Digest Week 7 - 8

Notes

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Transportations in General
a. Relationship to a Public Utility (ABUYUAN)
b. Nature of a Franchise (BERNARDO)

Raymundo v Luneta
Cogeo-Cubao Operator and Driver’s Association v CA

And so forth…

God Bless and Good Luck!
---- START HERE ----
a. Damages Recoverable from Common Carriers

i. In general
ii. Actual or compensatory
Arts. 2199, 2201, 2203, 1764, 2206 CC

#1 Pan Am v. IAC, supra (PELAYO)
Facts:
On 25 April 1978, Rene V. Pangan, president and general manager of the Sotang Bastos and Archer
Productions, while in San Francisco, California and Primo Quesada of Prime Films, San Francisco,
California, entered into an agreement whereby the former, for and in consideration of the amount
of US $2,500.00 per picture, bound himself to supply the latter with three films. ‘Ang Mabait,
Masungit at ang Pangit,’ ‘Big Happening with Chikiting and Iking,’ and ‘Kambal Dragon’ for exhibition
in the United States.

It was also their agreement that Pangan, et. al. would provide the necessary promotional and
advertising materials for said films on or before 30 May 1978.

On his way home to the Philippines, Pangan visited Guam where he caused the preparation of the
promotional handbills as well as fourteen clutch bags, four capiz lamps and four barong tagalog.

By virtue of the above agreements, plaintiff Pangan caused the preparation of the requisite
promotional handbills and still pictures for which he paid the total sum of P12,900.00. Likewise in
preparation for his trip abroad to comply with his contracts, plaintiff Pangan purchased fourteen
clutch bags, four capiz lamps and four barong tagalog, with a total value of P4,400.00.

On May 27, 1978, Pangan checked in his two luggages which the promotional and advertising
materials, the clutch bags, barong tagalog and his personal belongings. Subsequently, Pangan was
informed that his name was not in the manifest and so he could not take Flight No. 842 in the
economy class. Since there was no space in the economy class, plaintiff Pangan took the first class
because he wanted to be on time in Guam to comply with his commitment, paying an additional sum
of $112.0. However, when Pangan arrived in Guam his two luggages did not arrive with his flight, as a
consequence of which his agreements with Slutchnick and Quesada for the exhibition of the films in
Guam and in the United States were cancelled.

Pangan filed a complaint with the CFI. Based on the above facts, CFI rendered its decision ordering
Pan Am to pay Actual damages of lost profits and value of luggages amounting to P83,000
andP8,123.34 plus interest.

Pan Am contended that its liability for the lost baggage is only $600.00 ($20.00 x 30 kilos) as
stipulated in the airline ticket.

Issue:
1. Whether or not the Liability of Pan Am is limited only to $600.00 ($20.00 x 30 kilos) as
stipulated in the airline ticket.

2. Whether or not Pan Am should be held liable to pay lost profits
Ruling:
1. Yes, CA erred in affirming the trial court's award of actual damages beyond the limitation
of liability set forth in the Warsaw Convention and the contract of carriage.

On the basis of the foregoing stipulations printed at the back of the ticket, petitioner
contends that its liability for the lost baggage of private respondent Pangan is limited to
$600.00 ($20.00 x 30 kilos) as the latter did not declare a higher value for his baggage and
pay the corresponding additional charges.

SC find the ruling in Ong Yiu squarely applicable to the instant case. In said case the
Court, through Justice Melencio-Herrera, stated: Petitioner further contends that
respondent Court committed grave error when it limited PAL’s carriage liability to the
amount of P100.00 as stipulated at the back of the ticket. . . . We agree with the foregoing
finding. The pertinent Condition of Carnage printed at the back of the plane ticket reads: 8
BAGGAGE LIABILITY. . . The total liability of the Carrier for lost or damaged baggage of
the passenger is LIMITED TO P100.00 for each ticket unless a passenger declares a higher
valuation in excess of P100.00, but not in excess, however of a total valuation of P1,000.00
and additional charges are paid pursuant to Carrier’s tariffs. There is no dispute that
petitioner did not declare any higher value for his luggage, much less did he pay any
additional transportation charge.

2. No. PAn Am is not liable to pay lost profits.

The evidence reveals that the proximate cause of the cancellation of the contracts was
private respondent Pangan's failure to deliver the promotional and advertising materials on
the dates agreed upon. For this petitioner cannot be held liable. Private respondent Pangan
had not declared the value of the two luggages he had checked in and paid additional
charges. Neither was petitioner privy to respondents' contracts nor was its attention called
to the condition therein requiring delivery of the promotional and advertising materials on
or before a certain date.

#2 Cariaga v. LTBCo. and MRR, 110 Phil 346 (RAMORAN)

FACTS:
Plaintiff Cariaga is one of the passenger of LTB (Laguna Tayabas Bus), which was
driven by Moncada. LTB left its station at Azcarraga, Manila for Lilio, Laguna. As the bus
reached that part of the Poblacion of Bay, Laguna, where the national highway crossed a
railroad track, it bumped against the engine of a train then passing by with such terrific
force that the first six wheels of the latter were derailed, the engine and the front part of
the body of the bus was wrecked, the driver of the bus died instantly, while many of its
passengers, plaintiff among them, were severely injured. He was unconscious during the
first 35 days after the accident; at the De los Santos Clinic Dr. Gustilo removed the
fractured bones which lacerated the right frontal lobe of his brain and at the University of
Santo Tomas Hospital Dr. Gustilo performed another operation to cover a big hole on the
right frontal part of the head with a tantalum plate.
The LTB paid the sum of P16,964.45 for all the hospital, medical and miscellaneous
expenses incurred from June 18, 1952 to April, 1953. From January 15, 1953 up to April of
the same year Edgardo stayed in a private house in Quezon, City, the LTB having agreed to
give him a subsistence allowance of P10.00 daily during his convalescence, having spent in
this connection the total sum of P775.30 in addition to the amount already referred to
On April 24, 1953 the present action was filed to recover for Edgardo Cariaga, from
the LTB and the MRR Co. The LTB disclaimed liability claiming that the accident was due
to the negligence of its co-defendant, the Manila Railroad Company, for not providing
a crossing bar at the point where the national highway crossed the railway track, and
for this reason filed the corresponding cross-claim against the latter company to recover
the total sum of P18,194.75 representing the expenses paid to the plaintiff.
The Manila Railroad Company, in turn, denied liability upon the complaint and
cross-claim alleging that it was the reckless negligence of the bus driver that caused
the accident.
The lower court held that it was the negligence of the bus driver that caused
the accident and, as a result, rendered judgment sentencing the LTB to pay Edgardo
Cariaga. From this decision the Cariagas and the LTB appealed.
LTB’s contention is that the driver of the train locomotive, like the bus driver,
violated the law, first, in sounding the whistle only when the collision was about to take
place instead of at a distance at least 300 meters from the crossing, and second, in
not ringing the locomotive bell at all.

ISSUE:
Whether or not the LTB’s contention is bereft of merit.

RULING:
No. The above findings of the lower court are predicated mainly upon the testimony
of Gregorio Ilusondo, a witness for the Manila Railroad Company. Notwithstanding the
efforts exerted by the LTB to assail his credibility, we do not find in the record any fact or
circumstance sufficient to discredit his testimony. We have, therefore, no other
alternative but to accept the findings of the trial court to the effect, firstly, that
the whistle of locomotive was sounded four times — two long and two short — "as the
train was approximately 300 meters from the crossing"; secondly, that another LTB
bus which arrived at the crossing ahead of the one where Edgardo Cariaga was a
passenger, paid heed to the warning and stopped before the "crossing", while — as the
LTB itself now admits — the driver of the bus in question totally disregarded the
warning.
But to charge the MRR Co. with contributory negligence, the LTB claims that the
engineer of the locomotive failed to ring the bell altogether, in violation of the section 91 of
Article 1459, incorporated in the charter of the said MRR Co. This contention — as is
obvious — is the very foundation of the cross-claim interposed by the LTB against its
co-defendant. The former, therefore, had the burden of proving it affirmatively
because a violation of law is never presumed. The record discloses that this burden has
not been satisfactorily discharged.

