which affirmed the decision of the trial
court2 dismissing for lack of evidence herein petitioners' complaint in Civil Case
No R-2101 of the then Court of First Instance of Southern Leyte, Branch I.
The facts, as recounted by the court a quo and adopted by respondent court
after "considering the evidence on record," are as follows:
After the death of plaintiffs' mother, Crispina Galdo Saludo, in Chicago Illinois,
(on) October 23, 1976 (Exh. A), Pomierski and Son Funeral Home of Chicago,
made the necessary preparations and arrangements for the shipment, of the
remains from Chicago to the Philippines. The funeral home had the remains
embalmed (Exb. D) and secured a permit for the disposition of dead human
body on October 25, 1976 (Exh. C), Philippine Vice Consul in Chicago, Illinois,
Bienvenido M. Llaneta, at 3:00 p.m. on October 26, 1976 at the Pomierski & Son
Funeral Home, sealed the shipping case containing a hermetically sealed casket
that is airtight and waterproof wherein was contained the remains of Crispina
Saludo Galdo (sic) (Exb. B). On the same date, October 26, 1976, Pomierski
brought the remains to C.M.A.S. (Continental Mortuary Air Services) at the
airport (Chicago) which made the necessary arrangements such as flights,
transfers, etc.; C.M.A.S. is a national service used by undertakers to throughout
the nation (U.S.A.), they furnish the air pouch which the casket is enclosed in,
and they see that the remains are taken to the proper air freight terminal (Exh. 6-
TWA). C.M.A.S. booked the shipment with PAL thru the carrier's agent Air Care
International, with Pomierski F.H. as the shipper and Mario (Maria) Saludo as
the consignee. PAL Airway Bill No. 079-01180454 Ordinary was issued wherein
the requested routing was from Chicago to San Francisco on board TWA Flight
131 of October 27, 1976 and from San Francisco to Manila on board PAL Flight
No. 107 of the same date, and from Manila to Cebu on board PAL Flight 149 of
October 29, 1976 (See Exh. E., Also Exh. 1-PAL).
In the meantime, plaintiffs Maria Salvacion Saludo and Saturnino Saludo, thru a
travel agent, were booked with United Airlines from Chicago to California, and
with PAL from California to Manila. She then went to the funeral director of
Pomierski Funeral Home who had her mother's remains and she told the
director that they were booked with United Airlines. But the director told her that
the remains were booked with TWA flight to California. This upset her, and she
and her brother had to change reservations from UA to the TWA flight after she
confirmed by phone that her mother's remains should be on that TWA flight.
They went to the airport and watched from the look-out area. She saw no body
being brought. So, she went to the TWA counter again, and she was told there
was no body on that flight. Reluctantly, they took the TWA flight upon assurance
of her cousin, Ani Bantug, that he would look into the matter and inform her
about it on the plane or have it radioed to her. But no confirmation from her
cousin reached her that her mother was on the West Coast.
Upon arrival at San Francisco at about 5:00 p.m., she went to the TWA counter
there to inquire about her mother's remains. She was told they did not know
anything about it.
She then called Pomierski that her mother's remains were not at the West Coast
terminal, and Pomierski immediately called C.M.A.S., which in a matter of 10
minutes informed him that the remains were on a plane to Mexico City, that
there were two bodies at the terminal, and somehow they were switched; he
relayed this information to Miss Saludo in California; later C.M.A.S. called and
told him they were sending the remains back to California via Texas (see Exh. 6-
TWA).
It-turned out that TWA had carried a shipment under PAL Airway Bill No. 079-
ORD-01180454 on TWA Flight 603 of October 27, 1976, a flight earlier than
TWA Flight 131 of the same date. TWA delivered or transferred the said
shipment said to contain human remains to PAL at 1400H or 2:00 p.m. of the
same date, October 27, 1976 (Bee Exh. 1- TWA). "Due to a switch(ing) in
Chicago", this shipment was withdrawn from PAL by CMAS at 1805H (or 6:05
p.m.) of the same date, October 27 (Exh. 3-PAL, see Exh. 3-a-PAL).
What transpired at the Chicago (A)irport is explained in a memo or incident
report by Pomierski (Exh. 6-TWA) to Pomierski's lawyers who in turn referred to
said' memo and enclosed it in their (Pomierski's lawyers) answer dated July 18,
1981 to herein plaintiff's counsel (See Exh. 5-TWA). In that memo or incident
report (Exh. 6-TWA), it is stated that the remains (of Crispina Saludo) were
taken to CMAS at the airport; that there were two bodies at the (Chicago Airport)
terminal, and somehow they were switched, that the remains (of Crispina
Saludo) were on a plane to Mexico City; that CMAS is a national service used by
undertakers throughout the nation (U.S.A.), makes all the necessary
arrangements, such as flights, transfers, etc., and see(s) to it that the remains
are taken to the proper air freight terminal.
The following day October 28, 1976, the shipment or remains of Crispina Saludo
arrived (in) San Francisco from Mexico on board American Airlines. This
shipment was transferred to or received by PAL at 1945H or 7:45 p.m. (Exh. 2-
PAL, Exh. 2-a-PAL). This casket bearing the remains of Crispina Saludo, which
was mistakenly sent to Mexico and was opened (there), was resealed by Crispin
F. Patagas for shipment to the Philippines (See Exh. B-1). The shipment was
immediately loaded on PAL flight for Manila that same evening and arrived (in)
Manila on October 30, 1976, a day after its expected arrival on October 29,
1976.3
In a letter dated December 15, 1976,4 petitioners' counsel informed private
respondent Trans World Airlines (TWA) of the misshipment and eventual delay
in the delivery of the cargo containing the remains of the late Crispin Saludo,
and of the discourtesy of its employees to petitioners Maria Salvacion Saludo
and Saturnino Saludo. In a separate letter on June 10, 1977 addressed to co-
respondent Philippine Airlines (PAL),5 petitioners stated that they were holding
PAL liable for said delay in delivery and would commence judicial action should
no favorable explanation be given.
Both private respondents denied liability. Thus, a damage suit6 was filed by
petitioners before the then Court of First Instance, Branch III, Leyte, praying for
the award of actual damages of P50,000.00, moral damages of P1,000,000.00,
exemplary damages, attorney's fees and costs of suit.
As earlier stated, the court below absolved the two respondent airlines
companies of liability. The Court of Appeals affirmed the decision of the lower
court in toto, and in a subsequent resolution,7 denied herein petitioners' motion
for reconsideration for lack of merit.
In predictable disagreement and dissatisfaction with the conclusions reached by
respondent appellate court, petitioners now urge this Court to review the
appealed decision and to resolve whether or not (1) the delay in the delivery of
the casketed remains of petitioners' mother was due to the fault of respondent
airline companies, (2) the one-day delay in the delivery of the same constitutes
contractual breach as would entitle petitioners to damages, (3) damages are
recoverable by petitioners for the humiliating, arrogant and indifferent acts of the
employees of TWA and PAL, and (4) private respondents should be held liable
for actual, moral and exemplary damages, aside from attorney's fees and
litigation expenses.8
At the outset and in view of the spirited exchanges of the parties on this aspect,
it is to be stressed that only questions of law may be raised in a petition filed in
this Court to review on certiorari the decision of the Court of Appeals.9 This
being so, the factual findings of the Court of Appeals are final and conclusive
and cannot be reviewed by the Supreme Court. The rule, however, admits of
established exceptions, to wit: (a) where there is grave abuse of discretion; (b)
when the finding is grounded entirely on speculations, surmises or
conjectures;(c) when the inference made is manifestly-mistaken, absurd or
impossible; (d) when the judgment of the Court of Appeals was based on a
misapprehension of facts; (e) when the factual findings are conflicting; (f) when
the Court of Appeals, in making its findings, went beyond the issues of the case
and the same are contrary to the admissions of both appellant and appellee; 10
(g) when the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties and which, if properly considered, would justify a
different conclusion; 11 and (h) where the findings of fact of the Court of Appeals
are contrary to those of the trial court, or are mere conclusions without citation of
specific evidence, or where the facts of set forth by the petitioner are not
disputed by the respondent, or where the findings of fact of the Court of Appeals
are premised on the absence of evidence and are contradicted by the evidence
on record. 12
To distinguish, a question of law is one which involves a doubt or controversy on
what the law is on a certain state of facts; and, a question of fact, contrarily, is
one in which there is a doubt or difference as to the truth or falsehood of the
alleged facts. 13 One test, it has been held, is whether the appellate court can
determine the issue raised without reviewing or evaluating the evidence, in
which case it is a question of law, otherwise it will be a question of fact.14
Respondent airline companies object to the present recourse of petitioners on
the ground that this petition raises only factual questions. 15 Petitioners maintain
otherwise or, alternatively, they are of the position that, assuming that the
petition raises factual questions, the same are within the recognized exceptions
to the general rule as would render the petition cognizable and worthy of review
by the Court. 16
Since it is precisely the soundness of the inferences or conclusions that may be
drawn from the factual issues which are here being assayed, we find that the
issues raised in the instant petition indeed warrant a second look if this litigation
is to come to a reasonable denouement. A discussion seriatim of said issues will
further reveal that the sequence of the events involved is in effect disputed.
Likewise to be settled is whether or not the conclusions of the Court of Appeals
subject of this review indeed find evidentiary and legal support.
I. Petitioners fault respondent court for "not finding that private respondents
failed to exercise extraordinary diligence required by law which resulted in the
switching and/or misdelivery of the remains of Crispina Saludo to Mexico
causing gross delay in its shipment to the Philippines, and consequently,
damages to petitioners." 17
Petitioner allege that private respondents received the casketed remains of
petitioners' mother on October 26, 1976, as evidenced by the issuance of PAL
Air Waybill No. 079-01180454 18 by Air Care International as carrier's agent;
and from said date, private respondents were charged with the responsibility to
exercise extraordinary diligence so much so that for the alleged switching of the
caskets on October 27, 1976, or one day after private respondents received the
cargo, the latter must necessarily be liable.
To support their assertion, petitioners rely on the jurisprudential dictum, both
under American and Philippine law, that "(t)he issuance of a bill of lading carries
the presumption that the goods were delivered to the carrier issuing the bill, for
immediate shipment, and it is nowhere questioned that a bill of lading is prima
facie evidence of the receipt of the goods by the carrier. . . . In the absence of
convincing testimony establishing mistake, recitals in the bill of lading showing
that the carrier received the goods for shipment on a specified date control (13
C.J.S. 235)." 19
A bill of lading is a written acknowledgment of the receipt of the goods and an
agreement to transport and deliver them at a specified place to a person named
or on his order. Such instrument may be called a shipping receipt, forwarder's
receipt and receipt for transportation. 20 The designation, however, is
immaterial. It has been hold that freight tickets for bus companies as well as
receipts for cargo transported by all forms of transportation, whether by sea or
land, fall within the definition. Under the Tariff and Customs Code, a bill of lading
includes airway bills of lading. 21 The two-fold character of a bill of lading is all
too familiar; it is a receipt as to the quantity and description of the goods shipped
and a contract to transport the goods to the consignee or other person therein
designated, on the terms specified in such instrument. 22
Logically, since a bill of lading acknowledges receipt of goods to be transported,
delivery of the goods to the carrier normally precedes the issuance of the bill; or,
to some extent, delivery of the goods and issuance of the bill are regarded in
