TRANSPORTATION LAW

V. Damages
1. Davila vs PAL 49 SCRA 49
2. KLM vs CA (1975)
3. United Airline vs CA (2001)
4. Zalamea vs CA (1993)
5. Zulueta vs Pan-Am (1972)
6. Lopez vs PAN-AM (1966)
7. Victory Liner Inc. vs Gammad (2004)
8. Sulpicio Lines Inc. vs CA (1995)
9. People vs More (1999)
10. Tugade vs CA (2003)

G.R. No. L-28512 February 28, 1973

PEDRO R. DAVILA and PRECIOSA C. TIRO, plaintiffs-appellants,
vs.
PHILIPPINE AIR LINES, defendant-appellant.
Dizon, De Guzman and Vitug and Pedro R. Davila for plaintiffsappellants.
Siguion Reyna, Montecillo, Belo and Ongsiako for defendantappellant.
MAKALINTAL, J.:
In Civil Case No. 5728 of the Court of First Instance of Iloilo (Pedro R.
Davila and Preciosa C. Tirol, plaintiffs, vs. Philippine Air Lines, Inc.,
defendant) judgment was rendered ordering the defendant to pay the
plaintiffs various sums of money, as follows:
(1) For the death of Pedro T. Davila, Jr. the amount
of P6,000.00;
(2) For the loss of the earning capacity of the
deceased at the rate of P12,000.00 per annum for
five (5) years in the amount of Sixty Thousand
Pesos. (P60,000.00);
(3) For moral damages in favor of the plaintiffs Ten
Thousand Pesos (P10,000.00);
(4) For exemplary damages in the amount of Ten
Thousand Pesos (P10,000.00);
(5) For actual damages the amount of Five
Thousand Pesos (P5,000.00) broken down to as
follows: A rolex watch valued at P600.00; a pistol
worth P300.00; burial expenses P600.00; for the
lot and the mausoleum P3,500.00;
(6) For Attorney's fees the amount of Ten Thousand
Pesos (P10,000.00) or a total amount of One
Hundred and One Thousand Pesos (P101,000.00)
To pay the costs of this proceedings.
Both parties appealed directly to this Court in view of the aggregate
of the amounts awarded, the judgment having been rendered before
the effectivity of Rep. Act No. 5440. In this appeal the plaintiffs seek
an increase in said amounts, and the defendant, complete
exoneration from, or at least mitigation of, liability.
The case arose from the tragic crash of a passenger plane of the
defendant which took the lives of all its crew and passengers. The
plane, identified as PI-C133, was a DC-3 type of aircraft,
manufactured in 1942 and acquired by the defendant in 1948. It had
flown almost 18,000 hours at the time of its ill-fated flight. Despite its
age, however, it had been certified as airworthy by the Civil
Aeronautics Administration. On November 23, 1960, at 5:30 in the
afternoon, it took off from the Manduriao Airport, Iloilo, on its way to
Manila, with 33 people on board, including the plane's complement. It
did not reach its destination, but crashed at Mt. Baco, Mindoro, one
hour and fifteen minutes after take-off. A massive search was
undertaken by the defendant and by other parties as soon as it was
realized that the plane's arrival in Manila was overdue. The plaintiffs,
parents of Pedro T. Davila, Jr., who was one of the passengers, had no
definite news of what had happened to their son, getting what
information they could only from conflicting newspaper reports, until
they received, on December 19, 1960, a letter of condolence from the
defendant's president Andres Soriano, informing them that their son
had died in the crash. And it was only on December 29 that his body
was recovered an taken back to Iloilo.
The issues before the trial court, and now before Us in this appeal, are
whether or not the defendant is liable for violation of its contract of
carriage and if so, for how much. The provisions of the Civil Code on
this substantive question of liability are clear and explicit. Article
1733 binds common carriers, "from the nature of their business and
by reasons of public policy, ... to observe extraordinary diligence in
the vigilance ... for the safety of the passengers transported by them
according to all the circumstances of each case." Article 1755
establishes the standard of care required of a common carrier, which
is, "to carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with
due regard for all the circumstances." Article 1756 fixes the burden of
proof by providing that "in case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755." Lastly, Article
1757 states that "the responsibility of a common carrier for the safety
of passengers ... cannot be dispensed with or lessened by stipulation,
by the posting of notices, by statements on tickets, or otherwise."
The route prescribed by the Civil Aeronautics Administration for the
flight of plane PI-C113 in the afternoon of November 23, 1960 was
Iloilo-Romblon-Manila, the latter stage, denominated as airway
"Amber I," being a straight lane from Romblon to Manila. The
prescribed elevation of the flight was 6,000 ft. The plane reported its
position after take-off and again when it was abeam the Roxas homer.
However, it did not intercept airway "Amber I" over Romblon as it was

supposed to do, and the pilot did not give his position then although
Romblon was a compulsory checking point. The fact was that the
plane had deviated from the prescribed route by 32 miles to the west
when it crashed at Mt. Baco. The reading of the altimeter of the plane
when its wreckage was found was 6,800 ft.
There is a suggestion that in the course of the flight between
Romblon and Mindoro the aircraft was drifted westward by the crosswinds then blowing in the region. The defendant, however, has not
given a definite explanation as to why, if such was the case, the pilot
failed to make the necessary correction in his flight to compensate for
the drift. According to the defendant's witness, Maj. Mijares, Chief of
the Aviation Safety Division of the Civil Aeronautics Administration
and Chairman of the CAA Investigating Committee, there was a
navigational error, to which several factors contributed: "the weather
observation at that time from the Weather Bureau was not so good
between Mt. Baco and Romblon and the wind aloft was quite strong,
which would be also one of the causes for the drifting of the aircraft;
and the other strong probability, I would say, would be the
malfunction of the aircraft's navigational instrument." He further
explained that "a cross-wind can drift the plane if the pilot will not
make the necessary correction, if his navigational instrument is
malfunctioning and the visual reference outside the aircraft could not
make the necessary corrections."
There is nothing in the testimony of Maj. Mijares to show just how
strong the cross-winds were in the region at the time, although in the
investigation of the accident by the Senate Committee on
transportation there was testimony that the cross-winds had a
velocity of either 20 to 25 knots or 25 to 35 knots an hour.
Considering the relatively short distance from Romblon to Mt. Baco
and the brief span of time it would take to fly that distance, crosswinds with the velocity stated could not have possibly deviated the
plane by as much as 32 miles.
The defendant points out that the navigational instrument on board
the plane consisted of two (2) sets of automatic direction finders
(ADF) which, when found after the crash, showed a reading that the
aircraft was heading north, which was the proper flight direction. This
point, however, is of no vital significance in this case since it does not
explain why the aircraft was 32 miles off its prescribed route in the
first place. It is suggested that the pilot did not notice the drift of his
plane because of poor visibility due to thick clouds, which prevented
him from making the corresponding correction on the basis of visual
references to the terrain outside. But according to Maj. Mijares himself
the report from the Weather Bureau at the time showed that visibility
was 15 miles between Romblon and Mt. Baco and that the clouds
from 2,700 to 7,000 ft. elevation were "scattered." And the profile of
the probable weather cross-section along airway "Amber I" during the
flight (Exh. 33-A) shows that at 6,000 ft. the airlane was clear and free
of clouds. The suggestion therefore that the pilot was practically
flying blind and consequently failed to notice the drift of the aircraft is
not justified by the evidence. Indeed even the investigating team of
the defendant under the chairmanship of Capt. Jaime Manzano
concluded in its report that "based on the limited evidences available,
the board is of the opinion that the probable cause was the inability of
the pilot to intersect airway "Amber I" over Romblon and to maintain
track within its designated airway lane for reasons unknown."
What is undisputed therefore is that the pilot did not follow the route
prescribed for his flight, at least between Romblon and Manila. Since
up to that point over Romblon, where he was supposed to intersect
airway "Amber I" the weather was clear, the most reasonable
conclusion is that his failure to do so was intentional, and that he
probably wanted to fly on a straight line to Manila. It was a violation
of air-craft traffic rules to which, under the circumstances, the
accident may be directly attributable.
In any case, absent a satisfactory explanation on the part of the
defendant as to how and why the accident occurred, the presumption
is that it was at fault, under Article 1756 of the Civil Code.
The next question relates to the amount of damages that should be
awarded to the plaintiffs, parents of the deceased. The trial court
fixed the indemnity for his death in the amount of P6,000.00.
Pursuant to current jurisprudence on the point it should be increased
to P12,000.00. 1
The deceased was employed as manager of a radio station 2, from
which he was earning P8,400.00 a year, consisting of a monthly
salary of P600.00 and allowance of P100.00. As a lawyer and junior
partner of his father in the law office, he had an annual income of
P3,600.00. From farming he was getting an average of P3,000.00. All
in all therefore the deceased had gross earnings of P15,000.00 a year.
According to Article 2206, paragraph (1), of the Civil Code, "the
defendant shall be liable for the loss of the earning capacity of the
deceased and indemnity shall be paid to the heirs of the latter." This
Article, while referring to "damages for death caused by crime or
quasi-delict," is expressly made applicable by Article 1764 "to the
death of a passenger caused by the breach of contract by a common
carrier."
The deceased, Pedro Davila, Jr., was single and 30 years of age when
he died. At that age one's normal life expectancy is 33-1/3 years,
according to the formula (2/3 x [80-30]) adopted by this Court in the
case of Villa Rey Transit, Inc. vs. Court of Appeals 3 on the basis of the
American Expectancy Table of Mortality or the Actuarial of Combined
Experience Table of Mortality. However, although the deceased was in
relatively good health, his medical history shows that he had
complained of and been treated for such ailments as backaches,
chest pains and occasional feelings of tiredness. It is reasonable to
make an allowance for these circumstances and consider, for
purposes of this case, a reduction of his life expectancy to 25 years.
In the same case of Villa Revenue Transit this Court stated:
"... earning capacity, as an element of damages to one's estate for his
death by wrongful act is necessarily his net earning capacity or his
capacity to acquire money, less the necessary expense for his own

DAMAGES

TRANSPORTATION LAW
living. Stated otherwise, the amount recoverable is not loss of the
entire earnings, but rather the loss of that portion of the earnings
which the beneficiary would have received. In other words, only net
earnings, not gross earnings, are to be considered, that is, the total of
the earnings less expenses necessary in the creation of such earnings
or income and less living and other incidental expenses."
Considering the fact that the deceased was getting his income from
three (3) different sources, namely from managing a radio station,
from law practice and from farming, the expenses incidental to the
generation of such income were necessarily more than if he had only
one source. Together with his living expenses, a deduction of P600.00
a month, or P7,200.00 a year, seems to Us reasonable, leaving a net
yearly income of P7,800.00. This amount, multiplied by 25 years, or
P195,000.00 is the amount which should be awarded to the plaintiffs
in this particular respect.
Actual losses sustained consist of the following, as found by the trial
court: "Rolex Watch P600.00; pistol P300.00; Burial Expenses
P600.00; and cost of cemetery lot and mausoleum - P3,500.00."
Under Article 2206, in relation to Article 1764, of the Civil Code, the
parents of the deceased are entitled to moral damages for their
mental anguish. The trial court awarded P10,000.00 in this concept,
and We find no justification to change the award, considering the long
period of uncertainty and suffering the plaintiffs underwent from
November 23, when the plane crash occurred, to December 19, when
they received a letter from the defendant's president confirming the
death of their son, and again to the following December 29, when his
body was finally recovered and taken back to them.
With respect to the award of P10,000.00 as exemplary damages, it is
Our opinion that the same should be eliminated. According to Article
2232 of the Civil Code, in contracts and quasi-contracts the court may
award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner. The failure of
the defendant here to exercise extraordinary diligence, as required by
law, does not amount to anyone of the circumstances contemplated
in the said provision.
The trial court has awarded attorney's fees of P10,000.00. We do not
find this award groundless or the amount thereof unreasonable.
The total of the different items above enumerated is P232,000.00.
The judgment of the court a quo is therefore modified accordingly and
the defendant is ordered to pay the said amount to the plaintiffs, with
legal interest thereon from the finality of this judgment. With costs
against the defendant.
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.
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
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 BarcelonaLourdes 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".
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
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
(2) In the case of transportation of this nature, the
passenger or his representative can take action
only against the carrier who performed the
transportation during which the accident or the
delay occured, save in the case where, by express
agreement, the first carrier has assumed liability
for the whole journey. (emphasis supplied)
(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..
(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
(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. (emphasis by respondents)
(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.

DAMAGES

TRANSPORTATION LAW
(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.
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. 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.

[G.R. No. 124110. April 20, 2001]

UNITED AIRLINES, INC., petitioner, vs. COURT OF APPEALS,
ANICETO FONTANILLA, in his personal capacity and in
behalf
of
his
minor
son
MYCHAL
ANDREW
FONTANILLA respondents.
DECISION
KAPUNAN, J.:
On March 1, 1989, private respondent Aniceto Fontanilla
purchased from petitioner United Airlines, through the Philippine
Travel Bureau in Manila, three (3) Visit the U.S.A. tickets for himself,
his wife and his minor son Mychal for the following routes:
(a) San Francisco to Washington (15 April 1989);
(b) Washington to Chicago (25 April 1989);
(c) Chicago to Los Angeles (29 April 1989);
(d) Los Angeles to San Francisco (01 May 1989 for petitioners wife
and 05 May 1989 for petitioner and his son). [1]
All flights had been confirmed previously by United Airlines. [2]
The Fontanillas proceeded to the United States as planned,
where they used the first coupon from San Francisco to
Washington. On April 24, 1989, Aniceto Fontanilla bought two (2)
additional coupons each for himself, his wife and his son from
petitioner at its office in Washington Dulles Airport. After paying the
penalty for rewriting their tickets, the Fontanillas were issued tickets
with corresponding boarding passes with the words CHECK-IN

REQUIRED, for United Airlines Flight No. 1108, set to leave from Los
Angeles to San Francisco at 10:30 a.m. on May 5, 1989. [3]
The cause of the non-boarding of the Fontanillas on United
Airlines Flight No. 1108 makes up the bone of contention of this
controversy.
Private respondents' version is as follows:
Aniceto Fontanilla and his son Mychal claim that on May 5,
1989, upon their arrival at the Los Angeles Airport for their flight, they
proceeded to United Airlines counter where they were attended by an
employee wearing a nameplate bearing the name LINDA. Linda
examined their tickets, punched something into her computer and
then told them that boarding would be in fifteen minutes. [4]
When the flight was called, the Fontanillas proceeded to the
plane. To their surprise, the stewardess at the gate did not allow
them to board the plane, as they had no assigned seat
numbers. They were then directed to go back to the check-in
counter where Linda subsequently informed them that the flight had
been overbooked and asked them to wait.[5]
The Fontanillas tried to explain to Linda the special
circumstances of their visit. However, Linda told them in arrogant
manner, So what, I can not do anything about it.[6]
Subsequently, three other passengers with Caucasian features
were graciously allowed to board, after the Fontanillas were told that
the flight had been overbooked. [7]
The plane then took off with the Fontanillas baggage in tow,
leaving them behind.[8]
The Fontanillas then complained to Linda, who in turn gave
them an ugly stare and rudely uttered, Its not my fault. Its the
fault of the company. Just sit down and wait.[9] When Mr. Fontanilla
reminded Linda of the inconvenience being caused to them, she
bluntly retorted, Who do you think you are? You lousy Flips are good
for nothing beggars. You always ask for American aid. After which
she remarked Dont worry about your baggage. Anyway there is
nothing in there. What are you doing here anyway? I will report you
to immigration. You Filipinos should go home.[10] Such rude
statements were made in front of other people in the airport causing
the Fontanillas to suffer shame, humiliation and embarrassment. The
chastening situation even caused the younger Fontanilla to break into
tears.[11]
After some time, Linda, without any explanation, offered the
Fontanillas $50.00 each. She simply said Take it or leave it. This,
the Fontanillas declined.[12]
The Fontanillas then proceeded to the United Airlines customer
service counter to plead their case. The male employee at the
counter reacted by shouting that he was ready for it and left without
saying anything.[13]
The Fontanillas were not booked on the next flight, which
departed for San Francisco at 11:00 a.m. It was only at 12:00 noon
that they were able to leave Los Angeles on United Airlines Flight No.
803.
Petitioner United Airlines has a different version of what
occurred at the Los Angeles Airport on May 5, 1989.
According to United Airlines, the Fontanillas did not initially go
to the check-in counter to get their seat assignments for UA Flight
1108. They instead proceeded to join the queue boarding the aircraft
without first securing their seat assignments as required in their ticket
and boarding passes. Having no seat assignments, the stewardess at
the door of the plane instructed them to go to the check-in counter.
When the Fontanillas proceeded to the check-in counter, Linda Allen,
the United Airlines Customer Representative at the counter informed
them that the flight was overbooked. She booked them on the next
available
flight
and
offered
them
denied
boarding
compensation. Allen vehemently denies uttering the derogatory and
racist words attributed to her by the Fontanillas. [14]
The incident prompted the Fontanillas to file Civil Case No. 894268 for damages before the Regional Trial Court of Makati. After trial
on the merits, the trial court rendered a decision, the dispositive
portion of which reads as follows:
WHEREFORE, judgment is rendered dismissing the complaint. The
counterclaim is likewise dismissed as it appears that plaintiffs were
not actuated by legal malice when they filed the instant complaint. [15]
On appeal, the Court of Appeals ruled in favor of the
Fontanillas. The appellate court found that there was an admission
on the part of United Airlines that the Fontanillas did in fact observe
the check-in requirement. It ruled further that even assuming there
was a failure to observe the check-in requirement, United Airlines
failed to comply with the procedure laid down in cases where a
passenger is denied boarding. The appellate court likewise gave
credence to the claim of Aniceto Fontanilla that the employees of
United Airlines were discourteous and arbitrary and, worse,
discriminatory. In light of such treatment, the Fontanillas were
entitled to moral damages. The dispositive portion of the decision of
the respondent Court of Appeals dated 29 September 1995, states as
follows:
WHEREFORE, in view of the foregoing, judgment appealed herefrom is
hereby REVERSED and SET ASIDE, and a new judgment is entered
ordering defendant-appellee to pay plaintiff-appellant the following:
a) P200,000.00 as moral damages;
b) P200,000.00 as exemplary damages;
c) P50, 000.00 as attorneys fees.
No pronouncement as to costs.
SO ORDERED.[16]

DAMAGES

TRANSPORTATION LAW
Petitioner United Airlines now comes to this Court raising the
following assignment of errors:
I
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING
THAT THE TRIAL COURT WAS WRONG IN FAILING TO CONSIDER
THE ALLEGED ADMISSION THAT PRIVATE RESPONDENT
OBSERVED THE CHECK-IN REQUIREMENT.
II
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING
THAT PRIVATE RESPONDENTS FAILURE TO CHECK-IN WILL NOT
DEFEAT HIS CLAIMS BECAUSE THE DENIED BOARDING RULES
WERE NOT COMPLIED WITH.
III
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING
THAT PRIVATE RESPONDENT IS ENTITLED TO MORAL DAMAGES
OF P200, 000.
IV
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING
THAT PRIVATE RESPONDENT IS ENTITLED TO EXEMPLARY
DAMAGES OF P200,000.
V
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING
THAT PRIVATE RESPONDENT IS ENTITLED TO ATTORNEYS FEES
OF P50, 000.[17]
On the first issue raised by the petitioner, the respondent Court
of Appeals ruled that when Rule 9, Section 1 of the Rules of Court,
[18]
there was an implied admission in petitioner's answer in the
allegations in the complaint that private respondent and his son
observed the check-in requirement at the Los Angeles Airport. Thus:
A perusal of the above pleadings filed before the trial court
disclosed that there exists a blatant admission on the part of the
defendant-appellee that the plaintiffs-appellants indeed observed the
check-in requirement at the Los Angeles Airport on May 5, 1989. In
view of defendant-appellees admission of plaintiffs-appellants
material averment in the complaint, We find no reason why the trial
court should rule against such admission.[19]
We disagree with the above conclusion reached by respondent
Court of Appeals. Paragraph 7 of private respondents' complaint
states:
7. On May 5, 1989 at 9:45 a.m., plaintiff and his son checked in at
defendants designated counter at the airport in Los Angeles for their
scheduled flight to San Francisco on defendants Flight No. 1108. [20]
Responding to the above allegations, petitioner averred in
paragraph 4 of its answer, thus:
4. Admits the allegation set forth in paragraph 7 of the complaint
except to deny that plaintiff and his son checked in at 9:45 a.m., for
lack of knowledge or information at this point in time as to the truth
thereof.[21]
The rule authorizing an answer that the defendant has no
knowledge or information sufficient to form a belief as to the truth of
an averment and giving such answer the effect of a denial, does not
apply where the fact as to which want of knowledge is asserted is so
plainly and necessarily within the defendant's knowledge that his
averment of ignorance must be palpably untrue. [22] Whether or not
private respondents checked in at petitioner's designated counter at
the airport at 9:45 a.m. on May 5, 1989 must necessarily be within
petitioner's knowledge.
While there was no specific denial as to the fact of compliance
with the check-in requirement by private respondents, petitioner
presented evidence to support its contention that there indeed was
no compliance.
Private respondents then are said to have waived the rule on
admission. It not only presented evidence to support its contention
that there was compliance with the check-in requirement, it even
allowed petitioner to present rebuttal evidence. In the case of Yu
Chuck vs. "Kong Li Po," we ruled that:
The object of the rule is to relieve a party of the trouble and expense
in proving in the first instance an alleged fact, the existence or nonexistence of which is necessarily within the knowledge of the adverse
party, and of the necessity (to his opponents case) of establishing
which such adverse party is notified by his opponents pleadings.
The plaintiff may, of course, waive the rule and that is what must be
considered to have done (sic) by introducing evidence as to the
execution of the document and failing to object to the defendants
evidence in refutation; all this evidence is now competent and the
case must be decided thereupon.[23]

