[G.R. No. 136048.
January 23, 2001] The Facts
JOSE BARITUA and JB LINE, petitioners, vs. NIMFA DIVINA MERCADER in her capacity and
as guardian of DARWIN, GIOVANNI, RODEL and DENNIS, all surnamed MERCADER;
LEONIDA Vda. de MERCADER on her behalf and on behalf of her minor child MARY JOY
MERCADER; SHIRLEY MERCADER DELA CRUZ; MARIA THERESA MERCADER-GARCIA; DANILO
MERCADER; JOSE DANTE MERCADER; and JOSEFINA MERCADER, respondents.
DECISION
PANGANIBAN, J.:
The Manchester ruling requiring the payment of docket and other fees as a condition for
the acquisition of jurisdiction has no retroactive effect and applies only to cases filed
after its finality.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the April 17,
1998 Decision[1] and the October 28, 1998 Resolution[2] of the Court of Appeals (CA) in
CA-GR CV No. 40772. The decretal portion of said Decision reads as follows:
WHEREFORE, upon all the foregoing premises considered, the DECISION appealed from
is AFFIRMED with the MODIFICATION that the loss of earnings of the late Dominador
Mercader is reduced to P798,000.00.[3]
The assailed Resolution denied petitioners Motion for Reconsideration.
The Court of Appeals sustained the Decision of the Regional Trial Court (RTC) of Laoang,
Northern Samar (Branch 21). Except for the modification of the loss of earnings, it
affirmed all the monetary damages granted by the trial court to respondents. The
decretal portion of the assailed RTC Decision reads as follows:[4]
WHEREFORE, on preponderance of evidence, judgment is for [herein respondents] and
against [herein petitioners], ordering the latter to pay the former:
(a) As compensatory damages for the death of Dominador Mercader -- P50,000.00;
(b) For the loss of earnings of the late Dominador Mercader -- P1,660,000.00, more or less,
based on the average life span of 75 years from the time of his death who earned a net
income of P5,000.00 monthly out of his business;
(c) Actual damages of P30,000.00 receipted purchases of goods in Manila; P5,750.00 for
the first class coffin and a 15-day wake services evidenced by a receipt marked Exh. D;
[P]850.00 for the 50 x 60 headstone, receipt marked Exh. E and P1,590.00 -- Deed of
Absolute Sale of a burial lot, marked Exh. F;
(d) 25% of whatever amount is collected by [respondents] from [petitioners] but no less
than P50,000.00 plus P1,000.00 per hearing by way of attorneys fees;
(e) As moral damages -- P50,000.00;
(f) As exemplary damages -- P30,000.00; and
(g) To pay the costs.
The antecedents of the case are succinctly summarized by the Court of Appeals in this
wise:
The original complaint was filed against JB Lines, Inc. [Petitioner JB Lines, Inc.] filed a
motion to dismiss complaint, to strike out false-impertinent matters therefrom, and/or for
bill of particulars on the primary grounds that [respondents] failed to implead Jose
Baritua as an indispensable party and that the cause of action is a suit against a wrong
and non-existent party. [Respondents] filed an opposition to the said motion and an
amended complaint.
In an Order dated December 11, 1984 the trial court denied the aforesaid motion and
admitted the amended complaint of [respondents] impleading Jose Baritua and
alleged the following:
(10) The late Dominador Mercader is a [b]usinessman mainly engaged in the buy and
sell of dry goods in Laoang, N. Samar. He buys his goods from Manila and bring[s] them
to Laoang, Northern Samar for sale at his store located in the said locality;
(11) Sometime on March 16, 1983, the late Dominador Mercader boarded [petitioners]
bus No. 142 with Plate No. 484 EU at [petitioners] Manila Station/terminal, bound for Brgy.
Rawis, Laoang Northern Samar as a paying passenger;
(12) At that time, Dominador Mercader had with him as his baggage, assorted goods
(i.e. long pants, short pants, dusters, etc.) which he likewise loaded in [petitioners] bus;
(13) The late Dominador Mercader was not able to reach his destination considering
that on March 17, 1983 at Beily (Bugco) Bridge, Barangay Roxas, Mondragon, Northern
Samar, while he was on board [petitioners] bus no. 142 with Plate No. 484 EU, the said
bus fell into the river as a result of which the late Dominador Mercader died. x x x.
(14) The accident happened because [petitioners] driver negligently and recklessly
operated the bus at a fast speed in wanton disregard of traffic rules and regulations and
the prevailing conditions then existing that caused [the] bus to fall into the river.
[Respondents] then filed a motion to declare [petitioners] in default which motion was
opposed by [petitioners]. [Respondents] withdrew the said motion prompting the trial
court to cancel the scheduled hearing of the said motion to declare [petitioners] in
default in an Order dated January 23, 1985.
In its answer, [petitioners] denied specifically all the material allegations in the complaint
and alleged the following:
2. The alleged person of Dominador Mercader did not board bus 142 at [petitioners]
Manila station/terminal x x x as a (supposed paying passenger). There is even no
statement in the complaint that Dominador Mercader (if it were true that he was a
passenger of bus 142 at the [petitioners] Manila station/terminal) was issued any
passenger-freight ticket conformably with law and practice. It is a fact of public
knowledge that, in compliance with existing rules and laws, [Petitioner] Baritua, as a
public utility operator, issues, thru his conductors, in appropriate situations, to a true
passenger, the familiar and known passenger and freight ticket which reads in part:
NOTICE
Baggage carried at owners risk x x x liability on prepaid freight otherwise declared.
xxxxxxxxx
Whole Fare Paid P ______________
Declared value ____________ x x x.
Description of Freight _____________________________
Signature of Owner.
3. It is also a fact of public knowledge that [Petitioner] Baritua does not have any Manila
station/terminal, because what he has is a Pasay city station.
4. [Petitioner] Baritua had no prior knowledge that, on or about March 17, 1983, and/or
previous thereto, the Bugko Bailey Bridge (across Catarman-Laoang road) in Barangay
Roxas, Mondragon, Northern Samar, was in virtual dilapida[ted] and dangerous
condition, in a state of decay and disrepair, thus calling for the concerned government
and public officials performance of their coordinative and joint duties and
responsibilities, to repair, improve and maintain that bridge, in good and reasonably safe
condition, but, far from performing or complying with said subject duties and
responsibilities, the adverted officials concerned, without just cause, not only failed and
neglected to cause such needed repair, improvement and maintenance of the Bugko
Bailey Bridge, on or prior to March 17, 1983, but also failed, and neglected to either close
the Bugko Bridge to public use and travel, and/or to put appropriate warning and
cautionary signs, for repair, improvement, maintenance, and safety purposes. So that,
as a proximate and direct consequence of the aggregate officials nonfeasance, bad
faith, negligence, serious inefficiency, and callous indifference to public safety, that
Bugko Bridge collapsed inward and caved in ruin, on that March 17, 1983, while Barituas
bus 142 was cautiously and prudently passing and travelling across the said bridge, as a
result of which the bus fell into the river and sea waters, despite the exercise and
compliance by Baritua and his driver of their duties in the matter of their requisite degree
of diligence, caution and prudence, Baritua also exercised and complied with the
requisite duty of diligence, care, and prudence in the selection and supervision over his
driver, contrary to the baseless imputation in paragraphs 14 and 20 of the original and
amended complaints. Moreover, Baritua and his driver did not violate any traffic rule
and regulation, contrary to plaintiffs insinuation.
5. Furthermore, [Petitioner] Baritua and his driver have no causative connection with the
alleged death of Dominador Mercader who, according to a reliable source, was
already seriously suffering from a lingering illness even prior to his alleged demise. Baritua
also learned lately, and so it is herein alleged that Dominador Mercader contributed
considerably, to, and/or provided the proximate and direct cause of his own death,
hence, he himself is to be blamed for whatever may have happened to him or for
whatever may have been sustained by his supposed heirs, vis--vis the suit against the
wrong party.
6. Baritua and his driver, as earlier stated, did not commit any actionable breach of
contract with the alleged Dominador Mercader or the latters supposed heirs.
7. There is no factual nor any legal basis for plaintiffs proffered claims for damages.
II. AFFIRMATIVE DEFENSES
8. Based on the preceding averments, plaintiffs have neither a cause nor a right of
action against [Petitioner] Baritua and his driver.
8.1. The allegation that supposedly the x x x [p]laintiffs are the compulsory heirs of the
late DOMINADOR MERCADER x x x (par. 8, complaint) is too vague and too broad, as
the subject allegation is a bare and pure conclusionary averment unaccompanied by
the requisite statement of ultimate facts constitutive of a cause or right of action.
8.2. Even assuming arguendo, without however conceding, plaintiffs statement of a
cause of action, the complaint is nonetheless replete with false and impertinent matters
which fit the rule on striking out pleadings or parts thereof. To mention only a glaring few:
8.2.a. The allegation on exemplary damages x x x is impertinent and immaterial in the
complaint against a supposed employer. For, even theoretically assuming, without
however admitting a negligent act-omission on the part of a driver, nevertheless, in such
a hypothetical situation, the causative negligence, if any there was, is personal to the
wrongdoer, i.e., the employee-driver, to the exclusion of the employer.
8.2.b. The allegation on supposed minimum life of 75 years and on he expects to earn no
less than P1,680,000.00 x x x is false, a pure hyperbole, and bereft of factual and legal
basis. Besides, what jurisprudential rule refers to is only net earning. The law abhors a
claim, akin to plaintiffs allegation, which is manifestly speculative, as it may not exist at
all. Furthermore, the questioned allegation in the plaintiffs original and amended
complaints is not preceded by the requisite statement of definitive facts, nor of any
specific fact, which could possibly afford a rational basis for a reasonable expectation
of supposed earning that could be lost, or impaired.
8.2.c. Likewise, the allegations that allegedly x x x the late Dominador Mercader
boarded x x x Bus No. 142 x x x and that supposedly the latter had a baggage x x x
containing drygoods x x x in which case [petitioners have] to pay the value thereof in
such amount as may be proven by [respondents] in court during the trial x x x, apart
from being false, are offensive to the rule on concise statement of ultimate facts. The
assailed allegations also contravene Interim Rule 11, (i)f any demand is for damages in a
civil action the amount thereof must be specifically alleged. In consequence of this
averment, [respondents] have not yet paid the correct docket fee, for which reason,
[respondents] case may be dismissed on that ground alone.
8.3. In violation also of the same Interim Rule 11, regarding the requisite definitive amount
of claim, the allegation on the supposed funeral expense x x x does not also indicate
any specific amount. So with the averment on supposed moral damage which may not
be warranted because of absence of allegation of fraud or bad faith, if any, there was,
apart from want of causative connection with the defendant.
8.4. The allegation in paragraph 15 of the original and amended complaint is also a pure
conclusionary averment, without a factual premise.
9. [Petitioner] JB LINE, impleaded in the amended complaint, is merely a business name
and sole proprietorship of defendant Baritua. As such, JB Line is not a juridical person, nor
an entity authorized by law to sue and be sued, hence, it cannot legally be a party to
any action. With this averment, correlated with that in paragraphs 4-5 hereof,
[respondents] amended complaint is essentially a suit against a wrong party. [5]
The RTC, after due trial, rendered the aforesaid assailed Decision.
Ruling of the Court of Appeals
As earlier stated, the Court of Appeals affirmed the trial courts award of monetary
damages in favor of respondents, except the amount of Dominador Mercaders lost
earnings, which it reduced to P798,000. It held that petitioners failed to rebut the
presumption that in the event a passenger died or was injured, the carrier had acted
negligently. Petitioners, it added, presented no sufficient proof that they had exercised
extraordinary diligence.
Hence, this Petition.[6]
The Issues
In their Memorandum, petitioners submit the following issues for our consideration:
I
Did the honorable Court of Appeals (CA) gravely abuse its discretion when it allowed to
pass sub silencio the trial courts failure to rule frontally on petitioners plea for a bill of
particulars, and ignored the nature of respondents prayer in the complaint pleading for
an award of --
a) P12,000.00 -- representing the death compensation;
b) An amount to be proven in court, representing actual damages;
c) P1,660,000.00 or more as may be proven during the trial, by way of loss of earnings;
d) An amount to be proven in court as and by way of funeral expenses;
e) An amount to be proven during the trial, representing moral damages;
f) An amount to be determined by this Honorable Court, representing exemplary
damages;
g) An amount equivalent to 25% of whatever amount the plaintiffs would be able to
collect from the defendant but in no case less than P50,000.00 plus an additional
amount of P1,000.00 per hearing as and by way of Attorneys fees;
II
Did the CA also ignore the fact that the trial court was not paid the correct amount of
the docket and other lawful fees; hence, without jurisdiction over the original and
amended complaints or over the subject matter of the case;
III
Did the CA likewise arbitrarily disregard petitioners constitutional right to procedural due
process and fairness when it ignored and thrust aside their right to present evidence and
to expect that their evidence will be duly considered and appreciated; and
IV
In awarding excessive and extravagant damages, did the CA and the trial court adhere
to the rule that their assailed decision must state clearly and distinctly the facts and the
laws on which they are based?[7]
Distilling the alleged errors cited above, petitioners raise two main issues for our
consideration: (1) whether the CA erred in holding that the RTC had jurisdiction over the
subject matter of the case, and (2) whether the CA disregarded petitioners procedural
rights.
The Courts Ruling
The Petition is devoid of merit.
First Issue: Jurisdiction
Petitioners contend that since the correct amounts of docket and other lawful fees were
not paid by respondents, then the trial court did not acquire jurisdiction over the subject
matter of the case.
The Court, in Manchester Development Corporation v. CA, [8] held that [t]he court
acquires jurisdiction over any case only upon the payment of the prescribed docket
fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction
in the court, much less the payment of the docket fee based on the amounts sought in
the amended pleading. x x x.
Generally, the jurisdiction of a court is determined by the statute in force at the
commencement of the action,[9] unless such statute provides for its retroactive
application.[10] Once the jurisdiction of a court attaches, it continues until the case is
finally terminated.[11] The trial court cannot be ousted therefrom by subsequent
happenings or events, although of a character that would have prevented jurisdiction
from attaching in the first instance.[12]
The Manchester ruling, which became final in 1987, has no retroactive application and
cannot be invoked in the subject Complaint filed in 1984. The Court explicitly declared:
To put a stop to this irregularity, henceforth all complaints, petitions, answers and other
similar pleadings should specify the amount of damages being prayed for not only in the
body of the pleading but also in the prayer, and said damages shall be considered in
the assessment of the filing fees in any case. Any pleading that fails to comply with this
requirement shall not be accepted nor admitted, or shall otherwise be expunged from
the record.[13] (emphasis supplied)
Second Issue: Petitioners Procedural Rights
Motion for a Bill of Particulars
Petitioners argue that the Court of Appeals erred when it passed sub silencio on the trial We agree with the findings of both courts that petitioners failed to observe extraordinary
courts failure to rule frontally on their plea for a bill of particulars. diligence[18] that fateful morning. It must be noted that a common carrier, by the nature
of its business and for reasons of public policy, is bound to carry passengers safely as far
We are not impressed. It must be noted that petitioners counsel manifested in open
as human care and foresight can provide. It is supposed to do so by using the utmost
court his desire to file a motion for a bill of particulars. The RTC gave him ten days from
diligence of very cautious persons, with due regard for all the circumstances. [19] In case
March 12, 1985 within which to do so.[14] He, however, filed the aforesaid motion only on
of death or injuries to passengers, it is presumed to have been at fault or to have acted
April 2, 1985 or eleven days past the deadline set by the trial court.[15] Moreover, such
negligently, unless it proves that it observed extraordinary diligence as prescribed in
motion was already moot and academic because, prior to its filing, petitioners had
Articles 1733 and 1755[20] of the Civil Code.
already filed their answer and several other pleadings to the amended
Complaint. Section 1, Rule 12 of the Rules of Court, provides: We sustain the ruling of the CA that petitioners failed to prove that they had observed
extraordinary diligence.
Section 1. When applied for; purpose. -- Before responding to a pleading, a party may
move for a more definite statement or for a bill of particulars of any matter which is not First, petitioners did not present evidence on the skill or expertise of the driver of Bus No.
averred with sufficient definiteness or particularity to enable him properly to prepare his 142 or the condition of that vehicle at the time of the incident.
responsive pleading. If the pleading is a reply, the motion must be filed within ten (10)
Second, the bus was overloaded at the time. In fact, several individuals were standing
days from service thereof. Such motion shall point out the defects complained of, the
when the incident occurred.[21]
paragraphs wherein they are contained, and the details desired.[16] (emphasis supplied)
Petitioners Right to Adduce Evidence Third, the bus was overspeeding. Its conductor testified that it had overtaken several
buses before it reached the Bugko Bailey Bridge.[22] Moreover, prior to crossing the
Petitioners also argue that their right to present evidence was violated by the CA, bridge, it had accelerated and maintained its speed towards the bridge.[23]
because it did not consider their contention that the trial judges who heard the case
We therefore believe that there is no reason to overturn the assailed CA Decision, which
were biased and impartial. Petitioners contend, as they did before the CA, that Judge
affirmed that of the RTC. It is a well-settled rule that the trial courts factual findings, when
Tomas B. Noynay based his Decision on certain chosen partial testimonies of
affirmed by the appellate court, are conclusive and binding, if they are not tainted with
[respondents] witnesses x x x. They further maintain that Judge Fortunato Operario, who
arbitrariness or oversight of some fact or circumstance of significance and
initially handled the case, questioned some witnesses in an overzealous manner and
influence.[24] As clearly discussed above, petitioners have not presented sufficient
assum[ed] the dual role of magistrate and advocate.[17]
ground to warrant a deviation from this rule.
These arguments are not meritorious. First, judges cannot be expected to rely on the
Finally, we cannot fault the appellate court in its computation of the damages and lost
testimonies of every witness. In ascertaining the facts, they determine who are credible
earnings, since it effectively computed only net earnings in accordance with existing
and who are not. In doing so, they consider all the evidence before them. In other
jurisprudence.[25]
words, the mere fact that Judge Noynay based his decision on the testimonies of
respondents witnesses does not necessarily mean that he did not consider those of WHEREFORE, the Petition is hereby DENIED, and the assailed Decision AFFIRMED. Costs
petitioners. Second, we find no sufficient showing that Judge Operario was overzealous against petitioners.
in questioning the witnesses. His questions merely sought to clarify their testimonies. In all,
we reject petitioners contention that their right to adduce evidence was violated. SO ORDERED.

Alleged Failure to State Clearly the Facts and the Law

We are not convinced by petitioners contention, either, that both the trial and the
appellate courts failed to state clearly and distinctly the facts and the law involved in
the case. As can be gleaned from their Decisions, both courts clearly laid down their
bases for awarding monetary damages to respondents.
Both the RTC and the CA found that a contract of carriage existed between petitioners
and Dominador Mercader when he boarded Bus No. 142 in Pasay City on March 16,
1983. Petitioners failed to transport him to his destination, because the bus fell into a river
while traversing the Bugko Bailey Bridge. Although he survived the fall, he later died of
asphyxia secondary to drowning.
[G.R. No. 118664. August 7, 1998] On June 18, 1992, the trial court rendered its judgment in favor of private respondents
holding JAL liable for damages, viz.:
JAPAN AIRLINES, petitioner, vs. THE COURT OF APPEALS ENRIQUE AGANA, MARIA ANGELA
NINA AGANA, ADALIA B. FRANCISCO and JOSE MIRANDA, respondents. WHEREFORE, judgment is rendered in favor of plaintiffs ordering the defendant Japan
Airlines to pay the plaintiffs Enrique Agana, Adalia B. Francisco and Maria Angela Nina
DECISION
Agana the sum of One million Two Hundred forty-six Thousand Nine Hundred Thirty-Six
ROMERO, J.: Pesos (P1,246,936.00) and Jose Miranda the sum of Three Hundred Twenty Thousand Six
Hundred sixteen and 31/100 (P320,616.31) as actual, moral and exemplary damages
Before us is an appeal by certiorari filed by petitioner Japan Airlines, Inc. (JAL) seeking and pay attorneys fees in the amount of Two Hundred Thousand Pesos (P200,000.00),
the reversal of the decision of the Court of Appeals,[1] which affirmed with modification and to pay the costs of suit.
the award of damages made by the trial court in favor of herein private respondents
Enrique Agana, Maria Angela Nina Agana, Adelia Francisco and Jose Miranda. Undaunted, JAL appealed the decision before the Court of Appeals, which, however,
with the exception of lowering the damages awarded affirmed the trial courts
On June 13, 1991, private respondent Jose Miranda boarded JAL flight No. JL 001 in San finding,[3] thus:
Francisco, California bound for Manila. Likewise, on the same day private respondents
Enrique Agana, Maria Angela Nina Agana and Adelia Francisco left Los Angeles, Thus, the award of moral damages should be as it is hereby reduced to P200,000.00 for
California for Manila via JAL flight No. JL 061. As an incentive for travelling on the said each of the plaintiffs, the exemplary damages to P300,000.00 and the attorneys fees
airline, both flights were to make an overnight stopover at Narita, Japan, at the airlines to P100,000.00 plus the costs.
expense, thereafter proceeding to Manila the following day.
WHEREFORE, with the foregoing Modification, the judgment appealed from is hereby
Upon arrival at Narita, Japan on June 14, 1991, private respondents were billeted at AFFIRMED in all other respects.
Hotel Nikko Narita for the night. The next day, private respondents, on the final leg of
JAL filed a motion for reconsideration which proved futile and unavailing.[4]
their journey, went to the airport to take their flight to Manila. However, due to the Mt.
Pinatubo eruption, unrelenting ashfall blanketed Ninoy Aquino International Airport Failing in its bid to reconsider the decision, JAL has now filed this instant petition.
(NAIA), rendering it inaccessible to airline traffic. Hence, private respondents trip to
The issue to be resolved is whether JAL, as a common carrier has the obligation to
Manila was cancelled indefinitely.
shoulder the hotel and meal expenses of its stranded passengers until they have
To accommodate the needs of its stranded passengers, JAL rebooked all the Manila- reached their final destination, even if the delay were caused by force majeure.
bound passengers on flight No. 741 due to depart on June 16, 1991 and also paid for the
To begin with, there is no dispute that the Mt. Pinatubo eruption prevented JAL from
hotel expenses for their unexpected overnight stay. On June 16, 1991, much to the
proceeding to Manila on schedule. Likewise, private respondents concede that such
dismay of the private respondents, their long anticipated flight to Manila was again
event can be considered as force majeure since their delayed arrival in Manila was not
cancelled due to NAIAs indefinite closure. At this point, JAL informed the private
imputable to JAL.[5]
respondents that it would no longer defray their hotel and accommodation expense
during their stay in Narita. However, private respondents contend that while JAL cannot be held responsible for the
delayed arrival in Manila, it was nevertheless liable for their living expenses during their
Since NAIA was only reopened to airline traffic on June 22, 1991, private respondents
unexpected stay in Narita since airlines have the obligation to ensure the comfort and
were forced to pay for their accommodations and meal expenses from their personal
convenience of its passengers. While we sympathize with the private respondents plight,
funds from June 16 to June 21, 1991. Their unexpected stay in Narita ended on June 22,
we are unable to accept this contention.
1991 when they arrived in Manila on board JL flight No. 741.
We are not unmindful of the fact that in a plethora of cases we have consistently ruled
Obviously, still reeling from the experience, private respondents, on July 25, 1991,
that a contract to transport passengers is quite different in kind and degree from any
commenced an action for damages against JAL before the Regional Trial Court of
other contractual relation. It is safe to conclude that it is a relationship imbued with
Quezon City, Branch 104.[2] To support their claim, private respondents asserted that JAL
public interest. Failure on the part of the common carrier to live up to the exacting
failed to live up to its duty to provide care and comfort to its stranded passengers when
standards of care and diligence renders it liable for any damages that may be sustained
it refused to pay for their hotel and accommodation expenses from June 16 to 21, 1991
by its passengers. However, this is not to say that common carriers are absolutely
at Narita, Japan. In other words, they insisted that JAL was obligated to shoulder their
responsible for all injuries or damages even if the same were caused by a fortuitous
expenses as long as they were still stranded in Narita. On the other hand, JAL denied this
event. To rule otherwise would render the defense of force majeure, as an exception
allegation and averred that airline passengers have no vested right to these amenities in
from any liability, illusory and ineffective.
case a flight is cancelled due to force majeure.
Accordingly, there is no question that when a party is unable to fulfill his obligation
because of force majeure, the general rule is that he cannot be held liable for damages
for non-performance.[6] Corollarily, when JAL was prevented from resuming its flight to
Manila due to the effects of Mt. Pinatubo eruption, whatever losses or damages in the
form of hotel and meal expenses the stranded passengers incurred, cannot be charged
to JAL. Yet it is undeniable that JAL assumed the hotel expenses of respondents for their
unexpected overnight stay on June 15, 1991.
Admittedly, to be stranded for almost a week in a foreign land was an exasperating
experience for the private respondents. To be sure, they underwent distress and anxiety
during their unanticipated stay in Narita, but their predicament was not due to the fault
or negligence of JAL but the closure of NAIA to international flights. Indeed, to hold JAL,
in the absence of bad faith or negligence, liable for the amenities of its stranded
passengers by reason of a fortuitous event is too much of a burden to assume.
Furthermore, it has been held that airline passengers must take such risks incident to the
mode of travel.[7] In this regard, adverse weather conditions or extreme climatic
changes are some of the perils involved in air travel, the consequences of which the
passenger must assume or expect. After all, common carriers are not the insurer of all
risks.[8]
Paradoxically, the Court of Appeals, despite the presence of force majeure, still
ruled against JAL relying in our decision in PAL v. Court of Appeals,[9] thus:
We are not prepared, however, to completely absolve petitioner JAL from any liability. It
must be noted that private respondents bought tickets from the United States with
Manila as their final destination. While JAL was no longer required to defray private
respondents living expenses during their stay in Narita on account of the fortuitous event,
JAL had the duty to make the necessary arrangements to transport private respondents
on the first available connecting flight to Manila. Petitioner JAL reneged on its obligation
to look after the comfort and convenience of its passengers when it declassified private
respondents from transit passengers to new passengers as a result of which private
respondents were obliged to make the necessary arrangements themselves for the next
flight to Manila. Private respondents were placed on the waiting list from June 20 to June
24. To assure themselves of a seat on an available flight, they were compelled to stay in
the airport the whole day of June 22, 1991 and it was only at 8:00 p.m. of the aforesaid
date that they were advised that they could be accommodated in said flight which
flew at about 9:00 a.m. the next day.
We are not oblivious to the fact that the cancellation of JAL flights to Manila from June
15 to June 21, 1991 caused considerable disruption in passenger booking and
reservation. In fact, it would be unreasonable to expect, considering NAIAs closure, that
JAL flight operations would be normal on the days affected. Nevertheless, this does not
excuse JAL from its obligation to make the necessary arrangements to transport private
respondents on its first available flight to Manila. After all, it had a contract to transport
private respondents from the United States to Manila as their final destination.