commercial practice as simultaneous acts. 23 However, except as may be
prohibited by law, there is nothing to prevent an inverse order of events, that is,
the execution of the bill of lading even prior to actual possession and control by
the carrier of the cargo to be transported. There is no law which requires that the
delivery of the goods for carriage and the issuance of the covering bill of lading
must coincide in point of time or, for that matter, that the former should precede
the latter.
Ordinarily, a receipt is not essential to a complete delivery of goods to the carrier
for transportation but, when issued, is competent and prima facie, but not
conclusive, evidence of delivery to the carrier. A bill of lading, when properly
executed and delivered to a shipper, is evidence that the carrier has received
the goods described therein for shipment. Except as modified by statute, it is a
general rule as to the parties to a contract of carriage of goods in connection
with which a bill of lading is issued reciting that goods have been received for
transportation, that the recital being in essence a receipt alone, is not
conclusive, but may be explained, varied or contradicted by parol or other
evidence. 24
While we agree with petitioners' statement that "an airway bill estops the carrier
from denying receipt of goods of the quantity and quality described in the bill," a
further reading and a more faithful quotation of the authority cited would reveal
that "(a) bill of lading may contain constituent elements of estoppel and thus
become something more than a contract between the shipper and the carrier. . .
. (However), as between the shipper and the carrier, when no goods have been
delivered for shipment no recitals in the bill can estop the carrier from showing
the true facts . . . Between the consignor of goods and receiving carrier, recitals
in a bill of lading as to the goods shipped raise only a rebuttable presumption
that such goods were delivered for shipment. As between the consignor and a
receiving carrier, the fact must outweigh the recital." 25 (Emphasis supplied)
For this reason, we must perforce allow explanation by private respondents why,
despite the issuance of the airway bill and the date thereof, they deny having
received the remains of Crispina Saludo on October 26, 1976 as alleged by
petitioners.
The findings of the trial court, as favorably adopted by the Court of Appeals and
which we have earner quoted, provide us with the explanation that sufficiently
over comes the presumption relied on by petitioners in insisting that the remains
of their mother were delivered to and received by private respondents on
October 26, 1976. Thus —
. . . Philippine Vice Consul in Chicago, Illinois, Bienvenido M. Llaneta, at 3:00
p.m. on October 26, 1976 at the Pomierski & Son Funeral Home, sealed the
shipping case containing a hermetically sealed casket that is airtight and
waterproof wherein was contained the remains of Crispina Saludo Galdo (sic)
(Exh. B). On the same date October 26, 1976, Pomierski brought the remains to
C.M.A.S. (Continental Mortuary Air Services) at the airport (Chicago) which
made the necessary arrangements such as flights, transfers, etc; C.M.A.S. is a
national service used by undertakers throughout the nation (U.S.A.), they furnish
the air pouch which the casket is enclosed in, and they see that the remains are
taken to the proper air freight terminal (Exh. G-TWA). C.M.A.S. booked the
shipment with PAL thru the carrier's agent Air Care International, with Pomierski
F.H. as the shipper and Mario (Maria) Saludo as the consignee. PAL Airway Bill
No. 079- 01180454 Ordinary was issued wherein the requested routing was
from Chicago to San Francisco on board TWA Flight-131 of October 27;1976,
and from San Francisco to Manila on board PAL Flight No. 107 of the same
date, and from Manila to Cebu on board PAL Flight 149 of October 29, 1976
(See Exh. E, also Exh. 1-PAL).26 (Emphasis ours.)
Moreover, we are persuaded to believe private respondent PAL's account as to
what transpired October 26, 1976:
. . . Pursuant thereto, on 26 October 1976, CMAS acting upon the instruction of
Pomierski, F.H., the shipper requested booking of the casketed remains of Mrs.
Cristina (sic) Saludo on board PAL's San Francisco-Manila Flight No. PR 107 on
October 27, 1976.
2. To signify acceptance and confirmation of said booking, PAL issued to said
Pomierski F.H., PAL Airway Bill No. 079-01180454 dated October 27, 1976 (sic,
"10/26/76"). PAL confirmed the booking and transporting of the shipment on
board of its Flight PR 107 on October 27, 1976 on the basis of the
representation of the shipper and/or CMAS that the said cargo would arrive in
San Francisco from Chicago on board United Airlines Flight US 121 on 27
October 1976.27
In other words, on October 26, 1976 the cargo containing the casketed remains
of Crispina Saludo was booked for PAL Flight Number PR-107 leaving San
Francisco for Manila on October 27, 1976, PAL Airway Bill No. 079-01180454
was issued, not as evidence of receipt of delivery of the cargo on October 26,
1976, but merely as a confirmation of the booking thus made for the San
Francisco-Manila flight scheduled on October 27, 1976. Actually, it was not until
October 28, 1976 that PAL received physical delivery of the body at San
Francisco, as duly evidenced by the Interline Freight Transfer Manifest of the
American Airline Freight System and signed for by Virgilio Rosales at 1945H, or
7:45 P.M. on said date.28
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary
responsibility of the common carrier begins from the time the goods are
delivered to the carrier. This responsibility remains in full force and effect even
when they are temporarily unloaded or stored in transit, unless the shipper or
owner exercises the right of stoppage in transitu, 29 and terminates only after
the lapse of a reasonable time for the acceptance, of the goods by the
consignee or such other person entitled to receive them. 30 And, there is
delivery to the carrier 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. 31 Where such a
delivery has thus been accepted by the carrier, the liability of the common
carrier commences eo instanti. 32
Hence, while we agree with petitioners that the extraordinary diligence statutorily
required to be observed by the carrier instantaneously commences upon
delivery of the goods thereto, for such duty to commence there must in fact have
been delivery of the cargo subject of the contract of carriage. 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.
As already demonstrated, the facts in the case at bar belie the averment that
there was delivery of the cargo to the carrier on October 26, 1976. Rather, as
earlier explained, the body intended to be shipped as agreed upon was really
placed in the possession and control of PAL on October 28, 1976 and it was
from that date that private respondents became responsible for the agreed
cargo under their undertakings in PAL Airway Bill No. 079-01180454.
Consequently, for the switching of caskets prior thereto which was not caused
by them, and subsequent events caused thereby, private respondents cannot be
held liable.
Petitioners, proceeding on the premise that there was delivery of the cargo to
private respondents on October 26,1976 and that the latter's extraordinary
responsibility had by then become operative, insist on foisting the blame on
private respondents for the switching of the two caskets which occurred on
October 27, 1976. It is argued that since there is no clear evidence establishing
the fault Continental Mortuary Air Services (CMAS) for the mix-up, private
respondents are presumably negligent pursuant to Article 1735 of the Civil Code
and, for failure to rebut such presumption, they must necessarily be held liable;
or, assuming that CMAS was at fault, the same does not absolve private
respondents of liability because whoever brought the cargo to the airport or
loaded it on the plane did so as agent of private respondents.
This contention is without merit. As pithily explained by the Court of Appeals:
The airway bill expressly provides that "Carrier certifies goods described below
were received for carriage", and said cargo was "casketed human remains of
Crispina Saludo," with "Maria Saludo as Consignee; Pomierski F.H. as Shipper;
Air Care International as carrier's agent." On the face of the said airway bill, the
specific flight numbers, specific routes of shipment and dates of departure and
arrival were typewritten, to wit: Chicago TWA Flight 131/27 to San Francisco
and from San Francisco by PAL 107 on, October 27, 1976 to Philippines and to
Cebu via PAL Flight 149 on October 29, 1976. The airway bill also contains the
following typewritten words, as follows: all documents have been examined (sic).
Human remains of Crispina Saludo. Please return back (sic) first available flight
to SFO.
But, as it turned out and was discovered later the casketed human remains
which was issued PAL Airway Bill #079-1180454 was not the remains of
Crispina Saludo, the casket containing her remains having been shipped to
Mexico City.
However, it should be noted that, Pomierski F.H., the shipper of Mrs. Saludo's
remains, hired Continental Mortuary Services (hereafter referred to as
C.M.A.S.), which is engaged in the business of transporting and forwarding
human remains. Thus, C.M.A.S. made all the necessary arrangements such as
flights, transfers, etc. — for shipment of the remains of Crispina Saludo.
The remains were taken on October 26th, 1976, to C.M.A.S. at the airport.
These people made all the necessary arrangements, such as flights, transfers,
etc. This is a national service used by undertakers throughout the nation. They
furnished the air pouch which the casket is enclosed in, and they see that the
remains are taken to the proper air frieght terminal. I was very surprised when
Miss Saludo called me to say that the remains were not at the west coast
terminal. I immediately called C.M.A.S. They called me back in a matter of ten
minutes to inform me that the remains were on a plane to Mexico City. The man
said that there were two bodies at the terminal, and somehow they were
switched. . . . (Exb. 6 — "TWA", which is the memo or incident report enclosed
in the stationery of Walter Pomierski & Sons Ltd.)
Consequently, when the cargo was received from C.M.A.S. at the Chicago
airport terminal for shipment, which was supposed to contain the remains of
Crispina Saludo, Air Care International and/or TWA, had no way of determining
its actual contents, since the casket was hermetically sealed by the Philippine
Vice-Consul in Chicago and in an air pouch of C.M.A.S., to the effect that Air
Care International and/or TWA had to rely on the information furnished by the
shipper regarding the cargo's content. Neither could Air Care International
and/or TWA open the casket for further verification, since they were not only
without authority to do so, but even prohibited.
Thus, under said circumstances, no fault and/or negligence can be attributed to
PAL (even if Air Care International should be considered as an agent of PAL)
and/or TWA, the entire fault or negligence being exclusively with C.M.A.S.33
(Emphasis supplied.)
It can correctly and logically be concluded, therefore, that the switching occurred
or, more accurately, was discovered on October 27, 1976; and based on the
above findings of the Court of appeals, it happened while the cargo was still with
CMAS, well before the same was place in the custody of private respondents.
Thus, while the Air Cargo Transfer Manifest of TWA of October 27, 197634 was
signed by Garry Marcial of PAL at 1400H, or 2:00 P.M., on the same date,
thereby indicating acknowledgment by PAL of the transfer to them by TWA of
what was in truth the erroneous cargo, said misshipped cargo was in fact
withdrawn by CMAS from PAL as shown by the notation on another copy of said
manifest35 stating "Received by CMAS — Due to switch in Chicago 10/27-
1805H," the authenticity of which was never challenged. This shows that said
misshipped cargo was in fact withdrawn by CMAS from PAL and the correct
shipment containing the body of Crispina Saludo was received by PAL only on
October 28, 1976, at 1945H, or 7:45 P.M., per American Airlines Interline Freight
Transfer Manifest No. AA204312.36
Witness the deposition of TWA's ramp serviceman, Michael Giosso, on this
matter:
ATTY. JUAN COLLAS, JR.:
On that date, do (sic) you have occasion to handle or deal with the transfer of
cargo from TWA Flight No. 603 to PAL San Francisco?
MICHAEL GIOSSO:
Yes, I did.
ATTY. JUAN COLLAS, JR.:
What was your participation with the transfer of the cargo?
MICHAEL GIOSSO:
I manifested the freight on a transfer manifest and physically moved it to PAL
and concluded the transfer by signing it off.
ATTY. JUAN COLLAS, JR.:
You brought it there yourself?
MICHAEL GIOSSO:
Yes sir. ALBERTO A. LIM:

