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A. Common provisions Art 1764 to 1766 of NCC G.R. Nos. 66102-04 August 30, 1990 PHILIPPINE RABBIT BUS LINES, INC., petitioner, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT AND CASIANO PASCUA, ET AL., respondents. Santiago & Santiago for petitioner. Federico R. Vinluan for private respondents. MEDIALDEA, J.: This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court of Appeals) dated July 29, 1983 in AC-G.R. Nos. CV-65885, CV-65886 and CV65887 which reversed the decision of the Court of First Instance (now Regional Trial Court) of Pangasinan dated December 27, 1978; and its resolution dated November 28, 1983 denying the motion for reconsideration. It is an established principle that the factual findings of the Court of Appeals are final and may not be reviewed by this Court on appeal. However, this principle is subject to certain exceptions. One of these is when the findings of the appellate court are contrary to those of the trial court (see Sabinosa v. The Honorable Court of Appeals, et al., G.R. No. L-47981, July 24, 1989) in which case, a re-examination of the facts and evidence may be undertaken. This is Our task now. The antecedent facts are as follows: About 11:00 o'clock in the morning on December 24, 1966, Catalina Pascua, Caridad Pascua, Adelaida Estomo, Erlinda Meriales, Mercedes Lorenzo, Alejandro Morales and Zenaida Parejas boarded the jeepney owned by spouses Isidro Mangune and Guillerma Carreon and driven by Tranquilino Manalo at Dau, Mabalacat, Pampanga bound for Carmen, Rosales, Pangasinan to spend Christmas at their respective homes. Although they usually ride in buses, they had to ride in a jeepney that day because the buses were full. Their contract with Manalo was for them to pay P24.00 for the trip. The private respondents' testimonial evidence on this contractual relationship was not controverted by Mangune, Carreon and Manalo, nor by Filriters Guaranty Assurance Corporation, Inc., the insurer of the jeepney, with contrary evidence. Purportedly riding on the front seat with Manalo was Mercedes Lorenzo. On the left rear passenger seat were Caridad Pascua, Alejandro Morales and Zenaida Parejas. On the right rear passenger seat were Catalina Pascua, Adelaida Estomo, and Erlinda Meriales. After a brief stopover at Moncada, Tarlac for refreshment, the jeepney proceeded towards Carmen, Rosales, Pangasinan. Upon reaching barrio Sinayoan, San Manuel, Tarlac, the right rear wheel of the jeepney was detached, so it was running in an unbalanced position. Manalo stepped on the brake, as a result of which, the jeepney which was then running on the eastern lane (its right of way) made a U-turn, invading and eventually stopping on the western lane of the road in such a manner that the jeepney's front faced the south (from where it came) and its rear faced the north (towards where it was going). The jeepney practically occupied and blocked the greater portion of the western lane, which is the right of way of vehicles coming from the north, among which was Bus No. 753 of petitioner Philippine Rabbit Bus Lines, Inc. (Rabbit) driven by Tomas delos Reyes. Almost at the time when the jeepney made a sudden U-turn and encroached on the western lane of the highway as claimed by Rabbit and delos Reyes, or after stopping for a couple of minutes as claimed by Mangune, Carreon and Manalo, the bus bumped from behind the right rear portion of the jeepney. As a result of the collision, three passengers of the jeepney (Catalina Pascua, Erlinda Meriales and Adelaida Estomo) died while the other jeepney passengers sustained physical injuries. What could have been a festive Christmas turned out to be tragic. The causes of the death of the three jeepney passengers were as follows (p. 101, Record on Appeal): The deceased Catalina Pascua suffered the following injuries, to wit: fracture of the left parietal and temporal regions of the skull; fracture of the left mandible; fracture of the right humenous; compound fracture of the left radious and ullma middle third and lower third; fracture of the upper third of the right tibia and fillnea; avulsion of the head, left internal; and multiple abrasions. The cause of her death was shock, secondary to fracture and multiple hemorrhage. The fractures were produced as a result of the hitting of the victim by a strong force. The abrasions could be produced when a
GUTIERREZ, JR., J.: This is a petition to review the decision of respondent Court of Appeals, now Intermediate Appellate Court, affirming the decision of the Court of First Instance of Quezon, Ninth Judicial District, Branch 1, which found the accused Clemente Brias guilty of the crime of DOUBLE HOMICIDE THRU RECKLESS IMPRUDENCE prior the deaths of Martina Bool and Emelita Gesmundo. The information charged the accused-appellant. and others as follows: That on or about the 6th day of January, 1957, in the Municipality of Tiaong, Province of Quezon, Philippines, and within the jurisdiction of this Hon. Court, the said accused Victor Milan, Clemente Brias and Hermogenes Buencamino, being then persons in charge of passenger Train No. 522-6 of the Manila Railroad Company, then running from Tagkawayan to San Pablo City, as engine driver, conductor and assistant conductor, respectively, wilfully and unlawfully drove and operated the same in a negligent, careless and imprudent manner, without due regard to existing laws, regulations and ordinances, that although there were passengers on board the passenger coach, they failed to provide lamps or lights therein, and failed to take the necessary precautions for the safety of passengers and to prevent accident to persons and damage to property, causing by such negligence, carelessness and imprudence, that when said passenger Train No. 522-6 was passing the railroad tracks in the Municipality
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PANGASINAN TRANSPORTATION CO., INC., (PANTRANCO), petitioner, vs. HON. GREGORIO A. LEGASPI, Judge of the Court of First Instance of Pangasinan, PUA PIAN, ROLLY PUA, AIDA PUA, GLORIA PUA, CHUA TECK and CRISPINA BREGUERA respondents. Chuidian Law Offices for petitioner. Rodolfo B. Aquino for respondents. REGALA, J.: The issue is whether, in an action for damages for breach of contract of carriage, proof of the financial standing of the defendant is necessary so as to justify a request for the production of the financial statements relating to the business of the defendant under Rule 27 of the Revised Rules of Court. Civil Case No. A-247 and Civil Case No. A-248 were filed against the Pangasinan Transportation Co., Inc. (Pantranco) in the Court of First Instance of Pangasinan, for the recovery of damages for the death of Aurora Breguera and Welly Pua, wife and one-year old child, respectively, of respondent Pua Pian, and for the death of Memia Chua, 18-year old daughter of respondents Chua Teck and Crispina Breguera. In separate complaints, respondents Pua Pian and his children Rolly, Aida and Gloria, as plaintiffs in Civil Case No. A-247, and Chua Teck and Crispina Breguera as plaintiffs in Civil Case No. A-248, alleged that Aurora Breguera, Welly Pua and Memia Chua boarded at Dasol, Pangasinan, Pantranco Bus No. 334, bound for the town of Alaminos of the same province. They averred that before reaching Alaminos and just after rounding a blind curve, the bus driver, Arsenio Osorio, "by reason of his gross negligence, serious imprudence and wanton recklessness, collided with another oncoming passenger truck bus No. 306, likewise owned and operated by defendant (Pantranco)," causing Bus No. 334 to turn turtle several times and that as a result of the accident, Aurora Breguera and the child Welly Pua suffered injuries from which they died shortly after the accident, while Memia Chua died instantaneously.
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Separate Opinions REYES J.B.L., J., concurring and dissenting: I concur in the denial of the writ but solely on the basis that the original complaint for damages (Answer, Annex "I") expressly pleaded (paragraph V) "gross negligence, serious imprudence and wanton recklessness" of the driver of the petitioner company as cause of the mishap that occasioned the death of passenger Aurora Breguera and the serious injuries of passenger Welly Pua. The circumstances thus averred, if duly proved, would justify the award of damages "by way of example or correction, for the public good, in addition to the moral ... or compensatory damages" (Art. 2229 in connection with Art. 2232). Since such additional corrective damages are at the discretion of the Court (Art. 2233), the latter may properly inquire in this case into the pecuniary ability of the defendant in order to determine what amount should be added to the normal indemnity, to serve as effective deterrent to induce defendant to exert more diligence and care in the future. A small award of corrective damages would be ineffective for the purpose if the defendant possessed ample means; or it might prove excessive if the defendant were poor. But I must dissent in so far as the decision implies that inquiries into the resources of a defendant would be permissible whenever damages, pecuniary or moral, are sought . We cannot lose sight of the fact that the purpose of moral damages is essentially indemnity or reparation, not punishment or correction. Moral damages are emphatically not intended to enrich a complainant at the expense of a defendant; they are awarded only to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendant's culpable action. As stated by Enoch Aguiar (Hechos y Actos Juridicos, Tomo IV, Vol. 1, p. 247), "predomina en el resarcimiento del dao moral un caracter eminentemente reparativo, en cuanto el dinero con el cual se opera puede procurar al lesionado satisfacciones morales o' materiales que atenuen o' hagan desaparecer las molestias que lo constituyeron." In other words, the award of moral damages is aimed at a restoration, within the limits of the possible, of the spiritual status quo ante: and, therefore, it must be proportionate to the suffering inflicted. The intensity of the pain
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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.:
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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
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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;
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NARVASA, J.: Upon the following facts, found to have been satisfactorily established by the evidence, to wit: 1) that Edmundo P. Ongsiako, "with one piece of checked-in luggage, was a paying passenger on the ... PAN AM Flight 842 that left Manila for Honolulu, Hawaii, U.S.A., at about 12:30 p.m. on June 8, 1978, with Los Angeles, California, as his ultimate destination:" 1 2) that at Honolulu, Ongsiako "discovered that his luggage was not carried on board ...; (i)t was left at ... PAN AM's airport office in Manila where it was found a week later;" 2
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MENDOZA, J.:
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Compensation for Loss of Earning Capacity. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides that in addition to the indemnity for death arising from the breach of contrtact of carriage by a common carrier, 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." The formula established in decided cases for computing net earning capacity is as follows: 19 Gross Necessary Net Earning = Life x Annual Living Capacity Expectancy Income Expenses Life expectancy is equivalent to two thirds (2/3) multiplied by the difference of eighty (80) and the age of the deceased. 20 Since Atty. Caorong was 37 years old at that time of his death, 21 he had a life expectancy of 28 2/3 more years. 22 His projected gross annual income, computed based on his monthly salary of P11,385.00. 23 as a lawyer in the Department of Agrarian Reform at the time of his death, was P148,005.00. 24 Allowing for necessary living expenses of fifty percent (50%) 25 of his projected gross annual income, his total earning capacity amounts to P2,121,404.90. 26 Hence, the petitioner is liable to the private respondents in the said amount as a compensation for loss of earning capacity. WHEREFORE, the decision, dated July 29, 1994, of the Court of Appeals is hereby AFFIRMED with the MODIFICATION that petitioner Fortune Express, Inc. is ordered to pay the following amounts to private respondents Paulie, Yasser King, Rose Heinni, and Prince Alexander Caorong: 1. death indemnity in the amount of fifty thousand pesos (P50,000.00); 2. actual damages in the amount of thirty thousand pesos (P30,000.00); 3. moral damages in the amount of one hundred thousand pesos (P100,000.00);
Attorney's Fees. Pursuant to Art. 2208, attorney's fees may be recovered when, as in the instant case, exemplary damages are awarded. In the recent case of Sulpicio Lines, Inc. v. Court of Appeals, 18 we held an award of P50,000.00 as attorney's fees to be reasonable. Hence, the private respondents are entitled to attorney's fees in that amount.
4. exemplary damages in the amount of one hundred thousand pesos (P100,000.00); 5. attorney's fees in the amount of fifty thousand pesos (P50,000.00);
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CONCEPCION, C.J.: Both parties in this case have moved for the reconsideration of the decision of this Court promulgated on February 29, 1972. Plaintiffs maintain that the decision appealed from should be affirmed in toto. The defendant, in turn, prays that the decision of this Court be "set aside ... with or without a new trial, ... and that the complaint be dismissed, with costs; or, in the alternative, that the amount of the award embodied therein be considerably reduced." .
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CRUZ, J.: This is one of the many cases that have unnecessarily clogged the dockets of this Court because they should not have been brought to us in the first place. The issues are mainly factual. They have been resolved by the trial court, which has been affirmed by the respondent court, except as to the award of damages, which has been reduced. We see no reason why the decision had to be elevated to us. Time and again we have stressed that this Court is not a trier of facts. 1 We leave these matters to the lower courts, which have more opportunity and facilities to examine these matters. We have no jurisdiction as a rule to reverse their findings. 2 The exception invoked is that there is a clear showing of a grave abuse of discretion on their part, but we do not see it here. We are satisfied from the findings of the respondent court (and of the trial court) that the private respondent was, in the language of the airline industry, "bumped off." She had a confirmed ticket. She arrived at the airport on time. However, she was not allowed to board because her seat had already been given to another passenger. As a result, she suffered damages for which the petitioner should be held liable. Specifically, petitioner Korean Airlines (hereinafter called KAL) issued to Azucena Tomas a plane ticket to Los Angeles, California, U.S.A., on Flight No. KE 612 departing from the Manila International Airport on July 29, 1977, at 2:20 p.m. She paid the fare of P2,587.88 3 She and her husband arrived at the KAL check-in counter at 1.:50 p.m. of that date 4 and presented her ticket to Augusto Torres, Jr., who was in charge. Torres refused to check her in, saying that the Immigration Office was already closed. 5 Januario Tomas, her husband, rushed to the said office, which was still open, and was told by the immigration officer on duty that his wife could still be cleared for departure. Januario rushed back to Torres to convey this information and asked that his wife be checked in. Torres said this was no longer possible because her seat had already been given to another passenger. His reason was that Azucena had arrived late and had not checked in within forty minutes before departure time. 6
G.R. No. L-61418 September 24, 1987 KOREAN AIRLINES CO., LTD., petitioner, vs. HON. COURT OF APPEALS, THE HON. EDUARDO C. TUTAAN, Presiding Judge, Court of First Instance of Rizal, Branch V. Quezon City, AZUCENA and JANUARIO TOMAS, respondents.