The position taken by PAL in this case clearly illustrates its failure to grasp the exacting Consequently, the award of nominal damages is in order. Nominal damages are
standard required by law. Undisputably, PALs diversion of its flight due to inclement adjudicated in order that a right of a plaintiff, which has been violated or invaded by
weather was a fortuitous event. Nonetheless, such occurrence did not terminate PALs the defendant, may be vindicated or recognized and not for the purpose of
contract with its passengers. Being in the business of air carriage and the sole one to indemnifying any loss suffered by him.[12] The court may award nominal damages in
operate in the country, PAL is deemed equipped to deal with situations as in the case at every obligation arising from any source enumerated in Article 1157, or in every case
bar. What we said in one case once again must be stressed, i.e., the relation of carrier where any property right has been invaded.[13]
and passenger continues until the latter has been landed at the port of destination and
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals dated
has left the carriers premises. Hence, PAL necessarily would still have to exercise
December 22, 1993 is hereby MODIFIED. The award of actual, moral and exemplary
extraordinary diligence in safeguarding the comfort, convenience and safety of its
damages is hereby DELETED. Petitioner JAL is ordered to pay each of the private
stranded passengers until they have reached their final destination. On this score, PAL
respondents nominal damages in the sum of P100,000.00 each including attorneys fees
grossly failed considering the then ongoing battle between government forces and
of P50,000.00 plus costs.
Muslim rebels in Cotabato City and the fact that the private respondent was a stranger
to the place. SO ORDERED.
The reliance is misplaced. The factual background of the PAL case is different from the
instant petition. In that case there was indeed a fortuitous event resulting in the diversion
of the PAL flight. However, the unforeseen diversion was worsened when private
respondents (passenger) was left at the airport and could not even hitch a ride in a Ford
Fiera loaded with PAL personnel,[10] not to mention the apparent apathy of the PAL
station manager as to the predicament of the stranded passengers.[11] In light of these
circumstances, we held that if the fortuitous event was accompanied by neglect and
malfeasance by the carriers employees, an action for damages against the carrier is
permissible. Unfortunately, for private respondents, none of these conditions are present
in the instant petition.
[G.R. No. 138060. September 1, 2004]
WILLIAM TIU, doing business under the name and style of D Rough Riders, and VIRGILIO TE
LAS PIAS petitioners, vs. PEDRO A. ARRIESGADO, BENJAMIN CONDOR, SERGIO PEDRANO
and PHILIPPINE PHOENIX SURETY AND INSURANCE, INC., respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court from the
Decision[1] of the Court of Appeals in CA-G.R. CV No. 54354 affirming with modification
the Decision[2] of the Regional Trial Court, 7th Judicial Region, Cebu City, Branch 20, in
Civil Case No. CEB-5963 for breach of contract of carriage, damages and attorneys
fees, and the Resolution dated February 26, 1999 denying the motion for reconsideration
thereof.
The following facts are undisputed:
At about 10:00 p.m. of March 15, 1987, the cargo truck marked Condor Hollow Blocks
and General Merchandise bearing plate number GBP-675 was loaded with firewood in
Bogo, Cebu and left for Cebu City. Upon reaching Sitio Aggies, Poblacion,
Compostela, Cebu, just as the truck passed over a bridge, one of its rear tires exploded.
The driver, Sergio Pedrano, then parked along the right side of the national highway and
removed the damaged tire to have it vulcanized at a nearby shop, about 700 meters
away.[3] Pedrano left his helper, Jose Mitante, Jr. to keep watch over the stalled vehicle,
and instructed the latter to place a spare tire six fathoms away [4] behind the stalled truck
to serve as a warning for oncoming vehicles. The trucks tail lights were also left on. It was
about 12:00 a.m., March 16, 1987.
At about 4:45 a.m., D Rough Riders passenger bus with plate number PBP-724 driven by
Virgilio Te Laspias was cruising along the national highway of Sitio Aggies, Poblacion,
Compostela, Cebu. The passenger bus was also bound for Cebu City, and had come
from Maya, Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A.
Arriesgado and Felisa Pepito Arriesgado, who were seated at the right side of the bus,
about three (3) or four (4) places from the front seat.
As the bus was approaching the bridge, Laspias saw the stalled truck, which was then
about 25 meters away.[5] He applied the breaks and tried to swerve to the left to avoid
hitting the truck. But it was too late; the bus rammed into the trucks left rear. The impact
damaged the right side of the bus and left several passengers injured. Pedro Arriesgado
lost consciousness and suffered a fracture in his right colles.[6] His wife, Felisa, was brought
to the Danao City Hospital. She was later transferred to the Southern Island Medical
Center where she died shortly thereafter.[7]
Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of
carriage, damages and attorneys fees before the Regional Trial Court of Cebu City,
Branch 20, against the petitioners, D Rough Riders bus operator William Tiu and his driver,
Virgilio Te Laspias on May 27, 1987. The respondent alleged that the passenger bus in
question was cruising at a fast and high speed along the national road, and that
petitioner Laspias did not take precautionary measures to avoid the accident.[8] Thus:
6. That the accident resulted to the death of the plaintiffs wife, Felisa Pepito Arriesgado,
as evidenced by a Certificate of Death, a xerox copy of which is hereto attached as
integral part hereof and marked as ANNEX A, and physical injuries to several of its
passengers, including plaintiff himself who suffered a COLLES FRACTURE RIGHT, per
Medical Certificate, a xerox copy of which is hereto attached as integral part hereof
and marked as ANNEX B hereof.
7. That due to the reckless and imprudent driving by defendant Virgilio Te Laspias of the
said Rough Riders passenger bus, plaintiff and his wife, Felisa Pepito Arriesgado, failed to
safely reach their destination which was Cebu City, the proximate cause of which was
defendant-drivers failure to observe utmost diligence required of a very cautious person
under all circumstances.
8. That defendant William Tiu, being the owner and operator of the said Rough Riders
passenger bus which figured in the said accident, wherein plaintiff and his wife were
riding at the time of the accident, is therefore directly liable for the breach of contract
of carriage for his failure to transport plaintiff and his wife safely to their place of
destination which was Cebu City, and which failure in his obligation to transport safely his
passengers was due to and in consequence of his failure to exercise the diligence of a
good father of the family in the selection and supervision of his employees, particularly
defendant-driver Virgilio Te Laspias.[9]
The respondent prayed that judgment be rendered in his favor and that the petitioners
be condemned to pay the following damages:
1). To pay to plaintiff, jointly and severally, the amount of P30,000.00 for the death and
untimely demise of plaintiffs wife, Felisa Pepito Arriesgado;
2). To pay to plaintiff, jointly and severally, the amount of P38,441.50, representing actual
expenses incurred by the plaintiff in connection with the death/burial of plaintiffs wife;
3). To pay to plaintiff, jointly and severally, the amount of P1,113.80, representing
medical/hospitalization expenses incurred by plaintiff for the injuries sustained by him;
4). To pay to plaintiff, jointly and severally, the amount of P50,000.00 for moral damages;
5). To pay to plaintiff, jointly and severally, the amount of P50,000.00 by way of
exemplary damages;
6). To pay to plaintiff, jointly and severally, the amount of P20,000.00 for attorneys fees;
7). To pay to plaintiff, jointly and severally, the amount of P5,000.00 for litigation
expenses.
PLAINTIFF FURTHER PRAYS FOR SUCH OTHER RELIEFS AND REMEDIES IN LAW AND EQUITY. [10]
The petitioners, for their part, filed a Third-Party Complaint[11] on August 21, 1987 against
the following: respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII), petitioner
Tius insurer; respondent Benjamin Condor, the registered owner of the cargo truck; and
respondent Sergio Pedrano, the driver of the truck. They alleged that petitioner Laspias
was negotiating the uphill climb along the national highway of Sitio Aggies, Poblacion,
Compostela, in a moderate and normal speed. It was further alleged that the truck was
parked in a slanted manner, its rear portion almost in the middle of the highway, and
that no early warning device was displayed. Petitioner Laspias promptly applied the
brakes and swerved to the left to avoid hitting the truck head-on, but despite his efforts
to avoid damage to property and physical injuries on the passengers, the right side
portion of the bus hit the cargo trucks left rear. The petitioners further alleged, thus:
5. That the cargo truck mentioned in the aforequoted paragraph is owned and
registered in the name of the third-party defendant Benjamin Condor and was left
unattended by its driver Sergio Pedrano, one of the third-party defendants, at the time
of the incident;
6. That third-party defendant Sergio Pedrano, as driver of the cargo truck with marked
(sic) Condor Hollow Blocks & General Merchandise, with Plate No. GBP-675 which was
recklessly and imprudently parked along the national highway of Compostela, Cebu
during the vehicular accident in question, and third-party defendant Benjamin Condor,
as the registered owner of the cargo truck who failed to exercise due diligence in the
selection and supervision of third-party defendant Sergio Pedrano, are jointly and
severally liable to the third-party plaintiffs for whatever liability that may be adjudged
against said third-party plaintiffs or are directly liable of (sic) the alleged death of
plaintiffs wife;
7. That in addition to all that are stated above and in the answer which are intended to
show reckless imprudence on the part of the third-party defendants, the third-party
plaintiffs hereby declare that during the vehicular accident in question, third-party
defendant was clearly violating Section 34, par. (g) of the Land Transportation and
Traffic Code
10. That the aforesaid passenger bus, owned and operated by third-party plaintiff
William Tiu, is covered by a common carrier liability insurance with Certificate of Cover
No. 054940 issued by Philippine Phoenix Surety and Insurance, Inc., Cebu City Branch, in
favor of third-party plaintiff William Tiu which covers the period from July 22, 1986 to July
22, 1987 and that the said insurance coverage was valid, binding and subsisting during
the time of the aforementioned incident (Annex A as part hereof);
11. That after the aforesaid alleged incident, third-party plaintiff notified third-party
defendant Philippine Phoenix Surety and Insurance, Inc., of the alleged incident hereto
mentioned, but to no avail;
12. That granting, et arguendo et arguendi, if herein third-party plaintiffs will be adversely
adjudged, they stand to pay damages sought by the plaintiff and therefore could also
look up to the Philippine Phoenix Surety and Insurance, Inc., for contribution,
indemnification and/or reimbursement of any liability or obligation that they might [be]
adjudged per insurance coverage duly entered into by and between third-party plaintiff
William Tiu and third-party defendant Philippine Phoenix Surety and Insurance, Inc.;[12]
The respondent PPSII, for its part, admitted that it had an existing contract with petitioner
Tiu, but averred that it had already attended to and settled the claims of those who
were injured during the incident.[13] It could not accede to the claim of respondent
Arriesgado, as such claim was way beyond the scheduled indemnity as contained in the
contract of insurance.[14]
After the parties presented their respective evidence, the trial court ruled in favor of
respondent Arriesgado. The dispositive portion of the decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of plaintiff as
against defendant William Tiu ordering the latter to pay the plaintiff the following
amounts:
1 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as moral damages;
2 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as exemplary damages;
3 - The sum of THIRTY-EIGHT THOUSAND FOUR HUNDRED FORTY-ONE PESOS (P38,441.00) as
actual damages;
4 - The sum of TWENTY THOUSAND PESOS (P20,000.00) as attorneys fees;
5 - The sum of FIVE THOUSAND PESOS (P5,000.00) as costs of suit;
SO ORDERED.[15]
According to the trial court, there was no dispute that petitioner William Tiu was
engaged in business as a common carrier, in view of his admission that D Rough Rider
passenger bus which figured in the accident was owned by him; that he had been
engaged in the transportation business for 25 years with a sole proprietorship; and that
he owned 34 buses. The trial court ruled that if petitioner Laspias had not been driving at
a fast pace, he could have easily swerved to the left to avoid hitting the truck, thus,
averting the unfortunate incident. It then concluded that petitioner Laspias was
negligent.
The trial court also ruled that the absence of an early warning device near the place
where the truck was parked was not sufficient to impute negligence on the part of
respondent Pedrano, since the tail lights of the truck were fully on, and the vicinity was
well lighted by street lamps.[16] It also found that the testimony of petitioner Tiu, that he
based the selection of his driver Laspias on efficiency and in-service training, and that
the latter had been so far an efficient and good driver for the past six years of his
employment, was insufficient to prove that he observed the diligence of a good father
of a family in the selection and supervision of his employees.
After the petitioners motion for reconsideration of the said decision was denied, the
petitioners elevated the case to the Court of Appeals on the following issues:
I WHETHER THIRD PARTY DEFENDANT SERGIO PEDRANO WAS RECKLESS AND IMPRUDENT
WHEN HE PARKED THE CARGO TRUCK IN AN OBLIQUE MANNER;
II WHETHER THE THIRD PARTY DEFENDANTS ARE JOINTLY AND SEVERALLY LIABLE DIRECTLY
TO PLAINTIFF-APPELLEE OR TO DEFENDANTS-APPELLANTS FOR WHATEVER LIABILITY THAT
MAY BE ADJUDGED TO THE SAID DEFENDANTS-APPELLANTS;
III WHETHER DEFENDANT-APPELLANT VIRGILIO TE LASPIAS WAS GUILTY OF GROSS
NEGLIGENCE;
IV WHETHER DEFENDANT-APPELLANT WILLIAM TIU HAD EXERCISED THE DUE DILIGENCE OF
A GOOD FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION OF HIS DRIVERS;
V GRANTING FOR THE SAKE OF ARGUMENT THAT DEFENDANT-APPELLANT WILLIAM TIU IS
LIABLE TO PLAINTIFF-APPELLEE, WHETHER THERE IS LEGAL AND FACTUAL BASIS IN
AWARDING EXCESSIVE MORAL DAMAGES, EX[E]MPLARY DAMAGES, ATTORNEYS FEES
AND LITIGATION EXPENSES TO PLAINTIFF-APPELLEE;
VI WHETHER THIRD PARTY DEFENDANT PHILIPPINE PHOENIX SURETY AND INSURANCE, INC.
IS LIABLE TO DEFENDANT- APPELLANT WILLIAM TIU.[17]
The appellate court rendered judgment affirming the trial courts decision with the
modification that the awards for moral and exemplary damages were reduced
to P25,000. The dispositive portion reads:
WHEREFORE, the appealed Decision dated November 6, 1995 is hereby MODIFIED such
that the awards for moral and exemplary damages are each reduced to P25,000.00 or a
total of P50,000.00 for both. The judgment is AFFIRMED in all other respects.
SO ORDERED.[18]
According to the appellate court, the action of respondent Arriesgado was based not
on quasi-delict but on breach of contract of carriage. As a common carrier, it was
incumbent upon petitioner Tiu to prove that extraordinary diligence was observed in
ensuring the safety of passengers during transportation. Since the latter failed to do so,
he should be held liable for respondent Arriesgados claim. The CA also ruled that no
evidence was presented against the respondent PPSII, and as such, it could not be held
liable for respondent Arriesgados claim, nor for contribution, indemnification and/or
reimbursement in case the petitioners were adjudged liable.
The petitioners now come to this Court and ascribe the following errors committed by
the appellate court:
I. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING RESPONDENTS
BENJAMIN CONDOR AND SERGIO PEDRANO GUILTY OF NEGLIGENCE AND HENCE, LIABLE
TO RESPONDENT PEDRO A. ARRIESGADO OR TO PETITIONERS FOR WHATEVER LIABILITY
THAT MAY BE ADJUDGED AGAINST THEM.
II. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONERS GUILTY OF
NEGLIGENCE AND HENCE, LIABLE TO RESPONDENT PEDRO A. ARRIESGADO.
III. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONER WILLIAM TIU LIABLE
FOR EXEMPLARY DAMAGES, ATTORNEYS FEES AND LITIGATION EXPENSES.
IV.THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING RESPONDENT
PHILIPPINE PHOENIX SURETY AND INSURANCE, INC. LIABLE TO RESPONDENT PEDRO A.
ARRIESGADO OR TO PETITIONER WILLIAM TIU.[19]
According to the petitioners, the appellate court erred in failing to appreciate the
absence of an early warning device and/or built-in reflectors at the front and back of
the cargo truck, in clear violation of Section 34, par. (g) of the Land Transportation and
Traffic Code. They aver that such violation is only a proof of respondent Pedranos
negligence, as provided under Article 2185 of the New Civil Code. They also question
the appellate courts failure to take into account that the truck was parked in an oblique
manner, its rear portion almost at the center of the road. As such, the proximate cause
of the incident was the gross recklessness and imprudence of respondent Pedrano,
creating the presumption of negligence on the part of respondent Condor in supervising
his employees, which presumption was not rebutted. The petitioners then contend that
respondents Condor and Pedrano should be held jointly and severally liable to
respondent Arriesgado for the payment of the latters claim.
The petitioners, likewise, aver that expert evidence should have been presented to
prove that petitioner Laspias was driving at a very fast speed, and that the CA could not
reach such conclusion by merely considering the damages on the cargo truck. It was
also pointed out that petitioner Tiu presented evidence that he had exercised the
diligence of a good father of a family in the selection and supervision of his drivers.
The petitioners further allege that there is no legal and factual basis to require petitioner
Tiu to pay exemplary damages as no evidence was presented to show that the latter
acted in a fraudulent, reckless and oppressive manner, or that he had an active
participation in the negligent act of petitioner Laspias.
Finally, the petitioners contend that respondent PPSII admitted in its answer that while it
had attended to and settled the claims of the other injured passengers, respondent
Arriesgados claim remained unsettled as it was beyond the scheduled indemnity under
the insurance contract. The petitioners argue that said respondent PPSII should have
settled the said claim in accordance with the scheduled indemnity instead of just
denying the same.
On the other hand, respondent Arriesgado argues that two of the issues raised by the
petitioners involved questions of fact, not reviewable by the Supreme Court: the finding
of negligence on the part of the petitioners and their liability to him; and the award of
exemplary damages, attorneys fees and litigation expenses in his favor. Invoking the
principle of equity and justice, respondent Arriesgado pointed out that if there was an
error to be reviewed in the CA decision, it should be geared towards the restoration of
the moral and exemplary damages to P50,000 each, or a total of P100,000 which was
reduced by the Court of Appeals to P25,000 each, or a total of only P50,000.
Respondent Arriesgado also alleged that respondents Condor and Pedrano, and
respondent Phoenix Surety, are parties with whom he had no contract of carriage, and
had no cause of action against. It was pointed out that only the petitioners needed to
be sued, as driver and operator of the ill-fated bus, on account of their failure to bring
the Arriesgado Spouses to their place of destination as agreed upon in the contract of
carriage, using the utmost diligence of very cautious persons with due regard for all
circumstances.
Respondents Condor and Pedrano point out that, as correctly ruled by the Court of
Appeals, the proximate cause of the unfortunate incident was the fast speed at which
petitioner Laspias was driving the bus owned by petitioner Tiu. According to the
respondents, the allegation that the truck was not equipped with an early warning
device could not in any way have prevented the incident from happening. It was also
pointed out that respondent Condor had always exercised the due diligence required in
the selection and supervision of his employees, and that he was not a party to the
contract of carriage between the petitioners and respondent Arriesgado.
Respondent PPSII, for its part, alleges that contrary to the allegation of petitioner Tiu, it
settled all the claims of those injured in accordance with the insurance contract. It
further avers that it did not deny respondent Arriesgados claim, and emphasizes that its
liability should be within the scheduled limits of indemnity under the said contract. The
respondent concludes that while it is true that insurance contracts are contracts of
indemnity, the measure of the insurers liability is determined by the insureds compliance
with the terms thereof.
The Courts Ruling
At the outset, it must be stressed that this Court is not a trier of facts.[20] Factual findings of
the Court of Appeals are final and may not be reviewed on appeal by this Court,
except when the lower court and the CA arrived at diverse factual findings.[21] The
petitioners in this case assail the finding of both the trial and the appellate courts that
petitioner Laspias was driving at a very fast speed before the bus owned by petitioner Tiu
collided with respondent Condors stalled truck. This is clearly one of fact, not reviewable
by the Court in a petition for review under Rule 45.[22]
On this ground alone, the petition is destined to fail.
However, considering that novel questions of law are likewise involved, the Court
resolves to examine and rule on the merits of the case.
Petitioner Laspias
Was negligent in driving
The Ill-fated bus
In his testimony before the trial court, petitioner Laspias claimed that he was traversing
the two-lane road at Compostela, Cebu at a speed of only forty (40) to fifty (50)
kilometers per hour before the incident occurred.[23] He also admitted that he saw the
truck which was parked in an oblique position at about 25 meters before impact,[24] and
tried to avoid hitting it by swerving to the left. However, even in the absence of expert
evidence, the damage sustained by the truck[25] itself supports the finding of both the
trial court and the appellate court, that the D Rough Rider bus driven by petitioner
Laspias was traveling at a fast pace. Since he saw the stalled truck at a distance of 25
meters, petitioner Laspias had more than enough time to swerve to his left to avoid
hitting it; that is, if the speed of the bus was only 40 to 50 kilometers per hour as he
claimed. As found by the Court of Appeals, it is easier to believe that petitioner Laspias
was driving at a very fast speed, since at 4:45 a.m., the hour of the accident, there were
no oncoming vehicles at the opposite direction. Petitioner Laspias could have swerved
to the left lane with proper clearance, and, thus, could have avoided the
truck.[26] Instinct, at the very least, would have prompted him to apply the breaks to
avert the impending disaster which he must have foreseen when he caught sight of the
stalled truck. As we had occasion to reiterate:
A man must use common sense, and exercise due reflection in all his acts; it is his duty to
be cautious, careful and prudent, if not from instinct, then through fear of recurring
punishment. He is responsible for such results as anyone might foresee and for acts which
no one would have performed except through culpable abandon. Otherwise, his own
person, rights and property, and those of his fellow beings, would ever be exposed to all
manner of danger and injury.[27]
We agree with the following findings of the trial court, which were affirmed by the CA on
appeal:
A close study and evaluation of the testimonies and the documentary proofs submitted
by the parties which have direct bearing on the issue of negligence, this Court as shown
by preponderance of evidence that defendant Virgilio Te Laspias failed to observe
extraordinary diligence as a driver of the common carrier in this case. It is quite hard to
accept his version of the incident that he did not see at a reasonable distance ahead
the cargo truck that was parked when the Rough Rider [Bus] just came out of the bridge
which is on an (sic) [more] elevated position than the place where the cargo truck was
parked. With its headlights fully on, defendant driver of the Rough Rider was in a
vantage position to see the cargo truck ahead which was parked and he could just
easily have avoided hitting and bumping the same by maneuvering to the left without
hitting the said cargo truck. Besides, it is (sic) shown that there was still much room or
space for the Rough Rider to pass at the left lane of the said national highway even if
the cargo truck had occupied the entire right lane thereof. It is not true that if the Rough
Rider would proceed to pass through the left lane it would fall into a canal considering
that there was much space for it to pass without hitting and bumping the cargo truck at
the left lane of said national highway. The records, further, showed that there was no
incoming vehicle at the opposite lane of the national highway which would have
prevented the Rough Rider from not swerving to its left in order to avoid hitting and
bumping the parked cargo truck. But the evidence showed that the Rough Rider
instead of swerving to the still spacious left lane of the national highway plowed directly
into the parked cargo truck hitting the latter at its rear portion; and thus, the (sic) causing
damages not only to herein plaintiff but to the cargo truck as well.[28]
Indeed, petitioner Laspias negligence in driving the bus is apparent in the records. By his
own admission, he had just passed a bridge and was traversing the highway of
Compostela, Cebu at a speed of 40 to 50 kilometers per hour before the collision
occurred. The maximum speed allowed by law on a bridge is only 30 kilometers per
hour.[29] And, as correctly pointed out by the trial court, petitioner Laspias also violated
Section 35 of the Land Transportation and Traffic Code, Republic Act No. 4136, as
amended:
Sec. 35. Restriction as to speed. (a) Any person driving a motor vehicle on a highway
shall drive the same at a careful and prudent speed, not greater nor less than is
reasonable and proper, having due regard for the traffic, the width of the highway, and
or any other condition then and there existing; and no person shall drive any motor
vehicle upon a highway at such speed as to endanger the life, limb and property of any
person, nor at a speed greater than will permit him to bring the vehicle to a stop within
the assured clear distance ahead.[30]
Under Article 2185 of the Civil Code, a person driving a vehicle is presumed negligent if
at the time of the mishap, he was violating any traffic regulation.[31]
Petitioner Tiu failed to
Overcome the presumption
Of negligence against him as
One engaged in the business
Of common carriage
The rules which common carriers should observe as to the safety of their passengers are
set forth in the Civil Code, Articles 1733,[32] 1755[33] and 1756.[34] In this case, respondent
Arriesgado and his deceased wife contracted with petitioner Tiu, as owner and operator
of D Rough Riders bus service, for transportation from Maya, Daanbantayan, Cebu, to
Cebu City for the price of P18.00.[35] It is undisputed that the respondent and his wife
were not safely transported to the destination agreed upon. In actions for breach of
contract, only the existence of such contract, and the fact that the obligor, in this case
the common carrier, failed to transport his passenger safely to his destination are the
matters that need to be proved.[36] This is because under the said contract of carriage,
the petitioners assumed the express obligation to transport the respondent and his wife
to their destination safely and to observe extraordinary diligence with due regard for all
circumstances.[37] Any injury suffered by the passengers in the course thereof is
immediately attributable to the negligence of the carrier.[38] Upon the happening of the
accident, the presumption of negligence at once arises, and it becomes the duty of a
common carrier to prove that he observed extraordinary diligence in the care of his
passengers.[39] It must be stressed that in requiring the highest possible degree of
diligence from common carriers and in creating a presumption of negligence against
them, the law compels them to curb the recklessness of their drivers.[40]
While evidence may be submitted to overcome such presumption of negligence, it must
be shown that the carrier observed the required extraordinary diligence, which means
that the carrier must show the utmost diligence of very cautious persons as far as human
care and foresight can provide, or that the accident was caused by fortuitous
event.[41] As correctly found by the trial court, petitioner Tiu failed to conclusively rebut
such presumption. The negligence of petitioner Laspias as driver of the passenger bus is,
thus, binding against petitioner Tiu, as the owner of the passenger bus engaged as a
common carrier.[42]
The Doctrine of
Last Clear Chance
Is Inapplicable in the
Case at Bar
Contrary to the petitioners contention, the principle of last clear chance is inapplicable
in the instant case, as it only applies in a suit between the owners and drivers of two
colliding vehicles. It does not arise where a passenger demands responsibility from the
carrier to enforce its contractual obligations, for it would be inequitable to exempt the
negligent driver and its owner on the ground that the other driver was likewise guilty of
negligence.[43] The common law notion of last clear chance permitted courts to grant
recovery to a plaintiff who has also been negligent provided that the defendant had
the last clear chance to avoid the casualty and failed to do so. Accordingly, it is difficult
to see what role, if any, the common law of last clear chance doctrine has to play in a
jurisdiction where the common law concept of contributory negligence as an absolute
bar to recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of
the Civil Code.[44]
Thus, petitioner Tiu cannot escape liability for the death of respondent Arriesgados wife
due to the negligence of petitioner Laspias, his employee, on this score.
Respondents Pedrano and
Condor were likewise
Negligent
In Phoenix Construction, Inc. v. Intermediate Appellate Court,[45] where therein
respondent Dionisio sustained injuries when his vehicle rammed against a dump truck
parked askew, the Court ruled that the improper parking of a dump truck without any
warning lights or reflector devices created an unreasonable risk for anyone driving within
the vicinity, and for having created such risk, the truck driver must be held responsible. In
ruling against the petitioner therein, the Court elucidated, thus:
In our view, Dionisios negligence, although later in point of time than the truck drivers
negligence, and therefore closer to the accident, was not an efficient intervening or
independent cause. What the petitioners describe as an intervening cause was no more
than a foreseeable consequence of the risk created by the negligent manner in which
the truck driver had parked the dump truck. In other words, the petitioner truck driver
owed a duty to private respondent Dionisio and others similarly situated not to impose
upon them the very risk the truck driver had created. Dionisios negligence was not that
of an independent and overpowering nature as to cut, as it were, the chain of
causation in fact between the improper parking of the dump truck and the accident,
nor to sever the juris vinculum of liability.
We hold that private respondent Dionisios negligence was only contributory, that the
immediate and proximate cause of the injury remained the truck drivers lack of due
care.[46]
In this case, both the trial and the appellate courts failed to consider that respondent
Pedrano was also negligent in leaving the truck parked askew without any warning lights
or reflector devices to alert oncoming vehicles, and that such failure created the
presumption of negligence on the part of his employer, respondent Condor, in
supervising his employees properly and adequately. As we ruled in Poblete v. Fabros:[47]
It is such a firmly established principle, as to have virtually formed part of the law itself,
that the negligence of the employee gives rise to the presumption of negligence on the
part of the employer. This is the presumed negligence in the selection and supervision of
employee. The theory of presumed negligence, in contrast with the American doctrine
of respondeat superior, where the negligence of the employee is conclusively presumed
to be the negligence of the employer, is clearly deducible from the last paragraph of
Article 2180 of the Civil Code which provides that the responsibility therein mentioned
shall cease if the employers prove that they observed all the diligence of a good father
of a family to prevent damages. [48]
The petitioners were correct in invoking respondent Pedranos failure to observe Article
IV, Section 34(g) of the Rep. Act No. 4136, which provides:
(g) Lights when parked or disabled. Appropriate parking lights or flares visible one
hundred meters away shall be displayed at a corner of the vehicle whenever such
vehicle is parked on highways or in places that are not well-lighted or is placed in such
manner as to endanger passing traffic.
The manner in which the truck was parked clearly endangered oncoming traffic on both
sides, considering that the tire blowout which stalled the truck in the first place occurred
in the wee hours of the morning. The Court can only now surmise that the unfortunate
incident could have been averted had respondent Condor, the owner of the truck,
equipped the said vehicle with lights, flares, or, at the very least, an early warning
device.[49] Hence, we cannot subscribe to respondents Condor and Pedranos claim that
they should be absolved from liability because, as found by the trial and appellate
courts, the proximate cause of the collision was the fast speed at which petitioner
Laspias drove the bus. To accept this proposition would be to come too close to wiping
out the fundamental principle of law that a man must respond for the foreseeable
consequences of his own negligent act or omission. Indeed, our law on quasi-delicts
seeks to reduce the risks and burdens of living in society and to allocate them among its
members. To accept this proposition would be to weaken the very bonds of society.[50]
The Liability of
Respondent PPSII
as Insurer
The trial court in this case did not rule on the liability of respondent PPSII, while the
appellate court ruled that, as no evidence was presented against it, the insurance
company is not liable.
A perusal of the records will show that when the petitioners filed the Third-Party
Complaint against respondent PPSII, they failed to attach a copy of the terms of the
insurance contract itself. Only Certificate of Cover No. 054940 [51] issued in favor of Mr.
William Tiu, Lahug, Cebu City signed by Cosme H. Boniel was appended to the third-
party complaint. The date of issuance, July 22, 1986, the period of insurance, from July
22, 1986 to July 22, 1987, as well as the following items, were also indicated therein:
SCHEDULED VEHICLE
MODEL MAKE TYPE OF BODY COLOR BLT FILE NO.
Isuzu Forward Bus blue mixed
PLATE NO. SERIAL/CHASSIS MOTOR NO. AUTHORIZED UNLADEN
PBP-724 NO. SER450- 677836 CAPACITY 50 WEIGHT 6Cyls.
1584124 Kgs.
SECTION 1/11 *LIMITS OF LIABILITY P50,000.00 PREMIUMS
PAID
A. THIRD PARTY LIABILITY
B. PASSENGER LIABILITY Per Person Per Accident P540.0052
P12,000.00 P50,000
In its Answer53 to the Third-Party Complaint, the respondent PPSII admitted the existence
of the contract of insurance, in view of its failure to specifically deny the same as
required under then Section 8(a), Rule 8 of the Rules of Court,54 which reads:
Sec. 8. How to contest genuineness of such documents. When an action or defense is
founded upon a written instrument copied in or attached to the corresponding pleading
as provided in the preceding section, the genuineness and due execution of the
instrument shall be deemed admitted unless the adverse party, under oath, specifically
denies them, and sets forth what he claims to be the facts; but the requirement of an
oath does not apply when the adverse party does not appear to be a party to the
instrument or when compliance with an order for inspection of the original instrument is
refused.
In fact, respondent PPSII did not dispute the existence of such contract, and admitted
that it was liable thereon. It claimed, however, that it had attended to and settled the
claims of those injured during the incident, and set up the following as special
affirmative defenses:
Third party defendant Philippine Phoenix Surety and Insurance, Inc. hereby reiterates
and incorporates by way of reference the preceding paragraphs and further states
THAT:-
8. It has attended to the claims of Vincent Canales, Asuncion Batiancila and Neptali
Palces who sustained injuries during the incident in question. In fact, it settled financially
their claims per vouchers duly signed by them and they duly executed Affidavit[s] of
Desistance to that effect, xerox copies of which are hereto attached as Annexes 1, 2, 3,
4, 5, and 6 respectively;
9. With respect to the claim of plaintiff, herein answering third party defendant through
its authorized insurance adjuster attended to said claim. In fact, there were negotiations
to that effect. Only that it cannot accede to the demand of said claimant considering
that the claim was way beyond the scheduled indemnity as per contract entered into
with third party plaintiff William Tiu and third party defendant (Philippine Phoenix Surety
and Insurance, Inc.). Third party Plaintiff William Tiu knew all along the limitation as earlier
stated, he being an old hand in the transportation business; 55
Considering the admissions made by respondent PPSII, the existence of the insurance
contract and the salient terms thereof cannot be dispatched. It must be noted that after
filing its answer, respondent PPSII no longer objected to the presentation of evidence by
respondent Arriesgado and the insured petitioner Tiu. Even in its Memorandum56 before
the Court, respondent PPSII admitted the existence of the contract, but averred as
follows:
Petitioner Tiu is insisting that PPSII is liable to him for contribution, indemnification and/or
reimbursement. This has no basis under the contract. Under the contract, PPSII will pay all
sums necessary to discharge liability of the insured subject to the limits of liability but not
to exceed the limits of liability as so stated in the contract. Also, it is stated in the
contract that in the event of accident involving indemnity to more than one person, the
limits of liability shall not exceed the aggregate amount so specified by law to all
persons to be indemnified.57
As can be gleaned from the Certificate of Cover, such insurance contract was issued
pursuant to the Compulsory Motor Vehicle Liability Insurance Law. It was expressly
provided therein that the limit of the insurers liability for each person was P12,000, while
the limit per accident was pegged at P50,000. An insurer in an indemnity contract for
third party liability is directly liable to the injured party up to the extent specified in the
agreement but it cannot be held solidarily liable beyond that amount.58 The respondent
PPSII could not then just deny petitioner Tius claim; it should have paid P12,000 for the
death of Felisa Arriesgado,59 and respondent Arriesgados hospitalization expenses
of P1,113.80, which the trial court found to have been duly supported by receipts. The
total amount of the claims, even when added to that of the other injured passengers
which the respondent PPSII claimed to have settled,60 would not exceed the P50,000
limit under the insurance agreement.
Indeed, the nature of Compulsory Motor Vehicle Liability Insurance is such that it is
primarily intended to provide compensation for the death or bodily injuries suffered by
innocent third parties or passengers as a result of the negligent operation and use of
motor vehicles. The victims and/or their dependents are assured of immediate financial
assistance, regardless of the financial capacity of motor vehicle owners.61 As the Court,
speaking through Associate Justice Leonardo A. Quisumbing, explained in Government
Service Insurance System v. Court of Appeals:62
However, although the victim may proceed directly against the insurer for indemnity, the
third party liability is only up to the extent of the insurance policy and those required by
law. While it is true that where the insurance contract provides for indemnity against
liability to third persons, and such persons can directly sue the insurer, the direct liability
of the insurer under indemnity contracts against third party liability does not mean that
the insurer can be held liable in solidum with the insured and/or the other parties found
at fault. For the liability of the insurer is based on contract; that of the insured carrier or
vehicle owner is based on tort.
Obviously, the insurer could be held liable only up to the extent of what was provided for
by the contract of insurance, in accordance with the CMVLI law. At the time of the
incident, the schedule of indemnities for death and bodily injuries, professional fees and
other charges payable under a CMVLI coverage was provided for under the Insurance
Memorandum Circular (IMC) No. 5-78 which was approved on November 10, 1978. As
therein provided, the maximum indemnity for death was twelve thousand (P12,000.00)
pesos per victim. The schedules for medical expenses were also provided by said IMC,
specifically in paragraphs (C) to (G).63
Damages to be
Awarded
The trial court correctly awarded moral damages in the amount of P50,000 in favor of
respondent Arriesgado. The award of exemplary damages by way of example or
correction of the public good,64 is likewise in order. As the Court ratiocinated
in Kapalaran Bus Line v. Coronado:65
While the immediate beneficiaries of the standard of extraordinary diligence are, of
course, the passengers and owners of cargo carried by a common carrier, they are not
the only persons that the law seeks to benefit. For if common carriers carefully observed
the statutory standard of extraordinary diligence in respect of their own passengers, they
cannot help but simultaneously benefit pedestrians and the passengers of other vehicles
who are equally entitled to the safe and convenient use of our roads and highways. The
law seeks to stop and prevent the slaughter and maiming of people (whether
passengers or not) on our highways and buses, the very size and power of which seem
to inflame the minds of their drivers. Article 2231 of the Civil Code explicitly authorizes the
imposition of exemplary damages in cases of quasi-delicts if the defendant acted with
gross negligence.66
The respondent Pedro A. Arriesgado, as the surviving spouse and heir of Felisa
Arriesgado, is entitled to indemnity in the amount of P50,000.00.67
The petitioners, as well as the respondents Benjamin Condor and Sergio Pedrano are
jointly and severally liable for said amount, conformably with the following
pronouncement of the Court in Fabre, Jr. vs. Court of Appeals:68
The same rule of liability was applied in situations where the negligence of the driver of
the bus on which plaintiff was riding concurred with the negligence of a third party who
was the driver of another vehicle, thus causing an accident. In Anuran v. Buo, Batangas
Laguna Tayabas Bus Co. v. Intermediate Appellate Court, and Metro Manila Transit
Corporation v. Court of Appeals, the bus company, its driver, the operator of the other
vehicle and the driver of the vehicle were jointly and severally held liable to the
injured passenger or the latters heirs. The basis of this allocation of liability was explained
in Viluan v. Court of Appeals, thus:
Nor should it make difference that the liability of petitioner [bus owner] springs from
contract while that of respondents [owner and driver of other vehicle] arises from quasi-
delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in
case of injury to a passenger due to the negligence of the driver of the bus on which he
was riding and of the driver of another vehicle, the drivers as well as the owners of the
two vehicles are jointly and severally liable for damages. Some members of the Court,
though, are of the view that under the circumstances they are liable on quasi-delict.69
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of the
Court of Appeals is AFFIRMED with MODIFICATIONS:
(1) Respondent Philippine Phoenix Surety and Insurance, Inc. and petitioner William Tiu
are ORDERED to pay, jointly and severally, respondent Pedro A. Arriesgado the total
amount of P13,113.80;
(2) The petitioners and the respondents Benjamin Condor and Sergio Pedrano
are ORDERED to pay, jointly and severally, respondent Pedro A. Arriesgado P50,000.00 as
indemnity; P26,441.50 as actual damages; P50,000.00 as moral damages; P50,000.00 as
exemplary damages; and P20,000.00 as attorneys fees.
SO ORDERED.
[G.R. No. 113003. October 17, 1997]
ALBERTA YOBIDO and CRESENCIO YOBIDO, petitioners, vs. COURT OF APPEALS, LENY
TUMBOY, ARDEE TUMBOY and JASMIN TUMBOY, respondents.
DECISION
ROMERO, J.:
In this petition for review on certiorari of the decision of the Court of Appeals, the issue is
whether or not the explosion of a newly installed tire of a passenger vehicle is a fortuitous
event that exempts the carrier from liability for the death of a passenger.
On April 26, 1988, spouses Tito and Leny Tumboy and their minor children named Ardee
and Jasmin, boarded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for
Davao City. Along Picop Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of
the bus exploded. The bus fell into a ravine around three (3) feet from the road and
struck a tree. The incident resulted in the death of 28-year-old Tito Tumboy and physical
injuries to other passengers.
On November 21, 1988, a complaint for breach of contract of carriage, damages and
attorneys fees was filed by Leny and her children against Alberta Yobido, the owner of
the bus, and Cresencio Yobido, its driver, before the Regional Trial Court of Davao
City. When the defendants therein filed their answer to the complaint, they raised the
affirmative defense of caso fortuito. They also filed a third-party complaint against
Philippine Phoenix Surety and Insurance, Inc. This third-party defendant filed an answer
with compulsory counterclaim. At the pre-trial conference, the parties agreed to a
stipulation of facts.[1]
Upon a finding that the third party defendant was not liable under the insurance
contract, the lower court dismissed the third party complaint. No amicable settlement
having been arrived at by the parties, trial on the merits ensued.
The plaintiffs asserted that violation of the contract of carriage between them and the
defendants was brought about by the drivers failure to exercise the diligence required of
the carrier in transporting passengers safely to their place of destination. According to
Leny Tumboy, the bus left Mangagoy at 3:00 oclock in the afternoon. The winding road it
traversed was not cemented and was wet due to the rain; it was rough with crushed
rocks. The bus which was full of passengers had cargoes on top. Since it was running fast,
she cautioned the driver to slow down but he merely stared at her through the mirror. At
around 3:30 p.m., in Trento, she heard something explode and immediately, the bus fell
into a ravine.
For their part, the defendants tried to establish that the accident was due to a fortuitous
event. Abundio Salce, who was the bus conductor when the incident happened,
testified that the 42-seater bus was not full as there were only 32 passengers, such that
he himself managed to get a seat. He added that the bus was running at a speed of 60
to 50 and that it was going slow because of the zigzag road. He affirmed that the left
front tire that exploded was a brand new tire that he mounted on the bus on April 21,
1988 or only five (5) days before the incident. The Yobido Liner secretary, Minerva
Fernando, bought the new Goodyear tire from Davao Toyo Parts on April 20, 1988 and
she was present when it was mounted on the bus by Salce. She stated that all driver
applicants in Yobido Liner underwent actual driving tests before they were employed.
Defendant Cresencio Yobido underwent such test and submitted his professional drivers
license and clearances from the barangay, the fiscal and the police.
On August 29, 1991, the lower court rendered a decision [2] dismissing the action for lack
of merit. On the issue of whether or not the tire blowout was a caso fortuito, it found that
the falling of the bus to the cliff was a result of no other outside factor than the tire blow-
out. It held that the ruling in the La Mallorca and Pampanga Bus Co. v. De Jesus[3] that a
tire blowout is a mechanical defect of the conveyance or a fault in its equipment which
was easily discoverable if the bus had been subjected to a more thorough or rigid
check-up before it took to the road that morning is inapplicable to this case. It reasoned
out that in said case, it was found that the blowout was caused by the established fact
that the inner tube of the left front tire was pressed between the inner circle of the left
wheel and the rim which had slipped out of the wheel. In this case, however, the cause
of the explosion remains a mystery until at present. As such, the court added, the tire
blowout was a caso fortuito which is completely an extraordinary circumstance
independent of the will of the defendants who should be relieved of whatever liability
the plaintiffs may have suffered by reason of the explosion pursuant to Article 1174 [4] of
the Civil Code.
Dissatisfied, the plaintiffs appealed to the Court of Appeals. They ascribed to the lower
court the following errors: (a) finding that the tire blowout was a caso fortuito; (b) failing
to hold that the defendants did not exercise utmost and/or extraordinary diligence
required of carriers under Article 1755 of the Civil Code, and (c) deciding the case
contrary to the ruling in Juntilla v. Fontanar,[5] and Necesito v. Paras.[6]
On August 23, 1993, the Court of Appeals rendered the Decision[7] reversing that of the
lower court. It held that:
To Our mind, the explosion of the tire is not in itself a fortuitous event. The cause of the
blow-out, if due to a factory defect, improper mounting, excessive tire pressure, is not an
unavoidable event. On the other hand, there may have been adverse conditions on the
road that were unforeseeable and/or inevitable, which could make the blow-out a caso
fortuito. The fact that the cause of the blow-out was not known does not relieve the
carrier of liability. Owing to the statutory presumption of negligence against the carrier
and its obligation to exercise the utmost diligence of very cautious persons to carry the
passenger safely as far as human care and foresight can provide, it is the burden of the
defendants to prove that the cause of the blow-out was a fortuitous event. It is not
incumbent upon the plaintiff to prove that the cause of the blow-out is not caso-fortuito.
Proving that the tire that exploded is a new Goodyear tire is not sufficient to discharge
defendants burden. As enunciated in Necesito vs. Paras, the passenger has neither
choice nor control over the carrier in the selection and use of its equipment, and the
good repute of the manufacturer will not necessarily relieve the carrier from liability.
Moreover, there is evidence that the bus was moving fast, and the road was wet and
rough. The driver could have explained that the blow-out that precipitated the accident
that caused the death of Toto Tumboy could not have been prevented even if he had
exercised due care to avoid the same, but he was not presented as witness.
The Court of Appeals thus disposed of the appeal as follows:
WHEREFORE, the judgment of the court a quo is set aside and another one entered
ordering defendants to pay plaintiffs the sum of P50,000.00 for the death of Tito
Tumboy, P30,000.00 in moral damages, and P7,000.00 for funeral and burial expenses.
SO ORDERED.
The defendants filed a motion for reconsideration of said decision which was denied on
November 4, 1993 by the Court of Appeals. Hence, the instant petition asserting the
position that the tire blowout that caused the death of Tito Tumboy was a caso
fortuito. Petitioners claim further that the Court of Appeals, in ruling contrary to that of