The determination of the other issues raised is dependent on

whether or not there was a breach of contract in bad faith on the part
of the petitioner in not allowing the Fontanillas to board United
Airlines Flight 1108.
It must be remembered that the general rule in civil cases is
that the party having the burden of proof of an essential fact must
produce a preponderance of evidence thereon. [24]Although the
evidence adduced by the plaintiff is stronger than that presented by
the defendant, a judgment cannot be entered in favor of the former, if
his evidence is not sufficient to sustain his cause of action. The
plaintiff must rely on the strength of his own evidence and not upon
the weakness of the defendants.[25] Proceeding from this, and
considering the contradictory findings of facts by the Regional Trial
Court and the Court of Appeals, the question before this Court is
whether or not private respondents were able to prove with adequate
evidence his allegations of breach of contract in bad faith.
We rule in the negative.
Time and again, the Court has pronounced that appellate courts
should not, unless for strong and cogent reasons, reverse the findings
of facts of trial courts. This is so because trial judges are in a better
position to examine real evidence and at a vantage point to observe
the actuation and the demeanor of the witnesses. [26] While not the
sole indicator of the credibility of a witness, it is of such weight that it
has been said to be the touchstone of credibility. [27]
Aniceto Fontanillas assertion that upon arrival at the airport at
9:45 a.m., he immediately proceeded to the check-in counter, and
that Linda Allen punched in something into the computer is specious
and not supported by the evidence on record. In support of their
allegations, private respondents submitted a copy of the boarding
pass. Explicitly printed on the boarding pass are the words Check-In
Required. Curiously, the said pass did not indicate any seat
number. If indeed the Fontanillas checked in at the designated time
as they claimed, why then were they not assigned seat
numbers? Absent any showing that Linda was so motivated, we do
not buy into private respondents' claim that Linda intentionally
deceived him, and made him the laughing stock among the
passengers.[28] Hence, as correctly observed by the trial court:
Plaintiffs fail to realize that their failure to check in, as expressly
required in their boarding passes, is the very reason why they were
not given their respective seat numbers, which resulted in their being
denied boarding.[29]
Neither do we agree with the conclusion reached by the
appellate court that private respondents' failure to comply with the
check-in requirement will not defeat his claim as the denied boarding
rules were not complied with. Notably, the appellate court relied on
the Code of Federal Regulation Part on Oversales, which states:
250.6 Exceptions to eligibility for denied boarding compensation.
A passenger denied board involuntarily from an oversold flight shall
not be eligible for denied board compensation if:
(a) The passenger does not comply with the carriers contract of
carriage or tariff provisions regarding ticketing, reconfirmation, checkin, and acceptability for transformation.
The appellate court, however, erred in applying the laws of the
United States as, in the case at bar, Philippine law is the applicable
law. Although, the contract of carriage was to be performed in the
United States, the tickets were purchased through petitioners agent
in Manila. It is true that the tickets were rewritten in Washington,
D.C. However, such fact did not change the nature of the original
contract of carriage entered into by the parties in Manila.
In the case of Zalamea vs. Court of Appeals,[30] this Court
applied the doctrine of lex loci contractus. According to the doctrine,
as a general rule, the law of the place where a contract is made or
entered into governs with respect to its nature and validity, obligation
and interpretation. This has been said to be the rule even though the
place where the contract was made is different from the place where
it is to be performed, and particularly so, if the place of the making
and the place of performance are the same. Hence, the court should
apply the law of the place where the airline ticket was issued, when
the passengers are residents and nationals of the forum and the
ticket is issued in such State by the defendant airline.
The law of the forum on the subject matter is Economic
Regulations No. 7 as amended by Boarding Priority and Denied
Boarding Compensation of the Civil Aeronautics Board, which provides
that the check-in requirement be complied with before a passenger
may claim against a carrier for being denied boarding:
SEC. 5. Amount of Denied Boarding Compensation Subject to the
exceptions provided hereinafter under Section 6, carriers shall pay to
passengers holding confirmed reserved space and who
have presented themselves at the proper place and time and
fully complied with the carriers check-in and reconfirmation
procedures and who are acceptable for carriage under the Carriers
tariffs but who have been denied boarding for lack of space, a
compensation at the rate of: xx
Private respondents' narration that they were subjected to harsh
and derogatory remarks seems incredulous. However, this Court will
not attempt to surmise what really happened. Suffice to say, private
respondent was not able to prove his cause of action, for as the trial
court correctly observed:

DAMAGES

TRANSPORTATION LAW
xxx plaintiffs claim to have been discriminated against and insulted in
the presence of several people. Unfortunately, plaintiffs limited their
evidence to the testimony [of] Aniceto Fontanilla, without any
corroboration by the people who saw or heard the discriminatory
remarks and insults; while such limited testimony could possibly be
true, it does not enable the Court to reach the conclusion that
plaintiffs have, by a preponderance of evidence, proven that they are
entitled to P1,650,000.00 damages from defendant. [31]
As to the award of moral and exemplary damages, we find error
in the award of such by the Court of Appeals. For the plaintiff to be
entitled to an award of moral damages arising from a breach of
contract of carriage, the carrier must have acted with fraud or bad
faith. The appellate court predicated its award on our pronouncement
in the case of Zalamea vs. Court of Appeals, supra, where we stated:
Existing jurisprudence explicitly states that overbooking amounts to
bad faith, entitling passengers concerned to an award of moral
damages. In Alitalia Airways v. Court of Appeals, where passengers
with confirmed booking were refused carriage on the last minute, this
Court held that when an airline issues a ticket to a passenger
confirmed on a particular flight, on a certain date, a contract of
carriage arises, and the passenger has every right to expect that he
would fly on that flight and on that date. If he does not, then the
carrier opens itself to a suit for breach of contract of carriage. Where
an airline had deliberately overbooked, it took the risk of having to
deprive some passengers of their seats in case all of them would
show up for check in. For the indignity and inconvenience of being
refused a confirmed seat on the last minute, said passenger is
entitled to moral damages. (Emphasis supplied.)
However, the Courts ruling in said case should be read in
consonance with existing laws, particularly, Economic Regulations No.
7, as amended, of the Civil Aeronautics Board:
Sec 3. Scope. This regulation shall apply to every Philippine and
foreign air carrier with respect to its operation of flights or portions of
flights originating from or terminating at, or serving a point within the
territory of the Republic of the Philippines insofar as it denies
boarding to a passenger on a flight, or portion of a flight inside or
outside the Philippines, for which he holds confirmed reserved
space. Furthermore, this Regulation is designed to cover only honest
mistakes on the part of the carriers and excludes deliberate and
willful acts of non-accommodation. Provided, however, that
overbooking not exceeding 10% of the seating capacity of the
aircraft shall not be considered as a deliberate and willful act
of non-accommodation.
What this Court considers as bad faith is the willful and
deliberate overbooking on the part of the airline carrier. The abovementioned law clearly states that when the overbooking does not
exceed ten percent (10%), it is not considered as deliberate and
therefore does not amount to bad faith. While there may have been
overbooking in this case, private respondents were not able to prove
that the overbooking on United Airlines Flight 1108 exceeded ten
percent.
As earlier stated, the Court is of the opinion that the private
respondents were not able to prove that they were subjected to
coarse and harsh treatment by the ground crew of United
Airlines. Neither were they able to show that there was bad faith on
part of the carrier airline. Hence, the award of moral and exemplary
damages by the Court of Appeals is improper. Corollarily, the award of
attorney's fees is, likewise, denied for lack of any legal and factual
basis.
WHEREFORE, the petition is GRANTED. The decision of the
Court of Appeals in CA-G.R. CV No. 37044 is hereby REVERSED and
SET ASIDE. The decision of the Regional Trial Court of Makati City in
Civil Case No. 89-4268 dated April 8, 1991 is hereby REINSTATED.
SO ORDERED.

G.R. No. 104235 November 18, 1993

SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA
ZALAMEA, petitioners,
vs.
HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES,
INC., respondents.
Sycip, Salazar, Hernandez, Gatmaitan for petitioners.
Quisumbing, Torres & Evangelista for private-respondent.
NOCON, J.:
Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate
them in TWA Flight 007 departing from New York to Los Angeles on
June 6, 1984 despite possession of confirmed tickets, petitioners filed
an action for damages before the Regional Trial Court of Makati, Metro
Manila, Branch 145. Advocating petitioner's position, the trial court
categorically ruled that respondent TransWorld Airlines (TWA)
breached its contract of carriage with petitioners and that said breach
was "characterized by bad faith." On appeal, however, the appellate
court found that while there was a breach of contract on respondent
TWA's part, there was neither fraud nor bad faith because under the
Code of Federal Regulations by the Civil Aeronautics Board of the
United States of America it is allowed to overbook flights.
The factual backdrop of the case is as follows:

Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their

daughter, Liana Zalamea, purchased three (3) airline tickets from the
Manila agent of respondent TransWorld Airlines, Inc. for a flight to New
York to Los Angeles on June 6, 1984. The tickets of petitionersspouses were purchased at a discount of 75% while that of their
daughter was a full fare ticket. All three tickets represented confirmed
reservations.
While in New York, on June 4, 1984, petitioners received notice of the
reconfirmation of their reservations for said flight. On the appointed
date, however, petitioners checked in at 10:00 a.m., an hour earlier
than the scheduled flight at 11:00 a.m. but were placed on the waitlist because the number of passengers who had checked in before
them had already taken all the seats available on the flight. Liana
Zalamea appeared as the No. 13 on the wait-list while the two other
Zalameas were listed as "No. 34, showing a party of two." Out of the
42 names on the wait list, the first 22 names were eventually allowed
to board the flight to Los Angeles, including petitioner Cesar Zalamea.
The two others, on the other hand, at No. 34, being ranked lower than
22, were not able to fly. As it were, those holding full-fare tickets were
given first priority among the wait-listed passengers. Mr. Zalamea,
who was holding the full-fare ticket of his daughter, was allowed to
board the plane; while his wife and daughter, who presented the
discounted tickets were denied boarding. According to Mr. Zalamea, it
was only later when he discovered the he was holding his daughter's
full-fare ticket.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her
daughter, could not be accommodated because it was also fully
booked. Thus, they were constrained to book in another flight and
purchased two tickets from American Airlines at a cost of Nine
Hundred Eighteen ($918.00) Dollars.
Upon their arrival in the Philippines, petitioners filed an action for
damages based on breach of contract of air carriage before the
Regional Trial Court of Makati, Metro Manila, Branch 145. As aforesaid,
the lower court ruled in favor of petitioners in its decision 1 dated
January 9, 1989 the dispositive portion of which states as follows:
WHEREFORE, judgment is hereby rendered
ordering the defendant to pay plaintiffs the
following amounts:
(1) US $918.00, or its peso equivalent at the time
of payment representing the price of the tickets
bought by Suthira and Liana Zalamea from
American Airlines, to enable them to fly to Los
Angeles from New York City;
(2) US $159.49, or its peso equivalent at the time
of payment, representing the price of Suthira
Zalamea's ticket for TWA Flight 007;
(3) Eight Thousand Nine Hundred Thirty-Four Pesos
and Fifty Centavos (P8,934.50, Philippine Currency,
representing the price of Liana Zalamea's ticket for
TWA Flight 007,
(4) Two Hundred Fifty Thousand Pesos
(P250,000.00), Philippine Currency, as moral
damages for all the plaintiffs'
(5) One Hundred Thousand Pesos (P100,000.00),
Philippine Currency, as and for attorney's fees; and
(6) The costs of suit.
SO ORDERED. 2
On appeal, the respondent Court of Appeals held that moral damages
are recoverable in a damage suit predicated upon a breach of
contract of carriage only where there is fraud or bad faith. Since it is a
matter of record that overbooking of flights is a common and
accepted practice of airlines in the United States and is specifically
allowed under the Code of Federal Regulations by the Civil
Aeronautics Board, no fraud nor bad faith could be imputed on
respondent TransWorld Airlines.
Moreover, while respondent TWA was remiss in not informing
petitioners that the flight was overbooked and that even a person
with a confirmed reservation may be denied accommodation on an
overbooked flight, nevertheless it ruled that such omission or
negligence cannot under the circumstances be considered to be so
gross as to amount to bad faith.
Finally, it also held that there was no bad faith in placing petitioners in
the wait-list along with forty-eight (48) other passengers where fullfare first class tickets were given priority over discounted tickets.
The dispositive portion of the decision of respondent Court of
Appeals 3 dated October 25, 1991 states as follows:
WHEREFORE, in view of all the foregoing, the
decision under review is hereby MODIFIED in that
the award of moral and exemplary damages to the
plaintiffs is eliminated, and the defendantappellant is hereby ordered to pay the plaintiff the
following amounts:
(1) US$159.49, or its peso equivalent at the time
of the payment, representing the price of Suthira
Zalamea's ticket for TWA Flight 007;
(2) US$159.49, or its peso equivalent at the time
of the payment, representing the price of Cesar
Zalamea's ticket for TWA Flight 007;
(3) P50,000.00 as and for attorney's fees.
(4) The costs of suit.
SO ORDERED. 4
Not satisfied with the decision, petitioners raised the case on petition
for review on certiorari and alleged the following errors committed by
the respondent Court of Appeals, to wit:
I.
. . . IN HOLDING THAT THERE WAS NO FRAUD OR
BAD FAITH ON THE PART OF RESPONDENT TWA
BECAUSE IT HAS A RIGHT TO OVERBOOK FLIGHTS.
II.

DAMAGES

TRANSPORTATION LAW
. . . IN ELIMINATING THE AWARD OF EXEMPLARY
DAMAGES.
III.
. . . IN NOT ORDERING THE REFUND OF LIANA
ZALAMEA'S TWA TICKET AND PAYMENT FOR THE
AMERICAN AIRLINES
TICKETS. 5
That there was fraud or bad faith on the part of respondent airline
when it did not allow petitioners to board their flight for Los Angeles
in spite of confirmed tickets cannot be disputed. The U.S. law or
regulation allegedly authorizing overbooking has never been proved.
Foreign laws do not prove themselves nor can the courts take judicial
notice of them. Like any other fact, they must be alleged and
proved. 6 Written law may be evidenced by an official publication
thereof or by a copy attested by the officer having the legal custody
of the record, or by his deputy, and accompanied with a certificate
that such officer has custody. The certificate may be made by a
secretary of an embassy or legation, consul general, consul, viceconsul, or consular agent or by any officer in the foreign service of the
Philippines stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office. 7
Respondent TWA relied solely on the statement of Ms. Gwendolyn
Lather, its customer service agent, in her deposition dated January
27, 1986 that the Code of Federal Regulations of the Civil Aeronautics
Board allows overbooking. Aside from said statement, no official
publication of said code was presented as evidence. Thus, respondent
court's finding that overbooking is specifically allowed by the US Code
of Federal Regulations has no basis in fact.
Even if the claimed U.S. Code of Federal Regulations does exist, the
same is not applicable to the case at bar in accordance with the
principle of lex loci contractus which require that the law of the place
where the airline ticket was issued should be applied by the court
where the passengers are residents and nationals of the forum and
the ticket is issued in such State by the defendant airline. 8 Since the
tickets were sold and issued in the Philippines, the applicable law in
this case would be Philippine law.
Existing jurisprudence explicitly states that overbooking amounts to
bad faith, entitling the passengers concerned to an award of moral
damages. In Alitalia Airways v. Court of Appeals, 9 where passengers
with confirmed bookings were refused carriage on the last minute,
this Court held that when an airline issues a ticket to a passenger
confirmed on a particular flight, on a certain date, a contract of
carriage arises, and the passenger has every right to expect that he
would fly on that flight and on that date. If he does not, then the
carrier opens itself to a suit for breach of contract of carriage. Where
an airline had deliberately overbooked, it took the risk of having to
deprive some passengers of their seats in case all of them would
show up for the check in. For the indignity and inconvenience of being
refused a confirmed seat on the last minute, said passenger is
entitled to an award of moral damages.
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, 10 where
private respondent was not allowed to board the plane because her
seat had already been given to another passenger even before the
allowable period for passengers to check in had lapsed despite the
fact that she had a confirmed ticket and she had arrived on time, this
Court held that petitioner airline acted in bad faith in violating private
respondent's rights under their contract of carriage and is therefore
liable for the injuries she has sustained as a result.
In fact, existing jurisprudence abounds with rulings where the breach
of contract of carriage amounts to bad faith. InPan American World
Airways, Inc. v. Intermediate Appellate Court, 11 where a would-be
passenger had the necessary ticket, baggage claim and clearance
from immigration all clearly and unmistakably showing that she was,
in fact, included in the passenger manifest of said flight, and yet was
denied accommodation in said flight, this Court did not hesitate to
affirm the lower court's finding awarding her damages.
A contract to transport passengers is quite different in kind and
degree from any other contractual relation. So ruled this Court
in Zulueta v. Pan American World Airways, Inc. 12 This is so, for a
contract of carriage generates a relation attended with public duty
a duty to provide public service and convenience to its passengers
which must be paramount to self-interest or enrichment. Thus, it was
also held that the switch of planes from Lockheed 1011 to a smaller
Boeing 707 because there were only 138 confirmed economy class
passengers who could very well be accommodated in the smaller
planes, thereby sacrificing the comfort of its first class passengers for
the sake of economy, amounts to bad faith. Such inattention and lack
of care for the interest of its passengers who are entitled to its utmost
consideration entitles the passenger to an award of moral
damages. 13
Even on the assumption that overbooking is allowed, respondent TWA
is still guilty of bad faith in not informing its passengers beforehand
that it could breach the contract of carriage even if they have
confirmed tickets if there was overbooking. Respondent TWA should
have incorporated stipulations on overbooking on the tickets issued or
to properly inform its passengers about these policies so that the
latter would be prepared for such eventuality or would have the
choice to ride with another airline.
Respondent TWA contends that Exhibit I, the detached flight coupon
upon which were written the name of the passenger and the points of
origin and destination, contained such a notice. An examination of
Exhibit I does not bear this out. At any rate, said exhibit was not
offered for the purpose of showing the existence of a notice of
overbooking but to show that Exhibit I was used for flight 007 in first
class of June 11, 1984 from New York to Los Angeles.
Moreover, respondent TWA was also guilty of not informing its
passengers of its alleged policy of giving less priority to discounted
tickets. While the petitioners had checked in at the same time, and
held confirmed tickets, yet, only one of them was allowed to board

the plane ten minutes before departure time because the full-fare
ticket he was holding was given priority over discounted tickets. The
other two petitioners were left behind.
It is respondent TWA's position that the practice of overbooking and
the airline system of boarding priorities are reasonable policies, which
when implemented do not amount to bad faith. But the issue raised in
this case is not the reasonableness of said policies but whether or not
said policies were incorporated or deemed written on petitioners'
contracts of carriage. Respondent TWA failed to show that there are
provisions to that effect. Neither did it present any argument of
substance to show that petitioners were duly apprised of the
overbooked condition of the flight or that there is a hierarchy of
boarding priorities in booking passengers. It is evident that petitioners
had the right to rely upon the assurance of respondent TWA, thru its
agent in Manila, then in New York, that their tickets represented
confirmed seats without any qualification. The failure of respondent
TWA to so inform them when it could easily have done so thereby
enabling respondent to hold on to them as passengers up to the last
minute amounts to bad faith. Evidently, respondent TWA placed its
self-interest over the rights of petitioners under their contracts of
carriage. Such conscious disregard of petitioners' rights makes
respondent TWA liable for moral damages. To deter breach of
contracts by respondent TWA in similar fashion in the future, we
adjudge respondent TWA liable for exemplary damages, as well.
Petitioners also assail the respondent court's decision not to require
the refund of Liana Zalamea's ticket because the ticket was used by
her father. On this score, we uphold the respondent court. Petitioners
had not shown with certainty that the act of respondent TWA in
allowing Mr. Zalamea to use the ticket of her daughter was due to
inadvertence or deliberate act. Petitioners had also failed to establish
that they did not accede to said agreement. The logical conclusion,
therefore, is that both petitioners and respondent TWA agreed, albeit
impliedly, to the course of action taken.
The respondent court erred, however, in not ordering the refund of
the American Airlines tickets purchased and used by petitioners
Suthira and Liana. The evidence shows that petitioners Suthira and
Liana were constrained to take the American Airlines flight to Los
Angeles not because they "opted not to use their TWA tickets on
another TWA flight" but because respondent TWA could not
accommodate them either on the next TWA flight which was also fully
booked. 14 The purchase of the American Airlines tickets by petitioners
Suthira and Liana was the consequence of respondent TWA's
unjustifiable breach of its contracts of carriage with petitioners. In
accordance with Article 2201, New Civil Code, respondent TWA
should, therefore, be responsible for all damages which may be
reasonably attributed to the non-performance of its obligation. In the
previously cited case of Alitalia Airways v. Court of Appeals, 15 this
Court explicitly held that a passenger is entitled to be reimbursed for
the cost of the tickets he had to buy for a flight to another airline.
Thus, instead of simply being refunded for the cost of the unused TWA
tickets, petitioners should be awarded the actual cost of their flight
from New York to Los Angeles. On this score, we differ from the trial
court's ruling which ordered not only the reimbursement of the
American Airlines tickets but also the refund of the unused TWA
tickets. To require both prestations would have enabled petitioners to
fly from New York to Los Angeles without any fare being paid.
The award to petitioners of attorney's fees is also justified under
Article 2208(2) of the Civil Code which allows recovery when the
defendant's act or omission has compelled plaintiff to litigate or to
incur expenses to protect his interest. However, the award for moral
damages and exemplary damages by the trial court is excessive in
the light of the fact that only Suthira and Liana Zalamea were actually
"bumped off." An award of P50,000.00 moral damages and another
P50,000.00 exemplary damages would suffice under the
circumstances obtaining in the instant case.
WHEREFORE, the petition is hereby GRANTED and the decision of the
respondent Court of Appeals is hereby MODIFIED to the extent of
adjudging respondent TransWorld Airlines to pay damages to
petitioners in the following amounts, to wit:
(1) US$918.00 or its peso equivalent at the time of payment
representing the price of the tickets bought by Suthira and Liana
Zalamea from American Airlines, to enable them to fly to Los Angeles
from New York City;
(2) P50,000.00 as moral damages;
(3) P50,000.00 as exemplary damages;
(4) P50,000.00 as attorney's fees; and
(5) Costs of suit.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.
G.R. No. L-28589 February 29, 1972
RAFAEL ZULUETA, ET AL., plaintiffs-appellees,
vs.
PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant.
Jose W. Diokno for plaintiffs-appellees.
Ross, Salcedo, Del Rosario, Bito and Misa for defendant-appellant.
CONCEPCION, C.J.:p
Appeal, taken by defendant Pan American World Airways, Inc., from a
decision of the Court of First Instance of Rizal, sentencing said
defendant to pay herein plaintiffs Rafael Zulueta, Telly Albert
Zulueta and Carolinda Zulueta "the sum of P5,502.85, as actual
damages; plus the further sum of P1,000,000.00 as moral damages;
the further sum of P400,000.00 as exemplary damages; and
attorney's fees in the sum of P100,000.00" with the costs against said
defendant, hereinafter referred to as PANAM for the sake of brevity.
It is not disputed that, on October 23, 1964, the spouse Rafael
Zulueta and Telly Albert Zulueta hereinafter referred to as plaintiff
and Mrs. Zulueta, respectively as well as their daughter, Carolinda

