De Guzman v.

CA

Facts:

Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he
gathered to Manila for resale using 2 six-wheeler trucks. On the return trip to Pangasinan, respondent
would load his vehicle with cargo which various merchants wanted delivered, charging fee lower than
the commercial rates. Sometime in November 1970, petitioner Pedro de Guzman contracted with
respondent for the delivery of 750 cartons of Liberty Milk. On December 1, 1970, respondent loaded the
cargo. Only 150 boxes were delivered to petitioner because the truck carrying the boxes was hijacked
along the way. Petitioner commenced an action claiming the value of the lost merchandise. Petitioner
argues that respondent, being a common carrier, is bound to exercise extraordinary diligence, which it
failed to do. Private respondent denied that he was a common carrier, and so he could not be held liable
for force majeure. The trial court ruled against the respondent, but such was reversed by the Court of
Appeals.

Held:

(1) Article 1732 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. 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.

(2) Article 1734 establishes the general rule that common carriers are responsible for the loss,
destruction or deterioration of the goods which they carry, "unless the same is due to any of the
following causes only:

a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;

b. Act of the public enemy in war, whether international or civil;

c. Act or omission of the shipper or owner of the goods;

d. The character of the goods or defects in the packing or in the containers; and

e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any of the five (5) categories of exempting
causes listed in Article 1734. Private respondent as common carrier is presumed to have been at fault or
to have acted negligently. This presumption, however, may be overthrown by proof of extraordinary
diligence on the part of private respondent. We believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a
result of a robbery which is attended by "grave or irresistible threat, violence or force." we hold that the
occurrence of the loss must reasonably be regarded as quite beyond the control of the common
carrier and properly regarded as a fortuitous event. It is necessary to recall that even common carriers
are not made absolute insurers against all risks of travel and of transport of goods, and are not held
liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have
complied with the rigorous standard of extraordinary diligence.

MEDARDO AG. CADIENTE, petitioner,

vs.

BITHUEL MACAS, respondent.

The facts are undisputed.

Eyewitness Rosalinda Palero testified that on July 19, 1994, at about 4:00 p.m., at the intersection of
Buhangin and San Vicente Streets in Davao City, 15-year old high school student Bithuel Macas, herein
respondent, was standing on the shoulder of the road. She was about two and a half meters away from
the respondent when he was bumped and run over by a Ford Fiera, driven by Chona C. Cimafranca.
Rosalinda and another unidentified person immediately came to the respondent's rescue and told
Cimafranca to take the victim to the hospital. Cimafranca rushed the respondent to the Davao Medical
Center.

Cimafranca had since absconded and disappeared. Records showed that the Ford Fiera was registered in
the name of herein petitioner, Atty. Medardo Ag. Cadiente. However, Cadiente claimed that when the
accident happened, he was no longer the owner of the Ford Fiera. He alleged that he sold the vehicle to
Engr. Rogelio Jalipa on March 28, 1994,5 and turned over the Certificate of Registration and Official
Receipt to Jalipa, with the understanding that the latter would be the one to cause the transfer of the
registration.

In answer, Jalipa claimed that he was no longer the owner of the Ford Fiera at the time of the accident.
He alleged that he sold the vehicle to Abraham Abubakar on June 20, 1994.8 He thus filed a fourth-party
complaint9 against Abubakar.

Article 2179 of the Civil Code provides:

When the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot
recover damages. But if his negligence was only contributory, the immediate and proximate cause of
the injury being the defendant's lack of due care, the plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded.
The underlying precept on contributory negligence is that a plaintiff who is partly responsible for his
own injury should not be entitled to recover damages in full, but must proportionately bear the
consequences of his own negligence. The defendant is thus held liable only for the damages actually
caused by his negligence.17

Coming now to the second and third issues, this Court has recently reiterated in PCI Leasing and
Finance, Inc. v. UCPB General Insurance Co., Inc.,18 that the registered owner of any vehicle, even if
he had already sold it to someone else, is primarily responsible to the public for whatever damage or
injury the vehicle may cause. We explained,

…Were a registered owner allowed to evade responsibility by proving who the supposed transferee or
owner is, it would be easy for him, by collusion with others or otherwise, to escape said responsibility
and transfer the same to an indefinite person, or to one who possesses no property with which to
respond financially for the damage or injury done. A victim of recklessness on the public highways is
usually without means to discover or identify the person actually causing the injury or damage. He has
no means other than by a recourse to the registration in the Motor Vehicles Office to determine who
is the owner. The protection that the law aims to extend to him would become illusory were the
registered owner given the opportunity to escape liability by disproving his ownership.19

Bwho had since stopped schooling and is now forced to face life with nary but two remaining
limbs.WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated September 16,
2002 and Resolution dated December 18, 2003 of the Court of Appeals in CA-G.R. CV No. 64103 are
hereby AFFIRMED. Costs against the petitioner.

FILCAR TRANSPORT SERVICES,

Petitioner,

- versus -

JOSE A. ESPINAS,

at around 6:30 p.m., respondent Jose A. Espinas was driving his car along Leon Guinto Street in
Manila. Upon reaching the intersection of Leon Guinto and President Quirino Streets, Espinas stopped
his car. When the signal light turned green, he proceeded to cross the intersection. He was already in
the middle of the intersection when another car, traversing President Quirino Street and going to
Roxas Boulevard, suddenly hit and bumped his car. As a result of the impact, Espinas car turned
clockwise. The other car escaped from the scene of the incident, but Espinas was able to get its plate
number

After verifying with the Land Transportation Office, Espinas learned that the owner of the other car,
with plate number UCF-545, is Filcar.

Espinas sent several letters to Filcar and to its President and General Manager Carmen Flor,
demanding payment for the damages sustained by his car. On May 31, 2001, Espinas filed a complaint
for damages against Filcar and Carmen Flor before the Metropolitan Trial Court (MeTC) of Manila, and
the case was raffled to Branch 13. In the complaint, Espinas demanded that Filcar and Carmen Flor pay
the amount of P97,910.00, representing actual damages sustained by his car.

Filcar argued that while it is the registered owner of the car that hit and bumped Espinas car, the car
was assigned to its Corporate Secretary Atty. Candido Flor, the husband of Carmen Flor. Filcar further
stated that when the incident happened, the car was being driven by Atty. Flors personal driver,
Timoteo Floresca.

Our Ruling

The petition is without merit.

Filcar, as registered owner, is deemed the employer of the driver, Floresca, and is thus vicariously
liable under Article 2176 in relation with Article 2180 of the Civil Code

It is undisputed that Filcar is the registered owner of the motor vehicle which hit and caused damage to
Espinas car; and it is on the basis of this fact that we hold Filcar primarily and directly liable to Espinas
for damages.

As a general rule, one is only responsible for his own act or omission.[9] Thus, a person will generally
be held liable only for the torts committed by himself and not by another. This general rule is laid
down in Article 2176 of the Civil Code, which provides to wit:

Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence,
is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

Based on the above-cited article, the obligation to indemnify another for damage caused by ones act
or omission is imposed upon the tortfeasor himself, i.e., the person who committed the negligent act
or omission. The law, however, provides for exceptions when it makes certain persons liable for the
act or omission of another.
One exception is an employer who is made vicariously liable for the tort committed by his employee.
Article 2180 of the Civil Code states:

Article 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or
omissions, but also for those of persons for whom one is responsible.

Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks, even though the former are not engaged in any business or
industry.

The responsibility treated of in this article shall cease when the persons herein mentioned prove that
they observed all the diligence of a good father of a family to prevent damage.

Under Article 2176, in relation with Article 2180, of the Civil Code, an action predicated on an employees
act or omission may be instituted against the employer who is held liable for the negligent act or
omission committed by his employee.

Although the employer is not the actual tortfeasor, the law makes him vicariously liable on the basis
of the civil law principle of pater familias for failure to exercise due care and vigilance over the acts of
ones subordinates to prevent damage to another. In the last paragraph of Article 2180 of the Civil
Code, the employer may invoke the defense that he observed all the diligence of a good father of a
family to prevent damage.

LUCIA S. PAJARITO, petitioner,

vs.

HON. ALBERTO V. SEÑERIS, Presiding Judge of Branch II, Court of First Instance of Zamboanga; JOSELITO
AIZON, and FELIPE AIZON, respondents.

That on or about May 9, 1975, in the City of Zamboanga, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, being then the driver of an Isuzu Passenger Bus bearing
Plate No. SB-511 owned and operated by FELIPE AIZON, operating on the public road, and without
taking the necessary precautions, considering the width, traffic, visibility, grades, crossing, curvatures,
and other conditions of the road, so as to avoid accident to persons or damage to properties, did then
and there, through reckless and fast driving, caused the said Isuzu Passenger Bus to turn turtle, as a
After the judgment had become final and executory, a Writ of Execution was issued against Joselito
Aizon for the indemnity of P12,000.00, but the same was returned unsatisfied because of his
insolvency. Whereupon, petitioner Lucia S. Pajarito, mother of the late Myrna Pajarito de San Luis,
filed with the court a quo a motion for the issuance of Subsidiary Writ of Execution and served a copy
thereof to private respondent Felipe Aizon, employer of Joselito Aizon as alleged in the Information.

Felipe Aizon opposed the motion on the grounds, to wit: (1) that he is not the employer of Joselito
Aizon, the vehicle in question having been sold already to Isaac Aizon, father of Joselito, but that the
deed of transfer has not been executed because the full price has not yet been paid; and (2) that in
case of insolvency, Joselito has to suffer subsidiary imprisonment to satisfy the judgment insofar as
the indemnity is concerned.

The court denied petitioner's motion for Subsidiary Writ of Execution on the ground that Felipe Aizon,
alleged employer of Joselito, was not a party in the aforesaid criminal case. Said the court:

It is therefore, the well considered opinion of this Court that a separate civil action must be filed by
movant Lucia S. Pajarito against Felipe Aizon in order to enforce the subsidiary liability of the latter
under Article 103 of the Revised Penal Code, as amended.

On the other hand, respondents, in their Comment to the petition which We consider their Answer,
maintain that to enforce the subsidiary liability under Article 103 of the Revised Penal Code, as
amended, a separate civil action must be filed against the employer because under our present
judicial system, before one could be held subsidiary liable, he should be made a party defendant to
the action, which in this case is not legally feasible because respondent Felipe Aizon was not accused
together with Joselito Aizon in Criminal Case No. 512 (1313) for Double Homicide Through Reckless
Imprudence.

Obviously, the question to be considered here is whether the subsidiary civil liability established in
Articles 102 and 103 of the Revised Penal Code may be enforced in the same criminal case where the
award was made, or in a separate civil action.

Under Article 100 of the Revised Penal Code, a person criminally liable for a felony is also civilly liable.
As a consequence, the institution of the criminal action carries with it the institution of the civil action
arising therefrom, except when there is a separate civil action or reservation of the latter on the part
of the complainant.

As explained in Ramcar, Incorporated v. De Leon: 1 "When no civil action is expressly instituted,

according to subsection (a) of section 1 of Rule 107, it shall be impliedly jointly instituted with the
criminal action.' That means as if two actions are joined in one as twins, each one complete with the
same completeness as any of the two normal persons composing a twin. It means that the civil action
may be tried and prosecuted, with all the ancillary processes provided by law."

Pursuant to Article 103, in relation to Article 102, of the Revised Penal Code, an employer may be
subsidiary liable for the employee's civil liability in a criminal action when: (1) the employer is
engaged in any kind of industry; (2) the employee committed the offense in the discharge of his
duties; and (3) he is insolvent and has not satisfied his civil liability.

2 The subsidiary civil liability of the employer, however, arises only after conviction of the employee
in the criminal case. In Martinez v. Barredo, 3 this Court ruled that a judgment of conviction sentencing
a defendant employee to pay an indemnity in the absence of any collusion between the defendant and
the offended party, is conclusive upon the employer in an action for the enforcement of the latter's
subsidiary liability.

It is true that an employer, strictly speaking, is not a party to the criminal case instituted against his
employee, but in substance and in effect he is considering the subsidiary liability imposed upon him
by law. It is his concern, as well as of his employee, to see to it that his interest be protected in the
criminal case by taking virtual participation in the defense of his employee. He cannot leave him to his
own fate because his failure is also his. And if because of his indifference or inaction the employee is
convicted and damages are awarded against him, he cannot later be heard to complain, if brought to
court, for the enforcement of his subsidiary liability, that he was not given his day in court . (At p. 675.
Emphasis supplied.)

Considering that the judgment of conviction, sentencing a defendant employee to pay an indemnity
under Articles 102 and 103 of the Revised Penal Code, is conclusive upon the employer not only with
regard to the latter's civil liability but also with regard to its amount, this Court stated in Rotea, 8 that
in the action to enforce the employer's subsidiary liability, the court has no other function than to
render decision based upon the indemnity awarded in the criminal case and has no power to amend or
modify it even if in its opinion an error has been committed in the decision.

BRITISH AIRWAYS, petitioner, vs. COURT OF APPEALS, GOP MAHTANI, and PHILIPPINE AIRLINES,
respondents.
On April 16, 1989, Mahtani decided to visit his relatives in Bombay, India. In anticipation of his visit,
he obtained the services of a certain Mr. Gumar to prepare his travel plans. The latter, in turn,
purchased a ticket from BA where the following itinerary was indicated:[3]

Unfortunately, when Mahtani arrived in Bombay he discovered that his luggage was missing and that
upon inquiry from the BA representatives, he was told that the same might have been diverted to
London. After patiently waiting for his luggage for one week, BA finally advised him to file a claim by
accomplishing the Property Irregularity Report.[4]

Back in the Philippines, specifically on June 11, 1990, Mahtani filed his complaint for damages and
attorneys fees[5] against BA and Mr. Gumar before the trial court, docketed as Civil Case No. CEB-
9076.

On September 4, 1990, BA filed its answer with counter claim[6] to the complaint raising, as special
and affirmative defenses, that Mahtani did not have a cause of action against it. Likewise, on
November 9, 1990, BA filed a third-party complaint[7] against PAL alleging that the reason for the
non-transfer of the luggage was due to the latters late arrival in Hongkong, thus leaving hardly any
time for the proper transfer of Mahtanis luggage to the BA aircraft bound for Bombay.

On February 25, 1991, PAL filed its answer to the third-party complaint, wherein it disclaimed any
liability, arguing that there was, in fact, adequate time to transfer the luggage to BA facilities in
Hongkong. Furthermore, the transfer of the luggage to Hongkong authorities should be considered as
transfer to BA.[8]

After appropriate proceedings and trial, on March 4, 1993, the trial court rendered its decision in favor
of Mahtani,[9] the dispositive portion of which reads as follows:

Before we resolve the issues raised by BA, it is needful to state that the nature of an airlines contract
of carriage partakes of two types, namely: a contract to deliver a cargo or merchandise to its
destination and a contract to transport passengers to their destination. A business intended to serve
the travelling public primarily, it is imbued with public interest, hence, the law governing common
carriers imposes an exacting standard.[14] Neglect or malfeasance by the carriers employees could
predictably furnish bases for an action for damages.[15]

In the instant case, it is apparent that the contract of carriage was between Mahtani and BA.
Moreover, it is indubitable that his luggage never arrived in Bombay on time. Therefore, as in a
number of cases[16] we have assessed the airlines culpability in the form of damages for breach of
contract involving misplaced luggage.

In determining the amount of compensatory damages in this kind of cases, it is vital that the claimant
satisfactorily prove during the trial the existence of the factual basis of the damages and its causal
connection to defendants acts.[17]

In this regard, the trial court granted the following award as compensatory damages:

Admittedly, in a contract of air carriage a declaration by the passenger of a higher value is needed to
recover a greater amount. Article 22(1) of the Warsaw Convention,[19] provides as follows:

blind reliance on adhesion contracts where the facts and circumstances justify that they should be
disregarded.[22]

In addition, we have held that benefits of limited liability are subject to waiver such as when the air
carrier failed to raise timely objections during the trial when questions and answers regarding the
actual claims and damages sustained by the passenger were asked.[23]

Given the foregoing postulates, the inescapable conclusion is that BA had waived the defense of
limited liability when it allowed Mahtani to testify as to the actual damages he incurred due to the
misplacement of his luggage, without any objection. In this regard, we quote the pertinent transcript
of stenographic notes of Mahtanis direct testimony:[24]

Lastly, we sustain the trial courts ruling dismissing appellants third-party complaint against PAL.
The contract of air transportation in this case pursuant to the ticket issued by appellant to plaintiff-
appellee was exclusively between the plaintiff Mahtani and defendant-appellant BA. When plaintiff
boarded the PAL plane from Manila to Hongkong, PAL was merely acting as a subcontractor or agent
of BA. This is shown by the fact that in the ticket issued by appellant to plaintiff-appellee, it is
specifically provided on the Conditions of Contract, paragraph 4 thereof that:

Parenthetically, the Court of Appeals should have been cognizant of the well-settled rule that an
agent is also responsible for any negligence in the performance of its function[33] and is liable for
damages which the principal may suffer by reason of its negligent act.[34] Hence, the Court of Appeals
erred when it opined that BA, being the principal, had no cause of action against PAL, its agent or sub-
contractor.

Also, it is worth mentioning that both BA and PAL are members of the International Air Transport
Association (IATA), wherein member airlines are regarded as agents of each other in the issuance of
the tickets and other matters pertaining to their relationship.[35] Therefore, in the instant case, the
contractual relationship between BA and PAL is one of agency, the former being the principal, since it
was the one which issued the confirmed ticket, and the latter the agent.

Since the instant petition was based on breach of contract of carriage, Mahtani can only sue BA alone,
and not PAL, since the latter was not a party to the contract. However, this is not to say that PAL is
relieved from any liability due to any of its negligent acts. In China Air Lines, Ltd. v. Court of
Appeals,[37] while not exactly in point, the case, however, illustrates the principle which governs this
particular situation. In that case, we recognized that a carrier (PAL), acting as an agent of another
carrier, is also liable for its own negligent acts or omission in the performance of its duties.

British Airways vs. Court of Appeals

(285 SCRA 450)

Facts: On April 16, 1989, Mahtani is on his way to Bombay, India from Manila. His trip was Manila-Hong
Kong via PAL and then Hong Kong-India via British Airways. Prior to his departure, he checked in two
pieces of luggage containing his clothing and other personal effects, confident that the same would be
transferred to his BA flight.

Unfortunately, when he arrived in India, he discovered that his luggage was missing.

The RTC awarded Mahtani damages which was affirmed by CA.

Issue: Whether or not in a contract of air carriage a declaration by the passenger is needed to recover a
greater amount?

Held: American jurisprudence provides that an air carrier is not liable for the loss of baggage in an
amount in excess of the limits specified in the tariff which was filed with the proper authorities, such
tariff being binding on the passenger regardless of the passenger’s lack of knowledge thereof or assent
thereto. This doctrine is recognized in this jurisdiction.

The inescapable conclusion that BA had waived the defense of limited liability when it allowed Mahtani
to testify as to the actual damages he incurred due to misplacement of his luggage, without any
objection.

It is a well-settled doctrine that where the proponent offers evidence deemed by counsel of the adverse
party to be inadmissible for any reason, the latter has the right to object. However, such right is a mere
privilege which can be waived. Necessarily, the objection must be made at the earliest opportunity, in
case of silence when there is opportunity to speak may operate as a waiver of objections.

Email This

LA MALLORCA, petitioner,

vs.

HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET AL., respondents.

The facts of the case as found by the Court of Appeals, briefly are:

On December 20, 1953, at about noontime, plaintiffs, husband and wife, together with their minor
daughters, namely, Milagros, 13 years old, Raquel, about 4½ years old, and Fe, over 2 years old,
boarded the Pambusco Bus No. 352, bearing plate TPU No. 757 (1953 Pampanga), owned and
operated by the defendant, at San Fernando, Pampanga, bound for Anao, Mexico, Pampanga. At the
time, they were carrying with them four pieces of baggages containing their personal belonging. The
conductor of the bus, who happened to be a half-brother of plaintiff Mariano Beltran, issued three
tickets (Exhs. A, B, & C) 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 at which fare is charged in accordance with
the appellant's rules and regulations.

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. For, 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.1 The issue to be determined here is whether as to the child, who was already
led by the father to a place about 5 meters away from the bus, the liability of the carrier for her safety
under the contract of carriage also persisted.

It has been recognized as a rule that the relation of carrier and passenger does not cease at 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. And, what is a reasonable time or a reasonable delay
within this rule is to be determined from all the circumstances. Thus, a person who, after alighting
from a train, walks along the station platform is considered still a passenger.2 So also, where a
passenger has alighted at his destination and is proceeding by the usual way to leave the company's
premises, but before actually doing so is halted by the report that his brother, a fellow passenger, has
been shot, and he in good faith and without intent of engaging in the difficulty, returns to relieve his
brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled
as such to the protection of the railroad and company and its agents.3

In the circumstances, it cannot be claimed that the carrier's agent had exercised the "utmost
diligence" of a "very cautions 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. In the first place,
the driver, although stopping the bus, nevertheless did not put off the engine. Secondly, he started to
run the bus even before the bus conductor gave him the signal to go and while the latter was still
unloading part of the baggages of the passengers Mariano Beltran and family. The presence of 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.