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G.R. No. 50504-05 August 13, 1990 chanrobles virtual law library PHILIPPINE AIRLINES, INC., Petitioner, chanrobles virtual law library vs. COURT OF APPEALS, ADELINA BAGADIONG and ROSARIO STO. TOMAS, Respondents. Ricardo V. Puno, Jr., Wilfredo M. Chato & Marceliano C. Calica for petitioner.chanroblesvirtualawlibrary chanrobles virtual law library Antonio N. Gerona for private respondents.chanroblesvirtualawlibrary chanrobles virtual law library Romeo N. Gumba for Sto. Tomas. chanrobles virtual law library REGALADO, JR.: Petitioner seeks the review of the decision of the Court of Appeals, 1 promulgated on April 25, 1979 in CA-G.R. Nos. 58345-46-R, affirming with modifications the decision of the Court of First Instance of Camarines Sur, Branch 1, under the following decretal portion:
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G.R. No. 101538 June 23, 1992 AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, Augusto Benedicto Santos, petitioner, vs. NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, respondents.
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G.R. No. 60501. March 5, 1993. CATHAY PACIFIC AIRWAYS, LTD, petitioner, vs. COURT OF APPEALS and TOMAS L. ALCANTARA, respondents. Siguion-Reyna, Montecillo & Ongsiako and Tomacruz, Manguiat & Associates for petitioner. Tanjuatco, Oreta, Tanjuatco, Berenger & Corpus for private respondent. SYLLABUS 1. CIVIL LAW; CONTRACT OF CARRIAGE; BREACH THEREOF; PETITIONER BREACHED ITS CONTRACT OF CARRIAGE WITH PRIVATE RESPONDENT WHEN IT FAILED TO DELIVER HIS LUGGAGE AT THE DESIGNATED PLACE AND TIME. Petitioner breached its contract of carriage with private respondent when it failed to deliver his luggage at the designated place and time, it being the obligation of a common carrier to carry its passengers and their luggage safely to their destination, which includes the duty not to delay their transportation, and the evidence shows that petitioner acted fraudulently or in bad faith.
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2. DAMAGES; MORAL AND EXEMPLARY DAMAGES PREDICATED UPON A BREACH OF CONTRACT OF CARRIAGE; RECOVERABLE ONLY IN INSTANCES WHERE THE MISHAP RESULTS IN DEATH OF A PASSENGER, OR WHERE THE CARRIER IS GUILTY OF FRAUD OR BAD FAITH; THE CONDUCT OF PETITIONER'S REPRESENTATIVE TOWARDS RESPONDENT JUSTIFIES THE GRANT OF MORAL AND EXEMPLARY DAMAGES IN CASE AT BAR. Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in death of a passenger, or where the carrier is guilty of fraud or bad faith. The language and conduct of petitioner's representative towards respondent Alcantara was discourteous or arbitrary to justify the grant of moral damages. The CATHAY representative was not only indifferent and impatient; he was also rude and insulting. He simply advised Alcantara to buy anything he wanted. But even that was not sincere because the representative knew that the passenger was limited only to $20.00 which, certainly, was not enough to purchase comfortable clothings appropriate for an executive conference. Considering that Alcantara was not only a revenue passenger but even paid for a first class airline accommodation and accompanied at the time by the Commercial Attache of the Philippine Embassy who was assisting him in his problem, petitioner or its agents should have been more courteous and accommodating to private respondent, instead of giving him a curt reply, "What can we do, the baggage is missing. I cannot do anything . . . Anyhow, you can buy anything you need, charged to Cathay Pacific." Where in breaching the contract of carriage the defendant 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 obligation which the parties had foreseen or could have reasonably foreseen. In that case, such liability does not include moral and exemplary damages. Conversely, if the defendant airline is shown to have acted fraudulently or in bad faith, the award of moral and exemplary damages is proper.
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3. TEMPERATE DAMAGES; RECOVERABLE ONLY UPON PROOF THAT THE CLAIMANT SUSTAINED SOME PECUNIARY LOSS. However, respondent Alcantara is not entitled to temperate damages, contrary to the ruling of the court a quo, in the absence of any showing that he sustained some pecuniary loss. It cannot be gainsaid that respondent's luggage was ultimately delivered to him without serious or appreciable damage. 4. WARSAW CONVENTION; DOES NOT OPERATE AS AN EXCLUSIVE ENUMERATION OF THE INSTANCES FOR DECLARING A CARRIER LIABLE FOR BREACH OF CONTRACT OF CARRIAGE OR AS AN ABSOLUTE LIMIT OF THE EXTENT OF THAT LIABILITY; DOES NOT PRECLUDE THE OPERATION OF THE CIVIL CODE AND OTHER PERTINENT LAWS. As We have repeatedly held, although the Warsaw Convention has the force and effect of law in this country, being a treaty commitment assumed by the Philippine government, said convention does not operate as an exclusive enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Warsaw Convention declares the carrier liable for damages in the enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if wilfull misconduct on the part of the carrier's employees is found or established, which is clearly the case before Us. DECISION BELLOSILLO, J p:
This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed with modification that of the trial court by increasing the award of damages in favor of private respondent Tomas L. Alcantara. The facts are undisputed: On 19 October 1975, respondent Tomas L. Alcantara was a first class passenger of petitioner Cathay Pacific Airways, Ltd. (CATHAY for brevity) on its Flight No. CX-900 from Manila to Hongkong and onward from Hongkong to Jakarta on Flight No. CX-711. The purpose of his trip was to attend the following day, 20 October 1975, a conference with the Director General of Trade of Indonesia, Alcantara being the Executive VicePresident and General Manager of Iligan Cement Corporation, Chairman of the Export Committee of the Philippine Cement Corporation, and representative of the Cement Industry Authority and the Philippine Cement Corporation. He checked in his luggage which contained not only his clothing and articles for personal use but also papers and documents he needed for the conference. Upon his arrival in Jakarta, respondent discovered that his luggage was missing. When he inquired about his luggage from CATHAY's representative in Jakarta, private respondent was told that his luggage was left behind in Hongkong. For this, respondent Alcantara was offered $20.00 as "inconvenience money" to buy his immediate personal needs until the luggage could be delivered to him. His luggage finally reached Jakarta more than twenty four (24) hours after his arrival. However, it was not delivered to him at his hotel but was required by petitioner to be picked up by an official of the Philippine Embassy. On 1 March 1976, respondent filed his complaint against petitioner with the Court of First Instance (now Regional Trial Court) of Lanao del Norte praying for temperate, moral and exemplary damages, plus attorney's fees.
On 18 April 1976, the trial court rendered its decision ordering CATHAY to pay Plaintiff P20,000.00 for moral damages, P5,000.00 for temperate damages, P10,000.00 for exemplary damages, and P25,000.00 for attorney's fees, and the costs. 1 Both parties appealed to the Court of Appeals. CATHAY assailed the conclusion of the trial court that it was accountable for breach of contract and questioned the non-application by the court of the Warsaw Convention as well as the excessive damages awarded on the basis of its finding that respondent Alcantara was rudely treated by petitioner's employees during the time that his luggage could not be found. For his part, respondent Alcantara assigned as error the failure of the trial court to grant the full amount of damages sought in his complaint. On 11 November 1981, respondent Court of Appeals rendered its decision affirming the findings of fact of the trial court but modifying its award by increasing the moral damages to P80,000.00, exemplary damages to P20,000.00 and temperate or moderate damages to P10,000.00. The award of P25,000.00 for attorney's fees was maintained. The same grounds raised by petitioner in the Court of Appeals are reiterated before Us. CATHAY contends that: (1) the Court of Appeals erred in holding petitioner liable to respondent Alcantara for moral, exemplary and temperate damages as well as attorney's fees; and, (2) the Court of Appeals erred in failing to apply the Warsaw Convention on the liability of a carrier to its passengers. On its first assigned error, CATHAY argues that although it failed to transport respondent Alcantara's luggage on time, the one-day delay was not made in bad faith so as to justify moral, exemplary and temperate damages. It submits that the conclusion of respondent appellate court that private respondent was treated
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rudely and arrogantly when he sought assistance from CATHAY's employees has no factual basis, hence, the award of moral damages has no leg to stand on. Petitioner's first assigned error involves findings of fact which are not reviewable by this Court. 2 At any rate, it is not impressed with merit. Petitioner breached its contract of carriage with private respondent when it failed to deliver his luggage at the designated place and time, it being the obligation of a common carrier to carry its passengers and their luggage safely to their destination, which includes the duty not to delay their transportation, 3 and the evidence shows that petitioner acted fraudulently or in bad faith. Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in death of a passenger, 4 or where the carrier is guilty of fraud or bad faith. 5 In the case at bar, both the trial court and the appellate court found that CATHAY was grossly negligent and reckless when it failed to deliver the luggage of petitioner at the appointed place and time. We agree. CATHAY alleges that as a result of mechanical trouble, all pieces of luggage on board the first aircraft bound for Jakarta were unloaded and transferred to the second aircraft which departed an hour and a half later. Yet, as the Court of Appeals noted, petitioner was not even aware that it left behind private respondent's luggage until its attention was called by the Hongkong Customs authorities. More, bad faith or otherwise improper conduct may be attributed to the employees of petitioner. While the mere failure of CATHAY to deliver respondent's luggage at the agreed place and time did not ipso facto amount to willful misconduct since the luggage was eventually delivered to private respondent, albeit belatedly, 6 We are persuaded that the employees of CATHAY acted in bad faith. We refer to the deposition of Romulo Palma, Commercial Attache of the Philippine Embassy at Jakarta, who was with respondent Alcantara when the latter sought assistance from the employees of
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CATHAY. This deposition was the basis of the findings of the lower courts when both awarded moral damages to private respondent. Hereunder is part of Palma's testimony "Q: What did Mr. Alcantara say, if any? A. Mr. Alcantara was of course . . . . I could understand his position. He was furious for the experience because probably he was thinking he was going to meet the Director-General the following day and, well, he was with no change of proper clothes and so, I would say, he was not happy about the situation. Q: What did Mr. Alcantara say? A: He was trying to press the fellow to make the report and if possible make the delivery of his baggage as soon as possible. Q: And what did the agent or duty officer say, if any? A: The duty officer, of course, answered back saying 'What can we do, the baggage is missing. I cannot do anything.' something like it. 'Anyhow you can buy anything you need, charged to Cathay Pacific.' Q: What was the demeanor or comportment of the duty officer of Cathay Pacific when he said to Mr. Alcantara 'You can buy anything chargeable to Cathay Pacific'? A: If I had to look at it objectively, the duty officer would like to dismiss the affair as soon as possible by saying indifferently 'Don't worry. It can be found.'" 7
Indeed, the aforequoted testimony shows that the language and conduct of petitioner's representative towards respondent Alcantara was discourteous or arbitrary to justify the grant of moral damages. The CATHAY representative was not only indifferent and impatient; he was also rude and insulting. He simply advised Alcantara to buy anything he wanted. But even that was not sincere because the representative knew that the passenger was limited only to $20.00 which, certainly, was not enough to purchase comfortable clothings appropriate for an executive conference. Considering that Alcantara was not only a revenue passenger but even paid for a first class airline accommodation and accompanied at the time by the Commercial Attache of the Philippine Embassy who was assisting him in his problem, petitioner or its agents should have been more courteous and accommodating to private respondent, instead of giving him a curt reply, "What can we do, the baggage is missing. I cannot do anything . . . Anyhow, you can buy anything you need, charged to Cathay Pacific." CATHAY's employees should have been more solicitous to a passenger in distress and assuaged his anxieties and apprehensions. To compound matters, CATHAY refused to have the luggage of Alcantara delivered to him at his hotel; instead, he was required to pick it up himself and an official of the Philippine Embassy. Under the circumstances, it is evident that petitioner was remiss in its duty to provide proper and adequate assistance to a paying passenger, more so one with first class accommodation. Where in breaching the contract of carriage the defendant 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 obligation which the parties had foreseen or could have reasonably foreseen. In that case, such liability does not include moral and exemplary damages. 8 Conversely, if the defendant airline is shown to have acted fraudulently or in bad faith, the award of moral and exemplary damages is proper.