DAMAGES

TRANSPORTATION LAW
Zulueta hereinafter referred to as Miss Zulueta were passengers
aboard a PANAM plane, on Flight No. 841-23, from Honolulu to Manila,
the first leg of which was Wake Island. As the plane landed on said
Island, the passengers were advised that they could disembark for a
stopover of about 30 minutes. Shortly before reaching that place, the
flight was, according to the plaintiffs, "very rough." Testifying for
PANAM its purser, Miss Schmitz, asserted, however, that it was "very
calm"; but her notes, Exhibit 7 prepared upon the request of
Captain Zentner, on account of the incident involved in this case
state that there was "unusually small amount of roughness," which
His Honor, the Trial Judge, considered properly as "an admission that
there was roughness, only the degree thereof is in dispute." In any
event, plaintiff testified that, having found the need to relieve himself,
he went to the men's comfort room at the terminal building, but found
it full of soldiers, in view of which he walked down the beach some
100 yards away.
Meanwhile, the flight was called and when the passengers had
boarded the plane, plaintiff's absence was noticed. The take-off was,
accordingly, delayed and a search for him was conducted by Mrs.
Zulueta, Miss Zulueta and other persons. Minutes later, plaintiff was
seen walking back from the beach towards the terminal. Heading
towards the ramp of the plane, plaintiff remarked, "You people almost
made me miss your flight. You have a defective announcing system
and I was not paged." At this point, the decision appealed from has
the following to say:
(1) Plaintiffs were on their way to the plane in
order to board it, but defendant's employees
Kenneth Sitton, defendants airport manager,
according to plaintiffs; Wayne Pendleton,
defendant's airport customer service supervisor,
according to defendant stopped them at the
gate. This is what the report of Wayne Pendleton
the airport customer service supervisor, says:
...I made no comment to the passenger but turned
and led the group toward the ramp. Just as we
reached the boarding gate, Mr. Zulueta spoke to
me for the first time saying, `You people almost
made me miss your flight. You have a defective
announcing system and I was not paged."
I was about to make some reply when I noticed the
captain of the flight standing on the ramp, midway
between the gate and the aircraft, and talking with
the senior maintenance supervisor and several
other persons. The captain motioned for me to join
him which I did, indicating to the Zulueta family
that they should wait for a moment at the gate.
-- Exh. 5 .
(2) Thereafter, one of defendant's employees
Mr. Sitton, according to plaintiffs; Mr. Pendleton
according to defendants asked plaintiffs to turn
over their baggage claim checks. Plaintiffs did so,
handing him four (4) claim checks.
(3) However, only three (3) bags were located and
segregated from the rest of the passenger's
luggage. The items hand-carried by plaintiffs,
except for plaintiff's overcoat, were also brought
down. These hand-carried items, however, were
not opened or inspected; later, plaintiffs Mrs.
Zulueta and Miss Zulueta were permitted to
reboard the plane with their hand-carried luggage;
and when the plane took off, about two and a half
hours later, it carried plaintiff's fourth bag, his
overcoat and the hand-carried luggage.
(4) Once three bags had been identified, and while
the search was going on for the fourth bag, Mr.
Sitton, defendant's airport manager, demanded
that plaintiffs open the bags (actually, they were
closed, but not locked) and allow defendant's
employees to inspect them. Plaintiff Rafael Zulueta
refused and warned that defendant could open the
bags only by force and at its peril of a law suit.
(5) Mr. Sitton, defendant's manager, then told
plaintiff that he would not be allowed to proceed to
Manila on board the plane and handed Zulueta the
following letters:
"'24 October 1964
Wake Island
"Mr. Zulueta:
Passenger aboard flight 84123
Honolulu/Manila .
Sir:
We are forced to off-load you
from flight 84123 due to the
fact that you have refused to
open your checked baggage for
Inspection as requested.
During your stay on Wake
Island, which will be for a
minimum of one week, you will
be charged $13.30 per day for
each member of your party.
K. Sitton
Airport Manager, Wake Island
Pan American World Airways, Inc."
Exh. D
(6) All this happened in plain view and within
earshot of the other passengers on the plane,
many of whom were Filipinos who knew plaintiffs;

The departure of the plane was delayed for about

two hours
(7) Though originally all three plaintiffs had been
off loaded, plaintiff requested that his wife and
daughter be permitted to continue with the flight.
This was allowed but they were required to leave
the three bags behind. Nevertheless, the plane did
fly with the Plaintiff's fourth bag; it was found
among all other passengers' luggage flown to
Manila upon the plane's arrival here.
(8) Upon arrival at Manila, Mrs. Zulueta demanded
of defendant's Manila office that it re-route plaintiff
Rafael Zulueta to Manila at the earliest possible
time, by the fastest route, and at its expense;
defendant refused; so plaintiffs were forced to pay
for his ticket and to send him money as he was
without funds.
(9) On October 27, 1964, plaintiff Zulueta finally
arrived at Manila, after spending two nights at
Wake, going back to Honolulu, and from Honolulu
flying thru Tokyo to Manila.
(10) On December 21, 1964, plaintiffs demanded
that defendant reimburse them in the sum of
P1,505,502.85 for damages but defendants
refused to do so; hence this action.
In its brief, PANAM maintains that the trial court erred: (1) "in not
granting defendant additional hearing dates (not a postponement) for
the presentation of its other witnesses"; (2) "in assuming it to be true
that the reason plaintiff Rafael Zulueta did not come aboard when the
passengers were reboarded was that he had gone to the beach to
relieve himself"; (3) "in not holding that the real reason why plaintiff
Rafael Zulueta did not reboard the plane, when the announcement to
do so was made, was that he had a quarrel with his wife and after he
was found at the beach and his intention to be left behind at Wake
was temporarily thwarted he did everything calculated to compel Pan
American personnel to leave him behind"; (4) "in accepting as true
plaintiff Rafael Zulueta's claim of what occurred when; he arrived at
the terminal after he was found at the beach"; (5) "in not holding that
the captain was entitled to an explanation for Zulueta's failure to
reboard and not having received a reasonable explanation and
because of Zulueta's irrational behavior and refusal to have his bags
examined, the captain had the right and duty to leave Zulueta
behind"; (6) "in condemning the defendant to pay plaintiffs P5,502.85
as actual damages plus the further sum of P1,000,000.00 as moral
damages, and the further sum of P400,000.00 as exemplary
damages, and attorneys' fees in the sum of P100,000.00"; and (7) "in
not granting defendant's counterclaim of attorney's fees and
expenses of litigation." .
PANAM's first assignment of error refers to the denial of its motion,
dated October 20, 1966, that it "be granted other hearing dates about
two months from today so as to be able to present defendant's other
witnesses or their depositions."
It appears that the complaint in this case was filed on September 30,
1965. It was amended on December 1, 1965, and again on April 14,
1966. PANAM answered the second amended complaint on May 6,
1966. After a pre-trial conference, held on May 28, 1966, the case was
set for hearing on June 1, 2 and 3, 1966. By subsequent agreement of
the parties, the hearing was, on June 3, 1966, reset for August 1, 2
and 3, 1966. Plaintiffs rested their case on August 2, 1966,
whereupon it was agreed that PANAM's witnesses would be presented
"at a later date," months later, because they would "come from farflung places like Wake Island, San Francisco, Seattle and it will take
time to arrange for their coming here." Accordingly the case was reset
for October 17, 18 and 19, 1966, at 8:30 a.m. On motion of the
plaintiffs, the trial scheduled for October 17 was cancelled, without
any objection on the part of PANAM but, to offset said action,
additional hearings were set for October 18 and 19, in the afternoon,
apart from those originally set in the morning of these dates. Before
the presentation of PANAM's evidence, in the morning of October 18,
1966, plaintiffs' counsel asked for the names of the former's
witnesses, so that those not on the witness stand could be excluded
from the courtroom. PANAM's counsel announced that his witnesses
were Marshall Stanley Ho, Kenneth Sitton, Michael Thomas, Wayne S.
Pendleton, Capt. Robert Zentner and Miss Carol Schmitz.
The defense then proceeded to introduce the testimony of said
witnesses, and consumed therefor the morning and afternoon of
October 18 and the morning of October 19. Upon the conclusion, that
morning, of the testimony of the last witness for the defense, its
counsel asked that it "be given an opportunity to present our other
witnesses who are not present today, at the convenience of the
Court." The motion was denied, but, said counsel sought a
reconsideration and the court gave PANAM a last chance to present
its "other witnesses" the next day, October 20. Instead of doing so,
PANAM filed a written motion reiterating its prayer for "other hearing
dates about two months from today so as to be able to present
defendant's other witnesses or their depositions." Upon denial of this
motion, PANAM made an offer of the testimony it expected from one
Edgardo Gavino, an unnamed meteorologist, either Sue Welby and/or
Helga Schley, and John C. Craig, Ida V. Pomeroy, Herman Jaffe, Gerry
Cowles and Col. Nilo de Guia.
His Honor, the Trial Judge, did not commit a reversible error in
denying said motion of October 20, 1966. PANAM knew, as early as
August 2, 1966, that its turn to present evidence would take place, as
agreed upon, about two (2) months and a half later, or on October 17,
18 and 19, 1966. PANAM has not offered any valid excuse for its
failure to bring to court the witnesses mentioned in said motion,
despite the assurance given by its counsel, on August 2, 1966, that
the defense would "spare no effort to bring them here," or, if they
could not be brought due to circumstances beyond PANAM's control,

DAMAGES

TRANSPORTATION LAW
to "submit their deposition." The records do not show that any such
effort to bring the aforementioned witnesses had been exerted. The
defense has not even tried to explain why the deposition of said
witnesses was not taken. What is worse, the proffered explanation
that the six (6) persons who testified for the defense 1 were believed,
by defense counsel, to be enough for the three (3) days of October
set for the reception of his evidence 2 indicates that no effort
whatsoever had been made either to bring the "other witnesses" 3 or
to take and submit their depositions.
Besides, the testimony allegedly expected of said other witnesses for
the defense namely: (1) that there was, according to official
records, no turbulence in the flight from San Francisco to Honolulu, on
which the testimony of Carol Schmitz had touched; (2) that Ida V.
Pomeroy and John C. Craig would say that the passengers were
advised not to go beyond the terminal and that the stopover would be
for about 30 minutes only, on which duration of the stopover Miss
Schmitz had, also testified, as she could have similarly testified on
said advice, had it been given; (3) that either Helga Schley or Sue
Welby would narrate the sympathy with which Mrs. Zulueta was
allegedly treated during the flight from Wake Island to Manila, which
is not particularly relevant or material in the case at bar; (4) that
Herman Jaffe, Gerry Cowles and Nilo de Guia were, also, expected to
corroborate the testimony of Capt. Zentner; and (5) that Edgardo
Gavino was expected to corroborate Michael Thomas regarding the
remarks made by the plaintiff to Mrs. Zulueta and Miss Zulueta when
they and other members of the searching party found him in the early
morning of October 23, 1964 -- were merely cumulative in nature
Then, again, PANAM did not comply with section 4 of Rule 22 of the
Rules of Court, reading:
SEC. 4. Requisites of motion to postpone trial for
absence of evidence. A motion to postpone a
trial on the ground of absence can be granted only
upon affidavit showing the materiality of evidence
expected to be obtained, and that due diligence
has been used to procure it. But if the adverse
party admits the facts to be given in evidence,
even if he objects or reserves the right to object to
their admissibility, the trial must not be
postponed." .
Although this provision refers to motions "to postpone trial," it applies
with equal force to motions like the one under consideration, there
being no plausible reason to distinguish between the same and a
motion for postponement owing to the "absence of evidence."
The second, third and fourth assignments of error are interrelated.
They refer to the question whether the reason why plaintiff went to
the beach was to relieve himself, as testified to by him, or to remain
in Wake Island because he had quarreled with his wife, as contended
by PANAM's counsel.
The latter contention however, is utterly devoid of merit. To begin
with, plaintiff's testimony about what he did upon reaching the beach
is uncontradicted. Secondly, other portions of his testimony such
as, for instance, that the flight was somewhat rough, shortly before
reaching Wake Island; that there were quite a number of soldiers in
the plane and, later, in the terminal building; that he did not
voluntarily remain in Wake Island, but was "off-loaded" by PANAM's
agent therein are borne out by the very evidence for the defense.
Thirdly, PANAM's efforts to show that plaintiff had decided to remain
in the Island because he had quarreled with Mrs. Zulueta which is
ridiculous merely underscores the artificious nature of PANAM's
contention.
Fourthly, there is absolutely no direct evidence about said alleged
quarrel. Nobody testified about it. Counsel for the defense has, in
effect, merely concluded that there must have been such quarrel
because, when the searching party located plaintiff, he according
to Stanley Ho was "shouting in a loud tone of voice" not at his
wife, but "towards his wife and daughter," who headed said party
and to which the words spoken were addressed, according to plaintiff.
Capt. Zentner said that plaintiff was "angry with them" Mrs.
Zulueta and Miss Zulueta who Michael Thomas affirmed were
saying "I am sorry, I am sorry"; whereas, Wayne S. Pendleton declared
that Gavino told him that this "seems to stem from a domestic issue"
between Mr. and Mrs. Zulueta. Surely, this alleged surmise, not even
by Pendleton but by Gavino who was not placed on the witness
stand cannot be taken as competent evidence that plaintiff had
quarreled with his wife, apart from the circumstance that such quarrel
if it took place and there is absolutely no evidence or offer to prove
that anything had transpired between husband and wife before
reaching Wake Island which may suggest a misunderstanding
between them does not warrant jumping at the conclusion that
plaintiff had decided to remain in the Island, for he would gain
nothing thereby.
Needless to say, if plaintiff's purpose in going to the beach was to
hide from Mrs. and Miss Zulueta and PANAM's personnel, so that he
may be left in the Island, he, surely, would not have walked back from
the beach to the terminal, before the plane had resumed its flight to
Manila, thereby exposing his presence to the full view of those who
were looking for him.
Then, again, the words uttered by him as he saw the search party and
approached the plane "You people almost made me miss your
flight. You have a defective announcing system and I was not paged"
and the "belligerent" manner according to Captain Zentner in
which he said it revealed his feeling of distress at the thought that the
plane could have left without him. 4
The second, third and fourth assignments of error are thus clearly
untenable.
In connection with the fifth assignment of error, PANAM's witness,
Captain Zentner, testified that, while he was outside the plane,
waiting for the result of the search, a "man" approached him and
expressed concern over the situation; that the "man" said he was with

the State Department; that he, his wife and their children, who were
on board the aircraft, would not want to continue the flight unless the
missing person was found; that the "man" expressed fear of a
"bomb," a word he used reluctantly, because he knew it is violative of
a Federal law when said at the wrong time; that when plaintiff came,
Zentner asked him: "why did you not want to get on the airplane?";
that plaintiff then became "very angry" and spoke to him "in a way I
have not been spoken to in my whole adult life"; that the witness
explained: "I am Captain of the aircraft and it is my duty to see to the
flight's safety"; that he (Zentner) then told Wayne Pendleton
PANAM's Customer Service Supervisor to get plaintiff's "bags off
the plane to verify ... about the bomb"; that PANAM's airport manager
(K. Sitton) "got three bags of Mr. Zulueta"; that his fourth bag could
not be located despite a thorough search; that believing that it must
have been left behind, in Honolulu, "we took off"; and that he
(Zentner) would not have done so had he thought it was still aboard.
The lower court did not err in giving no credence to this testimony.
Indeed, Captain Zentner did not explain why he seemingly assumed
that the alleged apprehension of his informant was justified. He did
not ask the latter whether he knew anything in particular about
plaintiff herein, although some members of the crew would appear to
have a notion that plaintiff is an impresario. Plaintiff himself intimated
to them that he was well known to the U.S. State Department.
Apparently, Captain Zentner did not even know the informant's name.
Neither did the captain know whether the informant was really
working for or in the State Department. In other words, there was
nothing absolutely nothing to justify the belief that the luggage
of the missing person should be searched, in order to ascertain
whether there was a bomb in it; that, otherwise, his presence in the
aircraft would be inimical to its safety; and that, consequently, he
should be off-loaded.
In fact, PANAM has not given the name of that "man" of the State
Department. Neither has the defense tried to explain such omission.
Surely, PANAM's records would have disclosed the identity of said
"man," if he were not a mere figment of the imagination. The list of
passengers has been marked as Exh. A, and yet PANAM has not
pointed out who among them is the aforementioned "man".
The trial court did not believe the testimony of Captain Zentner and
rejected the theory of the defense, for the following reasons:
(1) The defendant had contracted to transport
plaintiff from Honolulu to Manila. It was its legal
obligation to do so, and it could be excused from
complying with the obligation only, if the
passenger had refused to continue with the trip or
it had become legally or physically impossible
without the carrier's fault, to transport him.
(2) In this case, it is plain that Zulueta was
desirous of continuing with the trip. Although
defendant's witnesses claim that Zulueta refused
to board the plane, its own evidence belies this
claim. The letter, Exh. "D", shows that it was
defendant who off-loaded Zulueta; not Zulueta
who resisted from continuing the trip. In his
testimony before the Court, Capt. Zentner,
defendant's pilot, said that if a passenger
voluntarily left the plane, the term used would be
`desistance' but the term "off-load" means that it
is the decision of the Captain not to allow the
passenger or luggage to continue the flight.
However, Capt. Zentner admitted on his testimony
that "his drunkenness... was of no consequence in
my report; (it) ... had nothing to do with his being
belligerent and unfriendly in his attitude towards
me and the rest of the members of the crew." The
written report of Capt. Zentner made in transit
from Wake to Manila "intimated he might possibly
continue;" but "due to drinking, belligerent
attitude, he was off-loaded along with his locked
bags." (Exh. 10). In a later report, Zentner
admitted, "The decision to leave Mr. Zulueta and
his locked luggage in Wake was mine and alone."
(Exh. 9). Defendant's airport customer service
supervisor, W.S. Pendleton, reported that:
"After the search for Mr. Zulueta had continued
almost 20 minutes and it was apparent that he
was not be found in the terminal building or
immediate vicinity, I proceeded to the parking lot
and picked up my jeep continue the search in
more remote areas. Just as I was getting
underway, a small group of persons approach from
the direction of the beach and a voice called out
the passenger had been found. Having parked the
jeep again, I walked toward the group and was met
by PAA fleet-serviceman E. Gavino who was
walking somewhere ahead of the others. Mr.
Gavino remarked to me privately that the trouble
seemed to have stemmed from some domestic
difference between the Passenger and his wife who
was not at his side and returning with him to the
gate.
"On hearing Mr. Gavino's remark, I made no
comment to the passenger but turned and led the
group toward the ramp. Just as we reached the
boarding gate, Mr. Zulueta spoke to me for the
first time saying, "You people almost made me
miss your flight. You have a defective announcing
system and I was not paged."
Exh. 5

DAMAGES

TRANSPORTATION LAW
Evidently, these could not have been the words of
a man who refused to board the plane.
(3) There was no legal or physical impossibility for
defendant to transport plaintiff Zulueta from Wake
to Manila as it had contracted to do. Defendant
claims that the safety of its craft and of the other
passengers demanded that it inspect Zulueta's
luggage and when he refused to allow inspection
that it had no recourse but to leave him behind.
The truth that, knowing that of plaintiff's four
pieces of luggage, one could still have been as
it was aboard, defendant's plane still flew on to
Manila. Surely, if the defendant's pilot and
employees really believed that Zulueta had
planted a bomb in one of the bags they would not
have flown on until they had made sure that the
fourth bag had been left behind at Honolulu until
enough time had lapsed for the bomb to have
been exploded, since presumably it had to have
been set to go off before they reached Manila.
"At any rate, it was quite evident that Zulueta had
nothing to hide; for the report of defendant's
witness, Mr. Stanley E. Ho, U.S. Marshall on Wake,
has this to say: "
"About twenty minutes later while an attempt was
being made to locate another piece of Mr.
Zulueta's luggage his daughter, Carolinda
approached her father and wanted to get some
clothes from one of the suitcases. Mr. Zulueta
asked the undersigned if it was alright if he
opened the suitcases and get the necessary
clothes. To this I stated he was free to open his
luggage and obtain whatever he needed. Mr.
Zulueta opened a suitcase and took the dress for
her then boarded the aircraft."
Exh. 2B .
(4) What is evident to the Court is that defendant
acted in a manner deliberately calculated to
humiliate and shame plaintiffs. Although the plane
was held up to wait for plaintiff for, as the
Captain admitted in his testimony, he did so
because he knew that it would be a week before
another plane would come in for Manila (t.s.n., 18
Oct. 1966, pp. 59-62) when plaintiff did come, he
was met and treated roughly by defendant's
manager Sitton. Here is what Zulueta testified to:
"Q. When you saw your wife and daughter what happened? A.
Then I started going towards the airplane. At the ramp, I do not know
what they call it, as soon as they arrived there, there was a man who
subsequently identified himself as Kenneth Sitton. He identified
himself as the Airport Manager of Wake Island. He did not ask me
what happened, was I sick, he looked at me and said, what in the hell
do you think you are? Get on that plane. Then I said, what right have
you to talk to me that way, I am a paying passenger. Do not treat me
this way. And this started the altercation, and then he said, do you
know you held up the plane? And I answered, this is not my fault, I
was sick. Did it not occur to you to ask me how I feel; then he said get
on that plane.
"Q. What happened? A. we started discussing kept saying, "You
get on that plane" and then I said, "I don't have to get on that plane."
After a prolonged discussion, he said, give me your baggage tags and
I gave him four baggage tickets or tags. I did not realize what he was
up to until finally, I saw people coming down the airplane and police
cars arrived and people were coming down the ramp. I gave him the
four baggage tags and a few minutes late, he brought three baggages
and said, open them up. I said, to begin with, there is one baggage
missing and that missing bag is my bag. Then I said you cannot make
me open these baggages unless you are United States customs
authorities and when I arrive in the Philippines they can be opened by
the Philippine Customs authorities. But an Airport Manager cannot
make me open my bags unless you do exactly the same thing to all
the passengers. Open the bags of all the other passengers and I will
open my bag.
"Q. What did he say: A. He just kept on saying open your bag,
and I drew up my hands and said, you want, you open yourself or give
me a search warrant I shall open this bag but give me a search
warrant and then I asked, who is the Chief of Police, and he said, "I
am Chief of Police," then I said how can you be the Chief Police and
Airport Manager and then he started to talk about double
compensation and by this time we were both quarreling and he was
shouting and so with me. Then there was a man who came around
and said `open the bag' and I said, show the warrant of arrest and do
all the checking and the discussion kept on going, and finally I said
look, my fourth bag is missing and he said, "I don't give damn."
People at the time were surrounding us and staring at us and also the
passengers. My wife and daughter all along had been made to sit on a
railing and this man screaming and looking at my wife and daughter.
Then he said, will you pull these three monkeys out of here? then I
said, will you send my wife and daughter up the plane which he did.
However, they have come down in their slippers and when they were
allowed to return to the plane none of the defendant's personnel who
had brought down the overcoats, shoes and handcarried items of my
wife and daughter ever offered to bring back the items to the plane,
until I demanded that one of the defendants should help my wife and
daughter which he did. And then one man told me, because you
refused to open your bag, "we shall hold you here in Wake Island."
then I asked, are we under arrest? and the man answered, no. And

