1.BASCOS vs.
CA and CIPRIANO DIGEST We agree with the respondent Court in its finding that petitioner is
April 7, 1993
FACTS: Rodolfo A. Cipriano representing Cipriano Trading
Enterprise (CIPTRADE for short) entered into a hauling contract
with Jibfair Shipping Agency Corp whereby the former bound
itself to haul the latter’s 2,000 m/tons of soya bean meal to the
warehouse in Calamba, Laguna. To carry out its obligation,
CIPTRADE, through Cipriano, subcontracted with Bascos to
transport and to deliver 400 sacks of soya bean meal from the
Manila Port Area to Calamba, Laguna. Petitioner failed to deliver
the said cargo. As a consequence of that failure, Cipriano paid
Jibfair Shipping Agency the amount of the lost goods in
accordance with their contract.
Cipriano demanded reimbursement from petitioner but the latter
refused to pay. Eventually, Cipriano filed a complaint for a sum of
money and damages with writ of preliminary attachment for
breach of a contract of carriage. The trial court granted the writ of
preliminary attachment.
In her answer, petitioner interposed the defense that there was no
contract of carriage since CIPTRADE leased her cargo truck to
load the cargo from Manila Port Area to Laguna and that the truck
carrying the cargo was hijacked and being a force majeure,
exculpated petitioner from any liability
After trial, the trial court rendered a decision in favor of Cipriano
and against Bascos ordering the latter to pay the former for actual
damages for attorney’s fees and cost of suit.
The “Urgent Motion To Dissolve/Lift preliminary Attachment”
Bascos is DENIED for being moot and academic.
Petitioner appealed to the Court of Appeals but respondent Court
affirmed the trial court’s judgment.
Hence this petition for review on certiorari
ISSUE:
(1) WON petitioner a common carrier
(2) WON the hijacking referred to a force majeure
HELD: The petition is DISMISSED and the decision of the Court
of Appeals is hereby AFFIRMED.
1. YES
In disputing the conclusion of the trial and appellate courts that
petitioner was a common carrier, she alleged in this petition that
the contract between her and Cipriano was lease of the truck. She
also stated that: she was not catering to the general public. Thus, in
her answer to the amended complaint, she said that she does
business under the same style of A.M. Bascos Trucking, offering
her trucks for lease to those who have cargo to move, not to the
general public but to a few customers only in view of the fact that
it is only a small business.
a common carrier.
Article 1732 of the Civil Code defines a common carrier as “(a)
person, corporation or firm, or association engaged in the business
of carrying or transporting passengers or goods or both, by land,
water or air, for compensation, offering their services to the
public.” The test to determine a common carrier is “whether the
given undertaking is a part of the business engaged in by the
carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business
transacted.” 12 In this case, petitioner herself has made the
admission that she was in the trucking business, offering her trucks
to those with cargo to move. Judicial admissions are conclusive
and no evidence is required to prove the same. 13
But petitioner argues that there was only a contract of lease
because they offer their services only to a select group of people.
Regarding the first contention, the holding of the Court in De
Guzman vs. Court of Appeals 14 is instructive. In referring to
Article 1732 of the Civil Code, it held thus:
“The above article makes no distinction between one whose
principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity
(in local idiom, as a “sideline”). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier
offering its services to the “general public,” i.e., the general
community or population, and one who offers services or solicits
business only from a narrow segment of the general population.
We think that Article 1732 deliberately refrained from making
such distinctions.”
2. NO
Likewise, We affirm the holding of the respondent court that the
loss of the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence in
the vigilance over the goods transported by them. Accordingly,
they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. There
are very few instances when the presumption of negligence does
not attach and these instances are enumerated in Article 1734. 19
In those cases where the presumption is applied, the common
carrier must prove that it exercised extraordinary diligence in order
to overcome the presumption.
In this case, petitioner alleged that hijacking constituted force
majeure which exculpated her from liability for the loss of the
cargo. In De Guzman vs. Court of Appeals, the Court held that
hijacking, not being included in the provisions of Article 1734,
must be dealt with under the provisions of Article 1735 and thus,
the common carrier is presumed to have been at fault or negligent.
To exculpate the carrier from liability arising from hijacking, he
must prove that the robbers or the hijackers acted with grave or
irresistible threat, violence, or force. This is in accordance with
Article 1745 of the Civil Code which provides:
“Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy; xx
(6) That the common carrier’s liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violences or force, is dispensed with or diminished;” xx
NOTES:
1. She cited as evidence certain affidavits which referred to the
contract as “lease”. These affidavits were made by Jesus Bascos
and by petitioner herself and Cipriano and CIPTRADE did not
object to the presentation of affidavits by petitioner where the
transaction was referred to as a lease contract. Both the trial and
appellate courts have dismissed them as self-serving and petitioner
contests the conclusion. We are bound by the appellate court’s
factual conclusions. Yet, granting that the said evidence were not
self-serving, the same were not sufficient to prove that the contract
was one of lease. It must be understood that a contract is what the
law defines it to be and not what it is called by the contracting
parties. Furthermore, petitioner presented no other proof of the
existence of the contract of lease. He who alleges a fact has the
burden of proving it.
2. Having affirmed the findings of the respondent Court on the
substantial issues involved, We find no reason to disturb the
conclusion that the motion to lift/dissolve the writ of preliminary
attachment has been rendered moot and academic by the decision
on the merits.
2. G.R. No. L-11513 December 4, 1917
LAMBERTO SONGCO, plaintiff-appellee,
vs.
GEORGE C. SELLNER, defendant-appellant.
Thos. D. Aitken for appellant.
Perfecto Gabriel for appellee.
STREET, J.:
In December, 1915, the defendant, George C. Sellner, was the
owner of a farm at Floridablanca, Pampanga, which was
contiguous to a farm owned by the plaintiff Lamberto Songco.
Both properties had a considerable quantity of the sugar cane ready
to be cut. At Dinalupijan, a short distance away, was located a
sugar central, and Sellner desired to mill his cane at this central.
One obstacle was that the owners of the central were not sure they
could mill his cane and would not promise to take it. Sellner,
however, learning that the central was going to mill Songco's cane,
conceived the idea of buying the cane of the latter, expecting to run
his own cane in that same time the other should be milled. Another
motive which evidently operated upon the mind of Sellner was the
desire to get a right of way over Songco's land for converting his
own sugar to the central. Accordingly he bought Songco's cane as
it stood in the fields for the agreed sum of P12,000 and executed
therefor three promissory notes of P4,000 each. Two of these notes
were paid; and the present action was instituted to recover upon the
third. From a judgement rendered in favor of the plaintiff, the
defendant has appealed.
The note, upon which the action was brought, was exhibited with
the complaint. The answer of the defendant was made under oath,
and contained a general denial of all the allegations of the
complaint. The answer also contained the allegation, asserted by
way of special defense, that the promissory note in question was
obtained from the defendant by means of certain false and
fraudulent representations therein specified. The note was admitted
in evidence by the court; and error is here assigned upon this
action, on the ground that the genuineness and due execution of the
note was not proved. There is nothing in this contention for several
reasons. In the first place a general denial of a complaint does not
raise a question as to the genuineness or due execution of a written
instrument. Under section 103 of the Code of Civil Procedure it is
necessary that the genuineness and due execution of the instrument
shall be specifically denied before an issue is raised up on this
point. This means that the defendant must declare under oath that
he did not sign the document or that it is otherwise false or
fabricated. Neither does the statement of the answer to the effect
that the instrument was procured by fraudulent representation raise
any issue as to its genuineness or due execution. On the contrary
such a plea is an admission both of the genuineness and due
execution thereof, since it seeks to avoid the instrument upon a
ground not affecting either. Furthermore, in this particular case the
fourth paragraph of the answer expressly admits the execution of
the instrument by the defendant.
The principal defense here urged relates to a false representation
which, it is claimed, was made by the plaintiff Songco with respect
to the quantity of uncut cane standing in the fields at the time the
defendant Sellner became the purchaser thereof. Upon this point it
is proved that Songco estimated that this cane would produce
3,000 piculs of the sugar and that Sellner bought the crop believing
this estimate to be substantially correct. As the crop turned out it
produced 2,017 piculs, gross, and after the toll for milling was
deducted the net left to Sellner was very much less. It appears that
in the course of negotiations Sellner requested Songco to guarantee
the quantity which the latter claimed to be in fields but he would
not do so. He, however, repeated that he was sure the fields
contained the quantity estimated by him. Some evidence was
introduced tending to show that the disparity between Songco's
estimate and the quantity actually obtained would have been more
expeditiously conducted. We do not think there is much in this;
and even making allowance for weight unnecessary lost, the
harvest fell far short of the amount estimated by Songco. We think
it is fairly shown by the evidence that Songco knew at the time he
made the representation in question that he was greatly
exaggerating the probable produce of his fields, and it is
impossible to believe that his estimate honestly reflected his true
opinion. He knew what these same fields had been producing over
a long period of years; and he knew that, judging from the
customary yield, the harvest of this year should fall far below the
amount stated.
Notwithstanding the fact that Songco's statement as to the probable
output of his crop was disingenuous and uncandid, we nevertheless
think that Sellner was bound and that he must pay the price
stipulated. The representation in question can only be considered
matter of opinion as the cane was still standing in the field, and the
quantity of the sugar it would produce could not be known with
certainty until it should be harvested and milled. Undoubtedly
Songco had better experience and better information on which to
form an opinion on this question than Sellner. Nevertheless the
latter could judge with his own eyes as to the character of the cane,
and it is shown that he measured the fields and ascertained that
they contained 96 1/2 hectares.
It is of course elementary that a misinterpretation upon a mere
matter of opinion is not an actionable deceit, nor is it a sufficient
ground for avoiding a contract as fraudulent. We are aware that
statements may be found in the books to the effect that there is a
difference between giving an honest opinion and making a false
representation as to what one's real opinion is. We do not think,
however, that this is a case where any such distinction should be
drawn.
The law allows considerable latitude to seller's statements, or
dealer's talk; and experience teaches that it is exceedingly risky to
accept it at its face value. The refusal of the seller to warrant his
estimate should have admonished the purchaser that that estimate
was put forth as a mere opinion; and we will not now hold the
seller to a liability equal to that which would have been created by
a warranty, if one had been given.
Assertions concerning the property which is the subject of a
contract of sale, or in regard to its qualities and characteristics, are
the usual and ordinary means used by sellers to obtain a high price
and are always understood as affording to buyers no ground for
omitting to make inquiries. A man who relies upon such an
affirmation made by a person whose interest might so readily
prompt him to exaggerate the value of his property does so at his
peril, and must take the consequences of his own imprudence. The
principles enunciated above are fully supported by the weight of
the judicial authority. In a case where the owners of a certain logs
represented to their vendee that the logs would produce a greater
per cent of superior lumber than was actually realized, but refused
to warrant their quality and required the vendee to examine for
himself before making the contract, it was held that the vendee
could not avoid the contract. (Fauntleroy vs. Wilcox, 80 Ill., 477.)
In Williamson vs. Holt (147 N. C., 515; 17 L. R. A. [N. S.], 240), it
appeared that the defendant had bought an ice plant with the
knowledge that its operation had been abandoned because the
output did not equal its capacity. He had full opportunity to
investigate its condition. It was held that he could not avoid paying
the purchase price because the vendor stated that, with some
repairs, it would turn out about a certain amount per day. In Poland
vs. Brownell (131 Mass., 138), where a man who bought a stock of
goods had ample opportunity to examine and investigate, it was
held that he could not rely on the seller's misrepresentations as to
the value of the goods or the extent of the business. It would have
been different if the seller had fraudulently induced him to forbear
inquiries or examination which he would otherwise have made.
It is not every false representation relating to the subject matter of
a contract which will render it void. It must be as to matters of fact
substantially affecting the buyer's interest, not as to matters of
opinion, judgment, probability, or expectation. (Long vs.
Woodman, 58 Me., 52; Hazard vs. Irwin, 18 Pick. [Mass.], 95;
Gordon vs. Parmelee, 2 Allen [Mass.],212; Williamson vs.
McFadden, 23 Fla., 143, 11 Am. St. Rep., 345.) When the
purchaser undertakes to make an investigation of his own, and the
seller does nothing to prevent this investigation from being as full
as he chooses to make it, the purchaser cannot afterwards allege
that the seller made misrepresentations. (National Cash Register
Co. vs. Townsend, 137 N. C., 652, 70 L. R. A., 349; Williamson
vs. Holt, 147 N. C., 515.) 1awphi1.net
We are aware that where one party to a contract, having special or
expert knowledge, takes advantage of the ignorance of another to
impose upon him, the false representation may afford ground for
relief, though otherwise the injured party would be bound. But we
do not think that the fact that Songco was an experienced farmer,
while Sellner was, as he claims, a mere novice in the business,
brings this case within that exception.
An incident of this action was that the plaintiffs sued out an
attachment against the defendant, at the time of the institution of
the suit, upon the ground that he was disposing of his property in
fraud of his creditors. This charge was completely refuted by proof
showing that the defendant is a man of large resources and had not
attempted to convey away his property as alleged. The court below
therefore found that this attachment had been wrongfully sued out,
and awarded damages to the defendant equivalent to the amount
actually paid out by him in procuring the dissolution of the
attachment. No appeal was taken from this action of the court by
the plaintiff; but the defendant assigns error to the action of the
court in refusing to award to him further damages for the injury
done to his credit. In this connection he shows that one of his
creditors, being appraised of the fact that the defendant had been
made the subject of an attachment, withheld further credit and
forced him to sell a large quantity of sugar at a price much lower
than he would have received if he could have carried it a few
weeks longer. We think the court below committed no error in
refusing to award damages upon this grounds, as such damages
were remote and speculative. It could hardly be foreseen as a
probable consequence of the suing out of this attachment that the
hands of the creditors would come down upon their unfortunate
client with such disastrous results; and the plaintiff certainly
cannot be held accountable for the complications of the defendant's
affairs which made possible the damage which in fact resulted. The
court below also refused to award punitive damages claimed by the
plaintiff on the ground that the attachment was maliciously sued
out. The action of the court in this respect will not be here
disturbed.
From what has been said it follows that the judgment of the court
below must be affirmed, with costs against the appellant. So
ordered.
Arellano, C. J., Torres, Carson, Araullo, and Malcolm, JJ., concur.
The Lawphil Project - Arellano Law Foundation
3.Taxation – Prescriptive Period – Defective Return
In 1948, Matias Yusay died leaving behind two heirs, namely, Jose
Yusay and Lilia Yusay Gonzales. Jose was appointed as
administrator. He filed an estate and inheritance tax return in 1949.
The Bureau of Internal Revenue (BIR) conducted a tax audit and
the BIR found that there was an under-declaration in the return
filed. In 1953 however, a project of partition between the two heirs
was submitted to the BIR. The estate was to be divided as follows:
1/3 for Gonzales and 2/3 for Jose. The BIR then conducted another
investigation in July 1957 with the same result – there was a huge
under-declaration. In February 1958, the Commissioner of Internal
Revenue issued a final assessment notice (FAN) against the entire
estate. In November 1959, Gonzales questioned the validity of the
FAN issued in 1958. She averred that it was issued way beyond the
prescriptive period of 5 years (under the old tax code). The return
was filed by Jose in 1949 and so the CIR’s right to make an
assessment has already prescribed in 1958.
ISSUE: Whether or not Gonzales is correct.
HELD: No. It was found that Jose filed a return which was so
defective that the CIR cannot make a correct computation on the
taxes due. When a tax return is so defective, it is as if there is no
return filed, hence, it is considered that the taxpayer omitted to file
a return. As such, the five year prescriptive period to make an
assessment (NOTE: Under the National Internal Revenue Code of
1997, prescriptive period for normal assessment is 3 years) is
extended to 10 years. And the counting of the prescriptive period
shall run from the discovery of the omission (or fraud or falsity in
appropriate cases). In the case at bar, the omission was deemed to
be discovered in the re-investigation conducted in July 1957.
Hence, the FAN issued in February 1958 was well within the ten
year prescriptive period. Gonzales was adjudged to pay the
deficiency tax in the FAN, without prejudice to her right to ask
reimbursement from Jose’s estate (Jose already died).
4. [ G.R. No. L-8034, November 18, 1955 ]
CORNELIA A. DE GILLACO, ET AL., PLAINTIFFS AND
APPELLEES, VS. MANILA RAILROAD COMPANY,
DEFENDANT AND APPELLANT.
DECISION
REYES, J.B.L., J.:
The Manila Railroad Company has appealed from a judgment of
the Court of First Instance of Laguna sentencing it to pay P4,000
damages to the appellees herein, the widow and children of the
late Tomas Gillaco, shot by an employee of the Company in April,
1946.
The judgment was rendered upon the following stipulation of facts:
"That at about 7:30 a.m., on the morning of April 1, 1946, Lieut.
Tomas Gillaco, husband of the plaintiff, was a passenger in the
early morning train of the Manila Railroad Company from
Calamba, Laguna to Manila;
That when the train reached the Paco Railroad station, Emilio
Devesa, a train guard of the Manila Railroad Company assigned in
the Manila-San Fernando, La Union Line, happened to be in said
station waiting for the same train which would take him to Tutuban
Station, where he was going to report for duty;
That Devesa's tour of duty on that day was from 9:00 a.m., until
the train to which he was assigned reached La Union at 7:00 p.m.
of the same day;
That Emilio Devesa had a long standing personal grudge against
Tomas Gillaco, same dating back during the Japanese occupation;
That because of this personal grudge, Devesa shot Gillaco with the
carbine furnished to him by the Manila Railroad Company for his
use as such train guard, upon seeing him inside the train coach;
That Tomas Gillaco died as a result of the would which he
sustained from the shot fired by Devesa."