However, respondent Alcantara is not entitled to temperate damages, contrary to the ruling of the court a quo, in the absence of any showing that he sustained some pecuniary loss. 9 It cannot be gainsaid that respondent's luggage was ultimately delivered to him without serious or appreciable damage. As regards its second assigned error, petitioner airline contends that the extent of its liability for breach of contract should be limited absolutely to that set forth in the Warsaw Convention. We do not agree. As We have repeatedly held, although the Warsaw Convention has the force and effect of law in this country, being a treaty commitment assumed by the Philippine government, said convention does not operate as an exclusive enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability. 10 The Warsaw Convention declares the carrier liable for damages in the enumerated cases and under certain limitations. 11 However, it must not be construed to preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, 12 especially if wilfull misconduct on the part of the carrier's employees is found or established, which is clearly the case before Us. For, the Warsaw Convention itself provides in Art. 25 that "(1) The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability, if the damage is caused by his wilfull misconduct or by such default on his part as, in accordance with the law of the court to which the case is submitted, is considered to be equivalent to wilfull misconduct." (2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused under the same circumstances by any agent of the carrier acting within the scope of his employment."
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When petitioner airline misplaced respondent's luggage and failed to deliver it to its passenger at the appointed place and time, some special species of injury must have been caused to him. For sure, the latter underwent profound distress and anxiety, and the fear of losing the opportunity to fulfill the purpose of his trip. In fact, for want of appropriate clothings for the occasion brought about by the delay of the arrival of his luggage, to his embarrassment and consternation respondent Alcantara had to seek postponement of his pre-arranged conference with the Director General of Trade of the host country. In one case, 13 this Court observed that a traveller would naturally suffer mental anguish, anxiety and shock when he finds that his luggage did not travel with him and he finds himself in a foreign land without any article of clothing other than what he has on. Thus, respondent is entitled to moral and exemplary damages. We however find the award by the Court of Appeals of P80,000.00 for moral damages excessive, hence, We reduce the amount to P30,000.00. The exemplary damages of P20,000.00 being reasonable is maintained, as well as the attorney's fees of P25,000.00 considering that petitioner's act or omission has compelled Alcantara to litigate with third persons or to incur expenses to protect his interest. 14 WHEREFORE, the assailed decision of respondent Court of Appeals is AFFIRMED with the exception of the award of temperate damages of P10,000.00 which is deleted, while the award of moral damages of P80,000.00 is reduced to P30,000.00. The award of P20,000.00 for exemplary damages is maintained as reasonable together with the attorney's fees of P25,000.00. The moral and exemplary damages shall earn interest at the legal rate from 1 March 1976 when the complaint was filed until full payment. SO ORDERED.
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Cruz, Grio-Aquino and Quiason, JJ ., concur. G.R. No. 119641 May 17, 1996 PHILIPPINE AIRLINES, INC., Petitioner, vs. COURT OF APPEALS, DR. JOSEFINO MIRANDA and LUISA MIRANDA, Respondents.
REGALADO, J.: In this appeal by certiorari, petitioner Philippine Airlines, Inc. (PAL) assails the decision of respondent Court of Appeals in CA-G.R. CV No. 29147 1 which affirmed the judgment of the trial court finding herein petitioner liable as follows: Wherefore, premises considered, judgment is hereby rendered ordering the defendant, Philippine Airlines or PAL, to pay to the plaintiffs, Dr. Josefino Miranda and Luisa Miranda, the sum of P100,000.00 as moral damages; P30,000.00 as exemplary or corrective damages; P10,000.00 as attorney's fees; and the costs. 2 The factual antecedents of the present petition reveal that sometime in May, 1988, Dr. Josefino Miranda and his wife, Luisa, who were residents of Surigao City, went to the United States of America on a regular flight of Philippine Airlines, Inc. (PAL). On June 19, 1988, after a stay of over a month there, they obtained confirmed bookings from PAL's San Francisco Office for PAL Flight PR 101 from San Francisco to Manila via Honolulu on June 21, 1988; PAL flight PR 851 from Manila to Cebu on June 24, 1988; and PAL Flight PR 905 from Cebu to Surigao also on June 24, 1988.
Accordingly, on June 21, 1988, private respondents boarded PAL Flight PR 101 in San Francisco with five (5) pieces of baggage. After a stopover at Honolulu, and upon arrival in Manila on June 23, 1988, they were told by the PAL personnel that their baggage consisting of two balikbayan boxes, two pieces of luggage and one fishing rod case were off-loaded at Honolulu, Hawaii due to weight limitations. Consequently, private respondents missed their connecting flight from Manila to Cebu City, as originally scheduled, since they had to wait for their baggage which arrived the following day, June 24, 1988, after their pre-scheduled connecting flight had left. They consequently also missed their other scheduled connecting flight from Cebu City to Surigao City. On June 25, 1988, they departed for Cebu City and therefrom private respondents had to transfer to PAL Flight 471 for Surigao City. On the way to Surigao City, the pilot announced that they had to return to Mactan Airport due to some mechanical problem. While at Mactan Airport, the passengers were provided by PAL with lunch and were booked for the afternoon flight to Surigao City. However, said flight was also canceled. Since there were no more lights for Surigao City that day, private respondents asked to be billeted at the Cebu Plaza Hotel where they usually stay whenever they happen to be in Cebu City. They were, however, told by the PAL employees that they could not be accommodated at said hotel supposedly because it was fully booked. Contrarily, when Dr. Miranda called the hotel, he was informed that he and his wife could be accommodated there. Although reluctant at first, PAL eventually agreed to private respondents' overnight stay at said hotel. Oscar Jereza, PAL duty manager, approved the corresponding hotel authority with standard meals. It was only after private respondents' insistence that their meals be ordered a la carte that they were allowed to do so by PAL provided that they sign for their orders.
Inasmuch as the shuttle bus had already left by the time private respondents were ready to go to the hotel, PAL offered them P150.00 to include the fare for the return trip to the airport. Dr. Miranda asked for P150.00 more as he and his wife, along with all of their baggage, could not be accommodated in just one taxi, aside from the need for tipping money for hotel boys. Upon refusal of this simple request, Dr. Miranda then declared that he would forego the amenities offered by PAL. Thus, the voucher for P150.00 and the authority for the hotel accommodations prepared by PAL were voided due to private respondents' decision not to avail themselves thereof. To aggravate the muddled situation, when private respondents tried to retrieve their baggage, they were told this time that the same were loaded on another earlier PAL flight to Surigao City. Thus, private respondents proceeded to the hotel sans their baggage and of which they were deprived for the remainder of their trip. Private respondents were finally able to leave on board the first PAL flight to Surigao City only on June 26, 1988. Thereafter, they instituted an action for damages which, after trial as well as on appeal, was decided in their favor. Petitioner PAL has come to us via the instant petition for review on certiorari, wherein it challenges the affirmatory decision of respondent Court of Appeals 3 (1) for applying Articles 2220, 2232 and 2208 of the Civil Code when it sustained the award of the court a quo for moral and exemplary damages and attorney's fees despite absence of bad faith on its part; and (2) for not applying the express provisions of the contract of carriage and pertinent provisions of the Warsaw Convention limiting its liability to US$20.00 per kilo of baggage. I. Anent the first issue, petitioner argues that there was no bad faith on its part for while there was admittedly a delay in fulfilling its obligation under the contract of carriage with respect to the transport of passengers and the delivery of their baggage, such delay was justified by the paramount consideration of
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ensuring the safety of its passengers. It likewise maintains that its employees treated private respondents fairly and with courtesy to the extent of acceding to most of their demands in order to mitigate the inconvenience occasioned by the measures undertaken by the airline to ensure passenger safety. 4 It reiterated its position that the off-loading of private respondents' baggage was due to "weight limitations," as lengthily explained by petitioner from an aeronautically technical viewpoint, 5 taking into consideration such variable factors as flight distance, weather, air resistance, runway condition and fuel requirement. Given the variable weather conditions, it claimed that the weight limitation for each flight can only be ascertained shortly before take-off. While admittedly there would be a resulting inconvenience in the accommodations of the passengers and the handling of their cargo, the same is outweighed by the paramount concern for the safety of the flight. Petitioner moreover impugns the Court of Appeal's allegedly improper reliance on the inaccurate interpretation of the testimony of PAL's baggage service representative, Edgar Mondejar, * that private respondents' baggage were offloaded to give preference to baggage and/or cargo originating from Honolulu. PAL argues that Mondejar's knowledge of what transpired in Honolulu was merely based on the telex report forwarded to PAL's Manila station stating that the off-loading was due to weight limitations. 6 Petitioner enumerates the following incidents as indicative of its good faith in dealing with private respondents: (1) The cancellation of the flight to Surigao City due to mechanical/engine trouble was to ensure the safety of passengers and cargo; (2) PAL offered to shoulder private respondents' preferred accommodations, meals and transportation while in Cebu City with more than the usual amenities given in cases of flight disruption, and gave them priority in the following day's flight to Surigao City; (3) PAL employees did not act rudely towards private respondents and its managerial personnel even gave them
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special attention; (4) It was reasonable for PAL to limit the transportation expense to P150.00, considering that the fare between the airport and the hotel was only P75.00, and they would be picked up by the shuttle bus from the hotel to the airport, while the request for money for tips could not be justified; and (5) The inadvertent loading of private respondents' baggage on the replacement flight to Surigao City was at most simple and excusable negligence due to the numerous flight disruptions and large number of baggage on that day. Petitioner strenuously, and understandably, insists that its employees did not lie to private respondents regarding the want of accommodations at the latter's hotel of preference. The only reason why Cebu Plaza Hotel was not initially offered to them by PAL was because of the earlier advice of the hotel personnel that not all the stranded PAL passengers could be accommodated therein. It claimed that it was in accordance with the airline's policy of housing all affected passengers in one location for easy communication and transportation, which accommodations in this instance could be provided by Magellan Hotel. However, upon insistence of the Mirandas on their preference for Cebu Plaza Hotel, Jeremias Tumulak, PAL's passenger relations officer, told them that they could use the office phone and that if they could arrange for such accommodation PAL would shoulder the expenses. This concession, so petitioner avers, negates any malicious intent on its part. Crucial to the determination of the propriety of the award of damages in this case is the lower court's findings on the matter of bad faith, which deserves to be quoted at length: These claims were reasonable and appeared to be supported by the evidence. Thus it cannot be denied that plaintiffs had to undergo some personal inconveniences in Manila for lack of their baggage. It is also highly probable that plaintiffs' scheduled return to Surigao City was upset because of their having to wait for one day for their missing things. Consequently, it was quite
evident that the off-loading of plaintiffs' baggage in Honolulu was the proximate cause of plaintiffs subsequent inconveniences for which they claimed to have suffered social humiliation, wounded feelings, frustration and mental anguish. xxx xxx xxx In the present case there was a breach of contract committed in bad faith by the defendant airlines. As previously noted, plaintiffs had a confirmed booking on PAL Flight PR 101 from San Francisco to Manila. Therefore plaintiffs were entitled to an assured passage not only for themselves but for their baggage as well. They had a legal right to rely on this. The evidence showed that plaintiffs' baggage were properly loaded and stowed in the plane when it left San Francisco for Honolulu. The off-loading or bumping off by defendant airlines of plaintiffs' baggage to give way to other passengers or cargo was an arbitrary and oppressive act which clearly amounted to a breach of contract committed in bad faith and with malice. In the aforecited case, the Supreme Court defined bad faith as a breach of a known duty through some motive of interest or ill will. Self-enrichment or fraternal interest, and not personal ill will, may have been the motive, but it is malice nevertheless (infra). As correctly pointed out in the Memorandum for Plaintiffs dated June 18, 1990 (pp. 4-5), the following excerpt from the testimony of Edgar Mondejar clearly demonstrated the act of discrimination perpetrated by defendant on the herein plaintiffs (TSN, Edgar Mondejar, Feb. 28, 1990, pp. 26-28), thus: Q Before a plane departs, your office will see to it the plane loads the exact weight limitation insofar as the cargoes (sic) and passengers are concerned, is that correct?