further stated, your wife and daughter can continue their flight but
you will not go to this flight an we will charge you $13.30 a day. Then
I said, who are you to tell all these things, and he answered, I am the
manager. I said, put it in writing, then left and in few minutes he came
back and handed me this letter (witness referring to Exhibit D)." .
t.s.n., August 1, 1966, pp. 15-21
Anyone in Zulueta's position would have reached the same way if he
had had a sense of dignity. Evidently, angered by Zulueta's reaction,
irked by the delay he had caused them, defendant's employees
decided to teach him a lesson by forcing him to open his bags when
there was no justifiable reason to do so:
(a) Defendant did not make any attempt to inquire from any
passenger or even the crew who knew Mr. Zulueta what his character
and reputation are, before demanding that he open the bags; if it had
done so, Miss Schmitz, the purser, and Col. Villamor would have
vouched for plaintiffs; for Miss Schmitz believed she had flown before
with the Zulueta's and they had been very nice people.
(b) Worse, defendant's manager Sitton admits that Zulueta had told
him who he was and his social position in Manila; still he insisted that
the bags be opened. Moreover, some passengers had informed the
supervisor that Zulueta was "the impresario"; but they persisted in
their demands.
(c) Defendant never identified the alleged State Department men who
reportedly approached the Captain and expressed fear about a bomb,
nor did they confront him if he existed with Mr. Zulueta despite Mr.
Zulueta's request.
(d) Defendant did not take any steps to put the luggage off-loaded far
from its passengers and plane, a strange procedure if it really
believed the luggage contained a bomb;
(e) Defendant continued with the flight knowing one bag -- Zulueta's
bag himself had not been located and without verifying from
Honolulu if the bag had been found there, nor even advising Honolulu
that a bag possibly containing a bomb had been left there, again an
inexplicable procedure if they sincerely believed that Zulueta had
planted a bomb;
(f) Defendant's manager himself took Zulueta and his off-loaded bags,
in his own car, from the terminal building to the hotel, which is also
inconsistent with a serious belief that the luggages contained a bomb;
(g) Defendant knew that while Zulueta's bags were on the ground, he
had opened one of them with the permission and in the presence of
the U. S. Marshall in order to enable his daughter to get a dress from
the bag; nothing suspicious was seen; still, defendant insisted on
refusing to allow Zulueta to continue unless he opened and allowed
inspection of the bags by them; .
(h) Defendant completely changed his tone and behavior towards the
Zulueta's after the plane had arrived at Manila and the Captain
learned that its Manila manager, Mr. Oppenheimer, was a friend of
Zulueta;
(i) Meantime, the attitude of Pan American towards the Zulueta's
caused other passengers to resent Zulueta (See reports of
Stewardesses and of Captain Zentner, Exhs. 7, 8, 9 and 10). "Many
passengers were angry towards the `missing passenger," says Miss
Schmitz's report. "A few inquisitive PA (passengers) one woman
quite rudely stared once we were airborne and left Mr. Zulueta behind
... anyway I told the woman to sit down so did Helga so did the
man near her," say Miss Schmitz's personal notes. This confirms the
testimony of plain plaintiffs that, all the while the search and
discussions were going on, they were the subject of stares, remarks
and whisper comments from the passengers and other persons
around the plane.
(j) Defendant did not allow plaintiff Zulueta to
board the plane at all, even though it was aware
that some of his personal belongings, such as his
overcoat were on the plane. Plaintiffs so testified;
and though defendant's witness Mr. Sitton denied
it, claiming that plaintiff was always free to board
the plane, this denial is belied by the report of
defendant's own witness, U.S. Marshall Ho, who
said that:
"Ten minutes later, Mr. Zulueta asked if he could
talk to his wife who was aboard the aircraft. I then
accompanied him and as we got to the ramp, we
met Mr. Sitton who stated he would summon Mrs.
Zulueta from the aircraft. Mr. Sitton summoned
Mrs. Zulueta and she met her husband at the foot
of the ramp. Mr. Zulueta then asked his wife and
himself to which I replied I was not concerned what
he had to say."
Exh. 2-B
(k) Finally, to add further humiliation and heap
indignity on plaintiffs, when Mrs. Zulueta arrived at
Manila and appealed to defendant's Manila
manager, Mr. Oppenheimer, to see to it that her
husband got back as soon as possible and was
made as comfortable as possible, at defendant's
expense, Mr. Oppenheimer refused to
acknowledge any obligation to transport Mr.
Zulueta back to Manila and forcing Mrs. Zulueta to
send her husband $100.00 for pocket money and

DAMAGES

TRANSPORTATION LAW
pay for his fare from Wake to Manila, thru Honolulu
and Tokyo.
Upon a review of the record, We are satisfied that the foregoing
findings of His Honor, the Trial Judge, are supported by a
preponderance of the evidence.
The last two (2) assignments of error are mere consequences of those
already disposed of, and, hence, need no extended discussion.
It is urged, however, that plaintiff is, at most, entitled to actual
damages only, because he was the first to commit a breach of
contract, for having gone over 200 yards away from the terminal,
where he could not expect to be paged. But, PANAM has not pointed
out what part of the contract has been violated thereby, apart from
the fact that the award for damages made in the decision appealed
from was due, not to PANAM's failure to so page the plaintiff, but to
the former's deliberate act of leaving him at Wake Island, and the
embarrassment and humiliation caused to him and his family in the
presence of many other persons. Then, also, considering the flat
nature of the terrain in Wake Island, and the absence of buildings and
structures, other than the terminal and a modest "hotel," as well as
plaintiff's need of relieving himself, he had to find a place beyond the
view of the people and near enough the sea to wash himself up
before going back to the plane.
It is next argued that plaintiff was, also, guilty of contributory
negligence for failure to reboard the plane within the 30 minutes
announced before the passengers debarked therefrom. This might
have justified a reduction of the damages, had plaintiff
been unwittingly left by the plane, owing to the negligence of PANAM
personnel, or even, perhaps, wittingly, if he could not be found before
the plane's departure. It does not, and cannot have such justification
in the case at bar, plaintiff having shown up before the plane had
taken off, and he having been off-loaded intentionally and with malice
aforethought, for his "belligerent" attitude, according to Captain
Zentner; for having dared despite his being one of "three
monkeys," the term used by Captain Zentner to refer to the
Zulueta family to answer him back when he (Captain
Zentner) 5 said: "what in the hell do you think you are ?" in a way
he had "not been spoken to" in his "whole adult life," in the presence
of the passengers and other PANAM employees; for having responded
to a command of either Zentner or Sitton to open his (plaintiff's) bags,
with a categorical refusal and a challenge for Zentner or Sitton to
open the bags without a search warrant therefor, thereby making
manifest the lack of authority of the aforementioned representative of
PANAM to issue said command and exposing him to ridicule before
said passengers and employees. Besides, PANAM's own witness and
employee, Wayne Pendleton, testified the plane could not take off at
4:30, as scheduled, because "we were still waiting for two (2) local
passengers."
Article 2201 of our Civil Code reads:
In contracts and quasi-contracts, the damages for which the obligor
who acted in good faith is liable shall be those that are the natural
and probable consequences of the breach of the obligation, and which
the parties have foreseen or could reasonably foreseen at the time
the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall
be responsible for all damages which may be reasonably attributed to
the non-performance of the obligation.
This responsibility applies to common carriers. Pursuant to Article
1759 of the same Code:
ART. 1759. Common carriers are liable for the death or injuries to
passengers through the negligence or wilful acts of the former's
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not
cease proof that they exercised all the diligence of
a good father of a family in the selection and
supervision of their employees.
Referring now to the specific amounts to damages due to plaintiffs
herein, We note that the sum of P5,502.85 awarded to them as actual
damages is not seriously disputed by PANAM.
As regards the moral and exemplary damages claimed by the
plaintiffs, our Civil Code provides:
ART. 21. Any person who wilfully causes loss or
injury to another in a manner that is contrary to
morals, good customs or public policy shall
compensate the latter for the damage.
ART. 2217. Moral damages include physical
suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral
damages may be recovered if they are the
proximate result of defendant's wrongful act or
omission.
ART. 2229. Exemplary or corrective damages are
imposed, by way of example or correction for the
public good, in addition to the moral, temperate
liquidated or compensatory damages.
ART. 2232. In contracts and quasi-contracts, the
court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.
The records amply establish plaintiffs' right to recover both moral and
exemplary damages. Indeed, the rude and rough reception plaintiff

received at the hands of Sitton or Captain Zentner when the latter

met him at the ramp ("what in the hell do you think you are? Get on
that plane"); the menacing attitude of Zentner or Sitton and the
supercilious manner in which he had asked plaintiff to open his bags
("open your bag," and when told that a fourth bag was missing, "I
don't give a damn"); the abusive language and highly scornful
reference to plaintiffs as monkeys by one of PANAM's employees (who
turning to Mrs. Zulueta and Miss Zulueta remarked, "will you pull
these three monkeys out of here?"); the unfriendly attitude, the ugly
stares and unkind remarks to which plaintiffs were subjected, and
their being cordoned by men in uniform as if they were criminals,
while plaintiff was arguing with Sitton; the airline officials' refusal to
allow plaintiff to board the plane on the pretext that he was hiding a
bomb in his luggage and their arbitrary and high-handed decision to
leave him in Wake; Mrs. Zulueta's having suffered a nervous
breakdown for which she was hospitalized as a result of the
embarrassment, insults and humiliations to which plaintiffs were
exposed by the conduct of PANAM's employees; Miss Zulueta's having
suffered shame, humiliation and embarrassment for the treatment
received by her parents at the airport 6 all these justify an award
for moral damages resulting from mental anguish, serious anxiety,
wounded feelings, moral shock, and social humiliation thereby
suffered by plaintiffs.
The relation between carrier and passenger
involves special and peculiar obligations and
duties, differing in kind and degree, from those of
almost every other legal or contractual relation.
On account of the peculiar situation of the parties
the law implies a promise and imposes upon the
carrier the corresponding duty of protection and
courteous treatment. Therefore, the carrier is
under the absolute duty of protecting his
passengers from assault or insult by himself or his
servants. 7
A contract to transport passengers is quite
different in kind and degree from any other
contractual relation. And this, because of the
relation which an air-carrier sustains with the
public. Its business is mainly with the travelling
public. It invites people to avail of the comforts
and advantages it offers. The contract of air
carriage, therefore, generates a relation tended
with a public duty. Neglect or malfeasance of the
carrier's employees naturally could give ground for
an action for damages.
Passengers do not contract merely for
transportation. They have a right to be treated by
the carrier's employees with kindness, respect,
courtesy and due consideration. They are titled to
be protected against personal misconduct,
injurious language, indignities and abuses from
such employees. So it is, that any rude or
discourteous conduct on the part of employees
towards a passenger gives the latter an action for
damages against the carrier. 8
A carrier of passengers is as much bound to
protect them from humiliation and insult as from
physical injury .. It is held in nearly all jurisdictions,
if not universally, that a carrier is liable to a
passenger for humiliation and mental suffering
caused by abusive or insulting language directed
at such passenger by an employee of the carrier. 9
Where a conductor uses language to a passenger
which is calculated to insult, humiliate, or wound
the feelings of a person of ordinary feelings and
sensibilities, the carrier is liable, because the
contract of carriage impliedly stipulates for decent,
courteous, and respectful treatment, at hands of
the carrier's employees. 10
The general rule that a carrier owes to a passenger
highest degree of care has been held to include
the duty to protect the passenger from abusive
language by the carrier's agents, or by others if
under such circumstances that the carrier's agents
should have known about it and prevented it.
Some of the courts have mentioned the implied
duty of the carrier, arising out of the contract of
carriage, not to insult the passenger, or permit him
to be insulted, and even where no mention is
made of this basis for liability, it is apparent that it
is the ground upon which recovery is allowed. 11
The question is whether the award of P1,000,000 as moral damages
was proper and justified by the circumstances. It has been held that
the discretion in fixing moral damages lies in the trial court. 12 Among
the factors courts take into account in assessing moral damages are
the professional, social, political and financial standing of the
offended parties on one hand, and the business and financial position
of the offender on the other. 13
In comparatively recent cases in this jurisdiction, also involving
breach of contract of air carriage, this Court awarded the amount of
P25,000, where plaintiff, a first-class passenger in an Air France plane
from Manila to Rome was, in Bangkok, forced by the manager of the
airline company to leave his first class accommodation after he was
already seated because there was a white man who, the manager
alleged, had a "better right" to the seat 14 ;the amount of P200,000,
where plaintiffs, upon confirmation of their reservation in defendant
airline's flight from Tokyo to San Francisco were issued first class
tickets, but upon arrival in Tokyo were informed that there was no
accommodation for them in the first class compartment and told they

DAMAGES

10

TRANSPORTATION LAW
could not go unless they took the tourist class 15 in both of which
cases the Court found the airline companies to have acted in bad
faith, or in a wanton, reckless and oppressive manner, justifying
likewise the award of exemplary damages.
None of the passengers involved in said cases was, however, offloaded, much less in a place as barren and isolated as Wake Island,
with the prospect of being stranded there for a week. The
aforementioned passengers were merely constrained to take a tourist
or third class accommodation in lieu of the first class passage they
were entitled to. Then, also, in none of said cases had the agents of
the carrier acted with the degree of malice or bad faith of those of
PANAM in the case at bar, or caused to the offended passengers a
mental suffering arising from injuries to feelings, fright and shock due
to abusive, rude and insulting language used by the carrier's
employees in the presence and within the hearing of others,
comparable to that caused by PANAM's employees to plaintiffs herein
To some extent, however, plaintiff had contributed to the gravity of
the situation because of the extreme belligerence with which he had
reacted on the occasion. We do not over-look the fact that he justly
believed he should uphold and defend his dignity and that of the
people of this country that the discomfort, the difficulties, and,
perhaps, the ordeal through which he had gone to relieve himself
which were unknown to PANAM's agents were such as to put him in
no mood to be understanding of the shortcoming of others; and that
said PANAM agents should have first inquired, with an open mind,
about the cause of his delay instead of assuming that he was at fault
and of taking an arrogant and overbearing attitude, as if they were
dealing with an inferior. Just the same, there is every reason to
believe that, in all probability, things would not have turned out as
bad as they became had he not allowed himself, in a way, to be
dragged to the level or plane on which PANAM's personnel had placed
themselves.
In view of this circumstance, We feel that the moral and exemplary
damages collectible by the plaintiffs should be reduced to one-half of
the amounts awarded by the lower court, that is, to P500,000 for
moral damages, and P200,000 for exemplary damages, aside from
the attorney's fees which should, likewise, be reduced to P75,000.
On April 22, 1971, Mrs. Zulueta filed a motion alleging that she had,
for more than two (2) years, been actually living separately from her
husband, plaintiff Rafael Zulueta, and that she had decided to settle
separately with PANAM and had reached a full and complete
settlement of all her differences with said defendant, and praying
accordingly, that this case be dismissed insofar as she is concerned,
Required to comment on said motion, PANAM expressed no objection
thereto.
Upon the other hand, plaintiff prayed that the motion be denied, upon
the ground that the case at bar is one for damages for breach of a
contract of carriage, owing to the off-loading of plaintiff Rafael
Zulueta, the husband and administrator of the conjugal partnership,
with the funds of which the PANAM had been paid under said
contract; that the action was filed by the plaintiffs as a family and the
lower court had awarded damages to them as such family; that,
although PANAM had questioned the award of damages, it had not
raised the question whether the lower court should have specified
what portion of the award should go to each plaintiff; that although
Mr. and Mrs. Zulueta had, for sometime, been living separately, this
has been without judicial approval; that Mrs. Zulueta may not,
therefore, bind the conjugal partnership or settle this case separately;
and that the sum given by PANAM to Mrs. Zulueta is believed to be
P50,000, which is less than 3-1/2% of the award appealed from,
thereby indicating the advisability of denying her motion to dismiss,
for her own protection.
Pursuant to a resolution, dated June 10, 1971, deferring action on said
motion to dismiss until the case is considered on the merits. We now
hold that the motion should be, as it is hereby denied. Indeed, "(t)he
wife cannot bind the conjugal partnership without the husband's
consent, except in cases provided by law," 16 and it has not been
shown that this is one of the cases so provided. Article 113 of our Civil
Code, pursuant to which "(t)he husband must be joined in all suits by
or against the wife, except: ... (2) If they have in fact been separated
for at least one year ..." relied upon by PANAM does not warrant
the conclusion drawn therefrom by the latter. Obviously the suit
contemplated in subdivision (2) of said Article 113 is one in which the
wife is the real party either plaintiff or defendant in interest, and,
in which, without being so, the hush must be joined as a party, by
reason only of his relation of affinity with her. Said provision cannot
possibly apply to a case, like the one at bar, in which the husband is
the main party in interest, both as the person principally grieved and
as administrator of the conjugal partnership. Moreover, he having
acted in this capacity in entering into the contract of carriage with
PANAM and paid the amount due to the latter, under the contract,
with funds of conjugal partnership, the damages recoverable for
breach of such contract belongs to said partnership.
Modified, as above stated, in the sense that plaintiffs shall recover
from defendant, Pan American World Airways, Inc., the sums of
P500,000 as moral damages, P200,000 as exemplary damages, and
P75,000 as attorney's fees, apart from P5,502.85 as actual damages,
and without prejudice to deducting the aforementioned sum of
P50,000 already paid Mrs. Zulueta, the decision appealed from is
hereby affirmed in all other respects, with the costs against said
defendant.
G.R. No. L-22415
March 30, 1966
FERNANDO LOPEZ, ET AL., plaintiffs-appellants,
vs.
PAN AMERICAN WORLD AIRWAYS, defendant-appellant.
Ross, Selph and Carrascoso for the defendant-appellant.
Vicente J. Francisco for the plaintiffs-appellants.
BENGZON, J.P., J.:

Plaintiffs and defendant appeal from a decision of the Court of First

Instance of Rizal. Since the value in controversy exceeds P200,000
the appeals were taken directly to this Court upon all questions
involved (Sec. 17, par. 3[5], Judiciary Act).
Stated briefly the facts not in dispute are as follows: Reservations for
first class accommodations in Flight No. 2 of Pan American World
Airways hereinafter otherwise called PAN-AM from Tokyo to San
Francisco on May 24, 1960 were made with
PAN-AM on March 29, 1960, by "Your Travel Guide" agency,
specifically, by Delfin Faustino, for then Senator Fernando Lopez, his
wife Maria J. Lopez, his son-in-law Alfredo Montelibano, Jr., and his
daughter, Mrs. Alfredo Montelibano, Jr., (Milagros Lopez Montelibano).
PAN-AM's San Francisco head office confirmed the reservations on
March 31, 1960.
First class tickets for the abovementioned flight were subsequently
issued by
PAN-AM on May 21 and 23, 1960, in favor of Senator Lopez and his
party. The total fare of P9,444 for all of them was fully paid before the
tickets were issued.
As scheduled Senator Lopez and party left Manila by Northwest
Airlines on May 24, 1960, arriving in Tokyo at 5:30 P.M. of that day. As
soon as they arrived Senator Lopez requested Minister Busuego of the
Philippine Embassy to contact PAN-AM's Tokyo office regarding their
first class accommodations for that evening's flight. For the given
reason that the first class seats therein were all booked up, however,
PAN-AM's Tokyo office informed Minister Busuego that PAN-AM could
not accommodate Senator Lopez and party in that trip as first class
passengers. Senator Lopez thereupon gave their first class tickets to
Minister Busuego for him to show the same to PAN-AM's Tokyo office,
but the latter firmly reiterated that there was no accommodation for
them in the first class, stating that they could not go in that flight
unless they took the tourist class therein.
Due to pressing engagements awaiting Senator Lopez and his wife, in
the United States he had to attend a business conference in San
Francisco the next day and she had to undergo a medical check-up in
Mayo Clinic, Rochester, Minnesota, on May 28, 1960 and needed
three days rest before that in San Francisco Senator Lopez and
party were constrained to take PAN-AM's flight from Tokyo to San
Francisco as tourist passengers. Senator Lopez however made it clear,
as indicated in his letter to PAN-AM's Tokyo office on that date (Exh.
A), that they did so "under protest" and without prejudice to further
action against the airline.1wph1.t
Suit for damages was thereafter filed by Senator Lopez and party
against PAN-AM on June 2, 1960 in the Court of First Instance of Rizal.
Alleging breach of contracts in bad faith by defendant, plaintiffs asked
for P500,000 actual and moral damages, P100,000 exemplary
damages, P25,000 attorney's fees plus costs. PAN-AM filed its answer
on June 22, 1960, asserting that its failure to provide first class
accommodations to plaintiffs was due to honest error of its
employees. It also interposed a counterclaim for attorney's fees of
P25,000.
Subsequently, further pleadings were filed, thus: plaintiffs' answer to
the counterclaim, on July 25, 1960; plaintiffs' reply attached to motion
for its admittance, on December 2, 1961; defendant's supplemental
answer, on March 8, 1962; plaintiffs' reply to supplemental answer, on
March 10, 1962; and defendant's amended supplemental answer, on
July 10, 1962.
After trial which took twenty-two (22) days ranging from November
25, 1960 to January 5, 1963 the Court of First Instance rendered its
decision on November 13, 1963, the dispositive portion stating:
In view of the foregoing considerations, judgment is hereby
rendered in favor of the plaintiffs and against the defendant,
which is accordingly ordered to pay the plaintiffs the
following: (a) P100,000.00 as moral damages; (b)
P20,000.00 as exemplary damages; (c) P25,000.00 as
attorney's fees, and the costs of this action.
So ordered.
Plaintiffs, however, on November 21, 1963, moved for reconsideration
of said judgment, asking that moral damages be increased to
P400,000 and that six per cent (6%) interest per annum on the
amount of the award be granted. And defendant opposed the same.
Acting thereon the trial court issued an order on December 14, 1963,
reconsidering the dispositive part of its decision to read as follows:
In view of the foregoing considerations, judgment is hereby
rendered in favor of the plaintiffs and against the defendant,
which is accordingly ordered to pay the plaintiffs the
following: (a) P150,000.00 as moral damages; (b)
P25,000.00 as exemplary damages; with legal interest on
both from the date of the filing of the complaint until paid;
and (c) P25,000.00 as attorney's fees; and the costs of this
action.
So ordered.
It is from said judgment, as thus reconsidered, that both parties have
appealed.
Defendant, as stated, has from the start admitted that it breached its
contracts with plaintiffs to provide them with first class
accommodations in its Tokyo-San Francisco flight of May 24, 1960. In
its appeal, however, it takes issue with the finding of the court a
quo that it acted in bad faith in the branch of said contracts. Plaintiffs,
on the other hand, raise questions on the amount of damages
awarded in their favor, seeking that the same be increased to a total
of P650,000.
Anent the issue of bad faith the records show the respective
contentions of the parties as follows.
According to plaintiffs, defendant acted in bad faith because it
deliberately refused to comply with its contract to provide first class
accommodations to plaintiffs, out of racial prejudice against Orientals.
And in support of its contention that what was done to plaintiffs is an
oftrepeated practice of defendant, evidence was adduced relating to