#3 Villa-Rey Transit v. CA, 31 SCRA 511; G.R. No. L-25499, Feb. 18, 1970 (REY)

Facts:
Petitioner Villa Rey Transit Inc., due to the negligence of its bus driver, was involved in a
vehicular accident in Minalin, Pampanga resulting in the death of Policronio Quintos, Jr., brother of
private respondents Trinidad, Prima and Julita Quintos. The private respondents brought this
action against herein petitioner as owner and operator of said passenger bus. The Regional Trial
Court (RTC) ruled in favor of the respondents and that the mishap was not the result of any
unforeseeable fortuitous event or emergency but was the direct result of the negligence of the bus
driver. The petitioner must, therefore, respond for damages resulting from its breach of contract
for carriage. As the complaint alleged a total damage of P63,750.00. Aggrieved, petitioner went to
the Court of Appeals (CA) to reverse the decision of the RTC. CA affirmed the decision of the RTC,
hence this case.

Issue:
Whether or not the RTC erred in computing the compensatory damages awarded to the
respondents.

Ruling:
Yes, the Court ruled that the CA affirming the award in toto is erroneous, and modified the
amount awarded to the respondents. Thus, life expectancy is, not only relevant, but also an
important element in fixing the amount recoverable by private respondents herein. Although it
is not the sole element determinative of said amount, no cogent reason has been given to warrant its
disregard and the adoption, in this case, of a purely arbitrary standard, such as a four-year rule. In
short, the CA has not erred in basing the computation of petitioner’s liability upon the life
expectancy of the victim.

It should be noted, also, that the Court are mainly concerned with the determination of the
losses or damages sustained by the private respondents, as dependents and intestate heirs of the
deceased, and that said damages consist, not of the full amount of his earnings, but of the support,
they received or would have received from him had he not died in consequence of the negligence of
petitioner’s agent. In fixing the amount of that support, the High Court must reckon with the
“necessary expenses of his own living,” which should be deducted from his earnings. Thus, it has
been consistently held that earning capacity, as an element of damages to one’s estate for his death
by wrongful act, is necessarily his net earning capacity or his capacity to acquire money, “less the
necessary expense for his own living.” Stated otherwise, the amount recoverable is not loss of the
entire earning, but rather the loss of that portion of the earnings which the beneficiary would have
received. In other words, only net earnings, not gross earnings, are to be considered, that is, the
total of the earnings less expenses necessary in the creation of such earnings or income and less
living and other incidental expenses.

#4 PHILIPPINE AIRLINES INC. vs CA and LEOVIGILDO A. PANTEJO
185 SCRA 110, G.R. No. 120262, July 17, 1997 (SANTOS)

FACTS:
Leovigildo A. Pantejo, then City Fiscal of Surigao City, boarded a PAL plane in Manila and
disembarked in Cebu City where he was supposed to take his connecting flight to Surigao City.
However, due to typhoon Osang, the connecting flight to Surigao City was cancelled.

To accommodate the needs of its stranded passengers, PAL initially gave out cash
assistance of P 100.00 and, the next day, P200.00, for their expected stay of 2 days in Cebu.

Pantejo requested instead that he be billeted in a hotel at the PAL’s expense because
he did not have cash with him at that time, but PAL refused. Thus, Pantejo was forced to seek
and accept the generosity of a co-passenger, an engineer named Andoni Dumlao, and he shared a
room with the latter at Sky View Hotel with the promise to pay his share of the expenses upon
reaching Surigao.

When the flight for Surigao was resumed, Pantejo came to know that the hotel expenses
of his co-passengers, one Superintendent Ernesto Gonzales and a certain Mrs. Gloria Rocha,
an Auditor of the Philippine National Bank, were reimbursed by PAL.

At this point, Pantejo informed Oscar Jereza, PAL’s Manager for Departure Services at
Mactan Airport and who was in charge of cancelled flights, that he was going to sue the airline for
discriminating against him. It was only then that Jereza offered to pay Pantejo P300.00 which, due
to the ordeal and anguish he had undergone, the latter declined.

ISSUE:
Whether petitioner airlines acted in bad faith when it failed and refused to provide hotel
accommodations for respondent Pantejo or to reimburse him for hotel expenses incurred by reason
of the cancellation of its connecting flight to Surigao City due to force majeur.

HELD:
Yes, PAL discriminated against Pantejo and thereby is in bad faith. A contract to transport
passengers is quite different in kind and degree from any other contractual relation, and this is
because of the relation which an air carrier sustains with the public. Its business is mainly with the
travelling public. It invites people to avail of the comforts and advantages it offers. The contract
of air carriage, therefore, generates a relation attended with a public duty. Neglect or
malfeasance of the carrier’s employees naturally could give ground for an action for damages.

The discriminatory act of PAL against Pantejo undeniably makes the former liable for moral
damages under Article 21 in relation to Article 2219 (10) of the Civil Code. As held in Alitalia
Airways vs. CA, et al., such inattention to and lack of care by the airline for the interest of its
passengers who are entitled to its utmost consideration, particularly as to their convenience,
amount to bad faith which entitles the passenger to the award of moral damages.

#5 Victory Liner v. Gammad, G.R. No. 159636, Nov. 25, 2004 (TULIAO)
#6 Enriquez vs Isarog Line Transport, G.R. No. 212008, 16 Nov. 2016 (USON)

FACTS: Sonny Enriquez was a passenger of a bus owned and operated by respondent Isarog Line Express driven by
Victor Sedenio. While traversing the diversion road at Silangang Malicboy, Pagbilao, Quezon, said bus collided with
another bus owned by Philtranco Service Enterprises, Inc. which was being driven by Primitivo Aya-ay. As a result of
the impact between the buses, several passengers died, including Sonny, who was twenty-six (26) years old at that
time.

Sonny's parents, petitioners William Enriquez and Nelia Vela-Enriquez, filed a complaint for damages against
Isarog Line and Philtranco as well as their drivers before the Regional Trial Court (RTC) of Libmanan, Camarines Sur.

The RTC rendered a Decision finding Isarog Line, Sedenio, Philtranco, and Aya-ay solidarity liable for
Sonny's death in the following amount:

a) PHP 50,000.00 - as civil indemnity for the death of Sonny Enriquez;
b) PHP 1,038,960.00 - for unrealized income;
c) PHP 100,000.00 - for moral damages;
d) PHP 25,000.00 - for exemplary damages;
e) PHP 25,000.00 - for attorney's fees.

On appeal, however, the Court of Appeals deleted the monetary award by way of unrealized income
amounting to P1,038,960.00.

ISSUE: Whether or not the Spouses Enriquez are entitled damages for their son's loss of earning capacity.

RULING: Yes. Under Article 2206 of the Civil Code, the heirs of the victim are entitled to indemnity for loss of
earning capacity. The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances. In addition:Chan(1) The defendant shall
be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the
latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of
permanent physical disability not caused by the defendant, had no earning capacity at the time of his death;

Compensation of this nature is awarded not for loss of earnings, but for loss of capacity to earn. The
indemnification for loss of earning capacity partakes of the nature of actual damages which must be duly proven by
competent proof and the best obtainable evidence thereof. Thus, as a rule, documentary evidence should be
presented to substantiate the claim for damages for loss of earning capacity. By way of exception, damages for
loss of earning capacity may be awarded despite the absence of documentary evidence when (1) the deceased was
self-employed and earning less than the minimum wage under current labor laws, in which case, judicial notice may be
taken of the fact that in the deceased's line of work no documentary evidence is available; or (2) the deceased was
employed as a daily wage worker earning less than the 'minimum wage under current labor laws.

The Spouses Enriquez were able to present competent proof and the best obtainable evidence of their
departed son's income since the defendants did not object when they presented the certification from ASLAN
Security Systems, Inc. (ASLAN) during the trial.