ATTY. JUAN COLIAS, JR.: If I recall correctly, I was queried by Manila, our Manila office with regard to a
certain complaint that a consignee filed that this shipment did not arrive on the
Do you have anything to show that PAL received the cargo from TWA on day that the consignee expects the shipment to arrive.
October 27, 1976?
ATTY CESAR P. MANALAYSAY:
MICHAEL GIOSSO:
Okay. Now, upon receipt of that query from your Manila office, did you conduct
Yes, I do. any investigation to pinpoint the possible causes of mishandling?

(Witness presenting a document) ALBERTO A. LIM:

ATTY. JUAN COLLAS, JR.: Yes.

For purposes of clarity, Exhibit I is designated as Exhibit I-TWA. xxx xxx xxx

xxx xxx xxx ATTY. CESAR P. MANALAYSAY:

ATTY. JUAN COLLAS, JR.: What is the result of your investigation?

This Exhibit I-TWA, could you tell what it is, what it shows? ALBERTO A. LIM:

MICHAEL GIOSSO: In the course of my investigation, I found that we received the body on October
28, 1976, from American Airlines.
It shows transfer of manifest on 10-27-76 to PAL at 1400 and verified with two
signatures as it completed the transfer. ATTY. CESAR P. MANALAYSAY:

ATTY. JUAN COLLAS, JR.: What body are you referring to?

Very good,. Who was the PAL employee who received the cargo? xxx xxx xxx

MICHAEL GIOSSO: ALBERTO A. LIM:

The name is Garry Marcial." 37 The remains of Mrs. Cristina (sic) Saludo.