DAMAGES

11

TRANSPORTATION LAW
two previous instances of alleged racial discrimination by defendant
against Filipinos in favor of "white" passengers. Said previous
occasions are what allegedly happened to (1) Benito Jalbuena and (2)
Cenon S. Cervantes and his wife.
And from plaintiffs' evidence this is what allegedly happened;
Jalbuena bought a first class ticket from PAN-AM on April 13, 1960; he
confirmed it on April 15, 1960 as to the Tokyo-Hongkong flight of April
20, 1960; PAN-AM similarly confirmed it on April 20, 1960. At the
airport he and another Oriental Mr. Tung were asked to step
aside while other passengers - including "white" passengers
boarded PAN-AM's plane. Then PAN-AM officials told them that one of
them had to stay behind. Since Mr. Tung was going all the way to
London, Jalbuena was chosen to be left behind. PAN-AM's officials
could only explain by saying there was "some mistake". Jalbuena
thereafter wrote PAN-AM to protest the incident (Exh. B).
As to Cenon S. Cervantes it would appear that in Flight No. 6 of PANAM on September 29, 1958 from Bangkok to Hongkong, he and his
wife had to take tourist class, although they had first class tickets,
which they had previously confirmed, because their seats in first class
were given to "passengers from London."
Against the foregoing, however, defendant's evidence would seek to
establish its theory of honest mistake, thus:
The first class reservations of Senator Lopez and party were made on
March 29, 1960 together with those of four members of the Rufino
family, for a total of eight (8) seats, as shown in their joint reservation
card (Exh. 1). Subsequently on March 30, 1960, two other Rufinos
secured reservations and were given a separate reservation card
(Exh. 2). A new reservation card consisting of two pages (Exhs. 3 and
4) was then made for the original of eight passengers, namely,
Senator Lopez and party and four members of the Rufino family, the
first page (Exh. 3) referring to 2 Lopezes, 2 Montelibanos and 1 Rufino
and the second page (Exh. 4) referring to 3 Rufinos. On April 18, 1960
"Your Travel Guide" agency cancelled the reservations of the Rufinos.
A telex message was thereupon sent on that date to PAN-AM's head
office at San Francisco by Mariano Herranz, PAN-AM's reservations
employee at its office in Escolta, Manila. (Annex A-Acker's to Exh. 6.)
In said message, however, Herranz mistakenly cancelled all the seats
that had been reserved, that is, including those of Senator Lopez and
party.
The next day April 1960 Herranz discovered his mistake, upon
seeing the reservation card newly prepared by his co-employee Pedro
Asensi for Sen. Lopez and party to the exclusion of the Rufinos (Exh.
5). It was then that Herranz sent another telex wire to the San
Francisco head office, stating his error and asking for the
reinstatement of the four (4) first class seats reserved for Senator
Lopez and party (Annex A-Velasco's to Exh. 6). San Francisco head
office replied on April 22, 1960 that Senator Lopez and party are
waitlisted and that said office is unable to reinstate them (Annex BVelasco's to Exh. 6).
Since the flight involved was still more than a month away and
confident that reinstatement would be made, Herranz forgot the
matter and told no one about it except his co-employee, either
Armando Davila or Pedro Asensi or both of them (Tsn., 123-124, 127,
Nov. 17, 1961).
Subsequently, on April 27, 1960, Armando Davila, PAN-AM's
reservations employee working in the same Escolta office as Herranz,
phoned PAN-AM's ticket sellers at its other office in the Manila Hotel,
and confirmed the reservations of Senator Lopez and party.
PAN-AM's reservations supervisor Alberto Jose, discovered Herranz's
mistake after "Your Travel Guide" phone on May 18, 1960 to state that
Senator Lopez and party were going to depart as scheduled.
Accordingly, Jose sent a telex wire on that date to PAN-AM's head
office at San Francisco to report the error and asked said office to
continue holding the reservations of Senator Lopez and party (Annex
B-Acker's to Exh. 6). Said message was reiterated by Jose in his telex
wire of May 19, 1960 (Annex C-Acker's to Exh. 6). San Francisco head
office replied on May 19, 1960 that it regrets being unable to confirm
Senator Lopez and party for the reason that the flight was solidly
booked (Exh. 7). Jose sent a third telex wire on May 20, 1960
addressed to PAN-AM's offices at San Francisco, New York (Idlewild
Airport), Tokyo and Hongkong, asking all-out assistance towards
restoring the cancelled spaces and for report of cancellations at their
end (Annex D-Acker's to Exh. 6). San Francisco head office reiterated
on May 20, 1960 that it could not reinstate the spaces and referred
Jose to the Tokyo and Hongkong offices (Exh. 8). Also on May 20, the
Tokyo office of PAN-AM wired Jose stating it will do everything possible
(Exh. 9).
Expecting that some cancellations of bookings would be made before
the flight time, Jose decided to withhold from Senator Lopez and
party, or their agent, the information that their reservations had been
cancelled.
Armando Davila having previously confirmed Senator Lopez and
party's first class reservations to PAN-AM's ticket sellers at its Manila
Hotel office, the latter sold and issued in their favor the corresponding
first class tickets on the 21st and 23rd of May, 1960.
From the foregoing evidence of defendant it is in effect admitted that
defendant through its agents first cancelled plaintiffs,
reservations by mistake and thereafter deliberately and
intentionally withheld from plaintiffs or their travel agent the fact of
said cancellation, letting them go on believing that their first class
reservations stood valid and confirmed. In so misleading plaintiffs into
purchasing first class tickets in the conviction that they had confirmed
reservations for the same, when in fact they had none, defendant
wilfully and knowingly placed itself into the position of having to
breach its a foresaid contracts with plaintiffs should there be no lastminute cancellation by other passengers before flight time, as it
turned out in this case. Such actuation of defendant may indeed have
been prompted by nothing more than the promotion of its self-interest
in holding on to Senator Lopez and party as passengers in its flight

and foreclosing on their chances to seek the services of other airlines

that may have been able to afford them first class accommodations.
All the time, in legal contemplation such conduct already amounts to
action in bad faith. For bad faith means a breach of a known duty
through some motive of interest or ill-will (Spiegel vs. Beacon
Participations, 8 NE 2d 895, 907). As stated in Kamm v. Flink, 113
N.J.L. 582, 175 A. 62, 99 A.L.R. 1, 7: "Self-enrichment or fraternal
interest, and not personal ill-will, may well have been the motive; but
it is malice nevertheless."
As of May 18, 1960 defendant's reservations supervisor, Alberto Jose
knew that plaintiffs' reservations had been cancelled. As of May 20 he
knew that the San Francisco head office stated with finality that it
could not reinstate plaintiffs' cancelled reservations. And yet said
reservations supervisor made the "decision" to use his own, word
to withhold the information from the plaintiffs. Said Alberto Jose in
his testimony:
Q Why did you not notify them?
A Well, you see, sir, in my fifteen (15) years of service with
the air lines business my experience is that even if the
flights are solidly booked months in advance, usually the
flight departs with plenty of empty seats both on the first
class and tourist class. This is due to late cancellation of
passengers, or because passengers do not show up in the
airport, and it was our hope others come in from another
flight and, therefore, are delayed and, therefore, missed
their connections. This experience of mine, coupled with
that wire from Tokyo that they would do everything possible
prompted me to withhold the information, but unfortunately,
instead of the first class seat that I was hoping for and which
I anticipated only the tourists class was open on which
Senator and Mrs. Lopez, Mr. and Mrs. Montelibano were
accommodated. Well, I fully realize now the gravity of my
decision in not advising Senator and Mrs. Lopez, Mr. and
Mrs. Montelibano nor their agents about the erroneous
cancellation and for which I would like them to know that I
am very sorry.
xxx
xxx
xxx
Q So it was not your duty to notify Sen. Lopez and parties
that their reservations had been cancelled since May 18,
1960?
A As I said before it was my duty. It was my duty but as I
said again with respect to that duty I have the power to
make a decision or use my discretion and judgment whether
I should go ahead and tell the passenger about the
cancellation. (Tsn., pp. 17-19, 28-29, March 15, 1962.)
At the time plaintiffs bought their tickets, defendant, therefore, in
breach of its known duty, made plaintiffs believe that their
reservation had not been cancelled. An additional indication of this is
the fact that upon the face of the two tickets of record, namely, the
ticket issued to Alfredo Montelibano, Jr. on May 21, 1960 (Exh. 22) and
that issued to Mrs. Alfredo Montelibano, Jr., on May 23, 1960 (Exh.
23), the reservation status is stated as "OK". Such willful-nondisclosure of the cancellation or pretense that the reservations for
plaintiffs stood and not simply the erroneous cancellation itself is
the factor to which is attributable the breach of the resulting
contracts. And, as above-stated, in this respect defendant clearly
acted in bad faith.
As if to further emphasize its bad faith on the matter, defendant
subsequently promoted the employee who cancelled plaintiffs'
reservations and told them nothing about it. The record shows that
said employee Mariano Herranz was not subjected to
investigation and suspension by defendant but instead was given a
reward in the form of an increase of salary in June of the following
year (Tsn., 86-88, Nov. 20, 1961).
At any rate, granting all the mistakes advanced by the defendant,
there would at least be negligence so gross and reckless as to amount
to malice or bad faith (Fores vs. Miranda, L-12163, March 4, 1959;
Necesito v. Paras, L-10605-06, June 30, 1958). Firstly, notwithstanding
the entries in the reservation cards (Exhs. 1 & 3) that the reservations
cancelled are those of the Rufinos only, Herranz made the mistake,
after reading said entries, of sending a wire cancelling all the
reservations, including those of Senator Lopez and party (Tsn., pp.
108-109, Nov. 17, 1961). Secondly, after sending a wire to San
Francisco head office on April 19, 1960 stating his error and asking for
reinstatement, Herranz simply forgot about the matter.
Notwithstanding the reply of San Francisco head Office on April 22,
1960 that it cannot reinstate Senator Lopez and party (Annex BVelasco's to Exh. 6), it was assumed and taken for granted that
reinstatement would be made. Thirdly, Armando Davila confirmed
plaintiff's reservations in a phone call on April 27, 1960 to defendant's
ticket sellers, when at the time it appeared in plaintiffs' reservation
card (Exh. 5) that they were only waitlisted passengers. Fourthly,
defendant's ticket sellers issued plaintiffs' tickets on May 21 and 23,
1960, without first checking their reservations just before issuing said
tickets. And, finally, no one among defendant's agents notified
Senator Lopez and party that their reservations had been cancelled, a
precaution that could have averted their entering with defendant into
contracts that the latter had already placed beyond its power to
perform.
Accordingly, there being a clear admission in defendant's evidence of
facts amounting to a bad faith on its part in regard to the breach of its
contracts with plaintiffs, it becomes unnecessary to further discuss
the evidence adduced by plaintiffs to establish defendant's bad faith.
For what is admitted in the course of the trial does not need to be
proved (Sec. 2, Rule 129, Rules of Court).
Addressing ourselves now to the question of damages, it is well to
state at the outset those rules and principles. First, moral damages
are recoverable in breach of contracts where the defendant acted
fraudulently or in bad faith (Art. 2220, New Civil Code). Second, in

DAMAGES

12

TRANSPORTATION LAW
addition to moral damages, exemplary or corrective damages may be
imposed by way of example or correction for the public good, in
breach of contract where the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner (Articles 2229,
2232, New Civil Code). And, third, a written contract for an attorney's
services shall control the amount to be paid therefor unless found by
the court to be unconscionable or unreasonable (Sec. 24, Rule 138,
Rules of Court).
First, then, as to moral damages. As a proximate result of defendant's
breach in bad faith of its contracts with plaintiffs, the latter suffered
social humiliation, wounded feelings, serious anxiety and mental
anguish. For plaintiffs were travelling with first class tickets issued by
defendant and yet they were given only the tourist class. At stopovers, they were expected to be among the first-class passengers by
those awaiting to welcome them, only to be found among the tourist
passengers. It may not be humiliating to travel as tourist passengers;
it is humiliating to be compelled to travel as such, contrary to what is
rightfully to be expected from the contractual undertaking.
Senator Lopez was then Senate President Pro Tempore. International
carriers like defendant know the prestige of such an office. For the
Senate is not only the Upper Chamber of the Philippine Congress, but
the nation's treaty-ratifying body. It may also be mentioned that in his
aforesaid office Senator Lopez was in a position to preside in
impeachment cases should the Senate sit as Impeachment Tribunal.
And he was former Vice-President of the Philippines. Senator Lopez
was going to the United States to attend a private business
conference of the Binalbagan-Isabela Sugar Company; but his
aforesaid rank and position were by no means left behind, and in fact
he had a second engagement awaiting him in the United States: a
banquet tendered by Filipino friends in his honor as Senate
President Pro Tempore (Tsn., pp. 14-15, Nov. 25, 1960). For the moral
damages sustained by him, therefore, an award of P100,000.00 is
appropriate.
Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige and
therefore his humiliation. In addition she suffered physical discomfort
during the 13-hour trip,(5 hours from Tokyo to Honolulu and 8 hours
from Honolulu to San Francisco). Although Senator Lopez stated that
"she was quite well" (Tsn., p. 22, Nov. 25, 1960) he obviously
meant relatively well, since the rest of his statement is that two
months before, she was attackedby severe flu and lost 10 pounds of
weight and that she was advised by Dr. Sison to go to the United
States as soon as possible for medical check-up and relaxation, (Ibid).
In fact, Senator Lopez stated, as shown a few pages after in the
transcript of his testimony, that Mrs. Lopez was sick when she left the
Philippines:
A. Well, my wife really felt very bad during the entire trip
from Tokyo to San Francisco. In the first place, she was sick
when we left the Philippines, and then with that discomfort
which she [experienced] or suffered during that evening, it
was her worst experience. I myself, who was not sick, could
not sleep because of the discomfort. (Tsn., pp. 27-28, Nov.
25, 1960).
It is not hard to see that in her condition then a physical discomfort
sustained for thirteen hours may well be considered a physical
suffering. And even without regard to the noise and trepidation inside
the plane which defendant contends, upon the strengh of expert
testimony, to be practically the same in first class and tourist class
the fact that the seating spaces in the tourist class are quite narrower
than in first class, there beingsix seats to a row in the former as
against four to a row in the latter, and that in tourist class there is
very little space for reclining in view of the closer distance between
rows (Tsn., p. 24, Nov. 25, 1960), will suffice to show that the
aforesaid passenger indeed experienced physical suffering during the
trip. Added to this, of course, was the painfull thought that she was
deprived by defendant after having paid for and expected the
same of the most suitable, place for her, the first class, where
evidently the best of everything would have been given her, the best
seat, service, food and treatment. Such difference in comfort between
first class and tourist class is too obvious to be recounted, is in fact
the reason for the former's existence, and is recognized by the airline
in charging a higher fare for it and by the passengers in paying said
higher rate Accordingly, considering the totality of her suffering and
humiliation, an award to Mrs. Maria J. Lopez of P50,000.00 for moral
damages will be reasonable.
Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as immediate
members of the family of Senator Lopez. They formed part of the
Senator's party as shown also by the reservation cards of PAN-AM. As
such they likewise shared his prestige and humiliation. Although
defendant contends that a few weeks before the flight they had asked
their reservations to be charged from first class to tourist class
which did not materialize due to alleged full booking in the tourist
class the same does not mean they suffered no shared in having to
take tourist class during the flight. For by that time they had already
been made to pay for first class seats and therefore to expect first
class accommodations. As stated, it is one thing to take the tourist
class by free choice; a far different thing to be compelled to take it
notwithstanding having paid for first class seats. Plaintiffs-appellants
now ask P37,500.00 each for the two but we note that in their motion
for reconsideration filed in the court a quo, they were satisfied with
P25,000.00 each for said persons. (Record on Appeal, p. 102). For
their social humiliation, therefore, the award to them of P25,000.00
each is reasonable.
The rationale behind exemplary or corrective damages is, as the
name implies, to provide an example or correction for public good.
Defendant having breached its contracts in bad faith, the court, as
stated earlier, may award exemplary damages in addition to moral
damages (Articles 2229, 2232, New Civil Code).
In view of its nature, it should be imposed in such an amount as to
sufficiently and effectively deter similar breach of contracts in the

future by defendant or other airlines. In this light, we find it just to

award P75,000.00 as exemplary or corrective damages.
Now, as to attorney's fees, the record shows a written contract of
services executed on June 1, 1960 (Exh. F) whereunder plaintiffsappellants engaged the services of their counsel Atty. Vicente J.
Francisco and agreedto pay the sum of P25,000.00 as attorney's
fees upon the termination of the case in the Court of First Instance,
and an additional sum of P25,000.00 in the event the case is
appealed to the Supreme Court. As said earlier, a written contract for
attorney's services shall control the amount to be paid therefor unless
found by the court to be unconscionable or unreasonable. A
consideration of the subject matter of the present controversy, of the
professional standing of the attorney for plaintiffs-appellants, and of
the extent of the service rendered by him, shows that said amount
provided for in the written agreement is reasonable. Said lawyer
whose prominence in the legal profession is well known studied the
case, prepared and filed the complaint, conferred with witnesses,
analyzed documentary evidence, personally appeared at the trial of
the case in twenty-two days, during a period of three years, prepared
four sets of cross-interrogatories for deposition taking, prepared
several memoranda and the motion for reconsideration, filed a joint
record on appeal with defendant, filed a brief for plaintiffs as
appellants consisting of 45 printed pages and a brief for plaintiffs as
appellees consisting of 265 printed pages. And we are further
convinced of its reasonableness because defendant's counsel likewise
valued at P50,000.00 the proper compensation for his services
rendered to defendant in the trial court and on appeal.
In concluding, let it be stressed that the amount of damages awarded
in this appeal has been determined by adequately considering the
official, political, social, and financial standing of the offended parties
on one hand, and the business and financial position of the offender
on the other (Domingding v. Ng, 55 O.G. 10). And further considering
the present rate of exchange and the terms at which the amount of
damages awarded would approximately be in U.S. dollars, this Court
is all the more of the view that said award is proper and reasonable.
Wherefore, the judgment appealed from is hereby modified so as to
award in favor of plaintiffs and against defendant, the following: (1)
P200,000.00 as moral damages, divided among plaintiffs, thus:
P100,000.00 for Senate President Pro Tempore Fernando Lopez;
P50,000.00 for his wife Maria J. Lopez; P25,000.00 for his son-in-law
Alfredo Montelibano, Jr.; and P25,000.00 for his daughter Mrs. Alfredo
Montelibano, Jr.; (2) P75,000.00 as exemplary or corrective damages;
(3) interest at the legal rate of 6% per annum on the moral and
exemplary damages aforestated, from December 14, 1963, the date
of the amended decision of the court a quo, until said damages are
fully paid; (4) P50,000.00 as attorney's fees; and (5) the costs.
Counterclaim dismissed.So ordered.
[G.R. No. 159636. November 25, 2004]
VICTORY LINER, INC., petitioner, vs. ROSALITO GAMMAD,
APRIL ROSSAN P. GAMMAD, ROI ROZANO P. GAMMAD
and DIANA FRANCES P. GAMMAD, respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review on certiorari is the April 11,
2003 decision[1] of the Court of Appeals in CA-G.R. CV No. 63290
which affirmed with modification the November 6, 1998 decision [2] of
the Regional Trial Court of Tuguegarao, Cagayan, Branch 5 finding
petitioner Victory Liner, Inc. liable for breach of contract of carriage in
Civil Case No. 5023.
The facts as testified by respondent Rosalito Gammad show that
on March 14, 1996, his wife Marie Grace Pagulayan-Gammad, [3] was
on board an air-conditioned Victory Liner bus bound for Tuguegarao,
Cagayan from Manila. At about 3:00 a.m., the bus while running at a
high speed fell on a ravine somewhere in Barangay Baliling, Sta. Fe,
Nueva Vizcaya, which resulted in the death of Marie Grace and
physical injuries to other passengers.[4]
On May 14, 1996, respondent heirs of the deceased filed a
complaint[5] for damages arising from culpa contractual against
petitioner. In its answer,[6] the petitioner claimed that the incident
was purely accidental and that it has always exercised extraordinary
diligence in its 50 years of operation.
After several re-settings,[7] pre-trial was set on April 10, 1997.
[8]
For failure to appear on the said date, petitioner was declared as in
default.[9] However, on petitioners motion [10] to lift the order of
default, the same was granted by the trial court. [11]
At the pre-trial on May 6, 1997, petitioner did not want to admit
the proposed stipulation that the deceased was a passenger of the
Victory Liner Bus which fell on the ravine and that she was issued
Passenger Ticket No. 977785. Respondents, for their part, did not
accept petitioners proposal to pay P50,000.00. [12]
After respondent Rosalito Gammad completed his direct
testimony, cross-examination was scheduled for November 17,
1997[13] but moved to December 8, 1997, [14]because the parties and
the counsel failed to appear. On December 8, 1997, counsel of
petitioner was absent despite due notice and was deemed to have
waived right to cross-examine respondent Rosalito. [15]
Petitioners motion to reset the presentation of its evidence to
March 25, 1998[16] was granted. However, on March 24, 1998, the
counsel of petitioner sent the court a telegram [17] requesting
postponement but the telegram was received by the trial court on
March 25, 1998, after it had issued an order considering the case

DAMAGES

13

TRANSPORTATION LAW
submitted for decision for failure of petitioner and counsel to appear.
[18]