It is also undisputed that Devesa was convicted of homicide by
final judgment of the Court of Appeals.
Appellant's contention is that, on the foregoing facts, no liability
attaches to it as employer of the killer, Emilio Devesa; that it is not
responsible subsidiary ex delicto, under Art. 103 of the Revised
Penal Code, because the crime was not committed while the slayer
was in the actual performance of his ordinary duties and service;
nor is it responsible ex contractu, since the complaint did not aver
sufficient facts to establish such liability, and no negligence on
appellant's part was shown. The Court below held the Railroad
company responsible on the ground that a contract of
transportation implies protection of the passengers against acts of
personal violence by the agents or employees of the carrier.
There can be no quarrel with the principle that a passenger is
entitled to protection from personal violence by the carrier or its
agents or employees, since the contract of transportation obligates
the carrier to transport a passenger safely to his destination. But
under the law of the case, this responsibility extends only to those
that the carrier could foresee or avoid through the exercise of the
degree of care and diligence required of it.
Discussing the basis of a carrier's liability under the old Civil Code
of 1889 (which was in force in 1946, when Gillaco was shot), this
Court said in Lasam vs. Smith (45 Phil., 657) :
"In our opinion, the conclusions of the court below are entirely
correct. That upon the facts stated the defendant's liability, if any,
is contractual, is well settled by previous decisions of the court,
beginning with the case of Rakes vs. Atlantic, Gulf & Pacific Co.
(7 Phil., 359), and the distinction between extra-contractual
liability and contractual liability has been so ably and exhaustively
discussed in various other cases, that nothing further need here be
said upon that subject. (See Cangco vs. Manila Railroad Co., 38
Phil., 768; Manila Railroad vs. Compañia Transatlantica and
Atlantic, Gulf & Pacific Co., 38 Phil., 875; De Guia vs. Manila
Electric Railroad & Light Co., 40 Phil., 706). It is sufficient to
reiterate that the source of the defendant's legal liability is the
contract of carriage; that by entering into that contract he bound
himself to carry the plaintiff safely and securely to their
destination; and that having failed to do so he is liable in damages
unless he shows that the failure to fulfill his obligation was due to
causes mentioned in article 1105 of the Civil Code, which reads as
follows:
" 'No one shall be liable for events which could not be foreseen or
which, even if foreseen, were inevitable, with the exception of the
cases in which the law expressly provides otherwise and those in
which the obligation itself imposes such liability.'"
The act of guard Devesa in shooting passenger Gillaco (because of
a personal grudge nurtured against the latter since the Japanese
occupation) was entirely unforseeable by the Manila Railroad Co.
The latter had no means to ascertain or anticipate that the two
would meet, nor could it reasonably foresee every personal rancor
that might exist between each one of its many employees and any
one of the thousands of eventual passengers riding in its trains. The
shooting in question was therefore "caso fortuito" within the
definition of article 1105 of the old Civil Code, being both
unforeseeable and inevitable under the given circumstances; and
pursuant to established doctrine, the resulting breach of appellant's
contract of safe carriage with the late Tomas Gillaco was excused
thereby.
No doubt that a common carrier is held to a very high degree of
care and diligence in the protection of its passengers; but,
considering the vast and complex activities of modern rail
transportation, to require of appellant that it should guard against
all possible misunderstanding between each and every one of its
employees and every passenger that might chance to ride in its
conveyances at any time, strikes us as demanding diligence beyond
what human care and foresight can provide.
The lower Court and the appellees both relied on the American Wherefore, the judgment appealed from is reversed and the
authorities that particularly hold carriers to be insurers of the safety complaint ordered dismissed, without costs. So ordered.
of their passengers against willful assault and intentional
illtreatment on the part of their servants, it being immaterial that
Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo,
the act should be one of private retribution on the part of the
and Concepcion, JJ., concur
servant, impelled by personal malice toward the passenger (10 Am.
Jur. 108; Ed. Note to Gassenheimer vs. Wester R. Co. 40 LRA
(NS), p. 999, et seq.). But as can be inferred from the previous
jurisprudence of this Court, the Civil Code of 1889 did not impose
such absolute liability (Lasam vs. Smith, supra). The liability of a 5. [ G.R. No. L-22272, June 26, 1967 ]
carrier as an insurer was not recognized in this jurisdiction
(Government vs. Inchausti & Co., 40 Phil., 219; Oriental Comm.
Co. vs. Naviera Filipina, 38 Off. Gaz., 1020). ANTONIA MARANAN PLAINTIFF-APPELLANT, VS. PASCUAL
PEREZ, ET AL., DEFENDANTS, PASCUAL PEREZ,
DEFENDANT-APPELLANT.
Another very important consideration that must be borne in mind is
that, when the crime took place, the guard Devesa had no duties to
discharge in connection with the transportation of the deceased DECISION
from Calamba to Manila. The stipulation of facts is clear that when
Devesa shot and killed Gillaco, Devesa was assigned to guard the
BENGZON, J.P., J.:
Manila-San Fernando (La Union) trains, and he was at Paco
Station awaiting transportation to Tutuban, the starting point of the
train that he was engaged to guard. In fact, his tour of duty was to Rogelio Corachea, on October 18, 1960, was a passenger in a
start at 9:00 a.m., two hours after the commission of the crime. taxicab owned and operated by Pascual Perez when he was stabbed
Devesa was therefore under no obligation to safeguard the and killed by the driver, Simeon Valenzuela.
passengers of the Calamba-Manila train, where the deceased was
riding; and the killing of Gillaco was not done in line of duty. The
Valenzuela was prosecuted for homicide in the Court of First
position of Devesa at the time was that of another would be
Instance of Batangas. Found guilty, he was sentenced to suffer
passenger, a stranger also awaiting transportation, and not that of
imprisonment and to indemnify the heirs of the deceased in the
an employee assigned to discharge any of the duties that the
sum of P6,000. Appeal from said conviction was taken to the
Railroad had assumed by its contract with the deceased. As a
Court of Appeals.
result, Devesa's assault cannot be deemed in law a breach of
Gillaco's contract of transportation by a servant or employee of the
carrier. We agree with the position taken by the Supreme Court of On December 6, 1961, while appeal was pending in the Court of
Texas in a similar case, where it held: Appeals, Antonia Maranan, Rogelio's mother, filed an action in the
Court of First Instance of Batangas to recover damages from Perez
and Valenzuela for the death of her son. Defendants asserted that
"The only good reason for making the carrier responsible for the
the deceased was killed in self-defense, since he first assaulted the
misconduct of the servant perpetrated in his own interest, and not
driver by stabbing him from behind. Defendant Perez further
in that of his employer, or otherwise within the scope of his
claimed that the death was a caso fortuito for which the carrier was
employment, is that the servant is clothed with the delegated
not liable.
authority, and charged with the duty by th« carrier, to execute his
undertaking with the passenger. And it cannot be said, we think,
that there is any such delegation to the employees at a station with The court a quo, after trial, found for the plaintiff and awarded her
reference to passengers embarking at another or traveling on the P3,000 as damages against defendant Perez. The claim against
train. Of course, we are speaking only of the principle which holds defendant Valenzuela was dismissed. From this ruling, both
a carrier responsible for wrongs done to passengers by servants plaintiff and defendant Perez appealed to this Court, the former
acting in their own interest, and not in that of the employer. That asking for more damages and the latter insisting on non-liability.
principle is not the ordinary rule, respondent superior, by which Subsequently, the Court of Appeals affirmed the judgment of
the employer is held responsible only for acts or omissions of the conviction earlier mentioned, during the pendency of the herein
employee in the scope of his employment; but the only reason in appeal, and on May 19, 1964, final judgment was entered therein.
our opinion for a broader liability arises from the fact that the (Rollo, p. 33)
servant, in mistreating the passenger wholly for some private
purpose of his own, in the very act, violates the contractual
obligation of the employer for the performance of which he has put Defendant-appellant relies solely on the ruling enunciated in
Gillaco v. Manila Railroad Co., 97 Phil. 884, that the carrier is
the employee in his place. That reason does not exist where the
under no absolute liability for assaults of its employees upon the
employee who committed the assault was never in a position in
which it became his duty to his employer to represent him in passengers. The attendant facts and controlling law of that case
and the one at bar are very different however. In the Gillaco case,
discharging any duty of the latter towards the passenger. The
the passenger was killed outside the scope and the course of duty
proposition that the carrier clothes every employee engaged in the
transportation business with the comprehensive duty of protecting of the guilty employee. As this Court there found:
every passenger with whom he may in any way come in contact,
and thereby makes himself liable for every assault committed by "x x x when the crime took place, the guard Devesa had no duties
such servant, without regard to the inquiry whether or not the to discharge in connection with the transportation of the
passenger has come within the sphere of duty Of that servant as
deceased from Calamba to Manila. The stipulation of facts is clear
indicated by the employment, is regarded as not only not sustained
by the authorities, but as being unsound and oppressive both to the that when Devesa shot and killed Gillaco, Devesa was assigned to
employer and the employee. (Houston & T. C. R. Co. vs. Bush, 32 guard the Manila-San Fernando (La Union) trains, and he was at
LRA (NS), p. 1205.) Paco Station awaiting transportation to Tutuban, the starting
point of the train that he was engaged to guard. In fact, his tour
of duty was to start at 9:00 a.m., two hours after the commission
of the crime. Devesawas therefore under no obligation to
safeguard the passengers of the Calamba-Manila train, where the
deceased was riding; and the killing of Gillaco was not done in line
of duty. The position of Devesa at the time was that of another
would be passenger, a stranger also awaiting transportation, and
not that of an employee assigned to discharge any of the duties
that the Railroad had assumed by its contract with the deceased.
As a result, Devesa's assault can not be deemed in law a breach of
Gillaco's contract of transportation by a servant or employee of
the carrier. x x x" (Emphasis supplied)
Now here, the killing was perpetrated by the driver of the very cab
transporting the passenger, in whose hands the carrier had
entrusted the duty of executing the contract of carriage. In other
words, unlike the Gillaco case, the killing of the passenger here
took place in the course of duty of the guilty employee and when
the employee was acting within the scope of his duties.
Moreover, the Gillaco case was decided under the provisions of the
Civil Code of 1889 which, unlike the present Civil Code, did not
impose upon common carriers absolute liability for the safety of
passengers against willful assaults or negligent acts committed by
their employees. The death of the passenger in the Gillaco case
was truly a fortuitous event which exempted the carrier from
liability. It is true that Art. 1105 of the old Civil Code on
fortuitous events has been substantially reproduced in Art. 1174 of
the Civil Code of the Philippines but both articles clearly remove
from their exempting effect the case where the law expressly
provides for liability inspite of the occurrence of force majeure.
And herein significantly lies the statutory difference between the
old and present Civil Codes, in the backdrop of the factual
situation before Us, which further accounts for a different result in
the Gillaco case. Unlike the old Civil Code, the new Civil Code of
the Philippines expressly makes the common carrier liable for
intentional assaults committed by its employees upon its
passengers, by the wording of Art. 1759 which categorically states
that
"Common carriers are liable for the death of or injuries to
passengers through the negligence or wilful acts of the former's
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the
common carriers."
The Civil Code provisions on the subject of Common Carriers[1]
are new and were taken from Anglo-American Law.[2] There, the
basis of the carrier's liability for assaults on passengers committed
by its drivers rests either on (1) the doctrine of respondent superior
or (2) the principle that it is the carrier's implied duty to transport
the passenger safely.[3]
Under the first, which is the minority view, the carrier is liable
only when the act of the employee is within the scope of his
authority and duty. It is not sufficient that the act be within the
course of employment only.[4]
Under the second view, upheld by the majority and also by the
later cases, it is enough that the assault happens within the course
of the employee's duty. It is no defense for the carrier that the act
was done in excess of authority or in disobedience of the carrier's
orders.[5] The carrier's liability here is absolute in the sense that it
practically secures the passengers from assaults committed by its
own employees.[6]
As can be gleaned from Art. 1759, the Civil Code of the
Philippines evidently follows the rule based on the second view.
At least three very cogent reasons underlie this rule. As explained
in Texas Midland R.R. v. Monroe, 110 Tex. 97, 216 S.W. 388,
389-390, and Haver v. Central Railroad Co., 43 LRA 84, 85: (1)
the special undertaking of the carrier requires that it furnish its
passenger that full measure of protection afforded by the exercise
of the high degree of care prescribed by the law, inter alia from
violence and insults at the hands of strangers and other passengers,
but above all, from the acts of the carrier's own servants charged
with the passenger's safety; (2) said liability of the carrier for the
servant's violation of duty to passengers, is the result of the
former's confiding in the servant's hands the performance of his
contract to safely transport the passenger, delegating therewith the
duty of protecting the passenger with the utmost care prescribed by
law; and (3) as between the carrier and the passenger, the former
must bear the risk of wrongful acts or negligence of the carrier's
employees against passengers, since it, and not the passengers, has
power to select and remove them.
Accordingly, it is the carrier's strict obligation to select its drivers
and similar employees with due regard not only to their technical
competence and physical ability, but also, no less important, to
their total personality, including their patterns of behavior, moral
fibers, and social attitude.
Applying this stringent norm to the facts in this case, therefore, the
lower court rightly adjudged the defendant carrier liable pursuant
to Art. 1759 of the Civil Code. The dismissal of the claim against
the defendant driver was also correct. Plaintiff's action was
predicated on breach of contract of carriage[7] and the cab driver
was not a party thereto. His civil liability is covered in the
criminal case wherein he was convicted by final judgment.
In connection with the award of damages, the court a quo granted
only P3,000 to plaintiff-appellant. This is the minimum
compensatory damages amount recoverable under Art. 1764 in
connection with Art. 2206 of the Civil Code when a breach of
contract results in the passenger's death. As has been the policy
followed by this Court, this minimal award should be increased to
P6,000. As to other alleged actual damages, the lower court's
finding that plaintiff's evidence thereon was not convincing,[8]
should not be disturbed. Still, Arts. 2206 and 1764 award moral
damages in addition to compensatory damages, to the parents of
the passenger killed to compensate for the mental anguish they
suffered. A claim therefor having been properly made, it becomes
the court's duty to award moral damages.[9] Plaintiff demands
P5,000 as moral damages; however, in the circumstances, We con-
sider P3,000 moral damages, in addition to the P6,000 damages
afore-stated, as sufficient. Interest upon such damages are also due
to plaintiff-appellant.[10]
WHEREFORE, with the modification increasing the award of
actual damages in plaintiff's favor to P6,000, plus P3,000 moral
damages, with legal interest on both from the filing of the
complaint on December 6, 1961 until the whole amount is paid, the
judgment appealed from is affirmed in all other respects. No costs.
SO ORDERED.
6.La Mallorca vs. CA Case Digest
La Mallorca vs. Court of Appeals
(G.R. No. L-20761, 27 July 1966, 17 SCRA 739)
Facts: Plaintiffs, husband and wife, together with their three
minor daughters (Milagros, 13 years old, Raquel, about 4
years old and Fe, 2 years old) boarded the Pambusco at
San Fernando Pampanga, bound for Anao, Mexico,
Pampanga. Such bus is owned and operated by the
defendant.
They were carrying with them four pieces of baggage
containing their personal belonging. The conductor of the b
us issued three tickets covering the full fares of the plaintiff
and their eldest child Milagros. No fare was charged on
Raquel and Fe, since both were below the height which fare
is charged in accordance with plaintiff’s rules and
regulations.
After about an hour’s trip, the bus reached Anao where it
stopped to allow the passengers bound therefore, among
whom were the plaintiffs and their children to get off.
Mariano Beltran, carrying some of their baggage was the
first to get down the bus, followed by his wife and children.
Mariano led his companion to a shaded spot on the left
pedestrian side of the road about four or five meters away
from the vehicle. Afterwards, he returned to the bus in
controversy to get his paying, which he had left behind, but
in so doing, his daughter followed him unnoticed by his
father. While said Mariano Beltran was on he running board
of the bus waiting for the conductor to hand him his bayong
which he left under one its seats near the door, the bus,
whose motor was not shut off while unloading suddenly
started moving forward, evidently to resume its trip,
notwithstanding the fact that the conductor was still attending
to the baggage left behind by Mariano Beltran. Incidentally,
when the bus was again placed in a complete stop, it had
traveled about 10 meters from point where plaintiffs had
gotten off.
Sensing the bus was again in motion; Mariano immediately
jumped form the running board without getting his bayong
from conductor. He landed on the side of the road almost
board in front of the shaded place where he left his wife and
his children. At that time, he saw people beginning to gather
around the body of a child lying prostrate on the ground, her
skull crushed, and without life. The child was none other
than his daughter Raquel, who was run over by the bus in
which she rode earlier together her parent.
For the death of the said child, plaintiffs comment the suit
against the defendant to recover from the latter damages.
Issue: Whether or not the child was no longer the passenger
of the bus involved in the incident, and therefore, the
contract of carriage was already terminated?
Held: There can be no controversy that as far as the father
is concerned, when he returned to the bus for his bayong
which was not unloaded, the relation of passenger and
carrier between him and the petitioner remained subsisting.
The relation of carrier and passenger does not necessarily
cease where the latter, after alighting from the car aids the
carrier’s servant or employee in removing his baggage from
the car.