But even assuming arguendo that the contract of carriage has already terminated, herein petitioner
can be held liable for the negligence of its driver, as ruled by the Court of Appeals, pursuant to Article
2180 of the Civil Code. Paragraph 7 of the complaint, which reads —

That aside from the aforesaid breach of contract, the death of Raquel Beltran, plaintiffs' daughter,
was caused by the negligence and want of exercise of the utmost diligence of a very cautious person
on the part of the defendants and their agent, necessary to transport plaintiffs and their daughter
safely as far as human care and foresight can provide in the operation of their vehicle.

BATANGAS TRANSPORTATION COMPANY, petitioner,

vs.

GREGORIO CAGUIMBAL, PANCRACIO CAGUIMBAL, MARIA MARANAN DE CAGUIMBAL, BIÑAN

TRANSPORTATION COMPANY and MARCIANO ILAGAN, respondents.

There is no dispute at all that the deceased Pedro Caguimbal, Barrio Lieutenant of Barrio Calansayan,
San Jose, Batangas, was a paying passenger of BTCO bus, with plate TPU-507, going south on its regular
route from Calamba, Laguna, to Batangas, Batangas, driven by Tomas Perez, its regular driver, at about
5:30 o'clock on the early morning of April 25, 1954. The deceased's destination was his residence at
Calansayan, San Jose, Batangas. The bus of the Biñan Transportation Company, bearing plate TPU-820,
driven by Marciano Ilagan, was coming from the opposite direction (north-bound). Along the national
highway at Barrio Daraza, Tanauan, Batangas, on the date and hour above indicated, a horse-driven
rig (calesa) managed by Benito Makahiya, which was then ahead of the Biñan bus, was also coming
from the opposite direction, meaning proceeding towards the north. As to what transpired thereafter,
the lower court chose to give more credence to defendant Batangas Transportation Company's
version which, in the words of the Court a quo, is as follows: "As the BTCO bus was nearing a house, a
passenger requested the conductor to stop as he was going to alight, and when he heard the signal of
the conductor, the driver Tomas Perez slowed down his bus swerving it farther to the right in order to
stop; at this juncture, a calesa, then driven by Benito Makahiya was at a distance of several meters
facing the BTCO bus coming from the opposite direction; that at the same time the Biñan bus was
about 100 meters away likewise going northward and following the direction of the calesa; that upon
seeing the Biñan bus the driver of the BTCO bus dimmed his light as established by Magno Ilaw, the
very conductor of the Biñan bus at the time of the accident; that as the calesa and the BTCO bus were
passing each other from the opposite directions, the Biñan bus following the calesa swerved to its left
in an attempt to pass between the BTCO bus and the calesa; that without diminishing its speed of
about seventy (70) kilometers an hour, the Biñan bus passed through the space between the BTCO
bus and the calesa hitting first the left side of the BTCO bus with the left front corner of its body and
then bumped and struck the calesa which was completely wrecked; that the driver was seriously
injured and the horse was killed; that the second and all other posts supporting the top of the left side
of the BTCO bus were completely smashed and half of the back wall to the left was ripped open.
(Exhibits 1 and 2). The BTCO bus suffered damages for the repair of its damaged portion.

As a consequence of this occurrence, two (2) passengers of BTCO died, namely, Pedro Caguimbal and
Guillermo Tolentino, apart from others who were injured. The widow and children of Caguimbal
instituted the present action, which was tried jointly with a similar action of the Tolentinos, to recover
damages from the Batangas Transportation Company, hereinafter referred to as BTCO. The latter, in
turn, filed a third-party complaint against the Biñan Transportation Company — hereinafter referred to
as Biñan — and its driver, Marciano Ilagan. Subsequently, the Caguimbals amended their complaint, to
include therein, as defendants, said Biñan and Ilagan.

After appropriate proceedings, the Court of First Instance of Batangas rendered a decision dismissing
the complaint insofar as the BTCO is concerned, without prejudice to plaintiff's right to sue Biñan —
which had stopped participating in the proceedings herein, owing apparently, to a case in the Court of
First Instance of Laguna for the insolvency of said enterprise — and Ilagan, and without pronouncement
as to costs.

On appeal taken by the Caguimbals, the Court of Appeals reversed said decision and rendered judgment
for them, sentencing the BTCO, Biñan and Ilagan to, jointly and severally, pay to the plaintiffs the
aggregate sum of P10,500.00 1 and the costs in both instances. Hence, this appeal by BTCO, upon the
ground that the Court of Appeals erred: 1) in finding said appellant liable for damages; and 2) in
awarding attorney's fees.

In connection with the first assignment of error, we note that the recklessness of defendant was,
manifestly, a major factor in the occurrence of the accident which resulted, inter alia, in the death of
Pedro Caguimbal. Indeed, as driver of the Biñan bus, he overtook Benito Makahiya's horse-driven rig or
calesa and passed between the same and the BTCO bus despite the fact that the space available was not
big enough therefor, in view of which the Biñan bus hit the left side of the BTCO bus and then the calesa.
This notwithstanding, the Court of Appeals rendered judgment against the BTCO upon the ground that
its driver, Tomas Perez, had failed to exercise the "extraordinary diligence," required in Article 1733 of
the new Civil Code, "in the vigilance for the safety" of his passengers. 2

The record shows that, in order to permit one of them to disembark, Perez drove his BTCO bus partly
to the right shoulder of the road and partly on the asphalted portion thereof. Yet, he could have and
should have seen to it — had he exercised "extraordinary diligence" — that his bus was completely
outside the asphalted portion of the road, and fully within the shoulder thereof, the width of which
being more than sufficient to accommodate the bus. He could have and should have done this,
because, when the aforementioned passenger expressed his wish to alight from the bus, Ilagan had
seen the aforementioned "calesa", driven by Makahiya, a few meters away, coming from the opposite
direction, with the Biñan bus about 100 meters behind the rig cruising at a good speed.

In an action based on a contract of carriage, the court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it responsible to pay the damages sought for by
the passenger. By the contract of carriage, the carrier assumes the express obligation to transport the
passenger to his destination safely and to observe extraordinary diligence with a due regard for all the
circumstances, and any injury that might be suffered by the passenger is right away attributable to
the fault or negligence of the carrier (Article 1756, new Civil Code). This is an exception to the general
rule that negligence must be proved, and it is therefore incumbent upon the carrier to prove that it
has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the new Civil Code.

WHEREFORE, the decision appealed from, should be, as it is hereby, affirmed, with the costs of this
instance against appellant Batangas Transportation Company.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

Bengzon, J.P., J., took no part.

6"Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all
the circumstances."
"Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been
at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755."

PANAY AUTOBUS COMPANY, INC., Petitioner, v. CRISANTA PASTOR, ET AL., Respondents.

Early in the morning of February 11, 1938, the deceased, Concepcion Gallopin, with her daughter-in-
law, Carmen Areda, left Estancia, Iloilo, for the City of Iloilo on truck No. 408 of the petitioner, Panay
Autobus Company, Inc., driven by one Felicisimo Tilos. Gallopin and Areda were seated at the extreme
right of the second bench behind the driver’s seat. In the course of transit, Gallopin stretched her right
arm beyond the railing of the bus, apparently pointing to her companion the rice fields yonder. This
arm was caught and broken by another truck driven by one Francisco Yap coming closely from the
opposite direction. Whether Gallopin stretched her right arm at the precise moment that the two
busses were about to cross each other or sometime prior thereto, and how close the two busses were to
each other, the record does not disclose. Her wrist bled profusely and notwithstanding medical
treatment at the Maternity Hospital at Sara and Mission Hospital at Jaro, Iloilo, where she was brought
after the accident, she died the following day, undoubtedly as a result of hemorrhage and severe shock.
Crisanta, Salome, and Jose, all surnamed Pastor, as heirs of the deceased, instituted in the court below
an action against the petitioner as owner of truck No. 408, seeking to recover damages in the sum of
P8,200 for the death of their mother. Petitioner having been absolved of the complaint, plaintiffs below
appealed to the Court of Appeals where the judgment of the trial court was reversed and another
entered in their favor awarding them damages in the sum of P2,000. Hence, this appeal by certiorari by
the petitioner.

The Court of Appeals rested its decision upon a finding of negligence on the part of petitioner’s
chauffeur in not having driven the bus in the proper place on the road, it having been found that the
bus was driven "almost in the middle of a 6-meter road, the space between the right edge of the ditch
on the left side of the road and the left side of the bus being two meters." And, on the basis of this
finding, the appellate court held petitioner guilty of breach of contractual duty to carry the deceased
safely to her destination.

We are unable to agree with this view. Driving at an appropriate speed, almost at the middle of a six-
meter highway which, at the time of the accident, was without traffic, is not, in our opinion,
negligence. Independently of the act of the deceased in stretching her right arm beyond the railing of
the bus, the manner the bus was driven could not have produced the injury. Petitioner’s driver at the
time that the other bus was passing closely from the opposite direction, did not know that the
deceased’s arm was extended beyond the railing of the bus. He has the right to assume that all his
passengers are taking the usual precaution for their own safety. If, without such knowledge of the
position of the deceased and on the assurance of such assumption, the chauffeur drives his bus at a
reasonably safe distance from that coming from the opposite direction, and one of his passengers
suffers an injury, the negligence cannot be attributed to him. In other words, the act performed by the
deceased at the time the accident occurred must be regarded as the proximate cause of the injury.

Judgment is reversed and petitioner is hereby absolved of the complaint, without costs.

PRECILLANO NECESITO, ETC., plaintiff-appellant,

vs.

NATIVIDAD PARAS, ET AL., defendants-appellees.

In the morning of January 28, 1964, Severina Garces and her one-year old son, Precillano Necesito,
carrying vegetables, boarded passenger auto truck or bus No. 199 of the Philippine Rabbit Bus Lines at
Agno, Pangasinan. The passenger truck, driven by Francisco Bandonell, then proceeded on its regular
run from Agno to Manila. After passing Mangatarem, Pangasinan truck No. 199 entered a wooden
bridge, but the front wheels swerved to the right; the driver lost control, and after wrecking the
bridge's wooden rails, the truck fell on its right side into a creek where water was breast deep. The
mother, Severina Garces, was drowned; the son, Precillano Necesito, was injured, suffering abrasions
and fracture of the left femur. He was brought to the Provincial Hospital at Dagupan, where the
fracture was set but with fragments one centimeter out of line. The money, wrist watch and cargo of
vegetables were lost.
Two actions for damages and attorney's fees totalling over P85,000 having been filed in the Court of
First Instance of Tarlac (Cases Nos. 908 and 909) against the carrier, the latter pleaded that the accident
was due to "engine or mechanical trouble" independent or beyond the control of the defendants or of
the driver Bandonell.

After joint trial, the Court of First Instance found that the bus was proceeding slowly due to the bad
condition of the road; that the accident was caused by the fracture of the right steering knuckle,
which was defective in that its center or core was not compact but "bubbled and cellulous", a
condition that could not be known or ascertained by the carrier despite the fact that regular thirty-day
inspections were made of the steering knuckle, since the steel exterior was smooth and shiny to the
depth of 3/16 of an inch all around; that the knuckles are designed and manufactured for heavy duty
and may last up to ten years; that the knuckle of bus No. 199 that broke on January 28, 1954, was last
inspected on January 5, 1954, and was due to be inspected again on February 5th. Hence, the trial
court, holding that the accident was exclusively due to fortuitous event, dismissed both actions.
Plaintiffs appealed directly to this Court in view of the amount in controversy.

We are thus forced to assume that the proximate cause of the accident was the reduced strength of
the steering knuckle of the vehicle caused by defects in casting it. While appellants hint that the
broken knuckle exhibited in court was not the real fitting attached to the truck at the time of
the accident, the records they registered no objection on that ground at the trial below. The issue is
thus reduced to the question whether or not the carrier is liable for the manufacturing defect of the
steering knuckle, and whether the evidence discloses that in regard thereto the carrier exercised the
diligence required by law (Art. 1755, new Civil Code).

ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with a due regard for the all the
circumstances.

It is clear that the carrier is not an insurer of the passengers' safety. His liability rests upon negligence,
his failure to exercise the "utmost" degree of diligence that the law requires, and by Art. 1756, in case
of a passenger's death or injury the carrier bears the burden of satisfying the court that he has duly
discharged the duty of prudence required. In the American law, where the carrier is held to the same
degree of diligence as under the new Civil Code, the rule on the liability of carriers for defects of
equipment is thus expressed: "The preponderance of authority is in favor of the doctrine that a
passenger is entitled to recover damages from a carrier for an injury resulting from a defect in an
appliance purchased from a manufacturer, whenever it appears that the defect would have been
discovered by the carrier if it had exercised the degree of care which under the circumstances was
incumbent upon it, with regard to inspection and application of the necessary tests. For the purposes
of this doctrine, the manufacturer is considered as being in law the agent or servant of the carrier, as
far as regards the work of constructing the appliance. According to this theory, the good repute of the
manufacturer will not relieve the carrier from liability" (10 Am. Jur. 205, s, 1324; see also Pennsylvania
R. Co. vs. Roy, 102 U. S. 451; 20 L. Ed. 141; Southern R. Co. vs. Hussey, 74 ALR 1172; 42 Fed. 2d 70; and
Ed Note, 29 ALR 788; Ann. Cas. 1916E 929).

The rationale of the carrier's liability is the fact that the passenger has neither choice nor control over
the carrier in the selection and use of the equipment and appliances in use by the carrier. Having no
privity whatever with the manufacturer or vendor of the defective equipment, the passenger has no
remedy against him, while the carrier usually has. It is but logical, therefore, that the carrier, while not
in insurer of the safety of his passengers, should nevertheless be held to answer for the flaws of his
equipment if such flaws were at all discoverable. Thus Hannen, J., in Francis vs. Cockrell, LR 5 Q. B. 184,
said:

ILTRANCO SERVICE ENTERPRISES, INC.,

Petitioner,

-versus-

FELIX PARAS AND INLAND TRAILWAYS, INC., AND HON. COURT OF APPEALS,

Antecedents

The antecedent facts, as summarized by the CA, are as follows:

Plaintiff-appellant [respondent] Felix Paras (Paras for brevity), who hails from Cainta, Rizal is engaged
in the buy and sell of fish products. Sometime on 08 February 1987, on his way home to Manila from
Bicol Region, he boarded a bus with Body No. 101 and Plate No. EVE 508, owned and operated by
Inland Trailways, Inc. (Inland for brevity) and driven by its driver Calvin Coner (Coner for brevity).
At approximately 3:50 oclock in the morning of 09 February 1987, while the said bus was travelling
along Maharlika Highway, Tiaong, Quezon, it was bumped at the rear by another bus with Plate No.
EVB 259, owned and operated by Philtranco Service Enterprises, Inc. (Philtranco for brevity). As a
result of the strong and violent impact, the Inland bus was pushed forward and smashed into a cargo
truck parked along the outer right portion of the highway and the shoulder thereof. Consequently, the
said accident bought considerable damage to the vehicles involved and caused physical injuries to the
passengers and crew of the two buses, including the death of Coner who was the driver of the Inland
Bus at the time of the incident

Paras was not spared from the pernicious effects of the accident. After an emergency treatment at the
San Pablo Medical Center, San Pablo City, Laguna, Paras was taken to the National Orthopedic Hospital.
At the latter hospital, he was found and diagnosed by Dr. Antonio Tanchuling, Jr. to be affected with the
following injuries: a) contusion/hematoma; b) dislocation of hip upon fracture of the fibula on the right
leg; c) fractured small bone on the right leg; and d) close fracture on the tibial plateau of the left leg.
(Exh. A, p. 157, record)

On 04 March 1987 and 15 April 1987, Paras underwent two (2) operations affecting the fractured
portions of his body. (Exhs. A-2 and A-3, pp. 159 and 160 respectively, record)

Unable to obtain sufficient financial assistance from Inland for the costs of his operations,
hospitalization, doctors fees and other miscellaneous expenses, on 31 July 1989, Paras filed a complaint
for damages based on breach of contract of carriage against Inland.

In its answer, defendant Inland denied responsibility, by alleging, among others, that its driver Coner
had observed an utmost and extraordinary care and diligence to ensure the safety of its passengers. In
support of its disclaimer of responsibility, Inland invoked the Police Investigation Report which
established the fact that the Philtranco bus driver of [sic] Apolinar Miralles was the one which
violently bumped the rear portion of the Inland bus, and therefore, the direct and proximate cause of
Paras injuries.

On 02 March 1990, upon leave of court, Inland filed a third-party complaint against Philtranco and
Apolinar Miralles (Third Party defendants). In this third-party complaint, Inland, sought for exoneration
of its liabilities to Paras, asserting that the latters cause of action should be directed against Philtranco
considering that the accident was caused by Miralles lack of care, negligence and reckless imprudence.
(pp. 50 to 56, records).

After trial, the RTC (Branch 71) in Antipolo, Rizal rendered its judgment on July 18, 1997,[1] viz:
The CA agreed with the RTCs finding that no trace of negligence at the time of the accident was
attributable to Inlands driver, rendering Inland not guilty of breach of contract of carriage; that faulty
brakes had caused Philtrancos bus to forcefully bump Inlands bus from behind, making it hit the rear
portion of a parked cargo truck; that the impact had resulted in considerable material damage to the
three vehicles; and that Paras and others had sustained various physical injuries.

Issues

Hence, this appeal, in which the petitioner submits that the CA committed grave abuse of discretion
amounting to lack of jurisdiction in awarding moral damages to Paras despite the fact that the complaint
had been anchored on breach of contract of carriage; and that the CA committed a reversible error in
substituting its own judgment by motu proprio awarding temperate damages of P250,000.00 to Inland
and P50,000.00 to Paras despite the clear fact that temperate damages were not raised on appeal by
Paras and Inland.

Ruling

The appeal lacks merit.

The Court does not disturb the unanimous findings by the CA and the RTC on the negligence of
Philtranco and its driver being the direct cause of the physical injuries of Paras and the material damage
of Inland.

As a general rule, indeed, moral damages are not recoverable in an action predicated on a breach of
contract. This is because such action is not included in Article 2219 of the Civil Code[5] as one of the
actions in which moral damages may be recovered. By way of exception, moral damages are
recoverable in an action predicated on a breach of contract: (a) where the mishap results in the death
of a passenger, as provided in Article 1764,[6] in relation to Article 2206, (3),[7] of the Civil Code; and
(b) where the common carrier has been guilty of fraud or bad faith,[8] as provided in Article 2220[9] of
the Civil Code.

Although this action does not fall under either of the exceptions, the award of moral damages to
Paras was nonetheless proper and valid. There is no question that Inland filed its third-party complaint
against Philtranco and its driver in order to establish in this action that they, instead of Inland, should be
directly liable to Paras for the physical injuries he had sustained because of their negligence. To be
precise, Philtranco and its driver were brought into the action on the theory of liability that the
proximate cause of the collision between Inlands bus and Philtrancos bus had been the negligent,
reckless and imprudent manner defendant Apolinar Miralles drove and operated his driven unit, the
Philtranco Bus with Plate No. 259, owned and operated by third-party defendant Philtranco Service
Enterprises, Inc.[10] The apparent objective of Inland was not to merely subrogate the third-party
defendants for itself, as Philtranco appears to suggest,[11] but, rather, to obtain a different relief
whereby the third-party defendants would be held directly, fully and solely liable to Paras and Inland
for whatever damages each had suffered from the negligence committed by Philtranco and its driver.
In other words, Philtranco and its driver were charged here as joint tortfeasors who would be jointly
and severally be liable to Paras and Inland

Impleading Philtranco and its driver through the third-party complaint filed on March 2, 1990 was
correct. The device of the third-party action, also known as impleader, was in accord with Section 12,
Rule 6 of the Revised Rules of Court, the rule then applicable, viz:

.R. No. L-28014-15 May 29, 1970

SPOUSES MARCELO LANDINGIN and RACQUEL BOCASAS, plaintiffs-appellees,

vs.

PANGASINAN TRANSPORTATION CO. and MARCELO OLIGAN, defendants-appellants.

SPOUSES PEDRO GARCIA and EUFRACIA LANDINGIN, plaintiffs-appellees,

vs.

PANGASINAN TRANSPORTATION CO. and MARCELO OLIGAN, defendants-appellants.

The complaints in said Civil Cases Nos. D-1468 and D-1470 were filed by the spouses Marcelo
Landingin and Racquel Bocasas, and the spouses Pedro Garcia and Eufracia Landingin, respectively, for
damages allegedly suffered by them in connection with the death of their respective daughter, Leonila
Landingin and Estrella Garcia, due to the alleged negligence of the defendants and/or breach of
contract of carriage.