On November 6, 1998, the trial court rendered its decision in

favor of respondents, the dispositive portion of which reads:
WHEREFORE, premises considered and in the interest of justice,
judgment is hereby rendered in favor of the plaintiffs and against the
defendant Victory Liner, Incorporated, ordering the latter to pay the
following:
1.
Actual Damages -------------------- P 122,000.00
2.
Death Indemnity --------------------50,000.00
3.
Exemplary and Moral Damages----- 400,000.00
4.
Compensatory Damages ---------- 1,500,000.00
5.
Attorneys Fees ------------ 10% of the total amount
granted
6.
Cost of the Suit.
SO ORDERED.[19]
On appeal by petitioner, the Court of Appeals affirmed the
decision of the trial court with modification as follows:
[T]he Decision dated 06 November 1998 is hereby MODIFIED to
reflect that the following are hereby adjudged in favor of plaintiffsappellees:
1.
Actual Damages in the amount of P88,270.00;
2.
Compensatory Damages in the amount of P1,135,536,10;
3.
Moral and Exemplary Damages in the amount of P400,000.00;
and
4.
Attorneys fees equivalent to 10% of the sum of the
actual, compensatory, moral, and exemplary
damages herein adjudged.
The court a quos judgment of the cost of the suit against defendantappellant is hereby AFFIRMED.
SO ORDERED.[20]
Represented by a new counsel, petitioner on May 21, 2003 filed
a motion for reconsideration praying that the case be remanded to
the trial court for cross- examination of respondents witness and for
the presentation of its evidence; or in the alternative, dismiss the
respondents complaint.[21] Invoking APEX Mining, Inc. v. Court of
Appeals,[22] petitioner argues, inter alia, that the decision of the trial
court should be set aside because the negligence of its former
counsel, Atty. Antonio B. Paguirigan, in failing to appear at the
scheduled hearings and move for reconsideration of the orders
declaring petitioner to have waived the right to cross-examine
respondents witness and right to present evidence, deprived
petitioner of its day in court.
On August 21, 2003, the Court of Appeals denied petitioners
motion for reconsideration.[23]
Hence, this petition for review principally based on the fact that
the mistake or gross negligence of its counsel deprived petitioner of
due process of law. Petitioner also argues that the trial courts award
of damages were without basis and should be deleted.
The issues for resolution are: (1) whether petitioners counsel
was guilty of gross negligence; (2) whether petitioner should be held
liable for breach of contract of carriage; and (3) whether the award of
damages was proper.
It is settled that the negligence of counsel binds the client. This
is based on the rule that any act performed by a counsel within the
scope of his general or implied authority is regarded as an act of his
client. Consequently, the mistake or negligence of counsel may result
in the rendition of an unfavorable judgment against the client.
However, the application of the general rule to a given case should be
looked into and adopted according to the surrounding circumstances
obtaining. Thus, exceptions to the foregoing have been recognized by
the court in cases where reckless or gross negligence of counsel
deprives the client of due process of law, or when its application will
result in outright deprivation of the clients liberty or property or
where the interests of justice so require, and accord relief to the client
who suffered by reason of the lawyers gross or palpable mistake or
negligence.[24]
The exceptions, however, are not present in this case. The
record shows that Atty. Paguirigan filed an Answer and Pre-trial Brief
for petitioner. Although initially declared as in default, Atty.
Paguirigan successfully moved for the setting aside of the order of
default. In fact, petitioner was represented by Atty. Paguirigan at the
pre-trial who proposed settlement for P50,000.00. Although Atty.
Paguirigan failed to file motions for reconsideration of the orders
declaring petitioner to have waived the right to cross-examine
respondents witness and to present evidence, he nevertheless, filed
a timely appeal with the Court of Appeals assailing the decision of the
trial court. Hence, petitioners claim that it was denied due process
lacks basis.
Petitioner too is not entirely blameless. Prior to the issuance of
the order declaring it as in default for not appearing at the pre-trial,
three notices (dated October 23, 1996,[25] January 30, 1997,[26] and
March 26, 1997,[27]) requiring attendance at the pre-trial were sent
and duly received by petitioner. However, it was only on April 27,
1997, after the issuance of the April 10, 1997 order of default for
failure to appear at the pre-trial when petitioner, through its finance
and administrative manager, executed a special power of
attorney[28] authorizing Atty. Paguirigan or any member of his law firm
to represent petitioner at the pre-trial. Petitioner is guilty, at the
least, of contributory negligence and fault cannot be imputed solely
on previous counsel.
The case of APEX Mining, Inc., invoked by petitioner is not on all
fours with the case at bar. In APEX, the negligent counsel not only

allowed the adverse decision against his client to become final and
executory, but deliberately misrepresented in the progress report that
the case was still pending with the Court of Appeals when the same
was dismissed 16 months ago. [29] These circumstances are absent in
this case because Atty. Paguirigan timely filed an appeal from the
decision of the trial court with the Court of Appeals.
In Gold Line Transit, Inc. v. Ramos,[30] the Court was similarly
confronted with the issue of whether or not the client should bear the
adverse consequences of its counsels negligence. In that case, Gold
Line Transit, Inc. (Gold Line) and its lawyer failed to appear at the pretrial despite notice and was declared as in default. After the plaintiffs
presentation of evidence ex parte, the trial court rendered decision
ordering Gold Line to pay damages to the heirs of its deceased
passenger. The decision became final and executory because counsel
of Gold Line did not file any appeal. Finding that Goldline was not
denied due process of law and is thus bound by the negligence of its
lawyer, the Court held as follows
This leads us to the question of whether the negligence of counsel
was so gross and reckless that petitioner was deprived of its right to
due process of law. We do not believe so. It cannot be denied that the
requirements of due process were observed in the instant case.
Petitioner was never deprived of its day in court, as in fact it was
afforded every opportunity to be heard. Thus, it is of record that
notices were sent to petitioner and that its counsel was able to file a
motion to dismiss the complaint, an answer to the complaint, and
even a pre-trial brief. What was irretrievably lost by petitioner was its
opportunity to participate in the trial of the case and to adduce
evidence in its behalf because of negligence.
In the application of the principle of due process, what is sought to be
safeguarded against is not the lack of previous notice but the denial
of the opportunity to be heard. The question is not whether petitioner
succeeded in defending its rights and interests, but simply, whether it
had the opportunity to present its side of the controversy. Verily, as
petitioner retained the services of counsel of its choice, it should, as
far as this suit is concerned, bear the consequences of its choice of a
faulty option. Its plea that it was deprived of due process echoes on
hollow ground and certainly cannot elicit approval nor sympathy.
To cater to petitioners arguments and reinstate its petition for relief
from judgment would put a premium on the negligence of its former
counsel and encourage the non-termination of this case by reason
thereof. This is one case where petitioner has to bear the adverse
consequences of its counsels act, for a client is bound by the action
of his counsel in the conduct of a case and he cannot thereafter be
heard to complain that the result might have been different had his
counsel proceeded differently. The rationale for the rule is easily
discernible. If the negligence of counsel be admitted as a reason for
opening cases, there would never be an end to a suit so long as a new
counsel could be hired every time it is shown that the prior counsel
had not been sufficiently diligent, experienced or learned. [31]
Similarly, in Macalalag v. Ombudsman,[32] a Philippine Postal
Corporation employee charged with dishonesty was not able to file an
answer and position paper. He was found guilty solely on the basis of
complainants evidence and was dismissed with forfeiture of all
benefits and disqualification from government service. Challenging
the decision of the Ombudsman, the employee contended that the
gross negligence of his counsel deprived him of due process of law. In
debunking his contention, the Court said
Neither can he claim that he is not bound by his lawyers actions; it is
only in case of gross or palpable negligence of counsel when the
courts can step in and accord relief to a client who would have
suffered thereby. If every perceived mistake, failure of diligence, lack
of experience or insufficient legal knowledge of the lawyer would be
admitted as a reason for the reopening of a case, there would be no
end to controversy. Fundamental to our judicial system is the principle
that every litigation must come to an end. It would be a clear
mockery if it were otherwise. Access to the courts is guaranteed, but
there must be a limit to it.
Viewed vis--vis the foregoing jurisprudence, to sustain
petitioners argument that it was denied due process of law due to
negligence of its counsel would set a dangerous precedent. It would
enable every party to render inutile any adverse order or decision
through the simple expedient of alleging gross negligence on the part
of its counsel. The Court will not countenance such a farce which
contradicts long-settled doctrines of trial and procedure. [33]
Anent the second issue, petitioner was correctly found liable for
breach of contract of carriage. A common carrier is bound to carry its
passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due regard
to all the circumstances. In a contract of carriage, it is presumed that
the common carrier was at fault or was negligent when a passenger
dies or is injured. Unless the presumption is rebutted, the court
need not even make an express finding of fault or negligence
on the part of the common carrier. This statutory presumption
may only be overcome by evidence that the carrier exercised
extraordinary diligence.[34]
In the instant case, there is no evidence to rebut the statutory
presumption that the proximate cause of Marie Graces death was the
negligence of petitioner. Hence, the courts below correctly ruled that
petitioner was guilty of breach of contract of carriage.
Nevertheless, the award of damages should be modified.
Article 1764[35] in relation to Article 2206[36] of the Civil Code,
holds the common carrier in breach of its contract of carriage that
results in the death of a passenger liable to pay the following: (1)

DAMAGES

14

TRANSPORTATION LAW
indemnity for death, (2) indemnity for loss of earning capacity, and
(3) moral damages.
In the present case, respondent heirs of the deceased are
entitled to indemnity for the death of Marie Grace which under
current jurisprudence is fixed at P50,000.00.[37]
The award of compensatory damages for the loss of the
deceaseds earning capacity should be deleted for lack of basis. As a
rule, documentary evidence should be presented to substantiate the
claim for damages for loss of earning capacity. By way of exception,
damages for loss of earning capacity may be awarded despite the
absence of documentary evidence when (1) the deceased is selfemployed earning less than the minimum wage under current labor
laws, and judicial notice may be taken of the fact that in the
deceaseds line of work no documentary evidence is available; or (2)
the deceased is employed as a daily wage worker earning less than
the minimum wage under current labor laws. [38]
In People v. Oco,[39] the evidence presented by the prosecution
to recover damages for loss of earning capacity was the bare
testimony of the deceaseds wife that her husband was earning
P8,000.00 monthly as a legal researcher of a private corporation.
Finding that the deceased was neither self-employed nor employed as
a daily-wage worker earning less than the minimum wage under the
labor laws existing at the time of his death, the Court held that
testimonial evidence alone is insufficient to justify an award for loss of
earning capacity.
Likewise, in People v. Caraig,[40] damages for loss of earning
capacity was not awarded because the circumstances of the 3
deceased did not fall within the recognized exceptions, and except for
the testimony of their wives, no documentary proof about their
income was presented by the prosecution. Thus
The testimonial evidence shows that Placido Agustin, Roberto Raagas,
and Melencio Castro Jr. were not self-employed or employed as dailywage workers earning less than the minimum wage under the labor
laws existing at the time of their death. Placido Agustin was a
Social Security System employee who received a monthly
salary of P5,000. Roberto Raagas was the President of
Sinclair Security and Allied Services, a family owned
corporation, with a monthly compensation of P30,000.
Melencio Castro Jr. was a taxi driver of New Rocalex with an
average daily earning of P500 or a monthly earning of
P7,500. Clearly, these cases do not fall under the exceptions where
indemnity for loss of earning capacity can be given despite lack of
documentary evidence. Therefore, for lack of documentary proof, no
indemnity for loss of earning capacity can be given in these cases.
(Emphasis supplied)
Here, the trial court and the Court of Appeals computed the
award of compensatory damages for loss of earning capacity only on
the basis of the testimony of respondent Rosalito that the deceased
was 39 years of age and a Section Chief of the Bureau of Internal
Revenue, Tuguergarao District Office with a salary of P83,088.00 per
annum when she died. [41] No other evidence was presented. The
award is clearly erroneous because the deceaseds earnings does not
fall within the exceptions.
However, the fact of loss having been established, temperate
damages in the amount of P500,000.00 should be awarded to
respondents. Under Article 2224 of the Civil Code, temperate or
moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that
some pecuniary loss has been suffered but its amount can not, from
the nature of the case, be proved with certainty.
In Pleno v. Court of Appeals,[42] the Court sustained the trial
courts award of P200,000.00 as temperate damages in lieu of actual
damages for loss of earning capacity because the income of the
victim was not sufficiently proven, thus
The trial court based the amounts of damages awarded to the
petitioner on the following circumstances:

As to the loss or impairment of earning capacity, there is no doubt

that Pleno is an ent[re]preneur and the founder of his own
corporation, the Mayon Ceramics Corporation. It appears also that he
is an industrious and resourceful person with several projects in line,
and were it not for the incident, might have pushed them through. On
the day of the incident, Pleno was driving homeward with geologist
Longley after an ocular inspection of the site of the Mayon Ceramics
Corporation. His actual income however has not been sufficiently
established so that this Court cannot award actual damages, but, an
award of temperate or moderate damages may still be made on loss
or impairment of earning capacity. That Pleno sustained a permanent
deformity due to a shortened left leg and that he also suffers from
double vision in his left eye is also established. Because of this, he
suffers from some inferiority complex and is no longer active in
business as well as in social life. In similar cases as in Borromeo v.
Manila Electric Railroad Co., 44 Phil 165; Coriage, et al. v. LTB Co., et
al., L-11037, Dec. 29, 1960, and in Araneta, et al. v. Arreglado, et al.,
L-11394, Sept. 9, 1958, the proper award of damages were given.

We rule that the lower courts awards of damages are more

consonant with the factual circumstances of the instant case. The trial
courts findings of facts are clear and well-developed. Each item of
damages is adequately supported by evidence on record.

Article 2224 of the Civil Code was likewise applied in the recent
cases of People v. Singh[43] and People v. Almedilla,[44] to justify the
award of temperate damages in lieu of damages for loss of earning
capacity which was not substantiated by the required documentary
proof.
Anent the award of moral damages, the same cannot be lumped
with exemplary damages because they are based on different jural
foundations.[45] These damages are different in nature and require
separate determination.[46] In culpa contractual or breach of contract,
moral damages may be recovered when the defendant acted in bad
faith or was guilty of gross negligence (amounting to bad faith) or in
wanton disregard of contractual obligations and, as in this case, when
the act of breach of contract itself constitutes the tort that results in
physical injuries. By special rule in Article 1764 in relation to Article
2206 of the Civil Code, moral damages may also be awarded in case
the death of a passenger results from a breach of carriage. [47] On the
other hand, exemplary damages, which are awarded by way of
example or correction for the public good may be recovered in
contractual obligations if the defendant acted in wanton, fraudulent,
reckless, oppressive, or malevolent manner.[48]
Respondents in the instant case should be awarded moral
damages to compensate for the grief caused by the death of the
deceased resulting from the petitioners breach of contract of
carriage. Furthermore, the petitioner failed to prove that it exercised
the extraordinary diligence required for common carriers, it is
presumed to have acted recklessly. [49] Thus, the award of exemplary
damages is proper. Under the circumstances, we find it reasonable to
award respondents the amount of P100,000.00 as moral damages
and P100,000.00 as exemplary damages. These amounts are not
excessive.[50]
The actual damages awarded by the trial court reduced by the
Court of Appeals should be further reduced. In People v. Duban,[51] it
was held that only substantiated and proven expenses or those that
appear to have been genuinely incurred in connection with the death,
wake or burial of the victim will be recognized. A list of expenses
(Exhibit J),[52] and the contract/receipt for the construction of the
tomb (Exhibit F)[53] in this case, cannot be considered competent
proof and cannot replace the official receipts necessary to justify the
award. Hence, actual damages should be further reduced to
P78,160.00,[54] which was the amount supported by official receipts.
Pursuant to Article 2208[55] of the Civil Code, attorneys fees
may also be recovered in the case at bar where exemplary damages
are awarded. The Court finds the award of attorneys fees equivalent
to 10% of the total amount adjudged against petitioner reasonable.
Finally, in Eastern Shipping Lines, Inc. v. Court of Appeals,[56] it
was held that when an obligation, regardless of its source, i.e., law,
contracts, quasi-contracts, delicts or quasi-delicts is breached, the
contravenor can be held liable for payment of interest in the concept
of actual and compensatory damages, subject to the following rules,
to wit
1.
When the obligation is breached, and it consists in the payment
of a sum of money, i.e., a loan or forbearance of money, the interest
due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be 12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2.
When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the demand
is established with reasonable certainty, the interest shall begin to
run from the time the claim is made judicially or extrajudicially (Art.
1169, Civil Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.
3.
When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2,
above, shall be 12% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit. (Emphasis supplied).
In the instant case, petitioner should be held liable for payment
of interest as damages for breach of contract of carriage. Considering
that the amounts payable by petitioner has been determined with
certainty only in the instant petition, the interest due shall be
computed upon the finality of this decision at the rate of 12% per
annum until satisfaction, per paragraph 3 of the aforecited rule. [57]
WHEREFORE, in view of all the foregoing, the petition
is PARTIALLY GRANTED. The April 11, 2003 decision of the Court of
Appeals in CA-G.R. CV No. 63290, which modified the decision of the
Regional Trial Court of Tuguegarao, Cagayan in Civil Case No. 5023, is
AFFIRMED with MODIFICATION. As modified, petitioner Victory Liner,
Inc., is ordered to pay respondents the following: (1) P50,000.00 as
indemnity for the death of Marie Grace Pagulayan-Gammad; (2)
P100,000.00 as moral damages; (3) P100,000.00 as exemplary
damages; (4) P78,160.00 as actual damages; (5) P500,000.00 as
temperate damages; (6) 10% of the total amount as attorneys fees;
and the costs of suit.

DAMAGES

15

TRANSPORTATION LAW
Furthermore, the total amount adjudged against petitioner shall
earn interest at the rate of 12% per annum computed from the finality
of this decision until fully paid.
SO ORDERED.

G.R. No. 106279 July 14, 1995

SULPICIO LINES, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS (Twelfth Division) and
JACINTA L. PAMALARAN, respondents.
QUIASON, J.:
This is a petition for review on certiorari under Rule 45 of the Revised
Rules of Court to reverse the Decision dated April 8, 1992 of the Court
of Appeals in CA-G.R. CV No. 21919, affirming the decision of the
Regional Trial Court of Bohol, Branch 2, Tagbilaran City, which
awarded the claim for damages filed by private respondent against
CBL Timber Corporation (CBL), AGO Lumber Company (ALC), Sulpicio
Lines, Inc. (SLI) and Ernie Santiago (Civil Case No. 2864).
We deny the petition.
I
A contract of carriage was entered into between petitioner and ALC
for the transport of the latter's timber from Pugad, Lianga, Surigao del
Sur.
On March 17, 1976, petitioner sent its tugboat "MT Edmund" and
barge "Solid VI" to Lianga to pick up ALC's timber. However, no
loading could be made because of the heavy downpour. The next
morning, several stevedores of CBL, who were hired by ALC, boarded
the "Solid VI" and opened its storeroom. The stevedores were warned
of the gas and heat generated by the copra stored in the holds of the
ship. Not heeding the warning, a stevedore entered the storeroom
and fell unconscious. Two other stevedores followed, one of whom
was Leoncio L. Pamalaran. He also lost consciousness and eventually
died of gas poisoning.
Thus, Civil Case No. 2864 for damages was filed with the Regional
Trial Court of Bohol, Branch 2, Tagbilaran by Pamalaran's heirs against
petitioner CBL, ALC and its manager, Ernie Santiago. The trial court
ruled in favor of plaintiffs, disposing as follows:
WHEREFORE, finding a preponderance of evidence
in favor of the plaintiffs, judgment is hereby
rendered:
Ordering defendants CBL Timber Corporation, AGO
Lumber Company, Sulpicio Lines, Inc. and Ernie
Santiago to pay plaintiffs jointly and severally:
1. Actual and compensatory damages of
P40,000.00;
2. Moral damages of P50,000.00;
3. Attorney's fees of P20,000.00 and the costs of
the suit (Rollo, p. 57).
On appeal, the Court of Appeals in its Decision dated April 8, 1992 in
CA-G.R. No. CV No. 21919, affirmed the lower court's decision, the
dispositive portion of which reads:
WHEREFORE, WE AFFIRM the appealed judgment
there being no justifiable reason that warrants the
reversal thereof. Costs against defendant-appellant
(Rollo, p. 32).
Not satisfied with the appellate court's decision, petitioner filed this
petition.
II
Petitioner raises the following arguments:
1. Pamalaran was never a passenger of petitioner.
Therefore, it is not liable as a common carrier;
2. Petitioner and its employees were not negligent
in the series of events which led to the death of
Pamalaran;
3. Petitioner is not liable under Article 2180 of the
New Civil Code;
4. It is CBL and/or ALC which should be held liable
for the death of the victim; and,
5. Petitioner should have been granted its just and
valid counterclaims and cross claims.
We agree with the Court of Appeals that although Pamalaran was
never a passenger of petitioner, still the latter is liable as a common
carrier for his death. The Court of Appeals relied on Canas v.
Dabatos, 8 Court of Appeals Report 918 (1965). In said case, 13
persons were on board the vessel of defendant not as passengers but
as 'cargadores' of the shipper's goods. They were there with the
consent and knowledge of the owner of the vessel. Despite the
absence of a passenger-carrier relationship between them, the
appellate court, just the same, held the patron thereof liable as a
common carrier. The appellate court ruled:
There is no debate as to the fact that not one of
the thirteen passengers have paid an amount of
money as fare for their conveyance from
Hingotanan to Cebu. The undisputed fact,
however, is that all of them were in the boat with
the knowledge and consent of the patron. The
eleven passengers, other than Encarnacion and
Diosdado were in the boat because they have
helped in loading cargoes in the boat, and "to
serve as cargadores of the cargoes," presumably,
in unloading them at the place of destination. For
those services they were permitted to be in the
boat and to proceed to their destination in
Cebu. The services rendered were the valuable

consideration in exchange for the transportation

fare. "In onerous contracts the cause is understood
to be, for each contracting party, the prestation or
promise of a thing or service by the other; . . ." (at
p. 925; emphasis supplied).
ALC had a contract of carriage with petitioner. The presence of the
stevedores sent by ALC on board the barge of petitioner was called
for by the contract of carriage. For how else would its lumber be
transported unless it is placed on board? And by whom? Of course,
the stevedores. Definitely, petitioner could not expect the shipper
itself to load the lumber without the aid of the stevedores.
Furthermore, petitioner knew of the presence and role of the
stevedores in its barge and thus consented to their presence. Hence,
petitioner was responsible for their safety while on board the barge.
Petitioner next claims that its employees even warned the stevedores
and tried to prevent their entry into the storeroom. Such argument,
again, is demolished by the findings of the Court of Appeals, thus:
. . . . However, appellant failed to prove that its
employees were actually trained or given specific
instructions to see to it that the barge is fit and
safe not only in transporting goods but also for
people who would be loading the cargo into the
bodega of the barge. It is not enough that
appellant's employees have warned the laborers
not to enter the barge after the hatch was
opened. Appellant's employees should have been
sufficiently instructed to see to it that the hatch of
the barge is not opened by any unauthorized
person and that the hatch is not easily opened by
anyone. At the very least, precautionary measures
should have been observed by appellant's
employees to see to it that no one could enter the
bodega of the barge until after they have made
sure that it is safe for anyone to enter the
same. Failing to exercise due diligence in the
supervision of its employees, the lower court was
correct in holding appellant liable for
damages (Rollo, pp. 31-32; Emphasis supplied).
Inasmuch as the findings of the Court of Appeals are merely an
affirmance of the findings of the trial court, which findings are
supported by the evidence, we do not find any reason to reverse the
same.
There is no quarrel that ALC and CBL are also liable as they were in
fact held liable by both the trial and appellate courts.
Both the counterclaims and cross claims of petitioner are without
legal basis. The counterclaims and cross claims were based on the
assumption that the other defendants are the ones solely liable.
However, inasmuch as its solidary liability with the other defendants
has clearly been established by both the trial and the appellate
courts, which we find to be in order, we cannot make a different
conclusion contrary to that of the said courts.
Finally, the indemnity for the death of Leoncio L. Pamalaran is
increased from P40,000.00 to P50,000.00 in accordance with our
ruling in People v. Flores, 237 SCRA 653 (1994).
WHEREFORE, the Decision of the Court of Appeals is AFFIRMED with
the MODIFICATION that the award of actual and compensatory
damages is increased to P50,000.00.
SO ORDERED.