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A Yes. Q And so with the PR 101 flight starting mainland USA, it complied with the weight limitation, passengers and baggages (sic) limitation, is that correct? A Yes. Q In other words the trip from the mainland USA started in Hawaii to off-load cargoes (sic), you complied with the weight limitation and so on? A Yes. Q But you are saying upon arriving in Honolulu certain containers were offloaded? A Yes. Q That would be therefore some containers were off-loaded to give way to some other containers starting from Honolulu towards Manila? A Yes. Q In other words Mr. Mondejar, preference was given to cargoes (sic) newly loaded at Honolulu instead of the cargoes (sic) already from mainland USA, is that correct? A Yes. The aforesaid testimony constituted a clear admission in defendant's evidence of facts amounting to a breach of contract in bad faith. This being so, defendant
must be held liable in damages for the consequences of its action. 7 (Corrections indicated in original text.) The trial court further found that the situation was aggravated by the following incidents: the poor treatment of the Mirandas by the PAL employees during the stopover at Mactan Airport in Cebu; the cavalier and dubious response of petitioner's personnel to the Miranda spouses' request to be billeted at the Cebu Plaza Hotel by denying the same allegedly because it was fully booked, which claim was belied by the fact that Dr. Miranda was easily able to arrange for accommodations thereat; and, the PAL employees' negligent, almost malicious, act of sending off the baggage of private respondents to Surigao City, while they were still in Cebu, without any explanation for this gross oversight. 8 The Court of Appeals affirmed these findings of the trial court by stating that While we recognize an airline's prerogative to off-load baggag(e) to conform with weight limitations for the purpose of ensuring the safety of passengers, We, however, cannot sanction the motion (sic) and manner it was carried out in this case. It is uncontroverted that appellees' baggag(e) were properly weighed and loaded in the plane when it left San Francisco for Honolulu. When they reached Honolulu, they were not informed that their baggag(e) would be off-loaded. Ironically, if the purpose of the off-loading was to conform with the weight limitations, why were other containers loaded in Honolulu? The real reason was revealed by Edgar Montejar, baggage service representative of the appellant. . . . 9 xxx xxx xxx
As earlier noted, the off-loading of appellees' baggag(e) was done in bad faith because it was not really for the purpose of complying with weight limitations but to give undue preference to newly-loaded baggag(e) in Honolulu. This was followed by another mishandling of said baggag(e) in the twice-cancelled connecting flight from Cebu to Surigao. Appellees' sad experience was further aggravated by the misconduct of appellant's personnel in Cebu, who lied to appellees in denying their request to be billeted at Cebu Plaza Hotel. 10 The Court has time and again ruled, and it cannot be over-emphasized, that a contract of air carriage generates a relation attended with a public duty and any discourteous conduct on the part of a carrier's employee toward a passenger gives the latter an action for damages and, more so, where there is bad faith. 11 It is settled that bad faith must be duly proved and not merely presumed. The existence of bad faith, being a factual question, and the Supreme Court not being a trier of facts, the findings thereon of the trial court as well as of the Court of Appeals shall not be disturbed on appeal and are entitled to great weight and respect. 12 Said findings are final and conclusive upon the Supreme Court except, inter alia, where the findings of the Court of Appeals and the trial court are contrary to each other. 13 It is evident that the issues raised in this petition are the correctness of the factual findings of the Court of Appeals of bad faith on the part of petitioner and the award of damages against it. This Court has consistently held that the findings of the Court of Appeals and the other lower courts are as a rule binding upon it, subject to certain exceptions created by case law. As nothing in the record indicates any of such exceptions, the factual conclusions of the appellate court must be affirmed. 14 It is now firmly settled that moral damages are recoverable in suits predicated on breach of a contract of carriage where it is proved that the carrier was guilty
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of fraud or bad faith. 15 Inattention to and lack of care for the interests of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to an award of moral damages. What the law considers as bad faith which may furnish the ground for an award of moral damages would be bad faith in securing the contract and in the execution thereof, as well as in the enforcement of its terms, or any other kind of deceit. 16 Such unprofessional and proscribed conduct is attributable to petitioner airline in the case at bar and the adverse doctrinal rule is accordingly applicable to it. In Cathay Pacific Airways, Ltd. v. Court of Appeals, et al., 17 a case which is virtually on all fours with the present controversy, we stated: In the case at bar, both the trial court and the appellate court found that CATHAY was grossly negligent and reckless when it failed to deliver the luggage of petitioner at the appointed place and time. We agree. . . . While the mere failure of CATHAY to deliver respondent's luggage at the agreed place and time did not ipso facto amount to willful misconduct since the luggage was eventually delivered to private respondent, albeit belatedly, We are persuaded that the employees of CATHAY acted in bad faith, . . . . . ., if the defendant airline is shown to have acted fraudulently or in bad faith, the award of moral and exemplary damages is proper. It must, of course, be borne in mind that moral damages are not awarded to penalize the defendant but to compensate the plaintiff for the injuries he may have suffered. 18 in a contractual or quasi-contractual relationship, exemplary damages, on the other hand, may be awarded only if the defendant had acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. 19 Attorney's fees in the concept of damages may be awarded where there is a finding of bad faith. 20 The evidence on record amply sustains, and we correspondingly find,
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that the awards assessed against petitioner on the aforestated items of damages are justified and reasonable. At this juncture, it may also be pointed out that it is PAL's duty to provide assistance to private respondents and, for that matter, any other passenger similarly inconvenienced due to delay in the completion of the transport and the receipt of their baggage. Therefore, its unilateral and voluntary act of providing cash assistance is deemed part of its obligation as an air carrier, and is hardly anything to rave about. Likewise, arrangements for and verification of requested hotel accommodations for private respondents could and should have been done by PAL employees themselves, and not by Dr. Miranda. It was rather patronizing of PAL to make much of the fact that they allowed Dr. Miranda to use its office telephone in order to get a hotel room. While it may be true that there was no direct evidence on record of blatant rudeness on the part of PAL employees towards the Mirandas, the fact that private respondents were practically compelled to haggle for accommodations, a situation unbefitting persons of their stature, is rather demeaning and it partakes of discourtesy magnified by PAL's condescending attitude. Moreover, it cannot be denied that the PAL employees herein concerned were definitely less than candid, to put it mildly, when they withheld information from private respondents that they could actually be accommodated in a hotel of their choice. Indeed, the flamboyant testimony of Oscar Jereza, * as PAL's duty manager, merely pays lip-service to, without putting into reality, the avowed company policy of invariably making available and always granting the requests for the kind and standard of accommodations demanded by and appropriate for its passengers. 21 Certainly, a more efficient service, and not a lackadaisical and disorganized system, is expected of the nation's flag carrier, especially on an international flight.
For, on the picayune matter of transportation expenses, PAL was obviously and unduly scrimping even on the small amount to be given to the Mirandas. PAL failed to consider that they were making arrangements for two paying roundtrip passengers, not penny-ante freeloaders, who had been inconvenienced by the numerous delays in flight services and careless handling of their belongings by PAL. The niggardly attitude of its personnel in this unfortunate incident, as well as their hair-splitting attempts at justification, is a disservice to the image which our national airline seeks to project in its costly advertisements. We agree with the findings of the lower court that the request of private respondents for monetary assistance of P300.00 for taxi fare was indeed justified, considering that there were two of them and they had several pieces of luggage which had to be ferried between the airport and the hotel. Also, the request for a small additional sum for tips is equally reasonable since tipping, especially in a first-rate hotel, is an accepted practice, of which the Court can take judicial notice. This is aside from the fact that private respondents, having just arrived from an extended trip abroad, had already run out of Philippine currency, which predicament was exacerbated by their additional stay in Manila due to the off-loading of their baggage. All these inconveniences should have warranted a commonsensical and more understanding treatment from PAL, considering that private respondents found themselves in. this unpleasant situation through no fault of theirs. 2. On its second issue, petitioner avers that the express provisions on private respondents' tickets stipulating that liability for delay in delivery of baggage shall be limited to US$20.00 per kilo of baggage delayed, unless the passenger declares a higher valuation, constitutes the contract of carriage between PAL and private respondents. It further contends that these express provisions are in compliance with the provisions of the Warsaw Convention for the Unification of Rules Relating to
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International Carrier by Air, to which the Philippines is a signatory. Thereunder, it is asserted that PAL flight PR 101 from San Francisco, U.S.A., to Manila, Philippines is an "international transportation" well within the coverage of the Warsaw Convention. Petitioner obstinately insists on the applicability of the provisions of the Warsaw Convention regarding the carrier's limited liability since the offloading was supposedly justified and not attended by bad faith. Neither was there any claim for loss of baggage as in fact private respondents' baggage were, albeit delayed, received by them in good condition. 22 The court a quo debunked petitioner's arguments by this holding: The defense raised by defendant airlines that it can be held liable only under the terms of the Warsaw Convention (Answer, Special and Affirmative Defenses, dated October 26, 1988) is of no moment. For it has also been held that Articles 17, 18 and 19 of the Warsaw Convention of 1929 merely declare the air carriers liable for damages in the cases enumerated therein, if the conditions specified are present. Neither the provisions of said articles nor others regulate or exclude liability for other breaches of contract by air carriers (Northwest Airlines, Inc. vs. Nicolas Cuenca, et al., 14 SCRA 1063). 23 This ruling of the trial court was affirmed by respondent Court of Appeals, thus: We are not persuaded. Appellees do not seek payment for loss of any baggage. They are claiming damages arising from the discriminatory off-loading of their baggag(e). That cannot be limited by the printed conditions in the tickets and baggage checks. Neither can the Warsaw Convention exclude nor regulate the liability for other breaches of contract by air carriers. A recognition of the Warsaw Convention does not preclude the operation of our Civil Code and
related laws in determining the extent of liability of common carriers in breach of contract of carriage, particularly for willful misconduct of their employees. 24 The congruent finding of both the trial court and respondent court that there was discriminatory off-loading being a factual question is, as stated earlier, binding upon and can no longer be passed upon by this Court, especially in view of and in deference to the affirmance of the same by respondent appellate court. There was no error on the part of the Court of Appeals when it refused to apply the provisions of the Warsaw Convention, for in the words of this Court in the aforequoted Cathay Pacific case: . . . although the Warsaw Convention has the force and effect of law in this country, being a treaty commitment assumed by the Philippine government, said convention does not operate as an exclusive enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Warsaw Convention declares the carrier liable in the enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the Civil Code and pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if willful misconduct on the part of the carrier's employees is found or established, which is the case before Us. . . . ACCORDINGLY, finding no reversible error, the challenged judgment of respondent Court of Appeals is hereby AFFIRMED in toto. SO ORDERED. Romero, Puno, Mendoza and Torres, Jr., JJ., concur.
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G.R. No. 122308 July 8, 1997 PURITA S. MAPA, CARMINA S. MAPA and CORNELIO P. MAPA, petitioners, vs. COURT OF APPEALS and TRANS-WORLD AIRLINES INC., respondents.
DAVIDE, JR., J.: The main issue in this petition for review under Rule 45 of the Rules of Court is the applicability of Article 28(1) of the Warsaw Convention, 1 which provides as follows:
Art. 28. (1) An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the contract has been made, or before the court at the place of destination.