Hence, the heirs were entitled to a monetary award for the loss of earning capacity. Using the settled
formula, the amount of damages for loss of earning capacity is P1,038,960.00, thus:

Net Earning Capacity = Life expectancy x Gross Annual Income - Living Expenses
13
= [2/3 (80 - age at death)] x GAI - [50% of GAI]

= [2/3 (80 - 26)] x P57,720.00 - P28,860.00
= [2/3 (54)] x P28,860.00
= 36 x P28,860.00
Net Earning Capacity = P1,038,960.00

#7 Fortune Express Inc. v. CA, G.R. No. 119756, March 18, 1999, supra. (VALENZUELA)
FACTS:
Petitioner’s bus met with an accident with a jeepney in Kauswagan, Lanao del Norte,
resulting in the death of several passengers of the jeepney, including two Maranaos. On
investigation, it was found that the owner of the jeepney was a Maranao and that they were
planning to take revenge on the petitioner by burning some of its buses. The bus company was
precautioned about this matter by the investigating officer.
Several days later, Atty. Caorong was on board a bus to Iligan when three Maranaos went on
board the vehicle. The leader of the group ordered the passengers to leave the bus. Atty. Caorong
later went back to get something when he saw that the Maranaos were already pouring gasoline on
the bus and on the driver. Atty. Caorong pleaded for the life of the driver, after which the driver
jumped out of the vehicle. Caorong was shot to death as a result.

RTC dismissed the complaint stating that Fortune was not negligent. Disregarding the
suggestion of providing its buses with security guards is not an omission of petitioner’s duty. The
evidence showed that the assailants did not intend to harm the passengers. The death of Atty.
Caorong was an unexpected and unforeseen occurrence beyond petitioner’s control.
On the other hand, CA reversed RTC’s ruling: Fortune is negligent. Despite the tip to of the
devious plan by several Maranaos, management did not do not take any safety precautions at all. One
available safeguard that could have absolved Fortune from liability was frisking of incoming
passengers en route to dangerous areas and bag inspection at the terminals, which Fortune failed to
do. The frisking system is not novel insensitive and dangerous places. Many companies adopt this
measure. Fortune did “absolutely nothing”

ISSUE:
1. W/N Petitioner is liable for the death of Atty. Caorong by failing to take necessary precautions
to ensure the safety of its passengers;
2. W/N the attack by the Maranaos constituted causo fortuito?

RULING:
1. Petitioner is liable.
Article 1763 holds common carriers liable for the injuries to passengers caused by the wilful act of
other passengers, if its employees failed to exercise the diligence of a good father in preventing
the act.
• Despite the warning by the constabulary officer, petitioner did nothing to protect the safety of
its passengers. If petitioner took the necessary precautions, they would have discovered the
weapons and the large quantity of gasoline the malefactors carried with them. A common carrier is
liable for failing to prevent hijacking by frisking passengers and inspecting baggages.
• Petitioner is solely liable for Atty. Caorong’s death. There was no contributory negligence on the
part of the victim, since all he did was pleading for the life of the driver. His heroic effort was
neither an act of negligence or recklessness.
From the foregoing, it is evident that petitioner’s employees failed to prevent the attack on one of
petitioner’s buses because they did not exercise the diligence of a good father of a family. Hence,
petitioner should be held liable for the death of Atty. Caorong.

2. Seizure of Petitioner’s Bus is not a Case of Force Majeure
Art. 1174 of the Civil Code defines a fortuitous event as an occurence which could not be foreseen,
is inevitable. To be considered as force majeure, it is necessary that (1) the cause of the breach of
the obligation must be independent of the human will; (2) the event must be either unforeseeable or
unavoidable; (3) the occurence must be render it impossible for the debtor to fulfill the obligation
in a normal manner; and (4) the obligor must be free of participation in, or aggravation of, the injury
to the creditor. The absence of any of the requisites mentioned above would prevent the obligor
from being excused from liability.

Thus, in Vasquez v. Court of Appeals, it was held that the common carrier was liable for its failure
to take the necessary precautions against an approaching typhoon, of which it was warned, resulting
in the loss of the lives of several passengers. The event was forseeable, and, thus, the second
requisite mentioned above was not fulfilled. This ruling applies by analogy to the present case.
Despite the report of PC agent Generalao that the Maranaos were going to attack its buses,
petitioner took no steps to safeguard the lives and properties of its passengers. The seizure of the
bus of the petitioner was foreseeable and, therefore, was not a fortuitous event which would
exempt petitioner from liabilty.

#8 Cruz vs. Sun Holidays, Inc. G.R. No. 186312, 6/29/2010, supra (ABUYUAN)
FACTS:
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 2001
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.
On September 11, 2000, as it was still windy, Miguel C. Matute (Matute), a scuba diving
instructor, and 25 other Resort guests including petitioner’s son and wife trekked to the other side
of the Coco Beach mountain that was sheltered from the wind where they boarded M/B Coco Beach
III, which was to ferry them to Batangas. Shortly after the boat sailed, it started to rain. As it
moved farther away from Puerto Galera and into the open seas, the rain and wind got stronger,
causing the boat to tilt from side to side, and the captain step forward to the front, leaving the
wheel to one of the crew members. The waves got more unwieldy. After getting hit by two big
waves, which came after the other, M/B Coco Beach III capsized, putting all passengers
underwater. The passengers, who had put on their life jackets, struggled to get out of the boat.
Upon seeing the captain, Matute and the other passengers, who reached the surface, asked him
what they could do to save the people who were still trapped under the boat. The captain replied.
“Iligtas ninyo na lang ang sarili ninyo ” (Just save yourselves).
At the time of Ruelito's death, he was 28 years old and employed as a contractual worker
for Mitsui Engineering & Shipbuilding Arabia, Ltd., in Saudi Arabia, with a basic monthly salary for
$900. Petitioners, by letter of October 26, 2000, demanded Indemnification from respondent for
the death of their son in the amount of at least P4,000.000.
Replying, respondent denied any responsibility for the incident, which it considered to be a
fortuitous event. It nevertheless offered, as an act of commiseration, the amount of PI 0,000 to
petitioners upon their signing of a waiver.
By Decision of February 16, 2005, Branch 267 of the Pasig RTC dismissed petitioners’
Complaint and respondent’s Counterclaim. Petitioner’s Motion for Reconsideration, having been
denied, they appealed to the Court of Appeals.
By Decision of August 19, 2008, the appellate court denied petitioners’ appeal, holding,
among other things, that the trial court correctly ruled that respondent is a private carrier, which
is only required to observe ordinary diligence; that respondent in fact observed extraordinary
diligence in transporting its guests on board M/B Coco Beach III; and that the proximate cause of
the incident was a squall, a fortuitous event.

Issue:
Whether or not the respondent is liable as a common carrier.