It is a rule that the relation of carrier and passenger does not
cease the moment the passenger alights from the carrier’s
vehicle at a place selected by the carrier at the point of
destination but continues until the passenger has had a
reasonable time or a reasonable opportunity to leave the
carrier’s premises.
The father returned to the bus to get one of his baggages
which was not unloaded when they alighted from the bus.
Raquel must have followed her father. However, although
the father was still on the running board of the bus awaiting
for the conductor to hand him the bag or bayong, the bus
started to run, so that even he had jumped down from the
moving vehicle. It was that this instance that the child, who
must be near the bus, was run over and killed. In the
circumstances, it cannot be claimed that the carrier’s agent
had exercised the “utmost diligence” of a “very cautious
person” required by Article 1755 of the Civil Code to be
observed by a common carrier in the discharge of its
obligation to transport safely its passengers. The driver,
although stopping the bus, nevertheless did not put off the
engine. He started to run the bus even before the conductor
gave him the signal to go and while the latter was still
unloading part of the baggage of the passengers Beltran and
family. The presence of the said passengers near the bus
was not unreasonable and they are, therefore, to be
considered still as passengers of the carrier, entitled to the
protection under their contract of carriage.

7. Cathay Pacific Airways Ltd. Vs. Vasquez (399 SCRA 207)
06 Mar
CATHAY PACIFIC AIRWAYS LTD., petitioner,
vs. SPOUSES DANIEL VASQUEZ and MARIA LUISA
MADRIGAL VASQUEZ, respondents.
[G.R. No. 150843. March 14, 2003]
FACTS:
In respondents’ return flight to Manila from Hongkong, they were
deprived of their original seats in Business Class with their
companions because of overbooking. Since respondents were
privileged members, their seats were upgraded to First Class.
Respondents refused but eventually persuaded to accept it. Upon
return to Manila, they demanded that they be indemnified in the
amount of P1million for the “humiliation and embarrassment”
caused by its employees. Petitioner’s Country Manager failed to
respond. Respondents instituted action for damages. The RTC
ruled in favor of respondents. The Court of Appeals affirmed the
RTC decision with modification in the award of damages.
ISSUE:
Whether or not the petitioners (1) breached the contract of
carriage, (2) acted with fraud and (3) were liable for damages.
RULING:
(1) YES. Although respondents have the priority of upgrading their
seats, such priority may be waived, as what respondents did. It
should have not been imposed on them over their vehement
objection.
(2) NO. There was no evident bad faith or fraud in upgrade of seat
neither on overbooking of flight as it is within 10% tolerance.
(3) YES. Nominal damages (Art. 2221, NCC) were awarded in the
amount of P5,000.00. Moral damages (Art.2220, NCC) and
attorney’s fees were set aside and deleted from the Court of
Appeals’ ruling.
8.FIRST DIVISION
[ G.R. No. 203902, July 19, 2017 ]
SPOUSES DIONISIO ESTRADA AND JOVITA R. ESTRADA,
PETITIONERS, V. PHILIPPINE RABBIT BUS LINES, INC. AND
EDUARDO R. SAYLAN, RESPONDENTS.
DECISION
DEL CASTILLO, J.:
The Court restates in this petition two principles on the grant of
damages. First, moral damages, as a general rule, are not
recoverable in an action for damages predicated on breach of
contract.[1] Second, temperate damages in lieu of actual damages
for loss of earning capacity may be awarded where earning
capacity is plainly established but no evidence was presented to
support the allegation of the injured party's actual income.[2]
This Petition for Review on Certiorari assails the May 16, 2012
Decision[3] and October 1, 2012 Resolution[4] of the Court of
Appeals (CA) in CA-G.R. CV No. 95520, which partially granted
the appeal filed therewith by respondent Philippine Rabbit Bus
Lines, Inc. (Philippine Rabbit) and denied petitioners spouses
Dionisio C. Estrada (Dionisio) and Jovita R. Estrada's motion for
reconsideration thereto.
Factual Antecedents
On April 13, 2004, petitioners filed with the Regional Trial Court
(RTC) of Urdaneta City, Pangasinan, a Complaint[5] for Damages
against Philippine Rabbit and respondent Eduardo R. Saylan
(Eduardo).
The facts as succinctly summarized by the RTC are as follows:
[A] mishap occurred on April 9, 2002 along the national highway
in Barangay Alipangpang, Pozorrubio, Pangasinan, between the
passenger bus with plate number CVK-964 and body number
3101, driven by [respondent] Eduardo Saylan and owned by
[respondent] Philippine Rabbit Bus, Lines, Inc., and the Isuzu
truck with plate number UPB-974 driven by Willy U. Urez and
registered in the name of Rogelio Cuyton, Jr.. At the time of the
incident, the Philippine Rabbit Bus was going towards the north
direction, while the Isuzu truck was travelling towards the south
direction. The collision happened at the left lane or the lane
properly belonging to the Isuzu truck. The right front portion of the
Isuzu Truck appears to have collided with the right side portion of
the body of the Philippine Rabbit bus. x x x Before the collision,
the bus was following closely a jeepney. When the jeepney
stopped, the bus suddenly swerved to the left encroaching upon the
rightful lane of the Isuzu truck, which resulted in the collision of
the two (2) vehicles. x x x The [petitioner] Dionisio Estrada, who
was among the passengers of the Philippine Rabbit bus, as
evidenced by the ticket issued to him, was injured on the [right]
arm as a consequence of the accident. His injured right arm was
amputated at the Villaflor Medical Doctor's Hospital in Dagupan
City x x x. For the treatment of his injury, he incurred expenses as
evidenced by x x x various receipts.[6]
Dionisio argued that pursuant to the contract of carriage between
him and Philippine Rabbit, respondents were duty-bound to carry
him safely as far as human care and foresight can provide, with
utmost diligence of a very cautious person, and with due regard for
all the circumstances from the point of his origin in Urdaneta City
to his destination in Pugo, La Union. However, through the fault
and negligence of Philippine Rabbit's driver, Eduardo, and without
human care foresight, and due regard for all circumstances,
respondents failed to transport him safely by reason of the
aforementioned collision which resulted in the amputation of
Dionisio's right arm. And since demands for Philippine Rabbit[7] to
pay him damages for the injury he sustained remained unheeded,
Dionisio filed the said complaint wherein he prayed for the
following awards: moral damages of P500,000, actual damages of
P60,000.00, and attorney's fees of P25,000.00.
Petitioners' claim for moral damages, in particular, was based on
the following allegations:
9. [The] amount of P500,000.00 as moral damages for the
amputation of [Dionisio's] right arm for life including his moral
sufferings for such [loss] of right arm is reasonable.
Said amount is computed and derived using the formula (2/3 x [80-
age of the complainant when the injury is sustained] = life
expectancy) adopted in the American Expectancy Table of
Mortality or the actuarial of Combined Experience Table of
Mortality. From such formula, [Dionisio] is expected to live for 18
years, which is equivalent [to] about 6570 days. For each day,
[Dionisio] is claiming P80.00 as he is expected to work for 8 hours
a day with his amputated arm or to enjoy the same for at least 8
hours a day (or is claiming P10.00 for each hour) for 18 years
(6570 days). The amount that can be computed thereof would be
P525,600.00 (6570 days x P80.00). [Dionisio] then [rounded] it off
to P500,000.00, the moral damages consisted [of] his moral
sufferings due to the [loss] of his right arm for life;[8]
Denying any liability, Philippine Rabbit in its Answer[9] averred
that it carried Dionisio safely as far as human care and foresight
could provide with the utmost diligence of a very cautious person
and with due regard for all the circumstances prevailing. While it
did not contest that its bus figured in an accident, Philippine Rabbit
nevertheless argued that the cause thereof was an extraordinary
circumstance independent of its driver's action or a fortuitous
event. Hence, it claimed to be exempt from any liability arising
therefrom. In any case, Philippine Rabbit averred that it was the
Isuzu truck coming from the opposite direction which had the last
clear chance to avoid the mishap. Instead of slowing down upon
seeing the bus, the said truck continued its speed such that it
bumped into the right side of the bus. The proximate cause of the
accident, therefore, was the wrongful and negligent manner in
which the Isuzu truck was operated by its driver. In view of this,
Philippine Rabbit believed that Dionisio has no cause of action
against it.
With respect to Eduardo, he was declared in default after he failed
to file an Answer despite due notice.[10]
Ruling of the Regional Trial Court
Treating petitioners' Complaint for damages as one predicated on
breach of contract of carriage, the RTC rendered its Decision [11] on
December 1, 2009.
In concluding that Eduardo was negligent in driving the Philippine
Rabbit bus, the said court ratiocinated, viz.:
Evidently, prior to the accident, [Eduardo] was tailgating the
jeepney ahead of him. When the jeepney stopped, [Eduardo]
suddenly swerved the bus to the left, encroaching in the process the
rightful lane of the oncoming Isuzu truck, thereby resulting in the
collision. The fact that [Eduardo] did not apply the brakes, but
instead swerved to the other lane, fairly suggests that he was not
only unnecessarily close to the jeepney, but that he was operating
the bus at a speed greater than what was reasonably necessary for
him to be able to bring his vehicle to a full stop to avoid hitting the
vehicle he was then following. Clearly, immediately before the
collision, [Eduardo] was actually violating 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 [what] 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 a 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 clear distance ahead.
Too, when [Eduardo] swerved to the left and encroached on the
rightful lane of the Isuzu truck, he was violating Section 41 of the
same Traffic Code:
Sec. 41. Restriction on overtaking and passing. - (a) The driver of a
vehicle shall not drive to the left side of the center line of a
highway in overtaking or passing another vehicle, proceeding in
the same direction, unless such left side is clearly visible, and is
free of oncoming traffic for a sufficient distance ahead to permit
such overtaking or passing to be made in safety.
The fact that the collision occurred immediately after the bus
swerved on the left lane clearly [indicates] that the other lane was
not clear and free of oncoming vehicle at the time x x x [Eduardo]
tried to overtake the jeepney to avoid hitting it.
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, unless there is proof to the contrary (Article 2185 of the
Civil Code). [Eduardo] failed to rebut this legal presumption as he
chose not answer the complaint and to testify in court. [Philippine
Rabbit was also] unsuccessful in overthrowing the said legal
presumption. x x x
[Eduardo's] failure to observe the proper and safe distance from the
vehicle ahead of him and in running the bus at a speed greater than
what was reasonably necessary to control and stop the vehicle
when warranted by the circumstances, clearly were reflective of his
lack of precaution, vigilance, and foresight in operating his vehicle.
As an experienced driver, he should have known about the danger
posed by tailgating another vehicle and driving his vehicle at an
unreasonable speed called for by the circumstances. For, the
sudden stopping of a motor vehicle, for whatever [reason], is not
an uncommon and [unforeseeable] occurrence in the highway. If
only he had exercised diligence, vigilance and foresight, he would
have refrained from tailgating another vehicle at a dangerously
close range. What he should have done instead was to maintain a
reasonable distance from the jeepney and drove his vehicle at a
speed not greater than will permit him to bring the vehicle to a stop
within the assured clear distance ahead. This he failed to do. As a
consequence, when the jeepney stopped, he was unable to control
and stop the bus. Instead, he was forced to swerve the bus to the
left lane blocking the path of the oncoming Isuzu truck. While he
averted smashing the jeepney, he however collided with the Isuzu
truck. No doubt, it was [Eduardo's] lack of precaution, vigilance
and foresight that led to the accident. Otherwise stated, it was his
recklessness or negligence that was the proximate cause of the
mishap.
[Philippine Rabbit's] imputation of fault to the driver of the Isuzu
truck, claiming that it was the latter [which] had the last clear
chance to avoid the accident, deserves scant consideration. As the
evidence would show, the impact occurred immediately after the
bus swerved and while in the process of encroaching on the left
lane. This is evidenced by the fact that the front portion of the
Isuzu truck collided with the right side portion of the bus. The
driver of the Isuzu truck, before the accident, was cruising on the
lane properly belonging to him. He had every right to expect that
all the vehicles, including the bus coming from the opposite
direction would stay on their proper lane. He certainly was not
expected to know what prompted the bus driver to suddenly
swerve his vehicle to the left. The abruptness by which the bus
swerved without a warning could not have given him the luxury of
time to reflect and anticipate the bus' encroachment of his lane for
him to be able to avoid it. Needless to point out, there was no last
clear chance to speak of on the part of the driver of the Isuzu truck
to avoid the accident. Besides, the 'last clear chance' principle is
not applicable in this case since the instant suit is between the
passenger and the common carrier. x x x[12]
The RTC then proceeded to determine whether Philippine Rabbit,
as it claimed, exercised the diligence of a good father of a family in
the selection and supervision of its drivers as to negate any liability
for damages. The said court, however, was unconvinced after it
found that (1) Philippine Rabbit failed to show that it had taken all
the necessary and actual steps to thoroughly examine the
qualifications of Eduardo as a driver worthy of employment; and
(2) no proof relative to the existence of company rules and
regulations, instructions, and policies affecting its drivers, as well
as to their actual implementation and observance, were presented.
Hence, Philippine Rabbit was held jointly and severally liable with
Eduardo for the awards made in favor of Dionisio as follows:
The emotional anguish and suffering of x x x Dionisio Estrada as a
consequence of the injury and amputation of his right arm due to
the reckless driving of x x x Eduardo, which resulted in the
accident, cannot be overemphasized. The loss of the use of his
right arm and the humiliation of being tagged in the public [eye] as
a person with only one arm would certainly be borne by him for
the rest of his life. The amount of moral damages he is praying
appears to be reasonable under the circumstances.
Too, the award of attorney's fees is proper considering that x x x
[Dionisio] was forced to litigate after x x x [Philippine Rabbit]
refused to heed his demand for the payment of damages as a
consequence of the accident.
WHEREFORE, judgment is hereby rendered ordering x x x
Philippine Rabbit Bus Lines, Inc. and Eduardo Saylan to pay
jointly and severally x x x Dionisio Estrada the following amounts:
1. Five Hundred Thousand Pesos (P500,000.00) as moral damages;
2. Fifty Seven Thousand Seven Hundred Sixty Six Pesos and
Twenty Five Centavos (P57,766.25), as actual damages; and
3. Twenty Five Thousand Pesos (P25,000.00), as attorney's fees;
and the costs of suit.
SO ORDERED.[13]
Philippine Rabbit filed a Motion for Reconsideration[14] but the
same was denied for lack of merit in an Order[15] dated May 31,
2010.
Ruling of the Court of Appeals
On appeal, Philippine Rabbit imputed error upon the RTC in not
finding that it exercised the diligence of a good father of a family
in the selection and supervision of its drivers. In any case, it argued
that moral damages are not recoverable in an action for damages
predicated on breach of contract except when death results or when
the carrier is guilty of fraud or bad faith. Since none of the two
aforementioned circumstances are present in this case, Philippine
Rabbit contended that it is Eduardo alone who should be held
civilly liable.
In a Decision[16] dated May 16, 2012, the CA partially granted the
appeal on the following ratiocination:
Based from [sic] the aforecited allegations in the complaint, it was
rightly regarded by the trial court as an action to recover damages
arising from breach of contract of carriage. There was in fact, an
admission that [Dionisio] was a passenger of a bus owned by
[Philippine Rabbit]. In an action for breach of contract of carriage,
all that is required 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. In the present case, it was
duly established that there was a collision and as a result of which,
[Dionisio] sustained an injury.
[Philippine Rabbit] was therefore properly found liable for breach
of contract of carriage. A common carrier is bound to carry its
passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due
regard to all the circumstances. In a contract of carriage, it is
presumed that the common carrier was at fault or was negligent
when a passenger dies or is injured. Unless the presumption is
rebutted, the court need not even make an express finding of fault
or negligence on the part of the common carrier. This presumption
may only be overcome by evidence that the carrier exercised
extraordinary diligence, and this presumption remained unrebutted
in this case. The trial court found that the accident which led to the
amputation of [Dionisio's] arm was due to the reckless driving and
negligence of [Philippine Rabbit's] driver and stated that:
No doubt, it was x x x [Eduardo's] lack of precaution, vigilance
and foresight that led to the accident. Otherwise stated, it was his
recklessness or negligence that was the proximate cause of the
mishap.
Such negligence and recklessness is binding against [Philippine
Rabbit] pursuant to Article 1759 of the Civil Code which provides:
Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the former's
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease upon proof
that they exercised all the diligence of a good father of a family in
the selection and supervision of their employees.
Thus, [Philippine Rabbit's] defense that it acted with the diligence
of a good father of a family in its selection of its driver, Eduardo R.
Saylan, is unavailing. [Philippine Rabbit] however is correct in its
contention that moral damages are not recoverable in actions for
damages predicated on a breach of contract, unless death of a
passenger results, or it is proved that the carrier was guilty of fraud
or bad faith, even if death does not result.
There was no evidence on record indicative of fraud or bad faith on
[Philippine Rabbit's] part. Bad faith should be established by clear
and convincing evidence. The settled rule is that the law always
presumes good faith such that any person who seeks to be awarded
damages due to the acts of another has the burden of proving that
the latter acted in bad faith or with ill motive. The award for
attorney's fees must likewise be deleted considering that moral
damages cannot be granted and none of the instances enumerated
in Article 2208 of the Civil Code is present in the instant case.
However, the actual damages awarded by the trial court are
adequately substantiated by official receipts. Therefore, the same
shall be sustained.
The driver on the other hand, may not be held liable under the
contract of carriage, not being a party to the same. The basis of a
cause of action of a passenger against the driver is either culpa
criminal or culpa aquiliana. A passenger may file a criminal case
based on culpa criminal punishable under the Revised Penal Code
or a civil case based on culpa aquiliana under Articles 2176 and
2177 of the Civil Code.