We are urged by the petitioners to reverse the 31 May 1995 Decision of the Court of Appeals in CA-G.R. CV No. 39896 2 affirming the 24 July 1992 Order of the Regional Trial Court of Quezon City, Branch 102, which dismissed Civil Case No. Q-91-9620 3 on the ground of lack of jurisdiction in view of the aforementioned Article 28(1) of the Warsaw Convention. The antecedent facts, as summarized by the Court of Appeals, are as follows:
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contents; (2) US$2,949.50, or its equivalent in Philippine currency, representing the cost of hotel, board and lodging, and communication expenses; (3) P1 million, by way of moral damages; (4) P1 million, by way of exemplary damages, with legal interest on said amounts from the date of extrajudicial demand thereof; and (5) P500,000.00 as attorney's fees, costs of the suit, and other expenses of litigation. 8 On 26 February 1992, TWA filed its Answer to the Amended Complaint raising, as special and affirmative defense, lack of jurisdiction of Philippine courts over the action for damages in the pursuant to Article 28(1) of the Warsaw Convention, the action could only be brought either in Bangkok where the contract was entered into, or in Boston which was the place of destination, or in Kansas City which is the carrier's domicile and principal place of business. TWA further alleged that pursuant to the Warsaw Convention and the Notice of Baggage Limitations at the back of the tickets, its liability to the petitioners is limited to US$9.07 per pound, or US$20.00 per kilo, which is in lieu of actual and compensatory damages. Even assuming that petitioners' bag weighed the maximum acceptable weight of 70 pounds, TWA's maximum liability is $640.00 per bag or $2,560.00 for the four pieces of baggage, which the petitioners have been offered and have accepted. TWA also submitted that it could not be liable for moral and exemplary damages and attorney's fees because it did not act in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 9 On 7 February 1992, the petitioners filed their second Amended Complaint 10 to include a claim of US$2,500, or its equivalent in Philippine Currency, representing the additional replacement cost of the items and personal effects contained in their lost luggage; and
Purita S. Mapa, Carmina S. Mapa, and Cornelio P. Mapa (herein petitioners) then filed with the trial court on 1 August 1991 a complaint 5 for damages, 6 which was docketed as Civil Case No. Q-91-9620. Before a responsive pleading was filed, the petitioners filed an Amended Complaint. 7 They prayed that after due trial private respondent Trans-World Airlines, Inc. (hereafter, TWA), be ordered to pay them the following amounts: (1) US$8,723.79, or its equivalent in Philippine currency, representing the cost of the lost luggage and its
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US$4,500 representing the travel expenses, hotel, lodging, food and other expenses of petitioner Cornelio Mapa, who was constrained to join his family in Boston to extend the necessary assistance in connection with the lost luggage. After the filing of TWA's Answer to the second Amended Complaint, 11 and petitioners' Reply thereto, the trial court gave TWA ten days within which to submit a memorandum in support of its affirmative defenses; after which the incident would be deemed submitted for resolution. 12 However, after TWA filed its Memorandum, 13 the trial court gave the petitioners five days within which to file a reply memorandum; and TWA, two days from receipt of the latter to file its comment thereon. 14 The petitioners then filed their Opposition (by way of Reply Memorandum) 15 to which TWA filed a Reply. 16 Thereafter, the petitioners submitted a Rejoinder 17; TWA, a Surrejoinder. 18 On 24 July 1992, the trial court issued an Order 19 dismissing the case for lack of jurisdiction in light of Article 28(1) of the Warsaw Convention. Thus:
It is plaintiffs' theory that the Warsaw Convention does not apply to the instant case because plaintiffs' contract of transportation does not constitute "international transportation" as defined in said convention. This however is belied by the Passenger Property Questionnaire which is Annex C of plaintiffs' amended complaint. Page two of said questionnaire accomplished by plaintiffs under the heading "Your Complete Itinerary" shows that the TWA tickets issued to the plaintiffs form part of the contract of transportation to be performed from Manila to the United States. Since the Philippines and the United States are parties to the convention, plaintiffs' contracts of transportation come within the meaning of International Transportation. xxx xxx xxx
On the basis of the foregoing, the Court holds that the Warsaw Convention is applicable to the case at bar, even if the basis of plaintiffs' present action is breach of contract of carriage under the New Civil Code. The next question to be resolved is whether or not the Court has jurisdiction to try the present case in the light of the provision of Art. 28(1) above-quoted. Under Art. 28(1) supra, a complaint for damages against an air carrier can be instituted only in any of the following places/courts: (1) The court of the domicile of the carrier; (2) The court of its principal place of business; (3) The court where it has a place of business through which the contract had been made; (4) The court of the place of destination. In interpreting the provision of Art. 28(1) of the Warsaw Convention, the Supreme Court in the same case of Augusto Benedicto Santos vs. Northwest Airlines held: Whether Article 28(1) refers to jurisdiction or only to venue is a question over which authorities are sharply divided. While the petitioner cites several cases holding that Article 28(1) refers to venue rather that jurisdiction, there are later cases cited by the private respondent supporting the conclusion that the provision is jurisdictional. Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent or waiver upon a court which otherwise would have no jurisdiction over the subject-matter of an action; but the venue of an action as fixed by statute may be changed by the consent of the parties and an objection that the plaintiff brought his suit in the wrong country may be waived by the
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said convention. 20 They claimed that their cause of action could be based on breach of contract of air carriage founded on Articles 1733, 1734, 1735, 1755, and 1756 of the New Civil Code governing common carriers or Article 2176 of the same Code governing tort or quasi-delict. The appellate court disagreed with the petitioners and affirmed the order of the trial court. It held that the Warsaw Convention is the law which governs the dispute between the petitioners and TWA because what is involved is international transportation defined by said Convention in Article I(2). This holding is founded on its determination that the two TWA tickets for Los Angeles-New York-Boston-St. LouisChicago purchased in Bangkok, Thailand, were issued in conjunction with, and therefore formed part of, the contract of transportation performed from Manila, Philippines, to the United States. The respondent court further held that the cause of action of the petitioners arose from the loss of the four checked pieces of baggage, which then falls under Article 18(1), Chapter III (Liability of the Carrier) of the Warsaw Conventions. 21 Pursuant to Article 24(1) of the Convention, all actions for damages, whether based on tort, code law or common law, arising from loss of baggage under Article 18 of the Warsaw Convention, can only be brought subject to the conditions and limits set forth in the Warsaw Convention. Article 28(1) thereof sets forth conditions and limits in that the action for damages may be instituted only in the territory of one of the High Contracting Parties, before the court of (1) the domicile of the carrier, (2) the carrier's principal place of business, (3) the place of business through which the contract has been made, or (4) the place of destination. Since the Philippines is not one of these places, a Philippine Court, like the RTC, has no jurisdiction over the complaint for damages.
Evidently discontented with the trial court's order, the petitioners appealed to the Court of Appeals, contending that the lower court erred in not holding that (1) it has jurisdiction over the instant case and (2) the Warsaw Convention is inapplicable in the instant case because the subject matter of the case is not included within the coverage of the
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Respondent Court of Appeals likewise held that the petitioners could not claim application of Articles 1733, 1734, 1735, 1755, and 1756 of the New Civil Code on common carriers without taking into consideration Article 1753 of the same Code, which provides that the law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction, or deterioration. Since the country of ultimate destination is Chicago, the law of Chicago shall govern the liability of TWA for the loss of the four pieces of baggage. Neither is Article 2176 of the New Civil Code on torts or quasi-delicts applicable in view of the private international law principle of lex loci delicti commissi. 22 In addition, comformably with Santos III v. Northwest Orient Airlines, 23 mere allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the comprehension of the Warsaw Convention. Failing in their bid to reconsider the decision, the petitioners filed this petition. They aver that respondent Court of Appeals gravely erred (1) in holding that the Warsaw Convention is applicable to this case and (2) in applying Article 1753 of the Civil Code and the principle of lex loci delicti commissi. 24 We resolved to give due course to the petitioner after the filing by TWA of its Comment on the petition and noted without action for the reasons stated in the resolution of 25 September 1996 petitioners' Reply and Rejoinder. We then required the parties to submit their respective memoranda. They did in due time. The petitioners insist that the Warsaw Convention is not applicable to their case because the contracts they had with TWA did not involve an international transportation. Whether the contracts were of international transportation is to be solely determined from the TWA
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tickets issued to them in Bangkok, Thailand, which showed that their itinerary was Los Angeles-New York-Boston-St. Louis-Chicago. Accordingly, since the place of departure (Los Angeles) and the place of destination (Chicago) are both within the territory of one High Contracting Party, with no agreed stopping place in a territory subject to the sovereignty, mandate, suzerainty or authority of another Power, the contracts did not constitute 'international transportation' as defined by the convention. They also claim to be without legal basis the contention of TWA that their transportation contracts were of international character because of the handwritten notations in the tickets re "INT'S TKT #079-4402956821-2" and "INT'L TKT #0794402956819." Notwithstanding such notations, the TWA tickets, viz., (a) No. 015.9475:153:304 and (b) No. 015:9475:153:305 did not cease to be for the itinerary therein designated. Besides, it is a fact that petitioners Purita and Carmina Mapa traveled from Manila to Los Angeles via Philippine Airlines (PAL) by virtue of PAL tickets issued independently of the TWA tickets. The pitch issue to be resolved under the petitioner's first assigned error is whether the contracts of transportation between Purita and Carmina Mapa, on the one hand, and TWA, on the other, were contracts of "international transportation" under the Warsaw Convention. If they were, then we should sustain the trial court and the Court of Appeals in light of our ruling in Santos v. Northwest Orient Airlines. 25 It appears clear to us that TWA itself, the trial court, and the Court of Appeals impliedly admit that if the sole basis were the two TWA tickets for Los Angeles-New York-Boston-St. Louis-Chicago, the contracts cannot be brought within the term "international transportation," as defined in Article I(2) of the Warsaw Convention. As provided therein, a contract is one of international transportation only if
There are then two categories of international transportation, viz., (1) that where the place of departure and the place of destination are situated within the territories of two High Contracting Parties regardless of whether or not there be a break in the transportation or a transshipment; and (2) that where the place of departure and the place of destination are within the territory of a single High Contracting Party if there is an agreed stopping place within a territory subject to the sovereignty, mandate, or authority of another power, even though the power is not a party of the Convention. The High Contracting Parties referred to in the Convention are the signatories thereto and those which subsequently adhered to it. In the case of the Philippines, the Convention was concurred in by the Senate, through Resolution No. 19, on 16 May 1950. The Philippine instrument of accession was signed by President Elpidio Quirino on 13 October 1950 and was deposited with the Polish Government on 9 November 1950. The Convention became applicable to the Philippines on 9 February 1951. Then, on 23 September 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring the Philippines' formal adherence thereto, "to the end that the same and every article and clause thereof may be observed and fulfilled in good faith by the Republic of the Philippines and the citizens thereof. 26 The contracts of transportation in this case are evidenced by the two TWA tickets, No. 015:9475:153:304 and No. 015:9475:153:305, both
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purchased and issued in Bangkok, Thailand. On the basis alone of the provisions therein, it is obvious that the place of departure and the place of destination are all in the territory of the United States, or of a single High Contracting Party. The contracts, therefore, cannot come within the purview of the first category of international transportation. Neither can it be under the second category since there was NO agreed stopping place within a territory subject to the sovereignty, mandate, or authority of another power. The only way to bring the contracts between Purita and Carmina Mapa, on the one hand, and TWA, on the other, within the first category of "international transportation" is to link them with, or to make them an integral part of, the Manila-Los Angeles travel of Purita and Carmina through PAL aircraft. The "linkages" which have been pointed out by the TWA, the trial court, and the Court of Appeals are (1) the handwritten notations, viz., INT'L TKT # 079-4402956821-2 and INT'L TKT # 079-4402956819, on the two TWA tickets; and (2) the entries made by petitioners Purita and Carmina Mapa in column YOUR COMPLETE ITINERARY in TWA's Passenger Property Questionnaire, wherein they mentioned their travel from Manila to Los Angeles in flight PR 102. The alleged "international tickets" mentioned in the notations in conjunction with which the two TWA tickets were issued were not presented. Clearly then, there is at all no factual basis of the finding that the TWA tickets were issued in conjunction with the international tickets, which are even, at least as of now, non-existent. As regards the petitioner's entry in YOUR COMPLETE ITINERARY column of the Passenger Property Questionnaire wherein they included the Manila-Los Angeles travel, it must be pointed out that this
was made on 4 September 1990 27 by petitioners Purita and Carmina Mapa, and only in connection with their claim for their lost pieces of baggage. The loss occurred much earlier, or on 27 August 1990. The entry can by no means be considered as a part of, or supplement to, their contracts of transportation evidenced by the TWA tickets which covered transportation within the United States only. It must be underscored that the first category of international transportation under the Warsaw Convention is based on "the contract made by the parties." TWA does not claim that the Manila-Los Angeles contracts of transportation which brought Purita and Carmina to Los Angeles were also its contracts. It does not deny the assertion of the petitioners that those contracts were independent of the TWA tickets issued in Bangkok, Thailand. No evidence was offered that TWA and PAL had an agreement concerning transportation of passengers from points of departures not served with aircrafts of one or the other. There could have been no difficulty for such agreement, since TWA admitted without qualification in paragraph 1 of its Answer 28 to the second Amended Complaint the allegation in paragraph 1.1 of the latter 29 that TWA "is a foreign corporation licensed to do business in the Philippines with office address at Ground Floor, Saville Building, Sen. Gil. J. Puyat Avenue, corner Paseo de Roxas, Makati, Metro Manila." TWA relies on Article I(3) of the Convention, which provides as follows:
3. A carriage to be performed by several successive air carriers is deemed, for the purposes of this Convention, to be one undivided carriage, if it has been regarded by the parties as a single operation, whether it had been agreed upon under the form of a single contract or of a series of contracts, and it shall not lose its international character merely because one contract or a series of contracts is to be performed entirely
within a territory subject to the sovereignty, suzerainty, mandate, or authority of the same High Contracting Party.
It also points to Article 15 of the IATA Recommend Practice 1724, which provides: Carriage to be performed by a several successive carriers under one ticket, or under a ticket and any conjunction ticket issued in connection therewith, is regarded as a single operation." 30 The flaw of respondent's position is the presumption that the parties have "regarded" as an "undivided carriage" or as a "single operation" the carriage from Manila to Los Angeles through PAL then to New York-Boston-St. Louis-Chicago through TWA. The dismissal then of the second Amended Complaint by the trial court and the Court of Appeals' affirmance of the dismissal were not based on indubitable facts or grounds, but no inferences without established factual basis. TWA should have offered evidence for its affirmative defenses at the preliminary hearing therefor. Section 5 of Rule 16 of the Rules of Court expressly provides:
Sec. 5. Pleading grounds as affirmative defenses. Any of the grounds for dismissal provided for in this rule, except improper venue, may be pleaded as an affirmative defense, and a preliminary hearing may be had thereon as if a motion to dismiss had been filed.
Without any further evidence as earlier discussed, the trial court should have denied the affirmative defense of lack of jurisdiction because it did not appear to be indubitable. Section 3 of Rule 16 of the Rules of Court provides:
Sec. 3. Hearing and order. After hearing the court may deny or grant the motion or allow amendment of pleading, or may defer the hearing and
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WHEREFORE, the instant petition is GRANTED and the challenged decision of 31 May 1995 of respondent Court of Appeals in CA-G.R. CV No. 39896, as well as the Order of 24 July 1992 of the Regional Trial Court of Quezon City, Branch 102, in Civil Case No. Q-91-9620, is REVERSED and SET ASIDE. The Regional Trial Court of Quezon City, Branch 102, is hereby DIRECTED to proceed with the pre-trial, if it has not been terminated, and with the trial on the merits of the case and then to render judgment thereon, taking into account the foregoing observations on the issue of jurisdiction. SO ORDERED. Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur.