The deposition of Alberto A. Lim, PAL's cargo supervisor at San Francisco, as ATTY. CESAR P. MANALAYSAY:
deponent-witness for PAL, makes this further clarification:
Is that the same body mentioned in this Airway Bill?
ATTY. CESAR P. MANALAYSAY:
ALBERTO A. LIM:
You mentioned Airway Bill, Mr. Lim. I am showing to you a PAL Airway Bill
Number 01180454 which for purposes of evidence, I would like to request that Yes.
the same be marked as evidence Exhibit I for PAL.
ATTY. CESAR P. MANALAYSAY:
xxx xxx xxx
What time did you receive said body on October 28, 1976?
In what circumstances did you encounter Exhibit I-PAL?
ALBERTO A. LIM:
If I recall correctly, approximately 7:45 of October 28, 1976.
ATTY. CESAR P. MANALAYSAY:
Do you have any proof with you to back the statement?
ALBERTO A. LIM:
Yes. We have on our records a Transfer Manifest from American Airlines
Number 204312 showing that we received a human remains shipment belong to
Mrs. Cristina (sic) Saludo or the human remains of Mrs. Cristina (sic) Saludo.
ATTY. CESAR P. MAIALAYSAY:
At this juncture, may I request that the Transfer Manifest referred to by the
witness be marked as an evidence as Exhibit II-PAL.
xxx xxx xxx
Mr. Lim, yesterday your co-defendant TWA presented as their Exhibit I evidence
tending to show that on October 27, 1976 at about 2:00 in the, afternoon they
delivered to you a cargo bearing human remains. Could you go over this Exhibit
I and please give us your comments as to that exhibit?
ATTY. ALBERTO C. MENDOZA:
That is a vague question. I would rather request that counsel propound specific
questions rather than asking for comments on Exhibit I-TWA.
ATTY. CESAR P. MANALAYSAY:
In that case, I will reform my question. Could you tell us whether TWA in fact
delivered to you the human remains as indicated in that Transfer Manifest?
ALBERTO A. LIM:
Yes, they did.
ATTY. CESAR P. MANALAYSAY:
I noticed that the Transfer Manifest of TWA marked as Exhibit I-TWA bears the
same numbers or the same entries as the Airway Bill marked as Exhibit I-A PAL
tending to show that this is the human remains of Mrs Cristina (sic) Saludo.
Could you tell us whether this is true?
ALBERTO A. LIM:
It is true that we received human remains shipment from TWA as indicated on
this Transfer Manifest. But in the course of investigation, it was found out that
the human remains transferred to us is not the remains of Mrs. Cristina (sic)
Saludo this is the reason why we did not board it on our flight. 38
Petitioners consider TWA's statement that "it had to rely on the information
furnished by the shipper" a lame excuse and that its failure to prove that its
personnel verified and identified the contents of the casket before loading the
same constituted negligence on the part of TWA.39
We upbold the favorable consideration by the Court of Appeals of the following
findings of the trial court:
It was not (to) TWA, but to C.M.A.S. that the Pomierski & Son Funeral Home
delivered the casket containing the remains of Crispina Saludo. TWA would
have no knowledge therefore that the remains of Crispina Saludo were not the
ones inside the casket that was being presented to it for shipment. TWA would
have to rely on there presentations of C.M.A.S. The casket was hermetically
sealed and also sealed by the Philippine Vice Consul in Chicago. TWA or any
airline for that matter would not have opened such a sealed casket just for the
purpose of ascertaining whose body was inside and to make sure that the
remains inside were those of the particular person indicated to be by C.M.A.S.
TWA had to accept whatever information was being furnished by the shipper or
by the one presenting the casket for shipment. And so as a matter of fact, TWA
carried to San Francisco and transferred to defendant PAL a shipment covered
by or under PAL Airway Bill No. 079-ORD-01180454, the airway bill for the
shipment of the casketed remains of Crispina Saludo. Only, it turned out later,
while the casket was already with PAL, that what was inside the casket was not
the body of Crispina Saludo so much so that it had to be withdrawn by C.M.A.S.
from PAL. The body of Crispina Saludo had been shipped to Mexico. The casket
containing the remains of Crispina Saludo was transshipped from Mexico and
arrived in San Francisco the following day on board American Airlines. It was
immediately loaded by PAL on its flight for Manila.
The foregoing points at C.M.A.S., not defendant TWA much less defendant PAL,
as the ONE responsible for the switching or mix-up of the two bodies at the
Chicago Airport terminal, and started a chain reaction of the misshipment of the
body of Crispina Saludo and a one-day delay in the delivery thereof to its
destination.40
Verily, no amount of inspection by respondent airline companies could have
guarded against the switching that had already taken place. Or, granting that
they could have opened the casket to inspect its contents, private respondents
had no means of ascertaining whether the body therein contained was indeed
that of Crispina Saludo except, possibly, if the body was that of a male person
and such fact was visually apparent upon opening the casket. However, to
repeat, private respondents had no authority to unseal and open the same nor
did they have any reason or justification to resort thereto.
It is the right of the carrier to require good faith on the part of those persons who
deliver goods to be carried, or enter into contracts with it, and inasmuch as the
freight may depend on the value of the article to be carried, the carrier ordinarily
has the right to inquire as to its value. Ordinarily, too, it is the duty of the carrier
to make inquiry as to the general nature of the articles shipped and of their value
before it consents to carry them; and its failure to do so cannot defeat the
shipper's right to recovery of the full value of the package if lost, in the absence
of showing of fraud or deceit on the part of the shipper. In the absence of more
definite information, the carrier has a the right to accept shipper's marks as to
the contents of the package offered for transportation and is not bound to inquire
particularly about them in order to take advantage of a false classification and
where a shipper expressly represents the contents of a package to be of a
designated character, it is not the duty of the carrier to ask for a repetition of the
statement nor disbelieve it and open the box and see for itself. 41 However,
where a common carrier has reasonable ground to suspect that the offered
goods are of a dangerous or illegal character, the carrier has the right to know
the character of such goods and to insist on an inspection, if reasonable and
practical under the circumstances, as a condition of receiving and transporting
such goods.42
It can safely be said then that 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. 43 The
consequent duty to conduct an inspection thereof arises in the event that there
should be reason to doubt the veracity of such representations. Therefore, to be
subjected to unusual search, other than the routinary inspection procedure
customarily undertaken, there must exist proof that would justify cause for
apprehension that the baggage is dangerous as to warrant exhaustive
inspection, or even refusal to accept carriage of the same; and it is the failure of
the carrier to act accordingly in the face of such proof that constitutes the basis
of the common carrier's liability. 44
In the case at bar, private respondents had no reason whatsoever to doubt the
truth of the shipper's representations. The airway bill expressly providing that
"carrier certifies goods received below were received for carriage," and that the
cargo contained "casketed human remains of Crispina Saludo," was issued on
the basis of such representations. The reliance thereon by private respondents
was reasonable and, for so doing, they cannot be said to have acted negligently.
Likewise, no evidence was adduced to suggest even an iota of suspicion that
the cargo presented for transportation was anything other than what it was
declared to be, as would require more than routine inspection or call for the
carrier to insist that the same be opened for scrutiny of its contents per
declaration.
Neither can private respondents be held accountable on the basis of petitioners'
preposterous proposition that whoever brought the cargo to the airport or loaded
it on the airplane did so as agent of private respondents, so that even if CMAS
whose services were engaged for the transit arrangements for the remains was
indeed at fault, the liability therefor would supposedly still be attributable to
private respondents.
While we agree that the actual participation of CMAS has been sufficiently and
correctly established, to hold that it acted as agent for private respondents would
be both an inaccurate appraisal and an unwarranted categorization of the legal
position it held in the entire transaction.
It bears repeating that CMAS was hired to handle all the necessary shipping
arrangements for the transportation of the human remains of Crispina Saludo to
Manila. Hence, it was to CMAS that the Pomierski & Son Funeral Home, as
shipper, brought the remains of petitioners' mother for shipment, with Maria
Saludo as consignee. Thereafter, CMAS booked the shipment with PAL through
the carrier's agent, Air Care International. 45 With its aforestated functions,
CMAS may accordingly be classified as a forwarder which, by accepted
commercial practice, is regarded as an agent of the shipper and not of the
carrier. As such, it merely contracts for the transportation of goods by carriers,
and has no interest in the freight but receives compensation from the shipper as
his agent. 46
At this point, it can be categorically stated that, as culled from the findings of
both the trial court and appellate courts, the entire chain of events which
culminated in the present controversy was not due to the fault or negligence of
private respondents. Rather, the facts of the case would point to CMAS as the
culprit. Equally telling of the more likely possibility of CMAS' liability is
petitioners' letter to and demanding an explanation from CMAS regarding the
statement of private respondents laying the blame on CMAS for the incident,
portions of which, reading as follows:
. . . we were informed that the unfortunate a mix-up occurred due to your
negligence. . . .
Likewise, the two airlines pinpoint the responsibility upon your agents. Evidence
were presented to prove that allegation.
On the face of this overwhelming evidence we could and should have filed a
case against you. . . . 47
clearly allude to CMAS as the party at fault. This is tantamount to an admission
by petitioners that they consider private respondents without fault, or is at the
very least indicative of the fact that petitioners entertained serious doubts as to
whether herein private respondents were responsible for the unfortunate turn of
events.
Undeniably, petitioners' grief over the death of their mother was aggravated by
the unnecessary inconvenience and anxiety that attended their efforts to bring
her body home for a decent burial. This is unfortunate and calls for sincere
commiseration with petitioners. But, much as we would like to give them
consolation for their undeserved distress, we are barred by the inequity of
allowing recovery of the damages prayed for by them at the expense of private
respondents whose fault or negligence in the very acts imputed to them has not
been convincingly and legally demonstrated.
Neither are we prepared to delve into, much less definitively rule on, the
possible liability of CMAS as the evaluation and adjudication of the same is not
what is presently at issue here and is best deferred to another time and
addressed to another forum.
II. Petitioners further fault the Court of Appeals for ruling that there was no
contractual breach on the part of private respondents as would entitle petitioners
to damages.
Petitioners hold that respondent TWA, by agreeing to transport the remains of
petitioners' mother on its Flight 131 from Chicago to San Francisco on October
27, 1976, made itself a party to the contract of carriage and, therefore, was
bound by the terms of the issued airway bill. When TWA undertook to ship the
remains on its Flight 603, ten hours earlier than scheduled, it supposedly
violated the express agreement embodied in the airway bill. It was allegedly this
breach of obligation which compounded, if not directly caused, the switching of
the caskets.
In addition, petitioners maintain that since there is no evidence as to who placed
the body on board Flight 603, or that CMAS actually put the cargo on that flight,
or that the two caskets at the Chicago airport were to be transported by the
same airline, or that they came from the same funeral home, or that both
caskets were received by CMAS, then the employees or agents of TWA
presumably caused the mix-up by loading the wrong casket on the plane. For
said error, they contend, TWA must necessarily be presumed negligent and this
presumption of negligence stands undisturbed unless rebutting evidence is
presented to show that the switching or misdelivery was due to circumstances
that would exempt the carrier from liability.
Private respondent TWA professes otherwise. Having duly delivered or
transferred the cargo to its co-respondent PAL on October 27, 1976 at 2:00
P.M., as supported by the TWA Transfer Manifest, TWA faithfully complied with
its obligation under the airway bill. Said faithful compliance was not affected by
the fact that the remains were shipped on an earlier flight as there was no fixed
time for completion of carriage stipulated on. Moreover, the carrier did not
undertake to carry the cargo aboard any specified aircraft, in view of the
condition on the back of the airway bill which provides:
CONDITIONS OF CONTRACT
xxx xxx xxx
It is agreed that no time is fixed for the completion of carriage hereunder and
that Carrier may without notice substitute alternate carriers or aircraft. Carrier
assumes no obligation to carry the goods by any specified aircraft or over any
particular route or routes or to make connection at any point according to any
particular schedule, and Carrier is hereby authorized to select, or deviate from
the route or routes of shipment, notwithstanding that the same may be stated on
the face hereof. The shipper guarantees payment of all charges and
advances.48
Hence, when respondent TWA shipped the body on earlier flight and on a
different aircraft, it was acting well within its rights. We find this argument
tenable.
The contention that there was contractual breach on the part of private
respondents is founded on the postulation that there was ambiguity in the terms
of the airway bill, hence petitioners' insistence on the application of the rules on
interpretation of contracts and documents. We find no such ambiguity. The
terms are clear enough as to preclude the necessity to probe beyond the
apparent intendment of the contractual provisions.
The hornbook rule on interpretation of contracts consecrates the primacy of the
intention of the parties, the same having the force of law between them. When
the terms of the agreement are clear and explicit, that they do not justify an
attempt to read into any alleged intention of the parties, the terms are to be
understood literally just as they appear on the face of the contract.49 The
various stipulations of a contract shall be interpreted together50 and such a
construction is to be adopted as will give effect to all provisions thereof.51 A
contract cannot be construed by parts, but its clauses should be interpreted in
relation to one another. The whole contract must be interpreted or read together
in order to arrive at its true meaning. Certain stipulations cannot be segregated
and then made to control; neither do particular words or phrases necessarily
determine the character of a contract. The legal effect of the contract is not to be
determined alone by any particular provision disconnected from all others, but in
the ruling intention of the parties as gathered from all the language they have
used and from their contemporaneous and subsequent acts. 52
Turning to the terms of the contract at hand, as presented by PAL Air Waybill
No. 079-01180454, respondent court approvingly quoted the trial court's
disquisition on the aforequoted condition appearing on the reverse side of the
airway bill and its disposition of this particular assigned error:
The foregoing stipulation fully answers plaintiffs' objections to the one-day delay
and the shipping of the remains in TWA Flight 603 instead of TWA Flight 131.
Under the stipulation, parties agreed that no time was fixed to complete the
contract of carriage and that the carrier may, without notice, substitute alternate
carriers or aircraft. The carrier did not assume the obligation to carry the
shipment on any specified aircraft.
xxx xxx xxx
Furthermore, contrary to the claim of plaintiffs-appellants, the conditions of the
Air Waybill are big enough to be read and noticed. Also, the mere fact that the
cargo in question was shipped in TWA Flight 603, a flight earlier on the same
day than TWA Flight 131, did not in any way cause or add to the one-day delay
complained of and/or the switching or mix-up of the bodies.53
Indubitably, that private respondent can use substitute aircraft even without
notice and without the assumption of any obligation whatsoever to carry the
goods on any specified aircraft is clearly sanctioned by the contract of carriage
as specifically provided for under the conditions thereof.
Petitioners' invocation of the interpretative rule in the Rules of Court that written
words control printed words in documents, 54 to bolster their assertion that the
typewritten provisions regarding the routing and flight schedule prevail over the
printed conditions, is tenuous. Said rule may be considered only when there is
inconsistency between the written and printed words of the contract.
As previously stated, we find no ambiguity in the contract subject of this case
that would call for the application of said rule. In any event, the contract has
provided for such a situation by explicitly stating that the above condition
remains effective "notwithstanding that the same (fixed time for completion of
carriage, specified aircraft, or any particular route or schedule) may be stated on
the face hereof." While petitioners hinge private respondents' culpability on the
fact that the carrier "certifies goods described below were received for carriage,"
they may have overlooked that the statement on the face of the airway bill
properly and completely reads —
Carrier certifies goods described below were received for carriage subject to the
Conditions on the reverse hereof the goods then being in apparent good order
and condition except as noted hereon. 55 (Emphasis ours.)
Private respondents further aptly observe that the carrier's certification regarding
receipt of the goods for carriage "was of a smaller print than the condition of the
Air Waybill, including Condition No. 5 — and thus if plaintiffs-appellants had
recognized the former, then with more reason they were aware of the latter. 56
In the same vein, it would also be incorrect to accede to the suggestion of
petitioners that the typewritten specifications of the flight, routes and dates of
departures and arrivals on the face of the airway bill constitute a special contract
which modifies the printed conditions at the back thereof. We reiterate that
typewritten provisions of the contract are to be read and understood subject to
and in view of the printed conditions, fully reconciling and giving effect to the
manifest intention of the parties to the agreement.
The oft-repeated rule regarding a carrier's liability for delay is that in the absence
of a special contract, a carrier is not an insurer against delay in transportation of
goods. When a common carrier undertakes to convey goods, the law implies a
contract that they shall be delivered at destination within a reasonable time, in
the absence, of any agreement as to the time of delivery. 57 But where a carrier
has made an express contract to transport and deliver property within a
specified time, it is bound to fulfill its contract and is liable for any delay, no
matter from what cause it may have arisen. 58 This result logically follows from
the well-settled rule that where the law creates a duty or charge, and the party is
disabled from performing it without any default in himself, and has no remedy
over, then the law will excuse him, but where the party by his own contract
creates a duty or charge upon himself, he is bound to make it good
notwithstanding any accident or delay by inevitable necessity because he might