the lower court, misapprehended facts and, therefore, its findings of fact cannot be
considered final which shall bind this Court. Hence, they pray that this Court review the
facts of the case.
The Court did re-examine the facts and evidence in this case because of the
inapplicability of the established principle that the factual findings of the Court of
Appeals are final and may not be reviewed on appeal by this Court. This general
principle is subject to exceptions such as the one present in this case, namely, that the
lower court and the Court of Appeals arrived at diverse factual findings.[8] However,
upon such re-examination, we found no reason to overturn the findings and conclusions
of the Court of Appeals.
As a rule, when a passenger boards a common carrier, he takes the risks incidental to
the mode of travel he has taken. After all, a carrier is not an insurer of the safety of its
passengers and is not bound absolutely and at all events to carry them safely and
without injury.[9] However, when a passenger is injured or dies while travelling, the law
presumes that the common carrier is negligent. Thus, the Civil Code provides:
Art. 1756. In case of death 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.
Article 1755 provides that (a) common carrier is bound to carry the passengers safely as
far as human care and foresight can provide, using the utmost diligence of very
cautious persons, with a due regard for all the circumstances. Accordingly, in culpa
contractual, once a passenger dies or is injured, the carrier is presumed to have been at
fault or to have acted negligently. This disputable presumption may only be overcome
by evidence that the carrier had observed extraordinary diligence as prescribed by
Articles 1733,[10] 1755 and 1756 of the Civil Code or that the death or injury of the
passenger was due to a fortuitous event.[11] Consequently, the court need not make an
express finding of fault or negligence on the part of the carrier to hold it responsible for
damages sought by the passenger.[12]
In view of the foregoing, petitioners contention that they should be exempt from liability
because the tire blowout was no more than a fortuitous event that could not have been
foreseen, must fail. A fortuitous event is possessed of the following characteristics: (a) the
cause of the unforeseen and unexpected occurrence, or the failure of the debtor to
comply with his obligations, must be independent of human will; (b) it must be impossible
to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must
be impossible to avoid; (c) the occurrence must be such as to render it impossible for
the debtor to fulfill his obligation in a normal manner; and (d) the obligor must be free
from any participation in the aggravation of the injury resulting to the creditor.[13] As
Article 1174 provides, no person shall be responsible for a fortuitous event which could
not be foreseen, or which, though foreseen, was inevitable. In other words, there must
be an entire exclusion of human agency from the cause of injury or loss.[14]
Under the circumstances of this case, the explosion of the new tire may not be
considered a fortuitous event. There are human factors involved in the situation. The fact
that the tire was new did not imply that it was entirely free from manufacturing defects
or that it was properly mounted on the vehicle. Neither may the fact that the tire bought
and used in the vehicle is of a brand name noted for quality, resulting in the conclusion
that it could not explode within five days use. Be that as it may, it is settled that an
accident caused either by defects in the automobile or through the negligence of its
driver is not a caso fortuito that would exempt the carrier from liability for damages.[15]
Moreover, a common carrier may not be absolved from liability in case of force
majeure or fortuitous event alone. The common carrier must still prove that it
was not negligent in causing the death or injury resulting from an accident.[16] This Court
has had occasion to state:
While it may be true that the tire that blew-up was still good because the grooves of the
tire were still visible, this fact alone does not make the explosion of the tire a fortuitous
event. No evidence was presented to show that the accident was due to adverse road
conditions or that precautions were taken by the jeepney driver to compensate for any
conditions liable to cause accidents. The sudden blowing-up, therefore, could have
been caused by too much air pressure injected into the tire coupled by the fact that the
jeepney was overloaded and speeding at the time of the accident.[17]
It is interesting to note that petitioners proved through the bus conductor, Salce, that the
bus was running at 60-50 kilometers per hour only or within the prescribed lawful speed
limit. However, they failed to rebut the testimony of Leny Tumboy that the bus was
running so fast that she cautioned the driver to slow down. These contradictory facts
must, therefore, be resolved in favor of liability in view of the presumption of negligence
of the carrier in the law. Coupled with this is the established condition of the road rough,
winding and wet due to the rain. It was incumbent upon the defense to establish that it
took precautionary measures considering partially dangerous condition of the road. As
stated above, proof that the tire was new and of good quality is not sufficient proof that
it was not negligent. Petitioners should have shown that it undertook extraordinary
diligence in the care of its carrier, such as conducting daily routinary check-ups of the
vehicles parts. As the late Justice J.B.L. Reyes said:
It may be impracticable, as appellee argues, to require of carriers to test the strength of
each and every part of its vehicles before each trip; but we are of the opinion that a
due regard for the carriers obligations toward the traveling public demands adequate
periodical tests to determine the condition and strength of those vehicle portions the
failure of which may endanger the safety of the passengers.[18]
Having failed to discharge its duty to overthrow the presumption of negligence with
clear and convincing evidence, petitioners are hereby held liable for damages. Article
1764[19] in relation to Article 2206[20] of the Civil Code prescribes the amount of at least
three thousand pesos as damages for the death of a passenger. Under prevailing
jurisprudence, the award of damages under Article 2206 has been increased to fifty
thousand pesos (P50,000.00).[21]
Moral damages are generally not recoverable in culpa contractual except when bad
faith had been proven. However, the same damages may be recovered when breach
of contract of carriage results in the death of a passenger,[22] as in this case. Exemplary
damages, awarded by way of example or correction for the public good when moral
damages are awarded,[23]may likewise be recovered in contractual obligations if the
defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent
manner.[24] Because petitioners failed to exercise the extraordinary diligence required of
a common carrier, which resulted in the death of Tito Tumboy, it is deemed to have
acted recklessly.[25] As such, private respondents shall be entitled to exemplary
damages.
WHEREFORE, the Decision of the Court of Appeals is hereby AFFIRMED subject to the
modification that petitioners shall, in addition to the monetary awards therein, be liable
for the award of exemplary damages in the amount of P20,000.00. Costs against
petitioners.
SO ORDERED.
[G.R. No. 116110. May 15,1996]
BALIWAG TRANSIT, INC., petitioner, vs. COURT OF APPEALS, SPOUSES ANTONIO GARCIA &
LETICIA GARCIA, A & J TRADING, AND JULIO RECONTIQUE, respondents.
SYLLABUS
1. CIVIL LAW; CONTRACTS; SPECIAL CONTRACTS; COMMON CARRIERS; LIABILITY FOR
DAMAGES; ESTABLISHED IN CASE AT BAR. As a common carrier, Baliwag breached its
contract of carriage when it failed to deliver its passengers, Leticia and Allan Garcia to
their destination safe and sound. A common carrier is bound to carry its passengers
safely as far as human care and foresight can provide, using the utmost diligence of a
very cautious person, with due regard for 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 as prescribed in Articles 1733 and 1755 of the Civil Code. The
records are bereft of any proof to show that Baliwag exercised extraordinary
diligence. On the contrary, the evidence demonstrates its driver's recklessness. Leticia
Garcia testified that the bus was running at a very high speed despite the drizzle and the
darkness of the highway. The passengers pleaded for its driver to slow down, but their
plea was ignored. Leticia also revealed that the driver was smelling of liquor. She could
smell him as she was seated right behind the driver. Another passenger, Felix Cruz
testified that immediately before the collision, the bus driver was conversing with a co-
employee. All these prove the bus driver's wanton disregard for the physical safety of his
passengers, which make Baliwag as a common carrier liable for damages under Article
1759 of the Civil Code.
2. ID.; ID.; ID.; ID.; LAND TRANSPORTATION AND TRAFFIC CODE; SECTION 34(g) THEREOF;
SUBSTANTIALLY COMPLIED WITH IN CASE AT BAR. Baliwag cannot evade its liability by
insisting that the accident was caused solely by the negligence of A & J Trading and
Julio Recontique. It harps on their alleged non use of early warning device as testified to
by Col. Demetrio dela Cruz, the station commander of Gapan, Nueva Ecija who
investigated the incident, and Francisco Romano, the bus conductor. The records do
not bear out Baliwag's contention. Col. dela Cruz and Romano testified that they did not
see any early warning device at the scene of the accident. They were referring to the
triangular reflectorized plates in red and yellow issued by the Land Transportation
Office. However, the evidence shows that Recontique and Ecala placed a kerosene
lamp or torch at the edge of the road, near the rear portion of the truck to serve as an
early warning device. This substantially complies with Section 34 (g) of the Land
Transportation and Traffic Code, to wit: "(g) lights and reflector when parked or disabled.
Appropriate parking lights or flares visible one hundred meters away shall be displayed
at the corner of the vehicle whenever such vehicle is parked on highways or in places
that are not well-lighted or, is placed in such manner as to endanger passing
traffic. Furthermore, every motor vehicle shall be provided at all times with built-in
reflectors or other similar warning devices either pasted, painted or attached at its front
and back which shall likewise be visible at night at least one hundred meters away. No
vehicle not provided with any of the requirements mentioned in this subsection shall be
registered." Baliwag's argument that the kerosene lamp or torch does not substantially
comply with the law is untenable. The aforequoted law clearly allows the use not only of
an early warning device of the triangular reflectorized plates variety but also parking
lights or flares visible one hundred meters away. Indeed, Col. dela Cruz himself admitted
that a kerosene lamp is an acceptable substitute for the reflectorized plates. No
negligence, therefore, may be imputed to A & J Trading and its driver, Recontique.
3. ID.; DAMAGES; To PROVE ACTUAL DAMAGES, THE BEST EVIDENCE AVAILABLE TO THE
PARTIES MUST BE PRESENTED. The propriety of the amount awarded as hospitalization and
medical fees. The award of P25,000.00 is not supported by the evidence on record. The
Garcias presented receipts marked as Exhibits "B-1 " to "B-42" but their total amounted
only to P5,017.74. To be sure, Leticia testified as to the extra amount spent for her
medical needs but without more reliable evidence, her lone testimony cannot justify the
award of P25,000.00. To prove actual damages, the best evidence available to the
injured party must be presented. The court cannot rely on uncorroborated testimony
whose truth is suspect, but must depend upon competent proof that damages have
been actually suffered. Thus, we reduce the actual damages for medical and
hospitalization expenses to P5,017.74.
4. ID.; ID.; MORAL DAMAGES; RECOVERABLE IF THE CARRIER THROUGH ITS AGENT, ACTED
FRAUDULENTLY OR IN BAD FAITH. The award of moral damages is in accord with law. In a
breach of contract of carriage, moral damages are recoverable if the carrier, through
its agent, acted fraudulently or in bad faith. The evidence shows the gross negligence of
the driver of Baliwag bus which amounted to bad faith. Without doubt, Leticia and Allan
experienced physical suffering, mental anguish and serious anxiety by reason of the
accident.
APPEARANCES OF COUNSEL
Leopoldo C. Sta. Maria for Baliwag Transit, Inc.
Arturo D. Vallar for Sps. Antonio & Leticia Garcia.
Allan A. Leynes for A & J Trading, and Julio Recontique.
DECISION
PUNO, J.:
This is a petition for certiorari to review the Decision[1] of the Court of Appeals in CA-G.R.
CV-31246 awarding damages in favor of the spouses Antonio and Leticia Garcia for
breach of contract of carriage.[2] filed by the spouses Garcia questioning the same
Court of Appeals' Decision which reduced their award of damages. On November 13,
1995, we denied their petition for review.
The records show that on July 31, 1980, Leticia Garcia, and her five-year old son, Allan
Garcia, boarded Baliwag Transit Bus No. 2036 bound for Cabanatuan City driven by
Jaime Santiago. They took the seat behind the driver.
At about 7:30 in the evening, in Malimba, Gapan, Nueva Ecija, the bus passengers saw
a cargo truck parked at the shoulder of the national highway. Its left rear portion jutted
to the outer lane, the shoulder of the road was too narrow to accommodate the whole
truck. A kerosene lamp appeared at the edge of the road obviously to serve as a
warning device. The truck driver, Julio Recontique, and his helper, Arturo Escala, were
then replacing a flat tire. The truck is owned by respondent A & J Trading.
Bus driver Santiago was driving at an inordinately fast speed and failed to notice the
truck and the kerosene lamp at the edge of the road. Santiago's passengers urged him
to slow down but he paid them no heed. Santiago even carried animated
conversations with his co-employees while driving. When the danger of collision became
imminent, the bus passengers shouted "Babangga tayo!". Santiago stepped on the
brake, but it was too late. His bus rammed into the stalled cargo truck. It caused the
instant death of Santiago and Escala, and injury to several others. Leticia and Allan
Garcia were among the injured passengers.
Leticia suffered a fracture in her pelvis and right leg. They rushed her to the provincial
hospital in Cabanatuan City where she was given emergency treatment. After three
days, she was transferred to the National Orthopedic Hospital where she was confined
for more than a month.[3] She underwent an operation for partial hip prosthesis.[4]
Allan, on the other hand, broke a leg. He was also given emergency treatment at the
provincial hospital.
Spouses Antonio and Leticia Garcia sued Baliwag Transit, Inc., A & J Trading and Julio
Recontique for damages in the Regional Trial Court of Bulacan.[5] Leticia sued as an
injured passenger of Baliwag and as mother of Allan. At the time of the complaint, Allan
was a minor, hence, the suit initiated by his parents in his favor.
Baliwag, A & J Trading and Recontique disclaimed responsibility for the mishap. Baliwag
alleged that the accident was caused solely by the fault and negligence of A & J
Trading and its driver, Recontique. Baliwag charged that Recontigue failed to place an
early warning device at the corner of the disabled cargo truck to warn oncoming
vehicles.[6] On the other hand, A & J Trading and Recontique alleged that the accident
was the result of the negligence and reckless driving of Santiago, bus driver of Baliwag. [7]
After hearing, the trial court found all the defendants liable, thus:
xxxxxxxxx
"In view thereof, the Court holds that both defendants should be held liable; the
defendant Baliwag Transit, Inc. for having failed to deliver the plaintiff and her son to
their point of destination safely in violation of plaintiff's and defendant Baliwag Transit's
contractual relation.
The defendant A & J and Julio Recontique for failure to provide its cargo truck with an
early warning device in violation of the Motor Vehicle Law."[8]
The trial court ordered Baliwag, A & J Trading and Recontique to pay jointly and
severally the Garcia spouses the following: (1) P25,000.00 hospitalization and medication
fee, (2) P450,000.00 loss of earnings in eight (8) years, (3) P2,000.00 for the hospitalization
of their son Allan Garcia, (4) P50,000.00 moral damages, and (5) P30,000.00 attorney's
fee.[9]
On appeal, the Court of Appeals modified the trial court's Decision by absolving A & J
Trading from liability and by reducing the award of attorney's fees to P10,000.00 and loss
of earnings to P300,000.00, respectively.[10]
Baliwag filed the present petition for review raising the following issues:
1. Did the Court of Appeals err in absolving A & J Trading from liability and holding
Baliwag solely liable for the injuries suffered by Leticia and Allan Garcia in the accident?
2. Is the amount of damages awarded by the Court of Appeals to the Garcia spouses
correct?
We affirm the factual findings of the Court of Appeals.
I
As a common carrier, Baliwag breached its contract of carriage when it failed to deliver
its passengers, Leticia and Allan Garcia to their destination safe and sound. A common
carrier is bound to carry its passengers safely as far as human care and foresight can
provide, using the utmost diligence of a very cautious person, with due regard for all the
circumstances.[11] 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 as prescribed in Articles 1733
and 1755 of the Civil Code.[12]
The records are bereft of any proof to show that Baliwag exercised extraordinary
diligence. On the contrary, the evidence demonstrates its driver's recklessness. Leticia
Garcia testified that the bus was running at a very high speed despite the drizzle and the
darkness of the highway. The passengers pleaded for its driver to slow down, but their
plea was ignored.[13]Leticia also revealed that the driver was smelling of liquor.[14] She
could smell him as she was seated right behind the driver. Another passenger, Felix Cruz
testified that immediately before the collision, the bus driver was conversing with a co-
employee.[15] All these prove the bus driver's wanton disregard for the physical safety of
his passengers, which makes Baliwag as a common carrier liable for damages under
Article 1759 of the Civil Code:
Art. 1759. Common carriers are liable for the death of or injuries to passengers through
the negligence or willfull 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 do not cease upon proof that they exercised all the
diligence of a good father of a family in the selection or supervision of their employees.
Baliwag cannot evade its liability by insisting that the accident was caused solely by the
negligence of A & J Trading and Julio Recontique. It harps on their alleged non use of an
early warning device as testified to by Col. Demetrio dela Cruz, the station commander
of Gapan, Nueva Ecija who investigated the incident, and Francisco Romano, the bus
conductor.
The records do not bear out Baliwag's contention. Col. dela Cruz and Romano testified
that they did not see any early warning device at the scene of the accident.[16] They
were referring to the triangular reflectorized plates in red and yellow issued by the Land
Transportation Office. However, the evidence shows that Recontique and Ecala placed
a kerosene lamp or torch at the edge of the road, near the rear portion of the truck to
serve as an early warning device.[17] This substantially complies with Section 34 (g) of the
Land Transportation and Traffic Code, to wit:
(g) Lights and reflector when parked or disabled. Appropriate parking lights or flares
visible one hundred meters away shall be displayed at the corner of the vehicle
whenever such vehicle is parked on highways or in places that are not well-lighted or, is
placed in such manner as to endanger passing traffic. Furthermore, every motor vehicle
shall be provided at all times with built-in reflectors or other similar warning devices either
pasted, painted or attached at its front and back which shall likewise be visible at night
at least one hundred meters away. No vehicle not provided with any of the
requirements mentioned in this subsection shall be registered. (Italics supplied)
Baliwag's argument that the kerosene lamp or torch does not substantially comply with
the law is untenable. The aforequoted law clearly allows the use not only of an early
warning device of the triangular reflectorized plates variety but also parking lights or
flares visible one hundred meters away. Indeed, Col. dela Cruz himself admitted that a
kerosene lamp is an acceptable substitute for the reflectorized plates.[18] No negligence,
therefore, may be imputed to A & J Trading and its driver, Recontique.
Anent this factual issue, the analysis of evidence made by the Court of Appeals
deserves our concurrence, viz:
xxx xxx xxx
In the case at bar, both the injured passengers of the Baliwag involved in the accident
testified that they saw some sort of kerosene or a torch on the rear portion of the truck
before the accident. Baliwag Transit's conductor attempted to defeat such testimony by
declaring that he noticed no early warning device in front of the truck.
Among the testimonies offered by the witnesses who were present at the scene of the
accident, we rule to uphold the affirmative testimonies given by the two injured
passengers and give less credence to the testimony of the bus conductor who solely
testified that no such early warning device exists.
The testimonies of injured passengers who may well be considered as disinterested
witness appear to be natural and more probable than the testimony given by Francisco
Romano who is undoubtedly interested in the outcome of the case, being the
conductor of the defendant-appellant Baliwag Transit Inc.
It must be borne in mind that the situation then prevailing at the time of the accident
was admittedly drizzly and all dark. This being so, it would be improbable and perhaps
impossible on the part of the truck helper without the torch nor the kerosene to remove
the flat tires of the truck. Moreover, witness including the bits conductor himself admitted
that the passengers shouted, that they are going to bump before the collision which
consequently caused the bus driver to apply the brake 3 to 4 meters away from the
truck. Again, without the kerosene nor the torch in front of the truck, it would be
improbable for the driver, more so the passengers to notice the truck to be bumped by
the bus considering the darkness of the place at the time of the accident.
xxxxxxxxx
While it is true that the investigating officer testified that he found no early warning
device at the time of his investigation, We rule to give less credence to such testimony
insofar as he himself admitted on cross examination that he did not notice the presence
of any kerosene lamp at the back of the truck because when he arrived at the scene of
the accident, there were already many people surrounding the place (TSN, Aug, 22,
1989, p. 13). He further admitted that there exists a probability that the lights of the truck
may have been smashed by the bus at the time of the accident considering the
location of the truck where its rear portion was connected with the front portion of the
bus (TSN, March 29, 1985, pp. 11-13). Investigator's testimony therefore did not confirm
nor deny the existence of such warning device, making his testimony of little probative
value.[19]
II
We now review the amount of damages awarded to the Garcia spouses.
First, the propriety of the amount awarded as hospitalization and medical fees. The
award of P25,000.00 is not supported by the evidence on record. The Garcias presented
receipts marked as Exhibits B-1 to B 42 but their total amounted only to P5,017.74. To be
sure, Leticia testified as to the extra amount spent for her medical needs but without
more reliable evidence, her lone testimony cannot justify the award of P25,000.00. To
prove actual damages, the best evidence available to the injured party must be
presented. The court cannot rely on uncorroborated testimony whose truth is suspect,
but must depend upon competent proof that damages have been actually
suffered[20] Thus, we reduce the actual damages for medical and hospitalization
expenses to P5,017.74.
Second, we find as reasonable the award of P300,000.00 representing Leticia's lost
earnings. Before the accident, Leticia was engaged in embroidery, earning P5,000.00
per month.[21] Her injuries forced her to stop working. Considering the nature and extent
of her injuries and the length of time it would take her to recover,[22] we find it proper
that Baliwag should compensate her lost income for five (5) years.[23]
Third, the award of moral damages is in accord with law. In a breach of contract of
carriage, moral damages are recoverable if the carrier, through its agent, acted
fraudulently or in bad faith.[24] The evidence shows the gross negligence of the driver of
Baliwag bus which amounted to bad faith. Without doubt, Leticia and Allan
experienced physical suffering, mental anguish and serious anxiety by reason of the
accident. Leticia underwent an operation to replace her broken hip bone with a metal
plate. She was confined at the National Orthopedic Hospital for 45 days. The young
Allan was also confined in the hospital for his foot injury. Contrary to the contention of
Baliwag, the decision of the trial court as affirmed by the Court of Appeals awarded
moral damages to Antonio and Leticia Garcia not in their capacity as parents of
Allan. Leticia was given moral damages as an injured party. Allan was also granted
moral damages as an injured party but because of his minority, the award in his favor
has to be given to his father who represented him in the suit.
Finally, we find the award of attorney's fees justified. The complaint for damages was
instituted by the Garcia spouses on December 15, 1982, following the unjustified refusal
of Baliwag to settle their claim. The Decision was promulgated by the trial court only on
January 29, 1991 or about nine years later. Numerous pleadings were filed before the
trial court, the appellate court and to this Court. Given the complexity of the case and
the amount of damages involved,[25] the award of attorney's fee for P10,000.00 is just
and reasonable.
IN VIEW WHEREOF, the Decision of the respondent Court of Appeals in CA-G.R. CV-31246
is AFFIRMED with the MODIFICATION reducing the actual damages for hospitalization
and medical fees to P5,017.74. No costs.
SO ORDERED.
G.R. No. 144723 February 27, 2006
LARRY ESTACION, Petitioner,
vs.
NOE BERNARDO, thru and his guardian ad litem ARLIE BERNARDO, CECILIA BANDOQUILLO
and GEMINIANO QUINQUILLERA, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review on certiorari filed by Larry Estacion (petitioner) seeking to
annul the Decision dated April 17, 20001 of the Court of Appeals (CA) in CA-GR CV No.
41447 which affirmed in toto the decision of the Regional Trial Court (RTC) of Dumaguete
City, Branch 41, Negros Oriental, holding petitioner and his driver Bienvenido Gerosano
(Gerosano) liable for damages for the injury sustained by Noe Bernardo (respondent
Noe). Also assailed is the appellate court’s Resolution dated August 16, 2000 2 denying
petitioner’s motion for reconsideration.
In the afternoon of October 16, 1982, respondent Noe was going home to Dumaguete
from Cebu, via Bato and Tampi. At Tampi, he boarded a Ford Fiera passenger jeepney
with plate no. NLD 720 driven by respondent Geminiano Quinquillera (Quinquillera),
owned by respondent Cecilia Bandoquillo (Bandoquillo), and was seated on the
extension seat placed at the center of the Fiera. From San Jose, an old woman wanted
to ride, so respondent Noe offered his seat. Since the Fiera was already full, respondent
Noe hung or stood on the left rear carrier of the vehicle. Somewhere along Barangay
Sto. Niño, San Jose, Negros Oriental, between kilometers 13 and 14, the Fiera began to
slow down and then stopped by the right shoulder of the road to pick up passengers.
Suddenly, an Isuzu cargo truck, owned by petitioner and driven by Gerosano, which was
traveling in the same direction, hit the rear end portion of the Fiera where respondent
Noe was standing. Due to the tremendous force, the cargo truck smashed respondent
Noe against the Fiera crushing his legs and feet which made him fall to the ground. A
passing vehicle brought him to the Silliman University Medical Center where his lower left
leg was amputated.
Police investigation reports showed that respondent Noe was one of the 11 passengers
of the Fiera who suffered injuries; that when the Fiera stopped to pick up a passenger,
the cargo truck bumped the rear left portion of the Fiera; that only one tire mark from
the front right wheel of the cargo truck was seen on the road. A sketch of the accident
was drawn by investigator Mateo Rubia showing the relative positions of the two
vehicles, their distances from the shoulder of the road and the skid marks of the right
front wheel of the truck measuring about 48 feet.
On February 18, 1993, respondent Noe, through his guardian ad litem Arlie Bernardo,
filed with the RTC of Dumaguete City a complaint3 for damages arising from quasi
delict against petitioner as the registered owner of the cargo truck and his driver
Gerosano. He alleged that the proximate cause of his injuries and suffering was the
reckless imprudence of Gerosano and petitioner’s negligence in the selection of a
reckless driver and for operating a vehicle that was not roadworthy. He prayed for
actual damages, loss of income, moral and exemplary damages, attorney’s fees,
litigation expenses and costs of suit.
Petitioner and his driver Gerosano filed their Answer4 denying the material allegations in
the complaint. They, in turn, filed a third party complaint5 against respondents
Bandoquillo and Quinquillera, as owner and driver respectively of the Fiera. They alleged
that it was the reckless imprudence of respondent driver Quinquillera and his clear
violation of the traffic rules and regulations which was the proximate cause of the
accident and asked for indemnification for whatever damages they would be
sentenced to pay. Respondents Bandoquillo and Quinquillera filed their Answer to the
third party complaint asking for the dismissal of the third party complaint and for
payment of attorney’s fees.
Driver Gerosano was charged criminally for reckless imprudence resulting to multiple
physical injuries with damage to property before the Municipal Circuit Trial Court (MCTC)
of Pamplona-Amlan and San Jose, Negros Oriental. On November 16, 1987, the MCTC
rendered its decision6 finding him guilty of the crime charged and was sentenced to four
months and one day to two years and four months and to pay the costs.
On February 18, 1993, the RTC rendered its judgment in the civil case, 7 the dispositive
portion of which reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered, ordering
defendants Gerosano and Estacion, to pay plaintiff, jointly or solidarily, the following:
1. ₱129,584.20 for actual damages in the form of medical and hospitalization expenses;
2. ₱50,000.00 for moral damages, consisting of mental anguish, moral shock, serious
anxiety and wounded feelings;
3. ₱10,000.00 for attorney’s fees; and
4. ₱5,000.00 for litigation expenses.
SO ORDERED.8
The trial court ruled that the negligence of Gerosano, petitioner’s driver, is the direct and
proximate cause of the incident and of the injuries suffered by respondent Noe; that
Gerosano’s gross negligence and reckless imprudence had been confirmed by the
Judgment in Criminal Case No. 463; that based on the findings of the police investigator,
the faulty brakes caused the cargo truck to bump the Fiera; that the Traffic Accident
Report showed that the tire mark of the cargo truck measuring 48 feet is visibly imprinted
on the road where the incident took place indicating that the said vehicle was
speeding fast; that the existence of one tire mark of the cargo truck proved that the said
vehicle had a faulty brake, otherwise, it would have produced two tire marks on the
road; and that the photographs taken right after the incident also showed who the
guilty party was.
The trial court did not give credence to the argument of petitioner and his driver that the
truck was properly checked by a mechanic before it was dispatched for a trip. It found
that petitioner is negligent in maintaining his vehicle in good condition to prevent any
accident to happen; that petitioner is liable under Article 2180 of the Civil Code as
employer of driver Gerosano for being negligent in the selection and supervision of his
driver as well as for maintaining and operating a vehicle that was not roadworthy; and
that petitioner and his driver are solidarily liable for all the natural and probable
consequences of their negligent acts or omissions. The trial court dismissed the third party
complaint filed by petitioner and his driver against respondents Bandoquillo and
Quinquillera.
Dissatisfied, only petitioner appealed to the CA. On April 17, 2000, the CA rendered the
assailed decision which affirmed in toto the decision of the trial court. Petitioner’s motion
for reconsideration was denied in a Resolution dated August 16, 2000.
Hence, the herein petition for review.
Petitioner submits the following issues for resolution:9
WHETHER THE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONER LARRY
ESTACION EXERCISED THE DUE DILIGENCE OF A GOOD FATHER OF A FAMILY TO PREVENT
DAMAGE DESPITE ABUNDANCE OF EVIDENCE TO THAT EFFECT;
WHETHER THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONER LARRY
ESTACION EXERCISED DUE DILIGENCE IN THE SELECTION AND SUPERVISION OF HIS
EMPLOYEE AND IN MAINTAINING HIS CARGO TRUCK ROADWORTHY AND IN GOOD
OPERATING CONDITION;
WHETHER THE COURT OF APPEALS ERRED IN EXONERATING RESPONDENTS CECILIA
BANDOQUILLO AND GEMINIANO QUINQUILLERA.
In his Memorandum, petitioner contends that he was able to establish that he observed
the diligence of a good father of a family not only in the selection of his employees but
also in maintaining his truck roadworthy and in good operating condition; that the CA
erred in exonerating respondents Bandoquillo and Quinquillera, owner and driver,
respectively of the Fiera from liability when their negligence was the proximate cause of
respondent Noe’s injuries; that respondent Noe’s act of standing in the rear carrier of the
Fiera is in itself negligence on his part which was aggravated by the fact that
respondent Quinquillera overtook the cargo truck driven by Gerosano on the curve and
suddenly cut into the latter’s lane; that due to the overloading of passengers, Gerosano
was not able to see the brake lights of the Fiera when it suddenly stopped to pick up
passengers; that overloading is in violation of the applicable traffic rules and regulations
and Article 2185 is explicit when it provides that "unless there is proof to the contrary, it is
presumed that a person driving a motor vehicle has been negligent if at the time of the
mishap, he was violating any traffic regulation"; that since the Fiera driver was negligent,
there arises a presumption that respondent Bandoquillo, as owner of the Fiera, is
negligent in the selection and supervision of her employee; that assuming petitioner
Estacion and his driver are not entirely blameless, the negligence of Quinquillera is
sufficient basis why the respective liabilities should be delineated vis-à-vis their degree of
negligence consistent with Article 2179 10 of the Civil Code.
Respondent Noe filed his Memorandum alleging that the first and second issues raised
are factual in nature which are beyond the ambit of a petition for review; that petitioner
failed to overcome the presumption of negligence thus he is liable for the negligence of
his driver Gerosano; and that the third issue is best addressed to respondents Bandoquillo
and Quinquillera.
Respondents Bandoquillo and Quinquillera failed to file their memorandum despite
receipt of our Resolution requiring them to submit the same.
We find it apropos to resolve first the third issue considering that the extent of the liability
of petitioner and his driver is dependent on whether respondents Bandoquillo and
Quinquillera are the ones negligent in the vehicular mishap that happened in the
afternoon of October 16, 1982 where respondent Noe was injured, resulting in the
amputation of his left leg.
At the outset, the issue raised is factual in nature. Whether a person is negligent or not is
a question of fact which we cannot pass upon in a petition for review on certiorari, as
our jurisdiction is limited to reviewing errors of law.11 As a rule, factual findings of the trial
court, affirmed by the CA, are final and conclusive and may not be reviewed on
appeal. The established exceptions are: (1) when the inference made is manifestly
mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when the
findings are grounded entirely on speculations, surmises or conjectures; (4) when the
judgment of the CA is based on misapprehension of facts; (5) when the findings of fact
are conflicting; (6) when the CA, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant and appellee; (7)
when the findings of fact are conclusions without citation of specific evidence on which
they are based; (8) when the CA manifestly overlooked certain relevant facts not
disputed by the parties and which, if properly considered, would justify a different
conclusion; and (9) when the findings of fact of the CA are premised on the absence of
evidence and are contradicted by the evidence on record.12
On the basis of the records of this case, we find that there is cogent reason for us to
review the factual findings of the lower courts to conform to the evidence on record
and consider this case as an exception to the general rule.
The trial court and the appellate court had made a finding of fact that the proximate
cause of the injury sustained by respondent Noe was the negligent and careless driving
of petitioner’s driver, Gerosano, who was driving at a fast speed with a faulty brake
when the accident happened. We see no cogent reason to disturb the trial court’s
finding in giving more credence to the testimony of respondent Noe than the testimony
of Gerosano, petitioner’s truck driver.
The correctness of such finding is borne by the records. In his testimony, Gerosano said
that he was driving the truck at a speed of about 40 kilometers per hour;13 that the Fiera
was behind him but upon reaching the curve, i.e.,after passing San Jose going to
Dumaguete, the Fiera overtook him and blocked his way;14 that he was 10 meters from
the Fiera prior to the impact15 when he applied the brakes16 and tried to evade the Fiera
but he still hit it.17
We agree with the trial court and the appellate court when they found that the truck
was running at a fast speed because if Gerosano was really driving at a speed of 40
kilometers per hour and considering that the distance between the truck and the Fiera
in front was about 10 meters, he had more than enough time to slacken his speed and
apply his break to avoid hitting the Fiera. However, from the way the truck reacted to
the application of the brakes, it showed that Gerosano was driving at a fast speed
because the brakes skidded a lengthy 48 feet as shown in the sketch of police
investigator Rubia of the tire marks visibly printed on the road.
Moreover, the photographs taken after the incident and the testimony of Gerosano as
to the extent of damage to the truck, i.e. the truck’s windshield was broken and its hood
was damaged after the impact,18 further support the finding of both courts that
Gerosano was driving at a fast pace.
The accident was further caused by the faulty brakes of the truck. Based on the sketch
report, there was only one tire mark of the right tire of the cargo truck during the incident
which, as testified to by police investigator Rubia, meant that the brakes of the truck
were not aligned otherwise there would be two tire marks impressions on the
road.19 Although petitioner contends that there are other factors to explain why only
one skid mark was found at the place of the incident, such as the angle and edges of
the road as well as the balance of the weight of the cargo laden in the truck, he failed
to show that indeed those factors were present to prove his defense. Such claim cannot
be given credence considering that investigator Rubia testified that the body of the
truck was very much on the road, i.e., not over the shoulder of the road,20 and the road
was straight.21 Indeed, it is the negligent act of petitioner’s driver of driving the cargo
truck at a fast speed coupled with faulty brakes which was the proximate cause of
respondent Noe’s injury.
Petitioner’s claim that right after overtaking the cargo truck, the Fiera driver suddenly
stopped to pick up three passengers from the side of the road; that the overloading of
passengers prevented his truck driver from determining that the Fiera had pulled over to
pick up passengers as the latter’s brakelights were obstructed by the passengers
standing on the rear portion of the Fiera were not substantiated at all. Respondent
Quinquillera, the driver of the Fiera, testified that the distance from the curve of the road
when he stopped and picked up passengers was estimated to be about 80 to 90
feet.22 In fact, from the sketch drawn by investigator Rubia, it showed a distance of 145
feet from the curve of the road to the speed tire mark (which measured about 48 feet)
visibly printed on the road to the Fiera. This means that the Fiera driver did not stop
immediately after the curve as what petitioner claims. Moreover, Gerosano admitted
that his truck was at a distance of 10 meters prior to the impact. The distance between
the two vehicles was such that it would be impossible for Gerosano not to have seen
that the Fiera had pulled over to pick up passengers.
However, we agree with petitioner that respondent Noe’s act of standing on the rear
carrier of the Fiera exposing himself to bodily injury is in itself negligence on his part. We
find that the trial court and the CA erred when they failed to consider that respondent
Noe was also guilty of contributory negligence. Contributory negligence is conduct on
the part of the injured party, contributing as a legal cause to the harm he has suffered,
which falls below the standard to which he is required to conform for his own
protection. 23
It has been established by the testimony of respondent Noe that he was with four or five
other persons standing on the rear carrier of the Fiera since it was already full.
Respondent Noe’s act of standing on the left rear carrier portion of the Fiera showed his
lack of ordinary care and foresight that such act could cause him harm or put his life in
danger. It has been held that "to hold a person as having contributed to his injuries, it
must be shown that he performed an act that brought about his injuries in disregard of
warning or signs of an impending danger to health and body.24 Respondent Noe’s act
of hanging on the Fiera is definitely dangerous to his life and limb.
We likewise find merit in petitioner’s contention that respondent Quinquillera, the Fiera
driver, was also negligent. There is merit to petitioner’s claim that there was overloading
which is in violation of traffic rules and regulations. Respondent Noe himself had testified
that he was standing at the rear portion of the Fiera because the Fiera was already full.
Respondent Quinquillera should not have taken more passengers than what the Fiera
can accommodate. If the Fiera was not overloaded, respondent Noe would not have
been standing on the rear carrier and sustained such extent of injury.
Furthermore, we find that respondent Quinquillera was negligent in allowing respondent
Noe to stand on the Fiera’s rear portion. Section 32(c) of Article III of Republic Act No.
4136, otherwise known as "The Land Transportation and Traffic Code" provides:
(c) Riding on running boards – No driver shall allow any person to ride on running board,
step board or mudguard of his motor vehicle for any purpose while the vehicle is in
motion.
Respondent Quinquillera’s act of permitting respondent Noe to hang on the rear portion
of the Fiera in such a dangerous position creates undue risk of harm to respondent Noe.
Quinquillera failed to observe that degree of care, precaution and vigilance that the
circumstances justly demand. Thus, respondent Noe suffered injury.25 Since respondent
Quinquillera is negligent, there arises a presumption of negligence on the part of his
employer, respondent Bandoquillo, in supervising her employees properly. Such
presumption was not rebutted at all by Bandoquillo. Thus, the CA erred in affirming the
dismissal of the third party complaint filed by petitioner against respondents Quinquillera
and Bandoquillo.
Petitioner contends that he was able to establish that he exercised the due diligence of
a good father of a family in the selection of his employees as well as in the maintenance
of his cargo truck in good operating condition. He claims that in addition to looking at
Gerosano’s driver’s license, he accompanied the latter in his first two trips, during which
he ascertained Gerosano’s competence as a driver, petitioner being a driver himself;
that the truck driven by Gerosano has never figured in any accident prior to the incident
involved; that upon his acquisition of the cargo truck on March 16, 1982, only 7 months
prior to the incident, the same was thoroughly checked up and reconditioned; and that
he had in his employ a mechanic who conducted periodic check-ups of the engine
and brake system of the cargo truck.
We are not persuaded.
Article 2180 of the Civil Code provides:
Art. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own
acts or omissions, but also for those of persons for whom one is responsible.
xxx
Employers shall be liable for the damages 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
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.
As the employer of Gerosano, petitioner is primarily and solidarily liable for the quasi-
delict committed by the former. Petitioner is presumed to be negligent in the selection
and supervision of his employee by operation of law and may be relieved of
responsibility for the negligent acts of his driver, who at the time was acting within the
scope of his assigned task, only if he can show that he observed all the diligence of a
good father of a family to prevent damage.26
In Yambao v. Zuniga,27 we have clarified the meaning of the diligence of a good father
of a family, thus:
The "diligence of a good father" referred to in the last paragraph of the aforecited
statute means diligence in the selection and supervision of employees. Thus, when an
employee, while performing his duties, causes damage to persons or property due to his
own negligence, there arises the juris tantum presumption that the employer is negligent,
either in the selection of the employee or in the supervision over him after the
selection. For the employer to avoid the solidary liability for a tort committed by his
employee, an employer must rebut the presumption by presenting adequate and
convincing proof that in the selection and supervision of his employee, he or she
exercises the care and diligence of a good father of a family. x x x
Petitioner’s claim that she exercised due diligence in the selection and supervision of her
driver, Venturina, deserves but scant consideration. Her allegation that before she hired
Venturina she required him to submit his driver’s license and clearances is worthless, in
view of her failure to offer in evidence certified true copies of said license and
clearances. Bare allegations, unsubstantiated by evidence, are not equivalent to proof
under the rules of evidence. x x x
In any case, assuming arguendo that Venturina did submit his license and clearances
when he applied with petitioner in January 1992, the latter still fails the test of due
diligence in the selection of her bus driver. Case law teaches that for an employer to
have exercised the diligence of a good father of a family, he should not be satisfied with
the applicant’s mere possession of a professional driver’s license; he must also carefully
examine the applicant for employment as to his qualifications, his experience and
record of service. Petitioner failed to present convincing proof that she went to this
extent of verifying Venturina’s qualifications, safety record, and driving history. The
presumption juris tantum that there was negligence in the selection of her bus driver,
thus, remains unrebutted.
Nor did petitioner show that she exercised due supervision over Venturina after his
selection. For as pointed out by the Court of Appeals, petitioner did not present any
proof that she drafted and implemented training programs and guidelines on road safety
for her employees. In fact, the record is bare of any showing that petitioner required
Venturina to attend periodic seminars on road safety and traffic efficiency. Hence,
petitioner cannot claim exemption from any liability arising from the recklessness or
negligence of Venturina.
In sum, petitioner’s liability to private respondents for the negligent and imprudent acts
of her driver, Venturina, under Article 2180 of the Civil Code is both manifest and clear.
Petitioner, having failed to rebut the legal presumption of negligence in the selection
and supervision of her driver, is responsible for damages, the basis of the liability being
the relationship of pater familias or on the employer’s own negligence. x x x28 (Emphasis
supplied)
Petitioner failed to show that he examined driver Gerosano as to his qualifications,
experience and service records. In fact, the testimony of driver Gerosano in his cross-
examination showed the non-observance of these requirements. Gerosano testified that
petitioner was his first employer in Dumaguete and that he was accepted by petitioner
on the very day he applied for the job;29 that his driver’s license was issued in Mindanao
where he came from30 and that while petitioner asked him about his driving record in
Mindanao, he did not present any document of his driving record.31 Such admission
clearly established that petitioner did not exercise due diligence in the selection of his
driver Gerosano.
Moreover, the fact that petitioner’s driver Gerosano was driving in an efficient manner
when petitioner was with him in his first two trips would not conclusively establish that
Gerosano was not at all reckless. It could not be considered as due diligence in the
supervision of his driver to exempt petitioner from liability. In the supervision of his driver,
petitioner must show that he had formulated training programs and guidelines on road
safety for his driver which the records failed to show. We find that petitioner failed to
rebut the presumption of negligence in the selection and supervision of his employees.
Moreover, there was also no proof that he exercised diligence in maintaining his cargo
truck roadworthy and in good operating condition. While petitioner’s mechanic driver
testified that he made a routine check up on October 15, 1982, one day before the
mishap happened, and found the truck operational, there was no record of such
inspection.
Turning now to the award of damages, since there was contributory negligence on the
part of respondent Noe, petitioner’s liability should be mitigated in accordance with
Article 2179 of the Civil Code which provides:
When the plaintiff’s own negligence was the immediate and proximate cause of his
injury, he cannot recover damages. But if his negligence was only contributory, the
immediate and proximate cause of the injury being the defendant’s lack of due care,
the plaintiff may recover damages, but the courts shall mitigate the damages to be
awarded.
The underlying precept of the above article on contributory negligence is that a plaintiff
who is partly responsible for his own injury should not be entitled to recover damages in
full but must bear the consequences of his own negligence. The defendant must thus be
held liable only for the damages actually caused by his negligence.32
In Phoenix Construction, Inc., v. Intermediate Appellate Court,33 where we held that the
legal and proximate cause of the accident and of Dionisio’s injuries was the wrongful
and negligent manner in which the dump truck was parked but found Dionisio guilty of
contributory negligence on the night of the accident, we allocated most of the
damages on a 20-80 ratio. In said case, we required Dionisio to bear 20% of the
damages awarded by the appellate court, except as to the award of exemplary
damages, attorney’s fees and costs.
Decision dated February 18, 1993 of the Regional Trial Court of Dumaguete City in Civil
Case No. 8122, should read as follows:
"WHEREFORE, in view of the foregoing, judgment is hereby rendered, ordering
defendants Gerosano and Estacion, as well as third party defendants Bandoquillo and
Quinquillera, to pay plaintiff, jointly and solidarily, the following:
1. ₱103,667.36 for actual damages in the form of medical and hospitalization expenses;
2. ₱40,000.00 for moral damages, consisting of mental anguish, moral shock, serious
anxiety and wounded feelings;
3. ₱10,000.00 for attorney’s fees; and