G.R. No. 104685 March 14, 1996 SABENA BELGIAN WORLD AIRLINES, petitioner, vs. HON. COURT OF APPEALS and MA. PAULA SAN AGUSTIN, respondents.
VITUG, J.:p The appeal before the Court involves the issue of an airline's liability for lost luggage. The petition for review assails the decision of the Court of Appeals, 1 dated 27 February 1992,
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G.R. No. 119706 March 14, 1996 PHILIPPINE AIRLINES, INC., petitioner, vs. COURT OF APPEALS and GILDA C. MEJIA, respondents.
(4) P10,000.00 as attorney's fee; all in addition to the costs of the suit. Defendant's counterclaim is hereby dismissed for lack of merit. 3
The facts as found by respondent Court of Appeals are as follows: REGALADO, J.:p This is definitely not a case of first impression. The incident which eventuated in the present controversy is a drama of common contentious occurrence between passengers and carriers whenever loss is sustained by the former. Withal, the exposition of the factual ambience and the legal precepts in this adjudication may hopefully channel the assertiveness of passengers and the intransigence of carriers into the realization that at times a bad extrajudicial compromise could be better than a good judicial victory. Assailed in this petition for review is the decision of respondent Court of Appeals in CA-G.R. CV No. 42744 1 which affirmed the decision of the lower court 2 finding petitioner Philippine Air Lines, Inc. (PAL) liable as follows:
ACCORDINGLY, judgment is hereby rendered ordering defendant Philippine Air Lines, Inc., to pay plaintiff Gilda C. Mejia: (1) P30,000.00 by way of actual damages of the microwave oven; (2) P10,000.00 by way of moral damages; On January 27, 1990, plaintiff Gilda C. Mejia shipped thru defendant, Philippine Airlines, one (1) unit microwave oven, with a gross weight of 33 kilograms from San Francisco, U.S.A. to Manila, Philippines. Upon arrival, however, of said article in Manila, Philippines, plaintiff discovered that its front glass door was broken and the damage rendered it unserviceable. Demands both oral and written were made by plaintiff against the defendant for the reimbursement of the value of the damaged microwave oven, and transportation charges paid by plaintiff to defendant company. But these demands fell on deaf ears. On September 25, 1990, plaintiff Gilda C. Mejia filed the instant action for damages against defendant in the lower court. In its answer, defendant Airlines alleged inter alia, by way of special and affirmative defenses, that the court has no jurisdiction over the case; that plaintiff has no valid cause of action against defendant since it acted only in good faith and in compliance with the requirements of the law, regulations, conventions and contractual commitments; and that defendant had always exercised the required diligence in the selection, hiring and supervision of its employees. 4
What had theretofore transpired at the trial in the court a quo is narrated as follows:
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As stated at the outset, respondent Court of Appeals similarly ruled in favor of private respondent by affirming in full the trial court's judgment in Civil Case No. 6210, with costs against petitioner. 6 Consequently, petitioner now impugns respondent appellate court's ruling insofar as it agrees with (1) the conclusions of the trial court that since the air waybill is a contract of adhesion, its provisions should be strictly construed against herein petitioner; (2) the finding of the trial court that herein petitioner's liability is not limited by the provisions of the air waybill; and (3) the award by the trial court to private respondent of moral and exemplary damages, attorney's fees and litigation expenses. The trial court relied on the ruling in the case of Fieldmen's Insurance Co., Inc. vs. Vda. De Songco, et al. 7 in finding that the provisions of the air waybill should be strictly construed against petitioner. More particularly, the court below stated its findings thus:
In this case, it is seriously doubted whether plaintiff had read the printed conditions at the back of the Air Waybill (Exh. "1"), or even if she had, if she was given a chance to negotiate on the conditions for loading her microwave oven. Instead she was advised by defendant's employee at San Francisco, U.S.A., that there is no need to declare the value of her oven since it is not brand new. Further, plaintiff testified that she immediately submitted a formal claim for P30,000.00 with defendant. But their claim was referred from one employee to another th(e)n told to come back the next day, and the next day, until she was referred to a certain Atty. Paco. When they got tired and frustrated of coming without a settlement of their claim in sight, they
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respondent in effect negotiated the terms of the contract and thus became bound thereby. 10 Counsel for private respondent refutes these arguments by saying that due to her eagerness to ship the microwave oven to Manila, private respondent assented to the terms and conditions of the contract without any opportunity to question or change its terms which are practically on a "take-it-or-leave-it" basis, her only participation therein being the affixation of her signature. Further, reliance on the Fieldmen's Insurance case is misplaced since it is not the ambiguity or obscurity of the stipulation that renders necessary the strict interpretation of a contract of adhesion against the drafter, but the peculiarity of the transaction wherein one party, normally a corporation, drafts all the provisions of the contract without any participation whatsoever on the part of the other party other than affixment of signature. 11 A review of jurisprudence on the matter reveals the consistent holding of the Court that contracts of adhesion are not invalid per se and that it has on numerous occasions upheld the binding effect thereof. 12 As explained in Ong Yiu vs. Court of Appeals, et al., supra:
. . . . Such provisions have been held to be a part of the contract of carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the regulation. It is what is known as a contract of "adhesion," in regards which it has been said that contracts of adhesion wherein one party imposes a ready-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. . . , a contract limiting liability upon an agreed valuation does not offend against the policy of the law forbidding one from contracting against his own negligence.
Respondent appellate court approved said findings of the trial court in this manner:
We cannot agree with defendant-appellant's above contention. Under our jurisprudence, the Air Waybill is a contract of adhesion considering that all the provisions thereof are prepared and drafted only by the carrier (Sweet Lines v. Teves, 83 SCRA 361). The only participation left of the other party is to affix his signature thereto (BPI Credit Corporation vs. Court of Appeals, 204 SCRA 601; Saludo, Jr. vs. C.A., 207 SCRA 498; Maersk vs. Court of Appeals, 222 SCRA 108, among the recent cases). In the earlier case of Angeles v. Calasanz, 135 SCRA 323, the Supreme Court ruled that "the terms of a contract [of adhesion] must be interpreted against the party who drafted the same." . . . . 9
Petitioner airlines argues that the legal principle enunciated in Fieldmen's Insurance does not apply to the present case because the provisions of the contract involved here are neither ambiguous nor obscure. The front portion of the air waybill contains a simple warning that the shipment is subject to the conditions of the contract on the dorsal portion thereof regarding the limited liability of the carrier unless a higher valuation is declared, as well as the reglementary period within which to submit a written claim to the carrier in case of damage or loss to the cargo. Granting that the air waybill is a contract of adhesion, it has been ruled by the Court that such contracts are not entirely prohibited and are in fact binding regardless of whether or not respondent herein read the provisions thereof. Having contracted the services of petitioner carrier instead of other airlines, private
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A judicious reading of the case reveals that what was pivotal in the judgment of liability against petitioner insurance company therein, and necessarily interpreting the provisions of the insurance policy as ineffective, was the finding that the representations made by the agent of the insurance company rendered it impossible to comply with the conditions of the contract in question, rather than the mere ambiguity of its terms. The extended pronouncements regarding strict construction of ambiguous provisions in an adhesion contract against its drafter, which although made by the Court as an aside but has perforce evolved into a judicial tenet over time, was actually an incidental statement intended to emphasize the duty of the court to protect the weaker, as against the more dominant, party to a contract, as well as to prevent the iniquitous situation wherein the will of one party is imposed upon the other in the course of negotiation. Thus, there can be no further question as to the validity of the terms of the air waybill, even if the same constitutes a contract of adhesion. Whether or not the provisions thereof particularly on the limited liability of the carrier are binding on private respondent in this instance must be determined from the facts and circumstances involved vis-a-vis the nature of the provisions sought to be enforced, taking care that equity and fair play should characterize the transaction under review. On petitioner's insistence that its liability for the damage to private respondent's microwave oven, if any, should be limited by the provisions of the air waybill, the lower court had this to say:
By and large, defendant's evidence is anchored principally on plaintiff's alleged failure to comply with paragraph 12, a(1) (Exh. "1-C2") of the Air waybill (Exh. "A," also Exh. "1"), by filing a formal claim immediately after discovery of the damage. Plaintiff filed her formal claim only on August 13, 1990 (Exh. "6", also Exh. "E"). And, failed to
The peculiar nature of such contracts behooves the Court to closely scrutinize the factual milieu to which the provisions are intended to apply. Thus, just as consistently and unhesitatingly, but without categorically invalidating such contracts, the Court has construed obscurities and ambiguities in the restrictive provisions of contracts of adhesion strictly albeit not unreasonably against the drafter thereof when justified in light of the operative facts and surrounding circumstances. 13 We find nothing objectionable about the lower court's reliance upon the Fieldmen's Insurance case, the principles wherein squarely apply to the present petition. The parallelism between the aforementioned case and this one is readily apparent for, just as in the instant case, it is the binding effect of the provisions in a contract of adhesion (an insurance policy in Fieldmen's Insurance) that is put to test.
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examination, the liability of petitioner, if any, should be limited to 28 kilograms multiplied by US $20, or $560. Moreover, the validity of these conditions has been upheld in the leading case of Ong Yiu vs. Court of Appeals, et al., supra, and subsequent cases, for being a mere reiteration of the limitation of liability under the Warsaw Convention, which treaty has the force and effect of law. 16 It is additionally averred that since private respondent was merely advised, not ordered, that she need not declare a higher value for her cargo, the final decision of refraining from making such a declaration fell on private respondent and should not put the petitioner in estoppel from invoking its limited liability. 17 In refutation, private respondent explains that the reason for the absence of a declaration of a higher value was precisely because petitioner's personnel in San Francisco, U.S.A. advised her not to declare the value of her cargo, which testimony has not at all been rebutted by petitioner. This being so, petitioner is estopped from faulting private respondent for her failure to declare the value of the microwave oven. 18 The validity of provisions limiting the liability of carriers contained in bills of lading have been consistently upheld for the following reason:
. . . . The stipulation in the bill of lading limiting the common carrier's liability to the value of goods appearing in the bill, unless the shipper or owner declares a greater value, is valid and binding. The limitation of the carrier's liability is sanctioned by the freedom of the contracting parties to establish such stipulations, clauses, terms, or conditions as they may deem convenient, provided they are not contrary to law, morals, good customs and public policy. . . . . 19
The appellate court declared correct the non-application by the trial court of the limited liability of therein defendant-appellant under the "Conditions of the Contract" contained in the air waybill, based on the ruling in Cathay Pacific Airways, Ltd. vs. Court of Appeals, et al., 15 which substantially enunciates the rule that while the Warsaw Convention has the force and effect of law in the Philippines, being a treaty commitment by the government and as a signatory thereto, the same does not operate as an exclusive enumeration of the instances when a carrier shall be liable for breach of contract or as an absolute limit of the extent of liability, nor does it preclude the operation of the Civil Code or other pertinent laws. Petitioner insists that both respondent court and the trial court erred in finding that petitioner's liability, if any, is not limited by the provisions of the air waybill, for, as evidence of the contract of carriage between petitioner and private respondent, it substantially states that the shipper certifies to the correctness of the entries contained therein and accepts that the carrier's liability is limited to US $20 per kilogram of goods lost, damaged or destroyed unless a value is declared and a supplementary charge paid. Inasmuch as no such declaration was made by private respondent, as she admitted during cross82
However, the Court has likewise cautioned against blind reliance on adhesion contracts where the facts and circumstances warrant that they should be disregarded. 20 In the case at bar, it will be noted that private respondent signified an intention to declare the value of the microwave oven prior to shipment, but was explicitly advised against doing so by PAL's personnel in San Francisco, U.S.A., as borne out by her testimony in court:
xxx xxx xxx Q Did you declare the value of the shipment? A No. I was advised not to. Q Who advised you? A At the PAL Air Cargo. 21
While Vicente Villaruz, officer-in-charge of the PAL Import Section at the time of incident, posited that there may have been inadequate and improper packing of the cargo, 24 which by itself could be a ground for refusing carriage of the goods presented for shipment, he nonetheless admitted on cross-examination that private respondent's cargo was accepted by PAL in its San Francisco office:
ATTY. VINCO So that, be that as it may, my particular concern is that, it is the PAL personnel that accepts the baggage? WITNESS Yes, sir. ATTY. VINCO Also, if he comes from abroad like in this particular case, it is the PAL personnel who accepts the baggage? WITNESS Yes, sir. ATTY. VINCO And the PAL personnel may or may not accept the baggage?
It cannot be denied that the attention of PAL through its personnel in San Francisco was sufficiently called to the fact that private respondent's cargo was highly susceptible to breakage as would necessitate the declaration of its actual value. Petitioner had all the opportunity to check the condition and manner of packing prior to acceptance for shipment, 22 as well as during the preparation of the air waybill by PAL's Acceptance Personnel based on information supplied by the shipper, 23 and to reject the cargo if the contents or the packing did not meet the company's required specifications. Certainly, PAL could not have been otherwise prevailed upon to merely accept the cargo.