In their complaints, plaintiffs averred, among others, that in the morning of April 20, 1963, their above-
mentioned daughters were among the passengers in the bus driven by defendant Marcelo Oligan and
owned and operated by defendant PANTRANCO on an excursion trip from Dagupan City to Baguio City
and back, that the bus was open on one side and enclosed on the other, in gross violation of the rules
of the Public Service Commission; that defendant PANTRANCO acted with negligence, fraud and bad
faith in pretending to have previously secured a special permit for the trip when in truth it had not
done so; that upon reaching an uphill point at Camp 8, Kennon Road, Baguio City, on the onward trip,
defendant driver, through utter lack of foresight, experience and driving knowledge, caused the bus to
stall and stop for a few moments; that through the said defendant's fault and mishandling, the motor
ceased to function, causing the bus to slide back unchecked; that when the said defendant suddenly
swerved and steered the bus toward the mountainside, Leonila and Estrella, together with several
other passengers, were thrown out of the bus through its open side unto the road, suffering serious
injuries as a result of which Leonila and Estrella died at the hospital and the same day; and that in
connection with the incident, defendant driver had been charged with and convicted of multiple
homicide and multiple slight physical injuries on account of the death of Leonila and Estrella and of
the injuries suffered by four others, although it may be said, by way of parenthesis, that this case is
now pending appeal in a higher court. The plaintiffs prayed for awards of moral, actual and exemplary
damages in the total sum of P40,000.00 in Civil Case No. D-1468, and in the total sum of P25,000.00 in
Civil Case No. D-1470 as well as attorney's fees in the amounts of P5,000.00 and P4,000.00, respectively.

Defendants filed a joint answer to each of the two complaints alleging, among others, that at the time
of the accident, defendant driver was driving the bus at, the slow speed of about 10 kilometers per
hour; that while the said defendant was steering his bus toward the mountainside after hearing a
sound coming from under the rear end of the bus, Leonila and Estrella recklessly, and in disobedience
to his shouted warnings and advice, jumped out of the bus causing their heads to hit the road or
pavement; that the bus was then being driven with extraordinary care, prudence and diligence; that
defendant PANTRANCO observed the care and diligence of a good father of a family to prevent the
accident as well as in the selection and supervision of its employees, particularly of defendant driver;
and that the decision convicting the said defendant was not yet final, the same having been appealed to
the Court of Appeals where it was still pending.

Defendants-appellants complain that having found them to be absolutely free from fault or negligence,
and having in fact dismissed the complaints against them, the court should not have ordered them to
assume any pecuniary liability. There would be merit in his argument but for the fact that defendant-
appellant PANTRANCO was guilty of breach of contract of carriage. It will be noted that in each of the
two complaints it is averred that two buses including the one in which the two deceased girls were
riding, were hired to transport the excursionist passengers from Dagupan City to Baguio City, and return,
and that the said two passengers did not reach destination safely.

As a common carrier, defendant-appellant PANTRANCO was duty bound to carry its passengers
"safely as far as human care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances." (Article 1755, Civil Code.) Did defendant-
appellant PANTRANCO measure up to the degree of care and foresight required it under the
circumstances? We think not. The court below found that the cross-joint of the bus in which the
deceased were riding broke, which caused the malfunctioning of the motor, which in turn resulted in
panic among some of the passengers. This is a finding of fact which this Court may not disturb. We are
of the opinion, however, that the lower court's conclusion drawn from that fact, i.e., that "the accident
was caused by a fortuitous event or an act of God brought about by some extraordinary circumstances
independent of the will of the Pantranco or its employees," is in large measure conjectural and
speculative, and was arrived at without due regard to all the circumstances, as required by Article 1755.
In Lasam vs. Smith (45 Phil. 660), this Court held that an accident caused by defects in the automobile
is not a caso fortuito. The rationale of the carrier's liability is the fact that "the passenger has neither
the choice nor control over the carrier in the selection and use of the equipment and appliances in use
by the carrier." (Necesito, et al. vs. Paras, et al., 104 Phil. 75.)

When a passenger dies or is injured, the presumption is that the common carrier is at fault or that it
acted negligently (Article 1756). This presumption is only rebutted by proof on the carrier's part that it
observed the "extraordinary diligence" required in Article 1733 and the "utmost diligence of very
cautious persons" required in Article 1755 (Article 1756). In the instant case it appears that the court
below considered the presumption rebutted on the strength of defendants-appellants' evidence that
only the day before the incident, the crossjoint in question was duly inspected and found to be in order.
It does not appear, however, that the carrier gave due regard for all the circumstances in connection
with the said inspection. The bus in which the deceased were riding was heavily laden with
passengers, and it would be traversing mountainous, circuitous and ascending roads. Thus the entire
bus, including its mechanical parts, would naturally be taxed more heavily than it would be under
ordinary circumstances. The mere fact that the bus was inspected only recently and found to be in
order would not exempt the carrier from liability unless it is shown that the particular circumstances
under which the bus would travel were also considered.

MANILA RAILROAD COMPANY, petitioner,

vs.

MACARIA BALLESTEROS, TIMOTEO CAMAYO, JOSE REYES and JULIAN MAIMBAN, JR., respondents.

In Bayombong, Nueva Vizcaya, Anastacio stopped the bus and got off to replace a defective spark
plug. While he was thus engaged, one Dionisio Abello, an auditor assigned to defendant company by
the General Auditing Office, took the wheel and told the driver to sit somewhere else. With Abello
driving, the bus proceeded on its way, from time to time stopping to pick up passengers. Anastacio
tried twice to take the wheel back but Abello would not relinquish it.

Then, in the language of the trial court, "while the bus was negotiating between Km. posts 328 and
329 (in Isabela) a freight truck ... driven by Marcial Nocum ... bound for Manila, was also negotiating
the same place; when these two vehicles were about to meet at the bend of the road Marcial Nocum,
in trying to evade several holes on the right lane, where his truck was running, swerved his truck
towards the middle part of the road and in so doing, the left front fender and left side of the freight
truck smashed the left side of the bus resulting in extensive damages to the body of the bus and
injuries to seventeen of its passengers, ... including the plaintiffs herein."

Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the
wilfull acts or negligence of other passengers or of strangers, if the common carrier's employees
through the exercise of the diligence of a good father of a family could have prevented or stopped the
act or omission.

Sec. 48(b). No professional chauffeur shall permit any unlicensed person to drive the motor vehicle
under his control, or permit a person, sitting beside him or in any other part of the car, to interfere
with him in the operation of the motor vehicle, by allowing said person to take hold of the steering
wheel, or in any other manner take part in the manipulation or control of the car.

PHILIPPINE AIRLINES, INC., petitioner,

vs.

COURT OF APPEALS and PEDRO ZAPATOS, respondents.

On 25 November 1976, private respondent filed a complaint for damages for breach of contract of
carriage2 against Philippine Airlines, Inc. (PAL), before the then Court of First Instance, now Regional
Trial Court, of Misamis Occidental, at Ozamiz City. According to him, on 2 August 1976, he was among
the twenty-one (21) passengers of PAL Flight 477 that took off from Cebu bound for Ozamiz City. The
routing of this flight was Cebu-Ozamiz-Cotabato. While on flight and just about fifteen (15) minutes
before landing at Ozamiz City, the pilot received a radio message that the airport was closed due to
heavy rains and inclement weather and that he should proceed to Cotabato City instead.
Private respondent chose to return to Cebu but was not accommodated because he checked-in as
passenger No. 9 on Flight 477. He insisted on being given priority over the confirmed passengers in the
accommodation, but the Station Agent refused private respondent's demand explaining that the
latter's predicament was not due to PAL's own doing but to be a force majeure.4

On 13 January 1977, PAL filed its answer denying that it unjustifiably refused to accommodate private
respondent.9 It alleged that there was simply no more seat for private respondent on Flight 560 since
there were only six (6) seats available and the priority of accommodation on Flight 560 was based on
the check-in sequence in Cebu; that the first six (6) priority passengers on Flight 477 chose to take Flight
560; that its Station Agent explained in a courteous and polite manner to all passengers the reason for
PAL's inability to transport all of them back to Cebu; that the stranded passengers agreed to avail of the
options and had their respective tickets exchanged for their onward trips; that it was

Significantly, PAL did not seem to mind the introduction of evidence which focused on its alleged
negligence in caring for its stranded passengers. Well-settled is the rule in evidence that the protest or
objection against the admission of evidence should be presented at the time the evidence is offered,
and that the proper time to make protest or objection to the admissibility of evidence is when the
question is presented to the witness or at the time the answer thereto is given. 16 There being no
objection, such evidence becomes property of the case and all the parties are amenable to any
favorable or unfavorable effects resulting from the evidence. 17

The contract of air carriage is a peculiar one. Being imbued with public interest, the law requires
common carriers to carry the passengers safely as far as human care and foresight can provide, using
the utmost diligence of very cautious persons, with due regard for all the circumstances. 20 In Air
France v. Carrascoso, 21 we held that —

A contract to transport passengers is quite different in kind and degree from any other contractual
relation. And this, because of the relation which an air carrier sustains with the public. Its business is
mainly with the travelling public. It invites people to avail of the comforts and advantages it offers.
The contract of air carriage, therefore, generates a relation attended with a public duty . . . . (
emphasis supplied).
The position taken by PAL in this case clearly illustrates its failure to grasp the exacting standard
required by law. Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous
event. Nonetheless, such occurrence did not terminate PAL's contract with its passengers. Being in the
business of air carriage and the sole one to operate in the country, PAL is deemed equipped to deal
with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the
relation of carrier and passenger continues until the latter has been landed at the port of destination
and has left the carrier's premises. 22 Hence, PAL necessarily would still have to exercise
extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded
passengers until they have reached their final destination. On this score, PAL grossly failed considering
the then ongoing battle between government forces and Muslim rebels in Cotabato City and the fact
that the private respondent was a stranger to the place. As the appellate court correctly ruled —

Since part of the failure to comply with the obligation of common carrier to deliver its passengers
safely to their destination lay in the defendant's failure to provide comfort and convenience to its
stranded passengers using extra-ordinary diligence, the cause of non-fulfillment is not solely and
exclusively due to fortuitous event, but due to something which defendant airline could have
prevented, defendant becomes liable to plaintiff. 23

HERMINIO L. NOCUM, plaintiff-appellee,

vs.

LAGUNA TAYABAS BUS COMPANY, defendant-appellant.

. Appellee, who was a passenger in appellant's Bus No. 120 then making a trip within the barrio of
Dita, Municipality of Bay, Laguna, was injured as a consequence of the explosion of firecrackers,
contained in a box, loaded in said bus and declared to its conductor as containing clothes and
miscellaneous items by a co-passenger. The findings of fact of the trial court are not assailed. The
appeal is purely on legal questions.

The main basis of the trial court's decision is that appellant did not observe the extraordinary or
utmost diligence of a very cautious person required by the following articles of the Civil Code:

ART. 1733. Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735,
and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further
set forth in articles 1755 and 1756.

ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all
the circumstances.

ART 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.

... Turning to the present case, it is quite clear that extraordinary or utmost diligence of a very
cautious person was not observed by the defendant company. The service manual, exhibits "3" and
"3-A," prohibits the employees to allow explosives, such as dynamite and firecrackers to be
transported on its buses. To implement this particular rule for 'the safety of passengers, it was
therefore incumbent upon the employees of the company to make the proper inspection of all the
baggages which are carried by the passengers.

If proper and rigid inspection were observed by the defendant, the contents of the box could have
been discovered and the accident avoided. Refusal by the passenger to have the package opened was
no excuse because, as stated by Dispatcher Cornista, employees should call the police if there were
packages containing articles against company regulations. Neither was failure by employees of
defendant company to detect the contents of the packages of passengers because like the rationale in
the Necesito vs. Paras case (supra), a passenger has neither choice nor control in the exercise of their
discretion in determining what are inside the package of co-passengers which may eventually prove
fatal.

In this particular case before Us, it must be considered that while it is true the passengers of
appellant's bus should not be made to suffer for something over which they had no control, as
enunciated in the decision of this Court cited by His Honor,1 fairness demands that in measuring a
common carrier's duty towards its passengers, allowance must be given to the reliance that should be
reposed on the sense of responsibility of all the passengers in regard to their common safety. It is to
be presumed that a passenger will not take with him anything dangerous to the lives and limbs of his
co-passengers, not to speak of his own

Explosive or Dangerous Contents. — A carrier is ordinarily not liable for injuries to passengers from
fires or explosions caused by articles brought into its conveyances by other passengers, in the absence
of any evidence that the carrier, through its employees, was aware of the nature of the article or had
any reason to anticipate danger therefrom. (Bogard v. Illinois C. R Co. 144 Ky. 649, 139 S. W. 855, 36 L.
R. A.[N. S.] 337; Clarke v. Louisville & N. R. Co. 101 Ky. 34, 39 S. W. 840, 36 L. R. A. 123 [explosion of can
of gasoline]; East Indian R. Co. v. Mukerjee [1901] A. C. [Eng.] 396, 3 B. R. C. 420 — P. C. [explosion of
fireworks]; Annotation: 37 L. R. A. [N. S.] 725.)3

Appellant further invokes Article 1174 of the Civil Code which relieves all obligors, including, of course,
common carriers like appellant, from the consequence of fortuitous events. The court a quo held that
"the breach of contract (in this case) was not due to fortuitous event and that, therefore, the
defendant is liable in damages." Since We hold that appellant has succeeded in rebutting the
presumption of negligence by showing that it has exercised extraordinary diligence for the safety of
its passengers, "according to the circumstances of the (each) case", We deem it unnecessary to rule
whether or not there was any fortuitous event in this case.

.R. No. 85691 July 31, 1990

BACHELOR EXPRESS, INCORPORATED, and CRESENCIO RIVERA, petitioners,

vs.

THE HONORABLE COURT OF APPEALS (Sixth Division), RICARDO BETER, SERGIA BETER, TEOFILO
RAUTRAUT and ZOETERA RAUTRAUT, respondents.

On August 1, 1980, Bus No. 800 owned by Bachelor Express, Inc. and driven by Cresencio Rivera was
the situs of a stampede which resulted in the death of passengers Ornominio Beter and Narcisa
Rautraut.
The evidence shows that the bus came from Davao City on its way to Cagayan de Oro City passing
Butuan City; that while at Tabon-Tabon, Butuan City, the bus picked up a passenger; that about fifteen
(15) minutes later, a passenger at the rear portion suddenly stabbed a PC soldier which caused
commotion and panic among the passengers; that when the bus stopped, passengers Ornominio
Beter and Narcisa Rautraut were found lying down the road, the former already dead as a result of
head injuries and the latter also suffering from severe injuries which caused her death later. The
passenger assailant alighted from the bus and ran toward the bushes but was killed by the police.
Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut, private respondents herein (Ricardo
Beter and Sergia Beter are the parents of Ornominio while Teofilo Rautraut and Zoetera [should be
Zotera] Rautraut are the parents of Narcisa) filed a complaint for "sum of money" against Bachelor
Express, Inc. its alleged owner Samson Yasay and the driver Rivera.

In their answer, the petitioners denied liability for the death of Ornominio Beter and Narcisa Rautraut.
They alleged that ... the driver was able to transport his passengers safely to their respective places of
destination except Ornominio Beter and Narcisa Rautraut who jumped off the bus without the
knowledge and consent, much less, the fault of the driver and conductor and the defendants in this
case; the defendant corporation had exercised due diligence in the choice of its employees to avoid as
much as possible accidents; the incident on August 1, 1980 was not a traffic accident or vehicular
accident; it was an incident or event very much beyond the control of the defendants; defendants
were not parties to the incident complained of as it was an act of a third party who is not in any way
connected with the defendants and of which the latter have no control and supervision; ..." (Rollo, pp.
112-113).i•t•c-aüsl

The liability, if any, of the petitioners is anchored on culpa contractual or breach of contract of carriage.
The applicable provisions of law under the New Civil Code are as follows:

ART. 1732. Common carriers are 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.

ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances of each case.
ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all
the circumstances.

ART. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been
at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
prescribed in Articles 1733 and 1755.

As will be seen, these authorities agree that some extraordinary circumstance independent of the will
of the obligor or of his employees, is an essential element of a caso fortuito. ...

However, in order that a common carrier may be absolved from liability in case of force majeure, it is
not enough that the accident was caused by force majeure. The common carrier must still prove that
it was not negligent in causing the injuries resulting from such accident. Thus, as early as 1912, we
ruled:

& MRS. ENGRACIO FABRE, JR.* and PORFIRIO CABIL, petitioners, vs. COURT OF APPEALS, THE WORD
FOR THE WORLD CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN RICHARDS, GONZALO
GONZALES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO,
RICHARD BAUTISTA, JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO
NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O. LOPEZ, JULIUS CAESAR GARCIA, ROSARIO MA. V.
ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA REGALA, MELINDA TORRES,
MARELLA MIJARES, JOSEFA CABATINGAN, MARA NADOC, DIANE MAYO, TESS PLATA, MAYETTE JOCSON,
ARLENE Y. MORTIZ, LIZA MAYO, CARLOS RANARIO, ROSAMARIA T. RADOC and BERNADETTE FERRER,
respondents.
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They used
the bus principally in connection with a bus service for school children which they operated in Manila.
The couple had a driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for two weeks.
His job was to take school children to and from the St. Scholasticas College in Malate, Manila.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF)
arranged with petitioners for the transportation of 33 members of its Young Adults Ministry from
Manila to La Union and back in consideration of which private respondent paid petitioners the
amount of P3,000.00.

The group was scheduled to leave on November 2, 1984, at 5:00 oclock in the afternoon. However, as
several members of the party were late, the bus did not leave the Tropical Hut at the corner of Ortigas
Avenue and EDSA until 8:00 oclock in the evening. Petitioner Porfirio Cabil drove the minibus.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen
was under repair, so that petitioner Cabil, who was unfamiliar with the area (it being his first trip to La
Union), was forced to take a detour through the town of Ba-ay in Lingayen, Pangasinan. At 11:30 that
night, petitioner Cabil came upon a sharp curve on the highway, running on a south to east direction,
which he described as siete. The road was slippery because it was raining, causing the bus, which was
running at the speed of 50 kilometers per hour, to skid to the left road shoulder. The bus hit the left
traffic steel brace and sign along the road and rammed the fence of one Jesus Escano, then turned
over and landed on its left side, coming to a full stop only after a series of impacts. The bus came to
rest off the road. A coconut tree which it had hit fell on it and smashed its front portion.

Several passengers were injured. Private respondent Amyline Antonio was thrown on the floor of the
bus and pinned down by a wooden seat which came off after being unscrewed. It took three persons
to safely remove her from this position. She was in great pain and could not move.

Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila. As
a result of the accident, she is now suffering from paraplegia and is permanently paralyzed from the
waist down. During the trial she described the operations she underwent and adduced evidence
regarding the cost of her treatment and therapy. Immediately after the accident, she was taken to the
Nazareth Hospital in Ba-ay, Lingayen. As this hospital was not adequately equipped, she was transferred
to the Sto. Nio Hospital, also in the town of Ba-ay, where she was given sedatives. An x-ray was taken
and the damage to her spine was determined to be too severe to be treated there. She was therefore
brought to Manila, first to the Philippine General Hospital and later to the Makati Medical Center
where she underwent an operation to correct the dislocation of her spine.

Considering the foregoing the fact that it was raining and the road was slippery, that it was dark, that
he drove his bus at 50 kilometers an hour when even on a good day the normal speed was only 20
kilometers an hour, and that he was unfamiliar with the terrain, Cabil was grossly negligent and
should be held liable for the injuries suffered by private respondent Amyline Antonio.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his
employers, the Fabres, were themselves negligent in the selection and supervision of their employee.

Due diligence in selection of employees is not satisfied by finding that the applicant possessed a
professional drivers license. The employer should also examine the applicant for his qualifications,
experience and record of service.[5] Due diligence in supervision, on the other hand, requires the
formulation of rules and regulations for the guidance of employees and the issuance of proper
instructions as well as actual implementation and monitoring of consistent compliance with the
rules.[6]

As already stated, this case actually involves a contract of carriage. Petitioners, the Fabres, did not
have to be engaged in the business of public transportation for the provisions of the Civil Code on
common carriers to apply to them. As this Court has held:[10]

Art. 1732. Common carriers are 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.

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.

As common carriers, the Fabres were bound to exercise extraordinary diligence for the safe
transportation of the passengers to their destination. This duty of care is not excused by proof that
they exercised the diligence of a good father of the family in the selection and supervision of their
employee. As Art. 1759 of the Code provides:

Common carriers are liable for the death of or injuries to passengers through the negligence or wilful
acts of the formers 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.

SPOUSES DANTE CRUZ and

LEONORA CRUZ,

Petitioners

- versus

SUN HOLIDAYS, INC.,

Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 2001[1] against Sun
Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of Pasig City for damages arising from
the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on September 11, 2000 on
board the boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera, Oriental
Mindoro where the couple had stayed at Coco Beach Island Resort (Resort) owned and operated by
respondent.