Ruling:
Yes. The Court ruled that respondent is liable as a common carrier.
Article 1764 vis-a-vis Article 2206 of the Civil Code holds the common carrier in breach of
its contract of carriage that results in the death of a passenger liable to pay the following: (1)
indemnity for death; (2) indemnity for loss of earning capacity; and (3) moral damages. Petitioners
are entitled to indemnity for the death of Ruelito, which is fixed at P50,000.
As for damages representing unearned income, the formula for its compensation is:

Net Earning Capacity = life expectancy x (gross annual income-reasonable and
necessary living expenses)

Life expectancy is determined in accordance with the formula: 2/3 x [80 - age of
deceased at the time of the death]

The first factor, i.e, life expectancy, is compared by applying the formula 2/3 x [80 - age at
death] adopted in the American Expectancy Table of Mortality or the Actuarial of Combine
Experience Table of Mortality. The second factor is computed by multiplying the life expectancy by
the net earnings of the deceased, i.e., the total earnings less expenses necessary in the creation of
such earnings or income and less living and other incidental expenses. The loss is not equivalent to
the entire earnings of the deceased, but only such portion, as he would have used to support his
dependents or heirs. Hence, to be deducted from his gross earnings are the necessary expenses
supposed to be used by the deceased for his own needs.
In computing the third factor — necessary living expense, Smith Bell Dodwell Shipping
Agency Corp. v. Borja teaches that when, as in this case, there is no showing that the living
expenses constituted the smaller percentage of the gross income, the living expenses are fixed at
half of the gross income.
Applying the above guidelines, the Court determines Ruelito’s life expectancy as follows:

Life expectancy = 2/3 x [80 - age of deceased at the time of death]
2/3 x [80-28]
2/3 x [52]
Life expectancy = 35

Documentary evidence shows that Ruelito was earning a basic monthly salary of $900 which,
when converted to Philippine peso applying the annual average exchange rate of 1 $ = P44 in 2000
amounts to P39,600. Ruelito’s net earning capacity is thus computed as follows:

Net Earning Capacity = life expectancy x (gross annual income reasonable and necessary
living expenses)
= 35 x (P475,200.00 - P237,600.00)
= 35 x (P237,600.00)
Net Earning Capacity = P8,316,000.00

Respecting the award of moral damages, since respondent common carrier’s breach of
contract of carriage resulted in the death of petitioners’ son, following Article 1765 vis-a-vis
Article 2206 of the Civil Code, petitioners are entitled to moral damages.
Since respondent failed to prove that it exercised the extraordinary diligence required of
common carriers, it is presumed to have acted recklessly, thus, warranting the award too of
exemplary damages, which are granted in contractual obligations if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner.
Under the circumstances, it is reasonable to award petitioners the amount of PI00,000 as
moral damages, and PI00,000 as exemplary damages. Pursuant to Article 2208 of the Civil Code,
attorney’s fees may also be awarded where exemplary damages are awarded. The Court finds that
10% of the total amount adjudged against respondent is reasonable for the purpose.

#9 Dangwa Transportation Co., v. CA, Cudiamat, G.R. No. 95582, October 7, 1991
(ALCANTARA)
DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL y MALECDAN,
petitioners,
vs.
COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT BANDOY, FERNANDO
CUDLAMAT, MARRIETA CUDIAMAT, NORMA CUDIAMAT, DANTE CUDIAMAT, SAMUEL
CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of the late Pedrito Cudiamat represented by
Inocencia Cudiamat, respondents.

FACTS:
On May 13, 1985, private respondents filed a complaint for damages against petitioners for the

death of Pedrito Cudiamat as a result of a vehicular accident which occurred on March 25,
1985 at Marivic, Sapid, Mankayan, Benguet. Among others, it was alleged that on said date,
while petitioner Theodore M. Lardizabal was driving a passenger bus belonging to petitioner
corporation in a reckless and imprudent manner and without due regard to traffic rules and
regulations and safety to persons and property, it ran over its passenger, Pedrito Cudiamat.
However, instead of bringing Pedrito immediately to the nearest hospital, the said driver, in
utter bad faith and without regard to the welfare of the victim, first brought his other
passengers and cargo to their respective destinations before banging said victim to the
Lepanto Hospital where he expired.
On the other hand, petitioners alleged that they had observed and continued to observe the
extraordinary diligence required in the operation of the transportation company and the
supervision of the employees, even as they add that they are not absolute insurers of the
safety of the public at large. Further, it was alleged that it was the victim's own carelessness
and negligence which gave rise to the subject incident, hence they prayed for the dismissal of
the complaint plus an award of damages in their favor by way of a counterclaim.
The trial court rendered a decision effectively in favor of petitioners, pronouncing that
Pedrito Cudiamat was negligent, which negligence was the proximate cause of his death.
Nonetheless, defendants in equity, were ordered to pay the heirs of Pedrito Cudiamat the sum of
P10,000.00 which approximates the amount defendants initially offered said heirs for the amicable
settlement of the case.
On appeal, the CA set aside the decision of the lower court, and ordered petitioners to pay
private respondents.
Petitioner’s MR was likewise denied. Hence, this petition.
ISSUE: Whether respondent court erred in reversing the decision of the trial court and in finding

petitioners negligent and liable for the damages claimed.
RULING:
The Court finds no reason to disturb the holding of the Court of Appeals. Its aforesaid
findings are supported by the testimony of petitioners' own witnesses. The testimonies show that
the place of the accident and the place where one of the passengers alighted were both between
Bunkhouses 53 and 54, hence the finding of the Court of Appeals that the bus was at a full stop
when the victim boarded the same is correct. They further confirm the conclusion that the victim
fell from the platform of the bus when it suddenly accelerated forward and was run over by the
rear right tires of the vehicle, as shown by the physical evidence on where he was thereafter found
in relation to the bus when it stopped. Under such circumstances, it cannot be said that the
deceased was guilty of negligence.
The contention of petitioners that the driver and the conductor had no knowledge that the victim
would ride on the bus, since the latter had supposedly not manifested his intention to board the
same, does not merit consideration. When the bus is not in motion there is no necessity for a person
who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is
in effect making a continuous offer to bus riders. Hence, it becomes the duty of the driver
and the conductor, every time the bus stops, to do no act that would have the effect of
increasing the peril to a passenger while he was attempting to board the same. The premature
acceleration of the bus in this case was a breach of such duty.
It is the duty of common carriers of passengers, including common carriers by railroad train,
streetcar, or motorbus, to stop their conveyances a reasonable length of time in order to
afford passengers an opportunity to board and enter, and they are liable for injuries suffered
by boarding passengers resulting from the sudden starting up or jerking of their conveyances
while they are doing so.
It is not negligence p

er se, or as a matter of law, for one to attempt to board a train or streetcar
which is moving slowly. The fact that passengers board and alight from a slowly moving vehicle is a
matter of common experience and both the driver and conductor in this case could not have been
unaware of such an ordinary practice.
The victim herein, by stepping and standing on the platform of the bus, is already considered

a passenger and is entitled to all the rights and protection pertaining to such a contractual
relation. Hence, it has been held that the duty which the carrier of passengers owes to its
patrons extends to persons boarding the cars as well as to those alighting therefrom.
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. 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.
It has also been repeatedly held that 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 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. 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 Civil Code.
Moreover, the circumstances under which the driver and the conductor failed to bring the
gravely injured victim immediately to the hospital for medical treatment is a patent and
incontrovertible proof of their negligence.
With respect to the award of damages, an oversight was, however, committed by respondent Court

of Appeals in computing the actual damages based on the gross income of the victim. The rule is
that the amount recoverable by the heirs of a victim of a tort is not the loss of the entire
earnings, but rather the loss of that portion of the earnings which the beneficiary would have
received. In other words, only net earnings, not gross earnings, are to be considered, that is,
the total of the earnings less expenses necessary in the creation of such earnings or income and
minus living and other incidental expenses.
#10 Baliwag Transit, Inc. v. CA, Sps Garcia, G.R. No. 116110, May 15, 1996 (BERNARDO)

iii. Moral
Arts. 2217, 2216, 2219, 2220, 2206(3)

#11 Fores v. Miranda, 105 Phil 266 (BUENCONSEJO)