In the present case, taking into account the contributing negligence of respondent Noe, 4. ₱5,000.00 for litigation expenses.1avvphil.net
we likewise rule that the demands of substantial justice are satisfied by distributing the SO ORDERED."
damages also on a 20-80 ratio excluding attorney’s fees and litigation
expenses.34 Consequently, 20% should be deducted from the actual and moral
damages awarded by the trial court in favor of respondent Noe, that is: 20% of
₱129,584.20 for actual damages is ₱25,916.84 and 20% of ₱50,000.00 for moral damages
is ₱10,000.00. Thus, after deducting the same, the award for actual damages should be
₱103,667.36 and ₱40,000.00 for moral damages or 80% of the damages so awarded.
Petitioner and respondents Bandoquillo and Quinquillera are jointly and severally liable
for the 80% of the damages as well as attorney’s fees and litigation expenses
conformably with our pronouncement in Tiu v. Arriesgado35 where we held:
The petitioners, as well as the respondents Benjamin Condor and Sergio Pedrano are
jointly and severally liable for said amount, conformably with the following
pronouncement of the Court in Fabre, Jr. v. Court of Appeals:
The same rule of liability was applied in situations where the negligence of the driver of
the bus on which plaintiff was riding concurred with the negligence of a third party who
was the driver of another vehicle, thus causing an accident. In Anuran v. Buño,
Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court, and Metro Manila
Transit Corporation v. Court of Appeals, the bus company, its driver, the operator of the
other vehicle and the driver of the vehicle were jointly and severally held liable to the
injured passenger or the latter’s heirs. The basis of this allocation of liability was explained
in Viluan v. Court of Appeals, thus:
"Nor should it make difference that the liability of petitioner [bus owner] springs from
contract while that of respondents [owner and driver of other vehicle] arises from quasi
delict. As early as 1913, we already ruled in Gutierrez v. Gutierrez, 56 Phil. 177, that in
case of injury to a passenger due to the negligence of the driver of the bus on which he
was riding and of the driver of another vehicle, the drivers as well as the owners of the
two vehicles are jointly and severally liable for damages. Some members of the Court,
though, are of the view that under the circumstances they are liable on quasi delict."36
WHEREFORE, the instant petition is PARTIALLY GRANTED. The assailed Decision of the
Court of Appeals dated April 17, 2000 as well as its Resolution dated August 16, 2000
are AFFIRMED with MODIFICATION to the effect that the dispositive portion of the
[G.R. No. 122039. May 31, 2000]
VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and
FRANCISCO SALVA, respondents.
D E C I S I ON
MENDOZA, J.:
This is a petition for review on certiorari of the decision[1] of the Court of Appeals, dated
March 31, 1991, reversing the contrary decision of the Regional Trial Court, Branch 36,
Dumaguete City, and awarding damages instead to private respondent Eliza Jujeurche
Sunga as plaintiff in an action for breach of contract of carriage.
The facts, as found by the Court of Appeals, are as follows:
At 10 oclock in the morning of August 23, 1989, private respondent Eliza Jujeurche G.
Sunga, then a college freshman majoring in Physical Education at the Siliman University,
took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the
jeepney was filled to capacity of about 24 passengers, Sunga was given by the
conductor an "extension seat," a wooden stool at the back of the door at the rear end
of the vehicle. Sclaw
On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a
passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the
outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena
and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result,
Sunga was injured. She sustained a fracture of the "distal third of the left tibia-fibula with
severe necrosis of the underlying skin." Closed reduction of the fracture, long leg circular
casting, and case wedging were done under sedation. Her confinement in the hospital
lasted from August 23 to September 7, 1989. Her attending physician, Dr. Danilo V.
Oligario, an orthopedic surgeon, certified she would remain on a cast for a period of
three months and would have to ambulate in crutches during said period.
On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging
violation of the contract of carriage by the former in failing to exercise the diligence
required of him as a common carrier. Calalas, on the other hand, filed a third-party
complaint against Francisco Salva, the owner of the Isuzu truck. Korte
The lower court rendered judgment against Salva as third-party defendant and
absolved Calalas of liability, holding that it was the driver of the Isuzu truck who was
responsible for the accident. It took cognizance of another case (Civil Case No. 3490),
filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the
same court held Salva and his driver Verena jointly liable to Calalas for the damage to
his jeepney. Rtcspped
On appeal to the Court of Appeals, the ruling of the lower court was reversed on the
ground that Sungas cause of action was based on a contract of carriage, not quasi-
delict, and that the common carrier failed to exercise the diligence required under the
Civil Code. The appellate court dismissed the third-party complaint against Salva and
adjudged Calalas liable for damages to Sunga. The dispositive portion of its decision
reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and
another one is entered ordering defendant-appellee Vicente Calalas to pay plaintiff-
appellant:
(1) P50,000.00 as actual and compensatory damages;
(2) P50,000.00 as moral damages;
(3) P10,000.00 as attorneys fees; and
(4) P1,000.00 as expenses of litigation; and
(5) to pay the costs.
SO ORDERED.
Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the
negligence of Verena was the proximate cause of the accident negates his liability and
that to rule otherwise would be to make the common carrier an insurer of the safety of
its passengers. He contends that the bumping of the jeepney by the truck owned by
Salva was a caso fortuito. Petitioner further assails the award of moral damages to
Sunga on the ground that it is not supported by evidence. Sdaadsc
The petition has no merit.
The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver
and the owner of the truck liable for quasi-delict ignores the fact that she was never a
party to that case and, therefore, the principle of res judicata does not apply. Missdaa
Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in
Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict
for the damage caused to petitioners jeepney. On the other hand, the issue in this case
is whether petitioner is liable on his contract of carriage. The first, quasi-delict, also known
as culpa aquiliana or culpa extra contractual, has as its source the negligence of the
tortfeasor. The second, breach of contract or culpa contractual, is premised upon the
negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly established
because it is the basis of the action, whereas in breach of contract, the action can be
prosecuted merely by proving the existence of the contract and the fact that the
obligor, in this case the common carrier, failed to transport his passenger safely to his
destination.[2] In case of death or injuries to passengers, Art. 1756 of the Civil Code
provides that common carriers are presumed to have been at fault or to have acted
negligently unless they prove that they observed extraordinary diligence as defined in
Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier
the burden of proof. Slxmis
There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding
Salva and his driver Verena liable for the damage to petitioners jeepney, should be
binding on Sunga. It is immaterial that the proximate cause of the collision between the
jeepney and the truck was the negligence of the truck driver. The doctrine of proximate
cause is applicable only in actions for quasi-delict, not in actions involving breach of
contract. The doctrine is a device for imputing liability to a person where there is no
relation between him and another party. In such a case, the obligation is created by
law itself. But, where there is a pre-existing contractual relation between the parties, it is
the parties themselves who create the obligation, and the function of the law is merely
to regulate the relation thus created. Insofar as contracts of carriage are concerned,
some aspects regulated by the Civil Code are those respecting the diligence required of
common carriers with regard to the safety of passengers as well as the presumption of
negligence in cases of death or injury to passengers. It provides: Slxsc
Art. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods
and for the safety of the passengers transported by them, according to all the
circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in
articles 1734, 1735, and 1746, Nos. 5,6, and 7, while the extraordinary diligence for the
safety of the passengers is further set forth in articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons, with
due regard for all the circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed by articles 1733 and 1755.
In the case at bar, upon the happening of the accident, the presumption of negligence
at once arose, and it became the duty of petitioner to prove that he had to observe
extraordinary diligence in the care of his passengers. Scslx
Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight
could provide, using the utmost diligence of very cautious persons, with due regard for
all the circumstances" as required by Art. 1755? We do not think so. Several factors
militate against petitioners contention. Slx
First, as found by the Court of Appeals, the jeepney was not properly parked, its rear
portion being exposed about two meters from the broad shoulders of the highway, and
facing the middle of the highway in a diagonal angle. This is a violation of the R.A. No.
4136, as amended, or the Land Transportation and Traffic Code, which provides:
Sec. 54. Obstruction of Traffic. - No person shall drive his motor vehicle in such a manner
as to obstruct or impede the passage of any vehicle, nor, while discharging or taking on
passengers or loading or unloading freight, obstruct the free passage of other vehicles
on the highway.
Second, it is undisputed that petitioners driver took in more passengers than the allowed
seating capacity of the jeepney, a violation of 32(a) of the same law. It provides: Mesm
Exceeding registered capacity. - No person operating any motor vehicle shall allow
more passengers or more freight or cargo in his vehicle than its registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in a peril greater than
that to which the other passengers were exposed. Therefore, not only was petitioner
unable to overcome the presumption of negligence imposed on him for the injury
sustained by Sunga, but also, the evidence shows he was actually negligent in
transporting passengers. Calrky
We find it hard to give serious thought to petitioners contention that Sungas taking an
"extension seat" amounted to an implied assumption of risk. It is akin to arguing that the
injuries to the many victims of the tragedies in our seas should not be compensated
merely because those passengers assumed a greater risk of drowning by boarding an
overloaded ferry. This is also true of petitioners contention that the jeepney being
bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an
event which could not be foreseen, or which, though foreseen, was inevitable.[3] This
requires that the following requirements be present: (a) the cause of the breach is
independent of the debtors will; (b) the event is unforeseeable or unavoidable; (c) the
event is such as to render it impossible for the debtor to fulfill his obligation in a normal
manner, and (d) the debtor did not take part in causing the injury to the
creditor.[4]Petitioner should have foreseen the danger of parking his jeepney with its
body protruding two meters into the highway. Kycalr
Finally, petitioner challenges the award of moral damages alleging that it is excessive
and without basis in law. We find this contention well taken.
In awarding moral damages, the Court of Appeals stated: Kyle
Plaintiff-appellant at the time of the accident was a first-year college student in that
school year 1989-1990 at the Silliman University, majoring in Physical Education. Because
of the injury, she was not able to enroll in the second semester of that school year. She
testified that she had no more intention of continuing with her schooling, because she
could not walk and decided not to pursue her degree, major in Physical Education
"because of my leg which has a defect already."
Plaintiff-appellant likewise testified that even while she was under confinement, she cried
in pain because of her injured left foot. As a result of her injury, the Orthopedic Surgeon
also certified that she has "residual bowing of the fracture side." She likewise decided not
to further pursue Physical Education as her major subject, because "my left leg x x x has
a defect already."
Those are her physical pains and moral sufferings, the inevitable bedfellows of the injuries
that she suffered. Under Article 2219 of the Civil Code, she is entitled to recover moral
damages in the sum of P50,000.00, which is fair, just and reasonable.
As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract for it is not one of the items enumerated under Art.
2219 of the Civil Code.[5] As an exception, such damages are recoverable: (1) in cases in
which the mishap results in the death of a passenger, as provided in Art. 1764, in relation
to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud
or bad faith, as provided in Art. 2220.[6]
In this case, there is no legal basis for awarding moral damages since there was no
factual finding by the appellate court that petitioner acted in bad faith in the
performance of the contract of carriage. Sungas contention that petitioners admission in
open court that the driver of the jeepney failed to assist her in going to a nearby hospital
cannot be construed as an admission of bad faith. The fact that it was the driver of the
Isuzu truck who took her to the hospital does not imply that petitioner was utterly
indifferent to the plight of his injured passenger. If at all, it is merely implied recognition by
Verena that he was the one at fault for the accident. Exsm
WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its
resolution, dated September 11, 1995, are AFFIRMED, with the MODIFICATION that the
award of moral damages is DELETED.
SO ORDERED.
[G.R. No. 142305. December 10, 2003]
SINGAPORE AIRLINES LIMITED, petitioner, vs. ANDION FERNANDEZ, respondent.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari assailing the Decision[1] of the Court of Appeals
which affirmed in toto the decision[2] of the Regional Trial Court of Pasig City, Branch 164
in Civil Case No. 60985 filed by the respondent for damages.
The Case for the Respondent
Respondent Andion Fernandez is an acclaimed soprano here in the Philippines and
abroad. At the time of the incident, she was availing an educational grant from the
Federal Republic of Germany, pursuing a Masters Degree in Music majoring in Voice. [3]
She was invited to sing before the King and Queen of Malaysia on February 3 and 4,
1991. For this singing engagement, an airline passage ticket was purchased from
petitioner Singapore Airlines which would transport her
to Manila from Frankfurt, Germany on January 28, 1991. From Manila, she would
proceed to Malaysia on the next day.[4] It was necessary for the respondent to pass
by Manila in order to gather her wardrobe; and to rehearse and coordinate with her
pianist her repertoire for the aforesaid performance.
The petitioner issued the respondent a Singapore Airlines ticket for Flight No. SQ 27,
leaving Frankfurt, Germany on January 27, 1991 bound for Singapore with onward
connections from Singapore to Manila. Flight No. SQ 27 was scheduled to
leave Frankfurt at 1:45 in the afternoon of January 27, 1991, arriving
at Singapore at 8:50 in the morning of January 28, 1991.The connecting flight
from Singapore to Manila, Flight No. SQ 72, was leaving Singapore at 11:00 in the
morning of January 28, 1991, arriving in Manila at 2:20 in the afternoon of the same
day.[5]
On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in Singapore two hours
late or at about 11:00 in the morning of January 28, 1991. By then, the aircraft bound
for Manilahad left as scheduled, leaving the respondent and about 25 other passengers
stranded in the Changi Airport in Singapore.[6]
Upon disembarkation at Singapore, the respondent approached the transit counter who
referred her to the nightstop counter and told the lady employee thereat that it was
important for her to reach Manila on that day, January 28, 1991. The lady employee told
her that there were no more flights to Manila for that day and that respondent had no
choice but to stay in Singapore. Upon respondents persistence, she was told that she
can actually fly to Hong Kong going to Manila but since her ticket was non-transferable,
she would have to pay for the ticket. The respondent could not accept the offer
because she had no money to pay for it.[7] Her pleas for the respondent to make
arrangements to transport her to Manila were unheeded.[8]
The respondent then requested the lady employee to use their phone to make a call
to Manila. Over the employees reluctance, the respondent telephoned her mother to
inform the latter that she missed the connecting flight. The respondent was able to
contact a family friend who picked her up from the airport for her overnight stay
in Singapore.[9]
The next day, after being brought back to the airport, the respondent proceeded to
petitioners counter which says: Immediate Attention To Passengers with Immediate
Booking. There were four or five passengers in line. The respondent approached
petitioners male employee at the counter to make arrangements for immediate
booking only to be told: Cant you see I am doing something. She explained her
predicament but the male employee uncaringly retorted: Its your problem, not ours.[10]
The respondent never made it to Manila and was forced to take a direct flight
from Singapore to Malaysia on January 29, 1991, through the efforts of her mother and
travel agency in Manila. Her mother also had to travel to Malaysia bringing with her
respondents wardrobe and personal things needed for the performance that caused
them to incur an expense of about P50,000.[11]
As a result of this incident, the respondents performance before the Royal Family of
Malaysia was below par. Because of the rude and unkind treatment she received from
the petitioners personnel in Singapore, the respondent was engulfed with fear, anxiety,
humiliation and embarrassment causing her to suffer mental fatigue and skin rashes. She
was thereby compelled to seek immediate medical attention upon her return
to Manila for acute urticaria.[12]
On June 15, 1993, the RTC rendered a decision with the following dispositive portion:
ACCORDINGLY and as prayed for, defendant Singapore Airlines is ordered to pay herein
plaintiff Andion H. Fernandez the sum of:
1. FIFTY THOUSAND (P50,000.00) PESOS as compensatory or actual damages;
2. TWO HUNDRED and FIFTY THOUSAND (P250,000.00) PESOS as moral damages
considering plaintiffs professional standing in the field of culture at home and abroad;
3. ONE HUNDRED THOUSAND (P100,000.00) PESOS as exemplary damages;
4. SEVENTY-FIVE THOUSAND (P75,000.00) PESOS as attorneys fees; and
5. To pay the costs of suit.
SO ORDERED.[13]
The petitioner appealed the decision to the Court of Appeals.
On June 10, 1998, the CA promulgated the assailed decision finding no reversible error in
the appealed decision of the trial court.[14]
Forthwith, the petitioner filed the instant petition for review, raising the following errors:
I
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING IN TOTO THE DECISION OF THE
TRIAL COURT THAT AWARDED DAMAGES TO RESPONDENT FOR THE ALLEGED FAILURE OF
THE PETITIONER TO EXERCISE EXTRAORDINARY DILIGENCE.
II
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER ACTED IN
BAD FAITH.
III
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONERS
COUNTERCLAIMS.[15]
The petitioner assails the award of damages contending that it exercised the
extraordinary diligence required by law under the given circumstances. The delay of
Flight No. SQ 27 from Frankfurt to Singapore on January 28, 1991 for more than two hours
was due to a fortuitous event and beyond petitioners control. Inclement weather
prevented the petitioners plane coming from Copenhagen, Denmark to arrive
in Frankfurt on time on January 27, 1991. The plane could not take off from the airport as
the place was shrouded with fog. This delay caused a snowball effect whereby the
other flights were consequently delayed. The plane carrying the respondent arrived
in Singapore two (2) hours behind schedule.[16] The delay was even compounded when
the plane could not travel the normal route which was through the Middle East due to
the raging Gulf War at that time. It had to pass through the restricted Russian airspace
which was more congested.[17]
Under these circumstances, petitioner therefore alleged that it cannot be faulted for the
delay in arriving in Singapore on January 28, 1991 and causing the respondent to miss
her connecting flight to Manila.
The petitioner further contends that it could not also be held in bad faith because its
personnel did their best to look after the needs and interests of the passengers including
the respondent. Because the respondent and the other 25 passengers missed their
connecting flight to Manila, the petitioner automatically booked them to the flight the
next day and gave them free hotel accommodations for the night. It was respondent
who did not take petitioners offer and opted to stay with a family friend in Singapore.
The petitioner also alleges that the action of the respondent was baseless and it
tarnished its good name and image earned through the years for which, it was entitled
to damages in the amount of P1,000,000; exemplary damages of P500,000; and
attorneys fees also in the amount of P500,000.[18]
The petition is barren of merit.
When an airline issues a ticket to a passenger, confirmed for a particular flight on a
certain date, a contract of carriage arises. The passenger then has every right to expect
that he be transported on that flight and on that date. If he does not, then the carrier
opens itself to a suit for a breach of contract of carriage.[19]
The contract of air carriage is a peculiar one. Imbued with public interest, the law
requires common carriers 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.[20] In an action for breach of contract of carriage, the
aggrieved party does not have to prove that the common carrier was at fault or was
negligent. All that is necessary to prove is the existence of the contract and the fact of
its non-performance by the carrier.[21]
In the case at bar, it is undisputed that the respondent carried a confirmed ticket for the
two-legged trip from Frankfurt to Manila: 1) Frankfurt-Singapore; and 2) Singapore-
Manila. In her contract of carriage with the petitioner, the respondent certainly
expected that she would fly to Manila on Flight No. SQ 72 on January 28, 1991. Since the
petitioner did not transport the respondent as covenanted by it on said terms, the
petitioner clearly breached its contract of carriage with the respondent. The respondent
had every right to sue the petitioner for this breach. The defense that the delay was due
to fortuitous events and beyond petitioners control is unavailing. In PAL vs. CA,[22] we
held that:
.... Undisputably, PALs diversion of its flight due to inclement weather was a fortuitous
event. Nonetheless, such occurrence did not terminate PALs contract with its
passengers. Being in the business of air carriage and the sole one to operate in the
country, PAL is deemed to be equipped to deal with situations as in the case at
bar. What we said in one case once again must be stressed, i.e., the relation of carrier
and passenger continues until the latter has been landed at the port of destination and
has left the carriers premises. Hence, PAL necessarily would still have to exercise
extraordinary diligence in safeguarding the comfort, convenience and safety of its
stranded passengers until they have reached their final destination...
...
...If the cause of non-fulfillment of the contract is due to a fortuitous event, it has to be
the sole and only cause (Art. 1755 C.C., Art. 1733 C.C.). Since part of the failure to
comply with the obligation of common carrier to deliver its passengers safely to their
destination lay in the defendants failure to provide comfort and convenience to its
stranded passengers using extraordinary diligence, the cause of non-fulfillment is not
solely and exclusively due to fortuitous event, but due to something which defendant
airline could have prevented, defendant becomes liable to plaintiff.
Indeed, in the instant case, petitioner was not without recourse to enable it to fulfill its
obligation to transport the respondent safely as scheduled as far as human care and
foresight can provide to her destination. Tagged as a premiere airline as it claims to be
and with the complexities of air travel, it was certainly well-equipped to be able to
foresee and deal with such situation. The petitioners indifference and negligence by its
absence and insensitivity was exposed by the trial court, thus:
(a) Under Section 9.1 of its Traffic Manual (Exhibit 4) flights can be delayed to await the
uplift of connecting cargo and passengers arriving on a late in-bound flight As adverted
to by the trial court,Flight SQ-27/28 maybe delayed for about half an hour to transfer
plaintiff to her connecting flight. As pointed out above, delay is normal in commercial air
transportation (RTC Decision, p. 22); or
(b) Petitioner airlines could have carried her on one of its flights bound
for Hongkong and arranged for a connecting flight from Hongkong to Manila all on the
same date. But then the airline personnel who informed her of such possibility told her
that she has to pay for that flight. Regrettably, respondent did not have sufficient funds
to pay for it. (TSN, 30 March 1992, pp.8-9; RTC Decision, pp. 22-23) Knowing the petitioners failure to bring the respondent to her destination, as scheduled, we find the
predicament of the respondent, petitioner did not offer to shoulder the cost of the ticket petitioner clearly liable for the breach of its contract of carriage with the respondent.
for that flight; or
We are convinced that the petitioner acted in bad faith. Bad faith means a breach of
(c) As noted by the trial court from the account of petitioners witness, Bob Khkimyong, known duty through some motive of interest or ill will. Self-enrichment or fraternal interest,
that a passenger such as the plaintiff could have been accommodated in another and not personal ill will, may well have been the motive; but it is malice
international airline such as Lufthansa to bring the plaintiff to Singapore early enough nevertheless.[26] Bad faith was imputed by the trial court when it found that the
from Frankfurt provided that there was prior communication from that station to enable petitioners employees at the Singapore airport did not accord the respondent the
her to catch the connecting flight to Manila because of the urgency of her business in attention and treatment allegedly warranted under the circumstances. The lady
Manila(RTC Decision, p. 23) employee at the counter was unkind and of no help to her. The respondent further
alleged that without her threats of suing the company, she was not allowed to use the
The petitioners diligence in communicating to its passengers the consequences of the
companys phone to make long distance calls to her mother in Manila. The male
delay in their flights was wanting. As elucidated by the trial court:
employee at the counter where it says: Immediate Attention to Passengers with
It maybe that delay in the take off and arrival of commercial aircraft could not be Immediate Booking was rude to her when he curtly retorted that he was busy attending
avoided and may be caused by diverse factors such as those testified to by defendants to other passengers in line. The trial court concluded that this inattentiveness and
pilot. However, knowing fully well that even before the plaintiff boarded defendants rudeness of petitioners personnel to respondents plight was gross enough amounting to
Jumbo aircraft in Frankfurt bound for Singapore, it has already incurred a delay of two bad faith. This is a finding that is generally binding upon the Court which we find no
hours. Nevertheless, defendant did not take the trouble of informing plaintiff, among its reason to disturb.
other passengers of such a delay and that in such a case, the usual practice of
Article 2232 of the Civil Code provides that in a contractual or quasi-contractual
defendant airline will be that they have to stay overnight at their connecting airport;
relationship, exemplary damages may be awarded only if the defendant had acted in
and much less did it inquire from the plaintiff and the other 25 passengers bound for
a wanton, fraudulent, reckless, oppressive or malevolent manner. In this case, petitioners
Manila whether they are amenable to stay overnight in Singapore and to take the
employees acted in a wanton, oppressive or malevolent manner. The award of
connecting flight to Manila the next day. Such information should have been given and
exemplary damages is, therefore, warranted in this case.
inquiries made in Frankfurt because even the defendant airlines manual provides that in
case of urgency to reach his or her destination on the same date, the head office of WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals is AFFIRMED.
defendant in Singapore must be informed by telephone or telefax so as the latter may
SO ORDERED.
make certain arrangements with other airlines in Frankfurt to bring such a passenger with
urgent business to Singapore in such a manner that the latter can catch up with her
connecting flight such as S-27/28 without spending the night in Singapore[23]
The respondent was not remiss in conveying her apprehension about the delay of the
flight when she was still in Frankfurt. Upon the assurance of petitioners personnel
in Frankfurt that she will be transported to Manila on the same date, she had every right
to expect that obligation fulfilled. She testified, to wit:
Q: Now, since you were late, when the plane that arrived from Frankfurt was late, did
you not make arrangements so that your flight from Singapore to Manila would be
adjusted?
A: I asked the lady at the ticket counter, the one who gave the boarding pass in
Frankfurt and I asked her, Since my flight going to Singapore would be late, what would
happen to my Singapore-Manila flight? and then she said, Dont worry, Singapore Airlines
would be responsible to bring you to Manila on the same date. And then they have
informed the name of the officer, or whatever, that our flight is going to be late.[24]
When a passenger contracts for a specific flight, he has a purpose in making that
choice which must be respected. This choice, once exercised, must not be impaired by
a breach on the part of the airline without the latter incurring any liability.[25] For
BRITISH AIRWAYS, petitioner, vs. COURT OF APPEALS, GOP MAHTANI, and PHILIPPINE
AIRLINES, respondents.
DECISION
ROMERO, J.:
In this appeal by certiorari, petitioner British Airways (BA) seeks to set aside the decision
of respondent Court of Appeals[1] promulgated on September 7, 1995, which affirmed
the award of damages and attorneys fees made by the Regional Trial Court of Cebu,
7th Judicial Region, Branch 17, in favor of private respondent GOP Mahtani as well as
the dismissal of its third-party complaint against Philippine Airlines (PAL).[2]
The material and relevant facts are as follows:
On April 16, 1989, Mahtani decided to visit his relatives in Bombay, India. In anticipation
of his visit, he obtained the services of a certain Mr. Gumar to prepare his travel
plans. The latter, in turn, purchased a ticket from BA where the following itinerary was
indicated:[3]
CARRIER FLIGHT DATE TIME STATUS
MANILA MNL PR 310Y 16 APR 1730 OK
HONGKONG HKG BA 20 M 16 APR 2100 OK
BOMBAY BOM BA 19 M 23 APR 0840 OK
MANILA MNL"
Since BA had no direct flights from Manila to Bombay, Mahtani had to take a flight to
Hongkong via PAL, and upon arrival in Hongkong he had to take a connecting flight to
Bombay on board BA.
Prior to his departure, Mahtani checked in at the PAL counter in Manila his two pieces of
luggage containing his clothings and personal effects, confident that upon reaching
Hongkong, the same would be transferred to the BA flight bound for Bombay.
Unfortunately, when Mahtani arrived in Bombay he discovered that his luggage was
missing and that upon inquiry from the BA representatives, he was told that the same
might have been diverted to London. After patiently waiting for his luggage for one
week, BA finally advised him to file a claim by accomplishing the Property Irregularity
Report.[4]
Back in the Philippines, specifically on June 11, 1990, Mahtani filed his complaint for
damages and attorneys fees[5] against BA and Mr. Gumar before the trial court,
docketed as Civil Case No. CEB-9076.
On September 4, 1990, BA filed its answer with counter claim[6] to the complaint raising,
as special and affirmative defenses, that Mahtani did not have a cause of action
against it.Likewise, on November 9, 1990, BA filed a third-party complaint[7] against PAL
alleging that the reason for the non-transfer of the luggage was due to the latters late
arrival in Hongkong, thus leaving hardly any time for the proper transfer of Mahtanis
luggage to the BA aircraft bound for Bombay.
On February 25, 1991, PAL filed its answer to the third-party complaint, wherein it
disclaimed any liability, arguing that there was, in fact, adequate time to transfer the
luggage to BA facilities in Hongkong. Furthermore, the transfer of the luggage to
Hongkong authorities should be considered as transfer to BA.[8]
After appropriate proceedings and trial, on March 4, 1993, the trial court rendered its
decision in favor of Mahtani,[9] the dispositive portion of which reads as follows:
WHEREFORE, premises considered, judgment is rendered for the plaintiff and against the
defendant for which defendant is ordered to pay plaintiff the sum of Seven Thousand
(P7,000.00) Pesos for the value of the two (2) suit cases; Four Hundred U.S. ($400.00)
Dollars representing the value of the contents of plaintiffs luggage; Fifty Thousand
(P50,000.00) Pesos for moral and actual damages and twenty percent (20%) of the total
amount imposed against the defendant for attorneys fees and costs of this action.
The Third-Party Complaint against third-party defendant Philippine Airlines is DISMISSED
for lack of cause of action.
SO ORDERED.
Dissatisfied, BA appealed to the Court of Appeals, which however, affirmed the trial
courts findings. Thus:
WHEREFORE, in view of all the foregoing considerations, finding the Decision appealed
from to be in accordance with law and evidence, the same is hereby AFFIRMED in toto,
with costs against defendant-appellant.
SO ORDERED.[10]
BA is now before us seeking the reversal of the Court of Appeals decision.
In essence, BA assails the award of compensatory damages and attorneys fees, as well
as the dismissal of its third-party complaint against PAL.[11]
Regarding the first assigned issue, BA asserts that the award of compensatory damages
in the separate sum of P7,000.00 for the loss of Mahtanis two pieces of luggage was
without basis since Mahtani in his complaint[12] stated the following as the value of his
personal belongings:
8. On said travel, plaintiff took with him the following items and its corresponding value,
to wit:
1. personal belonging - - - - - - - - - - - - - - P10,000.00
2. gifts for his parents and relatives - - - - - $5,000.00
Moreover, he failed to declare a higher valuation with respect to his luggage, a
condition provided for in the ticket, which reads:[13]
Liability for loss, delay, or damage to baggage is limited unless a higher value is
declared in advance and additional charges are paid:
1. For most international travel (including domestic corporations of international journeys)
the liability limit is approximately U.S. $9.07 per pound (U.S. $20.00) per kilo for checked
baggage and U.S. $400 per passenger for unchecked baggage.
Before we resolve the issues raised by BA, it is needful to state that the nature of an
airlines contract of carriage partakes of two types, namely: a contract to deliver a
cargo or merchandise to its destination and a contract to transport passengers to their
destination. A business intended to serve the travelling public primarily, it is imbued with
public interest, hence, the law governing common carriers imposes an exacting
standard.[14] Neglect or malfeasance by the carriers employees could predictably
furnish bases for an action for damages.[15]
In the instant case, it is apparent that the contract of carriage was between Mahtani
and BA. Moreover, it is indubitable that his luggage never arrived in Bombay on
time. Therefore, as in a number of cases[16] we have assessed the airlines culpability in
the form of damages for breach of contract involving misplaced luggage.
In determining the amount of compensatory damages in this kind of cases, it is vital that
the claimant satisfactorily prove during the trial the existence of the factual basis of the
damages and its causal connection to defendants acts.[17]
In this regard, the trial court granted the following award as compensatory damages:
Since plaintiff did not declare the value of the contents in his luggage and even failed
to show receipts of the alleged gifts for the members of his family in Bombay, the most
that can be expected for compensation of his lost luggage (2 suit cases) is Twenty U.S.
Dollars ($20.00) per kilo, or a combined value of Four Hundred ($400.00) U.S. Dollars for
Twenty kilos representing the contents plus Seven Thousand (P7,000.00) Pesos
representing the purchase price of the two (2) suit cases.
However, as earlier stated, it is the position of BA that there should have been no
separate award for the luggage and the contents thereof since Mahtani failed to
declare a separate higher valuation for the luggage,[18] and therefore, its liability is
limited, at most, only to the amount stated in the ticket.
Considering the facts of the case, we cannot assent to such specious argument.
Admittedly, in a contract of air carriage a declaration by the passenger of a higher
value is needed to recover a greater amount. Article 22(1) of the Warsaw
Convention,[19] provides as follows:
xxxxxxxxx
(2) In the transportation of checked baggage and goods, the liability of the carrier shall
be limited to a sum of 250 francs per kilogram, unless the consignor has made, at the
time the package was handed over to the carrier, a special declaration of the value at
delivery and has paid a supplementary sum if the case so requires. In that case the
carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that
the sum is greater than the actual value to the consignor at delivery.
American jurisprudence provides that an air carrier is not liable for the loss of baggage in
an amount in excess of the limits specified in the tariff which was filed with the proper
authorities, such tariff being binding on the passenger regardless of the passengers lack
of knowledge thereof or assent thereto.[20] This doctrine is recognized in this jurisdiction.[21]
Notwithstanding the foregoing, we have, nevertheless, ruled against blind reliance on
adhesion contracts where the facts and circumstances justify that they should be
disregarded.[22]
In addition, we have held that benefits of limited liability are subject to waiver such as
when the air carrier failed to raise timely objections during the trial when questions and
answers regarding the actual claims and damages sustained by the passenger were
asked.[23]
Given the foregoing postulates, the inescapable conclusion is that BA had waived the
defense of limited liability when it allowed Mahtani to testify as to the actual damages
he incurred due to the misplacement of his luggage, without any objection. In this
regard, we quote the pertinent transcript of stenographic notes of Mahtanis direct
testimony:[24]
Q - How much are you going to ask from this court?
A - P100,000.00.
Q - What else?
A - Exemplary damages.
Q - How much?
A - P100,000.00.
Q - What else?
A - The things I lost, $5,000.00 for the gifts I lost and my
personal belongings, P10,000.00.
Q - What about the filing of this case?
A - The court expenses and attorneys fees is 30%.
Indeed, it is a well-settled doctrine that where the proponent offers evidence deemed
by counsel of the adverse party to be inadmissible for any reason, the latter has the right
to object.However, such right is a mere privilege which can be waived. Necessarily, the
objection must be made at the earliest opportunity, lest silence when there is
opportunity to speak may operate as a waiver of objections.[25] BA has precisely failed in
this regard.
To compound matters for BA, its counsel failed, not only to interpose a timely objection,
but even conducted his own cross-examination as well.[26] In the early case of Abrenica
v. Gonda,[27] we ruled that:
x x x (I)t has been repeatedly laid down as a rule of evidence that a protest or objection
against the admission of any evidence must be made at the proper time, and that if not
so made it will be understood to have been waived. The proper time to make a protest
or objection is when, from the question addressed to the witness, or from the answer
thereto, or from the presentation of proof, the inadmissibility of evidence is, or may be
inferred.
Needless to say, factual findings of the trial court, as affirmed by the Court of Appeals,
are entitled to great respect.[28] Since the actual value of the luggage involved
appreciation of evidence, a task within the competence of the Court of Appeals, its
ruling regarding the amount is assuredly a question of fact, thus, a finding not reviewable
by this Court.[29]
As to the issue of the dismissal of BAs third-party complaint against PAL, the Court of
Appeals justified its ruling in this wise, and we quote:[30]
Lastly, we sustain the trial courts ruling dismissing appellants third-party complaint against
PAL.
The contract of air transportation in this case pursuant to the ticket issued by appellant
to plaintiff-appellee was exclusively between the plaintiff Mahtani and defendant-
appellant BA. When plaintiff boarded the PAL plane from Manila to Hongkong, PAL was
merely acting as a subcontractor or agent of BA. This is shown by the fact that in the
ticket issued by appellant to plaintiff-appellee, it is specifically provided on the
Conditions of Contract, paragraph 4 thereof that:
4. x x x carriage to be performed hereunder by several successive carriers is regarded as
a single operation.
The rule that carriage by plane although performed by successive carriers is regarded as
a single operation and that the carrier issuing the passengers ticket is considered the
principal party and the other carrier merely subcontractors or agent, is a settled issue.
We cannot agree with the dismissal of the third-complaint.
In Firestone Tire and Rubber Company of the Philippines v. Tempengko,[31] we
expounded on the nature of a third-party complaint thus:
The third-party complaint is, therefore, a procedural device whereby a third party who is
neither a party nor privy to the act or deed complained of by the plaintiff, may be
brought into the case with leave of court, by the defendant, who acts as third-party
plaintiff to enforce against such third-party defendant a right for contribution, indemnity,
subrogation or any other relief, in respect of the plaintiffs claim. The third-party complaint
is actually independent of and separate and distinct from the plaintiffs complaint. Were
it not for this provision of the Rules of Court, it would have to be filed independently and
separately from the original complaint by the defendant against the third-party. But the
Rules permit defendant to bring in a third-party defendant or so to speak, to litigate his
separate cause of action in respect of plaintiffs claim against a third-party in the original
and principal case with the object of avoiding circuitry of action and unnecessary
proliferation of law suits and of disposing expeditiously in one litigation the entire subject
matter arising from one particular set of facts.
Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view
of their contract of carriage. Yet, BA adamantly disclaimed its liability and instead
imputed it to PAL which the latter naturally denies. In other words, BA and PAL are
blaming each other for the incident.
In resolving this issue, it is worth observing that the contract of air transportation was
exclusively between Mahtani and BA, the latter merely endorsing the Manila to
Hongkong leg of the formers journey to PAL, as its subcontractor or agent. In fact, the
fourth paragraph of the Conditions of Contracts of the ticket[32] issued by BA to Mahtani
confirms that the contract was one of continuous air transportation from Manila to
Bombay.
4. x x x carriage to be performed hereunder by several successive carriers is regarded as
a single operation.
Prescinding from the above discussion, it is undisputed that PAL, in transporting Mahtani
from Manila to Hongkong acted as the agent of BA.
Parenthetically, the Court of Appeals should have been cognizant of the well-settled
rule that an agent is also responsible for any negligence in the performance of its
function[33] and is liable for damages which the principal may suffer by reason of its
negligent act.[34] Hence, the Court of Appeals erred when it opined that BA,
being the principal, had no cause of action against PAL, its agent or sub-contractor.
Also, it is worth mentioning that both BA and PAL are members of the International Air
Transport Association (IATA), wherein member airlines are regarded as agents of each
other in the issuance of the tickets and other matters pertaining to their
relationship.[35] Therefore, in the instant case, the contractual relationship between BA
and PAL is one of agency, the former being the principal, since it was the one which
issued the confirmed ticket, and the latter the agent.
Our pronouncement that BA is the principal is consistent with our ruling in Lufthansa
German Airlines v. Court of Appeals.[36] In that case, Lufthansa issued a confirmed ticket
to Tirso Antiporda covering five-leg trip aboard different airlines. Unfortunately, Air Kenya,
one of the airlines which was to carry Antiporda to a specific destination bumped him
off.
An action for damages was filed against Lufthansa which, however, denied any liability,
contending that its responsibility towards its passenger is limited to the occurrence of a
mishap on its own line. Consequently, when Antiporda transferred to Air Kenya, its
obligation as a principal in the contract of carriage ceased; from there on, it merely
acted as a ticketing agent for Air Kenya.
In rejecting Lufthansas argument, we ruled:
In the very nature of their contract, Lufthansa is clearly the principal in the contract of
carriage with Antiporda and remains to be so, regardless of those instances when actual
carriage was to be performed by various carriers. The issuance of confirmed Lufthansa
ticket in favor of Antiporda covering his entire five-leg trip aboard successive carriers
concretely attest to this.
Since the instant petition was based on breach of contract of carriage, Mahtani can
only sue BA alone, and not PAL, since the latter was not a party to the
contract. However, this is not to say that PAL is relieved from any liability due to any of its
negligent acts. In China Air Lines, Ltd. v. Court of Appeals,[37] while not exactly in point,
the case, however, illustrates the principle which governs this particular situation. In that
case, we recognized that a carrier (PAL), acting as an agent of another carrier, is also
liable for its own negligent acts or omission in the performance of its duties.
Accordingly, to deny BA the procedural remedy of filing a third-party complaint against
PAL for the purpose of ultimately determining who was primarily at fault as between
them, is without legal basis. After all, such proceeding is in accord with the doctrine
against multiplicity of cases which would entail receiving the same or similar evidence
for both cases and enforcing separate judgments therefor. It must be borne in mind that
the purpose of a third-party complaint is precisely to avoid delay and circuity of action
and to enable the controversy to be disposed of in one suit.[38] It is but logical, fair and
equitable to allow BA to sue PAL for indemnification, if it is proven that the latters
negligence was the proximate cause of Mahtanis unfortunate experience, instead of
totally absolving PAL from any liability.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-G.R. CV
No. 43309 dated September 7, 1995 is hereby MODIFIED, reinstating the third-party
complaint filed by British Airways dated November 9, 1990 against Philippine Airlines. No
costs.
SO ORDERED.
G.R. No. 123560 March 27, 2000
SPOUSES YU ENG CHO and FRANCISCO TAO YU, petitioners,
vs.
PAN AMERICAN WORLD AIRWAYS, INC., TOURIST WORLD SERVICES, INC., JULIETA CANILAO
and CLAUDIA TAGUNICAR, respondents.
PUNO, J.:
This petition for review seeks a reversal of the 31 August 1995 Decision 1 and 11 January
1998 Resolution 2 of the Court of Appeals holding private respondent Claudia Tagunicar
solely liable for moral and exemplary damages and attorney's fees, and deleting the trial
court's award for actual damages.
The facts as found by the trial court are as follows:
Plaintiff Yu Eng Cho is the owner of Young Hardware Co. and Achilles Marketing. In
connection with [this] business, he travels from time to time to Malaysia, Taipei and
Hongkong. On July 10, 1976, plaintiffs bought plane tickets (Exhs. A & B) from defendant
Claudia Tagunicar who represented herself to be an agent of defendant Tourist World
Services, Inc. (TWSI). The destination[s] are Hongkong, Tokyo, San Francisco, U.S.A., for
the amount of P25,000.00 per computation of said defendant Claudia Tagunicar (Exhs.
C & C-1). The purpose of this trip is to go to Fairfield, New Jersey, U.S.A. to buy to two (2)
lines of infrared heating system processing textured plastic article (Exh. K).
On said date, only the passage from Manila to Hongkong, then to Tokyo, were
confirmed. [PAA] Flight 002 from Tokyo to San Francisco was on "RQ" status, meaning "on
request". Per instruction of defendant Claudia Tagunicar, plaintiffs returned after a few
days for the confirmation of the Tokyo-San Francisco segment of the trip. After calling up
Canilao of TWSI, defendant Tagunicar told plaintiffs that their flight is now confirmed all
the way. Thereafter, she attached the confirmation stickers on the plane tickets (Exhs. A
& B).
A few days before the scheduled flight of plaintiffs, their son, Adrian Yu, called the Pan
Am office to verify the status of the flight. According to said Adrian Yu, a personnel of
defendant Pan Am told him over the phone that plaintiffs' booking[s] are confirmed.
On July 23, 1978, plaintiffs left for Hongkong and stayed there for five (5) days. They left
Hongkong for Tokyo on July 28, 1978. Upon their arrival in Tokyo, they called up Pan-Am
office for reconfirmation of their flight to San Francisco. Said office, however, informed
them that their names are not in the manifest. Since plaintiffs were supposed to leave on
the 29th of July, 1978, and could not remain in Japan for more than 72 hours, they were
constrained to agree to accept airline tickets for Taipei instead, per advise of JAL
officials. This is the only option left to them because Northwest Airlines was then on strike,
hence, there was no chance for the plaintiffs to obtain airline seats to the United States
within 72 hours. Plaintiffs paid for these tickets.
Upon reaching Taipei, there were no flight[s] available for plaintiffs, thus, they were
forced to return back to Manila on August 3, 1978, instead of proceeding to the United
States. [Japan] Air Lines (JAL) refunded the plaintiffs the difference of the price for Tokyo-
Taipei [and] Tokyo-San Francisco (Exhs. I & J) in the total amount of P2,602.00.
In view of their failure to reach Fairfield, New Jersey, Radiant Heat Enterprises, Inc.
cancelled Yu Eng Cho's option to buy the two lines of infra-red heating system (Exh. K).
The agreement was for him to inspect the equipment and make final arrangement[s]
with the said company not later than August 7, 1978. From this business transaction,
plaintiff Yu Eng Cho expected to realize a profit of P300,000.00 to P400,000.00.
[A] scrutiny of defendants' respective evidence reveals the following:
Plaintiffs, who were intending to go to the United States, were referred to defendant
Claudia Tagunicar, an independent travel solicitor, for the purchase of their plane
tickets. As such travel solicitor, she helps in the processing of travel papers like passport,
plane tickets, booking of passengers and some assistance at the airport. She is known to
defendants Pan-Am, TWSI/Julieta Canilao, because she has been dealing with them in
the past years. Defendant Tagunicar advised plaintiffs to take Pan-Am because
Northwest Airlines was then on strike and plaintiffs are passing Hongkong, Tokyo, then
San Francisco and Pan-Am has a flight from Tokyo to San Francisco. After verifying from
defendant TWSI, thru Julieta Canilao, she informed plaintiffs that the fare would be
P25,093.93 giving them a discount of P738.95 (Exhs. C, C-1). Plaintiffs, however, gave her
a check in the amount of P25,000.00 only for the two round trip tickets. Out of this
transaction, Tagunicar received a 7% commission and 1% commission for defendant
TWSI.
Defendant Claudia Tagunicar purchased the two round-trip Pan-Am tickets from
defendant Julieta Canilao with the following schedules:
Origin Destination Airline Date Time/Travel
Manila Hongkong CX900 7-23-78 1135/1325hrs
Hongkong Tokyo CS500 7-28-78 1615/2115hrs
Tokyo San Francisco PA002 7-29-78 1930/1640hrs
The use of another airline, like in this case it is Cathay Pacific out of Manila, is allowed,
although the tickets issued are Pan-Am tickets, as long as it is in connection with a Pan-
Am flight. When the two (2) tickets (Exhs. A & B) were issued to plaintiffs, the letter "RQ"
appears below the printed word "status" for the flights from Tokyo to San Francisco which
means "under request," (Exh. 3-A, 4-A Pan-Am). Before the date of the scheduled
departure, defendant Tagunicar received several calls from the plaintiffs inquiring about
the status of their bookings. Tagunicar in turn called up TWSI/Canilao to verify; and if
Canilao would answer that the bookings are not yet confirmed, she would relate that to
the plaintiffs.
Defendant Tagunicar claims that on July 13, 1978, a few days before the scheduled
flight, plaintiff Yu Eng Cho personally went to her office, pressing her about their flight.
She called up defendant Julieta Canilao, and the latter told her "o sige Claudia, confirm
na." She even noted this in her index card (Exh. L), that it was Julieta who confirmed the
booking (Exh. L-1). It was then that she allegedly attached the confirmation stickers
(Exhs. 2, 2-B TWSI) to the tickets. These stickers came from TWSI.
Defendant Tagunicar alleges that it was only in the first week of August, 1978 that she
learned from Adrian Yu, son of plaintiffs, that the latter were not able to take the flight
from Tokyo to San Francisco, U.S.A. After a few days, said Adrian Yu came over with a
gentleman and a lady, who turned out to be a lawyer and his secretary. Defendant
Tagunicar claims that plaintiffs were asking for her help so that they could file an action
against Pan-Am. Because of plaintiffs' promise she will not be involved, she agreed to
sign the affidavit (Exh. M) prepared by the lawyer.
Defendants TWSI/Canilao denied having confirmed the Tokyo-San Francisco segment of
plaintiffs' flight because flights then were really tight because of the on-going strike at
Northwest Airlines. Defendant Claudia Tagunicar is very much aware that [said]
particular segment was not confirmed, because on the very day of plaintiffs' departure,
Tagunicar called up TWSI from the airport; defendant Canilao asked her why she
attached stickers on the tickets when in fact that portion of the flight was not yet
confirmed. Neither TWSI nor Pan-Am confirmed the flight and never authorized
defendant Tagunicar to attach the confirmation stickers. In fact, the confirmation
stickers used by defendant Tagunicar are stickers exclusively for use of Pan-Am only.
Furthermore, if it is the travel agency that confirms the booking, the IATA number of said
agency should appear on the validation or confirmation stickers. The IATA number that
appears on the stickers attached to plaintiffs' tickets (Exhs. A & B) is 2-82-0770 (Exhs. 1, 1-A
TWSI), when in fact TWSI's IATA number is 2-83-0770 (Exhs. 5, 5-A TWSI). 3
A complaint for damages was filed by petitioners against private respondents Pan
American World Airways, Inc. (Pan Am), Tourist World Services, Inc. (TWSI), Julieta Canilao
(Canilao), and Claudia Tagunicar (Tagunicar) for expenses allegedly incurred such as
costs of tickets and hotel accommodations when petitioners were compelled to stay in
Hongkong and then in Tokyo by reason of the non-confirmation of their booking with
Pan-Am. In a Decision dated November 14, 1991, the Regional Trial Court of Manila,
Branch 3, held the defendants jointly and severally liable, except defendant Julieta
Canilao, thus:
WHEREFORE, judgment is hereby rendered for the plaintiffs and ordering defendants Pan
American World Airways, Inc., Tourist World Services, Inc. and Claudia Tagunicar, jointly
and severally, to pay plaintiffs the sum of P200,000.00 as actual damages, minus
P2,602.00 already refunded to the plaintiffs; P200,000.00 as moral damages; P100,000.00
as exemplary damages; an amount equivalent to 20% of the award for and as
attorney's fees, plus the sum of P30,000.00 as litigation expenses.
Defendants' counterclaims are hereby dismissed for lack of merit.
SO ORDERED.
Only respondents Pan Am and Tagunicar appealed to the Court of Appeals. On 11
August 1995, the appellate court rendered judgment modifying the amount of damages
awarded, holding private respondent Tagunicar solely liable therefor, and absolving
respondents Pan Am and TWSI from any and all liability, thus:
PREMISES CONSIDERED, the decision of the Regional Trial Court is hereby SET ASIDE and a
new one entered declaring appellant Tagunicar solely liable for:
1) Moral damages in the amount of P50,000.00;
2) Exemplary damages in the amount of P25,000.00; and
3) Attorney's fees in the amount of P10,000.00 plus costs of suit.
The award of actual damages is hereby DELETED.
SO ORDERED.
In so ruling, respondent court found that Tagunicar is an independent travel solicitor and
is not a duly authorized agent or representative of either Pan Am or TWSI. It held that
their business transactions are not sufficient to consider Pan Am as the principal, and
Tagunicar and TWSI as its agent and sub-agent, respectively. It further held that
Tagunicar was not authorized to confirm the bookings of, nor issue validation stickers to,
herein petitioners and hence, Pan Am and TWSI cannot be held responsible for her
actions. Finally, it deleted the award for actual damages for lack of proof.
Hence this petition based on the following assignment of errors:
1. the Court of Appeals, in reversing the decision of the trial court, misapplied the ruling
in Nicos Industrial Corporation vs. Court of Appeals, et. al. [206 SCRA 127]; and
2. the findings of the Court of Appeals that petitioners' ticket reservations in question
were not confirmed and that there is no agency relationship among PAN-AM, TWSI and
Tagunicar are contrary to the judicial admissions of PAN-AM, TWSI and Tagunicar and
likewise contrary to the findings of fact of the trial court.
We affirm.
I. The first issue deserves scant consideration. Petitioners contend that contrary to the
ruling of the Court of Appeals, the decision of the trial court conforms to the standards of
an ideal decision set in Nicos Industrial Corporation, et. al. vs. Court of
Appeals, et. al., 4 as "that which, with welcome economy of words, arrives at the factual
findings, reaches the legal conclusions, renders its ruling and, having done so, ends." It is
averred that the trial court's decision contains a detailed statement of the relevant facts
and evidence adduced by the parties which thereafter became the bases for the
court's conclusions.
A careful scrutiny of the decision rendered by the trial court will show that after narrating
the evidence of the parties, it proceeded to dispose of the case with a one-paragraph
generalization, to wit:
On the basis of the foregoing facts, the Court is constrained to conclude that defendant
Pan-Am is the principal, and defendants TWSI and Tagunicar, its authorized agent and
sub-agent, respectively. Consequently, defendants Pan-Am, TWSI and Claudia
Tagunicar should be held jointly and severally liable to plaintiffs for damages. Defendant
Julieta Canilao, who acted in her official capacity as Office Manager of defendant TWSI
should not be held personally liable. 5
The trial court's finding of facts is but a summary of the testimonies of the witnesses and
the documentary evidence presented by the parties. It did not distinctly and clearly set
forth, nor substantiate, the factual and legal bases for holding respondents TWSI, Pan Am
and Tagunicar jointly and severally liable. In Del Mundo vs. CA, et al. 6 where the trial
court, after summarizing the conflicting asseverations of the parties, disposed of the
kernel issue in just two (2) paragraphs, we held:
It is understandable that courts, with their heavy dockets and time constraints, often find
themselves with little to spare in the preparation of decisions to the extent most
desirable. We have thus pointed out that judges might learn to synthesize and to simplify
their pronouncements. Nevertheless, concisely written such as they may be, decisions
must still distinctly and clearly express, at least in minimum essence, its factual and legal
bases.
For failing to explain clearly and well the factual and legal bases of its award of moral
damages, we set it aside in said case. Once more, we stress that nothing less than
Section 14 of Article VIII of the Constitution requires that "no decision shall be rendered
by any court without expressing therein clearly and distinctly the facts and the law on
which it is based." This is demanded by the due process clause of the Constitution. In the
case at bar, the decision of the trial court leaves much to be desired both in form and
substance. Even while said decision infringes the Constitution, we will not belabor this
infirmity and rather examine the sufficiency of the evidence submitted by the petitioners.
II. Petitioners assert that Tagunicar is a sub-agent of TWSI while TWSI is a duly authorized
ticketing agent of Pan Am. Proceeding from this premise, they contend that TWSI and
Pan Am should be held liable as principals for the acts of Tagunicar. Petitioners
stubbornly insist that the existence of the agency relationship has been established by
the judicial admissions allegedly made by respondents herein, to wit: (1) the admission
made by Pan Am in its Answer that TWSI is its authorized ticket agent; (2) the affidavit
executed by Tagunicar where she admitted that she is a duly authorized agent of TWSI;
and (3) the admission made by Canilao that TWSI received commissions from ticket sales
made by Tagunicar.
We do not agree. By the contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of another, with the consent or
authority of the latter. 7 The elements of agency are: (1) consent, express or implied, of
the parties to establish the relationship; (2) the object is the execution of a juridical act in
relation to a third person; (3) the agent acts as a representative and not for himself; (4)
the agent acts within the scope of his authority. 8 It is a settled rule that persons dealing
with an assumed agent are bound at their peril, if they would hold the principal liable, to
ascertain not only the fact of agency but also the nature and extent of authority, and in
case either is controverted, the burden of proof is upon them to establish it. 9
In the case at bar, petitioners rely on the affidavit of respondent Tagunicar where she
stated that she is an authorized agent of TWSI. This affidavit, however, has weak
probative value in light of respondent Tagunicar's testimony in court to the contrary.
Affidavits, being taken ex parte, are almost always incomplete and often inaccurate,
sometimes from partial suggestion, or for want of suggestion and inquiries. Their infirmity
as a species of evidence is a matter of judicial experience and are thus considered
inferior to the testimony given in court. 10 Further, affidavits are not complete
reproductions of what the declarant has in mind because they are generally prepared
by the administering officer and the affiant simply signs them after the same have been
read to her. 11 Respondent Tagunicar testified that her affidavit was prepared and
typewritten by the secretary of petitioners' lawyer, Atty. Acebedo, who both came with
Adrian Yu, son of petitioners, when the latter went to see her at her office. This was
confirmed by Adrian Yu who testified that Atty. Acebedo brought his notarial seal and
notarized the affidavit of the same day. 12 The circumstances under which said affidavit
was prepared put in doubt petitioners' claim that it was executed voluntarily by
respondent Tagunicar. It appears that the affidavit was prepared and was based on the
answers which respondent Tagunicar gave to the questions propounded to her by Atty.
Acebedo. 13 They never told her that the affidavit would be used in a case to be filed
against her. 14 They even assured her that she would not be included as defendant if she
agreed to execute the affidavit. 15 Respondent Tagunicar was prevailed upon by
petitioners' son and their lawyer to sign the affidavit despite her objection to the
statement therein that she was an agent of TWSI. They assured her that "it is
immaterial"16 and that "if we file a suit against you we cannot get anything from
you." 17 This purported admission of respondent Tagunicar cannot be used by petitioners
to prove their agency relationship. At any rate, even if such affidavit is to be given any
probative value, the existence of the agency relationship cannot be established on its
sole basis. The declarations of the agent alone are generally insufficient to establish the
fact or extent of his authority. 18 In addition, as between the negative allegation of
respondents Canilao and Tagunicar that neither is an agent nor principal of the other,
and the affirmative allegation of petitioners that an agency relationship exists, it is the
latter who have the burden of evidence to prove their allegation, 19 failing in which, their
claim must necessarily fail.
We stress that respondent Tagunicar categorically denied in open court that she is a
duly authorized agent of TWSI, and declared that she is an independent travel
agent. 20 We have consistently ruled that in case of conflict between statements in the
affidavit and testimonial declarations, the latter command greater weight. 21
As further proofs of agency, petitioners call our attention to TWSI's Exhibits "7", "7-A", and
"8" which show that Tagunicar and TWSI received sales commissions from Pan Am. Exhibit
"7" 22 is the Ticket Sales Report submitted by TWSI to Pan Am reflecting the commissions
received by TWSI as an agent of Pan Am. Exhibit "7-A" 23 is a listing of the routes taken by
passengers who were audited to TWSI's sales report. Exhibit "8" 24 is a receipt issued by
TWSI covering the payment made by Tagunicar for the tickets she bought from TWSI.
These documents cannot justify the decision that Tagunicar was paid a commission
either by TWSI or Pan Am. On the contrary, Tagunicar testified that when she pays TWSI,
she already deducts in advance her commission and merely gives the net amount to
TWSI. 25 From all sides of the legal prism, the transaction is simply a contract of sale
wherein Tagunicar buys airline tickets from TWSI and then sells it at a premium to her
clients.
III. Petitioners included respondent Pan Am in the complainant on the supposition that
since TWSI is its duly authorized agent, and respondent Tagunicar is an agent of TWSI,
then Pan Am should also be held responsible for the acts of respondent Tagunicar. Our
disquisitions above show that this contention lacks factual and legal bases. Indeed,
there is nothing in the records to show that respondent Tagunicar has been employed
by Pan Am as its agent, except the bare allegation of petitioners. The real motive of
petitioners in suing Pan Am appears in its Amended Complaint that "[d]efendants TWSI,
Canilao and Tagunicar may not be financially capable of paying plaintiffs the amounts
herein sought to be recovered, and in such event, defendant Pan Am, being their
ultimate principal, is primarily and/or subsidiary liable to pay the said amounts to
plaintiffs." 26 This lends credence to respondent Tagunicar's testimony that she was
persuaded to execute an affidavit implicating respondents because petitioners knew
they would not be able to get anything of value from her. In the past, we have warned
that this Court will not tolerate an abuse of judicial process by passengers in order to pry
on international airlines for damage awards, like "trophies in a safari." 27
This meritless suit against Pan Am becomes more glaring with petitioner' inaction after
they were bumped off in Tokyo. If petitioners were of the honest belief that Pan Am was
responsible for the misfortune which beset them, there is no evidence to show that they
lodged a protest with Pan Am's Tokyo office immediately after they were refused
passage for the flight to San Francisco, or even upon their arrival in Manila. The testimony
of petitioner Yu Eng Cho in this regard is of title value, viz:
Atty. Jalandoni: . . .
q Upon arrival at the Tokyo airport, what did you do if any in connection with your
schedule[d] trip?
a I went to the Hotel, Holiday Inn and from there I immediately called up Pan Am office
in Tokyo to reconfirm my flight, but they told me that our names were not listed in the
manifest, so next morning, very early in the morning I went to the airport, Pan Am office
in the airport to verify and they told me the same and we were not allowed to leave.
q You were scheduled to be in Tokyo for how long Mr. Yu?
a We have to leave the next day 29th.
q In other words, what was your status as a passenger?
a Transient passengers. We cannot stay for more than 72 hours.
xxx xxx xxx
q As a consequence of the fact that you claimed that the Pan Am office in Tokyo told
you that your names were not in the manifest, what did you do, if any?
a I ask[ed] them if I can go anywhere in the State? They told me I can go to LA via
Japan Airlines and I accepted it.
q Do you have the tickets with you that they issued for Los Angels?
a It was taken by the Japanese Airlines instead they issue[d] me a ticket to Taipei.
xxx xxx xxx
q Were you able to take the trip to Los Angeles via Pan Am tickets that was issued to you
in lieu of the tickets to San Francisco?
a No, sir.
q Why not?
a The Japanese Airlines said that there were no more available seats.
q And as a consequence of that, what did you do, if any?
a I am so much scared and worried, so the Japanese Airlines advised us to go to Taipei
and I accepted it.
xxx xxx xxx
q Why did you accept the Japan Airlines offer for you to go to Taipei?
a Because there is no chance for us to go to the United States within 72 hours because
during that time Northwest Airlines [was] on strike so the seats are very scarce. So they
advised me better left (sic) before the 72 hours otherwise you will have trouble with the
Japanese immigration.
q As a consequence of that you were force[d] to take the trip to Taipei?
a Yes, sir. 28 (emphasis supplied)
It grinds against the grain of human experience that petitioners did not insist that they be
allowed to board, considering that it was then doubly difficult to get seats because of
the ongoing Northwest Airlines strike. It is also perplexing that petitioners readily
accepted whatever the Tokyo office had to offer as an alternative. Inexplicably too, no
demand letter was sent to respondents TWSI and Canilao. 29 Nor was a demand letter
sent to respondent Pan Am. To say the least, the motive of petitioners in suing Pan Am is
suspect.
We hasten to add that it is not sufficient to prove that Pan Am did not allow petitioners
to board to justify petitioners' claim for damages. Mere refusal to accede to the
passenger's wishes does not necessarily translate into damages in the absence of bad
faith. 30 The settled rule is that the law presumes good faith such that any person who
seeks to be awarded damages due to acts of another has the burden of proving that
the latter acted in bad faith or with ill motive. 31 In the case at bar, we find the evidence
presented by petitioners insufficient to overcome the presumption of good faith. They
have failed to show any wanton, malevolent or reckless misconduct imputable to
respondent Pan Am in its refusal to accommodate petitioners in its Tokyo-San Francisco
flight. Pan Am could not have acted in bad faith because petitioners did not have
confirmed tickets and more importantly, they were not in the passenger manifest.
In not a few cases, this Court did not hesitable to hold an airline liable for damages for
having acted in bad faith in refusing to accommodate a passenger who had a
confirmed ticket and whose name appeared in the passenger manifest. In Ortigas
Jr. v. Lufthansa German Airlines Inc., 32 we ruled that there was a valid and binding
contract between the airline and its passenger after finding that validating sticker on the
passenger's ticket had the letters "O.K." appearing in the "Res. Status" box which means
"space confirmed" and that the ticket is confirmed or validated. In Pan American World
Airways Inc. v. IAC, et al. 33 where a would-be-passenger had the necessary ticket,
baggage claim and clearance from immigration all clearly showing that she was a
confirmed passenger and included in the passenger manifest and yet was denied
accommodation in said flight, we awarded damages. In Armovit, et al. v. CA, et
al., 34 we upheld the award of damages made against an airline for gross negligence Undoubtedly, respondent Tagunicar should be liable for having acted in bad faith in
committed in the issuance of tickets with erroneous entries as to the time of flight. misrepresenting to petitioners that their tickets have been confirmed. Her culpability,
In Alitalia Airways v. CA, et al., 35we held that when airline issues a ticket to a passenger however, was properly mitigated. Petitioner Yu Eng Cho testified that he repeatedly tried
confirmed on a particular flight, on a certain date, a contract of carriage arises, and the to follow up on the confirmation of their tickets with Pan Am because he doubted the
passenger has every right to expect that he would fly on that flight and on that date. If confirmation made by respondent Tagunicar. 41 This is clear proof that petitioners knew
he does not, then the carrier opens itself to a suit for breach of contract of carriage. And that they might be bumped off at Tokyo when they decided to proceed with the trip.
finally, an award of damages was held proper in the case of Zalamea, et al. v. CA, et Aware of this risk, petitioners exerted efforts to confirm their tickets in Manila, then in
al., 36 where a confirmed passenger included in the manifest was denied Hongkong, and finally in Tokyo. Resultantly, we find the modification as to the amount of
accommodation in such flight. damages awarded just and equitable under the circumstances.
On the other hand, the respondent airline in Sarreal, Sr. v. Japan Airlines Co., Ltd., 37 was WHEREFORE, the decision appealed from is hereby AFFIRMED. Cost against
held not liable for damages where the passenger was not allowed to board the plane petitioners.1âwphi1.nêt
because his ticket had not been confirmed. We ruled that "[t]he stub that the lady
SO ORDERED.
employee put on the petitioner's ticket showed among other coded items, under the
column "status" the letters "RQ" — which was understood to mean "Request." Clearly, this
does not mean a confirmation but only a request. JAL Traffic Supervisor explained that it
would have been different if what was written in the stub were the letter "ok" in which
case the petitioner would have been assured of a seat on said flight. But in this case, the
petitioner was more of a wait-listed passenger than a regularly booked passenger."
In the case at bar, petitioners' ticket were on "RQ" status. They were not confirmed
passengers and their names were not listed in the passenger manifest. In other words,
this is not a case where Pan Am bound itself to transport petitioners and thereafter
reneged on its obligation. Hence, respondent airline cannot be held liable for damages.
IV. We hold that respondent Court of Appeals correctly rules that the tickets were never
confirmed for good reasons: (1) The persistent calls made by respondent Tagunicar to
Canilao, and those made by petitioners at the Manila, Hongkong and Tokyo offices in
Pan Am, are eloquent indications that petitioners knew that their tickets have not been
confirmed. For, as correctly observed by Pan Am, why would one continually try to have
one's ticket confirmed if it had already been confirmed? (2) The validation stickers which
respondent Tagunicar attached to petitioners' tickets were those intended for the
exclusive use of airline companies. She had no authority to use them. Hence, said
validation stickers, wherein the word "OK" appears in the status box, are not valid and
binding. (3) The names of petitioners do not appear in the passengers manifest. (4)
Respondent Tagunicar's "Exhibit 1" 38 shows that the status of the San Francisco-New York
segment was "Ok", meaning it was confirmed, but that the status of the Tokyo-San
Francisco segment was still "on request". (5) Respondent Canilao testified that on the
day that petitioners were to depart for Hongkong, respondent Tagunicar called her from
the airport asking for confirmation of the Tokyo-San Francisco flight, and that when she
told respondent Tagunicar that she should not have allowed petitioners to leave
because their tickets have not been confirmed, respondent Tagunicar merely said
"Bahala na." 39This was never controverted nor refuted by respondent Tagunicar. (6) To
prove that it really did not confirm the bookings of petitioners, respondent Canilao
pointed out that the validation stickers which respondent Tagunicar attached to the
tickets of petitioners had IATA No. 2-82-0770 stamped on it, whereas the IATA number of
TWSI is 28-30770. 40
[G.R. No. 127957. February 21, 2001]
COLLIN A. MORRIS and THOMAS P. WHITTIER, petitioners, vs. COURT OF APPEALS (Tenth
Division) and SCANDINAVIAN AIRLINES SYSTEM, respondents.
DECISION
PARDO, J.:
Petitioners appeal via certiorari from the decision[1] of the Court of Appeals, which
reversed the decision of the trial court and ordered the dismissal of petitioners complaint
for damages against respondent for breach of contract of air carriage.
On February 14, 1978, petitioners filed with the Regional Trial Court, Makati, Branch 143
an action for damages for breach of contract of air carriage against respondent airline
because they were bumped off from SAS Flight SK 893, Manila-Tokyo, on February 14,
1978, despite a confirmed booking in the first class section of the flight.
Petitioners Collin A. Morris and Thomas P. Whittier were American citizens; the vice-
president for technical services and the director for quality assurance, respectively, of
Sterling Asia, a foreign corporation with regional headquarters at No. 8741 Paseo de
Roxas, Makati City.
Respondent Scandinavian Airline System (SAS for brevity) is and at times material hereto
has been engaged in the commercial air transport of passengers globally.
Petitioner Morris and co-petitioner Whittier had a series of business meetings with
Japanese businessmen in Japan from February 14 to February 22, 1978. They requested
their travel agent, Staats Travel Service, Inc. to book them as first class passengers in SAS
Manila-Tokyo flight on February 14, 1978. Respondent booked them as first-class
passengers on Flight SK 893, Manila-Tokyo flight on February 14, 1978, at 3:50 in the
afternoon.
At 1:30 in the afternoon of February 14, 1978, a limousine service of the travel agency
fetched petitioner Morris at his house in Urdaneta Village, Makati City. Thereafter, they
went to Merville Park, Paraaque and fetched petitioner Whittier, arriving there at around
2:00 in the afternoon. From Paraaque, they went to the Manila International Airport and
arrived at 2:35 in the afternoon.
Upon arrival at the airport, representatives of the travel agency met petitioners. It took
petitioners two to three minutes to clear their bags at the customs section. After that,
they proceeded to the SAS check-in counter and presented their tickets, passports,
immigration cards and travel documents to Ms. Erlinda Ponce at the reception desk.
After about fifteen (15) minutes, petitioners noticed that their travel documents were not
being processed at the check-in counter. They were informed that there were no more
seats on the plane for which reason they could not be accommodated on the flight.
Petitioner Morris contacted Staats Travel Service and asked the latter to contact the
management of SAS to find out what was the problem. After ten (10) minutes, Staats
Travel Service called and confirmed their booking. Thereafter, petitioners Morris and
Whittier returned to respondents check-in counter anticipating that they would be
allowed to check-in. However, the check-in counter was closed.When they informed Ms.
Ponce, in-charge at the check-in counter that arrangements had been made with
respondents office, she ignored them. Even respondents supervisor, Raul Basa, ignored
them and refused to answer their question why they could not be accommodated in
the flight despite their confirmed booking.
When petitioners went to the supervisors desk to check the flight manifest, they saw that
their names on top of the list of the first class section had been crossed out. They pressed
the supervisor to allow them in the flight as they had confirmed tickets. Mr. Basa
informed them that it could not be done because the flight was closed and it was too
late to do anything. They checked in at exactly 3:10 in the afternoon and the flight was
scheduled to leave Manila International Airport at 3:50 in the afternoon.[2]
Petitioner Morris said that they were advised to be at the airport at least an hour before
departure time. This has been respondents policy in petitioners previous travels abroad. [3]
Ms. Erlinda Ponce, SAS employee on duty at the check-in counter on February 14, 1978
testified that the economy class of SAS Flight SK 893 was overbooked; however, the first
class section was open.She met petitioners, who were booked in the first class section,
when they approached the counter to check-in. They were not accommodated on the
flight because they checked-in after the flight manifest had been closed, forty (40)
minutes prior to the planes departure. Petitioners seats were given to economy class
passengers who were upgraded to first class.[4]
Upon cross-examination, Ms. Ponce said that petitioners might have arrived at the
airport earlier than 3:10 in the afternoon when the flight manifest was closed; she was
sure that they arrived at the check-in counter at past 3:10 in the afternoon. The first class
seats of petitioners were given to upgraded economy class passengers three (3) minutes
before the flight manifest was closed.[5]
Raul Cruz Basa, a supervisor of respondent airline company, testified that SAS Flight SK
893 on February 14, 1978 was overbooked in the economy class. Petitioner Morris and
Whittier were among the names listed in the first class section of the flight
manifest. However, their names were crossed out and the symbols NOSH, meaning NO
SHOW, written after their names. The NO SHOW notation could mean either that the
booked passengers or his travel documents were not at the counter at the time of the
closing of the flight manifest.
Mr. Basa said that he talked to petitioners at about 3:20 in the afternoon after receiving
a radio call from the ground staff at the check-in counter about complaints from
passengers.
He learned from Ms. Ponce that petitioners checked in late after the flight manifest had
been closed, after which time waitlisted passengers from the economy class had been
upgraded. He explained to petitioners that they could not be accommodated on the
plane because the seats were all filled up. He admitted that there were about six (6)
passengers in the counter who were refused boarding because waitlisted passengers
had been accepted. Most of those who were refused boarding came in late.[6]
Alice Magtulac, another witness of the respondent, testified that she was supervisor of
ticketing and reservation section. She said that petitioners Morris and Whittier had
confirmed reservation tickets to the first class section of SAS Flight SK 893, Manila-Tokyo
flight, on February 14, 1978. She confirmed that Ms. Thelma Lorraine Sayer was one of the
economy class passengers who was not able to leave because the flight was
overbooked on the economy class.
Ms. Magtulac said that it was not SAS policy to upgrade economy passengers to first
class if passengers booked for first class did not show up.[7]
On August 24, 1988, the trial court rendered a judgment against respondent and
in favor of petitioners Morris and Whittier. The dispositive portion reads:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of the
plaintiffs and against defendant, ordering the latter to pay the former the following:
1) Moral damages to plaintiff Collin A. Morris in the amount of P1,000,000.00 and to
plaintiff Thomas P. Whittier the sum of P750,000.00;
2) Exemplary damages in the sum of P200,00.00;
3) Attorneys fees in the amount of P300,000.00, plus the costs of suit.
SO ORDERED.
Makati, Metro Manila, August 24, 1988.
[ORIGINAL SIGNED]
TEOFILO GUADIZ, JR.
J u d g e[8]
On October 5, 1988, respondent filed a notice of appeal.[9]
Meanwhile, on October 6, 1988, petitioners Morris and Whittier moved for
reconsideration of the decision as regards the award of damages.
On November 2, 1988, respondent opposed the motion for reconsideration.[10]
On February 26, 1992, the trial court issued an order granting petitioners motion for
reconsideration, the decretal portion of which is quoted herein, to wit:
WHEREFORE, in view of the foregoing, the Court hereby grants the Motion for
Reconsideration. The dispositive portion of the Decision is hereby amended with respect
to the amount of moral damages, ordering the defendant to pay moral damages to
Collin Morris in the amount of P1,500,000.00 and to Thomas Whittier the amount of
P1,000,000.00.
SO ORDERED.
Makati, Metro Manila, February 26, 1992.
[ORIGINAL SIGNED]
TEOFILO GUADIZ, JR.
J u d g e[11]
Respondents appeal rested mainly on the ground that the trial court misappreciated the
facts and evidence adduced during the trial. The thrust of its defense was petitioners
lack of cause of action, considering that they checked-in at the SAS counter at the
Manila International Airport after the flight manifest was closed and after their first class
seats were given to waitlisted economy class passengers.[12]
On January 21, 1997, the Court of Appeals promulgated a decision reversing the
decision of the court a quo, and ordering the dismissal of the complaint for
damages. The dispositive portion of the decision provides:
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE and another one
rendered dismissing plaintiffs-appellees complaint.
SO ORDERED.[13]
In reversing the trial courts decision, the Court of Appeals found petitioners statements
self-serving. Petitioners failed to prove that they checked-in on time. The appellate court
lent credence to respondents claim that petitioners were denied boarding on SAS Flight
SK 893 because of their late arrival for check-in at the international airport. Respondents
employee, Ms. Erlinda Ponce, testified that petitioners checked in after the flight
manifest was closed.
Hence, this petition.[14]
Petitioners allege that the Court of Appeals gravely erred in dismissing their complaint for
damages and in finding their testimonies self-serving. They contend that the trial court
did not act arbitrarily in lending credence to their testimonies and finding their evidence
sufficient to warrant the award of damages against respondent. In sum, they claim to be
entitled to the award for damages because, as found by the trial court, they were
wrongfully and in bad faith, bumped-off from SAS Flight SK 893 on February 14, 1978,
despite their timely arrival at the airport for check-in and confirmed bookings as first class
passengers.[15]
The petition has no merit.
To begin with, it must be emphasized that a contract to transport passengers is quite
different in kind and degree from any other contractual relations, and this is 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 [themselves] of the comforts and advantages
it offers. The contract of air carriage, therefore, generates a relation attended with a
public duty. Neglect or malfeasance of the carriers employees naturally could give
ground for an action for damages.[16]
In awarding moral damages for breach of contract of carriage, the breach must be
wanton and deliberately injurious or the one responsible acted fraudulently or with
malice or bad faith.[17] Where in breaching the contract of carriage the defendant
airline is not shown to have acted fraudulently or in bad faith, liability for damages is
limited to the natural and probable consequences of the breach of obligation which
the parties had foreseen or could have reasonably foreseen. In that case, such liability
does not include moral and exemplary damages.[18] Moral damages are generally not
recoverable in culpa contractual except when bad faith had been proven. However,
the same damages may be recovered when breach of contract of carriage results in
the death of a passenger.[19]
The award of exemplary damages has likewise no factual basis. It is a requisite that the
act must be accompanied by bad faith or done in wanton, fraudulent or malevolent
manner--circumstances which are absent in this case. In addition, exemplary damages
cannot be awarded as the requisite element of compensatory damages was not
present."[20]
In the instant case, assuming arguendo that breach of contract of carriage may be
attributed to respondent, petitioners travails were directly traceable to their failure to
check-in on time, which led to respondents refusal to accommodate them on the flight.
The rule is that moral damages are recoverable in a damage suit predicated upon a
breach of contract of carriage only where (a) the mishap results in the death of a
passenger and (b) it is proved that the carrier was guilty of fraud and bad faith even if
death does not result.[21]
For having arrived at the airport after the closure of the flight manifest, respondents
employee could not be faulted for not entertaining petitioners tickets and travel
documents for processing, as the checking in of passengers for SAS Flight SK 893 was
finished. There was no fraud or bad faith as would justify the courts award of moral
damages.
Bad faith does not simply connote bad judgment or negligence, it imports a dishonest
purpose or some moral obliquity and conscious doing of a wrong, a breach of known
duty through some motive or interest or ill will that partakes of the nature of fraud.[22]
In the instant case, respondents denial of petitioners boarding on SAS Flight SK 893 was
not attended by bad faith or malice.
To the contrary, facts revealed that they were not allowed to board the plane due to
their failure to check-in on time. Petitioner Morris admitted that they were at the check-in
counter at around 3:10, exactly the same time that the flight manifest was closed, but
still too late to be accommodated on the plane. Respondents supervisor, Raul C. Basa,
testified that he met petitioners at about 3:20 in the afternoon after receiving a radio call
from the ground staff regarding petitioners complaints. Clearly, petitioners did not arrive
on time for check-in.
As we find petitioners not entitled to moral damages, an award of exemplary damages
is likewise baseless.[23] Where the award of moral and exemplary damages is eliminated,
so must the award for attorneys fees be deleted.[24]
WHEREFORE, the Court DENIES the petition for lack of merit. The Court AFFIRMS in toto the
decision of the Court of Appeals in CA-G. R. CV. No. 38684.
No costs.
SO ORDERED.
[G.R. No. 161730. January 28, 2005]
JAPAN AIRLINES, petitioner, vs. MICHAEL ASUNCION and JEANETTE
ASUNCION, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review seeks to reverse and set aside the October 9, 2002 decision [1]
of
the Court of Appeals and its January 12, 2004 resolution,[2] which affirmed in toto the
June 10, 1997 decision of the Regional Trial Court of Makati City, Branch 61 in Civil Case
No. 92-3635.[3]
On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board
Japan Airlines (JAL) Flight 742 bound for Los Angeles. Their itinerary included a stop-over
in Narita and an overnight stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs. Noriko
Etou-Higuchi of JAL endorsed their applications for shore pass and directed them to the
Japanese immigration official.[4] A shore pass is required of a foreigner aboard a vessel
or aircraft who desires to stay in the neighborhood of the port of call for not more than
72 hours.
During their interview, the Japanese immigration official noted that Michael appeared
shorter than his height as indicated in his passport. Because of this inconsistency,
respondents were denied shore pass entries and were brought instead to the Narita
Airport Rest House where they were billeted overnight.
The immigration official also handed Mrs. Higuchi a Notice [5] where it was stated that
respondents were to be watched so as not to escape.
Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by
Japans Immigration Department to handle passengers who were denied shore pass
entries, brought respondents to the Narita Airport Rest House where they stayed
overnight until their departure the following day for Los Angeles. Respondents were
charged US$400.00 each for their accommodation, security service and meals.
On December 12, 1992, respondents filed a complaint for damages [6] claiming that JAL
did not fully apprise them of their travel requirements and that they were rudely and
forcibly detained at Narita Airport.
JAL denied the allegations of respondents. It maintained that the refusal of the
Japanese immigration authorities to issue shore passes to respondents is an act of state
which JAL cannot interfere with or prevail upon. Consequently, it cannot impose upon
the immigration authorities that respondents be billeted at Hotel Nikko instead of the
airport resthouse.[7]
On June 10, 1997, the trial court rendered its decision, the dispositive portion of which
reads:
WHEREFORE PREMISES CONSIDERED, judgment is hereby rendered in favor of plaintiffs
ordering defendant JAL to pay plaintiffs as follows:
1. the sum of US$800.00 representing the expenses incurred at the Narita Airport with
interest at 12% per annum from March 27, 1992 until the sum is fully paid;
2. the sum of P200,000.00 for each plaintiff as moral damages;
3. the amount of P100,000.00 for each plaintiff as exemplary damages;
4. the amount of P100,000.00 as attorneys fees; and
5. costs of suit.
SO ORDERED.[8]
The trial court dismissed JALs counterclaim for litigation expenses, exemplary damages
and attorneys fees.
On October 9, 2002, the Court of Appeals affirmed in toto the decision of the trial court.
Its motion for reconsideration having been denied,[9] JAL now files the instant petition.
The basic issue for resolution is whether JAL is guilty of breach of contract.
Under Article 1755 of the Civil Code, a common carrier such as JAL 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 for all the circumstances. When an
airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a
contract of carriage arises. The passenger has every right to expect that he be
transported on that flight and on that date and it becomes the carriers obligation to
carry him and his luggage safely to the agreed destination.[10] If the passenger is not so
transported or if in the process of transporting he dies or is injured, the carrier may be
held liable for a breach of contract of carriage.[11]
We find that JAL did not breach its contract of carriage with respondents. It may be true
that JAL has the duty to inspect whether its passengers have the necessary travel
documents, however, such duty does not extend to checking the veracity of every
entry in these documents. JAL could not vouch for the authenticity of a passport and the
correctness of the entries therein. The power to admit or not an alien into the country is a
sovereign act which cannot be interfered with even by JAL. This is not within the ambit of
the contract of carriage entered into by JAL and herein respondents. As such, JAL
should not be faulted for the denial of respondents shore pass applications.
Prior to their departure, respondents were aware that upon arrival in Narita, they must
secure shore pass entries for their overnight stay. Respondents mother, Mrs. Imelda
Asuncion, insisted though that Ms. Linda Villavicencio of JAL assured her that her
children would be granted the passes.[12] This assertion was satisfactorily refuted by Ms.
Villavicencios testimony during the cross examination, to wit:
ATTY. GONZAGA:
Q I will show to you Exh. 9 which is the TIM and on page 184 hereof, particularly number
10, and I quote, Those holding tickets with confirmed seats and other documents for their
onward journey and continuing their journey to a third country provided that they obtain
an indorsement with an application of shore pass or transit pass from the airline ground
personnel before clearing the immigration formality?
WITNESS: .
A Yes, Sir. Q: During the time that you were in that room and you were given this notice for you to
sign, did you tell the immigration agent that Michael and Jeanette Asuncion should be
Q Did you tell this provision to Mrs. Asuncion?
allowed to stay at the Hotel Nikko Narita because, as passengers of JAL, and according
A Yes, Sir. I did. to the plaintiff, they had vouchers to stay in that hotel that night?