SECOND DIVISION
[G.R. No. 128820. December 23, 1999]
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. GAUDIOSO
MORE, ERNESTO, MORE and JERWIN MORE, accusedappellants.
DECISION
BELLOSILLO, J.:
GAUDIOSO, ERNESTO and JERWIN, all surnamed MORE, were
found guilty of murder by the trial court for the killing of Valentino
Pagumay on 22 February 1994 and sentenced toreclusion
perpetua with all its accessory penalties and to pay P28,977.00 for
funeral services and other expenses, P133,333.00 for loss of income
for five (5) years, P100,000.00 for moral damages, and the costs.
[1]
They now come to us appealing their conviction.
The factual backdrop: On 22 February 1994 at about six o'clock
in the evening, Valentino Pagumay and Romeo Muralla were walking
along the river in Brgy. Igsoligue, Miag-ao, Iloilo, on their way to
nearby Brgy. Igbogo to get some tuba when they chanced upon the
More brothers Gaudioso alias "Nono," Ernesto alias "Didoy" and Jerwin
alias "Max" some three hundred (300) meters away. As they drew
near, the accused who were armed with a gun and knives,
inexplicably shouted why Valentino and Romeo were pointing guns at
them. Both Valentino and Romeo were unarmed. When Valentino
nervously told Romeo, who had no quarrel with the accused, that the
More brothers were going to kill him, the duo ran as fast as they
could. But the accused chased them.
About three hundred (300) meters from where the chase began,
the accused led by Jerwin finally caught up with Valentino who was
lagging behind Romeo. Jerwin stabbed Valentino at the left side of his
mouth. Ernesto followed by stabbing the victim in the chest. While
Jerwin and Ernesto were stabbing Valentino Gaudioso held their
captive by the shoulders. Gaudioso then took his turn and stabbed

DAMAGES

16

TRANSPORTATION LAW
Valentino on the chest causing the latter to fall to the ground. The
three (3) accused persisted in their criminal design and pinned their
victim down with their hands and knees. They took turns in stabbing
him again several times.
As the stabbing progressed Romeo was having an unobstructed
view of the occurrence some ten (10) meters away. After they were
through with Valentino the accused turned to Romeo and warned him
against telling anybody about the incident and ordered him to go
home. The three (3) More brothers then ran away.
When the More brothers were already farther down the river
Romeo noticed Juanito Faromal standing a few meters away from the
crime scene. After seeing Valentino already lifeless Romeo left to
inform the victim's wife, but on the way he met Sgt. Romeo Gersa so
he reported the matter to him. [2] Sgt. Gersa pursued the accused but
could not apprehend them as he already got tired. When he fired a
warning shot the three (3) accused retaliated and fired three (3) shots
instead. Juanito corroborated the testimony of Romeo regarding the
assault except that according to him it was only Gaudioso who
stabbed the victim while his brothers Jerwin and Ernesto only assisted
in restraining the victim.
The accused, on their part, invoked self defense. The version of
Ernesto and Jerwin was that at about six o'clock in the evening of 22
February 1994 they were walking along a road in Brgy. Igsoligue
about ten (10) arms' length ahead of their brother Gaudioso when
they heard someone ask the latter for a light for his
cigarette. Ernesto and Jerwin did not recognize the voice. About two
(2) minutes later they heard a gun explode. They looked back and
saw Gaudioso and Valentino already on the ground wrestling with
each other. Gaudioso was sitting astride Valentino as he stabbed the
latter.[3] Ernesto and Jerwin rushed towards the two (2) - Gaudioso and
Valentino - entreating Gaudioso to stop, but to no avail. Gaudioso
only stopped when Valentino was already dead. Gaudioso then
explained to his brothers that he stabbed Valentino because the latter
was going to shoot him. Afterwards they went home and did not
report the incident anymore to the barangay captain since it was
already late.
Gaudioso claimed that when he handed his cigarette to
Valentino upon the latter's request he, instead of taking the cigarette,
suddenly drew a .38 caliber gun and pointed it at him with the
words: "I will shoot you.[4] Reacting immediately, Gaudioso, using
both hands, frustrated Valentino's attempt by grabbing the latter's
right hand that was holding the gun, twisted it, and then used his foot
to outbalance Valentino sending the latter to the ground. Thus
Valentino was not able to fire his gun. Gaudioso then straddled
Valentino and pinned his left hand with his right knee while his left
hand held Valentino's right that was clutching the gun. In this
position, Gaudioso repeatedly stabbed Valentino until the latter died.
[5]

On 9 May 1996 the trial court found all three (3) accused,
Gaudioso, Ernesto and Jerwin More, guilty as principals by conspiracy
for the murder of Valentino Pagumay, qualified by abuse of superior
strength. The trial court sustained the version of the prosecution and
rejected the theory of self-defense primarily in view of the eighteen
(18) stab wounds sustained by the victim and the fact that they were
caused by at least two (2) different knives, one single-bladed and the
other double-bladed, indicating that there were at least two (2)
assailants. The three (3) accused were accordingly sentenced to
suffer the penalty of reclusion perpetua with all its accessory
penalties, and to pay damages in the total amount of P262,310.00
plus the costs.
Accused-appellants contend in this appeal that the trial court
erred: (a) in not appreciating in their favor the justifying
circumstance of self-defense, insisting that all the elements thereof
were successfully established, and, (b) in finding them guilty beyond
reasonable doubt of murder notwithstanding the inconsistencies in
the testimonies of prosecution witnesses Romeo Muralla, Juanito
Faromal and Sgt. Gersa.
We find no merit in the appeal. When self-defense is invoked by
an accused charged with murder or homicide he necessarily owns up
to the killing but may escape criminal liability by proving that it was
justified and that he incurred no criminal liability therefor. [6] Hence,
the three (3) elements of self-defense, namely: (a) unlawful
aggression on the part of the victim; (b) reasonable necessity of the
means employed to prevent or repel the aggression; and, (c) lack of
sufficient provocation on the part of the person defending himself,
which must be proved by clear and convincing evidence. [7] However,
without unlawful aggression there can be no self-defense, either
complete or incomplete.[8]
In the instant case, accused-appellants sought to establish
unlawful aggression on the part of Valentino Pagumay by testifying
that the latter, after asking Gaudioso for a light for his cigarette,
suddenly and for no reason at all, drew his gun and pointed it at
Gaudioso with the threatening words, "I will shoot you." However,
quite an enlightening and revealing narrative follows thus:
Q: When Valentino Pagumay drew his gun from his waist what did
you do?
A: Both my hands caught his hand holding the firearm x x x x
Q: When you were able to grab the hand of Valentino Pagumay
what happened next?
A: He fell to the ground.
Q: So you want to tell the Court that immediately after you
grabbed or took hold of his hand he immediately fell to the
ground?
A: Yes sir because he wrestled with me when I took hold both of
his hand (sic) and twisted his arm.
Q: When Valentino Pagumay fell to the ground what did you do?
A: After he fell to the ground I sat on his abdomen. My right knee
was pinning down his left hand while my left hand was

Q:
A:
Q:
A:

pinning on the ground his right hand and then I delivered

several successive stab blows on his breast x x x x
And how many times did you stab him?
I was not able to count the number of times because I was
stabbing him successively.
And you cannot estimate the number of stab blows you
delivered to him?
I was not able to count the number of blows because I was
stabbing and hitting him until his death (underscoring ours).
[9]

Clearly, the unlawful aggression allegedly started by Valentino assuming it to be true - had already ceased by the time Gaudioso
repeatedly stabbed Valentino to death. Gaudioso himself testified
that after Valentino threatened to shoot him, he was able to grab
Valentino's right hand which was holding the gun, outbalance him,
and then pin both his hands while the latter was lying prone on the
ground. Having thus immobilized Valentino, there was obviously no
more reason for Gaudioso to stab Valentino eighteen (18) times as he
did because the alleged unlawful aggression from Valentino had
stopped. In legitimate self-defense the aggression must still
be existing or continuing when the person making the defense
attacks or injures the aggressor. [10] Thus when the unlawful aggression
ceases to exist, the one making the defense has no more right to kill
the former aggressor.[11] In such cases, less violent means would have
sufficed; hence, if not resorted to, the plea of self-defense must fail. [12]
In the instant case Valentino was already effectively
immobilized by Gaudioso, hence, the latter could have either simply
boxed the former with his free right hand, hit him on a non-vital part
of his body,[13] or better yet, summoned his brothers Ernesto and
Jerwin who were just standing a few meters away to help him in
ensuring no further aggression from Valentino. However, quite
inconsistent with his plea of self-defense, Gaudioso did none of these
things. Instead, he even ignored his brothers' entreaties for him to
stop, rebuffed their efforts to the extent of even accidentally hitting
Jerwin as claimed by the latter, [14] and continued stabbing Valentino
successively until the latter died.[15] Considering all these, the plea of
self-defense cannot but be received with incredulity and disbelief.
In addition to the foregoing, several other circumstances exist
to further undermine the plea of self-defense and establish accusedappellants' collective guilt.
First, the trial court correctly noted that the victim sustained a
total of eighteen (18) stab wounds, fourteen (14) of which
were inflicted on the anterior chest alone, and four (4) of which were
fatal. It is an oft-repeated rule that the presence of a large number of
wounds on the part of the victim negates self-defense because, rather
than suggest an effort to defend oneself, it instead strongly indicates
a determined effort to kill the victim.[16] Second, the claim that
Gaudioso alone killed Valentino in self-defense and that Ernesto and
Jerwin had nothing to do with the killing was disproved not only by
Romeo and Juanito's positive identification of Ernesto and Jerwin as
co-conspirators (at least) to the crime but, more importantly, by the
fact that the stab wounds themselves indicated that there was
actually more than one assailant. As testified to by Dr. Mary Joyce M.
Faeldan, the Acting Municipal Health Officer of Miag-ao who autopsied
the cadaver, the eighteen (18) stab wounds sustained by the victim
were not all caused by a single weapon but by two (2) kinds of
knives, i.e., one single-bladed, and the other, double-bladed. While
three (3) stab wounds had blunt and contussed extremities indicating
that they were inflicted with the use of a blunt single-bladed knife, the
remaining fourteen (14) stab wounds had regular distinct clean-cut
edges and sharp extremities indicating a sharp double-bladed knife as
the murder weapon.[17] Since only Gaudioso's right hand was free to
hold a weapon, his left hand already gripping Valentino's right hand,
then it is quite obvious that his brothers likewise participated in the
assault as claimed by the prosecution witnesses because Gaudioso,
evidently, could not have managed two (2) weapons at the same time
with only his right hand free.
Third, accused-appellants did not inform the authorities about
the incident. If they were really innocent as they claimed to be, they
should have told the authorities about the accidental killing. [18] Their
excuse that it was already late is not only shallow but quite incredible
considering three (3) factors: (a) accused-appellants managed to get
home at the relatively early hour of 6:30 in the evening; [19] (b) the
house of the barangay captain to whom they could have reported the
incident was a mere fifty (50) meters away from their own house;
[20]
and, (c) Gaudioso was himself a barangay official making it easier
for him to approach the other barangay authorities who were but his
colleagues.[21]
Fourth, accused-appellants do not deny that they did not
surrender to Sgt. Gersa when the latter saw them immediately after
the killing. In fact, they ignored his warning shot and ran
away. Worse, accused-appellants even returned fire with three (3)
gunshots of their own, continued their flight until Sgt. Gersa gave up
the chase through sheer exhaustion, and yielded only when they were
already invited for questioning by the police after having been
identified as the killers by eyewitnesses Romeo Muralla and Juanito
Faromal.
On the alleged inconsistencies in the testimonies of the
prosecution witnesses, suffice it to say that inconsistencies on minor
and trivial matters do not diminish but rather bolster a witness's
credibility as they in fact manifest spontaneity and lack of scheming.
[22]
In other words, they are badges of truth rather than indicia of
falsehood.[23] Thus the alleged contradictions on the relative positions
of Romeo and Valentino while the latter was being stabbed, whether it
was Romeo or Juanito who informed the victim's wife about the
incident, and whether Juanito was indeed taken by Sgt. Gersa to
Camp Monteclaro after the incident, are but trivial and minor
inconsistencies which neither detract from the essential integrity of

DAMAGES

17

TRANSPORTATION LAW
the prosecution's evidence nor strengthen accused-appellants'
flagging plea of self-defense. Having already pleaded self-defense,
accused-appellants could not invoke the alleged weakness of the
prosecution's evidence, for, even if the latter were weak (which is
certainly not so in the instant case), it could not be disbelieved in
view of their open admission of responsibility for the killing. [24]
On the civil liabilities of accused-appellants a modification of the
amounts awarded by the trial court is in order. By way of moral
damages, the trial court awarded P100,000.00. Since the award is
not meant to enrich the heirs of the victim but only to compensate
them for injuries sustained to their feelings we reduce the amount
to P50,000.00 consistent with prevailing jurisprudence. [25] A reduction
of the actual damages awarded is likewise proper. The trial court
awarded P28,977.00 for various expenses incurred by the victim's
widow as a result of the killing. However, since only the costs of the
tomb, coffin, embalming and funeral services in the total amount
of P8,977.00 were properly receipted [26] the estimated amount
of P20,000.00 allegedly spent for food and drinks consumed during
the wake must be disallowed for not having been competently
proved. The Court can only give credit to expenses which have been
duly substantiated.[27]
On the victim's loss of earning capacity, Victoria Pagumay
testified that her husband, a farmer, was 53 years old when he was
killed, with an average annual income of P40,000.00 toP50,000.00.
[28]
Using P40,000.00 as the deceased's average annual income while
still alive, the trial court awarded P133,333.00 for loss of earning
capacity after multiplying two-thirds (P26,666.67) of the victim's
average annual income[29]by five (5) years. No reason was given, and
no legal basis exists, why lost income was awarded for only five (5)
years. On the contrary, the victim's lost earnings are to be computed
according to the formula adopted by the Court in several decided
cases,[30] to
wit: net
earning
capacity
("X")
equals
life
expectancy[31] multiplied by gross annual income [32] less living
[33]
expenses. Thus, the victim's lost earning capacity amounted
to P405,000.00 as may be shown hereunder X = 2(80-53) x
[P45,000 - P22,500]
(27) x P22,500

3
X=2
3
X = 54 x P22,500
3
X = 18 x P22, 500
X = P405,000.00

Finally, an award of another P50,000.00 is warranted as civil

indemnity for the death of the victim without need of evidence or
proof of damages.[34]
WHEREFORE, the appealed Decision dated 9 May 1996 of the
Regional Trial Court of Iloilo City, Branch 25, finding accusedappellants GAUDIOSO MORE, ERNESTO MORE and JERWIN MORE
guilty beyond reasonable doubt of Murder is AFFIRMED. Accusedappellants are ordered to pay, jointly and severally, the heirs of
Valentino Pagumay the following amounts: (a) P50,000.00 as civil
indemnity; (b) P50,000.00 as moral damages; (c) P8,977.00 as actual
damages; and, (d) P405,000.00 for loss of earning capacity. Costs
against accused-appellants.
SO ORDERED.

SECOND DIVISION
[G.R. No. 120874. July 31, 2003]
NAPOLEON TUGADE, SR., and RIZALINA FABRO-TUGADE,
substituted by her heirs, namely, Napoleon Sr.,
Napoleon
Jr.,
and
Zenaida,
all
surnamed
TUGADE, petitioners, vs. COURT OF APPEALS and
PANGASINAN
ELECTRIC
COOPERATIVE,
INC., respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
While this Court is not a trier of facts, there are instances
however when we are called upon to re-examine the factual findings
of the trial court and the Court of Appeals and weigh, after
considering the records of the case, which of the conflicting findings is
more in accord with law and justice. [1] Such is the case at bar.
The antecedent facts of this case are as follows:
On June 12, 1980 at around 12:00 noon, Engr. Henry Tugade of
the Pangasinan Electric Cooperative, Inc. (Panelco) rode in a company
rover jeep together with four other employees bound from the
Panelco compound in Bani to Bolinao, Pangasinan. Somewhere in
Tiep, Pangasinan, a Dagupan bus that was also headed for Bolinao,
began to follow the rover jeep. While the bus was trying to overtake
the jeep, the latter turned turtle and caused four of its five occupants
to fall out of the jeep causing the death of Tugade and another
passenger by the name of Consuelo Estolonio.[2]
Separate cases for damages, docketed as Civil Cases Nos. A1368 and A-1384 were filed by the heirs of the two deceased before
the Regional Trial Court of Pangasinan against Panelco and Dagupan
Bus Co. and their respective drivers, Honorato Areola and Renato
Quiambao. It is Civil Case No. A-1368 filed by the heirs of Henry
Tugade, which is now the subject of the present petition.
The Regional Trial Court of Pangasinan (Branch 55) held Panelco
and its driver liable, thus:

As a consequence and in view of the evidence on record, the Court

holds and so finds that the accident occurred due to the fault or
negligence of Panelco and its driver Honorato Areola. The negligence
of Panelco consists in having allowed its rover jeep which is
mechanically defective, unsafe and not roadworthy to be operated on
a highway. On the other hand, the defendant-driver Honorato Areola
was likewise, negligent in driving a vehicle which was not roadworthy,
unsafe and with a mechanical defect.
The Court finds that the defendants Panelco and Honorato Areola are
liable to pay to the plaintiffs in Civil Case No. A-1368 damages, as
follows: actual damages, P99,131.00 (Exhibits H to H-3, I to I4 and K), attorneys fees, P20,000.00, moral damages, P20,000.00
and exemplary damages, P10,000.00
As to loss of earning capacity, it has been held in Villa-Rey Transit vs.
Court of Appeals, 31 SCRA 511, that this is based on net earnings and
not gross earnings. No evidence was introduced to show the net
earnings. However, under the Circumstances, the Court holds that a
monthly net earning of P500.00 would be reasonable. Using the
formula in the Villa-Rey case, the life expectancy of the late Henry
Tugade would be 36 years, hence the Court awards P216,000.00 for
loss of earning capacity.
WHEREFORE, the Court hereby renders judgment:
1.
Dismissing the complaint and cross-claim
as against Dagupan Bus in Civil Case No.
A-1368;
2.
Dismissing the complaint in Civil Case No.
A-1384;
3.
In Civil Case No. A-1368, ordering the
defendants
Pangasinan
Electric
Cooperative, Inc., and Honorato Areola to
pay, jointly and severally, to the
plaintiffs, the following:
P 99,131.00
as
actual damages;
216,000.00
for
loss
of
earning
capacity;
20,000.00 moral
damages; and
10,000.00
exemplary
damages; and
20,000.00
attorneys fees
With costs against said defendants. [3]
In arriving at its decision, the trial court explained that:
xxx Rosie Castrence, a passenger of Bus No. 244 who saw the
accident testified categorically that the rover jeep turned turtle in
front of the Dagupan Bus when the jeep was about 5 meters in front
of the Bus and the jeep turned turtle even without being bumped by
the Dagupan Bus. The Court considers this witness as an unbiased
witness as she appears not to be an interested party. She was also in
a good position to observe in detail what actually happened at the
scene of the accident as she was seated on the right front seat of the
bus. The Court believes this witness more than the other witnesses
who do not appear to be disinterested.
Furthermore, it is not credible that if the rover jeep was hit on its left
rear, it will turn turtle on its left side. The natural effect or tendency
is for the jeep to be pushed or even thrown towards its right side. If
the jeep turned turtle towards the left, it must have been due to some
other cause than being hit by the bus on its left side.
The physical facts which do not lie as well as testimonial evidence
support the stand of Dagupan Bus that the bus did not hit the left rear
of the rover jeep.
If the bus did not hit the left rear of the jeep what then caused the
latter to turn turtle. There is merit in the contention of defendant
Dagupan Bus that the cause was due to some mechanical defect. By
Defendant Areolas own admission, the rover jeep was being fixed by
the Chief mechanic at the motor pool of Panelco, when he arrived at
their compound, and that the jeep was Quite old.
Likewise, Rosie Castrence also testified that when she first saw the
Panelco jeep at Tiep, Bani, Pangasinan, the jeep was already zigzagging and wiggling, a sign that indeed the jeep had some
mechanical defect.
Another mark of a mechanical defect in the jeep was the fact that the
right front wheel and rear wheel of the jeep were detached because
their spindles were broken. This came from the mouth of Panelcos
witness Florencio Celeste.
The next issue to be resolved is what was the cause of death of Henry
Tugade? Plaintiffs theory is, of course, that Henry Tugade died
because he was run over and pinned under the left front wheel of
Dagupan Bus No. 244 crushing his head and upper body. This is the
same theory of defendants Panelco and Areola. Defendants Dagupan
Bus and Quiambao deny this claim and their theory is that Henry
Tugades death was caused by the violent impact of his head against
the hard pavement of the road when he was thrown out of the rover
jeep.
The plaintiffs theory is, however, contradicted by their own medico
legal expert Dr. Wilfredo Nazareno who testified positively that the
fatal injury which caused the death of Henry Tugade were the
fractures on his head which could have been due to the impact of the
head against the asphalted road.
Again plaintiffs theory is contradicted by Panelcos own witness
Florencio Celeste, Chief Engineer, who was the only one who did not
fall out of the jeep, when he testified that the left front wheel of the
bus did not rest on the head of Henry Tugade and the wheel of the
bus did not run over the head of the victim.
Rosie Castrence, a disinterested witness, also declared that the left
front tire of the bus did not run over the head of Henry Tugade. [4]