PAZ FORES, petitioner, vs. IRENEO MIRANDA, respondent.
Facts:
Defendant-petitioner Paz Fores brings this petition for review of the decision of the Court of Appeals awarding
to the plaintiff-respondent Ireneo Miranda the sums of P5,000 by way of actual damages and counsel fees, and
P10,000 as moral damages, with costs.
Respondent was one of the passengers on a jeepney driven by Eugenio Luga. While the vehicle was descending
the Sta. Mesa bridge at an excessive rate of speed, the driver lost control thereof, causing it to swerve and to hit the
bridge wall. The accident occurred on the morning of March 22, 1953. Five of the passengers were injured,
including the respondent who suffered a fracture of the upper right humerus. He was taken to the National
Orthopedic Hospital for treatment, and later was subjected to a series of operations.
The driver was charged with serious physical injuries through reckless imprudence, and upon interposing a plea
of guilty was sentenced accordingly.
Issue:
Whether or not the appellate court is correct in granting the award of moral damages to the
respondent.
Ruling:
No.
Moral damages are generally not recoverable in damage actions predicated on a breach of
contract of transportation in view of the provisions of Articles 2219 and 2220 of the new Civil Code.
"ART. 2219. Moral damages may be recovered in the following and analogous cases:
(1)A criminal offense resulting in physical injuries;
(2)Quasi-delicts causing physical injuries;
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."
By contrasting the provisions of these two articles it immediately becomes apparent that:
(a)In case of breach of contract (including one of transportation) proof of bad faith or fraud
(dolus),i .e., wanton or deliberately injurious conduct, is essential to justify an award of moral damages; and
(b)That a breach of contract can not be considered included in the descriptive term "analogous cases" used
in Art. 2219; not only because Art. 2220 specifically provides for the damages that are caused by
contractual breach, but because the definition of quasi-delict in Art. 2176 of the Code expressly excludes
the cases where there is a "preexisting contractual relation between the parties."
The exception to the basic rule of damages is a mishap resulting in the death of a passenger, in which case
Article 1764 makes the common carrier expressly subject to the rule of Art. 2206, of the Civil Code that entitles the
spouse, descendants and ascendants of the deceased passenger to "demand moral damages for mental anguish by
reason of the death of the deceased.
Where the injured passenger does not die, moral damages are not recoverable unless it is proved
that the carrier was guilty of malice or bad faith. It is clear that the mere carelessness of the carrier's
driver does not per se c onstitute of justify an inference of malice or bad faith on the part of the carrier;
and in the case at bar there is no other evidence of such malice to support the award of moral damages by
the Court of Appeals.
While it is true that negligence may be occasionally so gross as to amount to malice, that fact
must be shown in evidence. A carrier's bad faith is not to be lightly inferred from a mere finding that the
contract was breached through negligence of the carrier's employees.
The theory that carrier's violation of its engagement to safely transport the passenger involves a
breach of the passenger's confidence, and therefore should be regarded as a breach of contract in bad
faith, justifying recovery of moral damages, under Article 2220 of the New Civil Code is untenable, for
under it the carrier would always be deemed in bad faith in every case its obligation to the passenger is
infringed and it would never be accountable for simple negligence while under Article 1756 of the Civil
Code the presumption is that common carriers acted negligently and not maliciously, and Article 1762
speaks of negligence of the common carrier.
"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."
"ART. 1762. The contributory negligence of the passenger does not bar recovery of damages for
his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but
the amount of damages shall be equitably reduced."
An action for breach of contract imposes on the carrier a presumption of liability upon mere proof
of injury of the passenger; the latter does not have to establish the fault of the carrier, or of his employees,
and the burden is placed on the carrier to prove that it was due to an unforeseen event or to force majeure
(Congco vs. Manila Railroad Co. 38 Phil., 768, 777.) Morever, the carrier, unlike in suits for quasi-delict
may not escape liability by proving that it has exercised due diligence in the selection and supervision of
its employees. (Art. 1759 New Civil Code, Cangco vs. Manila Railroad Co. Supra; Prado vs. Manila
Electric Co., 51 Phil., 900)
The award of moral damages is thus eliminated.

#12 Air France v. Carrascoso, 18 SCRA 155 (CANENCIA)

FACTS:
Carrascoso, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila
for Lourdes on March 30, 1958. On March 28, Air France, through its authorized agent,
Philippine Air Lines, Inc., issued to Carrascoso a "first class" round trip airplane ticket from
Manila to Rome. From Manila to Bangkok, Carrascoso travelled in "first class", but at
Bangkok, the Manager of the Air France forced Carrascoso to vacate the "first class" seat
that he was occupying because, in the words of the witness Ernesto G. Cuento, there was a
"white man", who, the Manager alleged, had a "better right" to the seat. When asked to
vacate his "first class" seat, Carrascoso refused and told the Manager that his seat would be
taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento,
"many of the Filipino passengers got nervous in the tourist class; when they found out that
Mr. Carrascoso was having a hot discussion with the white man [manager], they came all
across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man."
Carrascoso reluctantly gave his "first class" seat in the plane. Desiring no repetition of the
inconvenience and embarrassments brought by defendant's breach of contract was forced to
take a Pan American World Airways plane on his return trip from Madrid to Manila.

Point of Controversy – Wrongful expulsion of Carrascoso
Cause of Action – Breach of contract of air carriage
CFI Manila – sentenced petitioner to pay respondent Rafael Carrascoso. CA – slightly reduced
the amount of refund on Carrascoso's plane ticket from P393.20 to P383.10, and voted to
affirm the appealed decision "in all other respects".

ISSUES:
Whether Carrascoso was entitled to the first class seat he claims. YES
Whether there was a finding of bad faith on the part of Air France to entitle Carrascoso for
the payment of moral damages. YES
Whether Air France (the employer) can be held liable for the action of its employee (the
manager). YES

HELD:
1. Yes, he was entitled to the first class seat. Defendant seems to capitalize on the
argument that the issuance of a first-class ticket was no guarantee. We are not impressed by
such reasoning. We cannot understand how a reputable firm like defendant airplane company
could have the indiscretion to give out tickets it never meant to honor at all. It received the
corresponding amount in payment of first-class tickets and yet it allowed the passenger to be
at the mercy of its employees.

2. Yes, there was bad faith. First, That there was a contract to furnish plaintiff a first
class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract
was breached when petitioner failed to furnish first class transportation at Bangkok; and
Third, that there was bad faith when petitioner's employee compelled Carrascoso to leave his
first class accommodation berth "after he was already, seated" and to take a seat in the
tourist class, by reason of which he suffered inconvenience, embarrassments and humiliations,
thereby causing him mental anguish, serious anxiety, wounded feelings and social humiliation,
resulting in moral damages. It is true that there is no specific mention of the term bad faith
in the complaint. The manager not only prevented Carrascoso from enjoying his right to a first
class seat; worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made
him suffer the humiliation of having to go to the tourist class compartment - just to give way
to another passenger whose right thereto has not been established. Certainly, this is bad
faith.

3. Yes, Air France is liable for the tortious act of its employees. Article 21 of the Civil Code
says: “Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.” A contract
to transport passengers is quite different in kind and degree from any other contractual
relation. And this is because of the relation which an air-carrier sustains with the public. Its
business is mainly with the travelling public. It invites people to avail of the comforts and
advantages it offers. The contract of air carriage, therefore, generates a relation attended
with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give
ground for an action for damages.

Passengers do not contract merely for transportation. They have a right to be treated by the
carrier's employees with kindness, respect, courtesy and due consideration. They are entitled
to be protected against personal misconduct, injurious language, indignities and abuses from
such employees. Any rule or discourteous conduct on the part of employees towards a
passenger gives the latter an action for damages against the carrier.

Petitioner's contract with Carrascoso is one attended with public duty. The stress of
Carrascoso's action is placed upon his wrongful expulsion. This is a violation of public duty by
the petitioner air carrier — a case of quasi-delict. Damages are proper.