A cause of action based on culpa contractual is also separate and
distinct from a cause of action based on culpa aquiliana. x x x
xxxx
The trial court therefore erred in ruling that [Philippine Rabbit] bus
company and [respondent] driver are jointly and severally liable.
The driver cannot be held jointly and severally liable with the
carrier in case of breach of the contract of carriage. The contract of
carriage is between the carrier and the passenger, and in the event
of contractual liability, the carrier is exclusively responsible
[therefor] to the passenger, even if such breach be due to the
negligence of his driver. The carrier can neither shift his liability
on the contract to his driver nor share it with him for his driver's
negligence is his.[17]
Accordingly, the CA modified the RTC Decision in that it declared
Philippine Rabbit as solely and exclusively liable to Dionisio for
actual damages in the amount of P57,766.25 and deleted the award
of moral damages and attorney's fees.
Petitioners filed a Motion for Reconsideration[18] but the same was
denied by the CA for lack of merit in a Resolution[19] dated
October 1, 2012.
Hence, this Petition for Review on Certiorari raising the following
issues:
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN DECLARING THAT THERE WAS NO
EVIDENCE ON RECORD INDICATIVE OF FRAUD OR BAD
FAITH ON [PHILIPPINE RABBIT'S] PART.
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN NOT [CONSIDERING] X X X THE
[COST OF THE] REPLACEMENT OF PETITIONER
[DIONISIO'S AMPUTATED RIGHT ARM] WITH [AN]
ARTIFICIAL ONE AS ACTUAL DAMAGES.[20]
The Parties' Arguments
Petitioners dispute the findings of lack of fraud or bad faith on the
part of Philippine Rabbit as to make it liable for moral damages.
According to them, the assertions of Philippine Rabbit in its
Answer, i.e., that it carried Dionisio safely; that it was not an
insurer of all risks; that the accident was caused by a fortuitous
event; that in any event, it was the negligent manner by which the
Isuzu truck was operated which was the proximate cause of the
accident; and that Dionisio has no cause of action against
Philippine Rabbit, were made with the intention to evade liability.
Petitioners claim that the said assertions are clear indication of
fraud or bad faith.
In justifying their claim for moral damages, petitioners aver that in
their Complaint, they did not seek for moral damages in terms of
physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury per se, but for moral damages based
purely on the fact that Dionisio lost his right arm. They argue that
while in a strict sense, Dionisio incurred actual damages through
the amputation of his right arm, such loss may rightly be
considered as falling under moral damages. This is because a right
arm is beyond the commerce of man and loss thereof necessarily
brings physical suffering, mental anguish, besmirched reputation,
social humiliation and similar injury to a person. At any rate,
should this Court award the amount of P500,000.00 as actual
damages due to the loss of Dionisio's right arm, petitioners also
find the same proper and appropriate under the circumstances.
Now jointly represented by one counsel, respondents, on the other
hand, reiterate the rule that moral damages are not recoverable in
an action for damages predicated on a breach of contract, as in this
case, since breach of contract is not one of the items enumerated in
Article 2219 of the Civil Code. Only as an exception, moral
damages may be recovered in an action for breach of contract of
carriage when the mishap results in death or if the carrier acted
fraudulently or in bad faith. Since Dionisio did not die in the
mishap nor was Philippine Rabbit found guilty of fraud or bad
faith, respondents argue that an award for moral damages is
improper for having no basis in fact and in law.
Our Ruling
The Court modifies the CA ruling.
Moral damages; Instances
when moral damages can be
awarded in an action for
breach of contract.
Moral damages include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they
are the proximate result of the defendant's wrongful act or
omission.[21]
Under Article 2219 of the Civil Code, moral damages are
recoverable in the following and analogous cases: (1) a criminal
offense resulting in physical injuries; (2) quasi-delicts causing
physical injuries; (3) seduction, abduction, rape or other lascivious
acts; (4) adultery or concubinage; (5) illegal or arbitrary detention
or arrest; (6) illegal search; (7) libel, slander, or any other form of
defamation; (8) malicious prosecution; (9) acts mentioned in
Article 309;[22] and (1) acts and actions referred to in Articles 21,[23]
26,[24] 27,[25] 28,[26] 29,[27] 30,[28] 32,[29] 34,[30] and 35.[31]
x x x [C]ase 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.[32]
Since breach of contract is not one of the items enumerated under
Article 2219, moral damages, as a general rule, are not recoverable
in actions for damages predicated on breach of contract.[33]
x x x As an exception, such damages are recoverable [in an action
for breach of contract:] (1) in cases in which the mishap results in
the death of a passenger, as provided in Article 1764, [34] in relation
to Article 2206(3)[35] of the Civil Code; and (2) in x x x cases in
which the carrier is guilty of fraud or bad faith, as provided in
Article 2220[36].[37]
Moral damages are not
recoverable in this case.
It is obvious that this case does not come under the first of the
above-mentioned exceptions since Dionisio did not die in the
mishap but merely suffered an injury. Nevertheless, petitioners
contend that it falls under the second category since they aver that
Philippine Rabbit is guilty of fraud or bad faith.
It has been held, however, that "allegations of bad faith and fraud
must be proved by clear and convincing evidence."[38] They are
never presumed considering that they are serious accusations that
can be so conveniently and casually invoked.[39] And unless
convincingly substantiated by whoever is alleging them, they
amount to mere slogans or mudslinging.[40]
In this case, the fraud or bad faith that must be convincingly
proved by petitioners should be one which was committed by
Philippine Rabbit in breaching its contract of carriage with
Dionisio. Unfortunately for petitioners, the Court finds no
persuasive proof of such fraud or bad faith.
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.[41]
Bad faith, on the other hand, "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."[42]
There is no showing here that Philippine Rabbit induced Dionisio
to enter into a contract of carriage with the former through
insidious machination. Neither is there any indication or even an
allegation of deceit or concealment or omission of material facts by
reason of which Dionisio boarded the bus owned by Philippine
Rabbit. Likewise, it was not shown that Philippine Rabbit's breach
of its known duty, which was to transport Dionisio from Urdaneta
to La Union,[43] was attended by some motive, interest, or ill will.
From these, no fraud or bad faith can be attributed to Philippine
Rabbit.
Still, petitioners insist that since the defenses it pleaded in its
Answer were designed to evade liability, Philippine Rabbit is
guilty of fraud or bad faith. Suffice it to state, however, that the
allegations which made up Philippine Rabbit's defenses are hardly
the kind of fraud or bad faith contemplated by law. Again, it bears
to mention that the fraud or bad faith must be one which attended
the contractual breach or one which induced Dionisio to enter into
contract in the first place.
Clearly, moral damages are not recoverable in this case. The CA,
therefore, did not err in deleting the award for moral damages.
Actual damages for
loss/impairment of earning
capacity are also not
recoverable. In lieu thereof, the
Court awards temperate
damages.
In an attempt to recover the P500,000.00 awarded by the RTC as
moral damages but deleted by the CA, petitioners would instead
want this Court to grant them the same amount as just and proper
compensation for the loss of Dionisio's right arm.
It can be recalled that in the Complaint, petitioners justified their
claim for moral damages as follows:
9. [The] amount of P500,000.00 as moral damages for the
amputation of [Dionisio's] right arm for life including his moral
sufferings for such [loss] of right arm is reasonable.
Said amount is computed and derived using the formula (2/3 x [80-
age of the complainant when the injury is sustained] = life
expectancy) adopted in the American Expectancy Table of
Mortality or the actuarial of Combined Experience Table of
Mortality. From such formula, [Dionisio] is expected to live for 18
years, which is equivalent [to] about 6570 days. For each day,
[Dionisio] is claiming P80.00 as he is expected to work for 8 hours
a day with his amputated arm or to enjoy the same for at least 8
hours a day (or is claiming P10.00 for each hour) for 18 years
(6570 days). The amount that can be computed thereof would be
P525,600.00 (6570 days x P80.00). [Dionisio] then [rounded] it off
to P500,000.00, the moral damages consisted [of] his moral
sufferings due to the [loss] of his right arm for life;[44]
It thus appears that while petitioners denominated their claim for
P500,000.00 as moral damages, their computation was actually
based on the supposed loss/impairment of Dionisio's earning
capacity.
Loss or impairment of earning capacity finds support under Article
2205 (1) of the Civil Code, to wit:
Art. 2205. Damages may be recovered:
(1) For loss or impairment of earning capacity in cases of
temporary or permanent personal injury;
xxxx
It is, however, settled that "damages for loss [or impairment] of
earning capacity is in the nature of actual damages x x x."[45]
Actual or compensatory damages are those awarded in order to
compensate a party for an injury or loss he suffered. They arise out
of a sense of natural justice, aimed at repairing the wrong done. To
be recoverable, they must be duly proved with a reasonable degree
of certainty. A court cannot rely on speculation, conjecture, or
guesswork as to the fact and amount of damages, but must depend
upon competent proof that they have suffered, and on evidence of
the actual amount thereof.[46]
Thus, as a rule, documentary evidence should be presented to
substantiate the claim for damages for loss of earning capacity. By
way of exception, damages for loss [or impairment] of earning
capacity may be awarded despite the absence of documentary
evidence when (1) the deceased [or the injured] was self-
employed and earning less than the minimum wage under
current labor laws, in which case, judicial notice may be taken
of the fact that in the deceased's line of work no documentary
evidence is available; or (2) the deceased was employed as a
daily worker earning less than the minimum wage under
current labor laws.[47]
Here, it is unlikely that petitioners presented evidence to prove a
claim for actual damages based on loss/impairment of earning
capacity since what they were claiming at the outset was an award
for moral damages. The Court has nonetheless gone over the
records to find out if they have sufficiently shown during trial that
they are entitled to such compensatory damages that they are now
claiming. Unfortunately, no documentary evidence supporting
Dionisio's actual income is extant on the records. What it bears is
the mere testimony of Dionisio on the matter, viz.:
COURT:
By the way, why did you submit the original copy of your
Q:
exhibits to the GSIS?
I am claiming my GSIS compensation because I am a
A:
government employee.
ATTY. SEVILLEJA:
Q: What particular government [agency do] you belong?
A: DECS.
Q: You are a teacher?
A: Yes sir.
Q: You are still continuing your profession as a teacher until now?
A: Yes sir.
Q:
By the way Mr. witness, you are claiming x x x moral damages
of P500,000.00? How did you compute that P500,000.00?
I based that from [sic] my income which is about P80.00 a day
A:
or P10.00 per hour.
Q: Is that x x x gross or not?
A: A: Net sir.
Q: What are your other sideline?
A: I know [how] to drive a tricycle.
Because of [the] amputation of your right arm, you mean to
Q:
say you [cannot] drive anymore a tricycle?
A: Yes sir.
By the way Mr. witness, how old are you when you met [the]
Q:
accident?
A: More than 53 years old sir, less than 54.
If you are claiming for x x x moral damages of P80.00 a day,
Q:
how come you are asking for P500,000.00?
If you compute that it is P2,400.00 monthly. If I still [live by]
A:
about 20-30 years [more], I can still [earn] that amount.[48]
It must be emphasized, though, that documentary proof of
Dionisio's actual income cannot be dispensed with since based on
the above testimony, Dionisio does not fall under any of the two
exceptions aforementioned. Thus, as it stands, there is no
competent proof substantiating his actual income and because of
this, an award for actual damages for loss/ impairment of earning
capacity cannot be made.
Nonetheless, since it was established that Dionisio lost his right
arm, temperate damages in lieu of actual damages for
loss/impairment of earning capacity may be awarded in his favor.
Under Article 2224, "[t]emperate or moderate damages, which are
more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be
proved with certainty."
The case of Tan v. OMC Carriers, Inc.[49] enumerates several
instances wherein the Court awarded temperate damages in lieu of
actual damages for loss of earning capacity, viz.:
In the past, we awarded temperate damages in lieu of actual
damages for loss of earning capacity where earning capacity is
plainly established but no evidence was presented to support the
allegation of the injured party's actual income.
In Pleno v. Court of Appeals, we sustained the award of temperate
damages in the amount of P200,000.00 instead of actual damages
for loss of earning capacity because the plaintiff's income was not
sufficiently proven.
We did the same in People v. Singh, and People v. Almedilla,
granting temperate damages in place of actual damages for the
failure of the prosecution to present sufficient evidence of the
deceased's income.
Similarly, in Victory Liner, Inc. v. Gammad, we deleted the award
of damages for loss of earning capacity for lack of evidentiary
basis of the actual extent of the loss. Nevertheless, because the
income-earning capacity lost was clearly established, we awarded
the heirs P500,000.00 as temperate damages.[50]
Accordingly, the Court in Tan awarded to the heirs of the therein
deceased victim, who was working as a tailor at the time of his
death, temperate damages in the amount of P300,000.00 in lieu of
compensatory damages.[51]
In the subsequent case of Orix Metro Leasing and Finance
Corporation v. Mangalinao,[52] the Court likewise awarded
temperate damages as follows:
While the net income had not been sufficiently established, the
Court recognizes the fact that the Mangalinao heirs had suffered
loss deserving of compensation. What the CA awarded is in
actuality a form of temperate damages. Such form of damages
under Article 2224 of the Civil Code is given in the absence of
competent proof on the actual damages suffered. In the past, we
awarded temperate damages in lieu of actual damages for loss of
earning capacity where earning capacity plainly established but no
evidence was presented to support the allegation of the injured
party's actual income. In this case, Roberto Mangalinao, the
breadwinner of the family, was a businessman engaged in buying
and selling palay and agricultural supplies that required high
capital in its operations and was only 37 at the time of his death.
Moreover, the Pathfinder which the Mangalinaos own, became a
total wreck. Under the circumstances, we find the award of
P500,000.00 as temperate damages as reasonable.[53]
And in the more recent case of People v. Salahuddin,[54] the lower
courts' award of P4,398,000.00 as compensation for loss of earning
capacity of a murdered lawyer was disallowed due to insufficiency
of evidence. Again in lieu thereof, temperate damages of
P1,000,000.00 was awarded.[55]
In view of the above rulings and under the circumstances of this
case, the Court finds reasonable to award Dionisio temperate
damages of P500,000.00 in lieu of actual damages for the
loss/impairment of his earning capacity.
Actual damages by way of
medical expenses must be
supported by official receipts.
Anent petitioners' assertion that actual damages should be awarded
to them for the cost of replacement of Dionisio's amputated right
arm, suffice it to state that petitioners failed to show during trial
that the said amputated right arm was actually replaced by an
artificial one. All that petitioners submitted was a quotation of
P160,000.00 for a unit of elbow prosthesis[56] and nothing more. It
has been held that actual proof of expenses incurred for medicines
and other medical supplies necessary for treatment and
rehabilitation must be presented by the claimant, in the form of
official receipts, to show the exact cost of his medication and to
prove that he indeed went through medication and rehabilitation. In
the absence of the same, such claim must be negated.[57]
At any rate, the RTC already granted petitioners actual damages by
way of medical expenses based on the official hospital receipts
submitted.[58] There is, however, a need to correct the amount, that
is, the same should be P57,658.25 as borne by the receipts and not
P57,766.25.
Legal interest is imposed on the
amounts awarded.
In addition, the amounts of damages awarded are declared subject
to legal interest of 6% per annum from the finality of this Decision
until full satisfaction.[59]
WHEREFORE, the Petition for Review on Certiorari is
DENIED. The assailed May 16, 2012 Decision and October 1,
2012 Resolution of the Court of Appeals in CA-G.R. CV No.
95520 are AFFIRMED with MODIFICATIONS as follows: (1)
petitioners are declared entitled to temperate damages of
P500,000.00; (2) the award of actual damages is set at the amount
of P57,658.25; and (3) all damages awarded are subject to legal
interest of 6% per annum from the finality of this Decision until
full satisfaction.
SO ORDERED.
9.PERALTA, J.:
Before us are consolidated petitions for review on certiorari under
Rule 45 of the Rules of Court assailing the Decision[1] dated
August 30, 2013, and Resolution[2] dated March 31, 2014 of the
Court of Appeals (CA) in CA-G.R. CV No. 93496 which affirmed
the Decision[3] dated September 9, 2008 of the Regional Trial
Court (RTC), Branch 97, Quezon City in Civil Case No. Q-N-02-
46727 finding Northwest Airlines, Inc. (Northwest) liable for
breach of contract of carriage.
The spouses Jesus and Elizabeth S. Fernando (Fernandos) are
frequent flyers of Northwest Airlines, Inc. and are holders of Elite
Platinum World Perks Card, the highest category given to frequent
flyers of the carrier.[4] They are known in the musical instruments
and sports equipments industry in the Philippines being the owners
of JB Music and JB Sports with outlets all over the country. They
likewise own the five (5) star Hotel Elizabeth in Baguio City and
Cebu City, and the chain of Fersal Hotels and Apartelles in the
country.[5]
The Fernandos initiated the filing of the instant case which arose
from two (2) separate incidents: first, when Jesus Fernando arrived
at Los Angeles (LA) Airport on December 20, 2001; second, when
the Fernandos were to depart from the LA Airport on January 29,
2002. The factual antecedents are as follows:
Version of Spouses Jesus and Elizabeth S. Fernando:
a.) The arrival at Los Angeles Airport on December 20, 2001
Sometime on December 20, 2001, Jesus Fernando arrived at the
LA Airport via Northwest Airlines Flight No. NW02 to join his
family who flew earlier to the said place for a reunion for the
Christmas holidays.[6]
When Jesus Fernando presented his documents at the immigration
counter, he was asked by the Immigration Officer to have his
return ticket verified and validated since the date reflected thereon
is August 2001. So he approached a Northwest personnel who was
later identified as Linda Puntawongdaycha, but the latter merely
glanced at his ticket without checking its status with the computer
and peremptorily said that the ticket has been used and could not
be considered as valid. He then explained to the personnel that he
was about to use the said ticket on August 20 or 21, 2001 on his
way back to Manila from LA but he could not book any seat
because of some ticket restrictions so he, instead, purchased new
business class ticket on the said date.[7] Hence, the ticket remains
unused and perfectly valid.