have provided against it by contract. Whether or not there has been such an
undertaking on the part of the carrier to be determined from the circumstances
surrounding the case and by application of the ordinary rules for the
interpretation of contracts.59
Echoing the findings of the trial court, the respondent court correctly declared
that —
In a similar case of delayed delivery of air cargo under a very similar stipulation
contained in the airway bill which reads: "The carrier does not obligate itself to
carry the goods by any specified aircraft or on a specified time. Said carrier
being hereby authorized to deviate from the route of the shipment without any
liability therefor", our Supreme Court ruled that common carriers are not
obligated by law to carry and to deliver merchandise, and persons are not
vested with the right to prompt delivery, unless such common carriers previously
assume the obligation. Said rights and obligations are created by a specific
contract entered into by the parties (Mendoza vs. PAL, 90 Phil. 836).
There is no showing by plaintiffs that such a special or specific contract had
been entered into between them and the defendant airline companies.
And this special contract for prompt delivery should call the attention of the
carrier to the circumstances surrounding the case and the approximate amount
of damages to be suffered in case of delay (See Mendoza vs. PAL, supra).
There was no such contract entered into in the instant case.60
Also, the theory of petitioners that the specification of the flights and dates of
departure and arrivals constitute a special contract that could prevail over the
printed stipulations at the back of the airway bill is vacuous. To countenance
such a postulate would unduly burden the common carrier for that would have
the effect of unilaterally transforming every single bill of lading or trip ticket into a
special contract by the simple expedient of filling it up with the particulars of the
flight, trip or voyage, and thereby imposing upon the carrier duties and/or
obligations which it may not have been ready or willing to assume had it been
timely, advised thereof.
Neither does the fact that the challenged condition No. 5 was printed at the back
of the airway bill militate against its binding effect on petitioners as parties to the
contract, for there were sufficient indications on the face of said bill that would
alert them to the presence of such additional condition to put them on their
guard. Ordinary prudence on the part of any person entering or contemplating to
enter into a contract would prompt even a cursory examination of any such
conditions, terms and/or stipulations.
There is a holding in most jurisdictions that the 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 by him, and in the absence of fraud or
mistake, he is estopped from thereafter denying that he assented to such terms.
This rule applies with particular force where a shipper accepts a bill of lading
with full knowledge of its contents, and acceptance under such circumstances
makes it a binding contract. In order that any presumption of assent to a
stipulation in a bill of lading limiting the liability of a carrier may arise, it must
appear that the clause containing this exemption from liability plainly formed a
part of the contract contained in the bill of lading. A stipulation printed on the
back of a receipt or bill of lading or on papers attached to such receipt will be
quite as effective as if printed on its face, if it is shown that the consignor knew
of its terms. Thus, where a shipper accepts a receipt which states that its
conditions are to be found on the back, such receipt comes within the general
rule, and the shipper is held to have accepted and to be bound by the conditions
there to be found. 61
Granting arguendo that Condition No. 5 partakes of the nature of a contract of
adhesion and as such must be construed strictly against the party who drafted
the same or gave rise to any ambiguity therein, it should be borne in mind that a
contract of adhesion may be struck down as void and unenforceable, for being
subversive of public policy, 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. 62 However, Ong Yiu vs. Court of Appeals, et al 63 instructs us that
contracts of adhesion are not entirely prohibited. The one who adheres to the
contract is in reality free to reject it entirely; if he adheres, be gives his consent.
Accordingly, petitioners, far from being the weaker party in this situation, duly
signified their presumed assent to all terms of the contract through their
acceptance of the airway bill and are consequently bound thereby. It cannot be
gainsaid that petitioners' were not without several choices as to carriers in
Chicago with its numerous airways and airliner servicing the same.
We wish to allay petitioners' apprehension that Condition No. 5 of the airway bill
is productive of mischief as it would validate delay in delivery, sanction violations
of contractual obligations with impunity or put a premium on breaches of
contract.
Just because we have said that condition No. 5 of the airway bill is binding upon
the parties to and fully operative in this transaction, it does not mean, and let this
serve as fair warning to respondent carriers, that they can at all times
whimsically seek refuge from liability in the exculpatory sanctuary of said
Condition No. 5 or arbitrarily vary routes, flights and schedules to the prejudice
of their customers. This condition only serves to insulate the carrier from liability
in those instances when changes in routes, flights and schedules are clearly
justified by the peculiar circumstances of a particular case, or by general
transportation practices, customs and usages, or by contingencies or
emergencies in aviation such as weather turbulence, mechanical failure,
requirements of national security and the like. And even as it is conceded that being passengers and not merely consignors of goods, petitioners had the right
specific routing and other navigational arrangements for a trip, flight or voyage, to be treated with courtesy, respect, kindness and due consideration.
or variations therein, generally lie within the discretion of the carrier in the
absence of specific routing instructions or directions by the shipper, it is plainly In riposte, TWA claims that its employees have always dealt politely with all
incumbent upon the carrier to exercise its rights with due deference to the rights, clients, customers and the public in general. PAL, on the other hand, declares
interests and convenience of its customers. that in the performance of its obligation to the riding public, other customers and
clients, it has always acted with justice, honesty, courtesy and good faith.
A common carrier undertaking to transport property has the implicit duty to carry
and deliver it within reasonable time, absent any particular stipulation regarding Respondent appellate court found merit in and reproduced the trial court's
time of delivery, and to guard against delay. In case of any unreasonable delay, refutation of this assigned error:
the carrier shall be liable for damages immediately and proximately resulting
About the only evidence of plaintiffs that may have reference to the manner with
from such neglect of duty. 64 As found by the trial court, the delay in the delivery
which the personnel of defendants treated the two plaintiffs at the San Francisco
of the remains of Crispina Saludo, undeniable and regrettable as it was, cannot
Airport are the following pertinent portions of Maria Saludo's testimony:
be attributed to the fault, negligence or malice of private respondents,65 a
conclusion concurred in by respondent court and which we are not inclined to Q When you arrived there, what did you do, if any?
disturb.
A I immediately went to the TWA counter and I inquired about whether my
We are further convinced that when TWA opted to ship the remains of Crispina mother was there or if' they knew anything about it.
Saludo on an earlier flight, it did so in the exercise of sound discretion and with
reasonable prudence, as shown by the explanation of its counsel in his letter of Q What was the answer?
February 19, 1977 in response to petitioners' demand letter:
A They said they do not know. So, we waited.
Investigation of TWA's handling of this matter reveals that although the shipment
was scheduled on TWA Flight 131 of October 27, 1976, it was actually boarded Q About what time was that when you reached San Francisco from Chicago?
on TWA Flight 603 of the same day, approximately 10 hours earlier, in order to
A I think 5 o'clock. Somewhere around that in the afternoon.
assure that the shipment would be received in San Francisco in sufficient time
for transfer to PAL. This transfer was effected in San Francisco at 2:00 P.M. on Q You made inquiry it was immediately thereafter?
October 27, 1976. 66
A Right after we got off the plane.
Precisely, private respondent TWA knew of the urgency of the shipment by
reason of this notation on the lower portion of the airway bill: "All documents Q Up to what time did you stay in the airport to wait until the TWA people could
have been certified. Human remains of Cristina (sic) Saludo. Please return bag tell you the whereabouts?
first available flight to SFO." Accordingly, TWA took it upon itself to carry the
remains of Crispina Saludo on an earlier flight, which we emphasize it could do A Sorry, Sir, but the TWA did not tell us anything. We stayed there until about 9
under the terms of the airway bill, to make sure that there would be enough time o'clock. They have not heard anything about it. They did not say anything.
for loading said remains on the transfer flight on board PAL.
Q Do you want to convey to the Court that from 5 up to 9 o'clock in the evening
III. Petitioners challenge the validity of respondent court's finding that private you yourself went back to the TWA and they could not tell you where the
respondents are not liable for tort on account of the humiliating, arrogant and remains of your mother were?
indifferent acts of their officers and personnel. They posit that since their
A Yes sir.
mother's remains were transported ten hours earlier than originally scheduled,
there was no reason for private respondents' personnel to disclaim knowledge of Q And after nine o'clock, what did you do?
the arrival or whereabouts of the same other than their sheer arrogance,
indifference and extreme insensitivity to the feelings of petitioners. Moreover,
A I told my brother my Mom was supposed to be on the Philippine Airlines flight.
"Why don't" we check with PAL instead to see if she was there?" We tried to
comfort each other. I told him anyway that was a shortest flight from Chicago to
California. We will be with our mother on this longer flight. So, we checked with
the PAL.
Q What did you find?
A We learned, Yes, my Mom would be on the flight.
Q Who was that brother?
A Saturnino Saludo.
Q And did you find what was your flight from San Francisco to the Philippines?
A I do not know the number. It was the evening flight of the Philippine Airline(s)
from San Francisco to Manila.
Q You took that flight with your mother?
A We were scheduled to, Sir.
Q Now, you could not locate the remains of your mother in San Francisco could
you tell us what did you feel?
A After we were told that my mother was not there?
Q After you learned that your mother could not fly with you from Chicago to
California?
A Well, I was very upset. Of course, I wanted the confirmation that my mother
was in the West Coast. The fliqht was about 5 hours from Chicago to California.
We waited anxiously all that time on the plane. I wanted to be assured about my
mother's remains. But there was nothing and we could not get any assurance
from anyone about it.
Q Your feeling when you reached San Francisco and you could not find out from
the TWA the whereabouts of the remains, what did you feel?
A Something nobody would be able to describe unless he experiences it himself.
It is a kind of panic. I think it's a feeling you are about to go crazy. It is something
I do not want to live through again. (Inting, t.s.n., Aug. 9, 1983, pp. 14-18).
The foregoing does not show any humiliating or arrogant manner with which the
personnel of both defendants treated the two plaintiffs. Even their alleged
indifference is not clearly established. The initial answer of the TWA personnel
at the counter that they did not know anything about the remains, and later, their
answer that they have not heard anything about the remains, and the inability of
the TWA counter personnel to inform the two plaintiffs of the whereabouts of the
remains, cannot be said to be total or complete indifference to the said plaintiffs.
At any rate, it is any rude or discourteous conduct, malfeasance or neglect, the
use of abusive or insulting language calculated to humiliate and shame
passenger or had faith by or on the part of the employees of the carrier that
gives the passenger an action for damages against the carrier (Zulueta vs. Pan
American World Airways, 43 SCRA 397; Air France vs. Carrascoso, et al., 18
SCRA 155; Lopez, et al. vs. Pan American World Airways, 16 SCRA 431;
Northwest Airlines, Inc. vs. Cuenca, 14 SCRA 1063), and none of the above is
obtaining in the instant case. 67
We stand by respondent court's findings on this point, but only to the extent
where it holds that the manner in which private respondent TWA's employees
dealt with petitioners was not grossly humiliating, arrogant or indifferent as
would assume the proportions of malice or bad faith and lay the basis for an
award of the damages claimed. It must however, be pointed out that the
lamentable actuations of respondent TWA's employees leave much to be
desired, particularly so in the face of petitioners' grief over the death of their
mother, exacerbated by the tension and anxiety wrought by the impasse and
confusion over the failure to ascertain over an appreciable period of time what
happened to her remains.
Airline companies are hereby sternly admonished that it is their duty not only to
cursorily instruct but to strictly require their personnel to be more
accommodating towards customers, passengers and the general public. After
all, common carriers such as airline companies are in the business of rendering
public service, which is the primary reason for their enfranchisement and
recognition in our law. Because the passengers in a contract of carriage do not
contract merely for transportation, they have a right to be treated with kindness,
respect, courtesy and consideration. 68 A contract to transport passengers is
quite different in kind and degree from any other contractual relation, and
generates a relation attended with public duty. The operation of a common
carrier is a business affected with public interest and must be directed to serve
the comfort and convenience of passengers. 69 Passengers are human beings
with human feelings and emotions; they should not be treated as mere numbers
or statistics for revenue.
The records reveal that petitioners, particularly Maria and Saturnino Saludo,
agonized for nearly five hours, over the possibility of losing their mother's mortal
remains, unattended to and without any assurance from the employees of TWA
that they were doing anything about the situation. This is not to say that
petitioners were to be regaled with extra special attention. They were, however,
entitled to the understanding and humane consideration called for by and
commensurate with the extraordinary diligence required of common carriers,
and not the cold insensitivity to their predicament. It is hard to believe that the
airline's counter personnel were totally helpless about the situation. Common
sense would and should have dictated that they exert a little extra effort in
making a more extensive inquiry, by themselves or through their superiors,
rather than just shrug off the problem with a callous and uncaring remark that
they had no knowledge about it. With all the modern communications equipment
readily available to them, which could have easily facilitated said inquiry and
which are used as a matter of course by airline companies in their daily
operations, their apathetic stance while not legally reprehensible is morally
deplorable.
Losing a loved one, especially one's, parent, is a painful experience. Our culture
accords the tenderest human feelings toward and in reverence to the dead. That
the remains of the deceased were subsequently delivered, albeit belatedly, and
eventually laid in her final resting place is of little consolation. The
imperviousness displayed by the airline's personnel, even for just that fraction of
time, was especially condemnable particularly in the hour of bereavement of the
family of Crispina Saludo, intensified by anguish due to the uncertainty of the
whereabouts of their mother's remains. Hence, it is quite apparent that private
respondents' personnel were remiss in the observance of that genuine human
concern and professional attentiveness required and expected of them.
The foregoing observations, however, do not appear to be applicable or
imputable to respondent PAL or its employees. No attribution of discourtesy or
indifference has been made against PAL by petitioners and, in fact, petitioner
Maria Saludo testified that it was to PAL that they repaired after failing to receive
proper attention from TWA. It was from PAL that they received confirmation that
their mother's remains would be on the same flight to Manila with them.
We find the following substantiation on this particular episode from the
deposition of Alberto A. Lim, PAL's cargo supervisor earlier adverted to,
regarding their investigation of and the action taken on learning of petitioner's
problem:
ATTY. ALBERTO C. MENDOZA:
Yes.
Mr. Lim, what exactly was your procedure adopted in your so called
investigation?
ALBERTO A. LIM:
I called the lead agent on duty at that time and requested for a copy of airway
bill, transfer manifest and other documents concerning the shipment.
ATTY ALBERTO C. MENDOZA:
Then, what?
ALBERTO A. LIM:
They proceeded to analyze exactly where PAL failed, if any, in forwarding the
human remains of Mrs. Cristina (sic) Saludo. And I found out that there was not
(sic) delay in shipping the remains of Mrs. Saludo to Manila. Since we received
the body from American Airlines on 28 October at 7:45 and we expedited the
shipment so that it could have been loaded on our flight leaving at 9:00 in the
evening or just barely one hour and 15 minutes prior to the departure of the
aircraft. That is so (sic) being the case, I reported to Manila these
circumstances. 70
IV. Finally, petitioners insist, as a consequence of the delay in the shipment of
their mother's remains allegedly caused by wilful contractual breach, on their
entitlement to actual, moral and exemplary damages as well as attorney's fees,
litigation expenses, and legal interest.
The uniform decisional tenet in our jurisdiction bolds that moral damages may
be awarded for wilful or fraudulent breach of contract 71 or when such breach is
attended by malice or bad faith. 72 However, in the absence of strong and
positive evidence of fraud, malice or bad faith, said damages cannot be
awarded.73 Neither can there be an award of exemplary damages 74 nor of
attorney's fees 75 as an item of damages in the absence of proof that defendant
acted with malice, fraud or bad faith.
The censurable conduct of TWA's employees cannot, however, be said to have
approximated the dimensions of fraud, malice or bad faith. It can be said to be
more of a lethargic reaction produced and engrained in some people by the
mechanically routine nature of their work and a racial or societal culture which
stultifies what would have been their accustomed human response to a human
need under a former and different ambience.
Nonetheless, the facts show that petitioners' right to be treated with due
courtesy in accordance with the degree of diligence required by law to be
exercised by every common carrier was violated by TWA and this entitles them,
at least, to nominal damages from TWA alone. Articles 2221 and 2222 of the
Civil Code make it clear that nominal damages are not intended for
indemnification of loss suffered but for the vindication or recognition of a right
violated of invaded. They are recoverable where some injury has been done but
the amount of which the evidence fails to show, the assessment of damages
being left to the discretion of the court according to the circumstances of the
case.76 In the exercise of our discretion, we find an award of P40,000.00 as
nominal damages in favor of, petitioners to be a reasonable amount under the
circumstances of this case.