#13 Lopez v. Pan Am, 16 SCRA 431 (CRUZ)
Lopez vs. Pan Am
FACTS:
Plaintiffs made first class reservations with defendant in its Tokyo-San Francisco flight. The
reservations having been confirmed, first class tickets were subsequently issued in favor of
plaintiffs. Through mistake, however, defendant’s agents cancelled the said reservations.
Expecting that some cancellations of bookings would be made before the flight time, the
reservations supervisor decided to withhold from plaintiffs the information that their reservations
had been cancelled. Upon arrival in Tokyo, defendant informed plaintiffs that there was no
accommodation for them in the first class stating that they could not go unless they take the
tourist class. Due to pressing engagements in the United States, plaintiffs were constrained to
take the flight as tourist passengers, but they did so under protest.
ISSUE: Whether defendant acted in bad faith in the breach of its contract with plaintiffs.
HELD:
In so misleading plaintiffs into purchasing first class tickets in the conviction that they had
confirmed reservations for the same, when in fact they had none, defendant wilfully and
knowingly placed itself into the position of having to breach its aforesaid contracts with plaintiffs
should there be no last-minute cancellation by other passengers before flight time, as it turned
out in this case. Such actuation of defendant may indeed have been promoted by nothing more
than the promotion of its self-interest in holding on to plaintiffs as passengers in its flight and
foreclosing their chances to seek the services of other airlines that may have been able to afford
them first class accommodations. All the same, in legal contemplation, such conduct already
amounts to action in bad faith.
Moral damages and exemplary are recoverable for breach of contract of carriage in bad faith.—As
a proximate result of defendant’s breach in bad faith of its contracts with plaintiffs, the latter
suffered social humiliation, wounded feelings, serious anxiety and mental anguish. For plaintiffs
were travelling with first class tickets issued by defendant and yet they were given only the tourist
class. At stopovers, they were expected to be among the first-class passengers by those awaiting
to welcome them, only to be found among the tourist passengers. It may not be humiliating to
travel as tourist passengers; it is humiliating to be compelled to travel as such, contrary to what is
rightfully to be expected from the contractual undertaking.
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 may award exemplary damages in addition to moral damages (Articles 2229, 2232, New Civil
Code). In view of its nature, it should be imposed in such amount as to sufficiently and effectively
deter similar breach of contracts in the future by defendant or other airlines.

#14 Ortigas v. Lufthansa, 64 SCRA 610 (DATAN)
Facts:
Francisco Ortigas, and defendant Lufthansa German Airlines, appealed from the decision of the
Court of First Instance of Manila, condemning the defendant to pay plaintiff an indemnity for the
former's failure to "comply with its obligation to give first class accommodation to a Filipino
passenger holding a first class ticket," This was due to giving of the space instead to a Belgian and
the improper conduct of its agents in dealing with him which was filled with discrimination.
During the trial, there were several postponements of the trial from both sides. Three hearings were
postponed on the request of the plaintiffs, 4 on the request of both parties, and 10 on the request of
respondents.
Due to so many postponements made by the respondent, including the no-show of their European
employees as witnesses, the case tilted out of their favor. One of their witnesses was stricken from
the list due to his non-appearance in the day that the cross-exam on him was to be finished and the
judge moved for a finality regarding the postponements (ie. no postponements were to be made
again)
Ortigas claimed that while in Rome, the discrimination against him took place. Moreover, when he
asked for a seat change to first class during the stop overs, he wasn’t given any. He was only given
the option when he was already in Hong Kong, about 3 hours only from Manila.
Issues:
1. WON the lower court acted in grave abuse of discretion when it denied the defendant’s motion for
postponement on Sept 24, 1966.
2. WON the lower court erred in striking out the testimony of one of the defendants witnesses even if
his testimony was not finished
3. WON the lower court erred in making the defendant pay indemnities.
Held: No to all. Judgment modified raising damages from 100k to 150k.
Ratio:
1. The case had been pending for about three years and had actually suffered during that period
even more than the usually permissible number of continuances, quite often to suit the convenience
of defendant's counsel. Notice of the September 28, 1966 schedule had been served on counsel the
month previous. It must be assumed that due preparations and arrangements were to be made
since the receipt of that notice to insure the presence in Manila for the expected witnesses on the
date set. Under the circumstances, the excuse given by defendant that the witnesses could not
leave their respective stations and places of work to attend the trial is plainly unacceptable. There
was enough time and opportunity for defendant to have made the corresponding adjustments in the
assignments of its personnel so as to enable its witnesses to be in court.
As it is, there was actually no basis at all for the exercise of discretion on the part of the trial judge in
a manner favorable to it. Trials may be postponed because of the absence of evidence only when
such absence is justified. Mere absence is not a justification in itself. Section 4 of Rule 22 is
sufficiently clear on this point. It provides that "A motion to postpone a trial on the ground of absence
of evidence can be granted only upon affidavit showing the materiality of evidence expected to be
obtained, and that due diligence has been used to procure it." This means that it must be shown to
the court that due diligence had been exercised in either securing the presence of the evidence
(witnesses) or preventing the absence thereof.
Indeed, even if such reason were given earlier on September 24, 1966 the court would have been as
well justified in denying the requested postponement. We cannot see any reason why, despite its
having knowledge of the date of the hearing about a month before, defendant did not see to it that its
expected witnesses were not assigned to do duty on the day they were supposed to appear in court.
We cannot believe Lufthansa could be so undermanned that such a simple adjustment of its
personnel had to be "impossible."
2. The right of a party to cross-examine the witnesses of his adversary is invaluable as it is inviolable
in civil cases, no less than the right of the accused in criminal cases. The express recognition of
such right of the accused in the Constitution does not render the right of parties in civil cases less
constitutionally based, for it is an indispensable part of the due process guaranteed by the
fundamental law. Subject to appropriate supervision by the judge in order to avoid unnecessary
delays on account of its being unduly protracted and to needed injunctions protective of the right of
the witness against self-incrimination and oppressive and unwarranted harassment and
embarrassment, a party is absolutely entitled to a full cross-examination as prescribed in Section 8
of Rule 132 thus: "Upon the termination of the direct examination, the witness may be
cross-examined by the adverse party as to any matters stated in the direct examination, or
connected therewith, with sufficient fullness and freedom to test his accuracy and truthfulness and
freedom from interest or bias, or the reverse, and to elicit all important facts bearing upon the issue."
Until such cross-examination has been finished, the testimony of the witness cannot be considered
as complete and may not, therefore, be allowed to form part of the evidence to be considered by the
court in deciding the case.
Oral testimony may be taken into account only when it is complete, that is, if the witness has been
wholly cross-examined by the adverse party or the right to cross-examine is lost wholly or in part thru
the fault of such adverse party. But when cross-examination is not and cannot be done or completed
due to causes attributable to the party offering the witness, the uncompleted testimony is thereby
rendered incompetent.
In the case at bar, however, the Supreme Court has not opted not to rely exclusively on the
foregoing considerations. In order to satisfy as to whether or not defendant stands to be irreparably
prejudiced by the impugned action of the trial court relative to the testimony of Lazzari, the justices
have just the same gone over the transcript thereof. After considering the same, they claimed that
even his direct testimony, without taking into account anymore his answers to the cross-examination
questions of counsel for plaintiff, cannot be of much weight in establishing the defenses in
defendant's answer.
However, the trial court's action cannot be categorized as arbitrary or oppressive or as amounting to
a grave abuse of discretion. To be sure, this second order was but a logical consequence of the
previous order denying defendant's motion for postponement. With such denial, the next thing in
order was to declare the presentation of evidence of the defendant terminated. Accordingly, it was
necessary to determine what evidence could be considered to be for the defendant. And so when
counsel for plaintiff asked the court to strike out the testimony so far given by Lazarri, there was
practically no alternative for the court but to grant the same. Indeed, defendant's counsel could not
and did not offer any objection thereto.
3. In the light of all the foregoing, there can be no doubt as to the right of Ortigas to damages, both
moral and exemplary. Precedents We have consistently adhered to so dictate.
Lopez- According to the Court, such omission placed plaintiffs in a predicament that enabled the
company to keep the plaintiffs as their passengers in the tourist class, thereby retaining the business
and promoting the company's self-interest at the expense of, embarrassment, discomfort and
humiliation on the part of the plaintiffs.
These precedents, as may be seen, apply four-square to herein plaintiffs case. Defendant's liability
for willful and wanton breach of its contract of carriage with plaintiff is, therefore, indubitable.