The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11, 2000 was by
virtue of a tour package-contract with respondent that included transportation to and from the Resort
and the point of departure in Batangas.
In its Answer,[7] respondent denied being a common carrier, alleging that its boats are not available to
the general public as they only ferry Resort guests and crew members. Nonetheless, it claimed that it
exercised the utmost diligence in ensuring the safety of its passengers; contrary to petitioners
allegation, there was no storm on September 11, 2000 as the Coast Guard in fact cleared the voyage;
and M/B Coco Beach III was not filled to capacity and had sufficient life jackets for its passengers. By way
of Counterclaim, respondent alleged that it is entitled to an award for attorneys fees and litigation
expenses amounting to not less than P300,000.

The Civil Code defines common carriers in the following terms:

Article 1732. Common carriers are 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.

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 1733 deliberately refrained from making such distinctions.

Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as
to be properly considered ancillary thereto. The constancy of respondents ferry services in its resort
operations is underscored by its having its own Coco Beach boats. And the tour packages it offers,
which include the ferry services, may be availed of by anyone who can afford to pay the same. These
services are thus available to the public.

Under the Civil Code, common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence for the safety of the passengers transported by
them, according to all the circumstances of each case.[19] They are 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.[20]
RAFAEL ZULUETA, ET AL., plaintiffs-appellees,

vs.

PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant.

Alfredo L. Benipayo for plaintiffs-appellee Rafael Zulueta and Carolina Zulueta.

Both parties in this case have moved for the reconsideration of the decision of this Court promulgated
on February 29, 1972. Plaintiffs maintain that the decision appealed from should be affirmed in toto.
The defendant, in turn, prays that the decision of this Court be "set aside ... with or without a new trial,
... and that the complaint be dismissed, with costs; or, in the alternative, that the amount of the award
embodied therein be considerably reduced." .

Subsequently to the filing of its motion for reconsideration, the defendant filed a "petition to annul
proceedings and/or to order the dismissal of plaintiffs-appellees' complaint" upon the ground that
"appellees' complaint actually seeks the recovery of only P5,502.85 as actual damages, because, for the
purpose of determining the jurisdiction of the lower court, the unspecified sums representing items of
alleged damages, may not be considered, under the settled doctrines of this Honorable Court," and "the
jurisdiction of courts of first instance when the complaint in the present case was filed on Sept. 30,
1965" was limited to cases "in which the demand, exclusive of interest, or the value of the property in
controversy amounts to more than ten thousand pesos" and "the mere fact that the complaint also
prays for unspecified moral damages and attorney's fees, does not bring the action within the
jurisdiction of the lower court."

We find no merit in this contention. To begin with, it is not true that "the unspecified sums representing
items or other alleged damages, may not be considered" — for the purpose of determining the
jurisdiction of the court — "under the settled doctrines of this Honorable Court." In fact, not a single
case has been cited in support of this allegation.

Secondly, it has been held that a clam for moral damages is one not susceptible of pecuniary
estimation.1 In fact, Article 2217 of the Civil Code of the Philippines explicitly provides that "(t)hough
incapable of pecuniary computation, moral damages may be recovered if they are the proximate result
of the defendant's wrongful act or omission." Hence, "(n)o proof pecuniary loss necessary" — pursuant
to Article 2216 of the same Code — "in order that moral ... damages may be adjudicated." And "(t)he
assessment of such damages ... is left to the discretion of the court" - said article adds - "according to
the circumstances of each case." Appellees' complaint is, therefore, within the original jurisdiction of
courts of first instance, which includes "all civil actions in which the subject of the litigation is not
capable of pecuniary estimation."2

Thirdly, in its answer to plaintiffs' original and amended complainants, defendant had set up a
counterclaim in the aggregate sum of P12,000, which is, also, within the original jurisdiction of said
courts, thereby curing the alleged defect if any, in plaintiffs' complaint.3

We need not consider the jurisdictional controversy as to the amount the appellant sues to recover
because the counterclaim interposed establishes the jurisdiction of the District Court. Merchants' Heat
& Light Co. v. James B. Clow & Sons, 204 U.S. 286, 27 S. Ct. 285, 51 L. Ed. 488; O. J. Lewis Mercantile Co.
v. Klepner, 176 F. 343 (C.C.A. 2), certiorari denied 216 U.S. 620, 30 S Ct. 575, 54 L. Ed. 641. ... .4

... courts have said that "when the jurisdictional amount is in question, the tendering of a counterclaim
in an amount which in itself, or added to the amount claimed in the petition, makes up a sum equal to
the amount necessary to the jurisdiction of this court, jurisdiction is established, whatever may be the
state of the plaintiff's complaint." American Sheet & Tin Plate Co. v. Winzeler (D.C.) 227 F. 321, 324.5

Thus, in Ago v. Buslon,6 We held:

... . Then, too, petitioner's counterclaim for P37,000.00 was, also, within the exclusive original
jurisdiction of the latter courts, and there are ample precedents to the effect that "although the original
claim involves less than the jurisdictional amount, ... jurisdiction can be sustained if the counterclaim (of
the compulsory type)" — such as the one set up by petitioner herein, based upon the damages allegedly
suffered by him in consequence of the filing of said complaint — "exceeds the jurisdictional amount."
(Moore Federal Practice, 2nd ed. [1948], Vol. 3, p. 41; Ginsburg vs. Pacific Mutual Life Ins. Co. of
California, 69 Fed. [2d] 97; Home Life Ins. Co. vs. Sipp., 11 Fed. [2d]474; American Sheet & Tin Plate Co.
vs. Winzeler [D.C.], 227 Fed. 321, 324; Brix vs. People's Mutual Life Ins. Co., 41 P. 2d. 537, 2 Cal. 2d. 446;
Emery vs. Pacific Employees Ins. Co., 67 P. 2d. 1046, 8 Cal. 2d. 663).

Needless to say, having not only failed to question the jurisdiction of the trial court — either in that
court or in this Court, before the rendition of the latter's decision, and even subsequently thereto, by
filing the aforementioned motion for reconsideration and seeking the reliefs therein prayed for — but,
also, urged both courts to exercise jurisdiction over the merits of the case, defendant is now estopped
from impugning said jurisdiction.7
Before taking up the specific questions raised in defendant's motion for reconsideration, it should be
noted that the same is mainly predicated upon the premise that plaintiffs' version is inherently
incredible, and that this Court should accept the theory of the defense to the effect that petitioner was
off-loaded because of a bomb-scare allegedly arising from his delay in boarding the aircraft and
subsequent refusal to open his bags for inspection. We need not repeat here the reasons given in Our
decision for rejecting defendant's contention and not disturbing the findings of fact of His Honor, the
Trial Judge, who had the decided advantage — denied to Us — of observing the behaviour of the
witnesses in the course of the trial and found those of the plaintiffs worthy of credence, not the
evidence for the defense.

It may not be amiss however, to stress the fact that, in his written report, made in transit from Wake to
Manila — or immediately after the occurrence and before the legal implications or consequences
thereof could have been the object of mature deliberation, so that it could, in a way, be considered as
part of the res gestae — Capt. Zentner stated that Zulueta had been off-loaded "due to drinking" and
"belligerent attitude," thereby belying the story of the defense about said alleged bomb-scare, and
confirming the view that said agent of the defendant had acted out of resentment because his ego had
been hurt by Mr. Zulueta's adamant refusal to be bullied by him. Indeed, had there been an iota of truth
in said story of the defense, Capt. Zentner would have caused every one of the passengers to be frisked
or searched and the luggage of all of them examined — as it is done now — before resuming the flight
from Wake Island. His failure to do so merely makes the artificious nature of defendant's version more
manifest. Indeed, the fact that Mrs. Zulueta and Miss Zulueta were on board the plane shows beyond
doubt that Mr. Zulueta could not possibly have intended to blow it up.

The defense tries to explain its failure to introduce any evidence to contradict the testimony of Mr.
Zulueta as to why he had gone to the beach and what he did there, alleging that, in the very nature of
things, nobody else could have witnessed it. Moreover, the defense insists, inter alia, that the testimony
of Mr. Zulueta is inherently incredible because he had no idea as to how many toilets the plane had; it
could not have taken him an hour to relieve himself in the beach; there were eight (8) commodes at the
terminal toilet for men ; if he felt the need of relieving himself, he would have seen to it that the soldiers
did not beat him to the terminal toilets; he did not tell anybody about the reason for going to the beach,
until after the plane had taken off from Wake.

We find this pretense devoid of merit. Although Mr. Zulueta had to look for a secluded place in the
beach to relieve himself, beyond the view of others, defendant's airport manager, whom Mr. Zulueta
informed about it, soon after the departure of the plane, could have forthwith checked the veracity of
Mr. Zulueta's statement by asking him to indicate the specific place where he had been in the beach and
then proceeding thereto for purposes of verification.

Then, again, the passenger of a plane seldom knows how many toilets it has. As a general rule, his
knowledge is limited to the toilets for the class — first class or tourist class — in which he is. Then, too, it
takes several minutes for the passengers of big aircrafts, like those flying from the U.S. to the
Philippines, to deplane. Besides, the speed with which a given passenger may do so depends, largely,
upon the location of his seat in relation to the exit door. He cannot go over the heads of those nearer
than he thereto. Again, Mr. Zulueta may have stayed in the toilet terminal for some time, expecting one
of the commodes therein to be vacated soon enough, before deciding to go elsewhere to look for a
place suitable to his purpose. But he had to walk, first, from the plane to the terminal building and, then,
after vainly waiting therein for a while, cover a distance of about 400 yards therefrom to the beach, and
seek there a place not visible by the people in the plane and in the terminal, inasmuch as the terrain at
Wake Island is flat. What is more, he must have had to takeoff part, at least, of his clothing, because,
without the facilities of a toilet, he had to wash himself and, then, dry himself up before he could be
properly attired and walk back the 400 yards that separated him from the terminal building and/or the
plane. Considering, in addition to the foregoing, the fact that he was not feeling well, at that time, We
are not prepared to hold that it could not have taken him around an hour to perform the acts narrated
by him.

But, why — asks the defendant — did he not reveal the same before the plane took off? The record
shows that, even before Mr. Zulueta had reached the ramp leading to the plane, Capt. Zentner was
already demonstrating at him in an intemperate and arrogant tone and attitude ("What do you think
you are?), thereby impelling Mr. Zulueta to answer back in the same vein. As a consequence, there
immediately ensued an altercation in the course of which each apparently tried to show that he could
not be cowed by the other. Then came the order of Capt. Zentner to off-load all of the Zuluetas,
including Mrs. Zulueta and the minor Miss Zulueta, as well as their luggage, their overcoats and other
effects handcarried by them; but, Mr. Zulueta requested that the ladies be allowed to continue the trip.
Meanwhile, it had taken time to locate his four (4) pieces of luggage. As a matter of fact, only three (3)
of them were found, and the fourth eventually remained in the plane. In short, the issue between Capt.
Zentner and Mr. Zulueta had been limited to determining whether the latter would allow himself to be
browbeaten by the former. In the heat of the altercation, nobody had inquired about the cause of Mr.
Zulueta's delay in returning to the plane, apart from the fact that it was rather embarrassing for him to
explain, in the presence and within the hearing of the passengers and the crew, then assembled around
them, why he had gone to the beach and why it had taken him some time to answer there a call of
nature, instead of doing so in the terminal building.
Defendant's motion for reconsideration assails: (1) the amount of damages awarded as excessive; (2)
the propriety of accepting as credible plaintiffs' theory; (3) plaintiffs' right to recover either moral or
exemplary damages; (4) plaintiffs' right to recover attorney's fees; and (5) the non-enforcement of the
compromise agreement between the defendant and plaintiff's wife, Mrs. Zulueta. Upon the other hand,
plaintiffs' motion for reconsideration contests the decision of this Court reducing the amount of
damages awarded by the trial court to approximately one-half thereof, upon the ground, not only that,
contrary to the findings of this Court, in said decision, plaintiff had not contributed to the aggravation of
his altercation or incident with Capt. Zentner by reacting to his provocation with extreme belligerency
thereby allowing himself to be dragged down to the level on which said agent of the defendant had
placed himself, but, also, because the purchasing power of our local currency is now much lower than
when the trial court rendered its appealed decision, over five (5) years ago, on July 5, 1967, which is an
undeniable and undisputed fact. Precisely, for this reason, defendant's characterization as exorbitant of
the aggregate award of over P700,000 by way of damages, apart from attorney's fees in the sum of
P75,000, is untenable. Indeed, said award is now barely equivalent to around 100,000 U. S. dollars.

It further support of its contention, defendant cites the damages awarded in previous cases to
passengers of airlines,8 as well as in several criminal cases, and some cases for libel and slander. None of
these cases is, however, in point. Said cases against airlines referred to passengers who were merely
constrained to take a tourist class accommodation, despite the fact that they had first class tickets, and
that although, in one of such cases, there was proof that the airline involved had acted as it did to give
preference to a "white" passenger, this motive was not disclosed until the trial in court. In the case at
bar, plaintiff Rafael Zulueta was "off-loaded" at Wake Island, for having dared to retort to defendant's
agent in a tone and manner matching, if not befitting his intemperate language and arrogant attitude.
As a consequence, Capt. Zentner's attempt to humiliate Rafael Zulueta had boomeranged against him
(Zentner), in the presence of the other passengers and the crew. It was, also, in their presence that
defendant's agent had referred to the plaintiffs as "monkeys," a racial insult not made openly and
publicly in the abovementioned previous cases against airlines.

In other words, Mr. Zulueta was off-loaded, not to protect the safety of the aircraft and its passengers,
but to retaliate and punish him for the embarrassment and loss of face thus suffered by defendant's
agent. This vindictive motive is made more manifest by the note delivered to Mr. Zulueta by defendant's
airport manager at Wake Island, Mr. Sitton, stating that the former's stay therein would be "for a
minimum of one week," during which he would be charged $13.30 per day. This reference to a
"minimum of one week" revealed the intention to keep him there stranded that long, for no other
plane, headed for Manila, was expected within said period of time, although Mr. Zulueta managed to
board, days later, a plane that brought him to Hawaii, whence he flew back to the Philippines, via Japan.
Neither may criminal cases, nor the cases for libel and slander cited in the defendant's motion for
reconsideration, be equated with the present case. Indeed, in ordinary criminal cases, the award for
damages is, in actual practice, of purely academic value, for the convicts generally belong to the poorest
class of society. There is, moreover, a fundamental difference between said cases and the one at bar.
The Zuluetas had a contract of carriage with the defendant, as a common carrier, pursuant to which the
latter was bound, for a substantial monetary consideration paid by the former, not merely to transport
them to Manila, but, also, to do so with "extraordinary diligence" or "utmost diligence."9 The
responsibility of the common carrier, under said contract, as regards the passenger's safety, is of such a
nature, affecting as it does public interest, that it "cannot be dispensed with" or even "lessened by
stipulation, by the posting of notices, by statements on tickets, or otherwise." 10 In the present case,
the defendant did not only fail to comply with its obligation to transport Mr. Zulueta to Manila, but,
also, acted in a manner calculated to humiliate him, to chastise him, to make him suffer, to cause to him
the greatest possible inconvenience, by leaving him in a desolate island, in the expectation that he
would be stranded there for a "minimum of one week" and, in addition thereto, charged therefor
$13.30 a day.

It is urged by the defendant that exemplary damages are not recoverable in quasi-delicts, pursuant to
Article 2231 of our Civil Code, except when the defendant has acted with "gross negligence," and that
there is no specific finding that it had so acted. It is obvious, however, that in off-loading plaintiff at
Wake Island, under the circumstances heretofore adverted to, defendant's agents had acted with malice
aforethought and evident bad faith. If "gross negligence" warrants the award of exemplary damages,
with more reason is its imposition justified when the act performed is deliberate, malicious and tainted
with bad faith. Thus, in Lopez v. PANAM, 11 We held:

The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or
correction for public good. Defendant having breached its contracts in bad faith, the court, as stated
earlier, may award exemplary damages in addition to moral damages (Articles 2229, 2232, New Civil
Code.)

Similarly, in NWA v. Cuenca, 12 this Court declared that an award for exemplary damages was justified
by the fact that the airline's "agent had acted in a wanton, reckless and oppressive manner" in
compelling Cuenca, upon arrival at Okinawa, to transfer, over his objection, from the first class, where
he was accommodated from Manila to Okinawa, to the tourist class, in his trip to Japan, "under threat of
otherwise leaving him in Okinawa," despite the fact that he had paid in full the first class fare and was
issued in Manila a first class ticket.
Defendant cites Rotea v. Halili, 13 in support of the proposition that a principal is not liable for
exemplary damages owing to acts of his agent unless the former has participated in said acts or ratified
the same. Said case involved, however, the subsidiary civil liability of an employer arising from criminal
acts of his employee, and "exemplary damages ... may be imposed when the crime was committed with
one or more aggravating circumstances." 14 Accordingly, the Rotea case is not in point, for the case at
bar involves a breach of contract, as well as a quasi-delict.

Neither may the case of Palisoc v. Brillantes, 15 invoked by the defendant, be equated with the case at
bar. The Palisoc case dealt with the liability of school officials for damages arising from the death of a
student (Palisoc) due to fist blows given by another student (Daffon), in the course of a quarrel between
them, while in a laboratory room of the Manila Technical Institute. In an action for damages, the head
thereof and the teacher in charge of said laboratory were held jointly and severally liable with the
student who caused said death, for failure of the school to provide "adequate supervision over the
activities of the students in the school premises," to protect them "from harm, whether at the hands of
fellow students or other parties." Such liability was predicated upon Article 2180 of our Civil Code, the
pertinent part of which reads:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is responsible.

xxx xxx xxx

Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their
pupils and students or apprentices, so long as they remain in their custody.

xxx xxx xxx

Obviously, the amount of damages warded in the Palisoc case is not and cannot serve as the measure of
the damages recoverable in the present case, the latter having been caused directly and intentionally by
an employee or agent of the defendant, whereas the student who killed the young Palisoc was in no
wise an agent of the school. Moreover, upon her arrival in the Philippines, Mrs. Zulueta reported her
husband's predicament to defendant's local manager and asked him to forthwith have him (Mr. Zulueta)
brought to Manila, which defendant's aforementioned manager refused to do, thereby impliedly
ratifying the off-loading of Mr. Zulueta at Wake Island.
It is next urged that, under the contract of carriage with the defendant, Mr. Zulueta was bound to be
present at the time scheduled for the departure of defendant's plane and that he had, consequently,
violated said contract when he did not show up at such time. This argument might have had some
weight had defendant's plane taken off before Mr. Zulueta had shown up. But the fact is that he was
ready, willing and able to board the plane about two hours before it actually took off, and that he was
deliberately and maliciously off-loaded on account of his altercation with Capt. Zentner. It should, also,
be noted that, although Mr. Zulueta was delayed some 20 to 30 minutes, the arrival or departure of
planes is often delayed for much longer periods of time. Followed to its logical conclusion, the argument
adduced by the defense suggests that airlines should be held liable for damages due to the
inconvenience and anxiety, aside from actual damages, suffered by many passengers either in their
haste to arrive at the airport on scheduled time just to find that their plane will not take off until later,
or by reason of the late arrival of the aircraft at its destination.

PANAM impugns the award of attorney's fees upon the ground that no penalty should be imposed upon
the right to litigate; that, by law, it may be awarded only in exceptional cases; that the claim for
attorney's fees has not been proven; and that said defendant was justified in resisting plaintiff's claim
"because it was patently exorbitant."

Nothing, however, can be farther from the truth. Indeed apart from plaintiff's claim for actual damages,
the amount of which is not contested, plaintiffs did not ask any specific sum by way of exemplary and
moral damages, as well as attorney's fees, and left the amount thereof to the "sound discretion" of the
lower court. This, precisely, is the reason why PANAM, now, alleges — without justification that the
lower court had no jurisdiction over the subject matter of the present case.

Moreover, Article 2208 of our Civil Code expressly authorizes the award of attorney's fees "when
exemplary damages are awarded," — as they are in this case —as well as "in any other case where the
court deems it just and equitable that attorney's fees ... be recovered," and We so deem it just and
equitable in the present case, considering the "exceptional" circumstances obtaining therein,
particularly the bad faith with which defendant's agent had acted, the place where and the conditions
under which Rafael Zulueta was left at Wake Island, the absolute refusal of defendant's manager in
Manila to take any step whatsoever to alleviate Mr. Zulueta's predicament at Wake and have him
brought to Manila — which, under their contract of carriage, was defendant's obligation to discharge
with "extra-ordinary" or "utmost" diligence — and, the "racial" factor that had, likewise, tainted the
decision of defendant's agent, Capt. Zentner, to off-load him at Wake Island.
As regards the evidence necessary to justify the sum of P75,000 awarded as attorney's fees in this case,
suffice it to say that the quantity and quality of the services rendered by plaintiffs' counsel appearing on
record, apart from the nature of the case and the amount involved therein, as well as his prestige as one
of the most distinguished members of the legal profession in the Philippines, of which judicial
cognizance may be taken, amply justify said award, which is a little over 10% of the damages (P700,000)
collectible by plaintiffs herein. Indeed, the attorney's fees in this case is proportionally much less than
that adjudged in Lopez v. PANAM 16 in which the judgment rendered for attorney's fees (P50,000) was
almost 20% of the damages (P275,000) recovered by the plaintiffs therein.