DAMAGES

18

TRANSPORTATION LAW
Petitioners went to the Court of Appeals questioning only the
award of damages and attorneys fees.[5] They claimed that the lower
court erred in: finding that the monthly earnings of the late Henry
Tugade at the time of his death was only P500.00; disregarding the
evidence on record showing the monthly earnings of the late Henry
Tugade; not considering the social, educational and economic status
of the plaintiffs in its assessment of the moral and exemplary
damages; and setting the sum ofP20,000.00 as attorneys fees.[6]
Respondent Panelco also appealed to the Court of Appeals from
the decision of the trial court and assailed its ruling that the
negligence of Panelco and its driver was the proximate cause of the
accident.[7]
In its decision dated September 7, 1994, [8] the Court of Appeals
reversed the findings of the trial court, declared that Dagupan Bus, as
an employer, had exercised due diligence in the selection and
supervision of its employees and disposed of the case in this wise:
WHEREFORE, in view of all the foregoing, the decision of the court a
quo is reversed, but only insofar as it holds defendant Pangasinan
Electric Cooperative, Inc. liable, and defendant Renato Quiambao is
ordered to pay to defendant-appellant Pangasinan Electric
Cooperative, Inc., P7,500.00 as temperate damages, P10,000.00 as
attorneys fees and costs of suit.[9]
The appellate court explained, thus:
The testimony of Castrence, on which the court a quo heavily relied in
its finding of facts, is contradicted by the greater weight of evidence
on record.
First, there is no evidence whatsoever --- for either one of the parties
--- of a blown-out tire. What the evidence on record indicates is that
the two right wheels of the jeep were detached. The testimony
regarding a blown-out tire is not even in consonance with the theory
of Dagupan, that is, that the wheels were detached due to mechanical
defects.
Second, her testimony that the jeep was wiggling and zigzagging is
contradicted by the testimonies of Florencio Celeste and Cipriano
Nacar, passengers of the jeep and witnesses for plaintiffs Tugade, to
the effect that their ride was smooth and normal. (TSN, September
29, 1983, pp. 10, 43 & 66; November 20, 1984, p. 7)
Third, her testimony regarding the sitting arrangement of passengers
of the jeep is contradicted by the testimony of Cipriano Nacar,
passenger of the jeep and witness for plaintiffs Tugade. According to
Nacar, he and Estolonio were seated at the rear of the jeep; the driver
Areola was behind the steering wheel, with Celeste to his right and
Tugade on the rightmost. In other words, Celeste was between Areola
and Tugade, and no one was seated to the left of the driver. (TSN,
September 29, 1983, pp. 9-10)
Fourth, her testimony that Tugades head was about one foot from the
left front tire of the bus is likewise contradicted by the testimonies of
Cipriano Nacar and Honorato Areola that the tire of the bus was partly
resting on the head of Tugade. In fact, the bus driver Renato
Quiambao even had to back up the bus so that Tugades body may be
pulled out from below. (ibid., pp. 22-23)
Fifth, her testimony that Tugades shirt was checkered is also
contradicted by Exhibit G, a photograph of the deceased as he lay on
the ground. The photograph shows Tugade wearing a plain white
shirt.
Finally, her testimony that she did not see Estolonio after the accident
because the latter was inside the jeep is again contradicted by the
finding of the court a quo that all the passengers of the rover jeep
were thrown out of the vehicle except Florencio Celeste and the body
of Henry Tugade landed on the left lane of the road and was in front of
the left front wheel of Bus No. 244. (underscoring ours, Decision, p.
2) In other words, Estolonio, just like Tugade, was sprawled on the
ground. (ibid., p. 22)
Castrences testimony is also marred by improbabilities.
First, she claims to have noticed the color of Tugades pants who was
seated --- in the front of the jeep. It is quite improbable that
Castrence, being seated inside the bus, could see the color of the
pants of Tugade who was seated on the front seat of the
jeep. Second, while she noticed the passengers in the front of the
jeep --- indeed she even noticed the color of the pants one of them
was wearing --- she could not tell whether or not there were
passengers at the back. Third, it is also improbable that the driver
and the passengers of the jeep simply continued with their journey,
oblivious to the wiggling and zigzagging of their vehicle.
Moreover, even disregarding the incredibility of Castrences
testimony, still the version that the accident was due to a mechanical
defect that allowed the wheels to be detached cannot be given
credence. If the cause of the accident was that both wheels on the
right side were detached, then the jeep would not have turned turtle
to its left, but to its right. If there had been no wheels to support its
right side, the jeep should have turned turtle to its right, but it turned
to its left instead.
The court a quo reasons that it is not credible that if the rover jeep
was hit on its left rear, it will turn turtle on its left side. The natural
effect or tendency is for the jeep to be pushed or even thrown
towards its right side. (Decision, p. 3) The court a quo, however,
seems to have disregarded the testimony of Honorato Areola that the
jeep first swerved to the right, then to the left. (TSN, October 15,
1984, p. 48) To be noted also is that a jeep is inherently
maneuverable, and may easily swerve from side to side when hit from
its left rear portion. Moreover, after the accident, both the jeep and
the bus were at the left side of the highway. If the bus were not
attempting to overtake the jeep, why then was it at the left side of the
highway?
As may be seen from the foregoing, the court a quo failed to take into
account the discrepancies and inconsistencies of Castrences
testimony vis--vis established facts and other evidence on record.
Moreover, the court a quo misappreciated the testimony of Areola
that the jeep was being checked up at the Panelco motor pool, and

interpreted such testimony to mean that the jeep was being fixed or
repaired due to a mechanical defect. First, the mere fact that the
jeep was at the motor pool does not mean that it was there due to a
mechanical defect. As testified by Areola, it was being subjected to a
check-up (TSN, October 9, 1984, pp. 41-42), which may have been
simply routinary. Second, even assuming that the jeep had a
mechanical defect, its presence at the motor pool may also mean that
such defect had been repaired and that the jeep was quite old does
not necessarily mean that it had a mechanical defect. That two
wheels were detached from the jeep and that its spindle was broken
can be just as reasonably explained by the fact that the jeep turned
turtle after being sideswiped by an overtaking bus.
On the contrary, Celeste and Nacar, witnesses for the plaintiffs
Tugade, consistently testified that their ride was normal and smooth.
In light of the foregoing, the conclusion must be that the accident was
caused by the negligence of Quiambao in driving Bus No. 244, as
testified to by Areola, Nacar and Celeste, for which he must be held
civilly liable.[10]xxx
Hence, petitioner filed the present petition for certiorari [11] of
the decision of the Court of Appeals and the resolution dated June 27,
1995 denying petitioners motion for reconsideration.
Petitioners contend that the Court of Appeals:
I
COMMITTED AN ERROR OF LAW AND VIOLATED THE RULES OF
EVIDENCE BY REJECTING THE TESTIMONY OF A DISINTERESTED
WITNESS AND ADMITTED THE BIASED TESTIMONIES OF THE
EMPLOYEES-WITNESSES FOR PRIVATE RESPONDENT PANELCO.
II
COMMITTED AN ERROR OF LAW BY SUBSTITUTING ITS FINDINGS OF
FACTS TO THAT OF THE TRIAL COURT WHICH WAS IN A BETTER
POSITION TO EVALUATE AT FIRST HAND THE EVIDENCE ADDUCED BY
THE PARTIES, PARTICULARLY THE SITUATION, DEMEANOR AND
SINCERITY OF THE WITNESSES.
III
MISINTERPRETED, IF NOT DELIBERATELY DISREGARDED, THE
BREAKING OF THE SPINDLE AND THE DETACHMENTS OF THE FRONT
RIGHT AND REAR WHEELS OF THE ROVER JEEP OF PRIVATE
RESPONDENT PANELCO WHICH ARE CONCLUSIVE PROOF OF THE
ROAD UNWORTHINESS OF THE ROVER JEEP THAT TURNED TURTLE
CAUSING THE DEATH OF THE LATE HENRY TUGADE.
IV
ERRED IN ARRIVING AT A CONCLUSION THAT PRIVATE RESPONDENT
WAS NOT NEGLIGENT AT THE TIME OF THE ACCIDENT AND IS NOT
THEREFORE LIABLE FOR THE UNTIMELY DEATH OF HENRY TUGADE.
V
ERRED IN NOT APPLYING PERTINENT JURISPRUDENCE AND
PROVISIONS OF LAWS IN REVERSING THE DECISION OF THE TRIAL
COURT.[12]
Petitioners stress that they only questioned before the Court of
Appeals the amount of damages, loss of earning capacity and
attorneys fees awarded by the trial court in its decision, but the
appellate court disregarded the factual findings and conclusions of
the trial court and substituted its own findings of fact. Petitioners
claim that this violates the doctrine that the findings of the trial court
on the credibility of witnesses are entitled to great weight on appeal
as it is in a better position to decide the question on credibility having
seen and heard the witnesses themselves. Petitioners further claim
that: the Court of Appeals erroneously disregarded the testimony of
Rosie Castrence which the trial court found to be a disinterested
party, based on minor and trivial inconsistencies; [13] the appellate
court overlooked or failed to consider the breaking of the spindles and
the detachment of the front and rear wheels of the rover jeep owned
by and belonging to respondent Panelco which led the trial court to
conclude that the accident was due to the negligence of private
respondent as it allowed its rover jeep which is mechanically
defective and not roadworthy to be operated on a highway and due to
the negligence of defendant Honorato Areola in driving a vehicle
which was not roadworthy. [14]
In its Comment, respondent Panelco points out that the factual
findings of the Court of Appeals is not reviewable by the Supreme
Court.[15]
Petitioners in their Reply, meanwhile, argue that where the
findings of the Court of Appeals and the trial court are contrary to
each other, such as in this case, the Supreme Court may scrutinize
the evidence on record.[16]
In its Rejoinder, respondent Panelco reiterates that: the
petitioners raised only factual issues which in effect will make this
Court a trier of facts; the Court of Appeals, contrary to the contention
of petitioners, actually set the record straight by carefully scrutinizing
the factual evidence; the appellate court pointed out in detail the
inconsistencies in the findings of the lower court unlike the haphazard
way by which the lower court reached its conclusions. [17]
We find the petition to be impressed with merit.
As mentioned earlier, it is settled that as a rule, our jurisdiction
in cases brought to us from the Court of Appeals is limited to the
review and revision of errors of law allegedly committed by the
appellate court, as its findings of fact are deemed conclusive and we
are not duty-bound to analyze and weigh all over again the evidence
already considered in the proceedings below.[18]
However, we have consistently enunciated that we may review
the findings of fact of the Court of Appeals:
(a) where there is grave abuse of discretion; (b) when the finding is
grounded entirely on speculations, surmises or conjectures; (c) when
the inference made is manifestly mistaken, absurd or impossible; (d)
when the judgment of the Court of Appeals was based on a
misapprehension of facts; (e) when the factual findings are
conflicting; (f) when the Court of Appeals, in making its findings, went
beyond the issues of the case and the same are contrary to the
admissions of both appellant and appellee; (g) when the Court of

DAMAGES

19

TRANSPORTATION LAW
Appeals manifestly overlooked certain relevant facts not disputed by
the parties and which, if properly considered, would justify a different
conclusion; and, (h) where the findings of fact of the Court of
Appeals are contrary to those of the trial court, or are mere
conclusions without citation of specific evidence, or where the facts
set forth by the petitioner are not disputed by the respondent, or
where the findings of fact of the Court of Appeals are premised on the
absence of evidence and are contradicted by the evidence on record.
[19]
[Emphasis ours]
In this case, the factual findings of the trial court and the Court
of Appeals are conflicting. Thus, it behooves this Court to review the
findings of facts of the lower courts.
The trial court gave weight to the testimony of Rosie Castrence,
a passenger of Dagupan bus who testified that the Panelco rover jeep
turned turtle without being hit by the bus from behind; while the
Court of Appeals pointed out inconsistencies in her testimony and
gave weight to the version of the employees of Panelco that the jeep
turned turtle because it was hit by the bus from behind.
The trial court reasoned that Castrence, a fish vendor who
happened to be a passenger at the time of the accident, was credible
and unbiased being a disinterested witness, unlike the other
witnesses who are employees of Panelco. It also explained that she
was in a good position to observe in detail what actually happened at
the scene of the accident as she was seated at the right front seat of
the bus.[20]
On the other hand, the Court of Appeals considered her
testimony not worthy of belief because of inconsistencies especially
vis-a-vis the testimonies of the employees of Panelco, namely: Areola,
Nacar and Celeste, [21] to which the appellate court gave greater
weight and on which basis it concluded that the accident was caused
by the negligence of Quiambao in driving Bus No. 244 for which he
must be held civilly liable.[22]
In ascertaining the facts of the case, it would have greatly aided
the courts if photographs of the vehicles were presented during the
trial. However, none was presented. Hence, we are constrained to
rely mainly on the testimonies of the witnesses.
After reviewing the entire records of the case, we find
compelling reasons to reverse the findings of the Court of Appeals,
and affirm the appreciation of facts of the trial court.
It is basic that findings of facts of trial courts are accorded by
appellate courts with great, if not conclusive effect. This is because of
the unique advantage enjoyed by trial courts of observing at close
range the demeanor, deportment and conduct of witnesses as they
give their testimonies.[23] Trial courts have the unique advantage of
being able to observe that elusive and incommunicable evidence of
the witness deportment on the stand while testifying --- the brazen
face of the liar, the glibness of the schooled witness in reciting a
lesson, the itching over-eagerness of the swift witness, as well as the
honest face of the truthful one. [24] Indeed, assignment of values to
declarations on the witness stand is best done by the trial judge who,
unlike appellate magistrates, can weigh firsthand the testimony of a
witness.[25]
While there may be inaccuracies in Castrences testimony as
pointed out by the appellate court---the mention of a blown out tire,
the seating arrangement of the passengers of the rover jeep, the
color of the shirt of the deceased, and the location of all the
passengers of the jeep after it turned turtle---we deem such
discrepancies
negligible
considering
the
totality
of
her
testimony. Records show that she was called to the witness stand six
years after the accident happened. It is therefore understandable
that she would miss recalling some details. As we held in the recent
case of People vs. Delim:
The inconsistencies in the testimonies of [witnesses] do not render
them incredible or their testimonies barren of probative weight. It
must be borne in mind that human memory is not as unerring as a
photograph and a persons sense of observation is impaired by many
factors A truth-telling witness is not always expected to give an
error-free testimony considering the lapse of time and the treachery
of human memory. What is primordial is that the mass of testimony
jibes on material points, the slight clashing of statements dilute
neither the witnesses credibility nor the veracity of his testimony
Inconsistencies on minor and trivial matters only serve to strengthen
rather than weaken the credibility of witnesses for they erase the
suspicion of rehearsed testimony. [26]
In her testimony, Rosie Castrence said that she saw the jeep
turn turtle in front of their bus.
Q Mrs. Witness, you testified that the PANELCO jeep
turned turtle infront of the Dagupan Bus, how close
was the Dagupan Bus to the PANELCO jeep when
you saw it turn turtle?
A
About five (5) meters infront the Dagupan Bus when it
turn (sic) turtle, sir.
Q In other words, the jeep turned turtle even without
being bumped by the Dagupan Bus?
A
Yes, sir.[27]
She also testified that before the jeep turned turtle she saw that
it was wiggling.
A
When we were still at Barangay Tiep I have seen
already that jeep.
xxx
xxx
xxx
Q What did you observe if any about the jeep that you
were following?
A
The jeep was already wiggling and was zigzagging
along the way.[28]
We find this testimony not only credible but also consistent with
the physical evidence as well as the testimonies of Panelcos own
employees.

Engr. Florencio Celeste, who was seated beside Henry Tugade,

testified that after the jeep turned turtle he saw that the right wheels
were detached and that the spindle was broken.
Q If it turned turtle, did you observe the jeep suffered
(sic) any mechanical defect or parts were broken?
A
After the jeep turned turtle, I noticed that the right
front wheel and rear wheel of the jeep were
detached, sir.
xxx
xxx
xxx
Q Did you see how the wheels were detached?
A
The spindle were (sic) broken, sir.[29]
Engr. Agustin Erezo, the Officer In Charge of the Motorpool of
Panelco at the time of the accident, also admitted in his testimony
that the rover jeep was merely assembled in their motorpool, thus:
Q You mentioned that the rover jeep was assembled in
February 1980, if it was assembled in February 1980,
what was the condition before you assembled? (sic)
A
We put all the spare parts new, we bought all the
spare parts new, all spare parts are new.
Q So you want to make us understand that it was almost
a junk at the time you repair it?
A
We bought the chassis, the engine and everything so
all the spare parts are new.
Q At the time you repaired it in 1980 (interruption)
A
I assembled it.[30]
xxx
xxx
xxx
Q Before you repaired it in February 1980, was it in
running condition?
A
Before we repaired it, it was not in running condition,
there was no jeep before the repair, they are all
spare parts and we assembled it.[31]
The driver of the jeep and one of the defendants, Honorato
Areola, also admitted that the engine of the jeep at the time of the
accident was already old.
Q And what year Mr. Witness is the model of the rover
jeep if you really know the model of the different
vehicles?
A
I already forgot, sir. It is diesel model.
Q To make specific Mr. Witness, what year was this
model, was it the model 69, 65 or what?
A
I cannot remember, sir.
Q But in your experience as driver, did this rover
jeepney, new or old, at the time you drove it on June
12, 1980.
A
Quite old already, sir.
Q What about the body of the jeepney, also old like the
engine?
A
The body is newly assembled, sir.[32]
Worth noting also is the admission of Engr. Celeste that the jeep
did not have a speedometer.
Q Now, you estimated the speed of the jeep at 45 to 50
kilometers per hour, because according to you you
are also a driver and you always look at the
speedometer is that correct?
A
Yes, sir.
Q This rover jeep having been made, home made at the
Panelco Motor pool, did not have speedometer, is
that correct?
A
It does not have speedometer, so the speedometer
does not function, sir.
Q Aside from the speedometer there were many parts of
the jeep which were not functioning is that correct?
A
All of those parts in the Panel board except its
speedometer cable.
Q And so, when you said that the jeep was running
about 45 to 50 kilometers the truth is the speed
could have been even less than 45 kilometers or
more than 50 kilometers.
A
That is approximate, sir.[33]
In sum, we find that with the testimony of Castrence, the broken
spindle of the rover jeep and the admissions of Panelcos own
employees that the jeep was merely assembled, had an old engine,
and did not have any speedometer, manifest gross negligence on the
part of Panelco and its driver Honorato Areola for which they should
be held liable to pay damages. The trial court correctly held both
Panelco and its driver liable for using an unsafe vehicle in
transporting Panelcos employees.
As provided for in the New Civil Code:
Art. 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage
done
Art. 2180. The obligation imposed by Article 2176 is demandable not
only for ones own acts or omissions, but also for those of persons for
whom one is responsible.
xxx
xxx
xxx
Employers shall be liable for the damage caused by their employees
and household helpers acting within the scope of their assigned tasks,
even though the former are not engaged in any business or industry.
xxx
xxx
xxx
The responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed all the diligence
of a good father of a family to prevent damage.
Areola, as driver of the vehicle, did not personally check the
condition of the vehicle before using it.

DAMAGES

20

TRANSPORTATION LAW
Q

And when you arrive at the Panelco compound this

jeep was already ready to be driven?
A
It was in the motor pool we were checking up.
Q But you yourself did not go to the motor pool to get
the jeep?
A
I just see the jeep but I did not go under the jeep, sir.
Q You mean to say that the jeep was in an elevated flat
(sic) form at the time when you saw it at the Panelco
compound being checked up?
A
Its not in the elevated place but it was in the Panelco
compound, I am looking for the Chief Mechanic
checking up the jeep. I was looking at the jeep
being checked up by the Chief Mechanic, sir.
Q How many mechanics were attending this rover jeep
at the time you were looking at the jeep?
A
They were many but who was looking after was the
Chief Mechanic, sir.
xxx
xxx
xxx
Q And these mechanics of the Panelco were helping or
attending the Chief Mechanic?
A
I do not know, sir, because they were doing
something.
Q So all these persons were working on the rover jeep, is
that correct?
A
No, sir.[34] (sic)
What was admitted was the fact that it was his first time to
drive said vehicle[35] and that he did not know whether or not the
vehicle was registered at the time of the accident.
Q xxx You are aware that the rover jeep was not
registered for that year 1980, the jeep you were
driving, is that correct?
A
That is what I do not know, sir.
xxx
xxx
xxx
Q Is it a matter of your practice, that when you drive a
vehicle you do not determine and find out anymore
whether the registration certificate is found in the
vehicle?
A
I relied that the papers are complete, sir.
Q But you yourself do not examine anymore whether the
vehicle that you are driving, that you are going to
drive has with the registration certificate.
A
No more, sir.[36]
Panelco meanwhile is liable both as owner of the mechanically
defective vehicle under Art. 2176 and as employer of the negligent
driver under Art. 2180.
Under Art. 2180, Panelco as employer of Areola is primarily and
solidarily liable for the quasi-delict committed by the latter. It is
presumed to be negligent in the selection and supervision of its
employees by operation of law and may be relieved of responsibility
for the negligent acts of its driver, who at the time was acting within
the scope of his assigned task, only if it can show that it observed all
the diligence of a good father of a family to prevent damage. [37]
In this case, Panelco failed to show that it exercised the
diligence of a good father of a family to prevent the damage and that
it was diligent in the selection and supervision of its employees.
Areola in his testimony admitted that he did not undergo
physical examination when he was hired as driver of the
company[38] and that there were no records of his examination and
interview during his application for employment. [39] He also admitted
that Panelco never gave them seminars regarding driving but only
received personal advice from the managers.[40]
The use of a vehicle with a defective speedometer has been
held by this Court as an indication of the owners laxity in the
operation of its business and in the supervision of its employees;
clearly, a conduct below the diligence required by law. [41] In this case,
the rover jeep of Panelco did not have a speedometer at all.
Finding both Panelco and its driver liable for the death of Henry
Tugade, we now consider the amount of damages that should be
awarded to the heirs of the deceased.
Following Art. 2206 of the Civil Code and recent jurisprudence,
the heirs of the victim in this case are automatically entitled to
P50,000.00 as indemnity for the death of Henry Tugade. [42]
Actual damages to be recoverable, must actually be proved and
supported by receipts. In this case, the petitioners failed to present
any receipt to prove the expenses they incurred. Nonetheless,
temperate damages may still be given to the heirs of the victim under
Art. 2224 of the Civil Code. [43] Based on prevailing jurisprudence, the
amount of P25,000.00 as temperate damages is in order.[44]
We also find that petitioners are entitled to the award of
attorneys fees which is proper where the acts and omissions of a
party have compelled another to litigate or incur expenses to protect
his rights and when deemed by the court as just and equitable. [45] We
find no cogent reason to disturb the award of P20,000.00 as
attorneys fees fixed by the trial court.
Moral damages should also be awarded for the mental anguish
and moral suffering suffered by the heirs of Henry Tugade brought
about by his untimely demise. As held by this Court, the award of
moral damages is aimed at a restoration, within the limits possible, of
the spiritual status quo ante and therefore must be proportionate to
the suffering inflicted.[46]
In this case, Napoleon Tugade, father of the deceased, testified
as follows:
Q How many children do you have?
A
We have three (3), sir.
xxx
xxx
xxx

Q
A
Q
A

about your second child, what is his profession or

employment at present, will you name your second
child?
He is the late Henry Tugade, an Agricultural Engineer.
xxx
xxx
xxx
At the time you learn the death of your son Henry,
how did you feel?
I was shocked and had a little mental torture because
its a shock that he is still young to die and
professional and he is the only one earning among
my children, so there was mental torture also to my
wife and to my family.[47]

Rizalina Tugade, mother of the victim, also testified as follows:

Q And Mrs. Witness, at the time your son died do you
know if he was a member of some civic
organizations or associations?
A
During his lifetime when he was studying, when he
was student, at the Araneta Univeristy, he was the
President of the Engineers Club Society.
Q And of course as a mother, having his son that caliber,
if said Henry your son, how did you feel on those
occasions, as he was a member of some
organizations.
A
I had a feeling of great pride, sir.
Q This pride enjoyed as a mother, did it continue to be
still in you as a pride enjoyed by a mother.
A
Well, my pride is no more sir, he already died.
Q And when at the time you learned for the first time of
the death of your son Mrs. Witness, how did you feel
as mother.
A
I was miserably shocked, sir.
Q Aside from the shock, what else.
A
Well, I lost my hope, my pride and happiness.[48]
Under Art. 2206 of the Civil Code, the ascendants of the
deceased may demand moral damages for mental anguish by reason
of the death of the deceased. Under the circumstances of the case at
bar an award of P100,000.00 would be appropriate. [49]
As to indemnity for loss of earning capacity, we take note of
Exh. L-1[50] showing Henry Tugades compensation to be Eight
Hundred Three Pesos (P803.00) a month which amounts to an annual
income of P9,636.00. He was 26 years old at the time of his
death. Using the formula enunciated in People vs. Napalit,[51] we
compute his lost earning capacity thus:
Net earning capacity = 2/3 x (80-26) x [P9,636.00 (P9,636.00)]
= 2/3 x (54) x P4,818.00
= 36 x P4,818.00
= P 173,448.00
WHEREFORE, we REVERSE and SET ASIDE the decision of the
Court of Appeals; AFFIRM the decision of the Regional Trial Court
dated July 24, 1990 with the MODIFICATION that Pangasinan Electric
Cooperative, Inc. (PANELCO) and Honorato Areola are ordered to pay
jointly and severally the following amounts to the heirs of Henry
Tugade:
1.
Death indemnity in the amount of Fifty Thousand
Pesos (P50,000.00);
2.
Temperate damages in the amount of Twenty-Five
Thousand Pesos (P25,000.00);
3.
Attorneys fees in the amount of Twenty Thousand
Pesos (P20,000.00);
4.
Moral damages in the amount of One Hundred
Thousand Pesos (P100,000.00);
5.
Loss of earning capacity in the amount of One
Hundred Seventy Three Thousand, Three Hundred
and Forty Eight Pesos (P173,448.00); and
6.
the costs of suit.
SO ORDERED.

DAMAGES

21