#15 PAL vs Miano, 242 SCRA 235 (DIMAUKOM)
PHILIPPINE AIR LINES, petitioner,
vs.
FLORANTE A. MIANO, respondent.
G.R. No. 106664 March 8, 1995
FACTS:
On August 31, 1988, private respondent took petitioner's flight bound for Germany. He had an
immediate onward connecting flight via Lufthansa flight to Vienna, Austria. At the NAIA, he
checked-in one brown suitcase but did not declare a higher valuation. He claimed that his suitcase
contained money, documents, one Nikkon camera with zoom lens, etc. Upon private respondent's
arrival at Vienna, his checked-in baggage was missing. He reported the matter to the authorities
and after three (3) hours of waiting, he proceeded to Piestany, Czechoslovakia. Eleven (11) days
after, his suitcase was delivered to him in Piestany. Private respondent instituted an action for
damages before the RTC Makati which rendered a decision awarding private respondent moral and
exemplary damages and atty’s fees.

ISSUE:
Whether or not the RTC erred in awarding moral and exemplary damages to private respondent.
RULING:
Assailed Decision MODIFIED deleting the award of moral and exemplary damages and attorney's
fees.
In breach of contract of carriage by air, moral damages are awarded only if the defendant acted
fraudulently or in bad faith. 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. The SC neither sustained the award of exemplary damages.
The prerequisite for the award of exemplary damages in cases of contract or quasi-contract is that
the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. 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. Needless to
say, award of attorney’s fees must be deleted where the award of moral and exemplary damages
are eliminated.

#16 PAL vs. Lopez, Jr., G.R. No. 156654, November 20, 2008 (DYSANGCO)

FACTS

Lopez filed a complaint claiming that PAL had unjustifiably downgraded his seat from
business class to economy class in his return flight from Bangkok to Manila, and that in
view thereof, PAL should pay him moral damages of at least P100,000.00, exemplary
damages of at least 20,000.00, attorney’s fees in the sum of P30,000.00 and costs of suit.
He averred that he purchased business class ticket and was surprised to learn during his
check-in for return flight to Manila that his status was changed, and PAL was not able to
offer any valid explanation.

PAL denied the liability and argued that it was due to Lopez’s own fault. PAL also asserted
that Lopez did not complain against it during the check-in and raised the issue only after
the flight. Thus, PAL prayed that the case be dismissed for lack of merit.

The trial court held that the inattention and lack of care on the part of the common
carrier, 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. It also
awarded attorney's fees in favor of Lopez after noting that he was forced to litigate to
assert his rights. PAL was ordered to pay Lopez P100,000.00 for moral damqges,
P20,000.00 for exemplary damages and P30,000.00 for attorney’s fees and also to pay for
the cost of suit.

On appeal, CA affirmed in toto the trial court’s decision.

PAL moved for reconsideration but denied. Hence, this petition.

ISSUE

Whether or not the amount of moral damages awarded by the trial court, as affirmed by
the CA, was excessive.

RULING

No. In Mercury Drug Corporation v. Baking, 523 SCRA 184 (2007), the SC 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.” Taking into account the attending
circumstances in this case, SC believes that the amount of P100,000 awarded as moral
damages is appropriate.

#17 United Airlines vs CA, 357 SCRA 99 (FULLEROS)
#18 Cathay Pacific v. Vasquez, 399 SCRA 207 (GR 150843; 3/14/03) (GALLEGO)
FACTS:
Cathay is a common carrier engaged in the business of transporting passengers and
goods by air. As part of its marketing strategy, Cathay accords its frequent flyers
membership in its Marco Polo Club. The members enjoy several privileges, such as
priority for u
pgrading of booking without any extra charge whenever an opportunity
arises. Thus, a frequent flyer booked in the Business Class has priority for upgrading to
First Class if the Business Class Section is fully booked.
Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez
are Gold Card members of its Marco Polo Club.
On 24 September 1996, the Vazquezes, together with their maid and two friends Pacita
Cruz and Josefina Vergel de Dios, went to Hongkong for pleasure and business.
For their return flight to Manila, they were booked on Cathay’s Flight. Two hours before
their time of departure, the Vazquezes and their companions checked in their luggage at
Cathay’s check-in counter and were given their respective boarding passes, to wit, Business
Class boarding passes for the Vazquezes and their two friends, and Economy Class for
their maid. They then proceeded to the Business Class passenger lounge.
When boarding time was announced, the Vazquezes and their two friends went to
Departure Gate which was designated for Business Class passengers. Dr. Vazquez
presented his boarding pass to the ground stewardess. The ground stewardess was
assisted by a ground attendant by the name of Clara Lai Fun Chiu. When Ms. Chiu glanced
at the computer monitor, she saw a message that there was a “seat change” from
Business Class to First Class, for the Vazquezes.
Dr. Vazquez refused the upgrade, reasoning that it would not look nice for them as
hosts to travel in First Class and their guests, in the Business Class; and moreover, they
were going to discuss business matters during the flight. He also told Ms. Chiu that she
could have other passengers instead transferred to the First Class Section. Dr. Vazquez
continued to refuse, so Ms. Chiu told them that if they would not avail themselves of the
privilege, they would not be allowed to take the flight. Eventually, after talking to his two
friends, Dr. Vazquez gave in. He and Mrs. Vazquez then proceeded to the First Class Cabin.
Upon return to the Philippines, Vazquez demanded that they may be indemnified in the
amount of 1 million pesos for the “humiliation and embarrassment” caused by its employees.
In his reply of 14 October 1996, Mr. Larry Yuen, the assistant to Cathay’s Country
Manager Argus Guy Robson, informed the Vazquezes that Cathay would investigate the
incident and get back to them within a week’s time.
On 8 November 1996, after Cathay’s failure to give them any feedback within its
self-imposed deadline, the Vazquezes instituted before the Regional Trial Court of Makati
City an action for damages against Cathay, praying for the payment to each of them the
amounts of P250,000 as temperate damages; P500,000 as moral damages; P500,000 as
exemplary or corrective damages; and P250,000 as attorney’s fees.
The trial court rendered a decision in favor of Vazquezes holding that Cathay offers
various classes of seats from which passengers are allowed to choose regardless of their
reasons or motives, whether it be due to budgetary constraints or whim. The choice
imposes a clear obligation on Cathay to transport the passengers in the class chosen by
them. The carrier cannot, without exposing itself to liability, force a passenger to
involuntarily change his choice. The upgrading of the Vazquezes’ accommodation over and
above their vehement objections was due to the overbooking of the Business Class. It was
a pretext to pack as many passengers as possible into the plane to maximize Cathay’s
revenues. Cathay’s actuations in this case displayed deceit, gross negligence, and bad faith,
which entitled the Vazquezes to awards for damages.
a)Nominal damages in the amount of P100,000.00 for each plaintiff;
b)Moral damages in the amount of P2,000,000.00 for each plaintiff;
c)Exemplary damages in the amount of P5,000,000.00 for each plaintiff;
d)Attorney’s fees and expenses of litigation in the amount of P1,000,000.00
for each plaintiff; and
e)Costs of suit.
On appeal by the petitioners, the Court of Appeals, in its decision of 24 July 2001, deleted
the award for exemplary damages; and it reduced the awards for moral and nominal
damages for each of the Vazquezes to P250,000 and P50,000, respectively, and the
attorney’s fees and litigation expenses to P50,000 for both of them.
The Court of Appeals ratiocinated that by upgrading the Vazquezes to First Class,
Cathay novated the contract of carriage without the former’s consent. There was a breach
of contract not because Cathay overbooked the Business Class Section of Flight CX-905
but because the latter pushed through with the upgrading despite the objections of the
Vazquezes
Vazquezes
Vazquezes
Vazquezes.
On appeal by the petitioners, the Court of Appeals, deleted the award for exemplary
damages; and it reduced the awards for moral and nominal damages for each of the
Vazquezes to P250,000 and P50,000, respectively, and the attorney’s fees and litigation
expenses to P50,000 for both of them.
Vazquezes.

ISSUE:
Whether or not there is a breach of contract and Vazquezes are entitled to moral and
exemplary damages.