WHEREFORE, with the modification that an award of P40,000.00 as and by way

of nominal damages is hereby granted in favor of petitioners to be paid by
respondent Trans World Airlines, the appealed decision is AFFIRMED in all
other respects.
[Nominal, Temperate and Liquidated]
[G.R. No. 118664. August 7, 1998]
JAPAN AIRLINES, petitioner, vs. THE COURT OF APPEALS ENRIQUE
AGANA, MARIA ANGELA NINA AGANA, ADALIA B. FRANCISCO and JOSE
MIRANDA, respondents.
DECISION
ROMERO, J.:
Before us is an appeal by certiorari filed by petitioner Japan Airlines, Inc. (JAL)
seeking the reversal of the decision of the Court of Appeals,[1] which affirmed
with modification the award of damages made by the trial court in favor of herein
private respondents Enrique Agana, Maria Angela Nina Agana, Adelia Francisco
and Jose Miranda.
On June 13, 1991, private respondent Jose Miranda boarded JAL flight No. JL
001 in San Francisco, California bound for Manila. Likewise, on the same day
private respondents Enrique Agana, Maria Angela Nina Agana and Adelia
Francisco left Los Angeles, California for Manila via JAL flight No. JL 061. As an
incentive for travelling on the said airline, both flights were to make an overnight
stopover at Narita, Japan, at the airlines expense, thereafter proceeding to
Manila the following day.
Upon arrival at Narita, Japan on June 14, 1991, private respondents were
billeted at Hotel Nikko Narita for the night. The next day, private respondents, on
the final leg of their journey, went to the airport to take their flight to Manila.
However, due to the Mt. Pinatubo eruption, unrelenting ashfall blanketed Ninoy
Aquino International Airport (NAIA), rendering it inaccessible to airline traffic.
Hence, private respondents trip to Manila was cancelled indefinitely.
To accommodate the needs of its stranded passengers, JAL rebooked all the
Manila-bound passengers on flight No. 741 due to depart on June 16, 1991 and
also paid for the hotel expenses for their unexpected overnight stay. On June
16, 1991, much to the dismay of the private respondents, their long anticipated
flight to Manila was again cancelled due to NAIAs indefinite closure. At this
point, JAL informed the private respondents that it would no longer defray their
hotel and accommodation expense during their stay in Narita.
Since NAIA was only reopened to airline traffic on June 22, 1991, private
respondents were forced to pay for their accommodations and meal expenses
from their personal funds from June 16 to June 21, 1991. Their unexpected stay
in Narita ended on June 22, 1991 when they arrived in Manila on board JL flight
No. 741.
Obviously, still reeling from the experience, private respondents, on July 25,
1991, commenced an action for damages against JAL before the Regional Trial
Court of Quezon City, Branch 104.[2] To support their claim, private respondents
asserted that JAL failed to live up to its duty to provide care and comfort to its
stranded passengers when it refused to pay for their hotel and accommodation
expenses from June 16 to 21, 1991 at Narita, Japan. In other words, they
insisted that JAL was obligated to shoulder their expenses as long as they were
still stranded in Narita. On the other hand, JAL denied this allegation and
averred that airline passengers have no vested right to these amenities in case
a flight is cancelled due to force majeure.
On June 18, 1992, the trial court rendered its judgment in favor of private
respondents holding JAL liable for damages, viz.:
WHEREFORE, judgment is rendered in favor of plaintiffs ordering the defendant
Japan Airlines to pay the plaintiffs Enrique Agana, Adalia B. Francisco and
Maria Angela Nina Agana the sum of One million Two Hundred forty-six
Thousand Nine Hundred Thirty-Six Pesos (P1,246,936.00) and Jose Miranda
the sum of Three Hundred Twenty Thousand Six Hundred sixteen and 31/100
(P320,616.31) as actual, moral and exemplary damages and pay attorneys fees
in the amount of Two Hundred Thousand Pesos (P200,000.00), and to pay the
costs of suit.
Undaunted, JAL appealed the decision before the Court of Appeals, which,
however, with the exception of lowering the damages awarded affirmed the trial
courts finding,[3] thus:
Thus, the award of moral damages should be as it is hereby reduced to
P200,000.00 for each of the plaintiffs, the exemplary damages to P300,000.00
and the attorneys fees to P100,000.00 plus the costs.
WHEREFORE, with the foregoing Modification, the judgment appealed from is
hereby AFFIRMED in all other respects.
JAL filed a motion for reconsideration which proved futile and unavailing.[4]
Failing in its bid to reconsider the decision, JAL has now filed this instant
petition.
The issue to be resolved is whether JAL, as a common carrier has the obligation
to shoulder the hotel and meal expenses of its stranded passengers until they
have reached their final destination, even if the delay were caused by force
majeure.
To begin with, there is no dispute that the Mt. Pinatubo eruption prevented JAL
from proceeding to Manila on schedule. Likewise, private respondents concede
that such event can be considered as force majeure since their delayed arrival in
Manila was not imputable to JAL.[5]
However, private respondents contend that while JAL cannot be held
responsible for the delayed arrival in Manila, it was nevertheless liable for their
living expenses during their unexpected stay in Narita since airlines have the
obligation to ensure the comfort and convenience of its passengers. While we
sympathize with the private respondents plight, we are unable to accept this
contention.
We are not unmindful of the fact that in a plethora of cases we have consistently
ruled that a contract to transport passengers is quite different in kind and degree
from any other contractual relation. It is safe to conclude that it is a relationship
imbued with public interest. Failure on the part of the common carrier to live up
to the exacting standards of care and diligence renders it liable for any damages
that may be sustained by its passengers. However, this is not to say that
common carriers are absolutely responsible for all injuries or damages even if
the same were caused by a fortuitous event. To rule otherwise would render the
defense of force majeure, as an exception from any liability, illusory and
ineffective.
Accordingly, there is no question that when a party is unable to fulfill his
obligation because of force majeure, the general rule is that he cannot be held
liable for damages for non-performance.[6] Corollarily, when JAL was prevented
from resuming its flight to Manila due to the effects of Mt. Pinatubo eruption,
whatever losses or damages in the form of hotel and meal expenses the
stranded passengers incurred, cannot be charged to JAL. Yet it is undeniable
that JAL assumed the hotel expenses of respondents for their unexpected
overnight stay on June 15, 1991.
Admittedly, to be stranded for almost a week in a foreign land was an
exasperating experience for the private respondents. To be sure, they
underwent distress and anxiety during their unanticipated stay in Narita, but their
predicament was not due to the fault or negligence of JAL but the closure of
NAIA to international flights. Indeed, to hold JAL, in the absence of bad faith or
negligence, liable for the amenities of its stranded passengers by reason of a
fortuitous event is too much of a burden to assume.
Furthermore, it has been held that airline passengers must take such risks
incident to the mode of travel.[7] In this regard, adverse weather conditions or
extreme climatic changes are some of the perils involved in air travel, the
consequences of which the passenger must assume or expect. After all,
common carriers are not the insurer of all risks.[8]
Paradoxically, the Court of Appeals, despite the presence of force majeure, still
ruled against JAL relying in our decision in PAL v. Court of Appeals,[9] thus:
The position taken by PAL in this case clearly illustrates its failure to grasp the
exacting standard required by law. Undisputably, PALs diversion of its flight due
to inclement weather was a fortuitous event. Nonetheless, such occurrence did
not terminate PALs contract with its passengers. Being in the business of air
carriage and the sole one to operate in the country, PAL is deemed equipped to
deal with situations as in the case at bar. What we said in one case once again
must be stressed, i.e., the relation of carrier and passenger continues until the
latter has been landed at the port of destination and has left the carriers
premises. Hence, PAL necessarily would still have to exercise extraordinary
diligence in safeguarding the comfort, convenience and safety of its stranded
passengers until they have reached their final destination. On this score, PAL
grossly failed considering the then ongoing battle between government forces
and Muslim rebels in Cotabato City and the fact that the private respondent was
a stranger to the place.
The reliance is misplaced. The factual background of the PAL case is different
from the instant petition. In that case there was indeed a fortuitous event
resulting in the diversion of the PAL flight. However, the unforeseen diversion
was worsened when private respondents (passenger) was left at the airport and
could not even hitch a ride in a Ford Fiera loaded with PAL personnel,[10] not to
mention the apparent apathy of the PAL station manager as to the predicament
of the stranded passengers.[11] In light of these circumstances, we held that if
the fortuitous event was accompanied by neglect and malfeasance by the
carriers employees, an action for damages against the carrier is permissible.
Unfortunately, for private respondents, none of these conditions are present in
the instant petition.
We are not prepared, however, to completely absolve petitioner JAL from any
liability. It must be noted that private respondents bought tickets from the United
States with Manila as their final destination. While JAL was no longer required to
defray private respondents living expenses during their stay in Narita on account
of the fortuitous event, JAL had the duty to make the necessary arrangements to
transport private respondents on the first available connecting flight to Manila.
Petitioner JAL reneged on its obligation to look after the comfort and
convenience of its passengers when it declassified private respondents from
transit passengers to new passengers as a result of which private respondents
were obliged to make the necessary arrangements themselves for the next flight
to Manila. Private respondents were placed on the waiting list from June 20 to
June 24. To assure themselves of a seat on an available flight, they were
compelled to stay in the airport the whole day of June 22, 1991 and it was only
at 8:00 p.m. of the aforesaid date that they were advised that they could be
accommodated in said flight which flew at about 9:00 a.m. the next day.

We are not oblivious to the fact that the cancellation of JAL flights to Manila from
June 15 to June 21, 1991 caused considerable disruption in passenger booking
and reservation. In fact, it would be unreasonable to expect, considering NAIAs
closure, that JAL flight operations would be normal on the days affected.
Nevertheless, this does not excuse JAL from its obligation to make the
necessary arrangements to transport private respondents on its first available
flight to Manila. After all, it had a contract to transport private respondents from
the United States to Manila as their final destination.