To avoid further arguments, Jesus Fernando gave the personnel the
number of his Elite Platinum World Perks Card for the latter to
access the ticket control record with the airline's computer and for
her to see that the ticket is still valid. But Linda Puntawongdaycha
refused to check the validity of the ticket in the computer but,
instead, looked at Jesus Fernando with contempt, then informed
the Immigration Officer that the ticket is not valid because it had
been used.[8]
The Immigration Officer brought Jesus Fernando to the
interrogation room of the Immigration and Naturalization Services
(INS) where he was asked humiliating questions for more than two
(2) hours. When he was finally cleared by the Immigration Officer,
he was granted only a twelve (12)-day stay in the United States
(US), instead of the usual six (6) months.[9]
When Jesus Fernando was finally able to get out of the airport, to
the relief of his family, Elizabeth Fernando proceeded to a
Northwest Ticket counter to verify the status of the ticket. The
personnel manning the counter courteously assisted her and
confirmed that the ticket remained unused and perfectly valid. To
avoid any future problems that may be encountered on the validity
of the ticket, a new ticket was issued to Jesus Fernando.[10]
Since Jesus Fernando was granted only a twelve (12)-day stay in
the US, his scheduled plans with his family as well as his business
commitments were disrupted. He was supposed to stay with his
family for the entire duration of the Christmas season because his
son and daughter were then studying at Pepperton University in
California. But he was forced to fly back to Manila before the
twelve (12)-day stay expired and flew back to the US on January
15, 2002. The Fernandos were, likewise, scheduled to attend the
Musical Instrument Trade Show in LA on January 17, 2002 and
the Sports Equipment Trade Show in Las Vegas on January 21 to
23, 2002 which were both previously scheduled. Hence, Jesus
Fernando had to spend additional expenses for plane fares and
other related expenses, and missed the chance to be with his family
for the whole duration of the Christmas holidays.[11]
b.) The departure from the Los Angeles Airport on January 29,
2002.
On January 29, 2002, the Fernandos were on their way back to the
Philippines. They have confirmed bookings on Northwest Airlines
NW Flight No. 001 for Narita, Japan and NW 029 for Manila.
They checked in with their luggage at the LA Airport and were
given their respective boarding passes for business class seats and
claim stubs for six (6) pieces of luggage. With boarding passes,
tickets and other proper travel documents, they were allowed entry
to the departure area and joined their business associates from
Japan and the Philippines who attended the Musical Instrument
Trade Show in LA on January 17, 2002 and the Sports Equipment
Trade Show in Las Vegas on January 21 to 23, 2002. When it was
announced that the plane was ready for boarding, the Fernandos
joined the long queue of business class passengers along with their
business associates.[12]
When the Fernandos reached the gate area where boarding passes
need to be presented, Northwest supervisor Linda Tang stopped
them and demanded for the presentation of their paper tickets
(coupon type). They failed to present the same since, according to
them, Northwest issued electronic tickets (attached to the boarding
passes) which they showed to the supervisor.[13] In the presence of
the other passengers, Linda Tang rudely pulled them out of the
queue. Elizabeth Fernando explained to Linda Tang that the matter
could be sorted out by simply verifying their electronic tickets in
her computer and all she had to do was click and punch in their
Elite Platinum World Perks Card number. But Linda Tang
arrogantly told them that if they wanted to board the plane, they
should produce their credit cards and pay for their new tickets,
otherwise Northwest would order their luggage off-loaded from the
plane. Exasperated and pressed for time, the Fernandos rushed to
the Northwest Airline Ticket counter to clarify the matter. They
were assisted by Northwest personnel Jeanne Meyer who retrieved
their control number from her computer and was able to ascertain
that the Fernandos' electronic tickets were valid and they were
confirmed passengers on both NW Flight No. 001 for Narita Japan
and NW 029 for Manila on that day. To ensure that the Fernandos
would no longer encounter any problem with Linda Tang, Jeanne
Meyer printed coupon tickets for them who were then advised to
rush back to the boarding gates since the plane was about to depart.
But when the Fernandos reached the boarding gate, the plane had
already departed. They were able to depart, instead, the day after,
or on January 30, 2002, and arrived in the Philippines on January
31, 2002.[14]
Version of Northwest Airlines, Inc.:
a.) The arrival at the Los Angeles Airport on December 20, 2001.
Northwest claimed that Jesus Fernando travelled from Manila to
LA on Northwest Airlines on December 20, 2001. At the LA
Airport, it was revealed that Jesus Fernando's return ticket was
dated August 20 or 21, 2001 so he encountered a problem in the
Immigration Service. About an hour after the aircraft had arrived,
Linda Puntawongdaycha, Northwest Customer Service Agent, was
called by a US Immigration Officer named "Nicholas" to help
verify the ticket of Jesus Fernando. Linda Puntawongdaycha then
asked Jesus Fernando to "show" her "all the papers." Jesus
Fernando only showed her the passenger receipt of his ticket
without any ticket coupon attached to it. The passenger receipt
which was labelled "Passenger Receipt" or "Customer Receipt"
was dated August 2001. Linda Puntawongdaycha asked Jesus
Fernando several times whether he had any other ticket, but Jesus
Fernando insisted that the "receipt" was "all he has", and the
passenger receipt was his ticket. He failed to show her any other
document, and was not able to give any other relevant information
about his return ticket. Linda Puntawongdaycha then proceeded to
the Interline Department and checked Jesus Fernando ss Passenger
Name Record (PNR) and his itinerary. The itinerary only showed
his coming from Manila to Tokyo and Los Angeles; nothing would
indicate about his flight back to Manila. She then looked into his
record and checked whether he might have had an electronic ticket
but she could not find any. For failure to find any other relevant
information regarding Fernando's return ticket, she then printed out
Jesus Fernando's PNR and gave the document to the US
Immigration Officer. Linda Puntawongdaycha insisted that she did
her best to help Jesus Fernando get through the US Immigration. [15]
b.) The departure from the Los Angeles Airport on January 29,
2002.
On January 29, 2002, the Fernandos took Northwest for their flight
back to Manila. In the trip, the Fernandos used electronic tickets
but the tickets were dated January 26, 2002 and August 21, 2001.
They reached the boarding gate few minutes before departure.
Northwest personnel Linda Tang was then the one assigned at the
departure area. As a standard procedure, Linda Tang scanned the
boarding passes and collected tickets while the passengers went
through the gate. When the Fernandos presented their boarding
passes, Linda Tang asked for their tickets because there were no
tickets stapled on their boarding passes. She explained that even
though the Fernandos had electronic tickets, they had made
"several changes on their ticket over and over". And when they
made the booking/reservation at Northwest, they never had any
ticket number or information on the reservation.[16]
When the Fernandos failed to show their tickets, Linda Tang called
Yong who was a supervisor at the ticket counter to verify whether
the Fernandos had checked in, and whether there were any tickets
found at the ticket counter. Upon verification, no ticket was found
at the ticket counter, so apparently when the Fernandos checked in,
there were no tickets presented. Linda Tang also checked with the
computer the reservation of the Fernandos, but again, she failed to
see any electronic ticket number of any kind, and/or any ticket
record. So as the Fernandos would be able to get on with the flight
considering the amount of time left, she told them that they could
purchase tickets with their credit cards and deal with the refund
later when they are able to locate the tickets and when they reach
Manila. Linda Tang believed that she did the best she could under
the circumstances.[17]
However, the Fernandos did not agree with the solution offered by
Linda Tang. Instead, they went back to the Northwest ticket
counter and were attended to by Jeanne Meyer who was
"courteous" and "was very kind enough" to assist them. Jeanne
Meyer verified their bookings and "printed paper tickets" for them.
Unfortunately, when they went back to the boarding gate, the plane
had departed. Northwest offered alternative arrangements for them
to be transported to Manila on the same day on another airline,
either through Philippine Airlines or Cathay Pacific Airways, but
they refused. Northwest also offered them free hotel
accommodations but they, again, rejected the offer[18] Northwest
then made arrangements for the transportation of the Fernandos
from the airport to their house in LA, and booked the Fernandos on
a Northwest flight that would leave the next day, January 30, 2002.
On January 30, 2002, the Fernandos flew to Manila on business
class seats.[19]
On April 30, 2002, a complaint for damages[20] was instituted by
the Fernandos against Northwest before the RTC, Branch 97,
Quezon City. During the trial of the case, the Fernandos testified to
prove their claim. On the part of Northwest, Linda Tang-
Mochizuki and Linda Puntawongdaycha testified through oral
depositions taken at the Office of the Consulate General, Los
Angeles City. The Northwest Manager for HR-Legal Atty. Cesar
Veneracion was also presented and testified on the investigation
conducted by Northwest as a result of the letters sent by Elizabeth
Fernando and her counsel prior to the filing of the complaint
before the RTC.[21]
On September 9, 2008, the RTC issued a Decision, the dispositive
portion of which states, thus:
WHEREFORE, in view of the foregoing, this Court rendered
judgment in favor of the plaintiffs and against defendant ordering
defendant to pay the plaintiffs, the following:
1. Moral damages in the amount of Two Hundred
Thousand Pesos (P200,000.00);
2. Actual or compensatory damages in the amount of Two
Thousand US Dollars ($2,000.00) or its corresponding
Peso equivalent at the time the airline ticket was
purchased;
3. Attorney's fees in the amount of Fifty Thousand pesos
(P50,000.00); and,
4. Cost of suit.
SO ORDERED.[22]
Both parties filed their respective appeals which were dismissed by
the CA in a Decision dated August 30, 2013, and affirmed the RTC
Decision.
The Fernandos and Northwest separately filed motions for a
reconsideration of the Decision, both of which were denied by the
CA on March 31, 2014.
The Fernandos filed a petition for review on certiorari[23] before
this court docketed as G.R. No. 212038. Northwest followed suit
and its petition[24] was docketed as G.R. No. 212043. Considering
that both petitions involved similar parties, emanated from the
same Civil Case No. Q-N-02-46727 and assailed the same CA
judgment, they were ordered consolidated in a Resolution[25] dated
June 18, 2014.
In G.R. No. 212038, the Fernandos raised the following issues:
WHETHER OR NOT THE ACTS OF THE PERSONNEL AND
THAT OF DEFENDANT NORTHWEST ARE WANTON,
MALICIOUS, RECKLESS, DELIBERATE AND OPPRESSIVE
IN CHARACTER, AMOUNTING TO FRAUD AND BAD
FAITH;
WHETHER OR NOT PETITIONER SPOUSES ARE ENTITLED
TO MORAL DAMAGES IN AN AMOUNT MORE THAN
THAT AWARDED BY THE TRIAL COURT;
WHETHER OR NOT DEFENDANT NORTHWEST IS LIABLE
TO PETITIONER SPOUSES FOR EXEMPLARY DAMAGES;
[and]
WHETHER OR NOT THE PETITIONER SPOUSES ARE
ENTITLED TO ATTORNEY'S FEES IN AN AMOUNT MORE
THAN THAT AWARDED BY THE TRIAL COURT.[26]
In G.R. No. 212043, Northwest anchored its petition on the
following assigned errors:
I
THE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN RULING THAT NORTHWEST COMMITTED A
BREACH OF CONTRACT OF CARRIAGE;
II
THE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN RULING THAT NORTHWEST IS LIABLE FOR
DAMAGES AND THE AWARDS FOR MORAL DAMAGES
AND ATTORNEY'S FEES ARE APPROPRIATE;
 III
THE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN RULING THAT NORTHWEST IS NOT ENTITLED
TO RECOVER ON ITS COUNTERCLAIMS.[27]
The Issues
The arguments proffered by the parties can be summed up into the
following issues: (1) whether or not there was breach of contract of
carriage and whether it was done In a wanton, malevolent or
reckless manner amounting to bad faith; (2) whether or not
Northwest is liable for the payment of moral damages and
attorney's fees and whether it is liable to pay more than that
awarded by the RTC; (3) whether or not Northwest is liable for the
payment of exemplary damages; and (4) whether or not Northwest
Airlines is entitled to recover on its counterclaim.
In their petition, the Fernandos contended that it was the personal
misconduct, gross negligence and the rude and abusive attitude of
Northwest employees Linda Puntawongdaycha and Linda Tang
which subjected them to indignities, humiliation and
embarrassment. The attitude of the aforesaid employees was
wanton and malevolent allegedly amounting to fraud and bad faith.
According to the Fernandos, if only Linda Puntawongdaycha had
taken the time to verify the validity of the ticket in the computer,
she would have not given the wrong information to the
Immigration Officer because the August 2001 return ticket
remained unused and valid for a period of one (1) year, or until
August 2002. The wrong information given by Linda
Puntawongdaycha aroused doubts and suspicions on Jesus
Fernando's travel plans. The latter was then subjected to two (2)
hours of questioning which allegedly humiliated him. He was even
suspected of being an "illegal alien". The negligence of Linda
Puntawongdaycha was allegedly so gross and reckless amounting
to malice or bad faith.
As to the second incident, the Fernandos belied the accusation of
Northwest that they did not present any tickets. They presented
their electronic tickets which were attached to their boarding
passes. If they had no tickets, the personnel at the check-in counter
would have not issued them their boarding passes and baggage
claim stubs. That's why they could not understand why the coupon-
type ticket was still demanded by Northwest.
On the award of moral damages, the Fernandos referred to the
testimony of Elizabeth Fernando that she could not sleep and had a
fever the night after the second incident. Thus, the Fernandos
demanded that they should be given more than the "token amount"
granted by the RTC which was affirmed by the CA. They stated
that their status in the society and in the business circle should also
be considered as a factor in awarding moral damages. They
averred that they are well-known in the musical instruments and
sports equipment industry in the country being the owners of JB
Music and JB Sports with outlets all over the country. They own
hotels, a chain of apartelles and a parking garage building in
Indiana, USA. And since the breach of contract allegedly
amounted to fraud and bad faith, they likewise demanded for the
payment of exemplary damages and attorney's fees more than the
amount awarded by the RTC.
On the other hand, Northwest stated in its petition that Linda
Puntawongdaycha tried her best to help Jesus Fernando get
through the US Immigration. Notwithstanding that Linda
Puntawongdaycha was not able to find any relevant information on
Jesus Fernando's return ticket, she still went an extra mile by
printing the PNR of Jesus Fernando and handling the same
personally to the Immigration Officer. It pointed out that the
Immigration Officer "noticed in the ticket that it was dated
sometime August 20 or 21, 2001, although it was already
December 2001."
As to the incident with Linda Tang, Northwest explained that she
was only following Northwest standard boarding procedures when
she asked the Fernandos for their tickets even if they had boarding
passes. Thus, the conduct cannot be construed as bad faith. The
dates indicated on the tickets did not match the booking. Elizabeth
Fernando was using an electronic ticket dated August 21, 2001,
while the electronic ticket of Jesus Fernando was dated January 26,
2002. According to Northwest, even if the Fernandos had
electronic tickets, the same did not discount the fact that, on the
face of the tickets, they were for travel on past dates. Also, the
electronic tickets did not contain the ticket number or any
information regarding the reservation. Hence, the alleged
negligence of the Fernandos resulted in the confusion in the
procedure in boarding the plane and the eventual failure to take
their flight.
Northwest averred that the award of moral damages and attorney's
fees were exorbitant because such must be proportionate to the
suffering inflicted. It argued that it is not obliged to give any
"special treatment" to the Fernandos just because they are good
clients of Northwest, because the supposed obligation does not
appear in the contract of carriage. It further averred that it is
entitled to its counterclaim in the amount of P500,000.00 because
the Fernandos allegedly acted in bad faith in prosecuting the case
which it believed are baseless and unfounded.
In the Comment[28] of Northwest, it insisted that assuming a
mistake was committed by Linda Tang and Linda
Puntawongdaycha, such mistake alone, without malice or ill will,
is not equivalent to fraud or bad faith that would entitle the
Fernandos to the payment of moral damages.
In the Reply[29] of the Fernandos, they asserted that it was a lie on
the part of Linda Puntawongdaycha to claim that she checked the
passenger name or PNR of Jesus Fernando from the computer and,
as a result, she was not allegedly able to find any return ticket for
him. According to Jesus Fernando, Linda Puntawongdaycha
merely looked at his ticket and declared the same to be invalid.
The Fernandos reiterated that after Jesus Fernando was released by
the US Immigration Service, Elizabeth Fernando proceeded to a
Northwest Ticket counter to verify the status of the ticket. The
personnel manning the counter courteously assisted her and
confirmed that the ticket remained unused and perfectly valid. The
personnel merely punched the Elite Platinum World Perks Card
number of Jesus Fernando and was able to verify the status of the
ticket. The Fernandos further argued that if there was a
discrepancy with the tickets or reservations, they would not have
been allowed to check in, and since they were allowed to check in
then they were properly booked and were confirmed passengers of
Northwest.