Q Are you sure? A: No, I couldnt do so.

A Yes, Sir. Q: Why not?

Q Did you give a copy?
A No, Sir, I did not give a copy but verbally I explained to her the procedure they have
to undergo when they get to narita airport.
. Mrs. Higuchi did all she could to assist the respondents. Upon being notified of the denial
Q And you read the contents of this [TIM]?
A No, Sir, I did not read it to her but I explained to her the procedure that each
passenger has to go through before when they get to narita airport before they line up
in the immigration counter.
Q In other words, you told Mrs. Asuncion the responsibility of securing shore passes bears
solely on the passengers only?
A Yes, Sir.
Q That the airline has no responsibility whatsoever with regards (sic) to the application for
shore passes?
A Yes, Sir.[13]
Next, respondents claimed that petitioner breached its contract of carriage when it
failed to explain to the immigration authorities that they had overnight vouchers at the
Hotel Nikko Narita. They imputed that JAL did not exhaust all means to prevent the
denial of their shore pass entry applications.
To reiterate, JAL or any of its representatives have no authority to interfere with or
influence the immigration authorities. The most that could be expected of JAL is to
endorse respondents applications, which Mrs. Higuchi did immediately upon their arrival
in Narita.
As Mrs. Higuchi stated during her deposition:
ATTY. QUIMBO
Q: Madam Witness, what assistance did you give, if any, to the plaintiffs during this
interview?
A: No, I was not present during their interview. I cannot assist.
Q: Why not?
A: It is forbidden for a civilian personnel to interfere with the Immigration agents duties.[14]
A: This notice is evidence which shows the decision of immigration authorities. It shows
there that the immigration inspector also designated Room 304 of the Narita Airport
Resthouse as the place where the passengers were going to wait for their outbound
flight. I cannot interfere with that decision.[15]
of respondents applications, Mrs. Higuchi immediately made reservations for
respondents at the Narita Airport Rest House which is really more a hotel than a
detention house as claimed by respondents.[16]
More importantly, nowhere in respondent Michaels testimony did he state categorically
that Mrs. Higuchi or any other employee of JAL treated them rudely or exhibited
improper behavior throughout their stay. We therefore find JAL not remiss in its
obligations as a common carrier.
Moral damages may be recovered in cases where one willfully causes injury to property,
or in cases of breach of contract where the other party acts fraudulently or in bad faith.
Exemplary damages are imposed by way of example or correction for the public good,
when the party to a contract acts in wanton, fraudulent, oppressive or malevolent
manner. Attorneys fees are allowed when exemplary damages are awarded and when
the party to a suit is compelled to incur expenses to protect his interest.[17] There being
no breach of contract nor proof that JAL acted in wanton, fraudulent or malevolent
manner, there is no basis for the award of any form of damages.
Neither should JAL be held liable to reimburse respondents the amount of US$800.00. It
has been sufficiently proven that the amount pertained to ISC, an agency separate and
distinct from JAL, in payment for the accommodations provided to respondents. The
payments did not in any manner accrue to the benefit of JAL.
However, we find that the Court of Appeals correctly dismissed JALs counterclaim for
litigation expenses, exemplary damages and attorneys fees. The action was filed by
respondents in utmost good faith and not manifestly frivolous. Respondents honestly
believed that JAL breached its contract. A persons right to litigate should not be
penalized by holding him liable for damages. This is especially true when the filing of the
case is to enforce what he believes to be his rightful claim against another although
found to be erroneous.[18]
WHEREFORE, in view of the foregoing, the instant petition is PARTLY GRANTED. The
October 9, 2002 decision of the Court of Appeals and its January 12, 2004 resolution in
CA-G.R. CV No. 57440, are REVERSED and SET ASIDE insofar as the finding of breach on
the part of petitioner and the award of damages, attorneys fees and costs of the suit in
favor of respondents is concerned. Accordingly, there being no breach of contract on
the part of petitioner, the award of actual, moral and exemplary damages, as well as
attorneys fees and costs of the suit in favor of respondents Michael and Jeanette
Asuncion, is DELETED for lack of basis. However, the dismissal for lack of merit of
petitioners counterclaim for litigation expenses, exemplary damages and attorneys fees,
is SUSTAINED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 170141 April 22, 2008
JAPAN AIRLINES, petitioner,
vs.
JESUS SIMANGAN, respondent.
DECISION
REYES R.T., J.:
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.1
The power to admit or not an alien into the country is a sovereign act which cannot be
interfered with even by Japan Airlines (JAL).2
In this petition for review on certiorari,3 petitioner JAL appeals the: (1) Decision4 dated
May 31, 2005 of the Court of Appeals (CA) ordering it to pay respondent Jesus Simangan
moral and exemplary damages; and (2) Resolution5 of the same court dated September
28, 2005 denying JAL's motion for reconsideration.
The Facts
In 1991, respondent Jesus Simangan decided to donate a kidney to his ailing cousin,
Loreto Simangan, in UCLA School of Medicine in Los Angeles, California, U.S.A. Upon
request of UCLA, respondent undertook a series of laboratory tests at the National
Kidney Institute in Quezon City to verify whether his blood and tissue type are
compatible with Loreto's.6 Fortunately, said tests proved that respondent's blood and
tissue type were well-matched with Loreto's.7
Respondent needed to go to the United States to complete his preliminary work-up and
donation surgery. Hence, to facilitate respondent's travel to the United States, UCLA
wrote a letter to the American Consulate in Manila to arrange for his visa. In due time,
respondent was issued an emergency U.S. visa by the American Embassy in Manila.8
Having obtained an emergency U.S. visa, respondent purchased a round trip plane
ticket from petitioner JAL for US$1,485.00 and was issued the corresponding boarding
pass.9 He was scheduled to a particular flight bound for Los Angeles, California, U.S.A.
via Narita, Japan.10
On July 29, 1992, the date of his flight, respondent went to Ninoy Aquino International
Airport in the company of several relatives and friends.11 He was allowed to check-in at
JAL's counter.12 His plane ticket, boarding pass, travel authority and personal articles
were subjected to rigid immigration and security routines.13 After passing through said
immigration and security procedures, respondent was allowed by JAL to enter its
airplane.14
While inside the airplane, JAL's airline crew suspected respondent of carrying a falsified
travel document and imputed that he would only use the trip to the United States as a
pretext to stay and work in Japan.15 The stewardess asked respondent to show his travel
documents. Shortly after, the stewardess along with a Japanese and a Filipino haughtily
ordered him to stand up and leave the plane.16 Respondent protested, explaining that
he was issued a U.S. visa. Just to allow him to board the plane, he pleaded with JAL to
closely monitor his movements when the aircraft stops over in Narita.17 His pleas were
ignored. He was then constrained to go out of the plane.18In a nutshell, respondent was
bumped off the flight.
Respondent went to JAL's ground office and waited there for three hours. Meanwhile,
the plane took off and he was left behind.19 Afterwards, he was informed that his travel
documents were, indeed, in order.20 Respondent was refunded the cost of his plane
ticket less the sum of US$500.00 which was deducted by JAL.21 Subsequently,
respondent's U.S. visa was cancelled.22
Displeased by the turn of events, respondent filed an action for damages against JAL
with the Regional Trial Court (RTC) in Valenzuela City, docketed as Civil Case No. 4195-V-
93. He claimed he was not able to donate his kidney to Loreto; and that he suffered
terrible embarrassment and mental anguish.23 He prayed that he be awarded P3 million
as moral damages, P1.5 million as exemplary damages and P500,000.00 as attorney's
fees.24
JAL denied the material allegations of the complaint. It argued, among others, that its
failure to allow respondent to fly on his scheduled departure was due to "a need for his
travel documents to be authenticated by the United States Embassy"25 because no one
from JAL's airport staff had encountered a parole visa before.26 It posited that the
authentication required additional time; that respondent was advised to take the flight
the following day, July 30, 1992. JAL alleged that respondent agreed to be rebooked on
July 30, 1992.27
JAL also lodged a counterclaim anchored on respondent's alleged wrongful institution
of the complaint. It prayed for litigation expenses, exemplary damages and attorney's
fees.28
On September 21, 2000, the RTC presided by Judge Floro P. Alejo rendered its decision in
favor of respondent (plaintiff), disposing as follows:
WHEREFORE, judgment is hereby rendered ordering the defendant to pay the plaintiff
the amount of P1,000,000.00 as moral damages, the amount of P500,000.00 as
exemplary damages and the amount of P250,000.00 as attorney's fees, plus the cost of
suit.29
The RTC explained:
In summarily and insolently ordering the plaintiff to disembark while the latter was
already settled in his assigned seat, the defendant violated the contract of carriage;
that when the plaintiff was ordered out of the plane under the pretext that the
genuineness of his travel documents would be verified it had caused him
embarrassment and besmirched reputation; and that when the plaintiff was finally not
allowed to take the flight, he suffered more wounded feelings and social humiliation for
which the plaintiff was asking to be awarded moral and exemplary damages as well as
attorney's fees.
The reason given by the defendant that what prompted them to investigate the
genuineness of the travel documents of the plaintiff was that the plaintiff was not then
carrying a regular visa but just a letter does not appear satisfactory. The defendant is
engaged in transporting passengers by plane from country to country and is therefore
conversant with the travel documents. The defendant should not be allowed to pretend,
to the prejudice of the plaintiff not to know that the travel documents of the plaintiff are
valid documents to allow him entry in the United States.
The foregoing act of the defendant in ordering the plaintiff to deplane while already
settled in his assigned seat clearly demonstrated that the defendant breached its
contract of carriage with the plaintiff as passenger in bad faith and as such the plaintiff
is entitled to moral and exemplary damages as well as to an award of attorney's fees.30
Disagreeing with the RTC judgment, JAL appealed to the CA contending that it is not
guilty of breach of contract of carriage, hence, not liable for damages.31 It posited that
it is the one entitled to recover on its counterclaim.32
CA Ruling
In a Decision33 dated May 31, 2005, the CA affirmed the decision of the RTC with
modification in that it lowered the amount of moral and exemplary damages and
deleted the award of attorney's fees. The fallo of the CA decision reads:
WHEREFORE, the appealed Decision is AFFIRMED with MODIFICATION. Appellant JAPAN
AIR LINES is ordered to pay appellee JESUS SIMANGAN the reduced sums, as follows: Five
Hundred Thousand Pesos (P500,000.00) as moral damages, and Two Hundred Fifty
Thousand Pesos (P250,000.00) as exemplary damages. The award of attorney's fees is
hereby DELETED.34
The CA elucidated that since JAL issued to respondent a round trip plane ticket for a
lawful consideration, "there arose a perfected contract between them." 35 It found that
respondent was "haughtily ejected"36 by JAL and that "he was certainly embarrassed
and humiliated"37 when, in the presence of other passengers, JAL's airline staff "shouted
at him to stand up and arrogantly asked him to produce his travel papers, without the
least courtesy every human being is entitled to";38 and that "he was compelled to
deplane on the grounds that his papers were fake."39
The CA ratiocinated:
While the protection of passengers must take precedence over convenience, the
implementation of security measures must be attended by basic courtesies.
In fact, breach of the contract of carriage creates against the carrier a presumption of
liability, by a simple proof of injury, relieving the injured passenger of the duty to establish
the fault of the carrier or of his employees; and placing on the carrier the burden to
prove that it was due to an unforeseen event or to force majeure.
That appellee possessed bogus travel documents and that he might stay illegally in
Japan are allegations without substantiation. Also, appellant's attempt to rebook
appellee the following day was too late and did not relieve it from liability. The damage
had been done. Besides, its belated theory of novation, i.e., that appellant's original
obligation to carry appellee to Narita and Los Angeles on July 29, 1992 was extinguished
by novation when appellant and appellant agreed that appellee will instead take
appellant's flight to Narita on the following day, July 30, 1992, deserves little attention. It is
inappropriate at bar. Questions not taken up during the trial cannot be raised for the first
time on appeal.40 (Underscoring ours and citations were omitted)
Citing Ortigas, Jr. v. Lufthansa German Airlines,41 the CA declared that "(i)n contracts of
common carriage, inattention and lack of care on the part of the carrier resulting in the
failure of the passenger to be accommodated in the class contracted for amounts to
bad faith or fraud which entitles the passengers to the award of moral damages in
accordance with Article 2220 of the Civil Code."42
Nevertheless, the CA modified the damages awarded by the RTC. It explained:
Fundamental in the law on damages is that one injured by a breach of a contract, or by
a wrongful or negligent act or omission shall have a fair and just compensation
commensurate to the loss sustained as consequence of the defendant's act. Being
discretionary on the court, the amount, however, should not be palpably and
scandalously excessive.
Here, the trial court's award of P1,000,000.00 as moral damages appears to be
overblown. No other proof of appellee's social standing, profession, financial capabilities
was presented except that he was single and a businessman. To Us, the sum of
500,000.00 is just and fair. For, moral damages are emphatically not intended to enrich a
complainant at the expense of the defendant. They are awarded only to enable the
injured party to obtain means, diversion or amusements that will serve to alleviate the
moral suffering he has undergone, by reason of the defendant's culpable action.
Moreover, the grant of P500,000.00 as exemplary damages needs to be reduced to a
reasonable level. The award of exemplary damages is designed to permit the courts to
mould behavior that has socially deleterious consequences and its imposition is required
by public policy to suppress the wanton acts of the offender. Hence, the sum
of P250,000.00 is adequate under the circumstances.
The award of P250,000.00 as attorney's fees lacks factual basis. Appellee was definitely
compelled to litigate in protecting his rights and in seeking relief from appellant's
misdeeds. Yet, the record is devoid of evidence to show the cost of the services of his
counsel and/or the actual expenses incurred in prosecuting his action.43(Citations were
omitted)
When JAL's motion for reconsideration was denied, it resorted to the petition at bar.
Issues
JAL poses the following issues -
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT WAS
ENTITLED TO MORAL DAMAGES, CONSIDERING THAT:
A. JAL WAS NOT GUILTY OF BREACH OF CONTRACT.
B. MORAL DAMAGES MAY BE AWARDED IN BREACH OF CONTRACT CASES ONLY WHEN
THE BREACH IS ATTENDED BY FRAUD OR BAD FAITH. ASSUMING ARGUENDO THAT JAL WAS
GUILTY OF BREACH, JAL DID NOT ACT FRAUDULENTLY OR IN BAD FAITH AS TO ENTITLE
RESPONDENT TO MORAL DAMAGES.
C. THE LAW DISTINGUISHES A CONTRACTUAL BREACH EFFECTED IN GOOD FAITH FROM
ONE ATTENDED BY BAD FAITH.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT WAS
ENTITLED TO EXEMPLARY DAMAGES CONSIDERING THAT:
A. EXEMPLARY DAMAGES ARE NOT RECOVERABLE IN BREACH OF CONTRACT OF
CARRIAGE UNLESS THE CARRIER IS GUILTY OF WANTON, FRAUDULENT, RECKLESS,
OPPRESSIVE OR MALEVOLENT CONDUCT.
B. ASSUMING ARGUENDO THAT JAL WAS GUILTY OF BREACH, JAL DID NOT ACT IN A
WANTON FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT MANNER AS TO ENTITLE
RESPONDENT TO EXEMPLARY DAMAGES.
III.
ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO AN AWARD OF DAMAGES,
WHETHER OR NOT THE COURT OF APPEALS AWARD OF P750,000 IN DAMAGES WAS
EXCESSIVEAND UNPRECEDENTED.
IV.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING FOR JAL ON
ITS COUNTERCLAIM.44 (Underscoring Ours)
Basically, there are three (3) issues to resolve here: (1) whether or not JAL is guilty of
contract of carriage; (2) whether or not respondent is entitled to moral and exemplary
damages; and (3) whether or not JAL is entitled to its counterclaim for damages.
Our Ruling
This Court is not a trier of facts.
Chiefly, the issues are factual. The RTC findings of facts were affirmed by the CA. The CA
also gave its nod to the reasoning of the RTC except as to the awards of damages,
which were reduced, and that of attorney's fees, which was deleted.
We are not a trier of facts. We generally rely upon, and are bound by, the conclusions
on this matter of the lower courts, which are better equipped and have better
opportunity to assess the evidence first-hand, including the testimony of the witnesses.45
We have repeatedly held that the findings of fact of the CA are final and conclusive
and cannot be reviewed on appeal to the Supreme Court provided they are based on
substantial evidence.46 We have no jurisdiction, as a rule, to reverse their
findings.47 Among the exceptions to this rule are: (a) when the conclusion is a finding
grounded entirely on speculations, surmises or conjectures; (b) when the inference
made is manifestly mistaken, absurd or impossible; (c) where there is grave abuse of
discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the
findings of facts are conflicting; (f) when the CA, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both appellant and
appellee.48
The said exceptions, which are being invoked by JAL, are not found here. There is no
indication that the findings of the CA are contrary to the evidence on record or that
vital testimonies of JAL's witnesses were disregarded. Neither did the CA commit
misapprehension of facts nor did it fail to consider relevant facts. Likewise, there was no
grave abuse of discretion in the appreciation of facts or mistaken and absurd
inferences.
We thus sustain the coherent facts as established by the courts below, there being no
sufficient showing that the said courts committed reversible error in reaching their
conclusions.
JAL is guilty of breach of
contract of carriage.
That respondent purchased a round trip plane ticket from JAL and was issued the
corresponding boarding pass is uncontroverted.49 His plane ticket, boarding pass, travel
authority and personal articles were subjected to rigid immigration and security
procedure.50 After passing through said immigration and security procedure, he was
allowed by JAL to enter its airplane to fly to Los Angeles, California, U.S.A. via Narita,
Japan.51 Concisely, there was a contract of carriage between JAL and respondent.
Nevertheless, JAL made respondent get off the plane on his scheduled departure on
July 29, 1992. He was not allowed by JAL to fly. JAL thus failed to comply with its
obligation under the contract of carriage.
JAL justifies its action by arguing that there was "a need to verify the authenticity of
respondent's travel document."52 It alleged that no one from its airport staff had
encountered a parole visa before.53 It further contended that respondent agreed to fly
the next day so that it could first verify his travel document, hence, there was
novation.54 It maintained that it was not guilty of breach of contract of carriage as
respondent was not able to travel to the United States due to his own voluntary
desistance.55
We cannot agree. JAL did not allow respondent to fly. It informed respondent that there
was a need to first check the authenticity of his travel documents with the U.S.
Embassy.56 As admitted by JAL, "the flight could not wait for Mr. Simangan because it
was ready to depart."57
Since JAL definitely declared that the flight could not wait for respondent, it gave
respondent no choice but to be left behind. The latter was unceremoniously bumped off
despite his protestations and valid travel documents and notwithstanding his contract of
carriage with JAL. Damage had already been done when respondent was offered to fly
the next day on July 30, 1992. Said offer did not cure JAL's default.
Considering that respondent was forced to get out of the plane and left behind against
his will, he could not have freely consented to be rebooked the next day. In short, he did
not agree to the alleged novation. Since novation implies a waiver of the right the
creditor had before the novation, such waiver must be express.58 It cannot be supposed,
without clear proof, that respondent had willingly done away with his right to fly on July
29, 1992.
Moreover, the reason behind the bumping off incident, as found by the RTC and CA,
was that JAL personnel imputed that respondent would only use the trip to the United
States as a pretext to stay and work in Japan.59
Apart from the fact that respondent's plane ticket, boarding pass, travel authority and
personal articles already passed the rigid immigration and security routines,60 JAL, as a
common carrier, ought to know the kind of valid travel documents respondent carried.
As provided in Article 1755 of the New Civil Code: "A common carrier is bound to carry
the passengers safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the circumstances."61 Thus,
We find untenable JAL's defense of "verification of respondent's documents" in its breach
of contract of carriage.
It bears repeating that the power to admit or not an alien into the country is a sovereign
act which cannot be interfered with even by JAL.62
In an action for breach of contract of carriage, all that is required of plaintiff is to prove
the existence of such contract and its non-performance by the carrier through the
latter's failure to carry the passenger safely to his destination.63Respondent has complied
with these twin requisites.
Respondent is entitled to moral and exemplary damages and attorney's fees plus legal
interest.
With reference to moral damages, JAL alleged that they are not recoverable in actions
ex contractu except only when the breach is attended by fraud or bad faith. It is
contended that it did not act fraudulently or in bad faith towards respondent, hence, it
may not be held liable for moral damages.
As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract for it is not one of the items enumerated under
Article 2219 of the Civil Code.64 As an exception, such damages are recoverable: (1) in
cases in which the mishap results in the death of a passenger, as provided in Article
1764, in relation to Article 2206(3) of the Civil Code; and (2) in the cases in which the
carrier is guilty of fraud or bad faith, as provided in Article 2220.65
The acts committed by JAL against respondent amounts to bad faith. As found by the
RTC, JAL breached its contract of carriage with respondent in bad faith. JAL personnel
summarily and insolently ordered respondent to disembark while the latter was already
settled in his assigned seat. He was ordered out of the plane under the alleged reason
that the genuineness of his travel documents should be verified.
These findings of facts were upheld by the CA, to wit:
x x x he was haughtily ejected by appellant. He was certainly embarrassed and
humiliated when, in the presence of other passengers, the appellant's airline staff
shouted at him to stand up and arrogantly asked him to produce his travel papers,
without the least courtesy every human being is entitled to. Then, he was compelled to
deplane on the grounds that his papers were fake. His protestation of having been
issued a U.S. visa coupled with his plea to appellant to closely monitor his movements
when the aircraft stops over in Narita, were ignored. Worse, he was made to wait for
many hours at the office of appellant only to be told later that he has valid travel
documents.66 (Underscoring ours)
Clearly, JAL is liable for moral damages. It is firmly settled that moral damages are
recoverable in suits predicated on breach of a contract of carriage where it is proved
that the carrier was guilty of fraud or bad faith, as in this case. Inattention to and lack of
care for the interests of its passengers who are entitled to its utmost consideration,
particularly as to their convenience, amount to bad faith which entitles the passenger to
an award of moral damages. What the law considers as bad faith which may furnish the
ground for an award of moral damages would be bad faith in securing the contract
and in the execution thereof, as well as in the enforcement of its terms, or any other kind
of deceit.67
JAL is also liable for exemplary damages as its above-mentioned acts constitute wanton,
oppressive and malevolent acts against respondent. Exemplary damages, which are
awarded by way of example or correction for the public good, may be recovered in
contractual obligations, as in this case, if defendant acted in wanton, fraudulent,
reckless, oppressive, or malevolent manner.68
Exemplary damages are designed by our civil law to permit the courts to reshape
behaviour that is socially deleterious in its consequence by creating negative incentives
or deterrents against such behaviour. In requiring compliance with the standard of
extraordinary diligence, a standard which is, in fact, that of the highest possible degree
of diligence, from common carriers and in creating a presumption of negligence against
them, the law seeks to compel them to control their employees, to tame their reckless
instincts and to force them to take adequate care of human beings and their property.69
Neglect or malfeasance of the carrier's employees could give ground for an action for
damages. Passengers have a right to be treated by the carrier's employees with
kindness, respect, courtesy and due consideration and are entitled to be protected
against personal misconduct, injurious language, indignities and abuses from such
employees.70
The assessment of P500,000.00 as moral damages and P100,000.00 as exemplary
damages in respondent's favor is, in Our view, reasonable and realistic. This award is
reasonably sufficient to indemnify him for the humiliation and embarrassment he
suffered. This also serves as an example to discourage the repetition of similar oppressive
acts.
With respect to attorney's fees, they may be awarded when defendant's act or omission
has compelled plaintiff to litigate with third persons or to incur expenses to protect his
interest.71 The Court, in Construction Development Corporation of the Philippines v.
Estrella,72 citing Traders Royal Bank Employees Union-Independent v. National Labor
Relations Commission,73 elucidated thus:
There are two commonly accepted concepts of attorney's fees, the so-called ordinary
and extraordinary. In its ordinary concept, an attorney's fee is the reasonable
compensation paid to a lawyer by his client for the legal services he has rendered to the
latter. The basis of this compensation is the fact of his employment by and his agreement
with the client.
In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by
the court to be paid by the losing party in a litigation. The basis of this is any of the cases
provided by law where such award can be made, such as those authorized in Article
2208, Civil Code, and is payable not to the lawyer but to the client, unless they have
agreed that the award shall pertain to the lawyer as additional compensation or as part
thereof.74
It was therefore erroneous for the CA to delete the award of attorney's fees on the
ground that the record is devoid of evidence to show the cost of the services of
respondent's counsel. The amount is actually discretionary upon the Court so long as it
passes the test of reasonableness. They may be recovered as actual or compensatory
damages when exemplary damages are awarded and whenever the court deems it
just and equitable,75 as in this case.
Considering the factual backdrop of this case, attorney's fees in the amount
of P200,000.00 is reasonably modest.
The above liabilities of JAL in the total amount of P800,000.00 earn legal interest pursuant
to the Court's ruling in Construction Development Corporation of the Philippines v.
Estrella,76 citing Eastern Shipping Lines, Inc. v. Court of Appeals,77 to wit:
Regarding the imposition of legal interest at the rate of 6% from the time of the filing of
the complaint, we held in Eastern Shipping Lines, Inc. v. Court of Appeals, 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.78 (Emphasis supplied and citations omitted)
Accordingly, in addition to the said total amount of P800,000.00, JAL is liable to pay
respondent legal interest. Pursuant to the above ruling of the Court, the legal interest is
6% and it shall be reckoned from September 21, 2000 when the RTC rendered its
judgment. From the time this Decision becomes final and executory, the interest rate
shall be 12% until its satisfaction.
JAL is not entitled to its counterclaim for damages.
The counterclaim of JAL in its Answer79 is a compulsory counterclaim for damages and
attorney's fees arising from the filing of the complaint. There is no mention of any other
counter claims.
This compulsory counterclaim of JAL arising from the filing of the complaint may not be
granted inasmuch as the complaint against it is obviously not malicious or unfounded. It
was filed by respondent precisely to claim his right to damages against JAL. Well-settled
is the rule that the commencement of an action does not per se make the action
wrongful and subject the action to damages, for the law could not have meant to
impose a penalty on the right to litigate.80
We reiterate case law that if damages result from a party's exercise of a right, it
is damnum absque injuria.81 Lawful acts give rise to no injury. Walang perhuwisyong
maaring idulot ang paggamit sa sariling karapatan.
During the trial, however, JAL presented a witness who testified that JAL suffered further
damages. Allegedly, respondent caused the publications of his subject complaint
against JAL in the newspaper for which JAL suffered damages.82
Although these additional damages allegedly suffered by JAL were not incorporated in
its Answer as they arose subsequent to its filing, JAL's witness was able to testify on the
same before the RTC.83 Hence, although these issues were not raised by the pleadings,
they shall be treated in all respects as if they had been raised in the pleadings.
As provided in Section 5, Rule 10 of the Rules of Court, "(w)hen issues not raised by the
pleadings are tried with the express or implied consent of the parties, they shall be
treated in all respects as if they had been raised in the pleadings."
Nevertheless, JAL's counterclaim cannot be granted.
JAL is a common carrier. JAL's business is mainly with the traveling public. It invites people
to avail themselves of the comforts and advantages it offers.84 Since JAL deals with the
public, its bumping off of respondent without a valid reason naturally drew public
attention and generated a public issue.
The publications involved matters about which the public has the right to be informed
because they relate to a public issue. This public issue or concern is a legitimate topic of
a public comment that may be validly published.
Assuming that respondent, indeed, caused the publication of his complaint, he may not
be held liable for damages for it. The constitutional guarantee of freedom of the speech
and of the press includes fair commentaries on matters of public interest. This is
explained by the Court in Borjal v. Court of Appeals,85 to wit:
To reiterate, fair commentaries on matters of public interest are privileged and constitute
a valid defense in an action for libel or slander. The doctrine of fair comment means that
while in general every discreditable imputation publicly made is deemed false, because
every man is presumed innocent until his guilt is judicially proved, and every false
imputation is deemed malicious, nevertheless, when the discreditable imputation is
directed against a public person in his public capacity, it is not necessarily actionable. In
order that such discreditable imputation to a public official may be actionable, it must
either be a false allegation of fact or a comment based on a false supposition. If the
comment is an expression of opinion, based on established facts, then it is immaterial
that the opinion happens to be mistaken, as long as it might reasonably be inferred from
the facts.86 (Citations omitted and underscoring ours)
Even though JAL is not a public official, the rule on privileged commentaries on matters
of public interest applies to it. The privilege applies not only to public officials but extends
to a great variety of subjects, and includes matters of public concern, public men, and
candidates for office.87
Hence, pursuant to the Borjal case, there must be an actual malice in order that a
discreditable imputation to a public person in his public capacity or to a public official
may be actionable. To be considered malicious, the libelous statements must be shown
to have been written or published with the knowledge that they are false or in reckless
disregard of whether they are false or not.88
Considering that the published articles involve matters of public interest and that its
expressed opinion is not malicious but based on established facts, the imputations
against JAL are not actionable. Therefore, JAL may not claim damages for them.
WHEREFORE, the petition is DENIED. The appealed Decision of the Court of Appeals
is AFFIRMED WITH MODIFICATION. As modified, petitioner Japan Airlines is ordered to pay
respondent Jesus Simangan the following: (1) P500,000.00 as moral damages;
(2) P100,000.00 as exemplary damages; and (3) P200,000.00 as attorney's fees.
The total amount adjudged shall earn legal interest at the rate of 6% per annum from
the date of judgment of the Regional Trial Court on September 21, 2000 until the finality
of this Decision. From the time this Decision becomes final and executory, the unpaid
amount, if any, shall earn legal interest at the rate of 12% per annum until its satisfaction.
SO ORDERED.
[G.R. No. 150843. March 14, 2003]
CATHAY PACIFIC AIRWAYS, LTD., petitioner, vs. SPOUSES DANIEL VAZQUEZ and MARIA
LUISA MADRIGAL VAZQUEZ, respondents.
DECISION
DAVIDE, JR., C.J.:
Is an involuntary upgrading of an airline passengers accommodation from one class to a
more superior class at no extra cost a breach of contract of carriage that would entitle
the passenger to an award of damages? This is a novel question that has to be resolved
in this case.
The facts in this case, as found by the Court of Appeals and adopted by petitioner
Cathay Pacific Airways, Ltd., (hereinafter Cathay) are as follows:
Cathay is a common carrier engaged in the business of transporting passengers and
goods by air. Among the many routes it services is the Manila-Hongkong-Manila
course. As part of its marketing strategy, Cathay accords its frequent flyers membership
in its Marco Polo Club. The members enjoy several privileges, such as priority
for upgrading of booking without any extra charge whenever an opportunity
arises. Thus, a frequent flyer booked in the Business Class has priority for upgrading to First
Class if the Business Class Section is fully booked.
Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez
are frequent flyers of Cathay and are Gold Card members of its Marco Polo Club. On 24
September 1996, the Vazquezes, together with their maid and two friends Pacita Cruz
and Josefina Vergel de Dios, went to Hongkong for pleasure and business.
For their return flight to Manila on 28 September 1996, they were booked on Cathays
Flight CX-905, with departure time at 9:20 p.m. Two hours before their time of departure,
the Vazquezes and their companions checked in their luggage at Cathays check-in
counter at Kai Tak Airport and were given their respective boarding passes, to wit,
Business Class boarding passes for the Vazquezes and their two friends, and Economy
Class for their maid. They then proceeded to the Business Class passenger lounge.
When boarding time was announced, the Vazquezes and their two friends went to
Departure Gate No. 28, which was designated for Business Class passengers. Dr.
Vazquez presented his boarding pass to the ground stewardess, who in turn inserted it
into an electronic machine reader or computer at the gate. The ground stewardess was
assisted by a ground attendant by the name of Clara Lai Han Chiu. When Ms. Chiu
glanced at the computer monitor, she saw a message that there was a seat change
from Business Class to First Class for the Vazquezes.
Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes accommodations
were upgraded to First Class. Dr. Vazquez refused the upgrade, reasoning that it would
not look nice for them as hosts to travel in First Class and their guests, in the Business
Class; and moreover, they were going to discuss business matters during the flight. He
also told Ms. Chiu that she could have other passengers instead transferred to the First
Class Section. Taken aback by the refusal for upgrading, Ms. Chiu consulted her
supervisor, who told her to handle the situation and convince the Vazquezes to accept
the upgrading. Ms. Chiu informed the latter that the Business Class was fully booked, and
that since they were Marco Polo Club members they had the priority to be upgraded to
the First Class. Dr. Vazquez continued to refuse, so Ms. Chiu told them that if they would
not avail themselves of the privilege, they would not be allowed to take the
flight. Eventually, after talking to his two friends, Dr. Vazquez gave in. He and Mrs.
Vazquez then proceeded to the First Class Cabin.
Upon their return to Manila, the Vazquezes, in a letter of 2 October 1996 addressed to
Cathays Country Manager, demanded that they be indemnified in the amount
of P1million for the humiliation and embarrassment caused by its employees. They also
demanded a written apology from the management of Cathay, preferably a
responsible person with a rank of no less than the Country Manager, as well as the
apology from Ms. Chiu within fifteen days from receipt of the letter.
In his reply of 14 October 1996, Mr. Larry Yuen, the assistant to Cathays Country Manager
Argus Guy Robson, informed the Vazquezes that Cathay would investigate the incident
and get back to them within a weeks time.
On 8 November 1996, after Cathays failure to give them any feedback within its self-
imposed deadline, the Vazquezes instituted before the Regional Trial Court of Makati
City an action for damages against Cathay, praying for the payment to each of them
the amounts of P250,000 as temperate damages; P500,000 as moral damages; P500,000
as exemplary or corrective damages; and P250,000 as attorneys fees.
In their complaint, the Vazquezes alleged that when they informed Ms. Chiu that they
preferred to stay in Business Class, Ms. Chiu obstinately, uncompromisingly and in a loud,
discourteous and harsh voice threatened that they could not board and leave with the
flight unless they go to First Class, since the Business Class was overbooked. Ms. Chius
loud and stringent shouting annoyed, embarrassed, and humiliated them because the
incident was witnessed by all the other passengers waiting for boarding. They also
claimed that they were unjustifiably delayed to board the plane, and when they were
finally permitted to get into the aircraft, the forward storage compartment was already
full. A flight stewardess instructed Dr. Vazquez to put his roll-on luggage in the overhead
storage compartment. Because he was not assisted by any of the crew in putting up his
luggage, his bilateral carpal tunnel syndrome was aggravated, causing him extreme
pain on his arm and wrist. The Vazquezes also averred that they belong to the
uppermost and absolutely top elite of both Philippine Society and the Philippine financial
community, [and that] they were among the wealthiest persons in the Philippine[s].
In its answer, Cathay alleged that it is a practice among commercial airlines to upgrade
passengers to the next better class of accommodation, whenever an opportunity arises,
such as when a certain section is fully booked. Priority in upgrading is given to its
frequent flyers, who are considered favored passengers like the Vazquezes. Thus, when
the Business Class Section of Flight CX-905 was fully booked, Cathays computer sorted
out the names of favored passengers for involuntary upgrading to First Class. When Ms.
Chiu informed the Vazquezes that they were upgraded to First Class, Dr. Vazquez
refused. He then stood at the entrance of the boarding apron, blocking the queue of
passengers from boarding the plane, which inconvenienced other passengers. He
shouted that it was impossible for him and his wife to be upgraded without his two
friends who were traveling with them. Because of Dr. Vazquezs outburst, Ms. Chiu
thought of upgrading the traveling companions of the Vazquezes. But when she
checked the computer, she learned that the Vazquezes companions did not have
priority for upgrading. She then tried to book the Vazquezes again to their original seats.
However, since the Business Class Section was already fully booked, she politely informed
Dr. Vazquez of such fact and explained that the upgrading was in recognition of their
status as Cathays valued passengers. Finally, after talking to their guests, the Vazquezes
eventually decided to take the First Class accommodation.
Cathay also asserted that its employees at the Hong Kong airport acted in good faith in
dealing with the Vazquezes; none of them shouted, humiliated, embarrassed, or
committed any act of disrespect against them (the Vazquezes). Assuming that there
was indeed a breach of contractual obligation, Cathay acted in good faith, which
negates any basis for their claim for temperate, moral, and exemplary damages and
attorneys fees. Hence, it prayed for the dismissal of the complaint and for payment
of P100,000 for exemplary damages and P300,000 as attorneys fees and litigation
expenses.
During the trial, Dr. Vazquez testified to support the allegations in the complaint. His
testimony was corroborated by his two friends who were with him at the time of the
incident, namely, Pacita G. Cruz and Josefina Vergel de Dios.
For its part, Cathay presented documentary evidence and the testimonies of Mr. Yuen;
Ms. Chiu; Norma Barrientos, Comptroller of its retained counsel; and Mr. Robson. Yuen
and Robson testified on Cathays policy of upgrading the seat accommodation of its
Marco Polo Club members when an opportunity arises. The upgrading of the Vazquezes
to First Class was done in good faith; in fact, the First Class Section is definitely much
better than the Business Class in terms of comfort, quality of food, and service from the
cabin crew. They also testified that overbooking is a widely accepted practice in the
airline industry and is in accordance with the International Air Transport Association
(IATA) regulations. Airlines overbook because a lot of passengers do not show up for their
flight. With respect to Flight CX-905, there was no overall overbooking to a degree that a
passenger was bumped off or downgraded. Yuen and Robson also stated that the
demand letter of the Vazquezes was immediately acted upon. Reports were gathered
from their office in Hong Kong and immediately forwarded to their counsel Atty. Remollo
for legal advice. However, Atty. Remollo begged off because his services were likewise
retained by the Vazquezes; nonetheless, he undertook to solve the problem in behalf of
Cathay. But nothing happened until Cathay received a copy of the complaint in this
case. For her part, Ms. Chiu denied that she shouted or used foul or impolite language
against the Vazquezes. Ms. Barrientos testified on the amount of attorneys fees and
other litigation expenses, such as those for the taking of the depositions of Yuen and
Chiu.
In its decision[1] of 19 October 1998, the trial court found for the Vazquezes and decreed
as follows:
WHEREFORE, finding preponderance of evidence to sustain the instant complaint,
judgment is hereby rendered in favor of plaintiffs Vazquez spouses and against
defendant Cathay Pacific Airways, Ltd., ordering the latter to pay each plaintiff the
following:
a) Nominal damages in the amount of P100,000.00 for each plaintiff;
b) Moral damages in the amount of P2,000,000.00 for each plaintiff;
c) Exemplary damages in the amount of P5,000,000.00 for each plaintiff;
d) Attorneys fees and expenses of litigation in the amount of P1,000,000.00 for each
plaintiff; and
e) Costs of suit.
SO ORDERED.
According to the trial court, Cathay offers various classes of seats from which passengers
are allowed to choose regardless of their reasons or motives, whether it be due to
budgetary constraints or whim. The choice imposes a clear obligation on Cathay to
transport the passengers in the class chosen by them. The carrier cannot, without
exposing itself to liability, force a passenger to involuntarily change his choice. The
upgrading of the Vazquezes accommodation over and above their vehement
objections was due to the overbooking of the Business Class. It was a pretext to pack as
many passengers as possible into the plane to maximize Cathays revenues. Cathays
actuations in this case displayed deceit, gross negligence, and bad faith, which entitled
the Vazquezes to awards for damages.
On appeal by the petitioners, the Court of Appeals, in its decision of 24 July
2001,[2] deleted the award for exemplary damages; and it reduced the awards for moral
and nominal damages for each of the Vazquezes to P250,000 and P50,000, respectively,
and the attorneys fees and litigation expenses to P50,000 for both of them.
The Court of Appeals ratiocinated that by upgrading the Vazquezes to First Class,
Cathay novated the contract of carriage without the formers consent. There was a
breach of contract not because Cathay overbooked the Business Class Section of Flight
CX-905 but because the latter pushed through with the upgrading despite the
objections of the Vazquezes.
However, the Court of Appeals was not convinced that Ms. Chiu shouted at, or meant
to be discourteous to, Dr. Vazquez, although it might seemed that way to the latter, who
was a member of the elite in Philippine society and was not therefore used to being
harangued by anybody. Ms. Chiu was a Hong Kong Chinese whose fractured Chinese
was difficult to understand and whose manner of speaking might sound harsh or shrill to
Filipinos because of cultural differences. But the Court of Appeals did not find her to
have acted with deliberate malice, deceit, gross negligence, or bad faith. If at all, she
was negligent in not offering the First Class accommodations to other
passengers. Neither can the flight stewardess in the First Class Cabin be said to have
been in bad faith when she failed to assist Dr. Vazquez in lifting his baggage into the
overhead storage bin. There is no proof that he asked for help and was refused even
after saying that he was suffering from bilateral carpal tunnel syndrome. Anent the delay
of Yuen in responding to the demand letter of the Vazquezes, the Court of Appeals
found it to have been sufficiently explained.
The Vazquezes and Cathay separately filed motions for a reconsideration of the
decision, both of which were denied by the Court of Appeals.
Cathay seasonably filed with us this petition in this case. Cathay maintains that the
award for moral damages has no basis, since the Court of Appeals found that there was
no wanton, fraudulent, reckless and oppressive display of manners on the part of its
personnel; and that the breach of contract was not attended by fraud, malice, or bad
faith. If any damage had been suffered by the Vazquezes, it was damnum absque
injuria, which is damage without injury, damage or injury inflicted without injustice, loss or
damage without violation of a legal right, or a wrong done to a man for which the law
provides no remedy. Cathay also invokes our decision in United Airlines, Inc. v. Court of
Appeals[3] where we recognized that, in accordance with the Civil Aeronautics Boards
Economic Regulation No. 7, as amended, an overbooking that does not exceed ten
percent cannot be considered deliberate and done in bad faith. We thus deleted in
that case the awards for moral and exemplary damages, as well as attorneys fees, for
lack of proof of overbooking exceeding ten percent or of bad faith on the part of the
airline carrier.
On the other hand, the Vazquezes assert that the Court of Appeals was correct in
granting awards for moral and nominal damages and attorneys fees in view of the
breach of contract committed by Cathay for transferring them from the Business Class to
First Class Section without prior notice or consent and over their vigorous objection. They
likewise argue that the issuance of passenger tickets more than the seating capacity of
each section of the plane is in itself fraudulent, malicious and tainted with bad faith.
The key issues for our consideration are whether (1) by upgrading the seat
accommodation of the Vazquezes from Business Class to First Class Cathay breached its
contract of carriage with the Vazquezes; (2) the upgrading was tainted with fraud or
bad faith; and (3) the Vazquezes are entitled to damages.
We resolve the first issue in the affirmative.
A contract is a meeting of minds between two persons whereby one agrees to give
something or render some service to another for a consideration. There is no contract
unless the following requisites concur: (1) consent of the contracting parties; (2) an
object certain which is the subject of the contract; and (3) the cause of the obligation
which is established.[4]Undoubtedly, a contract of carriage existed between Cathay and
the Vazquezes. They voluntarily and freely gave their consent to an agreement whose
object was the transportation of the Vazquezes from Manila to Hong Kong and back to
Manila, with seats in the Business Class Section of the aircraft, and whose cause or
consideration was the fare paid by the Vazquezes to Cathay.
The only problem is the legal effect of the upgrading of the seat accommodation of the
Vazquezes. Did it constitute a breach of contract?
Breach of contract is defined as the failure without legal reason to comply with the terms
of a contract.[5] It is also defined as the [f]ailure, without legal excuse, to perform any
promise which forms the whole or part of the contract.[6]
In previous cases, the breach of contract of carriage consisted in either the bumping off
of a passenger with confirmed reservation or the downgrading of a passengers seat
accommodation from one class to a lower class. In this case, what happened was the
reverse. The contract between the parties was for Cathay to transport the Vazquezes to
Manila on a Business Class accommodation in Flight CX-905. After checking-in their
luggage at the Kai Tak Airport in Hong Kong, the Vazquezes were given boarding cards
indicating their seat assignments in the Business Class Section. However, during the
boarding time, when the Vazquezes presented their boarding passes, they were
informed that they had a seat change from Business Class to First Class. It turned out that
the Business Class was overbooked in that there were more passengers than the number
of seats. Thus, the seat assignments of the Vazquezes were given to waitlisted
passengers, and the Vazquezes, being members of the Marco Polo Club, were
upgraded from Business Class to First Class.
We note that in all their pleadings, the Vazquezes never denied that they were members
of Cathays Marco Polo Club. They knew that as members of the Club, they had priority
for upgrading of their seat accommodation at no extra cost when an opportunity arises.
But, just like other privileges, such priority could be waived. The Vazquezes should have
been consulted first whether they wanted to avail themselves of the privilege or would
consent to a change of seat accommodation before their seat assignments were given
to other passengers. Normally, one would appreciate and accept an upgrading, for it
would mean a better accommodation. But, whatever their reason was and however
odd it might be, the Vazquezes had every right to decline the upgrade and insist on the
Business Class accommodation they had booked for and which was designated in their
boarding passes. They clearly waived their priority or preference when they asked that
other passengers be given the upgrade. It should not have been imposed on them over
their vehement objection. By insisting on the upgrade, Cathay breached its contract of
carriage with the Vazquezes.
We are not, however, convinced that the upgrading or the breach of contract was
attended by fraud or bad faith. Thus, we resolve the second issue in the negative.
Bad faith and fraud are allegations of fact that demand clear and convincing proof.
They are serious accusations that can be so conveniently and casually invoked, and
that is why they are never presumed. They amount to mere slogans or mudslinging unless
convincingly substantiated by whoever is alleging them.
Fraud has been defined to include an inducement through insidious
machination. Insidious machination refers to a deceitful scheme or plot with an evil or
devious purpose. Deceit exists where the party, with intent to deceive, conceals or omits
to state material facts and, by reason of such omission or concealment, the other party
was induced to give consent that would not otherwise have been given.[7]
Bad faith does not simply connote bad judgment or negligence; it imports a dishonest
purpose or some moral obliquity and conscious doing of a wrong, a breach of a known
duty through some motive or interest or ill will that partakes of the nature of fraud.[8]
We find no persuasive proof of fraud or bad faith in this case. The Vazquezes were not
induced to agree to the upgrading through insidious words or deceitful machination or
through willful concealment of material facts. Upon boarding, Ms. Chiu told the
Vazquezes that their accommodations were upgraded to First Class in view of their
being Gold Card members of Cathays Marco Polo Club. She was honest in telling them
that their seats were already given to other passengers and the Business Class Section
was fully booked. Ms. Chiu might have failed to consider the remedy of offering the First
Class seats to other passengers. But, we find no bad faith in her failure to do so, even if
that amounted to an exercise of poor judgment.
Neither was the transfer of the Vazquezes effected for some evil or devious purpose. As
testified to by Mr. Robson, the First Class Section is better than the Business Class Section
in terms of comfort, quality of food, and service from the cabin crew; thus, the
difference in fare between the First Class and Business Class at that time was
$250.[9] Needless to state, an upgrading is for the better condition and, definitely, for the
benefit of the passenger.
We are not persuaded by the Vazquezes argument that the overbooking of the Business
Class Section constituted bad faith on the part of Cathay. Section 3 of the Economic
Regulation No. 7 of the Civil Aeronautics Board, as amended, provides:
Sec 3. Scope. This regulation shall apply to every Philippine and foreign air carrier with
respect to its operation of flights or portions of flights originating from or terminating at, or
serving a point within the territory of the Republic of the Philippines insofar as it denies
boarding to a passenger on a flight, or portion of a flight inside or outside the Philippines,
for which he holds confirmed reserved space.Furthermore, this Regulation is designed to
cover only honest mistakes on the part of the carriers and excludes deliberate and willful
acts of non-accommodation. Provided, however, that overbooking not exceeding 10%
of the seating capacity of the aircraft shall not be considered as a deliberate and willful
act of non-accommodation.
It is clear from this section that an overbooking that does not exceed ten percent is not
considered deliberate and therefore does not amount to bad faith.[10] Here, while there
was admittedly an overbooking of the Business Class, there was no evidence of
overbooking of the plane beyond ten percent, and no passenger was ever bumped off
or was refused to board the aircraft.
Now we come to the third issue on damages.
The Court of Appeals awarded each of the Vazquezes moral damages in the amount
of P250,000. Article 2220 of the Civil Code provides:
Article 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are justly
due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith.
Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury. Although incapable of pecuniary computation, moral damages may be
recovered if they are the proximate result of the defendants wrongful act or
omission.[11] Thus, case law establishes the following requisites for the award of moral
damages: (1) there must be an injury clearly sustained by the claimant, whether
physical, mental or psychological; (2) there must be a culpable act or omission factually
established; (3) the wrongful act or omission of the defendant is the proximate cause of
the injury sustained by the claimant; and (4) the award for damages is predicated on
any of the cases stated in Article 2219 of the Civil Code.[12]
Moral damages predicated upon a breach of contract of carriage may only be
recoverable in instances where the carrier is guilty of fraud or bad faith or where the
mishap resulted in the death of a passenger.[13] Where in breaching the contract of
carriage the airline is not shown to have acted fraudulently or in bad faith, liability for
damages is limited to the natural and probable consequences of the breach of the
obligation which the parties had foreseen or could have reasonably foreseen. In such a
case the liability does not include moral and exemplary damages. [14]
In this case, we have ruled that the breach of contract of carriage, which consisted in
the involuntary upgrading of the Vazquezes seat accommodation, was not attended by
fraud or bad faith. The Court of Appeals award of moral damages has, therefore, no leg
to stand on.
The deletion of the award for exemplary damages by the Court of Appeals is correct. It
is a requisite in the grant of exemplary damages that the act of the offender must be
accompanied by bad faith or done in wanton, fraudulent or malevolent
manner.[15] Such requisite is absent in this case. Moreover, to be entitled thereto the
claimant must first establish his right to moral, temperate, or compensatory
damages.[16] Since the Vazquezes are not entitled to any of these damages, the award
for exemplary damages has no legal basis. And where the awards for moral and
exemplary damages are eliminated, so must the award for attorneys fees.[17]
The most that can be adjudged in favor of the Vazquezes for Cathays breach of
contract is an award for nominal damages under Article 2221 of the Civil Code, which
reads as follows:
Article 2221 of the Civil Code provides:
Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by
him.
Worth noting is the fact that in Cathays Memorandum filed with this Court, it prayed only
for the deletion of the award for moral damages. It deferred to the Court of Appeals
discretion in awarding nominal damages; thus:
As far as the award of nominal damages is concerned, petitioner respectfully defers to
the Honorable Court of Appeals discretion. Aware as it is that somehow, due to the
resistance of respondents-spouses to the normally-appreciated gesture of petitioner to
upgrade their accommodations, petitioner may have disturbed the respondents-
spouses wish to be with their companions (who traveled to Hong Kong with them) at the
Business Class on their flight to Manila. Petitioner regrets that in its desire to provide the
respondents-spouses with additional amenities for the one and one-half (1 1/2) hour
flight to Manila, unintended tension ensued.[18]
Nonetheless, considering that the breach was intended to give more benefit and
advantage to the Vazquezes by upgrading their Business Class accommodation to First
Class because of their valued status as Marco Polo members, we reduce the award for
nominal damages to P5,000.
Before writing finis to this decision, we find it well-worth to quote the apt observation of
the Court of Appeals regarding the awards adjudged by the trial court:
We are not amused but alarmed at the lower courts unbelievable alacrity, bordering on
the scandalous, to award excessive amounts as damages. In their complaint, appellees
asked for P1 million as moral damages but the lower court awarded P4 million; they
asked for P500,000.00 as exemplary damages but the lower court cavalierly awarded a
whooping P10 million; they asked for P250,000.00 as attorneys fees but were awarded P2
million; they did not ask for nominal damages but were awarded P200,000.00. It is as if
the lower court went on a rampage, and why it acted that way is beyond all tests of
reason. In fact the excessiveness of the total award invites the suspicion that it was the
result of prejudice or corruption on the part of the trial court.
The presiding judge of the lower court is enjoined to hearken to the Supreme Courts
admonition in Singson vs. CA (282 SCRA 149 [1997]), where it said:
The well-entrenched principle is that the grant of moral damages depends upon the
discretion of the court based on the circumstances of each case. This discretion is limited
by the principle that the amount awarded should not be palpably and scandalously
excessive as to indicate that it was the result of prejudice or corruption on the part of the
trial court.
and in Alitalia Airways vs. CA (187 SCRA 763 [1990], where it was held:
Nonetheless, we agree with the injunction expressed by the Court of Appeals that
passengers must not prey on international airlines for damage awards, like trophies in a
safari. After all neither the social standing nor prestige of the passenger should
determine the extent to which he would suffer because of a wrong done, since the
dignity affronted in the individual is a quality inherent in him and not conferred by these
social indicators. [19]
We adopt as our own this observation of the Court of Appeals.
WHEREFORE, the instant petition is hereby partly GRANTED. The Decision of the Court of
Appeals of 24 July 2001 in CA-G.R. CV No. 63339 is hereby MODIFIED, and as modified,
the awards for moral damages and attorneys fees are set aside and deleted, and the
award for nominal damages is reduced to P5,000.
No pronouncement on costs.
SO ORDERED.
[G.R. No. 135802. March 3, 2000]
PRISCILLA L. TAN, petitioner, vs. NORTHWEST AIRLINES, INC., respondent.
DECISION
PARDO, J.:
Petitioner Priscilla L. Tan appeals via certiorari from the decision of the Court of
Appeals[1] affirming with modification[2] the decision of the trial court,[3] ordering
respondent to pay petitioner the following amounts: (1) P15,000.00, as actual damages;
(2) P100,000.00, as moral damages; (3) P50,000.00, as exemplary damages; (4)
P30,000.00, as and for attorney's fees; and (6) costs.
The case before the Court traces its roots from an action for damages for breach of