Consequently, the award of nominal damages is in order. Nominal damages are

adjudicated in order that a right of a plaintiff, which has been violated or invaded
by the defendant, may be vindicated or recognized and not for the purpose of
indemnifying any loss suffered by him.[12] The court may award nominal
damages in every obligation arising from any source enumerated in Article 1157,
or in every case where any property right has been invaded.[13]

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals

dated December 22, 1993 is hereby MODIFIED. The award of actual, moral and
exemplary damages is hereby DELETED. Petitioner JAL is ordered to pay each
of the private respondents nominal damages in the sum of P100,000.00 each
including attorneys fees of P50,000.00 plus costs.
[Nominal, Temperate and Liquidated]
[G.R. No. 151783. July 8, 2003]
VICTORINO SAVELLANO, VIRGINIA B. SAVELLANO and DEOGRACIAS B.
SAVELLANO, petitioners, vs. NORTHWEST AIRLINES, respondent.
DECISION
PANGANIBAN, J.:
When, as a result of engine malfunction, a commercial airline is unable to ferry
its passengers on the original contracted route, it nonetheless has the duty of
fulfilling its responsibility of carrying them to their contracted destination on the
most convenient route possible. Failing in this, it cannot just unilaterally shuttle
them, without their consent, to other routes or stopping places outside of the
contracted sectors. However, moral damages cannot be awarded without proof
of the carriers bad faith, ill will, malice or wanton conduct. Neither will actual
damages be granted in the absence of convincing and timely proof of loss. But
nominal damages may be allowed under the circumstances in the case herein.
The Case
Before the Court is a Petition for Review under Rule 45 of the Rules of Court,
seeking to set aside the June 29, 2001 Decision[1] of the Court of Appeals[2] (CA)
in CA-GR CV No. 47165. The dispositive part of the Decision reads:
WHEREFORE, the judgment of July 29, 1994 is hereby REVERSED and SET
ASIDE and another rendered DISMISSING [petitioners] Complaint. No
pronouncement as to costs. [3]
On the other hand, the dispositive portion of the Regional Trial Court (RTC)
Decision[4] that was reversed by the CA disposed thus:
WHEREFORE, premises considered, decision is hereby rendered in favor of the
plaintiffs and against the defendant, sentencing the latter to pay to the former,
the following amounts:
1. P500,000.00 as actual damages;
2. P3,000,000.00 as moral damages;
3. P500,000.00 as exemplary damages; and
4. P500,000.00 as attorneys fees;
All such sums shall bear legal interest, i.e., 6% per annum pursuant to Article
2209 of the Civil Code (Reformina vs. Tomol, 139 SCRA 260) from the date of
the filing of the complaint until fully paid. Costs against the x x x Northwest
Airlines, Inc.
[Respondents] counterclaim is ordered dismissed, for lack of merit.[5]
The Facts
The facts of the case are summarized by the CA as follows:
[Petitioner] Victorino Savellano (Savellano) was a Cabugao, Ilocos Sur mayor
for many terms, former Chairman of the Commission on Elections and Regional
Trial Court (RTC) judge. His wife, [Petitioner] Virginia is a businesswoman and
operates several rural banks in Ilocos Sur. The couples x x x son [Petitioner]
Deogracias was, at the time [of] the incident subject of the case, the Vice-
Governor of Ilocos Sur.
On October 27, 1991, at around 1:45 p.m., [petitioners] departed from San
Francisco, USA on board Northwest Airlines (NW) Flight 27, Business Class,
bound for Manila, Philippines using the NW round-trip tickets which were issued
at [respondents] Manila ticketing office.
[Petitioners] were expected to arrive at the Ninoy Aquino International Airport
(NAIA), Manila on October 29, 1991 (Manila time) or after twelve (12) hours of
travel.
After being airborne for approximately two and one-half (2) hours or at about
4:15 p.m. of the same day, October 27, 1991 (Seattle, USA time), NW Flight 27s
pilot made an emergency landing in Seattle after announcing that a fire had
started in one of the planes engines.
[Petitioners] and the other passengers proceeded to Gate 8 of the Seattle
Airport where they were instructed to go home to Manila the next day, using the
same boarding passes with the same seating arrangements
[Respondents] shuttle bus thereafter brought all passengers to the Seattle Red
Lion Hotel where they were billeted by, and at the expense of [respondent].
[Petitioners] who were traveling as a family were assigned one room at the
hotel. At around 12:00 midnight, they were awakened by a phone call from
[respondents] personnel who advised them to be at the Seattle Airport by 7:00
a.m. (Seattle time) the following day, October 28, 1991, for departure. To reach
the airport on time, the NW shuttle bus fetched them early, making them skip the
6:30 a.m. hotel breakfast.
Prior to leaving the hotel, however, [petitioners] met at the lobby Col. Roberto
Delfin, a Filipino co-passenger who was also traveling Business Class, who
informed them that he and some passengers were leaving the next day, October
29, 1991, on board the same plane with the same itinerary.
On account of the engine failure of the plane, [petitioner] Virginia developed
nervousness. On getting wind of information that they were bumped off, she
took valium to calm her nerves and cough syrup for the fever and colds she had
developed during the trip.
When [petitioners] reached the Seattle Airport, [respondents] ground stewardess
belatedly advised them that instead of flying to Manila they would have to board
NW Flight 94, a DC-10 plane, bound for a 3-hour flight to Los Angeles for a
connecting flight to Manila. When [Petitioner] Savellano insisted theirs was a
direct flight to Manila, the female ground stewardess just told them to hurry up
as they were the last passengers to board.
In Los Angeles, [petitioners] and the other passengers became confused for
while there was a sort of a board which announced a Seoul-Bangkok flight, none
was posted for a Manila flight. It was only after they complained to the NW
personnel that the latter finally changed the board to include Manila.
Before boarding NW Flight 23 for Manila via Seoul, [petitioners] encountered
another problem. Their three small handcarried items which were not padlocked
as they were merely closed by zippers were not allowed to be placed inside the
passengers baggage compartments of the plane by an arrogant NW ground
stewardess.
On [petitioners] arrival at the NAIA, Manila where they saw Col. Delfin and his
wife as well as the other passengers of the distressed flight who unlike them
[petitioners] who left Seattle on October 28, 1991, left Seattle on October 29,
1991, they were teased for taking the longer and tiresome route to the
Philippines.
When [petitioners] claimed their luggage at the baggage carousel, they
discovered that the would-have-been handcarried items which were not allowed
to be placed inside the passengers baggage compartment had been ransacked
and the contents thereof stolen. Virginia was later to claim having lost her
diamond earrings costing P300,000.00, two (2) Perry Gan shoes worth US$
250.00, four (4) watches costing US$ 40.00 each, two (2) pieces of Tag Heuer
watch and three (3) boxes of Elizabeth Arden [perfumes]. Deogracias, on the
other hand, claimed to have lost two (2) pairs of Cole Haan shoes which he
bought for his wife, and the clothes, camera, personal computer, and jeans he
bought for his children.
By letter of November 22, 1991, [petitioners] through counsel demanded from
[respondent] the amount of P3,000,000.00 as damages for what they claimed to
be the humiliation and inconvenience they suffered in the hands of its personnel.
[Respondent] did not accede to the demand, however, impelling [petitioners] to
file a case for damages at the RTC of Cabugao, Ilocos Sur subject of the
present appeal.
[Petitioners] concede that they were not downgraded in any of the flights on their
way home to Manila. Their only complaint is that they suffered inconvenience,
embarrassment, and humiliation for taking a longer route.
During the trial, the [RTC], on motion of [petitioners], issued on October 29,
1993 a subpoena duces tecum directing [respondent] to submit the passengers
manifest of the distressed flight from San Francisco to Tokyo on October 27,
1991, the passengers manifest of the same distressed plane from Seattle to
Tokyo which took off on October 29, 1991, and the passenger manifest of the
substitute plane from Seattle to Los Angeles and Los Angeles to Seoul enroute
to Manila which took off on October 28, 1991.
The subpoena duces tecum was served on December 1, 1993 but was not
complied with, however, by [respondent], it proffering that its Minneapolis head
office retains documents only for one year after which they are destroyed.
x x x Branch 24 of the RTC of Cabugao, Ilocos Sur rendered judgment in favor
of [petitioners] x x x.
In granting moral and actual damages to [petitioners], the [RTC] credited
[petitioners] claim that they were excluded form the Seattle-Tokyo-Manila flight
to accommodate several Japanese passengers bound for Japan. And as basis
of its award of actual damages arising from the allegedly lost articles contained
in the would-have-been handcarried [luggage], the [RTC], passing on the lack of
receipts covering the same, took judicial notice of the Filipinos practice of often
bringing home pasalubong for friends and relatives.[6]
Ruling of the Court of Appeals
The CA ruled that petitioners had failed to show respondents bad faith,
negligence or malice in transporting them via the Seattle-Los Angeles-Seoul-
Manila route. Hence, it held that there was no basis for the RTCs award of moral
and exemplary damages. Neither did it find any reason to grant attorneys fees.
It further ruled:
[Petitioners] testimonial claim of losses is unsupported by any other evidence at
all. It is odd and even contrary to human experience for [petitioner] Virginia not
to have taken out a P300,000.00 pair of diamond earrings from an unlocked
small luggage after such luggage was not allowed to be placed inside the
passengers baggage compartment, given the ease with which it could have
been done as the small luggage was merely closed by zipper. Just as it is odd
why no receipts for alleged purchases for valuable pasalubongs including Tag
Huer watches, camera and personal computer were presented. x x x.[7]
Thus, even the trial courts award of actual damages was reversed by the
appellate court.
Hence this Petition.[8]
Issues
In their appeal, petitioners ask this Court to rule on these issues:
x x x [W]hether or not petitioners discriminatory bump-off from NW Flight No.
0027 on 28 October 1991 (not the diversion of the distressed plane to Seattle
the day before, i.e. NW Flight 27 on 27 October 1991) constitutes breach by
respondent airline of its air-carriage contract?
And if so, whether or not petitioners are entitled to actual, moral and exemplary
damages -- including attorneys fees -- as a consequence?[9]
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Breach of Contract
Petitioners contract of carriage with Northwest was for the San Francisco-
Tokyo(Narita)-Manila flights scheduled for October 27, 1991. This itinerary was
not followed when the aircraft used for the first segment of the journey
developed engine trouble. Petitioners stress that they are questioning, not the
cancellation of the original itinerary, but its substitution, which they allegedly had
not contracted for or agreed to. They insist that, like the other passengers of the
distressed flight, they had the right to be placed on Flight 27, which had a
connecting flight from Japan to Manila. They add that in being treated differently
and shabbily, they were being discriminated against.
A contract is the law between the parties.[10] Thus, in determining whether
petitioners rights were violated, we must look into its provisions, which are
printed on the airline ticket. Condition 9 in the agreement states that a x x x
[c]arrier may without notice substitute alternate carriers or aircraft, and may alter
or omit stopping places shown on the ticket in case of necessity. x x x. [11]
The basis of the Complaint was the way respondent allegedly treated petitioners
like puppets that could be shuttled to Manila via Los Angeles and Seoul without
their consent.[12] Undeniably, it did not take the time to explain how it would be
meeting its contractual obligation to transport them to their final destination. Its
employees merely hustled the confused petitioners into boarding one plane after
another without giving the latter a choice from other courses of action that were
available. It unilaterally decided on the most expedient way for them to reach
their final destination.
Passengers Consent
After an examination of the conditions printed on the airline ticket, we find
nothing there authorizing Northwest to decide unilaterally, after the distressed
flight landed in Seattle, what other stopping places petitioners should take and
when they should fly. True, Condition 9 on the ticket allowed respondent to
substitute alternate carriers or aircraft without notice. However, nothing there
permits shuttling passengers -- without so much as a by your-leave -- to
stopping places that they have not been previously notified of, much less agreed
to or been prepared for. Substituting aircrafts or carriers without notice is entirely
different from changing stopping places or connecting cities without notice.
The ambiguities in the contract, being one of adhesion, should be construed
against the party that caused its preparation -- in this case, respondent.[13] Since
the conditions enumerated on the ticket do not specifically allow it to change
stopping places or to fly the passengers to alternate connecting cities without
consulting them, then it must be construed to mean that such unilateral change
was not permitted.
Proof of Necessity of Alteration
Furthermore, the change in petitioners flight itinerary does not fall under the
situation covered by the phrase may alter or omit stopping places shown on the
ticket in case of necessity.[14] A case of necessity must first be proven. The
burden of proving it necessarily fell on respondent. This responsibility it failed to
discharge.
Petitioners do not question the stop in Seattle, so we will not delve into this
matter. The airplane engine trouble that developed during the flight bound for
Tokyo from San Francisco definitely merited the necessity of landing the plane
at some place for repair -- in this case, Seattle -- but not that of shuttling
petitioners to other connecting points thereafter without their consent.
Northwest failed to show a case of necessity for changing the stopping place
from Tokyo to Los Angeles and Seoul. It is a fact that some of the passengers
on the distressed flight continued on to the Tokyo (Narita) connecting place. No
explanation whatsoever was given to petitioners as to why they were not
similarly allowed to do so. It may be that the Northwest connecting flight from
Seattle to Tokyo to Manila could no longer accommodate them. Yet it may also
be that there were other carriers that could have accommodated them for these
sectors of their journey, and whose route they might have preferred to the more
circuitous one unilaterally chosen for them by respondent.
In the absence of evidence as to the actual situation, the Court is hard pressed
to determine if there was a case of necessity sanctioning the alteration of the
Tokyo stopping place in the case of petitioners. Thus, we hold that in the
absence of a demonstrated necessity thereof and their rerouting to Los Angeles
and Seoul as stopping places without their consent, respondent committed a
breach of the contract of carriage.
Second Issue:
Damages
Being guilty of a breach of their contract, respondent may be held liable for
damages suffered by petitioners in accordance with Articles 1170 and 2201 of
the Civil Code, which state:
Art. 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay and those who in any manner contravene the tenor
thereof are liable for damages. (Emphasis supplied)
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor
who acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have
foreseen or could have reasonably foreseen at the time the obligation was
constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-
performance of the obligation.
As a general rule, the factual findings of the CA when supported by substantial
evidence on record are final and conclusive and may not be reviewed on
appeal.[15] An exception to this rule is when the lower court and the CA arrive at
different factual findings.[16] In this case, the trial court found the presence of bad
faith and hence awarded moral and exemplary damages; while the CA found
none and hence deleted the award of damages. Thus, the Court is now
behooved to review the basis for sustaining the award or deletion of damages.
Petitioners impute oppression, discrimination, recklessness and malevolence to
respondent. We are not convinced. There is no persuasive evidence that they
were maliciously singled out to fly the Seattle-Los Angeles-Seoul-Manila route. It
appears that the passengers of the distressed flight were randomly divided into
two groups. One group was made to take the Tokyo-Manila flight; and the other,
the Los Angeles-Seoul-Manila flight. The selection of who was to take which
flight was handled via the computer reservation system, which took into account
only the passengers final destination.[17]
The records show that respondent was impelled by sincere motives to get
petitioners to their final destination by whatever was the most expeditious course
-- in its judgment, if not in theirs. Though they claim that they were not
accommodated on Flight 27 from Seattle to Tokyo because respondent had
taken on Japanese passengers, petitioners failed to present convincing
evidence to back this allegation. In the absence of convincing evidence, we
cannot find respondent guilty of bad faith.
Lopez, Zulueta and Ortigas
Rulings Not Applicable
Petitioners cite the cases of Lopez v. Pan American World Airways,[18] Zulueta v.
Pan American World Airways, Inc.[19] and Ortigas Jr. v. Lufthansa German
Airlines[20] to support their claim for moral and exemplary damages.
In Lopez, Honorable Fernando Lopez, then an incumbent senator and former
Vice President of the Philippines -- together with his wife, his daughter and his
son-in-law -- made first-class reservations with the Pan American World Airways
on its Tokyo-San Francisco flight. The reservation having been confirmed, first-
class tickets were subsequently issued in their favor. Mistakenly, however,
defendants agent cancelled the reservation. But expecting other cancellations
before the flight scheduled a month later, the reservations supervisor decided to
withhold the information from them, with the result that upon arrival in Tokyo, the
Lopezes discovered they had no first-class accommodations. Thus, they were
compelled to take the tourist class, just so the senator could be on time for his
pressing engagements in the United States.
In the light of these facts, the Court held there was a breach of the contract of
carriage. The failure of the defendant to inform the plaintiffs on time that their
reservations for the first class had long been cancelled was considered as the
element of bad faith entitling them to moral damages for the contractual breach.
According to the Court, such omission had placed them in a predicament that
enabled the company to keep them as their passengers in the tourist class.
Thus, the defendant was able to retain the business and to promote its self-
interest at the expense of embarrassment, discomfort and humiliation on their
part.
In Zulueta, the passenger was coming home to Manila from Honolulu via a Pan-
American flight. The plane had a stopover at Wake Island, where Rafael Zulueta
went down to relieve himself. At flight time, he could not be located immediately.
Upon being found, an altercation ensued between him and the Pan-Am
employees. One of them remonstrated: What in the hell do you think you are?
Get on that plane. An exchange of angry words followed, and the pilot went to
the extent of referring to the Zuluetas as those monkeys. Subsequently, for his
belligerent attitude, Rafael Zulueta was intentionally off-loaded and left at Wake
Island with the prospect of being stranded there for a week, with malice
aforethought. The Court awarded to the Zuluetas P500,000.00 as moral
damages, P200,000.00 as exemplary damages and P75,000.00 as attorneys
fees, apart from the actual damages of P5,502.85.
In Ortigas, Francisco Ortigas Jr. had a confirmed and validated first-class ticket
for Lufthansas Flight No. 646. His reserved first-class seat was, however, given
to a Belgian. As a result, he was forced to take economy class on the same
flight. Lufthansa succeeded in keeping him as a passenger by assuring him that
he would be given first-class accommodation at the next stop. The proper
arrangements therefor had supposedly been made already, when in truth such
was not the case. In justifying the award of moral and exemplary damages, the
Court explained:
x x x [W]hen it comes to contracts of common carriage, inattention and lack of
care on the part of the carrier resulting in the failure of the passenger to be
accommodated in the class contracted for amounts to bad faith or fraud which
entitles the passenger to the award of moral damages in accordance with Article
2220 of the Civil Code. But in the instant case, the breach appears to be of
graver nature, since the preference given to the Belgian passenger over plaintiff
was done willfully and in wanton disregard of plaintiffs rights and his dignity as a
human being and as a Filipino, who may not be discriminated against with
impunity.
To summarize, in Lopez, despite sufficient time -- one month -- to inform the
passengers of what had happened to their booking, the airline agent
intentionally withheld that information from them. In Zulueta, the passenger was
deliberately off-loaded after being gravely insulted during an altercation. And in
Ortigas, the passenger was intentionally downgraded in favor of a European.
These cases are different from and inapplicable to the present case. Here, there
is no showing that the breach of contract was done with the same
entrepreneurial motive or self-interest as in Lopez or with ill will as in Zulueta
and Ortigas. Petitioners have failed to show convincingly that they were rerouted
by respondent to Los Angeles and Seoul because of malice, profit motive or
self-interest. Good faith is presumed, while bad faith is a matter of fact that
needs to be proved[21] by the party alleging it.
In the absence of bad faith, ill will, malice or wanton conduct, respondent cannot
be held liable for moral damages. Article 2219 of the Civil Code[22] enumerates
the instances in which moral damages may be awarded. In a breach of contract,
such damages are not awarded if the defendant is not shown to have acted
fraudulently or with malice or bad faith.[23] Insufficient to warrant the award of
moral damages is the fact that complainants suffered economic hardship, or that
they worried and experienced mental anxiety.[24]
Neither are exemplary damages proper in the present case. The Civil Code
provides that [i]n contracts and quasi-contracts, the court may award exemplary
damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.[25] Respondent has not been proven to have acted in that
manner. At most, it can only be found guilty of having acted without first
considering and weighing all other possible courses of actions it could have
taken, and without consulting petitioners and securing their consent to the new
stopping places.
The unexpected and sudden requirement of having to arrange the connecting
flights of every single person in the distressed plane in just a few hours, in
addition to the Northwest employees normal workload, was difficult to satisfy
perfectly. We cannot find respondent liable for exemplary damages for its
imperfection of neglecting to consult with the passengers beforehand.
Nevertheless, herein petitioners will not be totally deprived of compensation.
Nominal damages may be awarded as provided by the Civil Code, from which
we quote:
Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff,
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 by him.
Art. 2222. The court may award nominal damages in every obligation arising
from any source enumerated in article 1157, or in every case where any
property right has been invaded.
Nominal damages are recoverable if no actual, substantial or specific damages days from the date of receipt in the case of luggage and seven days from date of
were shown to have resulted from the breach.[26] The amount of such damages receipt in the case of goods. In the case of delay the complaint must be made at
is addressed to the sound discretion of the court, taking into account the the latest within fourteen days from the date on which the luggage or goods
relevant circumstances.[27] have been placed at his disposal.