Our Ruling
We find merit in the petition of the Spouses Jesus and Elizabeth
Fernando.
The Fernandos' cause of action against Northwest stemmed from a
breach of contract of carriage. 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.[30]
A contract of carriage is defined as one whereby a certain person
or association of persons obligate themselves to transport persons,
things, or goods from one place to another for a fixed price. Under
Article 1732 of the Civil Code, this "persons, corporations, firms,
or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public" is called a
common carrier.[31] Undoubtedly, a contract of carriage existed
between Northwest and the Fernandos. They voluntarily and freely
gave their consent to an agreement whose object was the
transportation of the Fernandos from LA to Manila, and whose
cause or consideration was the fare paid by the Fernandos to
Northwest.[32]
In Alitalia Airways v. CA, et al.,[33] We held that 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 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 carnage.[34]
When Northwest confirmed the reservations of the Fernandos, it
bound itself to transport the Fernandos on their flight on 29
January 2002. We note that the witness[35] of Northwest admitted
on cross-examination that based on the documents submitted by
the Fernandos, they were confirmed passengers on the January 29,
2002 flight.[36]
In an action based on a breach of contract of carriage, the
aggrieved party does not have to prove that the common carrier
was at fault or was negligent. All that he has to prove is the
existence of the contract and the fact of its non-performance by the
carrier.[37] As the aggrieved party, the Fernandos only had to prove
the existence of the contract and the fact of its non-performance by
Northwest, as carrier, in order to be awarded compensatory and
actual damages.[38]
Therefore, having proven the existence of a contract of carriage
between Northwest and the Fernandos, and the fact of non-
performance by Northwest of its obligation as a common carrier, it
is clear that Northwest breached its contract of carriage with the
Fernandos. Thus, Northwest opened itself to claims for
compensatory, actual, moral and exemplary damages, attorney's
fees and costs of suit.[39]
Moreover, Article 1733 of the New Civil Code provides that
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. Also, Article 1755 of the same Code states 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 due regard for all the circumstances.
We, thus, sustain the findings of the CA and the RTC that
Northwest committed a breach of contract "in failing to provide the
spouses with the proper assistance to avoid any inconvenience"
and that the actuations of Northwest in both subject incidents "fall
short of the utmost diligence of a very cautious person expected of
it". Both ruled that considering that the Fernandos are not just
ordinary passengers but, in fact, frequent flyers of Northwest, the
latter should have been more courteous and accommodating to
their needs so that the delay and inconveniences they suffered
could have been avoided. Northwest was remiss in its duty to
provide the proper and adequate assistance to them.
Nonetheless, We are not in accord with the common finding of the
CA and the RTC when both ruled out bad faith on the part of
Northwest. While We agree that the discrepancy between the date
of actual travel and the date appearing on the tickets of the
Fernandos called for some verification, however, the Northwest
personnel failed to exercise the utmost diligence in assisting the
Fernandos. The actuations of Northwest personnel in both subject
incidents are constitutive of bad faith.
On the first incident, Jesus Fernando even gave the Northwest
personnel the number of his Elite Platinum World Perks Card for
the latter to access the ticket control record with the airline's
computer for her to see that the ticket is still valid. But Linda
Puntawongdaycha refused to check the validity of the ticket in the
computer. As a result, the Immigration Officer brought Jesus
Fernando to the interrogation room of the INS where he was
interrogated for more than two (2) hours. When he was finally
cleared by the Immigration Officer, he was granted only a twelve
(12)-day stay in the United States (US), instead of the usual six (6)
months.[40]
As in fact, the RTC awarded actual or compensatory damages
because of the testimony of Jesus Fernando that he had to go back
to Manila and then return again to LA, USA, two (2) days after
requiring him to purchase another round trip ticket from Northwest
in the amount of $2,000.00 which was not disputed by
Northwest.[41] In ignoring Jesus Fernando's pleas to check the
validity of the tickets in the computer, the Northwest personnel
exhibited an indifferent attitude without due regard for the
inconvenience and anxiety Jesus Fernando might have
experienced.
Passengers do not contract merely for transportation. They have a
right to be treated by the carrier's employees with kindness,
respect, courtesy and due consideration. They are entitled to be
protected against personal misconduct, injurious language,
indignities and abuses from such employees. So it is, that any rule
or discourteous conduct on the part of employees towards a
passenger gives the latter an action for damages against the
carrier.[42]
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.[43]
Notably, after the incident, the Fernandos proceeded to a
Northwest Ticket counter to verify the status of the ticket and they
were assured that the ticked remained unused and perfectly valid.
And, to avoid any future problems that may be encountered on the
validity of the ticket, a new ticket was issued to Jesus Fernando.
The failure to promptly verify the validity of the ticket connotes
bad faith on the part of Northwest.
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. It means breach of a known duty through some
motive, interest or ill will that partakes of the nature of fraud. A
finding of bad faith entitles the offended party to moral
damages.[44]
As to the second incident, there was likewise fraud or bad faith on
the part of Northwest when it did not allow the Fernandos to board
their flight for Manila on January 29, 2002, in spite of confirmed
tickets. We need to stress that they have confirmed bookings on
Northwest Airlines NW Flight No. 001 for Narita, Japan and NW
029 for Manila. They checked in with their luggage at LA Airport
and were given their respective boarding passes for business class
seats and claim stubs for six (6) pieces of luggage. With boarding
passes and electronic tickets, apparently, they were allowed entry
to the departure area; and, they eventually joined the long queue of
business class passengers along with their business associates.
However, in the presence of the other passengers, Northwest
personnel Linda Tang pulled the Fernandos out of the queue and
asked for paper tickets (coupon type). Elizabeth Fernando
explained to Linda Tang that the matter could be sorted out by
simply verifying their electronic tickets in her computer and all she
had to do was click and punch in their Elite Platinum World Perks
Card number. Again, the Northwest personnel refused to do so;
she, instead, told them to pay for new tickets so they could board
the plane. Hence, the Fernandos rushed to the Northwest Airline
Ticket counter to clarify the matter. They were assisted by
Northwest personnel Jeanne Meyer who retrieved their control
number from her computer and was able to ascertain that the
Fernandos' electronic tickets were valid, and they were confirmed
passengers on both NW Flight No. 001 for Narita Japan and NW
029 for Manila on that day.
In Ortigas, Jr. v. Lufthansa German Airlines,[45] this Court
declared that "(i)n contracts of common carriage, in attention 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."
In Pan American World Airways, Inc. v. Intermediate Appellate
Court,[46] where a would-be passenger had the necessary ticket,
baggage claim and clearance from immigration, all clearly and
unmistakably showing that she was, in fact, included in the
passenger manifest of said flight, and yet was denied
accommodation in said flight, this Court did not hesitate to affirm
the lower court's finding awarding her damages on the ground that
the breach of contract of carriage amounted to bad faith.[47] For the
indignity and inconvenience of being refused a confirmed seat on
the last minute, said passenger is entitled to an award of moral
damages.[48]
In this case, We need to stress that the personnel who assisted the
Fernandos even printed coupon tickets for them and advised them
to rush back to the boarding gates since the plane was about to
depart. But when the Fernandos reached the boarding gate, the
plane had already departed. They were able to depart, instead, the
day after, or on January 30, 2002.
In Japan Airlines v. Jesus Simangan,[49] this Court held that the
acts committed by Japan Airlines against Jesus Simangan
amounted to bad faith, thus:
x x x 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. As admitted by JAL,
"the flight could not wait for Mr. Simangan because it was ready to
depart."
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.[50]
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals,[51]
where private respondent was not allowed to board the plane
because her seat had already been given to another passenger even
before the allowable period for passengers to check in had lapsed
despite the fact that she had a confirmed ticket and she had
arrived on time, this Court held that petitioner airline acted in bad
faith in violating private respondent's rights under their contract of
carriage and is, therefore, liable for the injuries she has sustained
as a result.[52]
Under Article 2220[53] of the Civil Code of the Philippines, an
award of moral damages, in breaches of contract, is in order upon a
showing that the defendant acted fraudulently or in bad faith. [54]
Clearly, in this case, the Femandos are entitled to an award of
moral damages. The purpose of awarding moral damages is to
enable the injured party to obtain means, diversion or amusement
that will serve to alleviate the moral suffering he has undergone by
reason of defendant's culpable action.[55]
We note that even if both the CA and the RTC ruled out bad faith
on the part of Northwest, the award of "some moral damages" was
recognized. Both courts believed that considering that the
Fernandos are good clients of Northwest for almost ten (10) years
being Elite Platinum World Perks Card holders, and are known in
their business circle, they should have been given by Northwest the
corresponding special treatment.[56] They own hotels and a chain of
apartelles in the country, and a parking garage building in Indiana,
USA. From this perspective, We adopt the said view. We, thus,
increase the award of moral damages to the Fernandos in the
amount of P3,000,000.00.
As held in Kierulf v. Court of Appeals,[57] the social and financial
standing of a claimant may be considered if he or she was
subjected to contemptuous conduct despite the offender's
knowledge of his or her social and financial standing.
In Trans World Airlines v. Court of Appeals,[58] this Court
considered the social standing of the aggrieved passenger:
At the time of this unfortunate incident, the private respondent was
a practicing lawyer, a senior partner of a big law firm in
Manila. He was a director of several companies and was active
in civic and social organizations in the Philippines. Considering
the circumstances of this case and the social standing of private
respondent in the community, he is entitled to the award of
moral and exemplary damages. x x x This award should be
reasonably sufficient to indemnify private respondent for the
humiliation and embarrassment that he suffered and to serve
as an example to discourage the repetition of similar
oppressive and discriminatory acts.[59]
Exemplary damages, which are awarded by way of example or
correction for the public good, may be recovered in contractual
obligations, if defendant acted in wanton, fraudulent, reckless,
oppressive, or malevolent manner.[60] They are designed by our
civil law to permit the courts to reshape behavior that is socially
deleterious in its consequence by creating negative incentives or
deterrents against such behavior.[61] Hence, given the facts and
circumstances of this case, We hold Northwest liable for the
payment of exemplary damages in the amount of P2,000,000.00.
In the case of Northwest Airlines, Inc. v. Chiong,[62] Chiong was
given the run-around at the Northwest check-in counter, instructed
to deal with a man in barong to obtain a boarding pass, and
eventually barred from boarding a Northwest flight to
accommodate an American passenger whose name was merely
inserted in the Flight Manifest, and did not even personally check-
in at the counter. Under the foregoing circumstances, the award of
moral and exemplary damages was given by this Court.
Time and again, We have declared that a contract of carriage, in
this case, air transport, is primarily intended to serve the traveling
public and thus, imbued with public interest. The law governing
common carriers consequently imposes an exacting standard of
conduct.[63] A contract to transport passengers is quite different in
kind and degree from any other contractual relation because of the
relation which an air-carrier sustains with the public. Its business is
mainly with the travelling public. It invites people to avail of the
comforts and advantages it offers. The contract of air carriage,
therefore, generates a relation attended with a public duty. Neglect
or malfeasance of the carrier's employees, naturally, could give
ground for an action for damages.[64]
As to the payment of attorney's fees, We sustain the award thereof
on the ground that the Fernandos were ultimately compelled to
litigate and incurred expenses to protect their rights and interests,
and because the Fernandos are entitled to an award for exemplary
damages. Pursuant to Article 2208 of the Civil Code, attorney's
fees may be awarded when exemplary damages are awarded, or a
party is compelled to litigate or incur expenses to protect his
interest, or where the defendant acted in gross and evident bad
faith in refusing to satisfy the plaintiff's plainly valid, just and
demandable claim.
Records show that the Fernandos demanded payment for damages
from Northwest even before the filing of this case in court. Clearly,
the Fernandos were forced to obtain the services of counsel to
enforce a just claim, for which they should be awarded attorney's
fees.[65] We deem it just and equitable to grant an award of
attorney's fees equivalent to 10% of the damages awarded.
Lastly, the counterclaim of Northwest in its Answer[66] is a
compulsory counterclaim for damages and attorney's fees arising
from the filing of the complaint. This compulsory counterclaim of
Northwest 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 the Fernandos precisely to
claim their right to damages against Northwest. 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.[67]
WHEREFORE, the Decision dated August 30, 2013 and the
Resolution dated March 31, 2014 of the Court of Appeals, in CA-
GR. CV No. 93496 are hereby AFFIRMED WITH
MODIFICATION. The award of moral damages and attorney's
fees are hereby increased to P3,000,000.00 and ten percent (10%)
of the damages awarded, respectively. Exemplary damages in the
amount of P2,000,000.00 is also awarded. Costs against Northwest
Airlines.
The total amount adjudged shall earn legal interest at the rate of
twelve percent (12%) per annum computed from judicial demand
or from April 30, 2002 to June 30, 2013, and six percent (6%) per
annum from July 1, 2013 until their full satisfaction.
SO ORDERED.
10. SERENO, C.J.:
This is a Petition for Review on Certiorari filed by Cathay Pacific
Airways Ltd. from the Court of Appeals (CA) Decision [1] and
Resolution[2] in CA-G.R. CV No. 87698. The CA affirmed with
modification the Decision [3] issued by the Regional Trial Court
(RTC) Branch 30 in San Jose, Camarines Sur, in Civil Case No. T-
635.
The Case
The case originated from a Complaint[4] for damages filed by
respondents Arnulfo and Evelyn Fuentebella against petitioner
Cathay Pacific Airways Ltd., a foreign corporation licensed to do
business in the Philippines. Respondents prayed for a total of PI3
million in damages for the alleged besmirched reputation and
honor, as well as the public embarrassment they had suffered as a
result of a series of involuntary downgrades of their trip from
Manila to Sydney via Hong Kong on 25 October 1993 and from
Hong Kong to Manila on 2 November 1993.[5] In its Answer,[6]
petitioner maintained that respondents had flown on the sections
and sectors they had booked and confirmed.
The RTC ruled in favor of respondents and awarded P5 million as
moral damages, PI million as exemplary damages, and P500,000 as
attorney's fees. Upon review, the CA upheld the disposition and
the awards, with the modification that the attorney's fees be
reduced to P100,000.
Petitioner prays that the Complaint be dismissed, or in the
alternative, that the damages be substantially and equitably
reduced.[7]
Facts
In 1993, the Speaker of the House authorized Congressmen
Arnulfo Fuentebella (respondent Fuentebella), Alberto Lopez
(Cong. Lopez) and Leonardo Fugoso (Cong. Fugoso) to travel on
official business to Sydney, Australia, to confer with their
counterparts in the Australian Parliament from 25 October to 6
November 1993.[8]
On 22 October 1993, respondents bought Business Class tickets for
Manila to Sydney via Hong Kong and back.[9] They changed their
minds, however, and decided to upgrade to First Class.[10] From
this point, the parties presented divergent versions of facts. The
overarching disagreement was on whether respondents should have
been given First Class seat accommodations for all the segments of
their itinerary.
According to respondents, their travel arrangements, including the
request for the upgrade of their seats from Business Class to First
Class, were made through Cong. Lopez. [11] The congressman
corroborated this allegation. [12] On the other hand, petitioner
claimed that a certain Carol Dalag had transacted on behalf of the
congressmen and their spouses for the purchase of airline tickets
for Manila-Hong Kong-Sydney-Hong Kong- Manila. [13]
According to petitioner, on 23 October 1993, one of the passengers
called to request that the booking be divided into two: one for the
Spouses Lopez and Spouses Fugoso, and a separate booking for
respondents.[14] Cong. Lopez denied knowing a Carol Dalag. [15] He
was not questioned regarding the request for two separate
bookings. [16] However, in his testimony, he gave the impression
that the travel arrangements had been made for them as one group.
[17]
He admitted that he had called up petitioner, but only to request
an upgrade of their tickets from Business Class to First Class. [18]
He testified that upon assurance that their group would be able to
travel on First Class upon cash payment of the fare difference, he
sent a member of his staff that same afternoon to pay.[19]
Petitioner admits that First Class tickets were issued to
respondents, but clarifies that the tickets were open-dated
(waitlisted). [20] There was no showing whether the First Class
tickets issued to Sps. Lopez and Sps. Fugoso were open-dated or
otherwise, but it appears that they were able to fly First Class on all
the segments of the trip, while respondents were not.[21]
On 25 October 1993, respondents queued in front of the First Class
counter in the airport. [22] They were issued boarding passes for
Business Class seats on board CX 902 bound for Hong Kong from
Manila and Economy Class seats on board CX 101 bound for
Sydney from Hong Kong.[23] They only discovered that they had
not been given First Class seats when they were denied entry into
the First Class lounge.[24] Respondent Fuentebella went back to the
check-in counter to demand that they be given First Class seats or
at the very least, access to the First Class Lounge. He recalled that
he was treated by the ground staff in a discourteous, arrogant and
rude manner.[25] He was allegedly told that the plane would leave
with or without them.[26] Both the trial court and the CA gave
credence to the testimony of respondent Fuentebella.