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In response to the trial court's questions during the trial, he also stated that while the passenger's declaration regarding the general or fragile character of the cargo is to a certain extent determinative of its classification, PAL nevertheless has and exercises discretion as to the manner of handling required by the nature of the cargo it accepts for carriage. He further opined that the microwave oven was only a general, not a fragile, cargo which did not require any special handling.
26
There is no absolute obligation on the part of a carrier to accept a cargo. Where a common carrier accepts a cargo for shipment for valuable consideration, it takes the risk of delivering it in good condition as when it was loaded. And if the fact of improper packing is known to the carrier or its personnel, or apparent upon observation but it accepts
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the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom. 27 The acceptance in due course by PAL of private respondent's cargo as packed and its advice against the need for declaration of its actual value operated as an assurance to private respondent that in fact there was no need for such a declaration. Petitioner can hardly be faulted for relying on the representations of PAL's own personnel. In other words, private respondent Mejia could and would have complied with the conditions stated in the air waybill, i.e., declaration of a higher value and payment of supplemental transportation charges, entitling her to recovery of damages beyond the stipulated limit of US $20 per kilogram of cargo in the event of loss or damage, had she not been effectively prevented from doing so upon the advice of PAL's personnel for reasons best known to themselves. As pointed out by private respondent, the aforestated facts were not denied by PAL in any of its pleadings nor rebutted by way of evidence presented in the course of the trial, and thus in effect it judicially admitted that such an advice was given by its personnel in San Francisco, U.S.A. Petitioner, therefore, is estopped from blaming private respondent for not declaring the value of the cargo shipped and which would have otherwise entitled her to recover a higher amount of damages. The Court's bidding in the Fieldmen's Insurance case once again rings true:
. . . As estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to apply it in this case would result in gross travesty of justice.
We likewise uphold the lower court's finding that private respondent complied with the requirement for the immediate filing of a formal claim for damages as required in the air waybill or, at least, we find that there was substantial compliance therewith. Private respondent testified that she authorized her sister, Concepcion Dio, to claim her cargo consisting of a microwave oven since the former had to take a connecting flight to Bacolod City on the very same afternoon of the day of her arrival. 28 As instructed, Concepcion Dio promptly proceeded to PAL's Import Section the next day to claim the oven. Upon discovering that the glass door was broken, she immediately filed a claim by way of the baggage freight claim 29 on which was duly annotated the damage sustained by the oven. 30 Her testimony relates what took place thereafter:
ATTY. VINCO So, after that inspection, what did you do? WITNESS After that annotation placed by Mr. Villaruz, I went home and I followed it up the next day with the Clerk of PAL cargo office. ATTY. VINCO What did the clerk tell you? WITNESS
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PAL claims processor, Rodolfo Pandes, * confirmed having received the baggage freight claim on January 30, 1990 32 and the referral to and extended pendency of the private respondent's claim with the office of Atty. Paco, to wit:
ATTY. VINCO: Q And you did instruct the claimant to see the Claim Officer of the company, right?
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case do not call for the direct application of the provisions of the Warsaw Convention, it should be stressed that, indeed, recognition of the Warsaw Convention does not preclude the operation of the Civil Code and other pertinent laws in the determination of the extent of liability of the common carrier. 36 The Warsaw Convention, being a treaty to which the Philippines is a signatory, is as much a part of Philippine law as the Civil Code, Code of Commerce and other municipal special laws. 37 The provisions therein contained, specifically on the limitation of carrier's liability, are operative in the Philippines but only in appropriate situations. Petitioner ascribes ultimate error in the award of moral and exemplary damages and attorney's fees in favor of private respondent in that other than the statement of the trial court that petitioner acted in bad faith in denying private respondent's claim, which was affirmed by the Court of Appeals, there is no evidence on record that the same is true. The denial of private respondent's claim was supposedly in the honest belief that the same had prescribed, there being no timely formal claim filed; and despite having been given an opportunity to submit positive proof of the value of the damaged microwave oven, no such proof was submitted. Petitioner insists that its failure to deliver the oven in the condition in which it was shipped could hardly be considered as amounting to bad faith. 38 Private respondent counters that petitioner's failure to deliver the microwave oven in the condition in which it was received can be described as gross negligence amounting to bad faith, on the further consideration that it failed to prove that it exercised the extraordinary diligence required by law, and that no explanation whatsoever was given as to why the front glass of the oven was broken. 39
Considering the abovementioned incidents and private respondent Mejia's own zealous efforts in following up the claim, 34 it was clearly not her fault that the letter of demand for damages could only be filed, after months of exasperating follow-up of the claim, on August 13, 1990. 35 If there was any failure at all to file the formal claim within the prescriptive period contemplated in the air waybill, this was largely because of PAL's own doing, the consequences of which cannot, in all fairness, be attributed to private respondent. Even if the claim for damages was conditioned on the timely filing of a formal claim, under Article 1186 of the Civil Code that condition was deemed fulfilled, considering that the collective action of PAL's personnel in tossing around the claim and leaving it unresolved for an indefinite period of time was tantamount to "voluntarily preventing its fulfillment." On grounds of equity, the filing of the baggage freight claim, which sufficiently informed PAL of the damage sustained by private respondent's cargo, constituted substantial compliance with the requirement in the contract for the filing of a formal claim. All told, therefore, respondent appellate court did not err in ruling that the provision on limited liability is not applicable in this case. We, however, note in passing that while the facts and circumstances of this
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The trial court justified its award of actual, moral and exemplary damages, and attorney's fees in favor of private respondent in this wise:
Since the plaintiff's baggage destination was the Philippines, Philippine law governs the liability of the defendant for damages for the microwave oven. The provisions of the New Civil Code on common carriers are Article(s) 1733, 1735 and 1753 . . . . xxx xxx xxx In this case, defendant failed to overcome, not only the presumption but more importantly, plaintiff's evidence that defendant's negligence was the proximate cause of the damages of the microwave oven. Further plaintiff has established that defendant acted in bad faith when it denied the former's claim on the ground that the formal claim was filed beyond the period as provided in paragraph 12 (a-1) (Exh. "1-C2") of the Air Waybill (Exh. "1", also Exh. "A"), when actually, Concepcion Dio, sister of plaintiff has immediately filed the formal claim upon discovery of the damage. 40
defendant-appellant, entitling her to the award of moral and exemplary damages (Cathay Pacific Airways, Ltd. vs. C.A., supra; Arts. 2219 & 2221, New Civil Code), and certainly plaintiff-appellant's unjust refusal to comply with her valid demand for payment, thereby also entitling her to reasonable attorney's fees [Art. 2208 (2) and (11), id.]. 41
It will be noted that petitioner never denied that the damage to the microwave oven was sustained while the same was in its custody. The possibility that said damage was due to causes beyond the control of PAL has effectively been ruled out since the entire process in handling of the cargo from the unloading thereof from the plane, the towing and transfer to the PAL warehouse, the transfer to the Customs examination area, and its release thereafter to the shipper was done almost exclusively by, and with the intervention or, at the very least, under the direct supervision of a responsible PAL personnel. 42 The very admissions of PAL, through Vicente Villaruz of its Import Section, as follows:
ATTY. VINCO So that, you now claim, Mr. Witness, that from the time the cargo was unloaded from the plane until the time it reaches the Customs counter where it was inspected, all the way, it was the PAL personnel who did all these things? WITNESS Yes, however, there is also what we call the Customs storekeeper and
Respondent appellate court was in full agreement with the trial court's finding of bad faith on the part of petitioner as a basis for the award of the aforestated damages, declaring that:
As to the last assigned error, a perusal of the facts and law of the case reveals that the lower court's award of moral and exemplary damages, attorney's fees and costs of suit to plaintiff-appellee is in accordance with current laws and jurisprudence on the matter. Indeed, aside from the fact that defendant-appellant acted in bad faith in breaching the contract and in denying plaintiff's valid claim for damages, plaintiffappellee underwent profound distress, sleepless nights, and anxiety upon knowledge of her damaged microwave oven in possession of
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acceptance for shipment, the fact that it was delivered with a broken glass door raises the presumption that PAL's personnel were negligent in the carriage and handling of the cargo. 44 Furthermore, there was glaringly no attempt whatsoever on the part of petitioner to explain the cause of the damage to the oven. The unexplained cause of damage to private respondent's cargo constitutes gross carelessness or negligence which by itself justifies the present award of damages. 45 The equally unexplained and inordinate delay in acting on the claim upon referral thereof to the claims officer, Atty. Paco, and the noncommittal responses to private respondent's entreaties for settlement of her claim for damages belies petitioner's pretension that there was no bad faith on its part. This unprofessional indifference of PAL's personnel despite full and actual knowledge of the damage to private respondent's cargo, just to be exculpated from liability on pure technicality and bureaucratic subterfuge, smacks of willful misconduct and insensitivity to a passenger's plight tantamount to bad faith 46 and renders unquestionable petitioner's liability for damages. In sum, there is no reason to disturb the findings of the trial court in this case, especially with its full affirmance by respondent Court of Appeals. On this note, the case at bar goes into the annals of our jurisprudence after six years and recedes into the memories of our legal experience as just another inexplicable inevitability. We will never know exactly how many man-hours went into the preparation, litigation and adjudication of this simple dispute over an oven, which the parties will no doubt insist they contested as a matter of principle. One thing, however, is certain. As long as the first letter in "principle" is somehow outplaced by the peso sign, the courts will always have to resolve
lead to the inevitable conclusion that whatever damage may have been sustained by the cargo is due to causes attributable to PAL's personnel or, at all events, under their responsibility. Moreover, the trial court underscored the fact that petitioner was not able to overcome the statutory presumption of negligence in Article 1735 which, as a common carrier, it was laboring under in case of loss, destruction or deterioration of goods, through proper showing of the exercise of extraordinary diligence. Neither did it prove that the damage to the microwave oven was because of any of the excepting causes under Article 1734, all of the same Code. Inasmuch as the subject item was received in apparent good condition, no contrary notation or exception having been made on the air waybill upon its
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similar controversies although mutual goodwill could have dispensed with judicial recourse. IN VIEW OF ALL OF THE FOREGOING, the assailed judgment of respondent Court of Appeals is AFFIRMED in toto. SO ORDERED. Romero, Puno and Mendoza, JJ., concur. G.R. No. L-31150 July 22, 1975 KONINKLIJKE LUCHTVAART MAATSHAPPIJ N.V., otherwise known as KLM ROYAL DUTCH AIRLINES, petitioner, vs. THE HONORABLE COURT OF APPEALS, CONSUELO T. MENDOZA and RUFINO T. MENDOZA, respondents. Picazo, Agcaoili, Santayana, Reyes and Tayao for petitioner. Bengzon, Villegas, Zarraga, Narciso and Cudala for respondents.
spouses Rufino T. Mendoza and Consuelo T. Mendoza (hereinafter referred to as the respondents).1wph1.t Sometime in March 1965 the respondents approached Tirso Reyes, manager of a branch of the Philippine Travel Bureau, a travel agency, for consultations about a world tour which they were intending to make with their daughter and a niece. Reyes submitted to them, after preliminary discussions, a tentative itinerary which prescribed a trip of thirty-five legs; the respondents would fly on different airlines. Three segments of the trip, the longest, would be via KLM. The respondents expressed a desire to visit Lourdes, France, and discussed with Reyes two alternate routes, namely, Paris to Lourdes and Barcelona to Lourdes. The respondents decided on the Barcelona-Lourdes route with knowledge that only one airline, Aer Lingus, serviced it. The Philippine Travel Bureau to which Reyes was accredited was an agent for international air carriers which are members of the International Air Transport Association, popularly known as the "IATA," of which both the KLM and the Aer Lingus are members. After about two weeks, the respondents approved the itinerary prepared for them, and asked Reyes to make the necessary plane reservations. Reyes went to the KLM, for which the respondents had expressed preference. The KLM thereafter secured seat reservations for the respondents and their two companions from the carriers which would ferry them throughout their trip, with the exception of Aer Lingus. When the respondents left the Philippines (without their young wards who had enplaned much earlier), they were issued KLM tickets for their entire trip. However, their coupon for the Aer Lingus portion (Flight 861 for June 22, 1965) was marked "RQ" which meant "on request".