contract of air carrige for failure to deliver petitioner's baggages on the date of her
arrival filed on June 29, 1994 with the Regional Trial Court, Makati, Branch 150 against
respondent Northwest Airlines, Inc., a foreign corporation engaged in the business of air
transportation.
The antecedent facts are as follows:
On May 31, 1994, Priscilla L. Tan and Connie Tan boarded Northwest Airlines Flight 29 in
Chicago, U. S. A. bound for the Philippines, with a stop-over at Detroit, U. S. A. They
arrived at the Ninoy Aquino International Airport (NAIA) on June 1, 1994 at about 10:40 in
the evening.
Upon their arrival, petitioner and her companion Connie Tan found that their baggages
were missing. They returned to the airport in the evening of the following day and they
were informed that their baggages might still be in another plane in Tokyo, Japan.
On June 3, 1994, they recovered their baggages and discovered that some of its
contents were destroyed and soiled.
Claiming that they "suffered mental anguish, sleepless nights and great damage"
because of Northwest's failure to inform them in advance that their baggages would not
be loaded on the same flight they boarded and because of their delayed arrival, they
demanded from Northwest Airlines compensation for the damages they suffered. On
June 15, 1994 and June 22, 1994, petitioner sent demand letter to Northwest Airlines, but
the latter did not respond. Hence, the filing of the case with the regional trial court.
In its answer to the complaint, respondent Northwest Airlines did not deny that the
baggages of petitioners were not loaded on Northwest Flight 29. Petitioner's baggages
could not be carried on the same flight because of "weight and balance restrictions."
However, the baggages were loaded in another Northwest Airlines flight, which arrived
in the evening of June 2, 1994.
When petitioner received her baggages in damaged condition, Northwest offered to
either (1) reimburse the cost or repair of the bags; or (2) reimburse the cost for the
purchase of new bags, upon submission of receipts.
After due trial, on June 10, 1996, the trial court rendered decision finding respondent
Northwest Airlines, Inc. liable for damages, as follows:
"WHEREFORE, judgement is hereby rendered ordering the defendant to pay the plaintiff
the following amounts:
"1. P15,000.00, as actual damages;
"2. P100,000.00, as moral damages;
"3. P50,000.00, as exemplary damages;
"4. P30,000.00, as and for attorney's fees and
"5. Costs.
"SO ORDERED.
"Given this 10th day of June, 1996 at Makati City.
"ERNA FALLORAN ALIPOSA
"Judge"[4]
Respondent Northwest Airlines, Inc. appealed from the trial court's decision to the Court
of Appeals contending that the court a quo erred in finding it guilty of breach of
contract of carriage and of willful misconduct and awarded damages which had no
basis in fact or were otherwise excessive.
On September 30, 1998, the Court of Appeals promulgated its decision partially granting
the appeal by deleting the award of moral and exemplary damages and reducing the
attorney's fees, specifically providing that:
"WHEREFORE, PREMISES CONSIDERED, the appeal is hereby GRANTED partially. The
Decision of the lower court dated June 10, 1996 is AFFIRMED with the modification that
the award of moral and exemplary damages is deleted and the amount of attorney's
fees is reduced to ten thousand pesos (P10,000.00).
"No pronouncement as to costs.
"SO ORDERED."[5]
Hence, this appeal.[6]
The issue is whether respondent is liable for moral and exemplary damages for willful
misconduct and breach of the contract of air carriage.
The petition is without merit.
We agree with the Court of Appeals that respondent was not guilty of willful misconduct.
"For willful misconduct to exist there must be a showing that the acts complained of
were impelled by an intention to violate the law, or were in persistent disregard of one's
rights. It must be evidenced by a flagrantly or shamefully wrong or improper conduct." [7]
Contrary to petitioner's contention, there was nothing in the conduct of respondent
which showed that they were motivated by malice or bad faith in loading her
baggages on another plane. Due to weight and balance restrictions, as a safety
measure, respondent airline had to transport the baggages on a different flight, but with
the same expected date and time of arrival in the Philippines. As aptly explained by
respondent:
"To ensure the safety of each flight, Northwest's personnel determine every flight's
compliance with "weight and balance restrictions." They check the factors like weight of
the aircraft used for the flight gas input, passenger and crew load, baggage weight, all
in relation to the wind factor anticipated on the flight. If there is an overload, i.e., a
perceived safety risk, the aircraft's load will be reduced by off-loading cargo, which will
then be placed on the next available flight."[8]
It is admitted that respondent failed to deliver petitioner's luggages on time. However,
there was no showing of malice in such failure. By its concern for safety, respondent had
to ship the baggages in another flight with same date of arrival.
Hence, the Court of Appeals correctly held that respondent did not act in bad faith.[9]
"Bad faith does not simply connnote bad judgment or negligence, it imports a dishonest
purpose or some moral obliquity and conscious doing of a wrong, a breach of known
duty through some motive or interest or ill-will that partakes of the nature of fraud."[10]
"Where in breaching the contract of carriage the defendant airline is not shown to have
acted fraudulently or in bad faith, liability for damages is limited to the natural and
probable consequences of the breach of obligation which the parties had foreseen or
could have reasonably foreseen. In that case, such liability does not include moral and
exemplary damages."[11]
Consequently, we have no reason to reverse the decision of the Court of Appeals.
WHEREFORE, the Court DENIES the petition for lack of merit. The Court AFFIRMS the
decision of the Court of Appeals deleting, however, the award of attorney's fees.
No costs.
SO ORDERED.
G.R. No. 101538 June 23, 1992
AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, Augusto
Benedicto Santos, petitioner,
vs.
NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, respondents.
CRUZ, J.:
This case involves the Proper interpretation of Article 28(1) of the Warsaw Convention,
reading as follows:
Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the
territory of one of the High Contracting Parties, either before the court of the domicile of
the carrier or of his principal place of business, or where he has a place of business
through which the contract has been made, or before the court at the place of
destination.
The petitioner is a minor and a resident of the Philippines. Private respondent Northwest
Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A.
and licensed to do business and maintain a branch office in the Philippines.
On October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San
Francisco. U.S.A., for his flight from San Francisco to Manila via Tokyo and back. The
scheduled departure date from Tokyo was December 20, 1986. No date was specified
for his return to San Francisco. 1
On December 19, 1986, the petitioner checked in at the NOA counter in the San
Francisco airport for his scheduled departure to Manila. Despite a previous confirmation
and re-confirmation, he was informed that he had no reservation for his flight from Tokyo
to Manila. He therefore had to be wait-listed.
On March 12, 1987, the petitioner sued NOA for damages in the Regional Trial Court of
Makati. On April 13, 1987, NOA moved to dismiss the complaint on the ground of lack of
jurisdiction. Citing the above-quoted article, it contended that the complaint could be
instituted only in the territory of one of the High Contracting Parties, before:
1. the court of the domicile of the carrier;
2. the court of its principal place of business;
3. the court where it has a place of business through which the contract had been
made;
4. the court of the place of destination.
The private respondent contended that the Philippines was not its domicile nor was this
its principal place of business. Neither was the petitioner's ticket issued in this country nor
was his destination Manila but San Francisco in the United States.
On February 1, 1988, the lower court granted the motion and dismissed the case. 2 The
petitioner appealed to the Court of Appeals, which affirmed the decision of the lower
court. 3 On June 26, 1991, the petitioner filed a motion for reconsideration, but the same
was denied. 4 The petitioner then came to this Court, raising substantially the same issues
it submitted in the Court of Appeals.
The assignment of errors may be grouped into two major issues, viz:
(1) the constitutionality of Article 28(1) of the Warsaw Convention; and
(2) the jurisdiction of Philippine courts over the case.
The petitioner also invokes Article 24 of the Civil Code on the protection of minors.
I
THE ISSUE OF CONSTITUTIONALITY
A. The petitioner claims that the lower court erred in not ruling that Article 28(1) of the
Warsaw Convention violates the constitutional guarantees of due process and equal
protection.
The Republic of the Philippines is a party to the Convention for the Unification of Certain
Rules Relating to International Transportation by Air, otherwise known as the Warsaw
Convention. It took effect on February 13, 1933. The Convention was concurred in by the
Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of
accession was signed by President Elpidio Quirino on October 13, 1950, and was
deposited with the Polish government on November 9, 1950. The Convention became
applicable to the Philippines on February 9, 1951. On September 23, 1955, President
Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence
thereto. "to the end that the same and every article and clause thereof may be
observed and fulfilled in good faith by the Republic of the Philippines and the citizens
thereof." 5
The Convention is thus a treaty commitment voluntarily assumed by the Philippine
government and, as such, has the force and effect of law in this country.
The petitioner contends that Article 28(1) cannot be applied in the present case
because it is unconstitutional. He argues that there is no substantial distinction between
a person who purchases a ticket in Manila and a person who purchases his ticket in San
Francisco. The classification of the places in which actions for damages may be brought
is arbitrary and irrational and thus violates the due process and equal protection clauses.
It is well-settled that courts will assume jurisdiction over a constitutional question only if it is
shown that the essential requisites of a judicial inquiry into such a question are first
satisfied. Thus, there must be an actual case or controversy involving a conflict of legal
rights susceptible of judicial determination; the constitutional question must have been
opportunely raised by the proper party; and the resolution of the question is unavoidably
necessary to the decision of the case itself. 6
Courts generally avoid having to decide a constitutional question. This attitude is based
on the doctrine of separation of powers, which enjoins upon the departments of the
government a becoming respect for each other's acts.
The treaty which is the subject matter of this petition was a joint legislative-executive act.
The presumption is that it was first carefully studied and determined to be constitutional
before it was adopted and given the force of law in this country.
The petitioner's allegations are not convincing enough to overcome this presumption.
Apparently, the Convention considered the four places designated in Article 28 the
most convenient forums for the litigation of any claim that may arise between the airline
and its passenger, as distinguished from all other places. At any rate, we agree with the
respondent court that this case can be decided on other grounds without the necessity
of resolving the constitutional issue.
B. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of the
Warsaw Convention is inapplicable because of a fundamental change in the
circumstances that served as its basis.
The petitioner goes at great lengths to show that the provisions in the Convention were
intended to protect airline companies under "the conditions prevailing then and which
have long ceased to exist." He argues that in view of the significant developments in the
airline industry through the years, the treaty has become irrelevant. Hence, to the extent
that it has lost its basis for approval, it has become unconstitutional.
The petitioner is invoking the doctrine of rebus sic stantibus. According to Jessup, "this
doctrine constitutes an attempt to formulate a legal principle which would justify non-
performance of a treaty obligation if the conditions with relation to which the parties
contracted have changed so materially and so unexpectedly as to create a situation in
which the exaction of performance would be unreasonable." 7 The key element of this
doctrine is the vital change in the condition of the contracting parties that they could
not have foreseen at the time the treaty was concluded.
The Court notes in this connection the following observation made in Day v. Trans World
Airlines, Inc.: 8
The Warsaw drafters wished to create a system of liability rules that would cover all the
hazards of air travel . . . The Warsaw delegates knew that, in the years to come, civil
aviation would change in ways that they could not foresee. They wished to design a
system of air law that would be both durable and flexible enough to keep pace with
these changes . . . The ever-changing needs of the system of civil aviation can be
served within the framework they created.
It is true that at the time the Warsaw Convention was drafted, the airline industry was still
in its infancy. However, that circumstance alone is not sufficient justification for the
rejection of the treaty at this time. The changes recited by the petitioner were,
realistically, not entirely unforeseen although they were expected in a general sense
only. In fact, the Convention itself, anticipating such developments, contains the
following significant provision:
Article 41. Any High Contracting Party shall be entitled not earlier than two years after
the coming into force of this convention to call for the assembling of a new international
conference in order to consider any improvements which may be made in this
convention. To this end, it will communicate with the Government of the French
Republic which will take the necessary measures to make preparations for such
conference.
But the more important consideration is that the treaty has not been rejected by the
Philippine government. The doctrine of rebus sic stantibus does not operate
automatically to render the treaty inoperative. There is a necessity for a formal act of
rejection, usually made by the head of State, with a statement of the reasons why
compliance with the treaty is no longer required.
In lieu thereof, the treaty may be denounced even without an expressed justification for
this action. Such denunciation is authorized under its Article 39, viz:
Article 39. (1) Any one of the High Contracting Parties may denounce this convention by
a notification addressed to the Government of the Republic of Poland, which shall at
once inform the Government of each of the High Contracting Parties.
(2) Denunciation shall take effect six months after the notification of denunciation, and
shall operate only as regards the party which shall have proceeded to denunciation.
Obviously. rejection of the treaty, whether on the ground of rebus sic stantibus or
pursuant to Article 39, is not a function of the courts but of the other branches of
government. This is a political act. The conclusion and renunciation of treaties is the
prerogative of the political departments and may not be usurped by the judiciary. The
courts are concerned only with the interpretation and application of laws and treaties in
force and not with their wisdom or efficacy.
C. The petitioner claims that the lower court erred in ruling that the plaintiff must sue in
the United States, because this would deny him the right to access to our courts.
The petitioner alleges that the expenses and difficulties he will incur in filing a suit in the
United States would constitute a constructive denial of his right to access to our courts
for the protection of his rights. He would consequently be deprived of this vital guaranty
as embodied in the Bill of Rights.
Obviously, the constitutional guaranty of access to courts refers only to courts with
appropriate jurisdiction as defined by law. It does not mean that a person can go
to any court for redress of his grievances regardless of the nature or value of his claim. If
the petitioner is barred from filing his complaint before our courts, it is because they are
not vested with the appropriate jurisdiction under the Warsaw Convention, which is part
of the law of our land.
II
THE ISSUE OF JURISDICTION.
A. The petitioner claims that the lower court erred in not ruling that Article 28(1) of the
Warsaw Convention is a rule merely of venue and was waived by defendant when it did
not move to dismiss on the ground of improper venue.
By its own terms, the Convention applies to all international transportation of persons
performed by aircraft for hire.
International transportation is defined in paragraph (2) of Article 1 as follows:
(2) For the purposes of this convention, the expression "international transportation" shall
mean any transportation in which, according to the contract made by the parties, the
place of departure and the place of destination, whether or not there be a break in the
transportation or a transshipment, are situated [either] within the territories of two High
Contracting Parties . . .
Whether the transportation is "international" is determined by the contract of the parties,
which in the case of passengers is the ticket. When the contract of carriage provides for
the transportation of the passenger between certain designated terminals "within the
territories of two High Contracting Parties," the provisions of the Convention
automatically apply and exclusively govern the rights and liabilities of the airline and its
passenger.
Since the flight involved in the case at bar is international, the same being from the
United States to the Philippines and back to the United States, it is subject to the
provisions of the Warsaw Convention, including Article 28(1), which enumerates the four
places where an action for damages may be brought.
Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
authorities are sharply divided. While the petitioner cites several cases holding that
Article 28(1) refers to venue rather than jurisdiction, 9 there are later cases cited by the
private respondent supporting the conclusion that the provision is jurisdictional. 10
Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by
consent or waiver upon d court which otherwise would have no jurisdiction over the
subject-matter of an action; but the venue of an action as fixed by statute may be
changed by the consent of the parties and an objection that the plaintiff brought his suit
in the wrong county may be waived by the failure of the defendant to make a timely
objection. In either case, the court may render a valid judgment. Rules as to jurisdiction
can never be left to the consent or agreement of the parties, whether or not a
prohibition exists against their alteration. 11
A number of reasons tends to support the characterization of Article 28(1) as a
jurisdiction and not a venue provision. First, the wording of Article 32, which indicates the
places where the action for damages "must" be brought, underscores the mandatory
nature of Article 28(1). Second, this characterization is consistent with one of the
objectives of the Convention, which is to "regulate in a uniform manner the conditions of
international transportation by air." Third, the Convention does not contain any provision
prescribing rules of jurisdiction other than Article 28(1), which means that the phrase
"rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last
sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as
"jurisdictions," which, as such, cannot be left to the will of the parties regardless of the
time when the damage occurred.
This issue was analyzed in the leading case of Smith v. Canadian Pacific Airways,
Ltd., 12 where it was held:
. . . Of more, but still incomplete, assistance is the wording of Article 28(2), especially
when considered in the light of Article 32. Article 28(2) provides that "questions
of procedure shall be governed by the law of the court to which the case is submitted"
(Emphasis supplied). Section (2) thus may be read to leave for domestic decision
questions regarding the suitability and location of a particular Warsaw Convention case.
In other words, where the matter is governed by the Warsaw Convention, jurisdiction
takes on a dual concept. Jurisdiction in the international sense must be established in
accordance with Article 28(1) of the Warsaw Convention, following which the jurisdiction
of a particular court must be established pursuant to the applicable domestic law. Only
after the question of which court has jurisdiction is determined will the issue of venue be
taken up. This second question shall be governed by the law of the court to which the
case is submitted.
The petitioner submits that since Article 32 states that the parties are precluded "before
the damages occurred" from amending the rules of Article 28(1) as to the place where
the action may be brought, it would follow that the Warsaw Convention was not
intended to preclude them from doing so "after the damages occurred."
Article 32 provides:
Art. 32. Any clause contained in the contract and all special agreements entered into
before the damage occurred by which the parties purport to infringe the rules laid down
by this convention, whether by deciding the law to be applied, or by altering the rules as
to jurisdiction, shall be null and void. Nevertheless for the transportation of goods,
arbitration clauses shall be allowed, subject to this convention, if the arbitration is to take
place within one of the jurisdictions referred to in the first paragraph of Article 28.
His point is that since the requirements of Article 28(1) can be waived "after the
damages (shall have) occurred," the article should be regarded as possessing the
character of a "venue" and not of a "jurisdiction" provision. Hence, in moving to dismiss
on the ground of lack of jurisdiction, the private respondent has waived improper venue
as a ground to dismiss.
The foregoing examination of Article 28(1) in relation to Article 32 does not support this
conclusion. In any event, we agree that even granting arguendo that Article 28(1) is a
venue and not a jurisdictional provision, dismissal of the case was still in order. The
respondent court was correct in affirming the ruling of the trial court on this matter, thus:
Santos' claim that NOA waived venue as a ground of its motion to dismiss is not correct.
True it is that NOA averred in its MOTION TO DISMISS that the ground thereof is "the Court
has no subject matter jurisdiction to entertain the Complaint" which SANTOS considers as
equivalent to "lack of jurisdiction over the subject matter . . ." However, the gist of NOA's
argument in its motion is that the Philippines is not the proper place where SANTOS could
file the action — meaning that the venue of the action is improperly laid. Even assuming
then that the specified ground of the motion is erroneous, the fact is the proper ground
of the motion — improper venue — has been discussed therein.
Waiver cannot be lightly inferred. In case of doubt, it must be resolved in favor of non-
waiver if there are special circumstances justifying this conclusion, as in the petition at
bar. As we observed in Javier vs. Intermediate Court of Appeals: 13
Legally, of course, the lack of proper venue was deemed waived by the petitioners
when they failed to invoke it in their original motion to dismiss. Even so, the motivation of
the private respondent should have been taken into account by both the trial judge
and the respondent court in arriving at their decisions.
The petitioner also invokes KLM Royal Dutch Airlines v. RTC, 14 a decision of our Court of
Appeals, where it was held that Article 28(1) is a venue provision. However, the private
respondent avers that this was in effect reversed by the case of Aranas v. United
Airlines, 15 where the same court held that Article 28(1) is a jurisdictional provision.
Neither of these cases is binding on this Court, of course, nor was either of them
appealed to us. Nevertheless, we here express our own preference for the later case of
Aranas insofar as its pronouncements on jurisdiction conform to the judgment we now
make in this petition.
B. The petitioner claims that the lower court erred in not ruling that under Article 28(1) of
the Warsaw Convention, this case was properly filed in the Philippines, because Manila
was the destination of the plaintiff.
The Petitioner contends that the facts of this case are analogous to those in Aanestad v.
Air Canada. 16 In that case, Mrs. Silverberg purchased a round-trip ticket from Montreal
to Los Angeles and back to Montreal. The date and time of departure were specified
but not of the return flight. The plane crashed while on route from Montreal to Los
Angeles, killing Mrs. Silverberg. Her administratrix filed an action for damages against Air
Canada in the U.S. District Court of California. The defendant moved to dismiss for lack
of jurisdiction but the motion was denied thus:
. . . It is evident that the contract entered into between Air Canada and Mrs. Silverberg
as evidenced by the ticket booklets and the Flight Coupon No. 1, was a contract for Air
Canada to carry Mrs. Silverberg to Los Angeles on a certain flight, a certain time and a
certain class, but that the time for her to return remained completely in her power.
Coupon No. 2 was only a continuing offer by Air Canada to give her a ticket to return to
Montreal between certain dates. . . .
The only conclusion that can be reached then, is that "the place of destination" as used
in the Warsaw Convention is considered by both the Canadian C.T.C. and the United
States C.A.B. to describe at least two "places of destination," viz., the "place of
destination" of a particularflight either an "outward destination" from the "point of origin"
or from the "outward point of destination" to any place in Canada.
Thus the place of destination under Art. 28 and Art. 1 of the Warsaw Convention of the
flight on which Mrs. Silverberg was killed, was Los Angeles according to the ticket, which
was the contract between the parties and the suit is properly filed in this Court which has
jurisdiction.
The Petitioner avers that the present case falls squarely under the above ruling because
the date and time of his return flight to San Francisco were, as in the Aanestad case,
also left open. Consequently, Manila and not San Francisco should be considered the
petitioner's destination.
The private respondent for its part invokes the ruling in Butz v. British Airways, 17 where the
United States District Court (Eastern District of Pennsylvania) said:
. . . Although the authorities which addressed this precise issue are not extensive, both
the cases and the commentators are almost unanimous in concluding that the "place of
destination" referred to in the Warsaw Convention "in a trip consisting of several parts . . .
is the ultimate destination that is accorded treaty jurisdiction." . . .
But apart from that distinguishing feature, I cannot agree with the Court's analysis
in Aanestad; whether the return portion of the ticket is characterized as an option or a
contract, the carrier was legally bound to transport the passenger back to the place of
origin within the prescribed time and. the passenger for her part agreed to pay the fare
and, in fact, did pay the fare. Thus there was mutuality of obligation and a binding
contract of carriage, The fact that the passenger could forego her rights under the
contract does not make it any less a binding contract. Certainly, if the parties did not
contemplate the return leg of the journey, the passenger would not have paid for it and
the carrier would not have issued a round trip ticket.
We agree with the latter case. The place of destination, within the meaning of the
Warsaw Convention, is determined by the terms of the contract of carriage or,
specifically in this case, the ticket between the passenger and the carrier. Examination
of the petitioner's ticket shows that his ultimate destination is San Francisco. Although the
date of the return flight was left open, the contract of carriage between the parties
indicates that NOA was bound to transport the petitioner to San Francisco from Manila.
Manila should therefore be considered merely an agreed stopping place and not the
destination.
The petitioner submits that the Butz case could not have overruled the Aanestad case
because these decisions are from different jurisdictions. But that is neither here nor there.
In fact, neither of these cases is controlling on this Court. If we have preferred the Butz
case, it is because, exercising our own freedom of choice, we have decided that it
represents the better, and correct, interpretation of Article 28(1).
Article 1(2) also draws a distinction between a "destination" and an "agreed stopping
place." It is the "destination" and not an "agreed stopping place" that controls for
purposes of ascertaining jurisdiction under the Convention.
The contract is a single undivided operation, beginning with the place of departure and
ending with the ultimate destination. The use of the singular in this expression indicates
the understanding of the parties to the Convention that every contract of carriage has
one place of departure and one place of destination. An intermediate place where the
carriage may be broken is not regarded as a "place of destination."
C. The petitioner claims that the lower court erred in not ruling that under Art. 28(1) of the
Warsaw Convention, this case was properly filed in the Philippines because the
defendant has its domicile in the Philippines.
The petitioner argues that the Warsaw Convention was originally written in French and
that in interpreting its provisions, American courts have taken the broad view that the
French legal meaning must govern. 18 In French, he says, the "domicile" of the carrier
means every place where it has a branch office.
The private respondent notes, however, that in Compagnie Nationale Air France vs.
Giliberto, 19 it was held:
The plaintiffs' first contention is that Air France is domiciled in the United States. They say
that the domicile of a corporation includes any country where the airline carries on its
business on "a regular and substantial basis," and that the United States qualifies under
such definition. The meaning of domicile cannot, however, be so extended. The
domicile of a corporation is customarily regarded as the place where it is incorporated,
and the courts have given the meaning to the term as it is used in article 28(1) of the
Convention. (See Smith v. Canadian Pacific Airways, Ltd. (2d Cir. 1971), 452 F2d 798, 802;
Nudo v. Societe Anonyme Belge d' Exploitation de la Navigation Aerienne Sabena
Belgian World Airlines (E.D. pa. 1962). 207 F. Supp, 191; Karfunkel v. Compagnie
Nationale Air France (S.D.N.Y. 1977), 427 F. Suppl. 971, 974). Moreover, the structure of
article 28(1), viewed as a whole, is also incompatible with the plaintiffs' claim. The article,
in stating that places of business are among the bases of the jurisdiction, sets out two
places where an action for damages may be brought; the country where the carrier's
principal place of business is located, and the country in which it has a place of business
through which the particular contract in question was made, that is, where the ticket
was bought, Adopting the plaintiffs' theory would at a minimum blur these carefully
drawn distinctions by creating a third intermediate category. It would obviously
introduce uncertainty into litigation under the article because of the necessity of having
to determine, and without standards or criteria, whether the amount of business done by
a carrier in a particular country was "regular" and "substantial." The plaintiff's request to
adopt this basis of jurisdiction is in effect a request to create a new jurisdictional
standard for the Convention.
Furthermore, it was argued in another case 20 that:
. . . In arriving at an interpretation of a treaty whose sole official language is French, are
we bound to apply French law? . . . We think this question and the underlying choice of
law issue warrant some discussion
. . . We do not think this statement can be regarded as a conclusion that internal French
law is to be "applied" in the choice of law sense, to determine the meaning and scope
of the Convention's terms. Of course, French legal usage must be considered in arriving
at an accurate English translation of the French. But when an accurate English
translation is made and agreed upon, as here, the inquiry into meaning does not then
revert to a quest for a past or present French law to be "applied" for revelation of the
proper scope of the terms. It does not follow from the fact that the treaty is written in
French that in interpreting it, we are forever chained to French law, either as it existed
when the treaty was written or in its present state of development. There is no suggestion
in the treaty that French law was intended to govern the meaning of Warsaw's terms,
nor have we found any indication to this effect in its legislative history or from our study
of its application and interpretation by other courts. Indeed, analysis of the cases
indicates that the courts, in interpreting and applying the Warsaw Convention, have, not
considered themselves bound to apply French law simply because the Convention is
written in French. . . .
We agree with these rulings.
Notably, the domicile of the carrier is only one of the places where the complaint is
allowed to be filed under Article 28(1). By specifying the three other places, to wit, the
principal place of business of the carrier, its place of business where the contract was
made, and the place of destination, the article clearly meant that these three other
places were not comprehended in the term "domicile."
D. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of the
Warsaw Convention does not apply to actions based on tort.
The petitioner alleges that the gravamen of the complaint is that private respondent
acted arbitrarily and in bad faith, discriminated against the petitioner, and committed a
willful misconduct because it canceled his confirmed reservation and gave his reserved
seat to someone who had no better right to it. In short. the private respondent
committed a tort.
Such allegation, he submits, removes the present case from the coverage of the Warsaw
Convention. He argues that in at least two American cases, 21 it was held that Article
28(1) of the Warsaw Convention does not apply if the action is based on tort.
This position is negated by Husserl v. Swiss Air Transport Company, 22 where the article in
question was interpreted thus:
. . . Assuming for the present that plaintiff's claim is "covered" by Article 17, Article 24
clearly excludes any relief not provided for in the Convention as modified by the
Montreal Agreement. It does not, however, limit the kind of cause of action on which the
relief may be founded; rather it provides that any action based on the injuries specified
in Article 17 "however founded," i.e., regardless of the type of action on which relief is
founded, can only be brought subject to the conditions and limitations established by
the Warsaw System. Presumably, the reason for the use of the phrase "however
founded," in two-fold: to accommodate all of the multifarious bases on which a claim
might be founded in different countries, whether under code law or common law,
whether under contract or tort, etc.; and to include all bases on which a claim seeking
relief for an injury might be founded in any one country. In other words, if the injury
occurs as described in Article 17, any relief available is subject to the conditions and
limitations established by the Warsaw System, regardless of the particular cause of
action which forms the basis on which a plaintiff could seek
relief . . .
The private respondent correctly contends that the allegation of willful misconduct
resulting in a tort is insufficient to exclude the case from the comprehension of the
Warsaw Convention. The petitioner has apparently misconstrued the import of Article
25(l) of the Convention, which reads as follows:
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.
It is understood under this article that the court called upon to determine the
applicability of the limitation provision must first be vested with the appropriate
jurisdiction. Article 28(1) is the provision in the Convention which defines that jurisdiction.
Article 22 23 merely fixes the monetary ceiling for the liability of the carrier in cases
covered by the Convention. If the carrier is indeed guilty of willful misconduct, it can
avail itself of the limitations set forth in this article. But this can be done only if the action
has first been commenced properly under the rules on jurisdiction set forth in Article
28(1).
III
THE ISSUE OF PROTECTION TO MINORS
The petitioner calls our attention to Article 24 of the Civil Code, which states:
Art. 24. In all contractual property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts must be vigilant for his protection.
Application of this article to the present case is misplaced. The above provision assumes
that the court is vested with jurisdiction to rule in favor of the disadvantaged minor, As
already explained, such jurisdiction is absent in the case at bar.
CONCLUSION
A number of countries have signified their concern over the problem of citizens being
denied access to their own courts because of the restrictive provision of Article 28(1) of
the Warsaw Convention. Among these is the United States, which has proposed an
amendment that would enable the passenger to sue in his own domicile if the carrier
does business in that jurisdiction. The reason for this proposal is explained thus:
In the event a US citizen temporarily residing abroad purchases a Rome to New York to
Rome ticket on a foreign air carrier which is generally subject to the jurisdiction of the US,
Article 28 would prevent that person from suing the carrier in the US in a "Warsaw Case"
even though such a suit could be brought in the absence of the Convention.
The proposal was incorporated in the Guatemala Protocol amending the Warsaw
Convention, which was adopted at Guatemala City on March 8,
1971. 24 But it is still ineffective because it has not yet been ratified by the required
minimum number of contracting parties. Pending such ratification, the petitioner will still
have to file his complaint only in any of the four places designated by Article 28(1) of the
Warsaw Convention.
The proposed amendment bolsters the ruling of this Court that a citizen does not
necessarily have the right to sue in his own courts simply because the defendant airline
has a place of business in his country.
The Court can only sympathize with the petitioner, who must prosecute his claims in the
United States rather than in his own country at least inconvenience. But we are unable
to grant him the relief he seeks because we are limited by the provisions of the Warsaw
Convention which continues to bind us. It may not be amiss to observe at this point that
the mere fact that he will have to litigate in the American courts does not necessarily
mean he will litigate in vain. The judicial system of that country in known for its sense of
fairness and, generally, its strict adherence to the rule of law.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.
[G.R. No. 119706. March 14, 1996]
PHILIPPINE AIRLINES, INC., petitioner, vs. COURT OF APPEALS and GILDA C.
MEJIA, respondents.
DECISION
REGALADO, J.:
This is definitely not a case of first impression. The incident which eventuated in the
present controversy is a drama of common contentious occurrence between
passengers and carriers whenever loss is sustained by the former. Withal, the exposition
of the factual ambience and the legal precepts in this adjudication may hopefully
channel the assertiveness of passengers and the intransigence of carriers into the
realization that at times a bad extrajudicial compromise could be better than a good
judicial victory.
Assailed in this petition for review is the decision of respondent Court of Appeals in CA-
G.R. CV No. 42744[1] which affirmed the decision of the lower court[2] finding petitioner
Philippine Air Lines, Inc. (PAL) liable as follows:
ACCORDINGLY, judgment is hereby rendered ordering defendant Philippine Air Lines,
Inc., to pay plaintiff Gilda C. Mejia:
(1) P30,000.00 by way of actual damages of the microwave oven;
(2) P10,000.00 by way of moral damages;
(3) P20,000.00 by way of exemplary damages;
(4) P10,000.00 as attorneys fee;
all in addition to the costs of the suit.
Defendants counterclaim is hereby dismissed for lack of merit.[3]
The facts as found by respondent Court of Appeals are as follows:
On January 27, 1990, plaintiff Gilda C. Mejia shipped thru defendant, Philippine Airlines,
one (1) unit microwave oven, with a gross weight of 33 kilograms from San
Francisco, U.S.A. to Manila, Philippines. Upon arrival, however, of said article
in Manila, Philippines, plaintiff discovered that its front glass door was broken and the
damage rendered it unserviceable. Demands both oral and written were made by
plaintiff against the defendant for the reimbursement of the value of the damaged
microwave oven, and transportation charges paid by plaintiff to defendant
company. But these demands fell on deaf ears.
On September 25, 1990, plaintiff Gilda C. Mejia filed the instant action for damages
against defendant in the lower court.
In its answer, defendant Airlines alleged inter alia, by way of special and affirmative
defenses, that the court has no jurisdiction over the case; that plaintiff has no valid
cause of action against defendant since it acted only in good faith and in compliance
with the requirements of the law, regulations, conventions and contractual
commitments; and that defendant had always exercised the required diligence in the
selection, hiring and supervision of its employees.[4]
What had theretofore transpired at the trial in the court a quo is narrated as follows:
Plaintiff Gilda Mejia testified that sometime on January 27, 1990, she took defendants
plane from San Francisco, U.S.A. for Manila, Philippines (Exh. F). Amongst
her baggages (sic) was a slightly used microwave oven with the brand name Sharp
under PAL Air Waybill No. 0-79-1013008-3 (Exh. A). When shipped, defendants office
at San Francisco inspected it. It was in good condition with its front glass intact. She did
not declare its value upon the advice of defendants personnel at San Francisco.
When she arrived in Manila, she gave her sister Concepcion C. Dio authority to claim
her baggag(e) (Exh. G) and took a connecting flight for Bacolod City.
When Concepcion C. Dino claimed the baggag(e) (Exh. B) with defendant, then with
the Bureau of Customs, the front glass of the microwave oven was already broken and
cannot be repaired because of the danger of radiation. They demanded from
defendant thru Atty. Paco P30,000.00 for the damages although a brand new one costs
P40,000.00, but defendant refused to pay.
Hence, plaintiff engaged the services of counsel. Despite demand (Exh. E) by counsel,
defendant still refused to pay.
The damaged oven is still with defendant. Plaintiff is engaged in (the) catering and
restaurant business. Hence, the necessity of the oven. Plaintiff suffered sleepless nights
when defendant refused to pay her (for) the broken oven and claims P 10,000.00 moral
damages, P20,000.00 exemplary damages, P10,000.00 attorneys fees plus P300.00 per
court appearance and P15,000.00 monthly loss of income in her business beginning
February, 1990.
Defendant Philippine Airlines thru its employees Rodolfo Pandes and
Vicente Villaruz posited that plaintiffs claim was not investigated until after the filing of
the formal claim on August 13, 1990 (Exh. 6 also Exh. E). During the investigations, plaintiff
failed to submit positive proof of the value of the cargo. Hence her claim was denied.
Also plaintiffs claim was filed out of time under paragraph 12, a(1) of the Air Waybill
(Exh. A, also Exh. 1) which provides: (a) the person entitled to delivery must make a
complaint to the carrier in writing in case: (1) of visible damage to the goods,
immediately after discovery of the damage and at the latest within 14 days from the
receipt of the goods.[5]
As stated at the outset, respondent Court of Appeals similarly ruled in favor of private
respondent by affirming in full the trial courts judgment in Civil Case No. 6210, with costs
against petitioner.[6] Consequently, petitioner now impugns respondent appellate courts
ruling insofar as it agrees with (1) the conclusions of the trial court that since the air
waybill is a contract of adhesion, its provisions should be strictly construed against herein
petitioner; (2) the finding of the trial court that herein petitioners liability is not limited by
the provisions of the air waybill; and (3) the award by the trial court to private
respondent of moral and exemplary damages, attorneys fees and litigation expenses.
The trial court relied on the ruling in the case of Fieldmens Insurance Co., Inc. vs. Vda.
De Songco, et al.[7] in finding that the provisions of the air waybill should be strictly
construed against petitioner. More particularly, the court below stated its findings thus:
In this case, it is seriously doubted whether plaintiff had read the printed conditions at
the back of the Air Waybill (Exh. 1), or even if she had, if she was given a chance to
negotiate on the conditions for loading her microwave oven. Instead she was advised
by defendants employee at San Francisco, U.S.A., that there is no need to declare the
value of her oven since it is not brand new. Further, plaintiff testified that she immediately
submitted a formal claim for P30,000.00 with defendant. But their claim was referred from
one employee to another th(e)n told to come back the next day, and the next day,
until she was referred to a certain Atty. Paco. When they got tired and frustrated of
coming without a settlement of their claim in sight, they consulted a lawyer who
demanded from defendant on August 13, 1990(Exh. E, an[d] Exh. 6).
The conclusion that inescapably emerges from the above findings of fact is to concede
it with credence. x x x.[8]
Respondent appellate court approved said findings of the trial court in this manner:
We cannot agree with defendant-appellants above contention. Under our
jurisprudence, the Air Waybill is a contract of adhesion considering that all the provisions
thereof are prepared and drafted only by the carrier (Sweet Lines v. Teves, 83 SCRA
361). The only participation left of the other party is to affix his signature thereto (BPI
Credit Corporation vs. Court of Appeals, 204 SCRA 601; Saludo, Jr. vs. C.A., 207 SCRA
498; Maersk vs. Court of Appeals, 222 SCRA 108, among the recent cases). In the earlier
case of Angeles v. Calasanz, 135 SCRA 323, the Supreme Court ruled that the terms of a
contract (of adhesion) must be interpreted against the party who drafted the same.
x x x.[9]
Petitioner airlines argues that the legal principle enunciated in Fieldmens Insurance does
not apply to the present case because the provisions of the contract involved here are
neither ambiguous nor obscure. The front portion of the air waybill contains a simple
warning that the shipment is subject to the conditions of the contract on the dorsal
portion thereof regarding the limited liability of the carrier unless a higher valuation is
declared, as well as the reglementary period within which to submit a written claim to
the carrier in case of damage or loss to the cargo. Granting that the air waybill is a
contract of adhesion, it has been ruled by the Court that such contracts are not entirely
prohibited and are in fact binding regardless of whether or not respondent herein read
the provisions thereof. Having contracted the services of petitioner carrier instead of
other airlines, private respondent in effect negotiated the terms of the contract and thus
became bound thereby.[10]
Counsel for private respondent refutes these arguments by saying that due to her
eagerness to ship the microwave oven to Manila, private respondent assented to the
terms and conditions of the contract without any opportunity to question or change its
terms which are practically on a take-it-or-leave-it basis, her only participation therein
being the affixation of her signature. Further, reliance on the Fieldmens insurance case is
misplaced since it is not the ambiguity or obscurity of the stipulation that renders
necessary the strict interpretation of a contract of adhesion against the drafter, but the
peculiarity of the transaction wherein one party, normally a corporation, drafts all the
provisions of the contract without any participation whatsoever on the part of the other
party other than affixment of signature.[11]
A review of jurisprudence on the matter reveals the consistent holding of the Court that
contracts of adhesion are not invalid per se and that it has on numerous occasions
upheld the binding effect thereof.[12] As explained in Ong Yiu vs. Court of Appeals, et al.,
supra:
x x x. Such provisions have been held to be a part of the contract of carriage, and valid
and binding upon the passenger regardless of the latters lack of knowledge or assent to
the regulation. It is what is known as a contract of adhesion, in regards which it has been
said that contracts of adhesion wherein one party imposes a ready-made form of
contract on the other, as the plane ticket in the case at bar, are contracts not entirely
prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he
adheres, he gives his consent. x x x, a contract limiting liability upon an agreed valuation
does not offend against the policy of the law forbidding one from contracting against
his own negligence.
As rationalized in Saludo, Jr. vs. Court of Appeals, et al., supra:
x x x, it should be borne in mind that a contract of adhesion may be struck down as void
and unenforceable, for being subversive of public policy, only when the weaker party is
imposed upon in dealing with the dominant bargaining party and is reduced to the
alternative of taking it or leaving it, completely deprived of the opportunity to bargain
on equal footing. x x x.
but subject to the caveat that
x x x. Just because we have said that Condition No. 5 of the airway bill is binding upon
the parties to and fully operative in this transaction, it does not mean, and let this serve
as fair warning to respondent carriers, that they can at all times whimsically seek refuge
from liability in the exculpatory sanctuary of said Condition No. 5 x x x.
The peculiar nature of such contracts behooves the Court to closely scrutinize the
factual milieu to which the provisions are intended to apply. Thus, just as consistently and
unhesitatingly, but without categorically invalidating such contracts, the Court has
construed obscurities and ambiguities in the restrictive provisions of contracts of
adhesion strictly albeit not unreasonably against the drafter thereof when justified in light
of the operative facts and surrounding circumstances.[13]
We find nothing objectionable about the lower courts reliance upon
the Fieldmens Insurance case, the principles wherein squarely apply to the present
petition. The parallelism between the aforementioned case and this one is readily
apparent for, just as in the instant case, it is the binding effect of the provisions in a
contract of adhesion (an insurance policy in FieldmensInsurance) that is put to test.
A judicious reading of the case reveals that what was pivotal in the judgment of liability
against petitioner insurance company therein, and necessarily interpreting the provisions
of the insurance policy as ineffective, was the finding that the representations made by
the agent of the insurance company rendered it impossible to comply with the
conditions of the contract in question, rather than the mere ambiguity of its terms. The
extended pronouncements regarding strict construction of ambiguous provisions in an
adhesion contract against its drafter, which although made by the Court as an aside
but has perforce evolved into a judicial tenet over time, was actually an incidental
statement intended to emphasize the duty of the court to protect the weaker, as
against the more dominant, party to a contract, as well as to prevent the iniquitous
situation wherein the will of one party is imposed upon the other in the course of
negotiation.
Thus, there can be no further question as to the validity of the terms of the air waybill,
even if the same constitutes a contract of adhesion. Whether or not the provisions
thereof particularly on the limited liability of the carrier are binding on private
respondent in this instance must be determined from the facts and circumstances
involved vis-a-vis the nature of the provisions sought to be enforced, taking care that
equity and fair play should characterize the transaction under review.
On petitioners insistence that its liability for the damage to private respondents
microwave oven, if any, should be limited by the provisions of the air waybill, the lower
court had this to say:
By and large, defendants evidence is anchored principally on plaintiffs alleged failure to
comply with paragraph 12, a(1) (Exh. 1-C-2) of the Air waybill (Exh. A, also Exh. 1), by
filing a formal claim immediately after discovery of the damage. Plaintiff filed her formal
claim only on August 13, 1990 (Exh. 6, also Exh. E). And, failed to present positive proof on
the value of the damaged microwave oven.Hence, the denial of her claim.
This Court has misgivings about these pretensions of defendant.
xxx xxx xxx
Finally, the Court finds no merit to defendants contention that under the Warsaw
Convention, its liability if any, cannot exceed U.S. $20.00 based on weight as plaintiff did
not declare the contents of her baggage nor pay additional charges before
the flight.[14]
The appellate court declared correct the non-application by the trial court of the limited
liability of therein defendant-appellant under the Conditions of the Contract contained
in the air waybill , based on the ruling in Cathay Pacific Airways, Ltd. vs. Court of
Appeals, et al.,[15] which substantially enunciates the rule that while the Warsaw
Convention has the force and effect of law in the Philippines, being a treaty
commitment by the government and as a signatory thereto, the same does not operate
as an exclusive enumeration of the instances when a carrier shall be liable for breach of
contract or as an absolute limit of the extent of liability, nor does it preclude the
operation of the Civil Code or other pertinent laws.
Petitioner insists that both respondent court and the trial court erred in finding that
petitioners liability, if any, is not limited by the provisions of the air waybill, for, as
evidence of the contract of carriage between petitioner and private respondent, it
substantially states that the shipper certifies to the correctness of the entries contained
therein and accepts that the carriers liability is limited to US$20 per kilogram of goods
lost, damaged or destroyed unless a value is declared and a supplementary charge
paid. Inasmuch as no such declaration was made by private respondent, as she
admitted during cross-examination, the liability of petitioner, if any, should be limited to
28 kilograms multiplied by US$20, or $560. Moreover, the validity of these conditions has
been upheld in the leading case of Ong Yiu vs. Court of Appeals, et al., supra, and
subsequent cases, for being a mere reiteration of the limitation of liability under the.
Warsaw Convention, which treaty has the force and effect of law.[16]
It is additionally averred that since private respondent was merely advised, not ordered,
that she need not declare a higher value for her cargo, the final decision of refraining
from making such a declaration fell on private respondent and should not put the
petitioner in estoppel from invoking its limited liability.[17]
In refutation, private respondent explains that the reason for the absence of a
declaration of a higher value was precisely because petitioners personnel in San
Francisco, U.S.A.advised her not to declare the value of her cargo, which testimony has
not at all been rebutted by petitioner. This being so, petitioner is estopped from faulting
private respondent for her failure to declare the value of the microwave oven.[18]
The validity of provisions limiting the liability of carriers contained in bills of
lading have been consistently upheld for the following reason:
x x x. The stipulation in the bill of lading limiting the common carriers liability to the value
of goods appearing in the bill, unless the shipper or owner declares a greater value, is
valid and binding. The limitation of the carriers liability is sanctioned by the freedom of
the contracting parties to establish such stipulations, clauses, terms, or conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs
and public policy. x x x.[19]
However, the Court has likewise cautioned against blind reliance on adhesion contracts
where the facts and circumstances warrant that they should be disregarded.[20]
In the case at bar, it will be noted that private respondent signified an intention to
declare the value of the microwave oven prior to shipment, but was explicitly advised
against doing so by PALs personnel in San Francisco, U.S.A., as borne out by her
testimony in court:
xxx xxx xxx
Q Did you declare the value of the shipment?
A No. I was advised not to.
Q Who advised you?
A At the PAL Air Cargo.[21]
It cannot be denied that the attention of PAL through its personnel in San Francisco was
sufficiently called to the fact that private respondents cargo was highly susceptible to
breakage as would necessitate the declaration of its actual value. Petitioner had all the
opportunity to check the condition and manner of packing prior to acceptance for
shipment,[22] as well as during the preparation of the air waybill by PALs Acceptance
Personnel based on information supplied by the shipper,[23] and to reject the cargo if the
contents or the packing did not meet the companys required specifications. Certainly, And you could not show any document to the Court that would suggest that this
PAL could not have been otherwise prevailed upon to merely accept the cargo. baggage was denied admittance by your office at San Francisco?
While Vicente Villaruz, officer-in-charge of the PAL Import Section at the time of incident, WITNESS
posited that there may have been inadequate and improper packing of the
No, I cannot show.
cargo,[24] which by itself could be a ground for refusing carriage of the goods presented
for shipment, he nonetheless admitted on cross-examination that private respondents ATTY. VINCO
cargo was accepted by PAL in its San Francisco office:
Now, can you show any document that would suggest that there was
ATTY. VINCO insufficient pac(k)aging on this particular baggage from abroad?
So that, be that as it may, my particular concern is that, it is the PAL personnel WITNESS
that accepts the baggage?
No, sir.[25]
WITNESS
In response to the trial courts questions during the trial, he also stated that while the
Yes, sir. passengers declaration regarding the general or fragile character of the cargo is to a
certain extent determinative of its classification, PAL nevertheless has and exercises
ATTY. VINCO
discretion as to the manner of handling required by the nature of the cargo it accepts
Also, if he comes from abroad like in this particular case, it is the PAL personnel for carriage. He further opined that the microwave oven was only a general, not a
who accepts the baggage? fragile, cargo which did not require any special handling.[26]
WITNESS There is no absolute obligation on the part of a carrier to accept a cargo. Where a
common carrier accepts a cargo for shipment for valuable consideration, it takes the
Yes, sir.
risk of delivering it in good condition as when it was loaded. And if the fact of improper
ATTY. VINCO packing is known to the carrier or its personnel, or apparent upon observation but it
accepts the goods notwithstanding such condition, it is not relieved of liability for loss or
And the PAL personnel may or may not accept the baggage? injury resulting therefrom.[27]
WITNESS The acceptance in due course by PAL of private respondents cargo as packed and its
Yes, sir. advice against the need for declaration of its actual value operated as an assurance to
private respondent that in fact there was no need for such a declaration. Petitioner can
ATTY. VINCO hardly be faulted for relying on the representations of PALs own personnel.
According to what is stated as in the acceptance of the cargo, it is to the best interest In other words, private respondent Mejia could and would have complied with the
of the airlines, that is, he want(s) also that the airlines would be free from any conditions stated in the air waybill, i.e., declaration of a higher value and payment of
liability. Could that be one of the grounds for not admitting a baggage? supplemental transportation charges, entitling her to recovery of damages beyond the
WITNESS stipulated limit of US$20 per kilogram of cargo in the event of loss or damage, had she
not been effectively prevented from doing so upon the advice of PALs personnel for
Safety is number one (I) reasons best known to themselves.
xxx xxx xxx As pointed out by private respondent, the aforestated facts were not denied by PAL in
ATTY. VINCO any of its pleadings nor rebutted by way of evidence presented in the course of the trial,
and thus in effect it judicially admitted that such an advice was given by its personnel
So, this baggage was accepted and admitted in San Francisco? in San Francisco, U.S.A. Petitioner, therefore, is estopped from blaming private
respondent for not declaring the value of the cargo shipped and which would have
WITNESS
otherwise entitled her to recover a higher amount of damages. The Courts bidding in
Yes, sir. the Fieldmens Insurance case once again rings true:
ATTY. VINCO
x x x. As estoppel is primarily based on the doctrine of good faith and the avoidance of WITNESS
harm that will befall an innocent party due to its injurious reliance, the failure to apply it
Yes, sir. I personally visited Atty. Paco together with my auntie who was a former PAL
in this case would result in gross travesty of justice.
employee.
We likewise uphold the lower courts finding that private respondent complied with the
xxx xxx xxx
requirement for the immediate filing of a formal claim for damages as required in the air
waybill or, at least, we find that there was substantial compliance therewith. ATTY. VINCO
Private respondent testified that she authorized her sister, Concepcion Dio, to claim her So, what did you do, did you make a report or did you tell Atty. Paco of your scouting
cargo consisting of a microwave oven since the former had to take a connecting flight around for a possible replacement?
to Bacolod City on the very same afternoon of the day of her arrival.[28] As
instructed, Concepcion Dio promptly proceeded to PALs Import Section the next day to WITNESS
claim the oven. Upon discovering that the glass door was broken, she immediately filed I did call him back at his office. I made a telephone call.
a claim by way of the baggage freight claim[29] on which was duly annotated the
damage sustained by the oven.[30] ATTY. VINCO