The defense assails the last part of the decision sought to be reconsidered, in which — relying upon
Article 172 of our Civil Code, which provides that "(t)he wife cannot bind the conjugal partnership
without the husband's consent, except in cases provided by law," and it is not claimed that this is one of
such cases — We denied a motion, filed by Mrs. Zulueta, for the dismissal of this case, insofar as she is
concerned - she having settled all her differences with the defendant, which appears to have paid her
the sum of P50,000 therefor - "without prejudice to this sum being deducted from the award made in
said decision." Defendant now alleges that this is tantamount to holding that said compromise
agreement is both effective and ineffective.

This, of course, is not true. The payment is effective, insofar as it is deductible from the award, and,
because it is due (or part of the amount due) from the defendant, with or without its compromise
agreement with Mrs. Zulueta. What is ineffective is the compromise agreement, insofar as the conjugal
partnership is concerned. Mrs. Zulueta's motion was for the dismissal of the case insofar as she was
concerned, and the defense cited in support thereof Article 113 of said Code, pursuant to which "(t)he
husband must be joined in all suits by or against the wife except: ... (2) If they have in fact been
separated for at least one year." This provision, We held, however, refers to suits in which the wife is the
principal or real party in interest, not to the case at bar, "in which the husband is the main party in
interest, both as the person principally aggrieved and as administrator of the conjugal partnership ... he
having acted in this capacity in entering into the contract of carriage with PANAM and paid the amount
due to the latter, under the contract, with funds of the conjugal partnership," to which the amounts
recoverable for breach of said contract, accordingly, belong. The damages suffered by Mrs. Zulueta were
mainly an in accident of the humiliation to which her husband had been subjected. The Court ordered
that said sum of P50,00 paid by PANAM to Mrs. Zulueta be deducted from the aggregate award in favor
of the plaintiffs herein for the simple reason that upon liquidation of the conjugal partnership, as
provided by law, said amount would have to be reckoned with, either as part of her share in the
partnership, or as part of the support which might have been or may be due to her as wife of Rafael
Zulueta. It would surely be inane to sentence the defendant to pay the P700,000 due to the plaintiffs
and to direct Mrs. Zulueta to return said P50,000 to the defendant.
In this connection, it is noteworthy that, for obvious reasons of public policy, she is not allowed by law
to waive her share in the conjugal partnership, before the dissolution thereof. 17 She cannot even
acquire any property by gratuitous title, without the husband's consent, except from her ascendants,
descendants, parents-in-law, and collateral relatives within the fourth degree. 18

It is true that the law favors and encourages the settlement of litigations by compromise agreement
between the contending parties, but, it certainly does not favor a settlement with one of the spouses,
both of whom are plaintiffs or defendants in a common cause, such as the defense of the rights of the
conjugal partnership, when the effect, even if indirect, of the compromise is to jeopardize "the solidarity
of the family" — which the

law 19 seeks to protect — by creating an additional cause for the misunderstanding that had arisen
between such spouses during the litigation, and thus rendering more difficult a reconciliation between
them.

It is urged that there is no proof as to the purpose of the trip of the plaintiffs, that neither is there any
evidence that the money used to pay the plane tickets came from the conjugal funds and that the award
to Mrs. Zulueta was for her personal suffering or injuries. There was, however, no individual or specific
award in favor of Mrs. Zulueta or any of the plaintiffs. The award was made in their favor collectively.
Again, in the absence of said proof, the presumption is that the purpose of the trip was for the common
benefit of the plaintiffs and that the money had come from the conjugal funds, for, unless there is proof
to the contrary, it is presumed "(t)hat things have happened according to the ordinary course of nature
and the ordinary habits of life." 20 In fact Manresa maintains 21 that they are deemed conjugal, when
the source of the money used therefor is not established, even if the purchase had been made by the
wife. 22 And this is the rule obtaining in the Philippines. Even property registered, under the Torrens
system, in the name of one of the spouses, or in that of the wife only, if acquired during the marriage, is
presumed to belong to the conjugal partnership, unless there is competent proof to the contrary. 23

PANAM maintains that the damages involved in the case at bar are not among those forming part of the
conjugal partnership pursuant to Article 153 of the Civil Code, reading:

ART. 153. The following are conjugal partnership property:

(1) That which is acquired by onerous title during the marriage at the expense of the common fund,
whether the acquisition be for the partnership, or for only one of the spouses;
(2) That which is obtained by the industry, or work, or as salary of the spouses, or of either of them;

(3) The fruits, rents or interests received or due during the marriage, coming from the common
property or from the exclusive property of each spouse.

Considering that the damages in question have arisen from, inter alia, a breach of plaintiffs' contract of
carriage with the defendant, for which plaintiffs paid their fare with funds presumably belonging to the
conjugal partnership, We hold that said damages fall under paragraph (1) of said Article 153, the right
thereto having been "acquired by onerous title during the marriage ... ." This conclusion is bolstered up
by Article 148 of our Civil Code, according to which:

ART. 148. The following shall be the exclusive property of each spouse:

(1) That which is brought to the marriage as his or her own;

(2) That which each acquires, during the marriage, by lucrative title;

(3) That which is acquired by right of redemption or by exchange with other property belonging to
only one of the spouses;

(4) That which is purchased with exclusive money of the wife or of the husband.

The damages involved in the case at bar do not come under any of these provisions or of the other
provisions forming part of Chapter 3, Title VI, of Book I of the Civil Code, which chapter is entitled
"Paraphernal Property." What is more, if "(t)hat which is acquired by right of redemption or by exchange
with other property belonging to only one of the spouses," and "(t)hat which is purchased with exclusive
money of the wife or of the husband," 24 belong exclusively to such wife or husband, it follows
necessarily that that which is acquired with money of the conjugal partnership belongs thereto or forms
part thereof. The rulings in Maramba v. Lozano 25 and Perez v. Lantin, 26 cited in defendant's motion
for reconsideration, are, in effect, adverse thereto. In both cases, it was merely held that the
presumption under Article 160 of our Civil Code — to the effect that all property of the marriage belong
to the conjugal partnership — does not apply unless it is shown that it was acquired during marriage. In
the present case, the contract of carriage was concededly entered into, and the damages claimed by the
plaintiffs were incurred, during marriage. Hence, the rights accruing from said contract, including those
resulting from breach thereof by the defendant, are presumed to belong to the conjugal partnership of
Mr. and Mrs. Zulueta. The fact that such breach of contract was coupled, also, with a quasi-delict
constitutes an aggravating circumstance and can not possibly have the effect of depriving the conjugal
partnership of such property rights.

Defendant insists that the use of conjugal funds to redeem property does not make the property
redeemed conjugal if the right of redemption pertained to the wife. In the absence, however, of proof
that such right of redemption pertains to the wife — and there is no proof that the contract of carriage
with PANAM or the money paid therefor belongs to Mrs. Zulueta — the property involved, or the rights
arising therefrom, must be presumed, therefore, to form part of the conjugal partnership.

It is true that in Lilius v. Manila Railroad Co., 27 it was held that the "patrimonial and moral damages"
awarded to a young and beautiful woman by reason of a scar — in consequence of an injury resulting
from an automobile accident — which disfigured her face and fractured her left leg, as well as caused a
permanent deformity, are her paraphernal property. Defendant cites, also, in support of its contention
the following passage from Colin y Capitant:

No esta resuelta expresamente en la legislacion española la cuestion de si las indemnizaciones debidas

por accidentes del trabaho tienen la consideracion de gananciales, o son bienes particulares de los
conyuges.

Inclinan a la solucion de que estas indemnizaciones deben ser consideradas como gananciales, el hecho
de que la sociedad pierde la capacidad de trabajocon el accidente, que a ella le pertenece, puesto que
de la sociedad son losfrutos de ese trabajo; en cambio, la consideracion de que igual manera que
losbienes que sustituyen a los que cada conyuge lleva al matrimonio como propiostienen el caracter de
propios, hace pensar que las indemnizaciones que vengana suplir la capacidad de trabajo aportada por
cada conyuge a la sociedad, debenser juridicamente reputadas como bienes propios del conyuge que
haya sufrido elaccidente. Asi se llega a la misma solucion aportada por la jurisprudencia francesca. 28

This opinion is, however, undecisive, to say the least. It should be noted that Colin y Capitant were
commenting on the French Civil Code; that their comment referred to indemnities due in consequence
of "accidentes del trabajo "resulting in physical injuries sustained by one of the spouses (which Mrs.
Zulueta has not suffered); and that said commentators admit that the question whether or not said
damages are paraphernal property or belong to the conjugal partnership is not settled under the
Spanish law. 29 Besides, the French law and jurisprudence — to which the comments of Planiol and
Ripert, likewise, refer — are inapposite to the question under consideration, because they differ
basically from the Spanish law in the treatment of the property relations between husband and wife.
Indeed, our Civil Code, like the Spanish Civil Code, favors the system of conjugal partnership of gains.
Accordingly, the former provides that, "(i)n the absence of marriage settlements, or when the same are
void, the system of relative community or conjugal partnership of gains ... shall govern the property
relations between" the spouses. 30 Hence, "(a)ll property of the marriage is presumed to belong to the
conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife." 31

No similar rules are found in the French Civil Code. What is more, under the provisions thereof, the
conjugal partnership exists only when so stipulated in the "capitulaciones matrimoniales" or by way of
exception. In the language of Manresa —

Prescindimos de los preceptos de los Condigos de Francia, Italia, Holanda, Portugal, Alemania y Suiza,
porsue solo excepcionalmente, o cuando asi se pacta en las capitulaciones, admiten el sistema de
gananciales. 32

Again, Colin y Capitant, as well as the Lilius case, refer to damages recovered for physical injuries
suffered by the wife. In the case at bar, the party mainly injured, although not physically, is the husband.

Accordingly, the other Philippine cases 33 and those from Louisiana — whose civil law is based upon the
French Civil Code — cited by the defendant, which similarly refer to moral damages due to physical
injuries suffered by the wife, are, likewise, inapplicable to the case at bar.

We find, therefore, no plausible reason to disturb the views expressed in Our decision promulgated on
February 29, 1972.

WHEREFORE, the motions for reconsideration above-referred to should be, as they are hereby denied.
.R. No. 156654 November 20, 2008

PHILIPPINE AIRLINES, INC., petitioner

vs.

VICENTE LOPEZ, JR., respondent.

The antecedent facts are as follows:

In a Complaint4 dated February 11, 1992, filed with the RTC of Manila, Branch 24, Lopez claimed that
PAL had unjustifiably downgraded his seat from business to economy class in his return flight from
Bangkok to Manila last November 30, 1991, and that, in view thereof, PAL should be directed to pay him
moral damages of at least P100,000, exemplary damages of at least P20,000, attorney's fees in the sum
of P30,000, as well as the costs of suit.

To support his claim, Lopez averred that he purchased a Manila-Hongkong-Bangkok-Manila PAL business
class ticket and that his return flight to Manila was confirmed by PAL's booking personnel in Bangkok on
November 26, 1991. He also mentioned that he was surprised to learn during his check-in for the said
return flight that his status as business class passenger was changed to economy class, and that PAL was
not able to offer any valid explanation for the sudden change when he protested the change. Lopez
added that although aggrieved, he nevertheless took the said flight as an economy class passenger
because he had important appointments in Manila.

For its part, PAL denied any liability and claimed that whatever damage Lopez had suffered was due to
his own fault. PAL explained that the terms and conditions of the contract of carriage required Lopez to
reconfirm his booking for the Bangkok-to-Manila leg of his trip, and that he did not protest the economy
seat given to him when the change in his accommodations was read to him by the person who received
his phone reconfirmation. PAL also asserted that Lopez did not complain against his economy seat
during the check-in and that he raised the issue only after the flight was over.5 Thus, PAL prayed that
the case be dismissed for lack of merit.6

In its Decision dated April 19, 1995, the trial court held PAL liable for damages. It said that PAL's
contention that Lopez might have thought that he was holding an economy class ticket or that he
waived his right to have a business class seat is untenable, considering that Lopez is an experienced
businessman and a Bachelor of Science degree holder.

It also noted that the following showed that PAL's employees had been negligent in booking and
confirming Lopez's travel accommodations from Bangkok to Manila: (1) the admission of PAL's booking
personnel7 that she affixed the validation sticker on Lopez's ticket on the basis of the passenger's name
list showing that his reservation was for an economy class seat without examining or checking the
latter's ticket during his booking validation; and (2) the admission of PAL's check-in clerk8 at the
Bangkok Airport that when Lopez checked-in for his return trip to Manila, she similarly gave Lopez an
economy boarding pass based on the information found in the coupon of the ticket and the passenger
manifest without checking the latter's ticket. The trial court said that had PAL's employees examined his
ticket in those instances, the error or oversight which might have resulted from the phoned-in booking
could have been easily rectified.9

Thus, citing Articles 173310 and 222011 of the Civil Code and the case of Ortigas, Jr. v. Lufthansa
German Airlines,12 the trial court held that the inattention and lack of care on the part of the common
carrier, in this case PAL, resulting in the failure of the passenger to be accommodated in the class
contracted for amounts to bad faith or fraud, making it liable for damages.13 The trial court likewise
awarded attorney's fees in favor of Lopez after noting that Lopez was forced to litigate in order to assert
his rights.14

The dispositive portion of the trial court's decision reads:

Based on all the foregoing therefore, the Court finds in favor of the plaintiff and against the defendant
and orders defendant to pay plaintiff, as prayed for in the complaint, the following amounts:
P100,000.00 for moral damages; P20,000.00 for exemplary damages and P30,000.00 for attorney's fees
and also to pay for the cost of suit. All amounts awarded to bear legal interest from date of this decision.

SO ORDERED.15

On appeal, the Court of Appeals affirmed in toto the trial court's decision after having been fully
convinced of the negligence of PAL's employees and after finding PAL's defenses to be unworthy of
belief and contrary to common observation and experience.

PAL moved for reconsideration but it was denied. Hence, this petition.
In our Resolution16 dated September 26, 2007, we suspended the proceedings of this case and directed
PAL to submit a status report on its then ongoing corporate rehabilitation. Pursuant to our directive, PAL
submitted a Manifestation/Compliance17 dated October 22, 2007, informing us of the Securities and
Exchange Commission Order18 dated September 28, 2007, which granted its request to exit from
corporate rehabilitation. Thus, we now resolve the instant petition.

Petitioner contends that:

I.THE COURT OF APPEALS ERRED IN NOT RULING THAT IN AN OPEN-DATED CONTRACT OF CARRIAGE,
THE PARTIES ARE FREE TO AGREE ON THE TERMS THEREOF ON THE DATE LEFT OPEN.

II.THE COURT OF APPEALS ERRED IN NOT RULING THAT RESPONDENT'S CONTRIBUTORY NEGLIGENCE
PREVENTS HIM FROM RECOVERING DAMAGES FROM PETITIONER.

III.THE COURT OF APPEALS ERRED IN NOT RULING THAT IN MORAL DAMAGES RECOVERABLE IN
BREACHES OF CONTRACTS, THE TERMS "FRAUD" AND "BAD FAITH" HAVE REFERENCE TO WANTON,
RECKLESS, OPPRESSIVE, OR MALEVOLENT CONDUCT.

Simply put, the issues are: (1) Did the Court of Appeals err in not ruling that Lopez agreed or allowed his
business class seat to be downgraded to economy class? (2) Did the Court of Appeals err in not ruling
that Lopez's alleged contributory negligence was the proximate cause of the downgrading of his seat?
and (3) Did the Court of Appeals err in awarding moral damages, exemplary damages and attorney's
fees in favor of Lopez in view of the alleged absence of fraud or bad faith of PAL?

A perusal of the aforesaid issues readily shows that the same are questions of facts since its resolution
would entail a re-evaluation of the evidence presented before the trial court.20 Thus, we could not take
cognizance of such issues considering the settled rule that our review under Rule 45 is confined to
questions of law. It is true that there are several exceptions21 to the said rule; however, none finds
application in this case.Moreover, we had already specifically held that issues on the existence of
negligence, fraud and bad faith are questions of fact.22We had also observed that PAL is also guilty of
raising prohibited new matters23 and in changing its theory of defense24 since it is only in the present
petition that it alleged the contributory negligence of Lopez.
PAL's procedural lapses notwithstanding, we had nevertheless carefully reviewed the records of this
case and found no compelling reason to depart from the uniform factual findings of the trial court and
the Court of Appeals that: (1) it was the negligence of PAL which caused the downgrading of the seat of
Lopez; and (2) the aforesaid negligence of PAL amounted to fraud or bad faith, considering our ruling in
Ortigas.25

Moreover, we cannot agree with PAL that the amount of moral damages awarded by the trial court, as
affirmed by the Court of Appeals, was excessive. In Mercury Drug Corporation v. Baking,26 we had
stated that "there is no hard-and-fast rule in determining what would be a fair and reasonable amount
of moral damages, since each case must be governed by its own peculiar facts. However, it must be
commensurate to the loss or injury suffered."27 Taking into account the attending circumstances here,
we believe that the amount of P100,000 awarded as moral damages is appropriate.

WHEREFORE, the assailed Decision dated June 20, 2002 and Resolution dated December 10, 2002 of the
Court of Appeals in CA-G.R. CV No. 53360 are AFFIRMED. Costs against the petitioner.

SO ORDERED.

AN AIRLINES, petitioner, vs. MICHAEL ASUNCION and JEANETTE ASUNCION, respondents.

On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board Japan Airlines
(JAL) Flight 742 bound for Los Angeles. Their itinerary included a stop-over in Narita and an overnight
stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs. Noriko Etou-Higuchi of JAL endorsed their
applications for shore pass and directed them to the Japanese immigration official.[4] A shore pass is
required of a foreigner aboard a vessel or aircraft who desires to stay in the neighborhood of the port
of call for not more than 72 hours.

The basic issue for resolution is whether JAL is guilty of breach of contract.
Under Article 1755 of the Civil Code, a common carrier such as JAL is bound to carry its passengers safely
as far as human care and foresight can provide, using the utmost diligence of very cautious persons,
with due regard for all the circumstances. When an airline issues a ticket to a passenger, confirmed for a
particular flight on a certain date, a contract of carriage arises. The passenger has every right to expect
that he be transported on that flight and on that date and it becomes the carriers obligation to carry him
and his luggage safely to the agreed destination.[10] If the passenger is not so transported or if in the
process of transporting he dies or is injured, the carrier may be held liable for a breach of contract of
carriage.[11]

We find that JAL did not breach its contract of carriage with respondents. It may be true that JAL has
the duty to inspect whether its passengers have the necessary travel documents, however, such duty
does not extend to checking the veracity of every entry in these documents. JAL could not vouch for
the authenticity of a passport and the correctness of the entries therein. The power to admit or not an
alien into the country is a sovereign act which cannot be interfered with even by JAL. This is not within
the ambit of the contract of carriage entered into by JAL and herein respondents. As such, JAL should
not be faulted for the denial of respondents shore pass applications.

Prior to their departure, respondents were aware that upon arrival in Narita, they must secure shore
pass entries for their overnight stay. Respondents mother, Mrs. Imelda Asuncion, insisted though that
Ms. Linda Villavicencio of JAL assured her that her children would be granted the passes.[12] This
assertion was satisfactorily refuted by Ms. Villavicencios testimony during the cross examination, to wit:

JAPAN AIRLINES, petitioner,

vs.

JESUS SIMANGAN, respondent.

WHEN an airline issues a ticket to a passenger confirmed on a particular flight on a certain date, a
contract of carriage arises, and the passenger has every right to expect that he would fly on that flight
and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage.1

The power to admit or not an alien into the country is a sovereign act which cannot be interfered with
even by Japan Airlines (JAL).2
In 1991, respondent Jesus Simangan decided to donate a kidney to his ailing cousin, Loreto Simangan, in
UCLA School of Medicine in Los Angeles, California, U.S.A. Upon request of UCLA, respondent undertook
a series of laboratory tests at the National Kidney Institute in Quezon City to verify whether his blood
and tissue type are compatible with Loreto's.6 Fortunately, said tests proved that respondent's blood
and tissue type were well-matched with Loreto's.7

Basically, there are three (3) issues to resolve here: (1) whether or not JAL is guilty of contract of
carriage; (2) whether or not respondent is entitled to moral and exemplary damages; and (3) whether or
not JAL is entitled to its counterclaim for damages.

Our Ruling

This Court is not a trier of facts.