CASTRO, J.: In this appeal by way of certiorari the Koninklijke Luchtvaart Maatschappij N.V., otherwise known as the KLM Royal Dutch Airlines (hereinafter referred to as the KLM) assails the award of damages made by the Court of Appeals in CA-G.R. 40620 in favor of the
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After sightseeing in American and European cities (they were in the meantime joined by their two young companions), the respondents arrived in Frankfurt, Germany. They went to a KLM office there and obtained a confirmation from Aer Lingus of seat reservations on flight 861. After meandering in London, Paris and Lisbon, the foursome finally took wing to Barcelona for their trip to Lourdes, France. In the afternoon of June 22, 1965 the respondents with their wards went to the Barcelona airport to take their plane which arrived at 4:00 o'clock. At the airport, the manager of Aer Lingus directed the respondents to check in. They did so as instructed and were accepted for passage. However, although their daughter and niece were allowed to take the plane, the respondents were off-loaded on orders of the Aer Lingus manager who brusquely shoved them aside with the aid of a policeman and who shouted at them, "Conos! Ignorantes Filipinos!" Mrs. Mendoza later called up the manager of Aer Lingus and requested that they provide her and her husband means to get to Lourdes, but the request was denied. A stranger, however, advised them to take a train, which the two did; despite the third class accommodations and lack of food service, they reached Lourdes the following morning. During the train trip the respondents had to suffer draft winds as they wore only minimum clothing, their luggage having gone ahead with the Aer Lingus plane. They spent $50 for that train trip; their plane passage was worth $43.35. On March 17, 1966 the respondents, referring to KLM as the principal of Aer Lingus, filed a complaint for damages with the Court of First Instance of Manila arising from breach of contract of carriage and for the humiliating treatment received by them at the hands of the Aer Lingus manager in Barcelona. After due hearing, the trial court
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awarded damages to the respondents as follows: $43.35 or its peso equivalent as actual damages, P10,000 as moral damages, P5,000 as exemplary damages, and P5,000 as attorney's fees, and expenses of litigation. Both parties appealed to the Court of Appeals. The KLM sought complete exoneration; the respondents prayed for an increase in the award of damages. In its decision of August 14, 1969 the Court of Appeals decreed as follows: "Appellant KLM is condemned to pay unto the plaintiffs the sum of $43.35 as actual damages; P50,000 as moral damages; and P6,000 as attorney's fees and costs." Hence, the present recourse by the KLM. The KLM prays for exculpation from damages on the strength of the following particulars which were advanced to but rejected by the Court of Appeals: (a) The air tickets issued to the respondents stipulate that carriage thereunder is subject to the "Convention for the Unification of Certain Rules Relating to International Transportation by Air," otherwise known as the "Warsaw Convention," to which the Philippine Government is a party by adherence, and which pertinently provides. 1
ART. 30. (1) In the case of transportation to be performed by various successive carriers and failing within the definition set out in the third paragraph of Article I, each carrier who accepts passengers, baggage, or goods shall be subject to the rules set out in the convention, and shall be deemed to be one of the contracting parties to the contract of transportation insofar as the contract deals with that part of transportation which is performed under his supervision. 2
(b) On the inside front cover of each ticket the following appears under the heading "Conditions of Contract":
1 ... (a) Liability of carrier for damages shall be limited to occurrences on its own line, except in the case of checked baggage as to which the passenger also has a right of action against the first or last carrier. A carrier issuing a ticket or checking baggage for carriage over the lines of others does so only as agent..
(b) The condition in their tickets which purportedly excuse the KLM from liability appears in very small print, to read which, as found by the Court of Appeals, one has practically to use a magnifying glass. (c) The first paragraph of the "Conditions of Contract" appearing identically on the KLM tickets issued to them idubitably shows that their contract was one of continuous air transportation around the world:
1 ... "carriage" includes the air carrier issuing this ticket and all carriers that carry or undertake to carry the passenger or his baggage hereunder or perform any other service incidental to such air carriage... Carriage to be performed hereunder by several successive carrier is regarded as a single operation.
(c) All that the KLM did after the respondents completed their arrangements with the travel agency was to request for seat reservations among the airlines called for by the itinerary submitted to the KLM and to issue tickets for the entire flight as a ticket-issuing agent. The respondents rebut the foregoing arguments, thus: (a) Article 30 of the Warsaw Convention has no application in the case at bar which involves, not an accident or delay, but a willful misconduct on the part of the KLM's agent, the Aer Lingus. Under article 25 of the same Convention the following is prescribed:
ART. 25. (1) The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court to which the case is submitted, is considered to be equivalent to willful misconduct. 3
(d) The contract of air transportation was exclusively between the respondents and the KLM, the latter merely endorsing its performance to other carriers, like Aer Lingus, as its subcontractors or agents, as evidenced by the passage tickets themselves which on their face disclose that they are KLM tickets. Moreover, the respondents dealt only with KLM through the travel agency. 1. The applicability insisted upon by the KLM of article 30 of the Warsaw Convention cannot be sustained. That article presupposes the occurrence of either an accident or a delay, neither of which took place at the Barcelona airport; what is here manifest, instead, is that the Aer Lingus, through its manager there, refused to transport the respondents to their planned and contracted destination.
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2. The argument that the KLM should not be held accountable for the tortious conduct of Aer Lingus because of the provision printed on the respondents' tickets expressly limiting the KLM's liability for damages only to occurrences on its own lines is unacceptable. As noted by the Court of Appeals that condition was printed in letters so small that one would have to use a magnifying glass to read the words. Under the circumstances, it would be unfair and inequitable to charge the respondents with automatic knowledge or notice of the said condition so as to preclude any doubt that it was fairly and freely agreed upon by the respondents when they accepted the passage tickets issued to them by the KLM. As the airline which issued those tickets with the knowledge that the respondents would be flown on the various legs of their journey by different air carriers, the KLM was chargeable with the duty and responsibility of specifically informing the respondents of conditions prescribed in their tickets or, in the very least, to ascertain that the respondents read them before they accepted their passage tickets. A thorough search of the record, however, inexplicably fails to show that any effort was exerted by the KLM officials or employees to discharge in a proper manner this responsibility to the respondents. Consequently, we hold that the respondents cannot be bound by the provision in question by which KLM unilaterally assumed the role of a mere ticket-issuing agent for other airlines and limited its liability only to untoward occurrences on its own lines. 3. Moreover, as maintained by the respondents and the Court of Appeals, the passage tickets of the respondents provide that the carriage to be performed thereunder by several successive carriers "is to be regarded as a single operation," which is diametrically incompatible with the theory of the KLM that the respondents entered into a series of independent contracts with the carriers which took them on the various segments of their trip. This position of KLM we reject.
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The respondents dealt exclusively with the KLM which issued them tickets for their entire trip and which in effect guaranteed to them that they would have sure space in Aer Lingus flight 861. The respondents, under that assurance of the internationally prestigious KLM, naturally had the right to expect that their tickets would be honored by Aer Lingus to which, in the legal sense, the KLM had indorsed and in effect guaranteed the performance of its principal engagement to carry out the respondents' scheduled itinerary previously and mutually agreed upon between the parties. 4. The breach of that guarantee was aggravated by the discourteous and highly arbitrary conduct of an official of the Aer Lingus which the KLM had engaged to transport the respondents on the BarcelonaLourdes segment of their itinerary. It is but just and in full accord with the policy expressly embodied in our civil law which enjoins courts to be more vigilant for the protection of a contracting party who occupies an inferior position with respect to the other contracting party, that the KLM should be held responsible for the abuse, injury and embarrassment suffered by the respondents at the hands of a supercilious boor of the Aer Lingus. ACCORDINGLY, the judgment of the Court of Appeals dated August 14, 1969 is affirmed, at KLM's cost. Makalintal, C.J., Makasiar, Esguerra and Muoz Palma, JJ., concur.
CATHAY PACIFIC AIRWAYS, LTD., petitioner, vs. SPOUSES DANIEL VAZQUEZ and MARIA LUISA MADRIGAL VAZQUEZ, respondents. 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-HongkongManila 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.
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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
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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.
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In its decision1 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."
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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 Appeals3 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
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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
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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 nonaccommodation. 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:
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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 respondentsspouses to the normally-appreciated gesture of petitioner to upgrade their accommodations, petitioner may have disturbed the respondentsspouses 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."
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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. Vitug, Carpio, and Azcuna, JJ., concur. Ynares-Santiago, J., on leave. EN BANC G.R. No. L-22425 August 31, 1965
respondent has no cause of action; and (3) in awarding P20,000 as nominal damages.
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We deem it unnecessary to pass upon the first assignment of error because the same is the basis of the second assignment of error, and the latter is devoid of merit, even if we assumed the former to be well-taken. Indeed the second assignment of error is predicated upon Articles 17, 18 and 19 of said Convention, reading: ART. 17. The carrier shall be liable for damages sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking.
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NORTHWEST AIRLINES, INC., Petitioner, vs. NICOLAS L. CUENCA and COURT OF APPEALS (SPECIAL SIXTH DIVISION), Respondents. CONCEPCION, J.:
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This is an action for damages for alleged breach of contract. After appropriate proceedings the Court of First Instance of Manila, in which the case was originally filed, rendered judgment sentencing defendant Northwest Airlines, Inc. - hereinafter referred to as petitioner - to pay to plaintiff Cuenca hereinafter referred to as respondent - the sum of P20,000 as moral damages, together with the sum of P5,000 as exemplary damages, with legal interest thereon from the date of the filing of complaint," December 12, 1959, "until fully paid, plus the further sum of P2,000 as attorney's fees and expenses of litigation." On appeal taken by petitioner, said decision was affirmed by the Court of Appeals, except as to the P5,000.00 exemplary damages, which was eliminated, and the P20,000.00 award for moral damages, which was converted into nominal damages. The case is now before us on petition for review by certiorari filed by petitioner, upon the ground that the lower court has erred: (1) in holding that the Warsaw Convention of October 12, 1929, relative to transportation by air is not in force in the Philippines; (2) in not holding that
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ART. 18. (1) The carrier shall be liable for damage sustained in the event of the destruction or loss of, or of damage to, any checked baggage, or any goods, if the occurrence which caused the damage so sustained took place during the transportation by air.
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(2) The transportation by air within the meaning of the preceding paragraph shall comprise the period during which the baggage or goods are in charge of the carrier, whether in an airport or on board an aircraft, or, in the case of a landing outside an airport, in any place whatsoever.
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(3) The period of the transportation by air shall not extend to any transportation by land, by sea, or by river performed outside an airport. If, however, such transportation takes place in the performance of a contract for transportation by air, for the purpose of loading, delivery, or transhipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the transportation by air.
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ART. 19. The carrier shall be liable for damage occasioned by delay in the transportation by air of passengers, baggage, or goods. Petitioner argues that pursuant to those provisions, an air "carrier is liable only" in the event of death of a passenger or injury suffered by him, or of destruction or loss of, or damage to any checked baggage or any goods, or of delay in the transportation by air of passengers, baggage or goods. This pretense is not borne out by the language of said Articles. The same merely declare the carrier liable for damages in the enumerated cases, if the conditions therein specified are present. Neither said provisions nor others in the aforementioned Convention regulate or exclude liability for other breaches of contract by the carrier. Under petitioner's theory, 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.
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tourist class compartment. Although he revealed that he was traveling in his official capacity as official delegate of the Republic to a conference in Tokyo, an agent of petitioner rudely compelled him in the presence of other passengers to move, over his objection, to the tourist class, under threat of otherwise leaving him in Okinawa. In order to reach the conference on time, respondent had no choice but to obey.
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The third assignment of error is based upon Medina vs. Cresencia (52 Off. Gaz. 4606), and Quijano vs. Philippine Air Lines (CA-G.R. No. 21804-R). Neither case is, however, in point, aside from the fact that the latter is not controlling upon us. In the first case, this Court eliminated a P10,000 award for nominal damages, because the aggrieved party had already been awarded P6,000 as compensatory damages, P30,000 as moral damages and P10,000 as exemplary damages, and "nominal damages cannot co-exist with compensatory damages." In the case at bar, the Court of Appeals has adjudicated no such compensatory, moral and exemplary damages to respondent herein.
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It is true that said ticket was marked "W/L," but respondent's attention was not called thereto. Much less was he advised that "W/L" meant "wait listed." Upon the other hand, having paid the first class fare in full and having been given first class accommodation as he took petitioner's plane in Manila, respondent was entitled to believe that this was a confirmation of his first class reservation and that he would keep the same until his ultimate destination, Tokyo. Then, too, petitioner has not tried to explain or even alleged that the person to whom respondent's first class seat was given had a better right thereto. In other words, since the offense had been committed with full knowledge of the fact that respondent was an official representative of the Republic of the Philippines, the sum of P20,000 awarded as damages may well be considered as merely nominal. At any rate, considering that petitioner's agent had acted in a wanton, reckless and oppressive manner, said award may also be considered as one for exemplary damages.
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WHEREFORE, the decision appealed from is hereby affirmed, with costs against the petitioner. It is so ordered. Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Dizon, Regala, Makalintal and Zaldivar, JJ., concur. Bengzon, J.P., took no part. Barrera, J., is on leave.
Moreover, there are special reasons why the P20,000.00 award in favor of respondent herein is justified, even if said award were characterized as nominal damages. When his contract of carriage was violated by the petitioner, respondent held the office of Commissioner of Public Highways of the Republic of the Philippines. Having boarded petitioner's plane in Manila with a first class ticket to Tokyo, he was, upon arrival at Okinawa, transferred to the
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