Her testimony relates what took place thereafter: And what answer did Atty. Paco make after you have reported back to him?

ATTY. VINCO WITNESS

So, after that inspection, what did you do? They told me that they were going to process the claim based on the price that I gave
them but there was no definite result.
WITNESS
ATTY. VINCO
After that annotation placed by Mr. Villaruz, I went home and I followed it up the next
day with the Clerk of PAL cargo office. How many times did you go and see Atty. Paco regarding the claim of your sister?

ATTY. VINCO WITNESS

What did the clerk tell you? I made one personal visit and several follow-up calls. With Atty. Paco, I made one phone
call but I made several phone calls with his secretary or the clerk at PAL cargo office
WITNESS and I was trying to locate him but unfortunately, he was always out of his office.[31]
She told me that the claim was being processed and I made several phone calls after PAL claims processor, Rodolfo Pandes,* confirmed having received the baggage freight
that. I started my follow-ups February up to June 1990. claim on January 30, 1990[32] and the referral to and extended pendency of the private
ATTY. VINCO respondents claim with the office of Atty. Paco, to wit:

And what results did those follow-ups produce? ATTY. VINCO:

WITNESS Q And you did instruct the claimant to see the Claim Officer of the company, right?

All they said (was) that the document was being processed, that they were waiting for WITNESS:
Atty. Paco to report to the office and they could refer the matter to Atty. Paco. A Yes, sir.
ATTY. VINCO ATTY. VINCO:
Who is this Atty. Paco? Q And the Claim Officer happened to be Atty. Paco?
WITNESS WITNESS:
He was the one in-charge of approving our claim. A Yes, sir.
ATTY. VINCO ATTY. VINCO:
Were you able to see Atty. Paco?
Q And you know that the plaintiff thru her authorized representative Concepcion Dio,
who is her sister had many times gone to Atty. Paco, in connection with this claim of her
sister?
WITNESS:
A Yes, sir.
ATTY. VINCO:
Q As a matter of fact even when the complaint was already filed here in Court the
claimant had continued to call about the settlement of her claim with Atty. Paco, is that
correct?
xxx xxx xxx
WITNESS:
A Yes, sir.
ATTY. VINCO.
Q You know this fact because a personnel saw you in one of the pre-trial here when this
case was heard before the sala of Judge Moscardon, is that correct?
WITNESS:
A Yes.
ATTY. VINCO:
Q In other words, the plaintiff rather had never stop(ped) in her desire for your company
to settle this claim, right?
WITNESS
A Yes, sir.[33]
Considering the abovementioned incidents and private respondent Mejias own zealous
efforts in following up the claim,[34] it was clearly not her fault that the letter of demand
for damages could only be filed, after months of exasperating follow-up of the claim, on
August 13, 1990.[35] If there was any failure at all to file the formal claim within the
prescriptive period contemplated in the air waybill, this was largely because of PALs own
doing, the consequences of which cannot, in all fairness, be attributed to private
respondent.
Even if the claim for damages was conditioned on the timely filing of a formal claim,
under Article 1186 of the Civil Code that condition was deemed fulfilled, considering
that the collective action of PALs personnel in tossing around the claim and leaving it
unresolved for an indefinite period of time was tantamount to voluntarily preventing its
fulfillment. On grounds of equity, the filing of the baggage freight claim, which
sufficiently informed PAL of the damage sustained by private respondents cargo,
constituted substantial compliance with the requirement in the contract for the filing of a
formal claim.
All told, therefore, respondent appellate court did not err in ruling that the provision on
limited liability is not applicable in this case. We, however, note in passing that while the
facts and circumstances of this case do not call for the direct application of the
provisions of the Warsaw Convention, it should be stressed that, indeed, recognition of
the Warsaw Convention does not preclude the operation of the Civil Code and other
pertinent laws in the determination of the extent of liability of the common carrier.[36]
The Warsaw Convention, being a treaty to which the Philippines is a signatory, is as much
a part of Philippine law as the Civil Code, Code of Commerce and other municipal
special laws.[37] The provisions therein contained, specifically on the limitation of carriers
liability, are operative in the Philippines but only in appropriate situations.
Petitioner ascribes ultimate error in the award of moral exemplary damages and
attorneys fees in favor of private respondent in that other than the statement of the trial
court that petitioner acted in bad faith in denying private respondents claim, which was
affirmed by the Court of Appeals, there is no evidence on record that the same is
true. The denial of private respondents claim was supposedly in the honest belief that
the same had prescribed, there being no timely formal claim filed; and despite having
been given an opportunity to submit positive proof of the value of the damaged
microwave oven, no such proof was submitted. Petitioner insists that its failure to deliver
the oven in the condition in which it was shipped could hardly be considered as
amounting to bad faith.[38]
Private respondent counters that petitioners failure to deliver the microwave oven in the
condition in which it was received can be describe as gross negligence amounting to
bad faith, on the further consideration that it failed to prove that it exercised the
extraordinary diligence required by law, and that no explanation whatsoever was given
as to why the front glass of the oven was broken.[39]
The trial court justified its award of actual, moral and exemplary damages, and
attorneys fees in favor of private respondent in this wise:
Since the plaintiffs baggage destination was the Philippines, Philippine law governs the
liability of the defendant for damages for the microwave oven.
The provisions of the New Civil Code on common carriers are Article(s) 1733, 1735 and
1753 x x x.
xxx xxx xxx
In this case, defendant failed to overcome, not only the presumption but more
importantly, plaintiffs evidence that defendants negligence was the proximate cause of
the damages of the microwave oven.Further, plaintiff has established that defendant
acted in bad faith when it denied the formers claim on the ground that the formal claim
was filed beyond the period as provided in paragraph 12 (a-1) (Exh. 1-C-2) of the Air
Waybill (Exh. 1, also Exh A), when actually, Concepcion Dio, sister of plaintiff has
immediately filed the formal claim upon discovery of the damage.[40]
Respondent appellate court was in full agreement with the trial courts finding of bad
faith on the part of petitioner as a basis for the award of the aforestated damages,
declaring that:
As to the last assigned error, a perusal of the facts and law of the case reveals that the
lower courts award of moral and exemplary damages, attorneys fees and costs of suit to
plaintiff-appellee is in accordance with current laws and jurisprudence on the
matter. Indeed, aside from the fact that defendant-appellant acted in bad faith in
breaching the contract and in denying plaintiffs valid claim for damages, plaintiff-
appellee underwent profound distress, sleepless nights, and anxiety upon knowledge of
her damaged microwave oven in possession of defendant-appellant, entitling her to the
award of moral and exemplary damages (Cathay Pacific Airways,
Ltd. vs. C.A., supra; Arts. 2219 & 2221, New Civil Code), and certainly plaintiff-appellants
unjust refusal to comply with her valid demand for payment, thereby also entitling her to
reasonable attorneys fees [Art. 2208 (2) and (11), id.].[41]
It will be noted that petitioner never denied that the damage to the microwave oven
was sustained while the same was in its custody. The possibility that said damage was
due to causes beyond the control of PAL has effectively been ruled out since the entire
process in handling of the cargo - from the unloading thereof from the plane, the towing
and transfer to the PAL warehouse, the transfer to the Customs examination area, and its
release thereafter to the shipper - was done almost exclusively by, and with the
intervention or, at the very least, under the direct supervision of a responsible PAL
personnel.[42]
The very admissions of PAL, through Vicente Villaruz of its Import Section, as follows:
ATTY. VINCO
So that, you now claim, Mr. Witness, that from the time the cargo was unloaded from the
plane until the time it reaches the Customs counter where it was inspected, all the way,
it was the PAL personnel who did all these things?
WITNESS
Yes, however, there is also what we call the Customs storekeeper and the Customs
guard along with the cargo.
ATTY. VINCO
You made mention about a locator?
WITNESS
Yes, sir.
ATTY. VINCO
This locator, is he an employee of the PAL or the Customs?
WITNESS
He is a PAL employee.[43]
lead to the inevitable conclusion that whatever damage may have been sustained by
the cargo is due to causes attributable to PALs personnel or, at all events, under their
responsibility.
Moreover, the trial court underscored the fact that petitioner was not able to overcome
the statutory presumption of negligence in Article 1735 which, as a common carrier, it
was laboring under in case of loss, destruction or deterioration of goods, through proper
showing of the exercise of extraordinary diligence. Neither did it prove that the damage
to the microwave oven was because of any of the excepting causes under Article 1734,
all of the same Code. Inasmuch as the subject item was received in apparent good
condition, no contrary notation or exception having been made on the air waybill upon
its acceptance for shipment, the fact that it was delivered with a broken glass door
raises the presumption that PALs personnel were negligent in the carriage and handling
of the cargo.[44]
Furthermore, there was glaringly no attempt what so ever on the part of petitioner to
explain the cause of the damage to the oven. The unexplained cause of damage to
private respondents cargo constitutes gross carelessness or negligence which by itself
justifies the present award of damages.[45] The equally unexplained and inordinate delay
in acting on the claim upon referral thereof to the claims officer, Atty. Paco, and the
noncommittal responses to private respondents entreaties for settlement of her claim for
damages belies petitioners pretension that there was no bad faith on its part. This
unprofessional indifference of PALs personnel despite full and actual knowledge of the
damage to private respondents cargo, just to be exculpated from liability on pure
technicality and bureaucratic subterfuge, smacks of willful misconduct and insensitivity
to a passengers plight tantamount to bad faith[46] and renders unquestionable
petitioners liability for damages. In sum, there is no reason to disturb the findings of the
trial court in this case, especially with its full affirmance by respondent Court of Appeals.
On this note, the case at bar goes into the annals of our jurisprudence after six years and
recedes into the memories of our legal experience as just another inexplicable
inevitability. We will never know exactly how many man-hours went into the preparation,
litigation and adjudication of this simple dispute over an oven, which the parties will no
doubt insist they contested as a matter of principle. One thing, however, is certain. As
long as the first letter in principle is somehow outplaced by the peso sign, the courts will
always have to resolve similar controversies although mutual goodwill could have
dispensed with judicial recourse.
IN VIEW OF ALL OF THE FOREGOING, the assailed judgment of respondent Court of
Appeals is AFFIRMED in toto.
SO ORDERED.
PHILIPPINE AIRLINES, INC., petitioner, vs. COURT OF APPEALS, DR. JOSEFINO MIRANDA and
LUISA MIRANDA, respondents.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT OF AIR CARRIAGE; A RELATION
ATTENDED WITH PUBLIC DUTY; DISCOURTEOUS CONDUCT TOWARDS A PASSENGER GIVES
RISE FOR AN ACTION FOR DAMAGES. - The Court has time and again ruled, and it cannot
be over-emphasized, that a contract of air carriage generates a relation attended with
a public duty and any discourteous conduct on the part of a carriers employee toward
a passenger gives the latter an action for damages and, more so, where there is bad
faith. While it may be true that there was no direct evidence on record of blatant
rudeness on the part of PAL employees towards the Mirandas, the fact that private
respondents were practically compelled to haggle for accommodations, a situation
unbefitting persons of their stature, is rather demeaning and it partakes of discourtesy
magnified by PALs condescending attitude. Moreover, it cannot be denied that the PAL
employees herein concerned were definitely less than candid, to put it mildly, when they
withheld information from private respondents that they could actually be
accommodated in a hotel of their choice.
2. REMEDIAL LAW; EVIDENCE; FINDINGS OF THE TRIAL AND APPELLATE COURT ON THE
EXISTENCE OF BAD FAITH ON THE PART OF THE CARRIER, GENERALLY NOT DISTURBED ON
APPEAL. - It is settled that bad faith must be duly proved and not merely presumed. The
existence of bad faith, being a factual question, and the Supreme Court not being a
trier of facts, the findings thereon of the trial court as well as of the Court of Appeals shall
not be disturbed on appeal and are entitled to great weight and respect. Said findings
are final and conclusive upon the Supreme Court except, inter alia, where the findings
of the Court of Appeals and the trial court are contrary to each other.
3. ID.; ID.; ID.; CASE AT BAR. - It is evident that the issues raised in this petition are the
correctness of the factual findings of the Court of Appeals of bad faith on the part of
petitioner and the award of damages against it. This Court has consistently held that the
findings of the Court of Appeals and the other lower courts are as a rule binding upon it,
subject to certain exceptions created by case law. As nothing in the record indicates
any of such exceptions, the factual conclusions of the appellate court must be affirmed.
4. CIVIL LAW; DAMAGES; MORAL DAMAGES; RECOVERABLE IN A BREACH OF CONTRACT
ATTENDED WITH FRAUD OR BAD FAITH; INATTENTION TO AND LACK OF CARE FOR INTERESTS
OF PASSENGERS AMOUNTS TO BAD FAITH. - It is now firmly settled that moral damages
are recoverable in suits predicated on breach of a contract of carriage where it is
proved that the carrier was guilty of fraud or bad faith. Inattention to and lack of care
for the interests of its passengers who are entitled to its utmost consideration, particularly
as to their convenience, amount to bad faith which entitles the passenger to an award
of moral damages. What the law considers as bad faith which may furnish the ground
for an award of moral damages would be bad faith in securing the contract and in the
execution thereof, as well as in the enforcement of its terms, or any other kind of deceit.
Such unprofessional and prescribed conduct is attributable to petitioner airline in the
case at bar and the adverse doctrinal rule is accordingly applicable to it.
5. ID.; ID.; ID.; AWARDED TO COMPENSATE PLAINTIFFS INJURIES. - It must, of course, be
borne in mind that moral damages are not awarded to penalize the defendant but to
compensate the plaintiff for the injuries he may have suffered.
6. ID.; ID.; EXEMPLARY DAMAGES; AWARDED WHERE DEFENDANT ACTED IN WANTON,
FRAUDULENT AND OPPRESSIVE MANNER. - In a contractual or quasi-contractual
relationship, exemplary damages, on the other hand, may be awarded only if the
defendant had acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner.
7. ID.; ID.; ATTORNEYS FEES; AWARDED WHERE THERE IS A FINDING OF BAD FAITH; CASE AT
BAR. - Attorneys fees in the concept of damages may be awarded where there is a
finding of bad faith. The evidence on record amply sustains, and we correspondingly
find, that the awards assessed against petitioner on the aforestated items of damages
are justified and reasonable.
8. ID.; OBLIGATIONS AND CONTRACTS; CONTRACT OF AIR CARRIAGE; LIABILITY OF
CARRIER NOT LIMITED BY THE PROVISIONS OF WARSAW CONVENTION. - Although the
Warsaw Convention has the force and effect of law in this country, being a treaty
commitment assumed by the Philippine government, said convention does not operate
as an exclusive enumeration of the instances for declaring a carrier liable for breach of
contract of carriage or as an absolute limit of the extent of that liability. The Warsaw
Convention declares the carrier liable in the enumerated cases and under certain
limitations. However, it must not be construed to preclude the operation of the Civil
Code and pertinent laws. It does not regulate, much less exempt, the carrier from liability
for damages for violating the rights of its passengers under the contract of carriage,
especially if willful misconduct on the part of the carriers employees is found or
established. (Cathay Pacific Airways, Ltd. vs. Court of Appeals, et al., G.R. No. 60501,
March 5, 1993)
APPEARANCES OF COUNSEL
Siguion Reyna Montecillo & Ongsiako for petitioner.
Noel P. Catre for private respondents.
DECISION
REGALADO, J.:
In this appeal by certiorari, petitioner Philippine Airlines, Inc. (PAL) assails the decision of
respondent Court of Appeals in CA-G.R. CV No. 291471 which affirmed the judgment of
the trial court finding herein petitioner liable as follows:
Wherefore, premises considered, judgment is hereby rendered ordering the defendant,
Philippine Airlines or PAL, to pay to the plaintiffs, Dr. Josefino Miranda and Luisa Miranda,
the sum of P100,000.00 as moral damages; P30,000.00 as exemplary or corrective
damages; P 10,000.00 as attorneys fees; and the costs.2
The factual antecedents of the present petition reveal that sometime in May, 1988, Dr.
Josefino Miranda and his wife, Luisa, who were residents of Surigao City, went to
the United States of America on a regular flight of Philippine Airlines, Inc. (PAL). On June
19, 1988, after a stay of over a month there, they obtained confirmed bookings from
PALs San Francisco Office for PAL Flight PR 101 from San Francisco to Manila via Honolulu
on June 21, 1988; PAL Flight PR 851 from Manila to Cebu on June 24, 1988; and PAL Flight
PR 905 from Cebu to Surigao also on June 24, 1988.
Accordingly, on June 21, 1988, private respondents boarded PAL Flight PR 101 in San
Francisco with five (5) pieces of baggage. After a stopover at Honolulu, and upon arrival
in Manila on June 23, 1988, they were told by the PAL personnel that their baggage
consisting of two balikbayan boxes, two pieces of luggage and one fishing rod case
were off-loaded at Honolulu, Hawaii due to weight limitations. Consequently, private
respondents missed their connecting flight from Manila to Cebu City, as originally
scheduled, since they had to wait for their baggage which arrived the following
day, June 24, 1988, after their pre-scheduled connecting flight had left. They
consequently also missed their other scheduled connecting flight
from Cebu City to Surigao City.
On June 25, 1988, they departed for Cebu City and therefrom private respondents had
to transfer to PAL Flight 471 for Surigao City. On the way to Surigao City, the pilot
announced that they had to return to Mactan Airport due to some mechanical
problem. While at Mactan Airport, the passengers were provided by PAL with lunch and
were booked for the afternoon flight to Surigao City. However, said flight was also
canceled.
Since there were no more flights for Surigao City that day, private respondents asked to
be billeted at the Cebu Plaza Hotel where they usually stay whenever they happen to
be in Cebu City. They were, however, told by the PAL employees that they could not be
accommodated at said hotel supposedly because it was fully booked. Contrarily, when
Dr. Miranda called the hotel, he was informed that he and his wife could be
accommodated there. Although reluctant at first, PAL eventually agreed to private
respondents overnight stay at said hotel. Oscar Jereza, PAL duty manager, approved
the corresponding hotel authority with standard meals. It was only after private
respondents insistence that their meals be ordered a la carte that they were allowed to
do so by PAL provided that they sign for their orders.
Inasmuch as the shuttle bus had already left by the time private respondents were ready
to go to the hotel, PAL offered them P 150.00 to include the fare for the return trip to the
airport. Dr. Miranda asked for P 150.00 more as he and his wife, along with all of their
baggages, could not be accommodated in just one taxi, aside from the need for
tipping money for hotel boys. Upon refusal of this simple request, Dr. Miranda then
declared that he would forego the amenities offered by PAL. Thus, the voucher for P
150.00 and the authority for the hotel accommodations prepared by PAL were voided
due to private respondents decision not to avail themselves thereof.
To aggravate the muddled situation, when private respondents tried to retrieve their
baggage, they were told this time that the same were loaded on another earlier PAL
flight to Surigao City. Thus, private respondents proceeded to the hotel sans their
baggage and of which they were deprived for the remainder of their trip. Private
respondents were finally able to leave on board the first PAL flight to SurigaoCity only
on June 26, 1988. Thereafter, they instituted an action for damages which, after trial as
well as on appeal, was decided in their favor.
Petitioner PAL has come to us via the instant petition for review on certiorari, wherein it
challenges the affirmatory decision of respondent Court of Appeals 3 (1) for applying
Articles 2220, 2232 and 2208 of the Civil Code when it sustained the award of the court a
quo for moral and exemplary damages and attorneys fees despite absence of bad faith
on its part; and (2) for not applying the express provisions of the contract of carriage and
pertinent provisions of the Warsaw Convention limiting its liability to US$20.00 per kilo of
baggage.
1. Anent the first issue, petitioner argues that there was no bad faith on its part for while
there was admittedly a delay in fulfilling its obligation under the contract of carriage with
respect to the transport of passengers and the delivery of their baggage, such delay
was justified by the paramount consideration of ensuring the safety of its passengers. It
likewise maintains that its employees treated private respondents fairly and with courtesy
to the extent of acceding to most of their demands in order to mitigate the
inconvenience occasioned by the measures undertaken by the airline to ensure
passenger safety.4
It reiterated its position that the off-loading of private respondents baggage was due to
weight limitations, as lengthily explained by petitioner from an aeronautically technical
viewpoint,5 taking into consideration such variable factors as flight distance, weather, air
resistance, runway condition and fuel requirement. Given the variable weather
conditions, it claimed that the weight limitation for each flight can only be ascertained
shortly before take-off. While admittedly there would be a resulting inconvenience in the
accommodations of the passengers and the handling of their cargo, the same is
outweighed by the paramount concern for the safety of the flight.
Petitioner moreover impugns the Court of Appeals allegedly improper reliance on the
inaccurate interpretation of the testimony of PALs baggage service representative,
Edgar Mondejar,* that private respondents baggage were off-loaded to give
preference to baggage and/or cargo originating from Honolulu. PAL argues that
Mondejars knowledge of what transpired in Honolulu was merely based on the telex
report forwarded to PALs Manila station stating that the off-loading was due to weight
limitations.6
Petitioner enumerates the following incidents as indicative of its good faith in dealing
with private respondents: (1) The cancellation of the flight to Surigao City due to
mechanical/engine trouble was to ensure the safety of passengers and cargo; (2) PAL
offered to shoulder private respondents preferred accommodations, meals and
transportation while in Cebu City with more than the usual amenities given in cases of
flight disruption, and gave them priority in the following days flight to Surigao City; (3) PAL
employees did not act rudely towards private respondents and its managerial personnel
even gave them special attention; (4) It was reasonable for PAL to limit the
transportation expense to P150.00, considering that the fare between the airport and
the hotel was only P75.00, and they would be picked up by the shuttle bus from the
hotel to the airport, while the request for money for tips could not be justified;
and (5) The inadvertent loading of private respondents baggage on the replacement
flight to Surigao City was at most simple and excusable negligence due to the numerous
flight disruptions and large number of baggages on that day.
Petitioner strenuously, and understandably, insists that its employees did not lie to private
respondents regarding the want of accommodations at the latters hotel of preference.
The only reason why Cebu Plaza Hotel was not initially offered to them by PAL was
because of the earlier advice of the hotel personnel that not all the stranded PAL
passengers could be accommodated therein. It claimed that it was in accordance with
the airlines policy of housing all affected passengers in one location for easy
communication and transportation, which accommodations in this instance could be
provided by Magellan Hotel. However, upon insistence of the Mirandas on their
preference for Cebu Plaza Hotel, Jeremias Tumulak, PALs passenger relations officer, told
them that they could use the office phone and that if they could arrange for such
accommodation PAL would shoulder the expenses. This concession, so petitioner avers,
negates any malicious intent on its part.
Crucial to the determination of the propriety of the award of damages in this case is the
lower courts findings on the matter of bad faith, which deserves to be quoted at length:
These claims were reasonable and appeared to be supported by the evidence. Thus it
cannot be denied that plaintiffs had to undergo some personal inconveniences
in Manila for lack of their baggage. It is also highly probable that plaintiffs scheduled
return to Surigao City was upset because of their having to wait for one day for their
missing things. Consequently, it was quite evident that the off-loading of plaintiffs
baggage in Honolulu was the proximate cause of plaintiffs subsequent inconveniences
for which they claimed to have suffered social humiliation, wounded feelings, frustration
and mental anguish.
xxx xxx xxx
In the present case there was a breach of contract committed in bad faith by the
defendant airlines. As previously noted, plaintiffs had a confirmed booking on PAL Flight
PR 101 from San Francisco to Manila. Therefore plaintiffs were entitled to an assured
passage not only for themselves but for their baggage as well. They had a legal right to
rely on this.
The evidence showed that plaintiffs baggage were properly loaded and stowed in the
plane when it left San Francisco for Honolulu. The off-loading or bumping off by
defendant airlines of plaintiffs baggage to give way to other passengers or cargo was
an arbitrary and oppressive act which clearly amounted to a breach of contract
committed in bad faith and with malice. In the aforecited case, the Supreme Court
defined bad faith as a breach of a known duty through some motive of interest or ill will.
Self-enrichment or fraternal interest, and not personal ill will, may have been the motive,
but it is malice nevertheless (infra).
As correctly pointed out in the Memorandum for Plaintiffs dated June 18, 1990 (pp. 4-
5), the following excerpt from the testimony of Edgar Mondejar clearly demonstrated the
act of discrimination perpetrated by defendant on the herein plaintiffs (TSN, Edgar
Mondejar, Feb. 28, 1990, pp. 26-28), thus:
Q: Before a plane departs, your office will see to it the plane loads the exact weight
limitation insofar as the cargoes (sic) and passengers are concerned, is that correct?
A: Yes.
Q: And so with the PR 101 flight starting mainland USA, it complied with the weight
limitation, passengers and baggages (sic) limitation, is that correct?
A: Yes.
Q: In other words the trip from the mainland USA started in Hawaii to off-load cargoes
(sic), you complied with the weight limitation and so on?
A: Yes.
Q: But you are saying upon arriving in Honolulu certain containers were off-loaded?
A: Yes.
Q: That would be therefore some containers were off-loaded to give way to some other
containers starting from Honolulu towards Manila?
A: Yes.
Q: In other words Mr. Mondejar, preference was given to cargoes (sic) newly loaded at
Honolulu instead of the cargoes (sic) already from mainland USA, is that correct?
A: Yes.
The aforesaid testimony constituted a clear admission in defendants evidence of facts
amounting to a breach of contract in bad faith. This being so, defendant must be held
liable in damages for the consequences of its action.7 (Corrections indicated in original
text.)
The trial court further found that the situation was aggravated by the following incidents:
the poor treatment of the Mirandas by the PAL employees during the stopover at
Mactan Airport in Cebu; the cavalier and dubious response of petitioners personnel to
the Miranda spouses request to be billeted at the Cebu Plaza Hotel by denying the
same allegedly because it was fully booked, which claim was belied by the fact that Dr.
Miranda was easily able to arrange for accommodations thereat; and, the PAL
employees negligent, almost malicious, act of sending off the baggage of private
respondents to Surigao City, while they were still in Cebu, without any explanation for this
gross oversight.8
The Court of Appeals affirmed these findings of the trial court by stating that
While we recognize an airlines prerogative to off-load baggag(e) to conform with
weight limitations for the purpose of ensuring the safety of passengers, We, however,
cannot sanction the motion (sic) and manner it was carried out in this case.
It is uncontroverted that appellees baggag(e) were properly weighed and loaded in the
plane when it left San Francisco for Honolulu. When they reached Honolulu, they were
not informed that their baggag(e) would be off-loaded. Ironically, if the purpose of the
off-loading was to conform with the weight limitations, why were other containers
loaded in Honolulu? The real reason was revealed by Edgar Mondejar, baggage service
representative of the appellant. x x x9
xxx xxx xxx
As earlier noted, the off-loading of appellees baggag(e) was done in bad faith because
it was not really for the purpose of complying with weight limitations but to give undue
preference to newly-loaded baggag(e) in Honolulu. This was followed by another
mishandling of said baggag(e) in the twice-cancelled connecting flight from Cebu to
Surigao. Appellees sad experience was further aggravated by the misconduct of
appellants personnel in Cebu, who lied to appellees in denying their request to be
billeted at Cebu Plaza Hotel.10
The Court has time and again ruled, and it cannot be over-emphasized, that a contract
of air carriage generates a relation attended with a public duty and any discourteous
conduct on the part of a carriers employee toward a passenger gives the latter an
action for damages and, more so, where there is bad faith.11
It is settled that bad faith must be duly proved and not merely presumed. The existence
of bad faith, being a factual question, and the Supreme Court not being a trier of facts,
the findings thereon of the trial court as well as of the Court of Appeals shall not be
disturbed on appeal and are entitled to great weight and respect.12 Said findings are
final and conclusive upon the Supreme Court except, inter alia, where the findings of the
Court of Appeals and the trial court are contrary to each other.13
It is evident that the issues raised in this petition are the correctness of the factual findings
of the Court of Appeals of bad faith on the part of petitioner and the award of
damages against it. This Court has consistently held that the findings of the Court of
Appeals and the other lower courts are as a rule binding upon it, subject to certain
exceptions created by case law. As nothing in the record indicates any of such
exceptions, the factual conclusions of the appellate court must be affirmed. 14
It is now firmly settled that moral damages are recoverable in suits predicated on
breach of a contract of carriage where it is proved that the carrier was guilty of fraud or
bad faith.15 Inattention to and lack of care for the interests of its passengers who are
entitled to its utmost consideration, particularly as to their convenience, amount to bad
faith which entitles the passenger to an award of moral damages. What the law
considers as bad faith which may furnish the ground for an award of moral damages
would be bad faith in securing the contract and in the execution thereof, as well as in
the enforcement of its terms, or any other kind of deceit.16 Such unprofessional and
proscribed conduct is attributable to petitioner airline in the case at bar and the adverse
doctrinal rule is accordingly applicable to it.
In Cathay Pacific Airways, Ltd. vs. Court of Appeals, et al.,17 a case which is virtually on
all fours with the present controversy, we stated:
In the case at bar, both the trial court and the appellate court found that CATHAY was
grossly negligent and reckless when it failed to deliver the luggage of petitioner at the
appointed place and time. We agree. x x x. While the mere failure of CATHAY to deliver
respondents luggage at the agreed place and time did not ipso facto amount to willful
misconduct since the luggage was eventually delivered to private respondent, albeit
belatedly, We are persuaded that the employees of CATHAY acted in bad faith. x x x
x x x if the defendant airline is shown to have acted fraudulently or in bad faith, the
award of moral and exemplary damages is proper.
It must, of course, be borne in mind that moral damages are not awarded to penalize
the defendant but to compensate the plaintiff for the injuries he may have suffered. 18 In
a contractual or quasi-contractual relationship, exemplary damages, on the other hand,
may be awarded only if the defendant had acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner.19 Attorneys fees in the concept of damages may
be awarded where there is a finding of bad faith.20 The evidence on record amply
sustains, and we correspondingly find, that the awards assessed against petitioner on the
aforestated items of damages are justified and reasonable.
At this juncture, it may also be pointed out that it is PALs duty to provide assistance to
private respondents and, for that matter, any other passenger similarly inconvenienced
due to delay in the completion of the transport and the receipt of their baggage.
Therefore, its unilateral and voluntary act of providing cash assistance is deemed part of
its obligation as an air carrier, and is hardly anything to rave about. Likewise,
arrangements for and verification of requested hotel accommodations for private
respondents could and should have been done by PAL employees themselves, and not
by Dr. Miranda. It was rather patronizing of PAL to make much of the fact that they
allowed Dr. Miranda to use its office telephone in order to get a hotel room.
While it may be true that there was no direct evidence on record of blatant rudeness on
the part of PAL employees towards the Mirandas, the fact that private respondents were
practically compelled to haggle for accommodations, a situation unbefitting persons of
their stature, is rather demeaning and it partakes of discourtesy magnified by PALs
condescending attitude. Moreover, it cannot be denied that the PAL employees herein
concerned were definitely less than candid, to put it mildly, when they withheld
information from private respondents that they could actually be accommodated in a
hotel of their choice.
Indeed, the flambuoyant testimony of Oscar Jereza,* as PALs duty manager, merely
pays lip-service to, without putting into reality, the avowed company policy of invariably
making available and always granting the requests for the kind and standard of
accommodations demanded by and appropriate for its passengers.21 Certainly, a more
efficient service, and not a lackadaisical and disorganized system, is expected of the
nations flag carrier, especially on an international flight.
For, on the picayune matter of transportation expenses, PAL was obviously and unduly
scrimping even on the small amount to be given to the Mirandas. PAL failed to consider
that they were making arrangements for two paying round-trip passengers, not penny-
ante freeloaders, who had been inconvenienced by the numerous delays in flight
services and careless handling of their belongings by PAL. The niggardly attitude of its
personnel in this unfortunate incident, as well as their hair-splitting attempts at
justification, is a disservice to the image which our national airline seeks to project in its
costly advertisements.
We agree with the findings of the lower court that the request of private respondents for The congruent finding of both the trial court and respondent court that there was
monetary assistance of P300.00 for taxi fare was indeed justified, considering that there discriminatory off-loading being a factual question is, as stated earlier, binding upon and
were two of them and they had several pieces of luggage which had to be ferried can no longer be passed upon by this Court, especially in view of and in deference to
between the airport and the hotel. Also, the request for a small additional sum for tips is the affirmance of the same by respondent appellate court.
equally reasonable since tipping, especially in a first-rate hotel, is an accepted practice,
There was no error on the part of the Court of Appeals when it refused to apply the
of which the Court can take judicial notice. This is aside from the fact that private
provisions of the Warsaw Convention, for in the words of this Court in the
respondents, having just arrived from an extended trip abroad, had already run out of
aforequoted Cathay Pacific case:
Philippine currency, which predicament was exacerbated by their additional stay
in Manila due to the off-loading of their baggage. All these inconveniences should have x x x although the Warsaw Convention has the force and effect of law in this country,
warranted a commonsensical and more understanding treatment from PAL, considering being a treaty commitment assumed by the Philippine government, said convention
that private respondents found themselves in this unpleasant situation through no fault of does not operate as an exclusive enumeration of the instances for declaring a carrier
theirs. liable for breach of contract of carriage or as an absolute limit of the extent of that
liability. The Warsaw Convention declares the carrier liable in the enumerated cases and
2. On its second issue, petitioner avers that the express provisions on private respondents
under certain limitations. However, it must not be construed to preclude the operation of
tickets stipulating that liability for delay in delivery of baggage shall be limited to
the Civil Code and pertinent laws. It does not regulate, much less exempt, the carrier
US$20.00 per kilo of baggage delayed, unless the passenger declares a higher valuation,
from liability for damages for violating the rights of its passengers under the contract of
constitutes the contract of carriage between PAL and private respondents.
carriage, especially if willful misconduct on the part of the carriers
It further contends that these express provisions are in compliance with the provisions of
employees is found or established, which is the case before Us. x x x
the Warsaw Convention for the Unification of Rules Relating to International Carrier by
Air, to which the Philippines is a signatory. Thereunder, it is asserted that PAL flight PR 101 ACCORDINGLY, finding no reversible error, the challenged judgment of respondent
from San Francisco, U.S.A. to Manila, Philippines is an international transportation well Court of Appeals is hereby AFFIRMED in toto.
within the coverage of the Warsaw Convention.
SO ORDERED.
Petitioner obstinately insists on the applicability of the provisions of the Warsaw
Convention regarding the carriers limited liability since the off-loading was supposedly
justified and not attended by bad faith. Neither was there any claim for loss of baggage
as in fact private respondents baggage were, albeit delayed, received by them in good
condition.22
The court a quo debunked petitioners arguments by this holding:
The defense raised by defendant airlines that it can be held liable only under the terms
of the Warsaw Convention (Answer, Special and Affirmative Defenses, dated October
26, 1988) is of no moment. For it has also been held that Articles 17, 18 and 19 of the
Warsaw Convention of 1929 merely declare the air carriers liable for damages in the
cases enumerated therein, if the conditions specified are present. Neither the provisions
of said articles nor others regulate or exclude liability for other breaches of contract by
air carriers (Northwest Airlines, Inc. vs. Nicolas Cuenca, et al., 14 SCRA 1063).23
This ruling of the trial court was affirmed by respondent Court of Appeals, thus:
We are not persuaded. Appellees do not seek payment for loss of any baggage. They
are claiming damages arising from the discriminatory off-loading of their baggag(e).
That cannot be limited by the printed conditions in the tickets and baggage checks.
Neither can the Warsaw Convention exclude nor regulate the liability for other breaches
of contract by air carriers. A recognition of the Warsaw Convention does not preclude
the operation of our Civil Code and related laws in determining the extent of liability of
common carriers in breach of contract of carriage, particularly for willful misconduct of
their employees.24
[G.R. No. 120334. January 20, 1998]
NORTHWEST AIRLINES, INC. petitioner, vs. COURT OF APPEALS and ROLANDO I.
TORRES respondents.
[G.R. No. 120337. January 20, 1998]
ROLANDO I. TORRES, petitioner, vs. COURT OF APPEALS and NORTHWEST AIRLINES,
INC., respondents.
DECISION
DAVIDE, JR., J.:
Unable to accept the decision of the Court of Appeals in CA-G.R. CV No.
24068,[1] petitioner Northwest Airlines, Inc., (hereafter NORTHWEST) and petitioner
Rolando I. Torres (hereafter TORRES) filed separate petitions for review under Rule 45 of
the Rules of Court, which were docketed as G.R. No. 120334 and G.R. No. 120337 and
thereafter consolidated.
The antecedents of these cases were summarized by the Court of Appeals as follows: [2]
The plaintiff, [Torres], allegedly on a special mission to purchase firearms for the Philippine
Senate, purchased a round trip ticket from defendant [Northwest] for his travel to
Chicago and back to Manila. Via defendants flight, plaintiff left for United States.
After purchasing firearms and on the way back to Manila, plaintiff checked-in and
presented before defendants representative his two identical baggage, one of which
contained firearms.Defendants representative required the baggage to be opened and
the supporting evidence to be presented. Plaintiff showed them his authorization from
the Philippine government and the purchase receipts. Plaintiff thereafter sealed the
baggage and defendants representative placed a red tag on the baggage with
firearms with the marking "CONTAINS FIREARMS".
Upon arrival in Manila on June 22, 1988 plaintiff was not able to claim one of his
baggages. Plaintiff was informed by defendants representative that his baggage
containing firearms was recalled back to Chicago by defendant for US Customs
verification. A telex to this effect was shown to plaintiff.
On June 28, 1988, after being advised of the arrival of his other baggage, plaintiff
claimed and opened the baggage in the presence of defendants representative and
found out that the firearms were missing. A Personal Property Missing Damage Report
was issued by defendant to plaintiff.
On account of the continuous refusal of defendant to settle amicably, plaintiff then
prayed before the trial court that defendant be ordered to pay actual damages, moral
damages, temperate damages, exemplary damages and attorney's fees (pp. 1-6,
Complaint; p. 1, Record).
In its answer, defendant pleaded: a) that it was the agents from the US Customs who
ordered for the return of the weapons which plaintiff checked-in; b) that when opened
in the presence of US Customs agents the box contained no firearms; and c) that since
the baggage which was returned back to Chicago did not contain any firearms, then
the baggage which plaintiff received upon arrival in Manila must have contained the
firearms (pp. 3-5, Answer; pp. 32-34, Record).
After plaintiff had presented its evidence, defendant filed a "Motion to Dismiss (By Way
of Demurrer to the Evidence with Motion for Summary Judgment)" dated April 24, 1989.
In said motion, defendant moved for the dismissal of the complaint in so far as it prays for
moral, exemplary and temperate damages and attorney's fees and further moved for
"Summary Judgment to be rendered awarding the plaintiff $640.00 as actual damages."
(Motion to Dismiss By Way of Demurrer to Evidence with Motion for Summary Judgment;
p. 115, Records).
Plaintiff on the other hand, offered no objection to the submission of the case for
decision but insisted that he is entitled to damages as prayed for (p. 1, Comment on
Defendant's Motion to Dismiss by Way of Demurrer to Evidence with Summary Judgment;
pp. 136-169, Records).
We add to this summary the following relevant matters:
NORTHWEST argued in its motion for summary judgment that the Warsaw Convention
and the contract of carriage limited its liability to US$640 and that the evidence
presented by TORRES did not entitle him to moral, exemplary, and temperate damages
and attorneys fees.[3]
Instead of just ruling on NORTHWESTs Motion to Dismiss (By Way of Demurrer to Evidence)
with Motion for Summary Judgment, which it considered submitted for resolution in the
order of 14 June 1989,[4] the trial court rendered on 13 September 1989 a full-blown
decision[5] ordering NORTHWEST to pay TORRES the following amounts:
1. The amount of $9,009.32, with legal interest thereon from the date of the filing of the
complaint, in its peso equivalent at the official rate of exchange at the time payment is
made, representing the value of the goods lost by the plaintiff;
2. The amount of P100,000.00 by way of attorney's fees;
3. The amount of P5,181.09 as filing fees paid by the plaintiff and the amount
of P20,000.00 for expenses of litigation, representing travel expenses and hotel
accommodations of plaintiff's counsels; and
4. The amount of P50,000.00 as moral damages.
The award of US$9,009.32, representing the value of the lost firearms, was grounded on
the trial courts finding that the act of [NORTHWESTs] personnel in Tokyo or Narita Airport
in just guessing which baggage contained the firearms was careless and imprudent,
amounting to careless disregard for the safety of the luggage of
the passenger. According to the trial court, such act constituted willful misconduct
which brought the case beyond the application of Section 22(2) of the Warsaw
Convention, thereby depriving NORTHWEST of the limitation of the liability provided for in
said section.
The awards of attorneys fees and expenses of litigation were premised on NORTHWESTs
having ignored the demands of TORRES forcing the latter to litigate in order to assert his
right. TORRES was also awarded moral damages because of the inconvenience, anxiety
and worry he suffered by reason of NORTHWESTs unjustifiable refusal to settle his claim.
Both TORRES and NORTHWEST appealed from the decision to the Court of Appeals,
which docketed the case as CA-G.R. CV No. 24068. Torres assailed the failure of the trial
court to award the actual, moral, and exemplary damages prayed for by
him.[6] Northwest, on the other hand, alleged that in prematurely resolving the case on
the merits the court prevented it from presenting evidence, thereby denying it due
process; and that even assuming that the trial court could resolve the entire case on the
merits, it erred in awarding damages, attorneys fees, and expenses of litigation. [7]
In its Decision[8] of 14 September 1994, the Court of Appeals sustained the trial courts
judgment that TORRES was entitled to actual damages, since NORTHWEST had, in effect,
admitted the loss of the firearms when it insisted that its liability was limited to $9.07 per
pound or $20 per kilo. The appellate court then concluded that NORTHWESTs guessing of
which luggage contained the firearms amounted to willful misconduct under Section
25(1) of the Warsaw Convention which entitled TORRES to claim actual damages in
excess of the limitation provided for under Section 22(2) of said Convention.
Nevertheless, the Court of Appeals held that while the trial court properly ruled on the
right of TORRES to actual damages, it erred in determining by way of summary judgment
the amount of damages; for under Section 3 of Rule 34 of the Rules of Court, a summary
judgment may be rendered upon proper motion except as to the amount of damages.
As to the trial courts act of disposing of the entire case by way of summary judgment,
the Court of Appeals noted that NORTHWEST categorically moved for summary
judgment only on the issue of actual damages, but not on the claims for moral damages
and attorneys fees. NORTHWEST moved for the dismissal of the latter claims by way of
demurrer to evidence. That being so, the trial court could not, by way of summary
judgment, dispose of the case on its entirety. Section 2 of Rule 34 of the Rules of Court
required that summary judgment should be issued only after the motion therefor has
been heard. Since there was no such motion as to the claims for moral damages and
attorneys fees, no summary judgment thereon could be made.
Anent the demurrer to evidence, the Court of Appeals held that the trial court had to
either grant or deny it. If granted, no award therefor could have been validly made. If
denied, then under Section 1 of Rule 35 of the Rules of Court, NORTHWEST should have
been allowed to present its evidence, as it was not deemed to have waived that
right. This section provided:
SECTION 1. Effect of judgment on demurrer to evidence. -- After the plaintiff has
completed the presentation of his evidence, the defendant without waiving his right to
offer evidence in the event the motion is not granted, may move for a dismissal on the
ground that upon facts and the law the plaintiff has shown no right to relief. However, if
the motion is granted and order of dismissal is reversed on appeal, the movant loses his
right to present evidence in his behalf.[9]
The Court of Appeals then held that since the demurrer was impliedly denied by the trial
court, NORTHWEST should have been allowed to present its evidence in accordance
with the above rule.
Accordingly, the Court of Appeals affirmed the trial courts finding as to the right of
TORRES to actual damages but set aside the rest of the appealed decision. It then
remanded the case to the court a quo for further proceedings.
On 23 May 1995, the Court of Appeals denied[10] NORTHWESTs motion for a partial
reconsideration of the decision.
Hence, the present petitions.
NORTHWEST contests the right of TORRES to actual damages on the following
grounds: (1) the loss of firearms was disputed; (2) the finding of willful misconduct was
arbitrary; and (3) TORRES failed to produce a United States license for the shipment of
the firearms; hence, the importation was illegal and no damages could arise therefrom.
TORRES, on the other hand, claims that the Court of Appeals erred (1) in setting aside the
appealed decision of the court a quo as to the awards of damages, attorneys fees, and
cost of suit; (2) in remanding the case to the court a quo for further proceedings; and (3)
in failing to award other damages for breach of contract and willful misconduct
committed by Northwest for mishandling the cargo.
NORTHWESTs Motion to Dismiss (By Way of Demurrer to Evidence) with Motion for
Summary Judgment involved two distinct and separate processes, viz: (1) demurrer to
evidence, which was then governed by Rule 35, now by Rule 33; and (2) motion for
summary judgment, which was then governed by Rule 34, now Rule 35, of the Rules of
Court. The subject of the demurrer were the claims for moral, exemplary, and temperate
damages and attorneys fees; while the target of the motion for summary judgment was
the claim for actual damages.
We agree with the Court of Appeals in its holding that the trial court erred in deciding
the entire case on its merits. Indeed, as to the demurrer to evidence, the trial court
should have been solely guided by the procedure laid down in the abovementioned
rule on demurrer to evidence. It had no choice other than to grant or to deny the
demurrer. It could not, without committing grave abuse of discretion amounting to
excess of jurisdiction, deny the motion and then forthwith grant TORRES claims on a
finding that TORRES has established a preponderance of evidence in support of such
claims. In the instant case, the trial court did just that insofar as moral damages,
attorneys fees, and expenses of litigation were concerned.What it should have done
was to merely deny the demurrer and set a date for the reception of NORTHWESTs
evidence in chief.
As to the motion for summary judgment, both the trial court and the Court of Appeals
were in error . Summary judgments were formerly governed by Rule 34 of the Rules of
Court. The rule is now Rule 35 of the 1987 Rules of Civil Procedure with the amendments
allowing the parties to submit not only affidavits but also depositions or admissions in
support of their respective contentions.[11] Motions for summary judgment may be filed
by the claimant or by the defending party. Sections 1, 2, and 3 of the old Rule 34, the
governing law in this case, provided as follows:
SECTION 1. Summary judgment for claimant. -- A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the
pleading in answer thereto has been served, move with supporting affidavits for a We, however, agree with both the trial court and the Court of Appeals that NORTHWESTs
summary judgment in his favor upon all or any part thereof. liability for actual damages may not be limited to that prescribed in Section 22(2) of the
Warsaw Convention. In Alitalia v. Intermediate Appellate Court,[15] we held:
SEC. 2. Summary judgment for defending party. -- A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any time, The [Warsaw] Convention does not operate as an exclusive enumeration of the
move with supporting affidavits for a summary judgment in his favor as to all or any part instances of an airlines liability, or as an absolute limit of the extent of that liability. Such a
thereof. proposition is not borne out by the language of the Convention, as this Court has now,
and at an earlier time, pointed out. Moreover, slight reflection readily leads to the
SEC. 3. Motion and proceedings thereon. -- The motion shall be served at least ten (10)
conclusion that it should be deemed a limit of liability only in those cases where the
days before the time specified for the hearing. The adverse party prior to the day of
cause of the death or injury to person, or destruction, loss or damage to property or
hearing may serve opposing affidavits. After the hearing, the judgment sought shall be
delay in its transport is not attributable to or attended by any willful misconduct, bad
rendered forthwith if the pleadings, depositions, and admissions on file together with the
faith, recklessness, or otherwise improper conduct on the part of any official or
affidavits, show that, except as to the amount of damages, there is no genuine issue as
employee for which the carrier is responsible, and there is otherwise no special or
to any material fact and that the moving party is entitled to a judgment as a matter of
extraordinary form of resulting injury. The Conventions provisions, in short, do not regulate
law.
or exclude liability for other breaches of contract by the carrier or misconduct of its
NORTHWEST, the defending party, moved for summary judgment on the claim for actual officers and employees, or for some particular or exceptional type of damage.
damages after TORRES had presented his evidence in chief. This was allowed by Section
IN VIEW WHEREOF, judgment is hereby rendered (1) PARTLY GRANTING the petition in
2 where the motion may be filed at any time, as distinguished from section 1 where
G.R. No. 120334 by setting aside that portion of the challenged decision of the Court of
the claimant, like TORRES, may file the motion at any time after the answer is filed.
Appeals in CA-G.R. CV No. 24068 affirming the summary judgment as to the right of
Summary judgment is allowed if, except as to the amount of damages, there is no respondent ROLANDO I. TORRES to actual damages; (2) DENYING for want of merit the
genuine issue as to any material fact and the moving party is entitled to a judgment as a petition in G.R. No. 120337; and (3) REMANDING this case to the trial court for the
matter of law. reception of the evidence for Northwest Airlines, Inc. in Civil Case No. 88-46117 and,
thereafter, for the rendition of the judgment therein on the merits.
In this case, NORTHWEST denied in its Answer the material allegations in the complaint
and asserted, in fact, that it was not liable for actual damages because the box No pronouncement as to costs.
containing the alleged lost firearms was the one received by TORRES when he arrived in
SO ORDERED.
Manila. It likewise contended that, even granting that the firearms were lost, its liability
was limited by the Warsaw Convention and the contract of transportation to $9.07 per
pound, or a total of $640 as the box weighed 70 pounds.[12] It also denied having acted
fraudulently or in bad faith.[13]
In thus submitting for summary judgment the matter of its liability only to the maximum
allowed in Section 22(2) of the Warsaw Convention, NORTHWEST was deemed to have
hypothetically admitted arguendo that the firearms were lost. It did not waive the
presentation of evidence that it was not in fact liable for the alleged loss of firearms. And
even if it were so liable, NORTHWEST could still prove at the appropriate time that it was
not liable beyond the maximum provided in said Section 22(2). Notably, TORRES prayed
for actual damages in the amounts of (1) $9,009.32 representing the value of the lost
firearms; and (2) P39,065[14] representing the cost of his plane tickets.
Concretely then, there remained a genuine issue on the fact and amount of actual
damages. The motion for summary judgment was not therefore in order. NORTHWEST
must have resorted to it, in like manner as it did in filing the demurrer, to delay the
progress of the trial of the case. Verily, it was grave abuse of discretion on the part of the
trial court to grant such motion and award TORRES actual damages commensurate to
the value of the firearms and based on his evidence alone.
[G.R. No. 122308. July 8, 1997]
PURITA S. MAPA, CARMINA S. MAPA and CORNELIO P. MAPA, petitioners, vs. COURT OF
APPEALS and TRANS-WORLD AIRLINES INC., respondents.
DECISION
DAVIDE, JR., J.:
The main issue in this petition for review under Rule 45 of the Rules of Court is the
applicability of Article 28(1) of the Warsaw Convention,[1] which provides as follows:
ARTICLE 28. (1) An action for damages must be brought, at the option of the plaintiff, in
the territory of one of the High Contracting Parties, either before the court of the
domicile of the carrier or of his principal place of business, or where he has a place of
business through which the contract has been made, or before the court at the place of
destination.
We are urged by the petitioners to reverse the 31 May 1995 Decision of the Court of
Appeals in CA-G.R. CV No. 39896[2] affirming the 24 July 1992 Order of the Regional Trial
Court of Quezon City, Branch 102, which dismissed Civil Case No. Q-91-9620[3] on the
ground of lack of jurisdiction in view of the aforementioned Article 28(1) of the Warsaw
Convention.
The antecedent facts, as summarized by the Court of Appeals, are as follows:
Plaintiffs Cornelio P. Mapa and Purita S. Mapa are respectable members of the
society. Mr. Mapa is an established businessman and currently the Regional General
Manager of Akerlund and Rausing, a multinational packaging material manufacturer