Chiefly, the issues are factual. The RTC findings of facts were affirmed by the CA. The CA also gave its
nod to the reasoning of the RTC except as to the awards of damages, which were reduced, and that of
attorney's fees, which was deleted.

We are not a trier of facts. We generally rely upon, and are bound by, the conclusions on this matter of
the lower courts, which are better equipped and have better opportunity to assess the evidence first-
hand, including the testimony of the witnesses.45

We have repeatedly held that the findings of fact of the CA are final and conclusive and cannot be
reviewed on appeal to the Supreme Court provided they are based on substantial evidence.46 We have
no jurisdiction, as a rule, to reverse their findings.47 Among the exceptions to this rule are: (a) when the
conclusion is a finding grounded entirely on speculations, surmises or conjectures; (b) when the
inference made is manifestly mistaken, absurd or impossible; (c) where there is grave abuse of
discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts
are conflicting; (f) when the CA, in making its findings, went beyond the issues of the case and the same
is contrary to the admissions of both appellant and appellee.48

.
JAL is guilty of breach of

contract of carriage.

That respondent purchased a round trip plane ticket from JAL and was issued the corresponding
boarding pass is uncontroverted.49 His plane ticket, boarding pass, travel authority and personal articles
were subjected to rigid immigration and security procedure.50 After passing through said immigration
and security procedure, he was allowed by JAL to enter its airplane to fly to Los Angeles, California,
U.S.A. via Narita, Japan.51 Concisely, there was a contract of carriage between JAL and respondent.

Nevertheless, JAL made respondent get off the plane on his scheduled departure on July 29, 1992. He
was not allowed by JAL to fly. JAL thus failed to comply with its obligation under the contract of carriage.

JAL justifies its action by arguing that there was "a need to verify the authenticity of respondent's travel
document."52 It alleged that no one from its airport staff had encountered a parole visa before.53 It
further contended that respondent agreed to fly the next day so that it could first verify his travel
document, hence, there was novation.54 It maintained that it was not guilty of breach of contract of
carriage as respondent was not able to travel to the United States due to his own voluntary
desistance.55

We cannot agree. JAL did not allow respondent to fly. It informed respondent that there was a need to
first check the authenticity of his travel documents with the U.S. Embassy.56 As admitted by JAL, "the
flight could not wait for Mr. Simangan because it was ready to depart."57

As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of
contract for it is not one of the items enumerated under Article 2219 of the Civil Code.64 As an
exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a
passenger, as provided in Article 1764, in relation to Article 2206(3) of the Civil Code; and (2) in the
cases in which the carrier is guilty of fraud or bad faith, as provided in Article 2220.65

The acts committed by JAL against respondent amounts to bad faith. As found by the RTC, JAL breached
its contract of carriage with respondent in bad faith. JAL personnel summarily and insolently ordered
respondent to disembark while the latter was already settled in his assigned seat. He was ordered out of
the plane under the alleged reason that the genuineness of his travel documents should be verified.

These findings of facts were upheld by the CA, to wit:

x x x he was haughtily ejected by appellant. He was certainly embarrassed and humiliated when, in the
presence of other passengers, the appellant's airline staff shouted at him to stand up and arrogantly
asked him to produce his travel papers, without the least courtesy every human being is entitled to.
Then, he was compelled to deplane on the grounds that his papers were fake. His protestation of having
been issued a U.S. visa coupled with his plea to appellant to closely monitor his movements when the
aircraft stops over in Narita, were ignored. Worse, he was made to wait for many hours at the office of
appellant only to be told later that he has valid travel documents.66 (Underscoring ours)

Clearly, JAL is liable for moral damages. It is firmly settled that moral damages are recoverable in suits
predicated on breach of a contract of carriage where it is proved that the carrier was guilty of fraud or
bad faith, as in this case. Inattention to and lack of care for the interests of its passengers who are
entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which
entitles the passenger to an award of moral damages. What the law considers as bad faith which may
furnish the ground for an award of moral damages would be bad faith in securing the contract and in the
execution thereof, as well as in the enforcement of its terms, or any other kind of deceit.67

RUBEN T. REYES

PHILIPPINE CHARTER INSURANCE G.R. No. 145044

CORPORATION,

- versus - PUNO, C.J., Chairperson,

The facts are as follows:

On September 30, 1993, L.T. Garments Manufacturing Corp. Ltd. shipped from Hong Kong three sets of
warp yarn on returnable beams aboard respondent Neptune Orient Lines vessel, M/V Baltimar Orion,
for transport and delivery to Fukuyama Manufacturing Corporation (Fukuyama) of No. 7 Jasmin Street,
AUV Subdivision, Metro Manila.

During the course of the voyage, the container with the cargoes fell overboard and was lost.

Thus, Fukuyama wrote a letter to respondent Overseas Agency Services, Inc. (Overseas Agency), the
agent of Neptune Orient Lines in Manila, and claimed for the value of the lost cargoes. However,
Overseas Agency ignored the claim. Hence, Fukuyama sought payment from its insurer, PCIC, for the
insured value of the cargoes in the amount of P228,085, which claim was fully satisfied by PCIC.

As regards the issue on the limited liability of respondents, the Court upholds the decision of the CA.

Since the subject cargoes were lost while being transported by respondent common carrier from Hong
Kong to the Philippines, Philippine law applies pursuant to the Civil Code which provides:

Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of
the common carrier for their loss, destruction or deterioration.

Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall
be governed by the Code of Commerce and by special laws.

The rights and obligations of respondent common carrier are thus governed by the provisions of the Civil
Code, and the COGSA,[10] which is a special law, applies suppletorily.

The pertinent provisions of the Civil Code applicable to this case are as follows:

Art. 1749. A stipulation that the common carriers liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner declares a greater value, is binding.

Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances,
and has been fairly and freely agreed upon.

In addition, Sec. 4, paragraph (5) of the COGSA, which is applicable to all contracts for the carriage of
goods by sea to and from Philippine ports in foreign trade, provides:

A stipulation in the bill of lading limiting the common carriers liability for loss or destruction of a cargo to
a certain sum, unless the shipper or owner declares a greater value, is sanctioned by law, particularly
Articles 1749 and 1750 of the Civil Code which provide:
Art. 1749. A stipulation that the common carriers liability is limited to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances,
and has been fairly and freely agreed upon.

Such limited-liability clause has also been consistently upheld by this court in a number of cases. Thus, in
Sea-Land Service, Inc. vs. Intermediate Appellate Court, we ruled:

It seems clear that even if said section 4 (5) of the Carriage of Goods by Sea Act did not exist, the validity
and binding effect of the liability limitation clause in the bill of lading here are nevertheless fully
sustainable on the basis alone of the cited Civil Code Provisions. That said stipulation is just and
reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if a
greater value is not declared for the shipment in the bill of lading. To hold otherwise would amount to
questioning the justness and fairness of the law itself.... But over and above that consideration, the just
and reasonable character of such stipulation is implicit in it giving the shipper or owner the option of
avoiding accrual of liability limitation by the simple and surely far from onerous expedient of declaring
the nature and value of the shipment in the bill of lading.The CA, therefore, did not err in holding
respondents liable for damages to petitioner subject to the US$500 per package limited- liability
provision in the bill of lading.

WHEREFORE, the petition is DENIED. The Resolution of the Court of Appeals in CA-G.R. CV No. 52855
promulgated on April 13, 2000 is hereby AFFIRMED.
NEGROS NAVIGATION CO., INC., petitioner, vs. THE COURT OF APPEALS, RAMON MIRANDA, SPS.
RICARDO and VIRGINIA DE LA VICTORIA, respondents.

In April of 1980, private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc.
four special cabin tickets (#74411, 74412, 74413 and 74414) for his wife, daughter, son and niece who
were going to Bacolod City to attend a family reunion. The tickets were for Voyage No. 457-A of the M/V
Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980.

The ship sailed from the port of Manila on schedule.

At about 10:30 in the evening of April 22, 1980, 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 on July 16, 1980 in the Regional Trial Court of Manila, Branch 34,
against the Negros Navigation, the Philippine National Oil Company (PNOC), and the PNOC Shipping and
Transport Corporation (PNOC/STC), seeking damages for the death of Ardita de la Victoria Miranda, 48,
Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and Elfreda de la Victoria, 26.

In its answer, petitioner admitted that private respondents purchased ticket numbers 74411, 74412,
74413 and 74414; that the ticket numbers were listed in the passenger manifest; and that the Don Juan
left Pier 2, North Harbor, Manila on April 22, 1980 and sank that night after being rammed by the oil
tanker M/T Tacloban City, and that, as a result of the collision, some of the passengers of the M/V Don
Juan died. 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.

On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. entered into a compromise
agreement whereby petitioner assumed full responsibility for the payment and satisfaction of all claims
arising out of or in connection with the collision and releasing the PNOC and the PNOC/STC from any
liability to it. The agreement was subsequently held by the trial court to be binding upon petitioner,
PNOC and PNOC/STC. Private respondents did not join in the agreement.
After trial, the court rendered judgment on February 21, 1991, the dispositive portion of which reads as
follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs, ordering all
the defendants to pay jointly and severally to the plaintiffs damages as follows:

To Ramon Miranda:

P42,025.00 for actual damages;

P152,654.55 as compensatory damages for loss of earning capacity of his wife;

P90,000.00 as compensatory damages for wrongful death of three (3) victims;

P300,000.00 as moral damages;

P50,000.00 as exemplary damages, all in the total amount of P634,679.55; and

P40,000.00 as attorneys fees.

To Spouses Ricardo and Virginia de la Victoria:

P12,000.00 for actual damages;

P158,899.00 as compensatory damages for loss of earning capacity;

P30,000.00 as compensatory damages for wrongful death;

P100,000.00 as moral damages;

P20,000.00 as exemplary damages, all in the total amount of P320,899.00; and

P15,000.00 as attorneys fees.

On appeal, the Court of Appeals[1] affirmed the decision of the Regional Trial Court with modification

1. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon
Miranda the amount of P23,075.00 as actual damages instead of P42,025.00;

2. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiff-appellee Ramon
Miranda the amount of P150,000.00, instead of P90,000.00, as compensatory damages for the death of
his wife and two children;

3. Ordering and sentencing defendants-appellants, jointly and severally, to pay plaintiffs-appellees Dela
Victoria spouses the amount of P50,000.00, instead of P30,000.00, as compensatory damages for the
death of their daughter Elfreda Dela Victoria;

Hence this petition, raising the following issues:

(1) whether the members of private respondents families were actually passengers of the Don Juan;

(2) whether the ruling in Mecenas v. Court of Appeals,[2] finding the crew members of petitioner to be
grossly negligent in the performance of their duties, is binding in this case;
(3) whether the total loss of the M/V Don Juan extinguished petitioners liability; and

(4) whether the damages awarded by the appellate court are excessive, unreasonable and unwarranted.

First. The trial court held that the fact that the victims were passengers of the M/V Don Juan was
sufficiently proven by private respondent Ramon Miranda, who testified that he purchased tickets
numbered 74411, 74412, 74413, and 74414 at P131.30 each from the Makati office of petitioner for
Voyage No. 47-A of the M/V Don Juan, which was leaving Manila on April 22, 1980. This was
corroborated by the passenger manifest (Exh. E) on which the numbers of the tickets and the names of
Ardita Miranda and her children and Elfreda de la Victoria appear.

Petitioner contends that the purchase of the tickets does not necessarily mean that the alleged victims
actually took the trip. Petitioner asserts that it is common knowledge that passengers purchase tickets in
advance but do not actually use them. Hence, private respondent should also prove the presence of the
victims on the ship. The witnesses who affirmed that the victims were on the ship were biased and
unreliable.

This contention is without merit. Private respondent Ramon Miranda testified that he personally took
his family and his niece to the vessel on the day of the voyage and stayed with them on the ship until it
was time for it to leave. There is no reason he should claim members of his family to have perished in
the accident just to maintain an action. People do not normally lie about so grave a matter as the loss of
dear ones. It would be more difficult for private respondents to keep the existence of their relatives if
indeed they are alive than it is for petitioner to show the contrary. Petitioners only proof is that the
bodies of the supposed victims were not among those recovered from the site of the mishap. But so
were the bodies of the other passengers reported missing not recovered, as this Court noted in the
Mecenas[3] case.

Private respondent Mirandas testimony was corroborated by Edgardo Ramirez. Ramirez was a
seminarian and one of the survivors of the collision. He testified that he saw Mrs. Miranda and Elfreda
de la Victoria on the ship and that he talked with them. He knew Mrs. Miranda who was his teacher in
the grade school. He also knew Elfreda who was his childhood friend and townmate. Ramirez said he
was with Mrs. Miranda and her children and niece from 7:00 p.m. until 10:00 p.m. when the collision
happened and that he in fact had dinner with them. Ramirez said he and Elfreda stayed on the deck
after dinner and it was there where they were jolted by the collision of the two vessels. Recounting the
moments after the collision, Ramirez testified that Elfreda ran to fetch Mrs. Miranda. He escorted her to
the room and then tried to go back to the deck when the lights went out. He tried to return to the cabin
but was not able to do so because it was dark and there was a stampede of passengers from the deck.

Petitioner casts doubt on Ramirez testimony, claiming that Ramirez could not have talked with the
victims for about three hours and not run out of stories to tell, unless Ramirez had a storehouse of
stories. But what is incredible about acquaintances thrown together on a long journey staying together
for hours on end, in idle conversation precisely to while the hours away?

Petitioner also points out that it took Ramirez three (3) days before he finally contacted private
respondent Ramon Miranda to tell him about the fate of his family. But it is not improbable that it took
Ramirez three days before calling on private respondent Miranda to tell him about the last hours of Mrs.
Miranda and her children and niece, in view of the confusion in the days following the collision as rescue
teams and relatives searched for survivors.

Indeed, given the facts of this case, it is improper for petitioner to even suggest that private respondents
relatives did not board the ill-fated vessel and perish in the accident simply because their bodies were
not recovered.

Second. 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,[4] which case was brought for the
death of other passengers. In that case it was found that although the proximate cause of the mishap
was the negligence of the crew of the M/T Tacloban City, the crew of the Don Juan was equally
negligent as it found that the latters master, Capt. Rogelio Santisteban, was playing mahjong at the
time of collision, and the officer on watch, Senior Third Mate Rogelio De Vera, admitted that he failed
to call the attention of Santisteban to the imminent danger facing them. This Court found that Capt.
Santisteban and the crew of the M/V Don Juan failed to take steps to prevent the collision or at least
delay the sinking of the ship and supervise the abandoning of the ship.

Petitioner Negros Navigation was found equally negligent in tolerating the playing of mahjong by the
ship captain and other crew members while on board the ship and failing to keep the M/V Don Juan
seaworthy so much so that the ship sank within 10 to 15 minutes of its impact with the M/T Tacloban
City.
In addition, the Court found that the Don Juan was overloaded. The Certificate of Inspection, dated
August 27, 1979, issued by the Philippine Coast Guard Commander at Iloilo City stated that the total
number of persons allowed on the ship was 864, of whom 810 are passengers, but there were actually
1,004 on board the vessel when it sank, 140 persons more than the maximum number that could be
safely carried by it.

Taking these circumstances together, and the fact that the M/V Don Juan, as the faster and better-
equipped vessel, could have avoided a collision with the PNOC tanker, this Court held that even if the
Tacloban City had been at fault for failing to observe an internationally-recognized rule of navigation,
the Don Juan was guilty of contributory negligence. Through Justice Feliciano, this Court held:

The grossness of the negligence of the Don Juan is underscored when one considers the foregoing
circumstances in the context of the following facts: Firstly, the Don Juan was more than twice as fast as
the Tacloban City. The Don Juans top speed was 17 knots; while that of the Tacloban City was 6.3. knots.
Secondly, the Don Juan carried the full complement of officers and crew members specified for a
passenger vessel of her class. Thirdly, the Don Juan was equipped with radar which was functioning that
night. Fourthly, the Don Juans officer on-watch had sighted the Tacloban City on his radar screen while
the latter was still four (4) nautical miles away. Visual confirmation of radar contact was established by
the Don Juan while the Tacloban City was still 2.7 miles away. In the total set of circumstances which
existed in the instant case, the Don Juan, had it taken seriously its duty of extraordinary diligence,
could have easily avoided the collision with the Tacloban City. Indeed, the Don Juan might well have
avoided the collision even if it had exercised ordinary diligence merely.

It is true that the Tacloban City failed to follow Rule 18 of the International Rules of the Road which
requires two (2) power-driven vessels meeting end on or nearly end on each to alter her course to
starboard (right) so that each vessel may pass on the port side (left) of the other. The Tacloban City,
when the two (2) vessels were only three-tenths (0.3) of a mile apart, turned (for the second time) 15o
to port side while the Don Juan veered hard to starboard. . . . [But] route observance of the International
Rules of the Road will not relieve a vessel from responsibility if the collision could have been avoided by
proper care and skill on her part or even by a departure from the rules.

In the petition at bar, the Don Juan having sighted the Tacloban City when it was still a long way off was
negligent in failing to take early preventive action and in allowing the two (2) vessels to come to such
close quarters as to render the collision inevitable when there was no necessity for passing so near to
the Tacloban City as to create that hazard or inevitability, for the Don Juan could choose its own
distance. It is noteworthy that the Tacloban City, upon turning hard to port shortly before the moment
of collision, signalled its intention to do so by giving two (2) short blasts with its horn. The Don Juan gave
no answering horn blast to signal its own intention and proceeded to turn hard to starboard.

We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence
in connection with the collision of the Don Juan and Tacloban City and the sinking of the Don Juan
leading to the death of hundreds of passengers. . . .[5]

Petitioner criticizes the lower courts 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.

The contention is without merit. What petitioner contends may be true with respect to the merits of the
individual claims against petitioner but not as to the cause of the sinking of its ship on April 22, 1980 and
its liability for such accident, of which there can only be one truth. Otherwise, one would be subscribing
to the sophistry: truth on one side of the Pyrenees, falsehood on the other!

Adherence to the Mecenas case is dictated by this Courts policy of maintaining stability in jurisprudence
in accordance with the legal maxim stare decisis et non quieta movere (Follow past precedents and do
not disturb what has been settled.) 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.[6] In
Woulfe v. Associated Realties Corporation,[7] the Supreme Court of New Jersey held that where
substantially similar cases to the pending case were presented and applicable principles declared in
prior decisions, the court was bound by the principle of stare decisis. Similarly, in State ex rel. Tollinger v.
Gill,[8] it was held that under the doctrine of stare decisis a ruling is final even as to parties who are
strangers to the original proceeding and not bound by the judgment under the res judicata doctrine. The
Philadelphia court expressed itself in this wise: Stare decisis simply declares that, for the sake of
certainty, a conclusion reached in one case should be applied to those which follow, if the facts are
substantially the same, even though the parties may be different.[9] Thus, in J. M. Tuason v. Mariano,
supra, this Court relied on its rulings in other cases involving different parties in sustaining the validity of
a land title on the principle of stare decisis et non quieta movere.

Indeed, the evidence presented in this case was the same as those presented in the Mecenas case, to
wit:
Nor is it true that the trial court merely based its decision on the Mecenas case. The trial court made its
own independent findings on the basis of the testimonies of witnesses, such as Senior Third Mate
Rogelio de Vera, who incidentally gave substantially the same testimony on petitioners behalf before
the Board of Marine Inquiry. The trial court agreed with the conclusions of the then Minister of National
Defense finding both vessels to be negligent.

Third. The next issue is whether petitioner is liable to pay damages notwithstanding the total loss of its
ship. The issue is not one of first impression. The rule is well-entrenched in our jurisprudence that a
shipowner may be held liable for injuries to passengers notwithstanding the exclusively real and
hypothecary nature of maritime law if fault can be attributed to the shipowner.[15]

In Mecenas, this Court 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.

Fourth. 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 Mecenas case, the amount
of P307,500.00 was awarded to the seven children of the Mecenas couple. Under petitioners formula,
Ramon Miranda should receive P43,857.14, while the De la Victoria spouses should receive P97,714.28.

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.[16] The decision in the Mecenas
case relates to damages for which petitioner was liable to the claimants in that case.

In the case at bar, the award of P300,000.00 for moral damages is reasonable considering the grief
petitioner Ramon Miranda suffered as a result of the loss of his entire family. As a matter of fact, three
months after the collision, he developed a heart condition undoubtedly caused by the strain of the loss
of his family. The P100,000.00 given to Mr. and Mrs. de la Victoria is likewise reasonable and should be
affirmed.

As for the amount of civil indemnity awarded to private respondents, the appellate courts award of
P50,000.00 per victim should be sustained. The amount of P30,000.00 formerly set in De Lima v. Laguna
Tayabas Co.,[17] Heirs of Amparo delos Santos v. Court of Appeals,[18] and Philippine Rabbit Bus Lines,
Inc. v. Intermediate Appellate Court[19] as benchmark was subsequently increased to P50,000.00 in the
case of Sulpicio Lines, Inc. v. Court of Appeals,[20] which involved the sinking of another interisland ship
on October 24, 1988.