In the present case, we must consider that petitioners suffered the 3. Every complaint must be made in writing upon the document of carriage
inconveniences of having to wake up early after a bad night and having to miss or by separate notice in writing dispatched within the times aforesaid.
breakfast; as well as the fact that they were business class passengers. They
paid more for better service; thus, rushing them and making them miss their 4. Failing complaint within the times aforesaid, no action shall lie against
small comforts was not a trivial thing. We also consider their social and official the carrier, save in the case of fraud on his part.
status. Victorino Savellano was a former mayor, regional trial court judge and
After allegedly finding that their luggage had been ransacked, petitioners never
chairman of the Commission on Elections. Virginia B. Savellano was the
lodged a complaint with any Northwest airport personnel. Neither did they
president of five rural banks, and Deogracias Savellano was then the incumbent
mention the alleged loss of their valuables in their November 22, 1991 demand
vice governor of Ilocos Sur. Hence, it will be proper to grant one hundred fifty
letter.[31] Hence, in accordance with the parties contract of carriage, no claim can
thousand pesos (P150,000) as nominal damages[28] to each of them, in order to
be heard or admitted against respondent with respect to alleged damage to or
vindicate and recognize their right[29] to be notified and consulted before their
loss of petitioners baggage.
contracted stopping place was changed.
WHEREFORE, the Petition is hereby PARTIALLY GRANTED, and the assailed
A claim for the alleged lost items from the baggage of petitioners cannot
Decision MODIFIED. Respondent is ORDERED to pay one hundred fifty
prosper, because they failed to give timely notice of the loss to respondent. The
thousand pesos (P150,000) to each of the three petitioners as nominal
Conditions printed on the airline ticket plainly read:
damages. No pronouncement as to costs.
2. Carriage hereunder is subject to the rules and limitations relating to
liability established by the Warsaw Convention unless such carriage is not
International carriage as defined by that Convention.

xxx xxx xxx

7. Checked baggage will be delivered to bearer of the baggage check. In

case of damage to baggage moving in international transportation complaint
must be made in writing to carrier forthwith after discovery of damage, and at the
latest, within 7 days from receipt; in case of delay, complaint must be made
within 21 days from date the baggage was delivered. x x x.[30]

The pertinent provisions of the Rules Relating to International Carriage by Air

(Warsaw Convention) state:

Article 26

1. Receipt by the person entitled to delivery of luggage or goods without

complaint is prima facie evidence that the same have been delivered in good
condition and in accordance with the document of carriage.

2. In case of damage, the person entitled to delivery must complain to the

carrier forthwith after the discovery of the damage, and, at the latest, within three