During trial, petitioner offered the transcript of the deposition of its
senior reservation supervisor, Nenita Montillana (Montillana). [27]
She said that based on the record locator, respondents had
confirmed reservations for Business Class seats for the Manila-
Hong Kong, Sydney-Hong Kong, and Hong Kong-Manila flights;
but the booking for Business Class seats for the Hong Kong-
Sydney leg was "under request;" and due to the flight being full,
petitioner was not able to approve the request.[28]
Montillana admitted that First Class tickets had been issued to
respondents, but qualified that those tickets were open-dated. [29]
She referred to the plane tickets, which bore the annotations
"OPEN F OPEN" for all sectors of the flight.[30] Petitioner
explained that while respondents expressed their desire to travel
First Class, they could not be accommodated because they had
failed to confirm and the sections were full on the date and time of
their scheduled and booked flights.[31] Petitioner also denied that its
personnel exhibited arrogance in dealing with respondents; on the
contrary, it was allegedly respondent Fuentebella who was hostile
in dealing with the ground staff.[32]
Respondents alleged that during transit through the Hong Kong
airport on 25 October 1993, they were treated with far less respect
and courtesy by the ground staff.[33] In fact, the first employee they
approached completely ignored them and turned her back on
them.[34] The second one did not even give them any opportunity to
explain why they should be given First Class seats, but instead
brushed aside their complaints and told them to just fall in line in
Economy Class.[35] The third employee they approached shoved
them to the line for Economy Class passengers in front of many
people. [36]
Petitioner used the deposition of Manuel Benipayo (Benipayo),
airport service officer, and Raquel Galvez-Leonio (Galvez-
Leonio), airport services supervisor, to contradict the claims of
respondents. Benipayo identified himself as the ground staff who
had dealt with respondents' complaint. [37] He testified that around
five o'clock on 25 October 1993, respondent Fuentebella loudly
insisted that he be accommodated on First Class. But upon
checking their records, he found out that respondents were only
booked on Business Class. [38] Benipayo tried to explain this to
respondents in a very polite manner, [39] and he exerted his best
effort to secure First Class seats for them, but the plane was
already full. [40] He presented a telex sent to their Hong Kong
office, in which he requested assistance to accommodate
respondents in First Class for the Hong Kong-Sydney flight. [41] He
claimed that he was intimidated by respondent Fuentebella into
making the notations "Involuntary Downgrading" and "fare
difference to be refunded" on the tickets.[42]
For her part, Galvez-Leonio testified that it was company policy
not to engage passengers in debates or drawn-out discussions, but
to address their concerns in the best and proper way.[43] She
admitted, however, that she had no personal knowledge of
compliance in airports other than NAIA.[44]
Respondents narrated that for their trip from Hong Kong to
Sydney, they were squeezed into very narrow seats for eight and a
half hours and, as a result, they felt groggy and miserable upon
landing.[45]
Respondents were able to travel First Class for their trip from
Sydney to Hong Kong on 30 October 1993. [46] However, on the
last segment of the itinerary from Hong Kong to Manila on 2
November 1993, they were issued boarding passes for Business
Class.[47]
Upon arrival in the Philippines, respondents demanded a formal
apology and payment of damages from petitioner. [48] The latter
conducted an investigation, after which it maintained that no undue
harm had been done to them. [49] Ruling of the Regional Trial
Court
In resolving the case, the trial court first identified the ticket as a
contract of adhesion whose terms, as such, should be construed
against petitioner.[50] It found that respondents had entered into the
contract because of the assurance that they would be given First
Class seats.[51]
The RTC gave full faith and credence to the testimonies of
respondents and Cong. Fugoso, who testified in open court:
[T]he court was able to keenly observe [the] demeanor [of
respondents' witnesses] on the witness stand and they appear to be
frank, spontaneous, positive and forthright neither destroyed nor
rebutted in the course of the entire trial...The court cannot state the
same observation in regard to those witnesses who testified by way
of deposition [namely, Cong. Lopez all the witnesses of petitioner],
except those appearing in the transcript of records. And on record,
it appears [that] witness Nenita Montillana was reading a note.[52]
xxxx
[Montillana's] credibility, therefore, is affected and taking together
[her] whole testimony based on the so-called locator record of the
plaintiffs spouses from the defendant Cathay Pacific Airways, the
same has become less credible, if not, doubtful, to say the least. [53]
The trial court ordered petitioner to pay P5 million as moral
damages, P1 million as exemplary damages, and P500,000 as
attorney's fees. In setting the award for moral damages, the RTC
considered the prestigious position held by respondent Fuentebella,
as well as the bad faith exhibited by petitioner.[54] According to the
trial court, the contract was flagrantly violated in four instances:
first, when respondents were denied entry to the First Class lounge;
second, at the check-in counter when the airport services officer
failed to adequately address their concern; third, at the Hong Kong
airport when they were ignored; and fourth, when respondents
became the butt of jokes upon their arrival in Sydney.[55]
RULING OF THE COURT OF APPEALS
The CA affirmed the RTC Decision with the modification that the
attorney's fees be reduced to P100,000. The appellate court
reviewed the records and found that respondents were entitled to
First Class accommodation throughout their trip.[56] It gave weight
to the testimony of Cong. Lopez that they had paid the fare
difference to upgrade their Business Class tickets to First Class.[57]
It also considered the handwritten notation on the First Class
tickets stating "fare difference to be refunded" as proof that
respondents had been downgraded.[58]
With regard to the question of whether respondents had confirmed
their booking, the CA considered petitioner's acceptance of the fare
difference and the issuance of the First Class tickets as proof that
the request for upgrade had been approved.[59] It noted that the
tickets bore the annotation that reconfirmation of flights is no
longer necessary, further strengthening the fact of confirmation. [60]
The C A found that there were no conditions stated on the face of
the tickets; hence, respondents could not be expected to know that
the tickets they were holding were open-dated and were subject to
the availability of seats.[61] It applied the rule on contracts of
adhesion, and construed the terms against petitioner.
Finding that there was a breach of contract when petitioner
assigned Business Class and Economy Class seats to First Class
ticket holders, the CA proceeded to determine whether respondents
were entitled to moral damages. It said that bad faith can be
inferred from the inattentiveness and lack of concern shown by
petitioner's personnel to the predicament of respondents. [62] The
court also considered as a badge of bad faith the fact that
respondents had been downgraded due to overbooking.[63]
As regards the amount of moral damages awarded by the RTC, the
CA found no prejudice or corruption that might be imputed to the
trial court in light of the circumstances.[64] The appellate court
pointed out that the trial court only awarded half of what had been
prayed for.[65]
The award of exemplary damages was sustained to deter a similar
shabby treatment of passengers and a wanton and reckless refusal
to honor First Class tickets. [66] The award for attorney's fees was
likewise sustained pursuant to Article 2208(2) of the Civil Code
which allows recovery thereof when an act or omission of the
defendant compelled the plaintiff to litigate or incur expense to
protect the latter's interest.[67]
RULING OF THE COURT
There was a breach of contract.
In Air France v. Gillego[68] this Court ruled that in an action based
on a breach of contract of carriage, the aggrieved party does not
have to prove that the common carrier was at fault or was
negligent; all that he has to prove is the existence of the contract
and the fact of its nonperformance by the carrier. In this case, both
the trial and appellate courts found that respondents were entitled
to First Class accommodations under the contract of carriage, and
that petitioner failed to perform its obligation. We shall not delve
into this issue more deeply than is necessary because We have
decided to accord respect to the factual findings of the trial and
appellate courts. We must, however, point out a crucial fact We
have uncovered from the records that further debunks petitioner's
suggestion[69] that two sets of tickets were issued to respondents -
one for Business Class and another for open-dated First Class
tickets with the following entries:[70]
Business Class Tickets First Class Tickets
Date of Issue: 23 Date of Issue: 5 Actual
Segment October 1993 October 1993 Class
Boarded
Flight Class Status Flight Class Status
Manila-
Hong CX902 C OK OPEN F - Business
Kong
Hong
Kong- CX 101 C RQ OPEN F - Economy
Sydney
Sydney-
Hong CX 100 C OK OPEN F - First
Kong
Hong
Kong- CX901 C OK OPEN F - Business
Manila
The First Class tickets issued on 25 October 1993 indicate that
they were "issued in exchange for Ticket Nos. 160-401123987 and
160- 4474920334/5."[71] The latter set of tickets numbered 160-
4474920334/5 correspond to the Business Class tickets issued on
23 October 1993, which in turn originated from Ticket No. 160-
4011239858 issued on 22 October 1993.[72]
With this information, We can conclude that petitioner may have
been telling the truth that the passengers made many changes in
their booking. However, their claim that respondents held both
Business Class tickets and the open-dated First Class tickets is
untrue. We can also conclude that on the same day of the flight,
petitioner still issued First Class tickets to respondents. The
incontrovertible fact, therefore, is that respondents were holding
First Class tickets on 25 October 1993.
In FGU Insurance Corporation v. G.P. Sarmiento Trucking
Corporation,[73] We recognized the interests of the injured party in
breach of contract cases:
xxx. The law, recognizing the obligatory force of contracts, will
not permit a party to be set free from liability for any kind of
misperformance of the contractual undertaking or a contravention
of the tenor thereof. A breach upon the contract confers upon the
injured party a valid cause for recovering that which may have
been lost or suffered. The remedy serves to preserve the interests
of the promissee that may include his " expectation Interest,"
which is his interest in having the benefit of his bargain by being
put in as good a position as he would have been in had the contract
been performed, or his " reliance interest." which is his interest in
being reimbursed for loss caused by reliance on the contract by
being put in as good a position as he would have been in had the
contract not been made; or his "restitution interest." which is his
interest in having restored to him any benefit that he has conferred
on the other party.
According to Montillana, a reservation is deemed confirmed when
there is a seat available on the plane.[74] When asked how a
passenger was informed of the confirmation, Montillana replied
that computer records were consulted upon inquiry.[75] By its
issuance of First Class tickets on the same day of the flight in place
of Business Class tickets that indicated the preferred and
confirmed flight, petitioner led respondents to believe that their
request for an upgrade had been approved.
Petitioner tries to downplay the factual finding that no explanation
was given to respondents with regard to the types of ticket that
were issued to them. It ventured that respondents were seasoned
travelers and therefore familiar with the concept of open-dated
tickets.[76] Petitioner attempts to draw a parallel with Sarreal, Jr. v.
JAL,[77] in which this Court ruled that the airline could not be
faulted for the negligence of the passenger, because the latter was
aware of the restrictions carried by his ticket and the usual
procedure for travel. In that case, though, records showed that the
plaintiff was a well- travelled person who averaged two trips to
Europe and two trips to Bangkok every month for 34 years. In the
present case, no evidence was presented to show that respondents
were indeed familiar with the concept of open-dated ticket. In fact,
the tickets do not even contain the term "open-dated."
There is basis for the award of moral and exemplary
damages; however, the amounts were excessive.
Moral and exemplary damages are not ordinarily awarded in
breach of contract cases. This Court has held that damages may be
awarded only when the breach is wanton and deliberately
injurious, or the one responsible had acted fraudulently or with
malice or bad faith. [78] Bad faith is a question of fact that must be
proven by clear and convincing evidence. [79] Both the trial and the
appellate courts found that petitioner had acted in bad faith. After
review of the records, We find no reason to deviate from their
finding.
Petitioner argues that the testimonial evidence of the treatment
accorded by its employees to respondents is self-serving and,
hence, should not have been the basis for the finding of bad faith.
[80]
We do not agree. The Rules of Court do not require that the
testimony of the injured party be corroborated by independent
evidence. In fact, in criminal cases in which the standard of proof
is higher, this Court has ruled that the testimony of even one
witness may suffice to support a conviction. What more in the
present case, in which petitioner has had adequate opportunity to
controvert the testimonies of respondents.
In Singapore Airlines Limited v. Fernandez,[81] bad faith was
imputed by the trial court when it found that the ground staff had
not accorded the attention and treatment warranted under the
circumstances. This Court found no reason to disturb the finding of
the trial court that the inattentiveness and rudeness of the ground
staff were gross enough to amount to bad faith. The bad faith in the
present case is even more pronounced because petitioner's ground
staff physically manhandled the passengers by shoving them to the
line, after another staff had insulted them by turning her back on
them.
However, the award of P5 million as moral damages is excessive,
considering that the highest amount ever awarded by this Court for
moral damages in cases involving airlines is P500,000.[82] As We
said in Air France v. Gillego,[83] the mere fact that respondent was
a Congressman should not result in an automatic increase in the
moral and exemplary damages."
We find that upon the facts established, the amount of P500,000 as
moral damages is reasonable to obviate the moral suffering that
respondents have undergone. With regard to exemplary damages,
jurisprudence shows that P50,000 is sufficient to deter similar acts
of bad faith attributable to airline representatives.
WHEREFORE, the Petition is PARTIALLY GRANTED. The
Court of Appeals Decision dated 31 March 2009 in CA-G.R. CV
No. 87698 is hereby AFFIRMED with MODIFICATION in that
moral and exemplary damages are hereby reduced to P500,000 and
P50,000, respectively. These amounts shall earn legal interest of
6% per annum from the finality of this Decision until full payment.
SO ORDERED.
11. LUZON STEVEDORING vs. LUZON MARINE
DEPARTMENT UNION ET AL DIGEST
December 20, 2016 ~ vbdiaz
G.R. No. L-9265 April 29, 1957
LUZON STEVEDORING CO., INC., petitioner,
vs.
LUZON MARINE DEPARTMENT UNION and THE HON.
MODESTO CASTILLO, THE HON. JOSE S. BAUTISTA,
THE HON. V. JIMENEZ YANSON and THE HON. JUAN L.
LANTING, Judges of the Court of Industrial
Relations, respondents.
FACTS: Luzon Marine Department Union filed a petition with the
Court of Industrial Relations against petitioner Luzon Stevedoring
Co., Inc for full recognition of the right of COLLECTIVE
bargaining, close shop and check off. However, on July 18, 1948,
while the case was still pending with the CIR, said labor union
declared a strike which was ruled down as illegal by the SC. In
view of said ruling, the Union filed a “Constancia” with the Court
of Industrial Relations praying that the remaining unresolved
demands of the Union presented in their original petition, be
granted.
One of those claims was that the work performed in excess of eight
(8) hours he paid an overtime pay of 50 per cent the regular rate of
pay, and that work performed on Sundays and legal holidays be
paid double the regular rate of pay.
TRIAL COURT: Petitioner gave said employees 3 free meals
every day and about 20 minutes rest after each mealtime; that they
worked from 6:00 am. to 6:00 p.m. every day including Sundays
and holidays, and for work performed in excess of 8 hours, the
officers, patrons and radio operators were given overtime pay in
the amount of P4 each and P2 each for the rest of the crew up to
March, 1947, and after said date, these payments were increased to
P5 and P2.50, respectively, until the time of their separation or the
strike of July 19, 1948; that when the tugboats underwent repairs,
their personnel worked only 8 hours a day excluding Sundays and
holidays; that although there was an effort on the part of claimants
to show that some had worked beyond 6:00 p.m., the evidence was
uncertain and indefinite and that demand was, therefore, denied;
that respondent Company, by the nature of its business and as
defined by law is considered a public service operator by the
Public Service Commission, and, therefore, exempt from paying
additional remuneration or compensation for work performed on
Sundays and legal holidays.
CIR: Ruled that the 20 minutes’ rest given the claimants after
mealtime should not be deducted from the 4 hours of overtime
worked performed by said claimants
The company though insists that the rules on the 8 hours work of
land based jobs should be different from their seamen counterparts.
ISSUE: WON the rest periods given to the claimants (after each
meal) should be deducted from their overtime pay.
HELD: NO.
The SC finds no reason to set for seamen a criterion different from
that applied to laborers on land.
Section 1 of Commonwealth Act No. 444, known as the Eight-
Hour Labor Law, provides:
SEC. 1. The legal working day for any person employed by
another shall be of not more than eight hours daily. When the
work is not continuous, the time during which the laborer is not
working AND CAN LEAVE HIS WORKING PLACE and can
rest completely, shall not be counted.
The only thing to be done is to determine the meaning and scope of
the term “working place” used therein. As We understand this
term, a laborer need not leave the premises of the factory, shop
or boat in order that his period of rest shall not be counted, it
being enough that he “cease to work”, may rest completely and
leave or may leave at his will the spot where he actually stays
while working, to go somewhere else, whether within or outside
the premises of said factory, shop or boat. If these requisites
are complied with, the period of such rest shall not be counted.
In the case at bar We do not need to look into the nature of the
work of claimant mariners to ascertain the truth of petitioners
allegation that this kind of seamen have had enough “free time”, a
task of which we are relieved, for although after an ocular
inspection of the working premises of the seamen affected in this
case, the TRIAL COURT declared in his decision that the
Company gave the complaining laborers 3 free meals a day with a
recess of 20 minutes after each meal, this decision was specifically
amended by the CIR, wherein it held that the claimants
herein rendered services to the Company from 6:00 a.m. to 6:00
p.m. including Sundays and holidays, which implies either that
said laborers were not given any recess at all, or that they were
not allowed to leave the spot of their working place, or that
they could not rest completely. And such resolution being on a
question essentially of fact, this Court is now precluded to
review the same.
12. CASE DIGEST (Transportation Law): Monarch
Insurance Co., Inc. vs. CA
MONARCH INSURANCE CO., INC vs. COURT OF APPEALS and
ABOITIZ SHIPPING CORPORATION
G.R. No. 92735. June 8, 2000
FACTS:
Monarch and Tabacalera are insurance carriers of lost cargoes.
They indemnified the shippers and were consequently subrogated
to their rights, interests and actions against Aboitiz, the cargo
carrier. Because Aboitiz refused to compensate Monarch, it filed
two complaints against Aboitiz which were consolidated and
jointly tried.
Aboitiz rejected responsibility for the claims on the ground that
the sinking of its cargo vessel was due to force majeure or an act
of God. Aboitiz was subsequently declared as in default and
allowed Monarch and Tabacalera to present evidence ex-parte.
ISSUE:
Whether or not the doctrine of limited liability applies in the
instant case.