We now turn to the determination of the earning capacity of the victims. With respect to Ardita
Miranda, the trial court awarded damages computed as follows:[21]

In the case of victim Ardita V. Miranda whose age at the time of the accident was 48 years, her life
expectancy was computed to be 21.33 years, and therefore, she could have lived up to almost 70 years
old. Her gross earnings for 21.33 years based on P10,224.00 per annum, would be P218,077.92.
Deducting therefrom 30% as her living expenses, her net earnings would be P152,654.55, to which
plaintiff Ramon Miranda is entitled to compensatory damages for the loss of earning capacity of his wife.
In considering 30% as the living expenses of Ardita Miranda, the Court takes into account the fact that
plaintiff and his wife were supporting their daughter and son who were both college students taking
Medicine and Law respectively.

In accordance with the ruling in Villa-Rey Transit, Inc. v. Court of Appeals,[22] we think the life
expectancy of Ardita Miranda was correctly determined to be 21.33 years, or up to age 69. Petitioner
contends, however, that Mrs. Miranda would have retired from her job as a public school teacher at 65,
hence her loss of earning capacity should be reckoned up to 17.33 years only.

The accepted formula for determining life expectancy is 2/3 multiplied by (80 minus the age of the
deceased). It may be that in the Philippines the age of retirement generally is 65 but, in calculating the
life expectancy of individuals for the purpose of determining loss of earning capacity under Art. 2206(1)
of the Civil Code, it is assumed that the deceased would have earned income even after retirement from
a particular job. In this case, the trial court took into account the fact that Mrs. Miranda had a masters
degree and a good prospect of becoming principal of the school in which she was teaching. There was
reason to believe that her income would have increased through the years and she could still earn more
after her retirement, e.g., by becoming a consultant, had she not died. The gross earnings which Mrs.
Miranda could reasonably be expected to earn were it not for her untimely death was, therefore,
correctly computed by the trial court to be P218,077.92 (given a gross annual income of P10,224.00 and
life expectancy of 21.33 years).

Petitioner contends that from the amount of gross earnings, 60% should be deducted as necessary living
expenses, not merely 30% as the trial court allowed. Petitioner contends that 30% is unrealistic,
considering that Mrs. Mirandas earnings would have been subject to taxes, social security deductions
and inflation.

We agree with this contention. In Villa-Rey Transit, Inc. v. Court of Appeals,[23] the Court allowed a
deduction of P1,184.00 for living expenses from the P2,184.00 annual salary of the victim, which is
roughly 54.2% thereof. The deceased was 29 years old and a training assistant in the Bacnotan Cement
Industries. In People v. Quilaton,[24] the deceased was a 26-year old laborer earning a daily wage. The
court allowed a deduction of P120,000.00 which was 51.3% of his annual gross earnings of P234,000.00.
In People v. Teehankee,[25] the court allowed a deduction of P19,800.00, roughly 42.4% thereof from
the deceaseds annual salary of P46,659.21. The deceased, Maureen Hultman, was 17 years old and had
just received her first paycheck as a secretary. In the case at bar, we hold that a deduction of 50% from
Mrs. Mirandas gross earnings (P218,077.92) would be reasonable, so that her net earning capacity
should be P109,038.96. There is no basis for supposing that her living expenses constituted a smaller
percentage of her gross income than the living expenses in the decided cases. To hold that she would
have used only a small part of her income for herself, a larger part going to the support of her children
would be conjectural and unreasonable.

As for Elfreda de la Victoria, the trial court found that, at the time of her death, she was 26 years old, a
teacher in a private school in Malolos, Bulacan, earning P6,192.00 per annum. Although a probationary
employee, she had already been working in the school for two years at the time of her death and she
had a general efficiency rating of 92.85% and it can be presumed that, if not for her untimely death, she
would have become a regular teacher. Hence, her loss of earning capacity is P111,456.00, computed as
follows:

net earning capacity (x) = life expectancy x [ gross annual income less reasonable & necessary living
expenses (50%) ]

x = [ 2 (80-26) ] x [P6,192.00 - P3,096.00]

3

= 36 x 3,096.00

= P111,456.00

On the other hand, the award of actual damages in the amount of P23,075.00 was determined by the
Court of Appeals on the basis of receipts submitted by private respondents. This amount is reasonable
considering the expenses incurred by private respondent Miranda in organizing three search teams to
look for his family, spending for transportation in going to places such as Batangas City and Iloilo, where
survivors and the bodies of other victims were found, making long distance calls, erecting a monument
in honor of the four victims, spending for obituaries in the Bulletin Today and for food, masses and
novenas.

Petitioners contention that the expenses for the erection of a monument and other expenses for
memorial services for the victims should be considered included in the indemnity for death awarded to
private respondents is without merit. Indemnity for death is given to compensate for violation of the
rights of the deceased, i.e., his right to life and physical integrity.[26] On the other hand, damages
incidental to or arising out of such death are for pecuniary losses of the beneficiaries of the deceased.

As for the award of attorneys fees, we agree with the Court of Appeals that the amount of P40,000.00
for private respondent Ramon Miranda and P15,000.00 for the de la Victoria spouses is justified. The
appellate court correctly held:

The Mecenas case cannot be made the basis for determining the award for attorneys fees. The award
would naturally vary or differ in each case. While it is admitted that plaintiff-appellee Ramon Miranda
who is himself a lawyer, represented also plaintiffs-appellees Dela Victoria spouses, we note that
separate testimonial evidence were adduced by plaintiff-appellee Ramon Miranda (TSN, February 26,
1982, p. 6) and plaintiffs-appellees spouses Dela Victoria (TSN, August 13, 1981, p. 43). Considering the
amount of work and effort put into the case as indicated by the voluminous transcripts of stenographic
notes, we find no reason to disturb the award of P40,000.00 for plaintiff-appellee Ramon Miranda and
P15,000.00 for plaintiffs-appellees Dela Victoria spouses.[27]
The award of exemplary damages should be increased to P300,000.00 for Ramon Miranda and
P100,000.00 for the de la Victoria spouses in accordance with our ruling in the Mecenas case:

Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is
socially deleterious in its consequence by creating negative incentives or deterrents against such
behaviour. In requiring compliance with the standard of extraordinary diligence, a standard which is in
fact that of the highest possible degree of diligence, from common carriers and in creating a
presumption of negligence against them, the law seeks to compel them to control their employees, to
tame their reckless instincts and to force them to take adequate care of human beings and their
property. The Court will take judicial notice of the dreadful regularity with which grievous maritime
disasters occur in our waters with massive loss of life. The bulk of our population is too poor to afford
domestic air transportation. So it is that notwithstanding the frequent sinking of passenger vessels in
our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments
given to it by the law for securing the ends of law and public policy. One of those instruments is the
institution of exemplary damages; one of those ends, of special importance in an archipelagic state like
the Philippines, is the safe and reliable carriage of people and goods by sea.[28]

LBC AIR CARGO, INC. FERNANDO M. YU and JAIME TANO, petitioners,

vs.

HON. COURT OF APPEALS, Fourth Division, SHERWIN MONTEROLA y OYON-OYON, represented by

PATROCENIA GRONDIANO y MONTEROLA, and PATROCENIA GRONDIANO y MONTEROLA, respondents.

In this petition for review, the application of the doctrines of "proximate cause" and "last clear chance"
is, once again, being put to test. The petition questions the decision of the Court of Appeals, dated 18
July 1991, which has reversed that of the trial court.
The case arose from a vehicular collision which occurred at about 11:30 in the morning of 15 November
1987. Rogelio Monterola, a licensed driver, was traveling on board his Suzuki motorcycle towards
Mangagoy on the right lane along a dusty national road in Bislig, Surigao del Sur. At about the same
time, a cargo van of the LBC Air Cargo Incorporated, driven by defendant Jaime Tano, Jr., was coming
from the opposite direction on its way to the Bislig Airport. On board were passengers Fernando Yu,
Manager of LBC Air Cargo, and his son who was seated beside Tano. When Tano was approaching the
vicinity of the airport road entrance on his left, he saw two vehicles racing against each other from the
opposite direction. Tano stopped his vehicle and waited for the two racing vehicles to pass by. The
stirred cloud of dust made visibility extremely bad. Instead of waiting for the dust to settled, Tano
started to make a sharp left turn towards the airport road. When he was about to reach the center of
the right lane, the motorcycle driven by Monterola suddenly emerged from the dust and smashed head-
on against the right side of the LBC van. Monterola died from the severe injuries he sustained.

Tano should not have made a left turn under the conditions admitted by him. Under the Land
Transportation and Traffic Code, the driver of any vehicle upon a highway, before starting, stopping or
turning from a direct line, is called upon to first see that such movement can be made in safety, and
whenever the operation of any other vehicle approaching may be affected by such movement, shall give
a signal plainly visible to the driver of such other vehicles of the intention to make such movement (Sec.
44, R.A. 4136, as amended). This means that before a driver turns from a direct line, in this case to the
left, the driver must first see to it that there are no approaching vehicles and, if there are, to make the
turn only if it can be made in safety, or at the very least give a signal that is plainly visible to the driver of
such other vehicle. Tano did neither in this case, for he recklessly made a left turn even as visibility was
still very poor, and thus failed to see the approaching motorcycle and warn the latter, of his intention to
make a left turn. This is plain and simple negligence.

In thus making the left turn, he placed his vehicle directly at the path of the motorcycle which, unaware
of Tano's intention to make a left turn, smashed at Tano's vehicle. It was Tano's negligence that created
the risk or the condition of danger that set into operation the event that led to the smashedup and
untimely death of Rogelio Monterola.

Tano's proven negligence created a presumption of negligence on the part of his employer, the LBC
Air Cargo Corporation, in supervising its employees properly and adequately (Phoenix Construction,
Inc. vs. Intermediate Appellate Court, supra), which may only be destroyed by proof of due diligence
in the selection and supervision of his employees to prevent the damage (Article 2180, N.C.C.). No
such defense was interposed by defendants in their answer.
Petitioners poorly invoke the doctrine of "last clear chance" (also referred to, at times, as
"supervening negligence" or as "discovered peril"). The doctrine, in essence, is to the effect that
where both parties are negligent, but the negligent act of one is appreciably later in time than that of
the other, or when it is impossible to determine whose fault or negligence should be attributed to the
incident, the one who had the last clear opportunity to avoid the impending harm and failed to do so
is chargeable with the consequences thereof (see Picart vs. Smith, 37 Phil. 809). Stated differently, the
rule would also mean that an antecedent negligence of a person does not preclude the recovery of
damages for supervening negligence of, or bar a defense against the liability sought by, another if the
latter, who had the last fair chance, could have avoided the impending harm by the exercise of due
diligence (Pantranco North Express, Inc. vs. Baesa, 179 SCRA 384; Glan People's Lumber and Hardware
vs. Intermediate Appellate Court, 173 SCRA 464).

SO ORDERED.

PHILIPPINE AIR LINES, petitioner,

vs.

FLORANTE A. MIANO, respondent.

The facts are uncontroverted.

On August 31, 1988, private respondent took petitioner's flight PR 722, Mabuhay Class, bound for
Frankfurt, Germany. He had an immediate onward connecting flight via Lufthansa flight LH 1452 to
Vienna, Austria. At the Ninoy Aquino International Airport, he checked-in one brown suitcase weighing
twenty (20) kilograms2 but did not declare a higher valuation. He claimed that his suitcase contained
money, documents, one Nikkon camera with zoom lens, suits, sweaters, shirts, pants, shoes, and other
accessories.3

Upon private respondent's arrival at Vienna via Lufthansa flight LH 1452, his checked-in baggage was
missing. He reported the matter to the Lufthansa authorities. After three (3) hours of waiting in vain, he
proceeded to Piestany, Czechoslovakia. Eleven (11) days after or on September 11, 1988, his suitcase
was delivered to him in his hotel in Piestany, Czechoslovakia. He claimed that because of the delay in the
delivery of his suitcase, he was forced to borrow money to buy some clothes, to pay $200.00 for the
transportation of his baggage from Vienna to Piestany, and lost his Nikkon camera.4

In November 1988, private respondent wrote to petitioner a letter demanding: (1) P10,000.00 cost of
allegedly lost Nikkon camera; (2) $200.00 for alleged cost of transporting luggage from Vienna to
Piestany; and (3) P100,000.00 as damages. In its reply, petitioner informed private respondent that his
letter was forwarded to its legal department for investigation.

Private respondent felt his demand letter was left unheeded. He instituted an action for Damages
docketed as Civil Case No. 89-3496 before the Regional Trial Court of Makati.

Petitioner contested the complaint. It disclaimed any liability on the ground that there was neither a
report of mishandled baggage on flight PR 722 nor a tracer telex received from its Vienna Station. It,
however, contended that if at all liable its obligation is limited by the Warsaw Convention rate.

Petitioner filed a Third-Party Complaint against Lufthansa German Airlines imputing the mishandling of
private respondent's baggage, but was dismissed for its failure to prosecute.

In its decision, the trial court observed that petitioner's actuation was not attended by bad faith.
Nevertheless, it awarded private respondent damages and attorney's fees, the dispositive portion of
which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff (private respondent) and against the
defendant (petitioner), thereby ordering the latter to pay the following:

(a) U.S. $200.00 as cost of transporting the suitcase from Vienna to Czechoslovakia;

(b) P40,000.00 as moral damages;

(c) P20,000.00 as exemplary damages; and

(d) P15,000.00 as attorney's fees.

SO ORDERED. 5

Hence, this petition for review.

In breach of contract of carriage by air, moral damages are awarded only if the defendant acted
fraudulently or in bad faith.6 Bad faith means a breach of a known duty through same motive of
interest or ill will.7

The trial court erred in awarding moral damages to private respondent. The established facts evince that
petitioner's late delivery of the baggage for eleven (11) days was not motivated by ill will or bad faith. In
fact, it immediately coordinated with its Central Baggage Services to trace private respondent's suitcase
and succeeded in finding it. At the hearing, petitioner's Manager for Administration of Airport Services
Department Miguel Ebio testified that their records disclosed that Manila, the originating station, did
not receive any tracer telex.8 A tracer telex, an airline lingo, is an action of any station that the airlines
operate from whom a passenger may complain or have not received his baggage upon his arrival.9 It
was reasonable to presume that the handling of the baggage was normal and regular. Upon inquiry from
their Frankfurt Station, it was however discovered that the interline tag of private respondent's baggage
was accidentally taken off. According to Mr. Ebio, it was customary for destination stations to hold a
tagless baggage until properly identified. The tracer telex, which contained information on the baggage,
is matched with the tagless luggage for identification. Without the tracer telex, the color and the type of
baggage are used as basis for the matching. Thus, the delay.

Worthy to stress, the trial court made an unequivocal conclusion that petitioner did not act in bad faith
or with malice, viz.:

Absent a finding as to the bad intention of defendant (petitioner) PAL, this court finds it appropriate to
apply the Warsaw Convention with respect to the liability of Air Carriers.10

The mere fact that defendant (petitioner) exerted effort to assist plaintiff (private respondent) in his
predicament as shown in defendant's (petitioner's) letter to plaintiff (private respondent) (Exh. "E") and
likewise the letter from Mr. Miguel Ebio, Manager-Airport Services Administration of defendant
(petitioner) PAL to its Senior Counsel-Litigation, Atty. Marceliano Calica (Exh. "3") which reveals the fact
that an investigation was conducted as to mishandled baggage, coupled with the fact that said
information were then relayed to plaintiff (private respondent) as evidenced by a letter of defendant
(petitioner) to plaintiff (private respondent) (Exh. "4") does not warrant a showing of malice on the part
of defendant

Under the circumstances obtaining, considering that defendant's (petitioner's) actuation was not
attendant with bad faith, the award of moral damages in the amount of P40,000.00 is but just and fair.
12

Bad faith must be substantiated by evidence. In LBC vs. Court of

Appeals,13 we ruled:

Bad faith under the law cannot be presumed; it must be established by clear and convincing evidence.
Again, the unbroken jurisprudence is that in breach of contract cases where the defendant is not shown
to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable
consequences of the breach of the obligation which the parties had foreseen or could reasonably have
foreseen. The damages, however, will not include liability far moral damages. (Citations omitted)

We can neither sustain the award of exemplary damages. The prerequisite for the award of exemplary
damages in cases of contract or quasi-contract14 is that the defendant acted in wanton, fraudulent,
reckless, oppressive, or malevolent manner. 15 The undisputed facts do not so warrant the
characterization of the action of petitioner.

The award of attorney's fees must also be disallowed for lack of legal leg to stand on. The fact that
private respondent was compelled to litigate and incur expenses to protect and enforce his claim did not
justify the award of attorney's fees. The general rule is that attorney's fees cannot be recovered as part
of damages because of the policy that no premium should be placed on the right to litigate.16 Petitioner
is willing to pay the just claim of $200.00 as a result of the delay in the transportation of the luggage in
accord with the Warsaw Convention. Needless to say, the award of attorney's fees must be deleted
where the award of moral and exemplary damages are eliminated.

IN VIEW WHEREOF, the assailed Decision of July 29, 1992 is MODIFIED deleting the award of moral and
exemplary damages and attorney's fees. No costs.
SO ORDERED.

Narvasa, C.J., Bidin, Regalado and Mendoza, JJ., concur.

G.R. No. 83612 November 24, 1994

LUFTHANSA GERMAN AIRLINES, petitioner,

vs.

COURT OF APPEALS and TIRSO V. ANTIPORDA, SR., respondents.

In this petition for review on certiorari, the Court is confronted with the issue of whether or not
petitioner Lufthansa German Airlines which issued a confirmed Lufthansa ticket to private respondent
Antiporda covering a five-leg trip abroad different airlines should be held liable for damages occasioned
by the "bumping-off" of said private respondent Antiporda by Air Kenya, one of the airlines contracted
to carry him to a particular destination of the five-leg trip.
Tirso V. Antiporda, Sr. was an associate director of the Central Bank of the Philippines and a registered
consultant of the Asian Development Bank, the World Bank and the UNDP. He was, contracted by Sycip,
Gorres, Velayo & Co. (SGV) to be the institutional financial specialist for the agricultural credit institution
project of the Investment and Development Bank of Malawi in Africa. According to the letter of August
30, 1984 addressed to Antiporda from J.F. Singson of SGV, he would render his services to the Malawi
bank as an independent contractor for which he would be paid US$9,167 for a 50-day period
commencing sometime in September 1984. For the engagement, Antiporda would be provided one
round-trip economy ticket from Manila to Blantyre and back with a maximum travel time of four days
per round-trip and, in addition, a travel allowance of $50 per day, a travel insurance coverage of
P100,000 and major hospitalization with AFIA and an accident insurance coverage of P150,000.1 On
September 17, 1984, Lufthansa, through SGV, issued ticket No. 3477712678 for Antiporda's confirmed
flights to Malawi, Africa. The ticket particularized his itinerary as follows:

Carrier Flight Date Time Status

Manila to SQ 081 25-9-84 1530 OK

Singapore

Singapore to LH 695 25-9-84 2200 OK

Bombay

Bombay to KQ 203 26-9-84 0215 OK

Nairobi

Nairobi to QM 335 26-9-84 1395 OK

Lilongwe

Lilongwe to QM 031 26-9-84 1600 OK

Blantyre
Thus, on September 25, 1984, Antiporda took the Lufthansa flight to Singapore from where he
proceeded to Bombay on board the same airline. He arrived in Bombay as scheduled and waited at the
transit area of the airport for his connecting flight to Nairobi which was, per schedule given him by
Lufthansa, to leave Bombay in the morning of September 26, 1984. Finding no representative of
Lufthansa waiting for him at the gate, Antiporda asked the duty officer of Air India how he could get in
touch with Lufthansa. He was told to call up Lufthansa which informed him that somebody would attend
to him shortly. Ten minutes later, Gerard Matias, Lufthansa's traffic officer, arrived, asked for
Antiporda's ticket and told him to just sit down and wait. Matias returned with one Leslie Benent, duty
officer of Lufthansa, who informed Antiporda that his seat in Air Kenya Flight 203 to Nairobi had been
given to a very important person of Bombay who was attending a religious function in Nairobi.
Antiporda protested, stressing that he had an important professional engagement in Blantyre, Malawi in
the afternoon of September 26, 1984. He requested that the situation be remedied but Air Kenya Flight
203 left for Nairobi without him on board. Stranded in Bombay, Antiporda was booked for Nairobi via
Addis Ababa only on September 27, 1984. He finally arrived in Blantyre at 9:00 o'clock in the evening of
September 28, 1984, more than a couple of days late for his appointment with people from the
institution he was to work with in Malawi.

Consequently, on January 8, 1985, Antiporda's counsel wrote the general manager of Lufthansa in
Manila demanding P1,000,000 in damages for the airline's "malicious, wanton, disregard of the contract
of carriage." 2 In reply, Lufthansa general manager Hagen Keilich assured Antiporda that the matter
would be investigated.