based in Manila. He was previously the Senior Vice President of Phimco Industries, an
affiliate company of Swedish Match Company. Mrs. Mapa is a successful
businesswoman engaged in the commercial transactions of high value antique and
oriental arts decor items originating from Asian countries. Carmina S. Mapa is the
daughter of plaintiffs Purita and Cornelio and is a graduate of the International School in
Bangkok, Thailand, now presently enrolled at the Boston University where she is majoring
in communication.
Plaintiffs Mapa entered into contract of air transportation with defendant TWA as
evidenced by TWA ticket Nos. 015:9475:153:304 and 015:9475:153:305, purchased in
Bangkok, Thailand. Said TWA tickets are for Los Angeles-New York-Boston-St. Louis-
Chicago ....
Domicile of carrier TWA is Kansas City, Missouri, USA. Its principal place of business is
Kansas City, Missouri, USA. TWAs place of business through which the contracts were
made is Bangkok, Thailand.The place of destination is Chicago, USA.
On August 10, 1990, plaintiffs Carmina and Purita left Manila on board PAL flight No. 104
for Los Angeles. Carmina was to commence schooling and thus was accompanied by
Purita to assist her in settling down at the University.
They arrived in Los Angeles on the same date and stayed there until August 14, 1990
when they left for New York City.
On August 14, 1990, plaintiffs Purita and Carmina S. Mapa arrived at the John F. Kennedy
(JFK) Airport, New York, on TWA Flight No. 904.
On August 27, 1990, plaintiffs Purita and Carmina S. Mapa departed for Boston, taking a
connecting flight on TWAs carrier, TW 0901, from JFK Airport, New York, to Bostons Logan
Airport, checking in seven (7) pieces of luggage at the TWA counter in the JFK
Airport. The seven baggages were received by a porter who issued seven TWA
baggage receipts numbered 17-8270, 71, 72, 73, 74, 75, and 76therefor.
From the entrance gate of the terminal building, plaintiffs Purita and Carmina
proceeded to TWAs ticket counter and presented their confirmed TWA tickets
numbered 015:9475:153:304 and 015:9475:153:305 with a 3:00 p.m. departure time. They
were issued their boarding passes and were instructed to proceed to gate 35 for
boarding. At about 2:40 p.m., plaintiffs noticed that there was still no instruction to board
the aircraft so they made inquiries. The TWA ground stewardess informed plaintiffs that
they were at the wrong gate because their flight was boarding at gate 1. Upon hearing
this, plaintiffs rushed to gate 1 which was in another building terminal. At gate 1, they
were told by a TWA ground stewardess that flight 901 had just departed. However, they
were consoled that another TWA flight was leaving for Boston after 30 minutes and
plaintiffs could use the same boarding pass for the next flight. At around 3:15 p.m.,
plaintiffs Purita and Carmina were able to board the next flight.However, the plane was
not immediately cleared for take off on account of a thunderstorm. The passengers
were instructed to stay inside the aircraft until 6:00 p.m. when the plane finally left for
Boston.
Upon arriving in Boston, plaintiffs Purita and Carmina proceeded to the carousel to claim
their baggages and found only three out of the seven they checked in, to wit: one
Samsonite on the carousel, another Samsonite lying on the floor near the carousel and a
third baggage, an American Tourister, inside the unclaimed baggage office. Plaintiffs
immediately reported the loss of their four baggages to the TWA Baggage Office at
Logan Airport. TWAs representative confidently assured them that their baggages would
be located within 24 hours and not more than 48 hours.
On September 2, 1990, plaintiffs received a letter from TWA, signed by Mr. J.A. Butler,
Customer Relations-Baggage Service, apologizing for TWAs failure to locate the missing
luggage and requesting plaintiffs to accomplish a passenger property questionnaire to
facilitate a further intensive and computerized search for the lost luggage. Plaintiffs duly
accomplished the passenger property questionnaire, taking pains to write down in detail
the contents of each missing baggage. The total value of the lost items amounted to
$11, 283.79.
On September 20, 1990, plaintiffs counsel wrote TWA thru its General Sales Manager in
the Philippines, Daniel Tuason, with office address at Ground Floor, Saville Building, Sen.
Gil J. Puyat Avenue corner Paseo de Roxas, Makati, Metro Manila demanding
indemnification for the grave damage and injury suffered by the plaintiffs.
TWA again assured plaintiffs that intensive search was being conducted.
On October 8, 1990, TWA offered to amicably settle the case by giving plaintiffs-
appellants two options: (a) transportation credit for future TWA travel or (b) cash
settlement. Five months lapsed without any result on TWAs intensive search.
On January 3, 1991, plaintiffs-appellants opted for transportation credit for future TWA
travel.
On January 11, 1991, TWA disregarded plaintiffs option and unilaterally declared the
payment of $2,560.00 as constituting full satisfaction of the plaintiffs claim.
On July 19, 1991, plaintiffs accepted the check for $2,560.00, as partial payment for the
actual cost of their lost baggages and their contents.
Despite demands by plaintiffs, TWA failed and refused without just cause to indemnify
and redress plaintiffs for the grave injury and damages they have suffered.[4]
Purita S. Mapa, Carmina S. Mapa, and Cornelio P. Mapa (herein petitioners) then filed
with the trial court on 1 August 1991 a complaint[5] for damages,[6] which was docketed
as Civil Case No. Q-91-9620. Before a responsive pleading was filed, the petitioners filed
an Amended Complaint.[7] They prayed that after due trial private respondent Trans-
World Airlines, Inc. (hereafter, TWA), be ordered to pay them the following amounts: (1)
US$8,723.79, or its equivalent in Philippine currency, representing the cost of the lost
luggage and its contents; (2) US$2,949.50, or its equivalent in Philippine currency,
representing the cost of hotel, board and lodging, and communication expenses; (3) P1
million, by way of moral damages; (4) P1 million, by way of exemplary damages, with
legal interest on said amounts from the date of extrajudicial demand thereof; and
(5) P500,000.00 as attorney's fees, costs of the suit, and other expenses of litigation.[8]
On 26 February 1992, TWA filed its Answer to the Amended Complaint raising, as special
and affirmative defense, lack of jurisdiction of Philippine courts over the action for
damages in that pursuant to Article 28(1) of the Warsaw Convention, the action could
only be brought either in Bangkok where the contract was entered into, or in Boston
which was the place of destination, or in Kansas City which is the carrier's domicile and
principal place of business.
TWA further alleged that pursuant to the Warsaw Convention and the Notice of
Baggage Limitations at the back of the tickets, its liability to the petitioners is limited to
US$9.07 per pound, or US$20.00 per kilo, which is in lieu of actual and compensatory
damages. Even assuming that petitioners bag weighed the maximum acceptable
weight of 70 pounds, TWAs maximum liability is $640.00 per bag or $2,560.00 for the four
pieces of baggage, which the petitioners have been offered and have accepted. TWA
also submitted that it could not be liable for moral and exemplary damages and
attorneys fees because it did not act in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.[9]
On 7 February 1992, the petitioners filed their second Amended Complaint[10] to include
a claim of US$2,500, or its equivalent in Philippine Currency, representing the additional
replacement cost of the items and personal effects contained in their lost luggage; and
US$4,500 representing the travel expenses, hotel, lodging, food and other expenses of
petitioner Cornelio Mapa, who was constrained to join his family in Boston to extend the
necessary assistance in connection with the lost luggage.
After the filing of TWAs Answer to the second Amended Complaint,[11] and petitioners
Reply thereto, the trial court gave TWA ten days within which to submit a memorandum
in support of its affirmative defenses; after which the incident would be deemed
submitted for resolution.[12] However, after TWA filed its Memorandum,[13] the trial court
gave the petitioners five days within which to file a reply memorandum; and TWA, two
days from receipt of the latter to file its comment thereon.[14] The petitioners then filed
their Opposition (by way of Reply Memorandum)[15] to which TWA filed a
Reply.[16] Thereafter, the petitioners submitted a Rejoinder [17]; TWA, a Surrejoinder.[18]
On 24 July 1992, the trial court issued an Order[19] dismissing the case for lack of
jurisdiction in light of Article 28(1) of the Warsaw Convention. Thus:
It is plaintiffs' theory that the Warsaw Convention does not apply to the instant case
because plaintiffs' contract of transportation does not constitute "international
transportation" as defined in said convention.This however is belied by the Passenger
Property Questionnaire which is Annex C of plaintiffs' amended complaint. Page two of
said questionnaire accomplished by plaintiffs under the heading "Your Complete
Itinerary" shows that the TWA tickets issued to the plaintiffs form part of the contract of
transportation to be performed from Manila to the United States. Since the Philippines
and the United States are parties to the convention, plaintiffs' contracts of transportation
come within the meaning of International Transportation.
...
On the basis of the foregoing, the Court holds that the Warsaw Convention is applicable
to the case at bar, even if the basis of plaintiffs' present action is breach of contract of
carriage under the New Civil Code.
The next question to be resolved is whether or not the Court has jurisdiction to try the
present case in the light of the provision of Art. 28(1) above-quoted.
Under Art. 28(1) supra, a complaint for damages against an air carrier can be instituted
only in any of the following places/courts:
(1) The court of the domicile of the carrier;
(2) The court of its principal place of business;
(3) The court where it has a place of business through which the contract had been
made;
(4) The court of the place of destination.
In interpreting the provision of Art. 28(1) of the Warsaw Convention, the Supreme Court in
the same case of Augusto Benedicto Santos vs. Northwest Airlines held:
"Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
authorities are sharply divided. While the petitioner cites several cases holding that
Article 28(1) refers to venue rather that jurisdiction, there are later cases cited by the
private respondent supporting the conclusion that the provision is jurisdictional.
Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by
consent or waiver upon a court which otherwise would have no jurisdiction over the
subject-matter of an action; but the venue of an action as fixed by statute may be
changed by the consent of the parties and an objection that the plaintiff brought his suit
in the wrong country may be waived by the failure of the defendant to make a timely
objection. In either case, the court may render a valid judgment. Rules as to jurisdiction
can never be left to the consent or agreement of the parties, whether or not a
prohibition exists against their alteration.
A number of reasons tends to support the characterization of Article 28(1) as a
jurisdiction and not a venue provision. First, the wording of Article 32, which indicates the
places where the action for damages "must" be brought, underscores the mandatory
nature of Article 28(1). Second, this characterization is consistent with one of the
objectives of the Convention, which is to "regulate in a uniform manner the conditions of
international transportation by air." Third, the Convention does not contain any provision
prescribing rules of jurisdiction other than Article 28(1), which means that the phrase
"rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last
sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as
"jurisdictions," which, as such, cannot be left to the will of the parties regardless of the
time when the damage occurred.
...
It has been shown by the defendant that the domicile of the defendant Trans World
Airlines, Inc. is Kansas City, Missouri, its principal place of business is also in Kansas City,
Missouri, the carrier's place of business through which the contracts were made is
Bangkok (Annexes A and A-1, Amended Complaint), and the place of destination was
Boston.
The Philippines not being one of the places specified in Art. 28(1) above-quoted where
the complaint may be instituted, this Court therefore, does not have jurisdiction over the
present case.
Evidently discontented with the trial court's order, the petitioners appealed to the Court
of Appeals, contending that the lower court erred in not holding that (1) it has
jurisdiction over the instant case and (2) the Warsaw Convention is inapplicable in the
instant case because the subject matter of the case is not included within the coverage
of the said convention.[20] They claimed that their cause of action could be based on
breach of contract of air carriage founded on Articles 1733, 1734, 1735, 1755, and 1756
of the New Civil Code governing common carriers or Article 2176 of the same Code
governing tort or quasi-delict.
The appellate court disagreed with the petitioners and affirmed the order of the trial
court. It held that the Warsaw Convention is the law which governs the dispute between
the petitioners and TWA because what is involved is international transportation defined
by said Convention in Article I(2). This holding is founded on its determination that the
two TWA tickets for Los Angeles-New York-Boston-St. Louis-Chicago purchased in
Bangkok, Thailand, were issued in conjunction with, and therefore formed part of, the
contract of transportation performed from Manila, Philippines, to the United States.
The respondent court further held that the cause of action of the petitioners arose from
the loss of the four checked pieces of baggage, which then falls under Article 18(1),
Chapter III (Liability of the Carrier) of the Warsaw Convention.[21] Pursuant to Article 24(1)
of the Convention, all actions for damages, whether based on tort, code law or
common law, arising from loss of baggage under Article 18 of the Warsaw Convention,
can only be brought subject to the conditions and limits set forth in the Warsaw
Convention. Article 28(1) thereof sets forth conditions and limits in that the action for
damages may be instituted only in the territory of one of the High Contracting Parties,
before the court of (1) the domicile of the carrier, (2) the carriers principal place of
business, (3) the place of business through which the contract has been made, or (4) the
place of destination. Since the Philippines is not one of these places, a Philippine Court,
like the RTC, has no jurisdiction over the complaint for damages.
Respondent Court of Appeals likewise held that the petitioners could not claim
application of Articles 1733, 1734, 1735, 1755, and 1756 of the New Civil Code on
common carriers without taking into consideration Article 1753 of the same Code, which
provides that the law of the country to which the goods are to be transported shall
govern the liability of the common carrier for their loss, destruction, or
deterioration. Since the country of ultimate destination is Chicago, the law of Chicago
shall govern the liability of TWA for the loss of the four pieces of baggage. Neither is
Article 2176 of the New Civil Code on torts or quasi-delicts applicable in view of the
private international law principle of lex loci delicti commissi.[22] In addition, comformably
with Santos III v. Northwest Orient Airlines,[23] mere allegation of willful misconduct
resulting in a tort is insufficient to exclude the case from the comprehension of the
Warsaw Convention.
Failing in their bid to reconsider the decision, the petitioners filed this petition. They aver
that respondent Court of Appeals gravely erred (1) in holding that the Warsaw
Convention is applicable to this case and (2) in applying Article 1753 of the Civil Code
and the principle of lex loci delicti commissi.[24]
We resolved to give due course to the petition after the filing by TWA of its Comment on
the petition and noted without action for the reasons stated in the resolution of 25
September 1996 petitioners Reply and Rejoinder. We then required the parties to submit
their respective memoranda. They did in due time.
The petitioners insist that the Warsaw Convention is not applicable to their case because
the contracts they had with TWA did not involve an international transportation. Whether
the contracts were of international transportation is to be solely determined from the
TWA tickets issued to them in Bangkok, Thailand, which showed that their itinerary
was Los Angeles-New York-Boston-St. Louis-Chicago. Accordingly, since the place of
departure (Los Angeles) and the place of destination (Chicago) are both within the
territory of one High Contracting Party, with no agreed stopping place in a territory
subject to the sovereignty, mandate, suzerainty or authority of another Power, the
contracts did not constitute international transportation as defined by the
convention. They also claim to be without legal basis the contention of TWA that their
transportation contracts were of international character because of the handwritten
notations in the tickets re INTL TKT #079-4402956821-2 and INTL TKT #079-
4402956819. Notwithstanding such notations, the TWA tickets, viz., (a) No.
015.9475:153:304 and (b) No. 015:9475:153:305 did not cease to be for the itinerary
therein designated. Besides, it is a fact that petitioners Purita and Carmina Mapa
traveled from Manila to Los Angeles via Philippine Airlines (PAL) by virtue of PAL tickets
issued independently of the TWA tickets.
The pith issue to be resolved under the petitioners first assigned error is whether the
contracts of transportation between Purita and Carmina Mapa, on the one hand, and
TWA, on the other, were contracts of international transportation under the Warsaw
Convention. If they were, then we should sustain the trial court and the Court of Appeals
in light of our ruling in Santos v. Northwest Orient Airlines.[25] It appears clear to us that
TWA itself, the trial court, and the Court of Appeals impliedly admit that if the sole basis
were the two TWA tickets for Los Angeles-New York-Boston-St. Louis-Chicago, the
contracts cannot be brought within the term international transportation, as defined in
Article I(2) of the Warsaw Convention. As provided therein, a contract is one
of international transportation only if
according to the contract made by the parties, the place of departure and the place
of destination, whether or not there be a break in the transportation or a transshipment,
are situated either within the territories of two High Contracting Parties, or within the
territory of a single High Contracting Party, if there is an agreed stopping place within a
territory subject to the sovereignty, mandate or authority of another power, even though
that power is not a party to this convention.
There are then two categories of international transportation, viz., (1) that where the
place of departure and the place of destination are situated within the territories of two
High Contracting Parties regardless of whether or not there be a break in the
transportation or a transshipment; and (2) that where the place of departure and the
place of destination are within the territory of a single High Contracting Party if there is
an agreed stopping place within a territory subject to the sovereignty, mandate, or
authority of another power, even though the power is not a party to the Convention.
The High Contracting Parties referred to in the Convention are the signatories thereto
and those which subsequently adhered to it. In the case of the Philippines, the
Convention was concurred in by the Senate, through Resolution No. 19, on 16 May
1950. The Philippine instrument of accession was signed by President Elpidio Quirino on 13
October 1950 and was deposited with the Polish Government on 9 November 1950. The
Convention became applicable to the Philippines on 9 February 1951. Then, on 23
September 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring
the Philippines formal adherence thereto, to the end that the same and every article
and clause thereof may be observed and fulfilled in good faith by the Republic of the
Philippines and the citizens thereof.[26]
The contracts of transportation in this case are evidenced by the two TWA tickets, No.
015:9475:153:304 and No. 015:9475:153:305, both purchased and issued in Bangkok,
Thailand.On the basis alone of the provisions therein, it is obvious that the place of
departure and the place of destination are all in the territory of the United States, or of a
single High Contracting Party. The contracts, therefore, cannot come within the purview
of the first category of international transportation. Neither can it be under the second
category since there was NO agreed stopping place within a territory subject to the
sovereignty, mandate, or authority of another power.
The only way to bring the contracts between Purita and Carmina Mapa, on the one
hand, and TWA, on the other, within the first category of international transportation is to
link them with, or to make them an integral part of, the Manila-Los Angeles travel of
Purita and Carmina through PAL aircraft. The linkages which have been pointed out by
the TWA, the trial court, and the Court of Appeals are (1) the handwritten notations, viz.,
INTL TKT # 079-4402956821-2 and INTL TKT # 079-4402956819, on the two TWA tickets; and
(2) the entries made by petitioners Purita and Carmina Mapa in column YOUR
COMPLETE ITINERARY in TWAs Passenger Property Questionnaire, wherein they
mentioned their travel from Manila to Los Angeles in flight PR 102.
The alleged international tickets mentioned in the notations in conjunction with which
the two TWA tickets were issued were not presented. Clearly then, there is at all no
factual basis of the finding that the TWA tickets were issued in conjunction with the
international tickets, which are even, at least as of now, non-existent.
As regards the petitioners entry in YOUR COMPLETE ITINERARY column of the Passenger
Property Questionnaire wherein they included the Manila-Los Angeles travel, it must be
pointed out that this was made on 4 September 1990[27] by petitioners Purita and
Carmina Mapa, and only in connection with their claim for their lost pieces of
baggage. The loss occurred much earlier, or on 27 August 1990. The entry can by no
means be considered as a part of, or supplement to, their contracts of transportation
evidenced by the TWA tickets which covered transportation within the United States
only.
It must be underscored that the first category of international transportation under the
Warsaw Convention is based on the contract made by the parties. TWA does not claim
that the Manila-Los Angeles contracts of transportation which brought Purita and
Carmina to Los Angeles were also its contracts. It does not deny the assertion of the
petitioners that those contracts were independent of the TWA tickets issued in Bangkok,
Thailand. No evidence was offered that TWA and PAL had an agreement concerning
transportation of passengers from points of departures not served with aircrafts of one or
the other. There could have been no difficulty for such agreement, since TWA admitted
without qualification in paragraph 1 of its Answer [28] to the second Amended Complaint
the allegation in paragraph 1.1 of the latter[29] that TWA is a foreign corporation licensed
to do business in the Philippines with office address at Ground Floor, Saville Building, Sen.
Gil. J. Puyat Avenue, corner Paseo de Roxas, Makati, Metro Manila.
TWA relies on Article I(3) of the Convention, which provides as follows:
3. A carriage to be performed by several successive air carriers is deemed, for the
purposes of this Convention, to be one undivided carriage, if it has been regarded by
the parties as a single operation, whether it had been agreed upon under the form of a
single contract or of a series of contracts, and it shall not lose its international character
merely because one contract or a series of contracts is to be performed entirely within a
territory subject to the sovereignty, suzerainty, mandate, or authority of the same High
Contracting Party.
It also points to Article 15 of the IATA Recommend Practice 1724, which
provides: Carriage to be performed by several successive carriers under one ticket, or
under a ticket and any conjunction ticket issued in connection therewith, is regarded as
a single operation.[30]
The flaw of respondents position is the presumption that the parties have regarded as an
undivided carriage or as a single operation the carriage from Manila to Los Angeles
through PAL then to New York-Boston- St. Louis-Chicago through TWA. The dismissal then
of the second Amended Complaint by the trial court and the Court of Appeals
affirmance of the dismissal were not based on indubitable facts or grounds, but on
inferences without established factual basis.
TWA should have offered evidence for its affirmative defenses at the preliminary hearing
therefor. Section 5 of Rule 16 of the Rules of Court expressly provides:
SEC. 5. Pleading grounds as affirmative defenses. -- Any of the grounds for dismissal
provided for in this rule, except improper venue, may be pleaded as an affirmative
defense, and a preliminary hearing may be had thereon as if a motion to dismiss had
been filed.
Without any further evidence as earlier discussed, the trial court should have denied the
affirmative defense of lack of jurisdiction because it did not appear to
be indubitable. Section 3 of Rule 16 of the Rules of Court provides:
SEC. 3. Hearing and order. -- After hearing the court may deny or grant the motion or
allow amendment of pleading, or may defer the hearing and determination of the
motion until the trial if the ground alleged therein does not appear to be indubitable.
WHEREFORE, the instant petition is GRANTED and the challenged decision of 31 May 1995
of respondent Court of Appeals in CA-G.R. CV No. 39896, as well as the Order of 24 July
1992 of the Regional Trial Court of Quezon City, Branch 102, in Civil Case No. Q-91-9620,
is REVERSED and SET ASIDE.
The Regional Trial Court of Quezon City, Branch 102, is hereby DIRECTED to proceed with
the pre-trial, if it has not been terminated, and with the trial on the merits of the case
and then to render judgment thereon, taking into account the foregoing observations
on the issue of jurisdiction.
SO ORDERED.
[G.R. No. 116044-45. March 9, 2000]
AMERICAN AIRLINES, petitioner, vs. COURT OF APPEALS, HON. BERNARDO LL. SALAS and
DEMOCRITO MENDOZA, respondents. Oldmis o
DECISION
GONZAGA_REYES, J.:
Before us is a petition for review of the decision dated December 24, 1993 rendered by
the Court of Appeals in the consolidated cases docketed as CA-G.R. SP nos. 30946 and
31452 entitled American Airlines vs. The Presiding Judge Branch 8 of the Regional Trial
Court of Cebu and Democrito Mendoza, petitions for certiorari and prohibition. In SP no.
30946, the petitioner assails the trial courts order denying the petitioners motion to dismiss
the action for damages filed by the private respondent for lack of jurisdiction under
section 28 (1) of the Warsaw Convention; and in SP No. 31452 the petitioner challenges
the validity of the trial courts order striking off the record the deposition of the petitioners
security officer taken in Geneva, Switzerland for failure of the said security officer to
answer the cross interrogatories propounded by the private respondent. Ncm
The sole issue raised in SP No. 30946 is the questioned jurisdiction of the Regional Trial
Court of Cebu to take cognizance of the action for damages filed by the private
respondent against herein petitioner in view of Art 28 (1) of the Warsaw Convention.[1] It
is undisputed that the private respondent purchased from Singapore Airlines in Manila
conjunction tickets for Manila - Singapore - Athens - Larnaca - Rome - Turin - Zurich -
Geneva - Copenhagen - New York. The petitioner was not a participating airline in any
of the segments in the itinerary under the said conjunction tickets. In Geneva the
petitioner decided to forego his trip to Copenhagen and to go straight to New York and
in the absence of a direct flight under his conjunction tickets from Geneva to New York,
the private respondent on June 7, 1989 exchanged the unused portion of the
conjunction ticket for a one-way ticket from Geneva to New York from the petitioner
airline. Petitioner issued its own ticket to the private respondent in Geneva and claimed
the value of the unused portion of the conjunction ticket from the IATA[2] clearing house
in Geneva.Ncmmis
In September 1989, private respondent filed an action for damages before the regional
trial court of Cebu for the alleged embarassment and mental anguish he suffered at the
Geneva Airport when the petitioners security officers prevented him from boarding the
plane, detained him for about an hour and allowed him to board the plane only after all
the other passengers have boarded. The petitioner filed a motion to dismiss for lack of
jurisdiction of Philippine courts to entertain the said proceedings under Art. 28 (1) of the
Warsaw Convention. The trial court denied the motion. The order of denial was elevated
to the Court of Appeals which affirmed the ruling of the trial court. Both the trial and that
appellate courts held that the suit may be brought in the Philippines under the pool
partnership agreement among the IATA members, which include Singapore Airlines and
American Airlines, wherein the members act as agents of each other in the issuance of
tickets to those who may need their services. The contract of carriage perfected in
Manila between the private respondent and Singapore Airlines binds the petitioner as
an agent of Singapore Airlines and considering that the petitioner has a place of
business in Manila, the third option of the plaintiff under the Warsaw Convention i.e. the
action may be brought in the place where the contract was perfected and where the
airline has a place of business, is applicable. Hence this petition assailing the order
upholding the jurisdiction of Philippine courts over the instant action. Scnc m
Both parties filed simultaneous memoranda pursuant to the resolution of this Court giving
due course to the petition.
The petitioners theory is as follows: Under Art 28 (1) of the Warsaw convention an action
for damages must be brought at the option of the plaintiff either before the court of the
1) domicile of the carrier; 2) the carriers principal place of business; 3) the place where
the carrier has a place of business through which the contract was made; 4) the place
of destination. The petitioner asserts that the Philippines is neither the domicile nor the
principal place of business of the defendant airline; nor is it the place of destination. As
regards the third option of the plaintiff, the petitioner contends that since the Philippines
is not the place where the contract of carriage was made between the parties herein,
Philippine courts do not have jurisdiction over this action for damages. The issuance of
petitioners own ticket in Geneva in exchange for the conjunction ticket issued by
Singapore Airlines for the final leg of the private respondents trip gave rise to a separate
and distinct contract of carriage from that entered into by the private respondent with
Singapore Airlines in Manila. Petitioner lays stress on the fact that the plane ticket for a
direct flight from Geneva to New York was purchased by the private respondent from
the petitioner by "exchange and cash" which signifies that the contract of carriage with
Singapore Airlines was terminated and a second contract was perfected. Moreover, the
second contract of carriage cannot be deemed to have been an extension of the first
as the petitioner airline is not a participating airline in any of the destinations under the
first contract. The petitioner claims that the private respondents argument that the
petitioner is bound under the IATA Rules as agent of the principal airline is irrelevant and
the alleged bad faith of the airline does not remove the case from the applicability of
the Warsaw Convention. Further, the IATA Rule cited by the private respondent which is
admittedly printed on the ticket issued by the petitioner to him which states, "An air
carrier issuing a ticket for carriage over the lines of another carrier does so only as its
agent" does not apply herein, as neither Singapore Airlines nor the petitioner issued a
ticket to the private respondent covering the route of the other. Since the conjunction
tickets issued by Singapore Airlines do not include the route covered by the ticket issued
by the petitioner, the petitioner airline submits that it did not act as an agent of
Singapore Airlines. Sdaa miso
Private respondent controverts the applicability of the Warsaw Convention in this case.
He posits that under Article 17 of the Warsaw Convention[3] a carrier may be held liable
for damages if the "accident" occurred on board the airline or in the course of
"embarking or disembarking" from the carrier and that under Article 25 (1)[4] thereof the
provisions of the convention will not apply if the damage is caused by the "willful
misconduct" of the carrier. He argues that his cause of action is based on the incident at
the pre-departure area of the Geneva airport and not during the process of embarking
nor disembarking from the carrier and that security officers of the petitioner airline acted
in bad faith. Accordingly, this case is released from the terms of the Convention. Private
respondent argues that assuming that the convention applies, his trip to nine cities in
different countries performed by different carriers under the conjunction tickets issued in
Manila by Singapore Airlines is regarded as a single transaction; as such the final leg of
his trip from Geneva to New York with the petitioner airline is part and parcel of the
original contract of carriage perfected in Manila. Thus, the third option of the plaintiff
under Art. 28 (1) e.g., where the carrier has a place of business through which the
contract of carriage was made, applies herein and the case was properly filed in the
Philippines. The private respondent seeks affirmance of the ruling of the lower courts that
the petitioner acted as an agent of Singapore Airlines under the IATA Rules and as an
agent of the principal carrier the petitioner may be held liable under the contract of
carriage perfected in Manila, citing the judicial admission made by the petitioner that it
claimed the value of the unused portion of the private respondents conjunction tickets
from the IATA Clearing House in Geneva where the accounts of both airlines are
respectively credited and debited. Accordingly, the petitioner cannot now deny the
contract of agency with Singapore Airlines after it honored the conjunction tickets issued
by the latter. Sdaad
The petition is without merit.
The Warsaw Convention to which the Republic of the Philippines is a party and which
has the force and effect of law in this country applies to all international transportation
of persons, baggage or goods performed by an aircraft gratuitously or for hire.[5] As
enumerated in the Preamble of the Convention, one of the objectives is "to regulate in a
uniform manner the conditions of international transportation by air".[6] The contract of
carriage entered into by the private respondent with Singapore Airlines, and
subsequently with the petitioner, to transport him to nine cities in different countries with
New York as the final destination is a contract of international transportation and the
provisions of the Convention automatically apply and exclusively govern the rights and
liabilities of the airline and its passengers.[7] This includes section 28 (1) which enumerates
the four places where an action for damages may be brought.Scs daad
The threshold issue of jurisdiction of Philippine courts under Art 28 (1) must first be resolved
before any pronouncements may be made on the liability of the carrier
thereunder.[8] The objections raised by the private respondent that this case is released
from the terms of the Convention because the incident on which this action is
predicated did not occur in the process of embarking and disembarking from the carrier
under Art 17[9] and that the employees of the petitioner airline acted with malice and
bad faith under Art 25 (1)[10] pertain to the merits of the case which may be examined
only if the action has first been properly commenced under the rules on jurisdiction set
forth in Art. 28 (1).
Art (28) (1) of the Warsaw Convention states: Sup rema
Art 28 (1) An action for damages must be brought at the option of the plaintiff, in the
territory of one of the High Contracting Parties, either before the court of the domicile of
the carrier or of his principal place of business or where he has a place of business
through which the contract has been made, or before the court at the place of
destination.
There is no dispute that petitioner issued the ticket in Geneva which was neither the
domicile nor the principal place of business of petitioner nor the respondents place of
destination.
The question is whether the contract of transportation between the petitioner and the
private respondent would be considered as a single operation and part of the contract
of transportation entered into by the latter with Singapore Airlines in Manila.
Petitioner disputes the ruling of the lower court that it is. Petitioners main argument is that
the issuance of a new ticket in Geneva created a contract of carriage separate and
distinct from that entered by the private respondent in Manila.
We find the petitioners argument without merit. Juris
Art 1(3) of the Warsaw Convention which states:
"Transportation to be performed by several successive carriers shall be deemed, for the
purposes of this convention, to be one undivided transportation, if it has been regarded
by the parties as a single operation, whether it has been agreed upon under the form of
a single contract or a series of contracts, and it shall not lose its international character
merely because one contract or series of contracts is to be performed entirely within the
territory subject of the sovereignty, suzerainty, mandate or authority of the same High
contracting Party." Sc juris
The contract of carriage between the private respondent and Singapore Airlines
although performed by different carriers under a series of airline tickets, including that
issued by petitioner, constitutes a single operation. Members of the IATA are under a
general pool partnership agreement wherein they act as agent of each other in the
issuance of tickets[11] to contracted passengers to boost ticket sales worldwide and at
the same time provide passengers easy access to airlines which are otherwise
inaccessible in some parts of the world. Booking and reservation among airline members
are allowed even by telephone and it has become an accepted practice among
them.[12] A member airline which enters into a contract of carriage consisting of a series
of trips to be performed by different carriers is authorized to receive the fare for the
whole trip and through the required process of interline settlement of accounts by way
of the IATA clearing house an airline is duly compensated for the segment of the trip
serviced.[13] Thus, when the petitioner accepted the unused portion of the conjunction
tickets, entered it in the IATA clearing house and undertook to transport the private
respondent over the route covered by the unused portion of the conjunction
tickets, i.e., Geneva to New York, the petitioner tacitly recognized its commitment under
the IATA pool arrangement to act as agent of the principal contracting airline,
Singapore Airlines, as to the segment of the trip the petitioner agreed to undertake. As
such, the petitioner thereby assumed the obligation to take the place of the carrier
originally designated in the original conjunction ticket. The petitioners argument that it is
not a designated carrier in the original conjunction tickets and that it issued its own ticket
is not decisive of its liability. The new ticket was simply a replacement for the unused
portion of the conjunction ticket, both tickets being for the same amount of US$ 2,760
and having the same points of departure and destination.[14] By constituting itself as an
agent of the principal carrier the petitioners undertaking should be taken as part of a
single operation under the contract of carriage executed by the private respondent
and Singapore Airlines in Manila.
The quoted provisions of the Warsaw Convention Art. 1(3) clearly states that a contract
of air transportation is taken as a single operation whether it is founded on a single
contract or a series of contracts. The number of tickets issued does not detract from the
oneness of the contract of carriage as long as the parties regard the contract as a
single operation. The evident purpose underlying this Article is to promote international
air travel by facilitating the procurement of a series of contracts for air transportation
through a single principal and obligating different airlines to be bound by one contract
of transportation. Petitioners acquiescence to take the place of the original designated
carrier binds it under the contract of carriage entered into by the private respondent
and Singapore Airlines in Manila. Juris sc
The third option of the plaintiff under Art 28 (1) of the Warsaw Convention e.g., to sue in
the place of business of the carrier wherein the contract was made, is therefore, Manila,
and Philippine courts are clothed with jurisdiction over this case. We note that while this
case was filed in Cebu and not in Manila the issue of venue is no longer an issue as the
petitioner is deemed to have waived it when it presented evidence before the trial
court.
The issue raised in SP No. 31452 which is whether or not the trial court committed grave
abuse of discretion in ordering the deposition of the petitioners security officer taken in
Geneva to be stricken off the record for failure of the said security officer to appear
before the Philippine consul in Geneva to answer the cross-interrogatories filed by the
private respondent does not have to be resolved. The subsequent appearance of the
said security officer before the Philippine consul in Geneva on September 19, 1994 and
the answer to the cross-interrogatories propounded by the private respondent was
transmitted to the trial court by the Philippine consul in Geneva on September 23,
1994[15] should be deemed as full compliance with the requisites of the right of the
private respondent to cross-examine the petitioners witness. The deposition filed by the
petitioner should be reinstated as part of the evidence and considered together with
the answer to the cross-interrogatories.
WHEREFORE, the judgment of the appellate court in CA-G.R. SP No. 30946 is affirmed. The
case is ordered remanded to the court of origin for further proceedings. The decision of
the appellate court in CA-G.R. SP. No. 31452 is set aside. The deposition of the petitioners
security officer is reinstated as part of the evidence. Misj uris
SO ORDERED.
[G.R. No. 127768. November 19, 1999]
UNITED AIRLINES, petitioner, vs. WILLIE J. UY, respondent.
DECISION
BELLOSILLO, J.:
UNITED AIRLINES assails in this petition for review on certiorari under Rule 45 the 29 August
1995 Decision of the Court of Appeals in CA-G.R. CV No. 39761 which reversed the 7
August 1992 order issued by the trial court in Civil Case No. Q-92-12410[1] granting
petitioner's motion to dismiss based on prescription of cause of action. The issues sought
to be resolved are whether the notice of appeal to the appellate court was timely filed,
and whether Art. 29 of the Warsaw Convention[2] should apply to the case at bar.
On 13 October 1989 respondent Willie J. Uy, a revenue passenger on United Airlines Flight
No. 819 for the San Francisco - Manila route, checked in together with his luggage one
piece of which was found to be overweight at the airline counter. To his utter
humiliation, an employee of petitioner rebuked him saying that he should have known
the maximum weight allowance to be 70 kgs. per bag and that he should have packed
his things accordingly. Then, in a loud voice in front of the milling crowd, she told
respondent to repack his things and transfer some of them from the overweight luggage
to the lighter ones. Not wishing to create further scene, respondent acceded only to find
his luggage still overweight. The airline then billed him overweight charges which he
offered to pay with a miscellaneous charge order (MCO) or an airline pre-paid
credit. However, the airlines employee, and later its airport supervisor, adamantly
refused to honor the MCO pointing out that there were conflicting figures listed on
it.Despite the explanation from respondent that the last figure written on the MCO
represented his balance, petitioners employees did not accommodate him. Faced with
the prospect of leaving without his luggage, respondent paid the overweight charges
with his American Express credit card.
Respondents troubles did not end there. Upon arrival in Manila, he discovered that one
of his bags had been slashed and its contents stolen. He particularized his losses to be
around US $5,310.00. In a letter dated 16 October 1989 respondent bewailed the insult,
embarrassment and humiliating treatment he suffered in the hands of United Airlines
employees, notified petitioner of his loss and requested reimbursement
thereof. Petitioner United Airlines, through Central Baggage Specialist Joan Kroll, did not
refute any of respondents allegations and mailed a check representing the payment of
his loss based on the maximum liability of US $9.70 per pound. Respondent, thinking the
amount to be grossly inadequate to compensate him for his losses, as well as for the
indignities he was subjected to, sent two (2) more letters to petitioner airline, one dated 4
January 1990 through a certain Atty. Pesigan, and another dated 28 October 1991
through Atty. Ramon U. Ampil demanding an out-of-court settlement
of P1,000,000.00. Petitioner United Airlines did not accede to his demands.
Consequently, on 9 June 1992 respondent filed a complaint for damages against United
Airlines alleging that he was a person of good station, sitting in the board of directors of
several top 500 corporations and holding senior executive positions for such similar
firms;[3] that petitioner airline accorded him ill and shabby treatment to his extreme
embarrassment and humiliation; and, as such he should be paid moral damages of at
least P1,000,000.00, exemplary damages of at least P500,000.00, plus attorney's fees of at
least P50,000.00. Similarly, he alleged that the damage to his luggage and its stolen
contents amounted to around $5,310.00, and requested reimbursement therefor.
United Airlines moved to dismiss the complaint on the ground that respondents cause of
action had prescribed, invoking Art. 29 of the Warsaw Convention which provides -
Art. 29 (1) The right to damages shall be extinguished if an action is not brought within
two (2) years, reckoned from the date of arrival at the destination, or from the date on
which the aircraft ought to have arrived, or from the date on which the transportation
stopped.
(2) The method of calculating the period of limitation shall be determined by the law of
the court to which the case is submitted.
Respondent countered that par. (1) of Art. 29 of the Warsaw Convention must be
reconciled with par. (2) thereof which states that "the method of calculating the period
of limitation shall be determined by the law of the court to which the case is submitted."
Interpreting thus, respondent noted that according to Philippine laws the prescription of
actions is interrupted "when they are filed before the court, when there is a written
extrajudicial demand by the creditors, and when there is any written acknowledgment
of the debt by the debtor."[4] Since he made several demands upon United Airlines: first,
through his personal letter dated 16 October 1989; second, through a letter dated 4
January 1990 from Atty. Pesigan; and, finally, through a letter dated 28 October 1991
written for him by Atty. Ampil, the two (2)-year period of limitation had not yet been
exhausted.
On 2 August 1992 the trial court ordered the dismissal of the action holding that the
language of Art. 29 is clear that the action must be brought within two (2) years from the
date of arrival at the destination. It held that although the second paragraph of Art. 29
speaks of deference to the law of the local court in "calculating the period of limitation,"
the same does not refer to the local forums rules in interrupting the prescriptive period
but only to the rules of determining the time in which the action may be deemed
commenced, and within our jurisdiction the action shall be deemed "brought" or
commenced by the filing of a complaint. Hence, the trial court concluded that Art. 29
excludes the application of our interruption rules.
Respondent received a copy of the dismissal order on 17 August 1992. On 31 August
1992, or fourteen (14) days later, he moved for the reconsideration of the trial courts
order. The trial court denied the motion and respondent received copy of the denial
order on 28 September 1992. Two (2) days later, on 1 October 1992 respondent filed his
notice of appeal.
United Airlines once again moved for the dismissal of the case this time pointing out that
respondents fifteen (15)-day period to appeal had already elapsed. Petitioner argued
that having used fourteen (14) days of the reglementary period for appeal, respondent
Uy had only one (1) day remaining to perfect his appeal, and since he filed his notice of
appeal two (2) days later, he failed to meet the deadline.
In its questioned Decision dated 29 August 1995[5] the appellate court gave due course
to the appeal holding that respondents delay of two (2) days in filing his notice of
appeal did not hinder it from reviewing the appealed order of dismissal since
jurisprudence dictates that an appeal may be entertained despite procedural lapses
anchored on equity and justice.
On the applicability of the Warsaw Convention, the appellate court ruled that the
Warsaw Convention did not preclude the operation of the Civil Code and other
pertinent laws. Respondents failure to file his complaint within the two (2)-year limitation
provided in the Warsaw Convention did not bar his action since he could still hold
petitioner liable for breach of other provisions of the Civil Code which prescribe a
different period or procedure for instituting an action. Further, under Philippine laws,
prescription of actions is interrupted where, among others, there is a written extrajudicial
demand by the creditors, and since respondent Uy sent several demand letters to
petitioner United Airlines, the running of the two (2)-year prescriptive period was in effect
suspended. Hence, the appellate court ruled that respondents cause of action had not
yet prescribed and ordered the records remanded to the Quezon City trial court for
further proceedings.
Petitioner now contends that the appellate court erred in assuming jurisdiction over
respondent's appeal since it is clear that the notice of appeal was filed out of time. It
argues that the courts relax the stringent rule on perfection of appeals only when there
are extraordinary circumstances, e.g., when the Republic stands to lose hundreds of
hectares of land already titled and used for educational purposes; when the counsel of
record was already dead; and wherein appellant was the owner of the trademark for
more than thirty (30) years, and the circumstances of the present case do not compare
to the above exceptional cases.[6]
Section 1 of Rule 45 of the 1997 Rules of Civil Procedure provides that "a party may
appeal by certiorari, from a judgment of the Court of Appeals, by filing with the
Supreme Court a petition for certiorari, within fifteen (15) days from notice of judgment
or of the denial of his motion for reconsideration filed in due time x x x x" This Rule
however should not be interpreted as "to sacrifice the substantial right of the appellant in
the sophisticated altar of technicalities with impairment of the sacred principles of
justice."[7] It should be borne in mind that the real purpose behind the limitation of the
period of appeal is to forestall or avoid an unreasonable delay in the administration of
justice. Thus, we have ruled that delay in the filing of a notice of appeal does not justify
the dismissal of the appeal where the circumstances of the case show that there is no
intent to delay the administration of justice on the part of appellant's counsel,[8] or when
there are no substantial rights affected,[9] or when appellant's counsel committed a
mistake in the computation of the period of appeal, an error not attributable to
negligence or bad faith.[10]
In the instant case, respondent filed his notice of appeal two (2) days later than the
prescribed period. Although his counsel failed to give the reason for the delay, we are
inclined to give due course to his appeal due to the unique and peculiar facts of the
case and the serious question of law it poses. In the now almost trite but still good
principle, technicality, when it deserts its proper office as an aid to justice and becomes
its great hindrance and chief enemy, deserves scant consideration.[11]
Petitioner likewise contends that the appellate court erred in ruling that respondent's
cause of action has not prescribed since delegates to the Warsaw Convention clearly
intended the two (2)-year limitation incorporated in Art. 29 as an absolute bar to suit and
not to be made subject to the various tolling provisions of the laws of the
forum. Petitioner argues that in construing the second paragraph of Art. 29 private
respondent cannot read into it Philippine rules on interruption of prescriptive periods and
state that his extrajudicial demand has interrupted the period of
prescription.[12] American jurisprudence has declared that "Art. 29 (2) was not intended
to permit forums to consider local limitation tolling provisions but only to let local law
determine whether an action had been commenced within the two-year period, since
the method of commencing a suit varies from country to country." [13]
Within our jurisdiction we have held that the Warsaw Convention can be applied, or
ignored, depending on the peculiar facts presented by each case.[14] Thus, we have
ruled that the Convention's provisions do not regulate or exclude liability for other
breaches of contract by the carrier or misconduct of its officers and employees, or for
some particular or exceptional type of damage.[15] Neither may the Convention be
invoked to justify the disregard of some extraordinary sort of damage resulting to a
passenger and preclude recovery therefor beyond the limits set by said
Convention.[16] Likewise, we have held that the Convention does not preclude the
operation of the Civil Code and other pertinent laws.[17] It does not regulate, much less
exempt, the carrier from liability for damages for violating the rights of its passengers
under the contract of carriage, especially if willful misconduct on the part of the carrier's
employees is found or established.[18]
Respondent's complaint reveals that he is suing on two (2) causes of action: (a) the
shabby and humiliating treatment he received from petitioner's employees at the San
Francisco Airport which caused him extreme embarrassment and social humiliation;
and, (b) the slashing of his luggage and the loss of his personal effects amounting to US
$5,310.00.
While his second cause of action - an action for damages arising from theft or damage
to property or goods - is well within the bounds of the Warsaw Convention, his first cause
of action -an action for damages arising from the misconduct of the airline employees
and the violation of respondent's rights as passenger - clearly is not.
Consequently, insofar as the first cause of action is concerned, respondent's failure to file
his complaint within the two (2)-year limitation of the Warsaw Convention does not bar
his action since petitioner airline may still be held liable for breach of other provisions of
the Civil Code which prescribe a different period or procedure for instituting the action,
specifically, Art. 1146 thereof which prescribes four (4) years for filing an action based on
torts.
As for respondent's second cause of action, indeed the travaux preparatories of the
Warsaw Convention reveal that the delegates thereto intended the two (2)-year
limitation incorporated in Art. 29 as an absolute bar to suit and not to be made subject
to the various tolling provisions of the laws of the forum. This therefore forecloses the
application of our own rules on interruption of prescriptive periods.Article 29, par. (2),
was intended only to let local laws determine whether an action had been
commenced within the two (2)-year period, and within our jurisdiction an action shall be Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.
deemed commenced upon the filing of a complaint. Since it is indisputable that
respondent filed the present action beyond the two (2)-year time frame his second
cause of action must be barred. Nonetheless, it cannot be doubted that respondent
exerted efforts to immediately convey his loss to petitioner, even employed the services
of two (2) lawyers to follow up his claims, and that the filing of the action itself was
delayed because of petitioner's evasion.
In this regard, Philippine Airlines, Inc. v. Court of Appeals[19] is instructive. In this case
of PAL, private respondent filed an action for damages against petitioner airline for the
breakage of the front glass of the microwave oven which she shipped under PAL Air
Waybill No. 0-79-1013008-3. Petitioner averred that, the action having been filed seven
(7) months after her arrival at her port of destination, she failed to comply with par. 12,
subpar. (a) (1), of the Air Waybill which expressly provided that the person entitled to
delivery must make a complaint to the carrier in writing in case of visible damage to the
goods, immediately after discovery of the damage and at the latest within 14 days from
receipt of the goods. Despite non-compliance therewith the Court held that by private
respondent's immediate submission of a formal claim to petitioner, which however was
not immediately entertained as it was referred from one employee to another, she was
deemed to have substantially complied with the requirement. The Court noted that with
private respondent's own zealous efforts in pursuing her claim it was clearly not her fault
that the letter of demand for damages could only be filed, after months of exasperating
follow-up of the claim, on 13 August 1990, and that if there was any failure at all to file
the formal claim within the prescriptive period contemplated in the Air Waybill, this was
largely because of the carrier's own doing, the consequences of which could not in all
fairness be attributed to private respondent.
In the same vein must we rule upon the circumstances brought before us. Verily,
respondent filed his complaint more than two (2) years later, beyond the period of
limitation prescribed by the Warsaw Convention for filing a claim for damages. However,
it is obvious that respondent was forestalled from immediately filing an action because
petitioner airline gave him the runaround, answering his letters but not giving in to his
demands. True, respondent should have already filed an action at the first instance
when his claims were denied by petitioner but the same could only be due to his desire
to make an out-of-court settlement for which he cannot be faulted. Hence, despite the
express mandate of Art. 29 of the Warsaw Convention that an action for damages
should be filed within two (2) years from the arrival at the place of destination, such rule
shall not be applied in the instant case because of the delaying tactics employed by
petitioner airline itself. Thus, private respondent's second cause of action cannot be
considered as time-barred under Art. 29 of the Warsaw Convention.
WHEREFORE, the assailed Decision of the Court of Appeals reversing and setting aside
the appealed order of the trial court granting the motion to dismiss the complaint, as
well as its Resolution denying reconsideration, is AFFIRMED. Let the records of the case
be remanded to the court of origin for further proceedings taking its bearings from this
disquisition.
SO ORDERED.