HELD:
Yes.
The failure of Aboitiz to present sufficient evidence to exculpate
itself from fault and/or negligence in the sinking of its vessel in
the face of the foregoing expert testimony constrains us to hold
that Aboitiz was concurrently at fault and/or negligent with the
ship captain and crew of the M/V P. Aboitiz. [This is in accordance
with the rule that in cases involving the limited liability of
shipowners, the initial burden of proof of negligence or
unseaworthiness rests on the claimants. However, once the vessel
owner or any party asserts the right to limit its liability, the
burden of proof as to lack of privity or knowledge on its part with
respect to the matter of negligence or unseaworthiness is shifted
to it. This burden, Aboitiz had unfortunately failed to discharge.]
That Aboitiz failed to discharge the burden of proving that the
unseaworthiness of its vessel was not due to its fault and/or
negligence should not however mean that the limited liability rule
will not be applied to the present cases. The peculiar
circumstances here demand that there should be no strict
adherence to procedural rules on evidence lest the just claims of
shippers/insurers be frustrated. The rule on limited liability should
be applied in accordance with the latest ruling in Aboitiz Shipping
Corporation v. General Accident Fire and Life Assurance
Corporation, Ltd.,] promulgated on January 21, 1993, that
claimants be treated as "creditors in an insolvent corporation
whose assets are not enough to satisfy the totality of claims
against it."
13. G.R. No. 110398 November 7, 1997
NEGROS NAVIGATION CO., INC., petitioner,
vs.
THE COURT OF APPEALS, RAMON MIRANDA, SPS.
RICARDO and VIRGINIA DE LA VICTORIA, respondents.
Facts:
Private respondent Ramon Miranda purchased from the Negros
Navigation Co., Inc. four special cabin tickets. The tickets were for
Voyage No. 457-A of the M/V Don Juan, leaving Manila and
going to Bacolod.
Subsequently, the Don Juan collided off the Tablas Strait in
Mindoro, with the M/T Tacloban City, an oil tanker owned by the
Philippine National Oil Company (PNOC) and the PNOC Shipping
and Transport Corporation (PNOC/STC). As a result, the M/V Don
Juan sank. Several of her passengers perished in the sea tragedy.
The bodies of some of the victims were found and brought to
shore, but the four members of private respondents’ families were
never found.
Private respondents filed a complaint against the Negros
Navigation, the Philippine National Oil Company (PNOC), and the
PNOC Shipping and Transport Corporation (PNOC/STC), seeking
damages for the death. Petitioner, however, denied that the four
relatives of private respondents actually boarded the vessel as
shown by the fact that their bodies were never recovered.
Petitioner further averred that the Don Juan was seaworthy and
manned by a full and competent crew, and that the collision was
entirely due to the fault of the crew of the M/T Tacloban City.
In finding petitioner guilty of negligence and in failing to exercise
the extraordinary diligence required of it in the carriage of
passengers, both the trial court and the appellate court relied on the
findings of this Court in Mecenas v. Intermediate Appellate Court,
which case was brought for the death of other passengers. In
Mecenas, SC found petitioner guilty of negligence in (1) allowing
or tolerating the ship captain and crew members in playing
mahjong during the voyage, (2) in failing to maintain the vessel
seaworthy and (3) in allowing the ship to carry more passengers
than it was allowed to carry. Petitioner is, therefore, clearly liable
for damages to the full extent.
Petitioner criticizes the lower court’s reliance on the Mecenas case,
arguing that, although this case arose out of the same incident as
that involved in Mecenas, the parties are different and trial was
conducted separately. Petitioner contends that the decision in this
case should be based on the allegations and defenses pleaded and
evidence adduced in it or, in short, on the record of this case.
Issues:
1. Whether the ruling in Mecenas v. Court of Appeals, finding the
crew members of petitioner to be grossly negligent in the
performance of their duties, is binding in this case;
2. Whether the award for damages in Mecenas v. Court of Appeals
is applicable in this case.
Held:
1. No. The contention is without merit.
Adherence to the Mecenas case is dictated by this Court’s policy of
maintaining stability in jurisprudence. Where, as in this case, the
same questions relating to the same event have been put forward
by parties similarly situated as in a previous case litigated and
decided by a competent court, the rule of stare decisis is a bar to
any attempt to relitigate the same issue.
2. No, it is not applicable.
Petitioner contends that, assuming that the Mecenas case applies,
private respondents should be allowed to claim only P43,857.14
each as moral damages because in the Mecenascase, the amount of
P307,500.00 was awarded to the seven children of the Mecenas
couple. Here is where the principle of stare decisis does not apply
in view of differences in the personal circumstances of the victims.
For that matter, differentiation would be justified even if private
respondents had joined the private respondents in the Mecenas
case.
The doctrine of stare decisis works as a bar only against issues
litigated in a previous case. Where the issue involved was not
raised nor presented to the court and not passed upon by the court
in the previous case, the decision in the previous case is not stare
decisis of the question presently presented.
The Mecenas case cannot be made the basis for determining the
award for attorney’s fees. The award would naturally vary or differ
in each case.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED
with modification and petitioner is ORDERED to pay private
respondents damages.
[ G.R. No. L-21495, March 18, 1924 ]
THE GOVERNMENT OF THE PHILIPPINE ISLANDS,
PLAINTIFF AND APPELLANT, VS. THE INSULAR MARITIME
CO., DEFENDANT AND APPELLEE.
DECISION
MALCOLM, J.:
The Government of the Philippine Islands seeks by this action to
recover from The Insular Maritime Company the sum of
P30,437.91 for repairs made by the Bureau of Commerce and
Industry on the motor ship Insular.
The Insular Maritime Company was organized with a capital of
P150,000. It became the owner of one vessel only, the Insular,
valued at P150,000. On October 29, 1919. The Insular Maritime
Company asked the Bureau of Commerce and Industry to perform
certain repairs on the Insular. The Government consented and
terminated said Government of the P. I. vs. Insular Maritime Co.
repairs on November 29 of the same year. Subsequent thereto, on
April 15, 1920, the Insular suffered a total loss by fire.
The bill prepared by the chief accountant of the Bureau of
Commerce and Industry for work done on the motor ship Insular
in the amount of P30,437.91, was dated July 31, 1920. Collection
of the claim was attempted pursuant to formal demand made by the
Acting Insular Auditor of date April 30, 1921.
It will thus be noted, as was emphasized by the defense and by His
Honor, the trial judge, that no steps were taken by the Government
to secure payment for the repairs until after the loss of the vessel
Insular. The first error assigned by the Attorney-General addressed
to this finding of fact is accordingly without merit.
The trial, judge further found in effect, as a legal conclusion, that
the loss of the vessel Insular extinguished the obligation. The
Attorney-General challenges the correctness of this view.
The decision of the trial judge was predicated on his understanding
of the provisions of article 591 of the Code of Commerce in
relation with other articles of the same Code, and with the decision
of this court in the case of Philippine Shipping Co. vs. Garcia
Vergara [1906], 6 Phil., 281). As to the applicability of article 591
of the Code of Commerce, there is nothing in the language to
denote that the liability of the owners of a vessel is wiped out by
the loss of that vessel. As to the applicability of the decision in the
case of Philippine Shipping Co. vs. Garcia Vergara, supra, the facts
are not the same. There, the owners and agents of a vessel causing
the loss of another vessel by collision were held "not liable beyond
the vessel itself causing the collision," but were "not required to
pay such indemnification for the reason that the obligation thus
incurred has been extinguished on account of the loss of the thing
bound for the payment thereof." Here, there is a contractual
relation which remains unaffected by the loss of the thing
concerned in the contract and which is governed principally by the
provisions of the Civil Code.
The rights and liabilities of owners of ships are in many respects
essentially the same as in the case of other owners of things. As a
general rule, the owners of a vessel and the vessel itself are liable
for necessary repairs. Naturally the total destruction of the vessel
extinguishes a maritime lien, as there is no longer any res to which
it can attach. But the total destruction of the vessel does not affect
the liability of the owners for repairs on the vessel completed
before its loss.
It is but fair to say that what has been stated in this decision more
accurately expresses the consensus of opinion in the court than it
does the views of the writer, who sees more in the appellee's case
than do his colleagues in the court.
The trial court was accordingly right in its exposition of the facts
but not in its application of the law. Judgment must therefore be as
it is hereby reversed, and in lieu of the judgment appealed from,
another shall be entered here in favor of the plaintiff and against
the defendant for the sum of P30,437.91 with legal interest from
July 20, 1921, when the complaint was presented, until payment.
Without special finding as to costs in either instance, it is so
ordered.
16. Vasquez v. CA
138 SCRA 553
Facts: Petitioners lost their children in a shipwreck involving the
vessel of private respondent when it sailed despite a typhoon.
Issue: 1) W/n it is a fortuitous event
2) W/n respondents are liable
HELD:
1) No. It is not a caso fortuito. The elements to consider in
sustaining a case of caso fortuito are the ff: 1) the event must be
independent of the human will, 2) the occurrence must render it
impossible for the debtor to fulfill the obligation in a normal
manner, 3) the obligor must be free of participation in,
aggravation of, the injury to the creditor,
2) Petitioners are liable as it is not a caso fortutito. There is no
caso fortuito when the ship captain proceeded en route despite a
typhoon advice close to the area where the vessel will pass.
Moreover, the Board of Marine’s inquiry conclusion that the ship
captain was not negligent is not binding on the Court when said
finding is not complete. The liability of the ship owner also
extends to the value of vessel and the insurance proceeds
thereon.
17. NATIONAL FOOD AUTHORITY vs. CA G.R. No. 96453,
August 4, 1999
Thursday, January 29, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Commercial Law
Facts: National Food Authority (NFA), thru its
officers, entered into a “Letter of Agreement for
Vessel/Barge Hire with Hongfil for the shipment of
200,000 bags of corn grains from Cagayan de Oro
City to Manila.
The loading of bags of corn grains in the vessel
commenced but it took a longer period of 21 days,
15 hours, and 18 minutes to finish than as was
certified by the arrastre firm as there was a strike
staged by the arrastre workers in view of the refusal
of the striking stevedores to attend to their work.
The vessel was allowed to depart for the port of
Manila and arrived there, but unfortunately, it took a
longer period of 20 days, 14 hours and 33 minutes to
finish the unloading than the discharging rate
certified by the Port of Manila, due to the
unavailability of a berthing space for the vessel M/V
CHARLIE/DIANE. Only 166,798 bags were unloaded
at the Port of Manila.
After the discharging was completed, NFA paid
Hongfil the amount of P1,006,972.11 covering the
shipment of corn grains. Thereafter, Hongfil sent its
billing to NFA claiming payment for freight covering
the shut-out load or deadfreight as well as
demurrage, allegedly sustained during the loading
and unloading of subject shipment of corn grains.
When NFA refused to pay the amount reflected in the
billing, Hongfil brought the present action against
NFA.
Issues:
1) Can petitioners be held liable for deadfreight?
2) Can petitioners be held liable for demurrage?
Held: 1) Yes. It bears stressing that subject Letter of
Agreement is considered a Charter Party. A charter
party is classified into (1) “bareboat” or “demise”
charter and (2) contract of affreightment. Subject
contract is one of affreightment, whereby the owner
of the vessel leases part or all of its space to haul
goods for others. It is a contract for special service
to be rendered by the owner of the vessel. Under
such contract, the ship retains possession,
command, and navigation of the ship, the charterer
or freighter merely having use of the space in the
vessel in return for his payment of the charter hire.
Under the law, the cargo not loaded is considered a
deadfreight. It is the amount paid by or recoverable
from a charterer of a ship for the portion of the
ship’s capacity the latter contracted for but failed to
occupy. Explicit and succinct is the law that the
liability for deadfreight is on the charterer. (Article
680 of the Code of Commerce).
2) No. Demurrage is the sum fixed in a charter party
as a remuneration to the owner of the ships for the
detention of his vessel beyond the number of days
allowed by the charter party for loading or unloading
or for sailing. Liability for demurrage, using the word
in its technical sense, exists only when expressly
stipulated in the contract.
Shipper or charterer is liable for the payment of
demurrage claims when he exceeds the period for
loading and unloading as agreed upon or the agreed
“laydays”. The period for such may or may not be
stipulated in the contract. A charter party may either
provide for a fixed laydays or contain general or
indefinite words such as “customary quick dispatch”
or “as fast as the streamer can load”. In the case at
bar, the charter party provides merely for a general
or indefinite words of “customary quick dispatch”.
Such stipulation implies that loading and unloading
of the cargo should be within a reasonable time.
The charterer NFA could not be held liable for
demurrage for it appears that cause of delay was not
imputable to either of the parties. The cause of delay
during the loading was the strike staged by the crew
of the arrastre operator, and the unavailability of a
berthing space for the vessel during the unloading.
Here, the Court holds that the delay sued upon was
still within the “reasonable time” embraced in the
stipulation of “Customary Quick Dispatch”.
Furthermore, considering the subject contract of
affreightment contains an express provision
“Demurrage/Dispatch: NONE”, the same left the
parties with no recourse but to apply the literal
meaning of such stipulation.
18.Inter Orient Maritime Enterprises Inc, et al vs NLRC
Chester Cabalza recommends his visitors to please read the
original & full text of the case cited. Xie xie!
INTERORIENT MARITIME ENTERPRISES, INC., FIRCROFT SHIPPING
CORPORATION and TIMES SURETY & INSURANCE CO., INC.,
petitioners,
vs
NATIONAL LABOR RELATIONS COMMISSION and CONSTANCIA
PINEDA, respondents.
G.R. No. 115497
September 16, 1996
Facts:
The instant petition seeks the reversal and/or modification of the
Resolution dated March 30, 1994 of public respondent National
Labor Relations Commission dismissing the appeals of petitioners
and affirming the decision dated November 16, 1992 of Philippine
Overseas Employment Administration (POEA) Administrator
Felicisimo C. Joson, This is a claim for death compensation
benefits filed by Constancia Pineda as heir of her deceased son,
seaman Jeremias Pineda, against Interorient Maritime
Enterprises, Inc. and its foreign principal, Fircroft Shipping
Corporation and the Times Surety and Insurance Co., Inc. The
following facts were found by the POEA Administrator.
On September 28, 1989, he finished his contract and was
discharged from the port of Dubai for repatriation to Manila; that
his flight schedule from Dubai to the Philippines necessitated a
stopover at Bangkok, Thailand, and during said stopover he
disembarked on his own free will and failed to join the connecting
flight to Hongkong with final destination to Manila; that on
October 5, 1990, it received a fax transmission from the
Department of Foreign Affairs to the effect that Jeremias Pineda
was shot by a Thai Officer on duty on October 2, 1989 at around
4:00 P.M.; that the police report submitted to the Philippine
Embassy in Bangkok confirmed that it was Pineda who
"approached and tried to stab the police sergeant with a knife and
that therefore he was forced to pull out his gun and shot Pineda"
Petitioner contends that they are not liable to pay any
death/burial benefits pursuant to the provisions of Par. 6, Section
C. Part II, POEA Standard Format of Employment which state(s)
that "no compensation shall be payable in respect of any injury,
(in)capacity, disability or death resulting from a willful (sic) act on
his own life by the seaman"; that the deceased seaman died due
to his own willful (sic) act in attacking a policeman in Bangkok
who shot him in self-defense.
After the parties presented their respective evidence, the POEA
Administrator rendered his decision holding petitioners liable for
death compensation benefits and burial expenses.
Petitioners appealed the POEA decision to the public respondent.
In a Decision dated March 30, 1994, public respondent upheld the
POEA.
Thus, this recourse to this Court by way of a special civil action for
certiorari per Rule 65 of the Rules of Court.
Issue:
Whether the petitioners can be held liable for the death of
seaman Jeremias Pineda?
Held:
The petitioners contention that the assailed Resolution has no
factual and legal bases is belied by the adoption with approval by
the public respondent of the findings of the POEA Administrator,
which recites at length the reasons for holding that the deceased
Pineda was mentally sick prior to his death and concomitantly,
was no longer in full control of his mental faculties.
In this instance, seaman Pineda, who was discharged in Dubai, a
foreign land, could not reasonably be expected to immediately
resort to and avail of psychiatric examination, assuming that he
was still capable of submitting himself to such examination at that
time, not to mention the fact that when he disembarked in Dubai,
he was already discharged and without employment — his
contract having already run its full term — and he had already
been put on a plane bound for the Philippines. Such mental
disorder became evident when he failed to join his connecting
flight to Hongkong, having during said stopover wandered out of
the Bangkok airport's immigration area on his own. This Court
agrees with the POEA Administrator that seaman Pineda was no
longer acting sanely when he attacked the Thai policeman. The
report of the Philippine Embassy in Thailand dated October 9,
1990 depicting the deceased's strange behavior shortly before he
was shot dead, after having wandered around Bangkok for four
days, clearly shows that the man was not in full control of his own
self.
The POEA Administrator ruled, and this Court agrees, that since
Pineda attacked the Thai policeman when he was no longer in
complete control of his mental faculties, the aforequoted
provision of the Standard Format Contract of Employment
exemption the employer from liability should not apply in the
instant case. Firstly, the fact that the deceased suffered from
mental disorder at the time of his repatriation means that he
must have been deprived of the full use of his reason, and that
thereby, his will must have been impaired, at the very least. Thus,
his attack on the policeman can in no wise be characterized as a
deliberate, willful or voluntary act on his part. Secondly, and apart
from that, we also agree that in light of the deceased's mental
condition, petitioners "should have observed some precautionary
meas