Apparently getting no positive action from Lufthansa, on January 21, 1985, Antiporda filed with the
Regional Trial Court of Quezon City a complaint against Lufthansa which was docketed as Civil Case No.
Q-43810.

The lower court, 3 guided by the Supreme Court ruling in KLM Dutch Airlines v. Court of Appeals, et al., 4
found that Lufthansa breached the contract to transport Antiporda from Manila to Blantyre on a trip of
five legs. It said:

The threshold issue that confronts this Court is:

Was there a breach of obligation by the defendant in failing to transport the plaintiff from Manila to
Blantyre, Malawi, Africa?
The defendant admits the issuance and validity of Ticket

No. 3477712678 (Exh. B). However, it denies its obligation to transport the plaintiff to his point of
destination at Blantyre, Malawi, Africa. Defendant claims that it was obligated to transport the plaintiff
only up to Bombay.

This case is one of a contract of carriage. And the ticket issued by the defendant to the plaintiff is the
written agreement between the

parties herein. Ticket No. 3477712678 particularizes the itinerary of the plaintiff . . .

From the ticket, therefore, it is indubitably clear that it was the duty and responsibility of the defendant
Lufthansa to transport the plaintiff from Manila to Blantyre, on a trip of five legs.

The posture taken by the defendant that it was Air Kenya's, not Lufthansa's, liability to transport plaintiff
from Bombay to Malawi, is inacceptable. The plaintiff dealt exclusively with the defendant Lufthansa
which issued to him the ticket for his entire trip and which in effect guaranteed to the plaintiff that he
would have sure space in Air Kenya's flight to Nairobi. Plaintiff, under that assurance of the defendant,
naturally, had the right to expect that his ticket would be honored by Air Kenya, to which, in the legal
sense, Lufthansa had endorsed and in effect guaranteed the performance of its principal engagement to
carry out plaintiff's scheduled itinerary previously and mutually agreed upon by the parties. Defendant
itself admitted that the flight from Manila, Singapore, Bombay, Nairobi, Lilongwe, Blantyre, Malawi,
were all confirmed with the stamped letters "OK" thereon. In short, after issuing a confirmed ticket from
Manila to Malawi and receiv(ing) payment from the plaintiff for such one whole trip, how can the
defendant now deny its contractual obligation by alleging that its responsibility ceased at the Bombay
Airport?

The contract of air transportation was exclusively between the plaintiff Antiporda and the defendant
Lufthansa, the latter merely endorsing its performance to Air Kenya, as its subcontractor or agent. The
fourth paragraph of the "Conditions of Contracts" of the ticket (Exh. B) issued by Lufthansa to plaintiff
indubitably shows that the contract was one of continuous air transportation from Manila to Blantyre,
Malawi.

4. . . . carriage to be performed hereunder by several successive carriers is regarded as a single

operation.

This condition embodied in the ticket issued to plaintiff is diametrically opposed to the defense theory
that Lufthansa's liability is only limited up to Bombay.
Pursuant to the above reasoning, the lower court held that Lufthansa cannot limit its liability as a mere
ticket issuing agent for other airlines and only to untoward occurrences on its own line.

The lower court added that under the pool arrangement of the International Air Transport Association
(IATA), of which Lufthansa and Air Kenya are members, member airlines are agents of each other in the
issuance of tickets and, therefore, in accordance with Ortigas v. Lufthansa,5 an airline company is
considered bound by the mistakes committed by another member of IATA which, in behalf of the
former, had confirmed a passenger's reservation for accommodation.

In justifying its award of moral and exemplary damages, the lower court emphasized that the breach of
contract was "aggravated by the discourteous and highly arbitrary conduct of Gerard Matias, an official
of petitioner Lufthansa in Bombay." Its factual findings on the matter are the following:

. . . . Bumped off from his connecting flight to Nairobi and stranded in the Bombay Airport for 32 hours,
when plaintiff insisted on taking his scheduled flight to Nairobi, Gerard Matias got angry and threw the
ticket and passport on plaintiff's lap and was ordered to go to the basement with his heavy luggages for
no reason at all. It was a difficult task for the plaintiff to carry three luggages and yet Gerard Matias did
not even offer to help him. Plaintiff requested accommodation but Matias ignored it and just left. Not
even Lufthansa office in Bombay, after learning plaintiff's being stranded in Bombay and his
accommodation problem, provided any relief to plaintiff's sordid situation. Plaintiff had to stay in the
transit area and could not sleep for fear that his luggages might be lost. Everytime he went to the toilet,
he had to drag with him his luggages. He tried to eat the high-seasoned food available at the airport but
developed stomach trouble. It was indeed a pathetic sight that the plaintiff, an official of the Central
Bank, a multi-awarded institutional expert, tasked to perform consultancy work in a World Bank funded
agricultural bank project in Malawi instead found himself stranded in a foreign land where nobody was
expected to help him in his predicament except the defendant, who displayed utter lack of concern of its
obligation to the plaintiff and left plaintiff alone in his misery at the Bombay airport.

Citing Air France v. Carrascoso, 6 the lower court ruled that passengers have a right to be treated with
kindness, respect, courtesy and consideration by the carrier's employees apart from their right to be
protected against personal misconduct, injurious language, indignities and abuses from such employees.

Consequently, the trial court ordered Lufthansa to pay Antiporda the following:
(a) the amount of P300,000.00 as moral damages;

(b) the amount of P200,000.00 as exemplary damages; and

(c) the amount of P50,000.00 as reasonable attorney's fees.

With costs against the defendant.

Lufthansa elevated the case to the Court of Appeals arguing that it cannot be held liable for the acts
committed by Air Kenya on the basis of the following:

(a) it merely acted as a ticket-issuing agent in behalf of Air Kenya; consequently the contract of
carriage entered into is between respondent Antiporda and Air Kenya, to the exclusion of petitioner
Lufthansa;

(b) under sections (1) and (2) Article 30 of the Warsaw Convention, an airline carrier is liable only to
untoward occurrences on its own line;

(c) the award of moral and exemplary damages in addition to attorney's fees by the trial court is
without basis in fact and in law.

The Court of Appeals not convinced with Lufthansa's appeal, affirmed the decision on the trial court
sought to be reviewed.

Explained the Court of Appeals: although the contract of carriage was to be performed by several air
carriers, the same is to be treated as a single operation conducted by Lufthansa because Antiporda dealt
exclusively with it which issued him a Lufthansa ticket for the entire trip. By issuing a confirmed ticket,
Lufthansa in effect guaranteed Antiporda a sure seat with Air Kenya. Private respondent Antiporda,
maintained the Court of Appeals, had the right to expect that his ticket would be honored by Air Kenya
which, in the legal sense, Lufthansa had endorsed and, in effect, guaranteed the performance of its
principal engagement to carry out his five-leg trip.
The appellate court also ruled that Lufthansa cannot rely on Sections (1) and (2), Article 30 of the
Warsaw Convention 7 because the provisions thereof are not applicable under the circumstances of the
case.

Sections (1) and (2), Article 30 of the Warsaw Convention provide:

Art. 30 (1). In the case of transportation to be performed by various successive carriers and falling
within the definition set out in the third paragraph of Article I, each carrier who accepts passengers,
baggage, or goods shall be subject to the rules set out in the convention, and shall be deemed to be one
of the contracting parties to the contract of transportation insofar as the contract deals with that part of
the transportation which is performed under his supervision.

(2) In the case of transportation of this nature, the passenger or his representative can take action
only against the carrier who performed the transportation during which the accident or the delay
occurred, save in the case where, by express agreement, the first carrier has assumed liability for the
whole journey. (Emphasis supplied).

According to the Court of Appeals, Antiporda's cause of action is not premised on the occurrence of an
accident or delay as contemplated under Section 2 of said Article but on Air Kenya's refusal to transport
him in order to accommodate another. To support this ruling, the Court of Appeals cited the Supreme
Court ruling in KLM Royal Dutch Airlines v. Court of Appeals, 8 which held, inter alia, that:

1. The applicability insisted upon by the KLM of Article 30 of the Warsaw Convention cannot be
sustained. That article presupposes the occurrence of either an accident or a delay, neither of which
took place at the Barcelona airport; what is here manifest, instead, is that the Aer Lingus, through its
manager there, refused to transport the respondents to their planned and contracted destination.

The Court of Appeals concluded that Lufthansa cannot, thus, invoke Sections (1) and (2), Article 30 of
the Warsaw Convention to evade liability.

Failing to obtain a favorable decision, Lufthansa filed this petition for review on certiorari anchored on
the following arguments:

1. The respondent court erred as a matter of law in refusing to apply the Warsaw Convention to
the instant case.
2. Respondent court's ruling that Lufthansa had deceived private respondent has no factual or
legal basis.

3. The respondent court erred as a matter of law in affirming the trial court's award of moral
damages in the face of this Court's rulings concerning moral damages in cases of breach of contract.

4. The respondent court erred as a matter of law in affirming the trial court's award of exemplary
damages for lack of legal or factual basis therefor.

The arguments propounded by petitioner Lufthansa cannot suffice to reverse the appellate court's
decision as prayed for. Lufthansa raised four assignments of error but the focal point at issue has been
defined by us at the inception of this ponencia.

Lufthansa maintains that its liability to any passenger is limited to occurrences in its own line, and, thus,
in the case at bench, its liability to Antiporda is limited to the extent that it had transported him from
Manila to Singapore and from Singapore to Bombay; that therefrom, responsibility for the performance
of the contract of carriage is assumed by the succeeding carriers tasked to transport him for the
remaining leg of his trip because at that stage, its contract of carriage with Antiporda ceases, with
Lufthansa acting, no longer as the principal in the contract of carriage, but merely as a ticket-issuing
agent for the other carriers.

In further advancing this line of defense, Lufthansa invoked Section 2, Article 30 of the Warsaw
Convention9 which expressly stipulates that in cases where the transportation of passengers or goods is
performed by various successive carriers, the passenger can take action only against the carrier which
performed the transportation, during which the accident or delay occurred. Lufthansa further advanced
the theory that this provision of the Warsaw Convention is applicable to the present case, contrary to
the decision of the Court of Appeals which relied on the Supreme Court ruling in KLM Royal Dutch Lines.
10 For Lufthansa, "bumping-off" is considered delay since delay would inevitably result therefrom. It
implored this Court to re-examine our ruling in KLM and take heed of jurisprudence 11 in the U.S. where
"delay," unlike in our ruling in KLM, contemplates the instance of "bumping-off." In KLM, we held that
the term "delay" does not encompass the instance of "bumping-off," the latter having been defined as
refusal to carry or transport a passenger.
On his part, private respondent Antiporda insists that he entered with Lufthansa an exclusive contract of
carriage, the nature of which is a continuous carriage by air from Manila to Blantyre Malawi; that it did
not enter into a series of independent contracts with the carriers that transported him for the remaining
leg of his trip.

The basis for such claim is well-founded. As ruled by the trial court, with the Court of Appeals concurring
favorably, Antiporda was issued a confirmed Lufthansa ticket all throughout the five-leg trip. The fourth
paragraph of the "Conditions of Contract" stipulated in the ticket indubitably showed that the contract
of carriage was considered as one of continuous air transportation from Manila to Blantyre, Malawi,
thus:

4. . . . carriage to be performed hereunder by several successive carriers is regarded as a single

operation.

In light of the stipulations expressly specified in the ticket defining the true nature of its contract of
carriage with Antiporda, Lufthansa cannot claim that its liability thereon ceased at Bombay Airport and
thence, shifted to the various carriers that assumed the actual task of transporting said private
respondent.

We, therefore, reject Lufthansa's theory that from the time another carrier was engaged to transport
Antiporda on another segment of his trip, it merely acted as a ticket-issuing agent in behalf of said
carrier. In the very nature of their contract, Lufthansa is clearly the principal in the contract of carriage
with Antiporda and remains to be so, regardless of those instances when actual carriage was to be
performed by various carriers. The issuance of a confirmed Lufthansa ticket in favor of Antiporda
covering his entire five-leg trip abroad successive carriers concretely attests to this. This also serves as
proof that Lufthansa, in effect guaranteed that the successive carriers, such as Air Kenya would honor
his ticket; assure him of a space therein and transport him on a particular segment of his trip. This ruling
finds corroboration in the Supreme Court decision in KLM , 12 where the same issues were confronted,
thus:

The passage tickets of the respondents provide that the carriage to be performed thereunder by several
successive carriers "is to be regarded as a single operation," which is diametrically incompatible with the
theory of the KLM that the respondents entered into a series of independent contracts with the carriers
which took them on the various segments of their trip. This position of KLM we reject. The respondents
dealt exclusively with the KLM which issued them tickets for their entire trip and which in effect
guaranteed to them that they would have sure space in Aer Lingus flight 861. The respondents, under
that assurance of the internationally prestigious KLM, naturally had the right to expect that their tickets
would be honored by Aer Lingus to which, in the legal sense, the KLM had indorsed and in effect
guaranteed the performance of its principal engagement to carry out the respondents' scheduled
itinerary previously and mutually agreed upon between the parties.

On the issue of whether the Warsaw Convention, particularly Section 2, Article 30 thereof is applicable
herein, we agree with the Court of Appeals in ruling in the negative. We reiterate what has been settled
in KLM:

1. The applicability insisted upon by the KLM of Article 30 of the Warsaw Convention cannot be
sustained. That article presupposes the occurrence of either an accident or a delay, neither of which
took place at the Barcelona airport; what is here manifest, instead, is that the Aer Lingus, through its
manager there, refused to transport the respondents to their planned and contracted destination. . . .

Lufthansa prays this court to take heed of jurisprudence in the United States where the term "delay"
was interpreted to include "bumping-off" or failure to carry a passenger with a confirmed reservation.
These decisions in the United States are not controlling in this jurisdiction. We are not prepared, absent
reasons of compelling nature, to entertain an extended meaning of the term "delay," which in KLM was
given its ordinary signification. "Construction and interpretation come only after it has been
demonstrated that application is impossible or inadequate without them. The ordinary language of a
statute must be given its ordinary meaning and limited to a reasonable interpretation." 13 In its
ordinary sense, "delay" means to prolong the time of or before; to stop, detain or hinder for a time, or
cause someone or something to be behind in schedule or usual rate of movement in progress. 14
"Bumping-off," which is the refusal to transport passengers with confirmed reservation to their planned
and contracted destinations, totally forecloses said passengers' right to be transported, whereas delay
merely postpones for a time being the enforcement of such right.

Consequently, Section 2, Article 30 of the Warsaw Convention which does not contemplate the instance
of "bumping-off" but merely of simple delay, cannot provide a handy excuse for Lufthansa as to
exculpate it from any liability to Antiporda. The payment of damages is, thus, deemed warranted by this
Court. We find no reversible error in the lower court's award of moral and exemplary damages,
including attorney's fees in favor of Antiporda.

Article 2220 of the Civil Code provides:

Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are justly due. The same rule applies to
breaches of contract where the defendant acted fraudulently or in bad faith.

According to the findings of the appellate court which affirmed that of the lower court, the reasons
given by the witnesses for Lufthansa for private respondent's being "bumped off" at Bombay airport
were conflicting.

Observed the Court of Appeals:

If there was really no seat available because of over-booking, why did Lufthansa confirm the ticket of the
plaintiff-appellee? It has to be pointed out that the confirmed ticket is up to Blantyre, Malawi, not only
to Bombay.

If the plaintiff-appellee was not in the list of passengers of Kenya Airways (the connecting flight) then
Lufthansa must have deceived him in Manila because according to Gerard Matias, the passengers
booked by Kenya Airways for Boeing 707 were 190 passengers when the plane could accommodate only
144 passengers considering that the name of plaintiff-appellee was not in the list. If that was the
situation, Lufthansa by the issuance of its ticket should have not assured the plaintiff-appellee that he
could get the connecting flights as scheduled. Surely, Lufthansa before confirming the ticket of the
plaintiff-appellee must have confirmed the flight with Kenya Airways. If it was impossible to get a seat
upon its own investigation in Bombay, then it should have not confirmed the ticket of the plaintiff-
appellee. It is the defendant-appellant who was negligent in the performance of its duties, and plaintiff-
appellee was just plainly deceived.

Since the ticket was marked O.K., meaning confirmed, therefore plaintiff-appellee must have a definite
seat with Kenya Airways but it was lost or given to another person. It is not true therefore, that plaintiff-
appellee's name was not in the list of Kenya Airways. Besides, why should Lufthansa allow a passenger
to depart from the Philippines with a confirmed ticket, without instructing its Bombay office to reserve a
seat with Kenya Airways for its connecting flight? In spite of the confirmation, Nelda Aquino testified
that plaintiff-appellee was stranded in Bombay because he did not get a seat with Kenya Airways, and
his name did not appear in the list of passengers. Then contrary to the testimonies of

Berndt Loewe and Gerard Matias that the obligation of the

defendant-appellant is only up to Bombay and the reason why plaintiff-appellee was not in the list of
passengers is because of overbooking. Nelda Aquino contrary to the testimonies of the two, testified
that the reason for the bumping-off is that the seat was given to another passenger, to wit:

Q Did you know or eventually learned later that the name of Antiporda was not in the list of
confirmed passengers?

A I only learned from the office at Bombay that it was given to other passenger which I only
learned from the office at Bombay.

Q Who informed you that the seat of Mr. Antiporda was given to other passenger?

A From our international officer.

Q Who is he?

A Our Sales Manager.

Q Is he your Sales Manager in Bombay?

A Yes, our Manager.

If Nelda Aquino knew that the reason for the bumping-off is that the seat was given to another, how
come Berndt Loewe, passenger Sales Manager of defendant, Gerard Matias, an employee of defendant-
appellant in Bombay did not know the said reason why the name of plaintiff-appellee did not appear in
the list of passengers? It is either they knew the truth but because they wanted to escape liability they
pretended not to know the truth.
Clearly, bad faith attended the performance of the contract of carriage, for even while Antiporda was in
Bombay, representatives of Lufthansa already tried to evade liability first, by claiming that the contract
of carriage between Lufthansa and Antiporda ceased at Bombay airport, in disregard of the fact that
Antiporda was holding a Lufthansa ticket for the entire five-leg trip; second, despite Berndt Loewe's
knowledge that Antiporda's seat was allowed to be given to another passenger, the same suppressed
the information and feigned ignorance of the matter, presenting altogether another reason why
Antiporda was not listed in the manifest, i.e. that Air Kenya Boeing 707 was overbooked,
notwithstanding clear proof that Lufthansa in Manila confirmed his reservation for said flight.

Antiporda is likewise entitled to the award of exemplary damages on the basis of Article 2232 of the Civil
Code which provides:

Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

There is every indication that Lufthansa, through its representatives in Bombay, acted in a reckless and
malevolent manner in dealing with Antiporda.

As found by the trial court:

The breach of the guarantee was aggravated by the discourteous and highly arbitrary conduct of Gerard
Matias, an official of Lufthansa in Bombay. Bumped off from his connecting flight to Nairobi and
stranded in the Bombay Airport for 32 hours, when plaintiff insisted on taking his scheduled flight to
Nairobi, Gerard Matias got angry and threw the ticket and passport on plaintiff's lap and was ordered to
go to the basement with his heavy luggages for no reason at all. It was a difficult task for the plaintiff to
carry three luggages and yet Gerard Matias did not even offer to help him. Plaintiff requested
accommodation but Matias ignored it and just left. Not even Lufthansa office in Bombay, after learning
plaintiff's being stranded in Bombay and his accommodation problem, provided any relief to plaintiff's
sordid situation. Plaintiff has to stay in the transit area and could not sleep for fear that his luggages
might be lost. Everytime he went to the toilet, he had to drag with him his luggages. He tried to eat the
high-seasoned food available at the airport but developed stomach trouble. It was indeed a pathetic
sight that the plaintiff, an official of the Central Bank, a multi-awarded institutional expert, tasked to
perform consultancy work in a World Bank funded agricultural bank project in Malawi instead found
himself stranded in a foreign land where nobody was expected to help him in his predicament except
the defendant, who displayed utter lack of concern of its obligation to the plaintiff and left plaintiff
alone in his misery at the Bombay airport.

These findings of the trial court were affirmed by the Court of Appeals on the ground that there are no
cogent reasons to justify a contrary finding. The same holds true with this Court. The findings of fact of
lower courts are binding on us and will not be generally disturbed on appeal. 15 In affirming the lower
court's award of damages to Antiporda, we take into account his high position in the government,
coupled with the fact that he failed to meet his professional commitment in Blantyre, Malawi due to the
"bumping-off" incident accompanied by rude and discourteous behavior on the part of airline officials
who should have been the first to attend to his travel needs.

WHEREFORE, the petition for review is hereby DENIED and the decision of the Court of Appeals
AFFIRMED.

Costs against petitioner.

SO ORDERED.

Bidin and Vitug, JJ., concur.

Feliciano, J., is on leave.

Melo, J., took no part.

#Footnotes