RULING:
Yes. There is a breach of contract BUT the Vazquezes are NOT ENTITLED TO MORAL
AND EXEMPLARY DAMAGES.
The Court held that normally, one would appreciate and accept an upgrading, for it
would mean a better accommodation. But, whatever their reason was and however odd it
might be, the Vazquezes had every right to decline the upgrade and insist on the Business
Class accommodation they had booked for and which was designated in their boarding
passes. They clearly waived their priority or preference when they asked that other
passengers be given the upgrade. It should not have been imposed on them over their
vehement objection. By insisting on the upgrade, Cathay breached its contract of carriage
with the Vazquezes.
Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Although incapable of pecuniary computation, moral damages may be recovered if they are
the proximate result of the defendant’s wrongful act or omission. Thus, case law
establishes the following requisites for the award of moral damages: (1) there must be an
injury clearly sustained by the claimant, whether physical, mental or psychological; (2)
there must be a culpable act or omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of the injury sustained by the claimant;
and (4) the award for damages is predicated on any of the cases stated in Article 2219 of
the Civil Code.
Moral damages predicated upon a breach of contract of carriage may only be
recoverable in instances where the carrier is guilty of fraud or bad faith or where
the mishap resulted in the death of a passenger. Where in breaching the contract of
carriage the airline is not shown to have acted fraudulently or in bad faith, liability for
damages is limited to the natural and probable consequences of the breach of the
obligation which the parties had foreseen or could have reasonably foreseen. In such a
case the liability does not include moral and exemplary damages.
In this case, we have ruled that the breach of contract of carriage, which consisted
in the involuntary upgrading of the Vazquezes’ seat accommodation, was not attended by
fraud or bad faith. The Court of Appeals’ award of moral damages has, therefore, no leg to
stand on.
The deletion of the award for exemplary damages by the Court of Appeals is
correct. It is a requisite in the grant of exemplary damages that the act of the offender
must be accompanied by bad faith or done in wanton, fraudulent or malevolent manner.
Such requisite is absent in this case. Moreover, to be entitled thereto the claimant must
first establish his right to moral, temperate, or compensatory damages. Since the
Vazquezes are not entitled to any of these damages, the award for exemplary damages has
no legal basis. And where the awards for moral and exemplary damages are eliminated, so
must the award for attorney’s fees.
The Court awards only nominal damages in the amount of P5,000.00 to the
respondent spouses.

#19 Air France v. Gillego, G.R. No. 165266, December 15, 2010 (LEONOR)
FACTS: Gillego, then incumbent Congressman and Chairman of the House of Representatives
Committee on Civil, Political and Human Rights, was invited to participate as one of the keynote
speakers at the 89th Inter-Parliamentary Conference Symposium on Parliament Guardian of Human
Rights to be held in Budapest, Hungary and Tokyo, Japan.

On May 16, 1993, Gillego left Manila on board Air Frances aircraft bound for Paris, France. While
waiting at the Airport for his connecting flight to Budapest scheduled a few hours after his arrival
learned that Air France had another aircraft bound for Budapest with an earlier departure time
than his scheduled flight. He then made arrangements for the change in his booking. He was given a
corresponding ticket and boarding pass and also a new baggage claim stub for his checked-in
luggage. However, his baggage despite numerous follow-up was never delivered to him prompting
Gillego to purchase new set of clothes and other personal effects.

Gillego filed a complaint for damages against the Air France alleging that by reason of its
negligence and breach of obligation to transport and deliver his luggage, Gillego suffered
inconvenience, serious anxiety, physical suffering and sleepless nights. It was further alleged that
due to the physical, mental and emotional strain resulting from the loss of his luggage, aggravated
by the fact that he failed to take his regular medication, Gillego had to be taken to a medical clinic
in Tokyo, Japan for emergency treatment.

The RTC found there was gross negligence on the part of Air France. It likewise found Air France
guilty of willful misconduct as it persistently disregarded the rights of Gillego. As to the
applicability of the limited liability for lost baggage under the Warsaw Convention, the trial court
rejected the argument of Air France. The CA affirmed the trial courts decision.

ISSUES:

I. Was there legal and factual basis that Air France's actions were attended by gross negligence,
bad faith and willful misconduct and that it acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner to justify award of moral and exemplary damages?

II. Is the amount of damages awarded by the RTC and affirmed by the CA as moral and exemplary
damages excessive, unconscionable and unreasonable?

HELD: I. In an action based on a breach of contract of carriage, the aggrieved party does not
have to prove that the common carrier was at fault or was negligent. All that he has to prove
is the existence of the contract and the fact of its non-performance by the carrier.

The action filed by the respondent is founded on such breach of the contract of carriage with
petitioner who offered no satisfactory explanation for the unreasonable delay in the delivery of
respondents baggage. The presumption of negligence was not overcome by the petitioner and hence
its liability for the delay was sufficiently established.

The Court held that the trial and appellate courts did not err in finding that petitioner acted in bad
faith in repeatedly ignoring respondents follow-up calls. Clearly, Air France did not give the
attention and care due to its passenger whose baggage was not transported and delivered to him at
his travel destination and scheduled time; inattention to and lack of care for the interest 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.

HELD: II. The amount of damages must be fair, reasonable and proportionate to the injury
suffered. The purpose of awarding moral damages is to enable the injured party to obtain
means, diversion or amusement that will serve to alleviate the moral suffering he has
undergone by reason of defendant's culpable action. On the other hand, the aim of awarding
exemplary damages is to deter serious wrongdoings. Hence, the Court held that the sum of
P1,000,000.00 awarded by the trial court is excessive and not proportionate to the loss or
suffering inflicted on the passenger under the circumstances.

#20 Sulpicio Lines, Inc. vs. Curso, G.R. No 157009, March 17, 2010 (MACAPAAR)

FACTS: Dr. Curso boarded MVDoña Marilyn, an inter--island vessel owned and operated by petitioner
Sulpicio Lines, Inc., bound for Tacloban. The ship sank while at sea and many bodies of its ill--f ated
passengers (including Dr. Curso) were never found.
Respondents (siblings of Dr. Curso) sued the petitioner to claim damages based on breach of contract
of carriage by sea, averring that the petitioner had acted negligently in transporting Dr. Curso and the
other passengers.
They claim that since Dr. Curso died single and without issue, they were his surviving heirs and
successors in interest who are entitled to recover moral and other damages (compensatory,
exemplary, expenses of litigation, costs of suit).
The petitioner denied liability, insisting that the sinking of the vessel was due to force majeure (i.e.,
Typhoon Unsang), which exempted a common carrier from liability. It averred that the MV Doña Marilyn
was seaworthy in all respects, and was in fact cleared by the Philippine Coast Guard for the voyage;
and that after the accident it conducted intensive search and rescue operations and extended
assistance and aid to the victims and their families.
The RTC dismissed the complaint finding that the vessel sank due to force majeure, and that the ship was
seaworthy. The CA reversed the decision stating that there was inadequate proof to show that Sulpicio
Lines, Inc., or its officers and crew, had exercised the required degree of diligence (extraordinary) to
acquit the it of liability. The CA claims that the mishap would not have occurred if the crew had been
monitoring the weather reports. As such, Sulpicio Lines Inc. was ordered to pay death indemnity, loss of
earning capacity, moral damages and costs of suit. Hence this petition.
ISSUES: Whether or not the surviving brothers and sisters of a deceased passenger of a vessel that
sinks during a voyage is entitled to recover MORAL DAMAGES from the common carrier.
RULING: NO. They are not included in the law. As a general rule, moral damages are not recoverable in
actions for damages predicated on a breach of contract, unless there is fraud or bad faith. As an
exception, moral damages may be awarded in case of breach of contract of carriage that results in the
death of a passenger, in accordance with Article 1764, in relation to Article 2206 (3), of the Civil Code,
which states: “The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.”
The foregoing legal provisions set forth the persons entitled to moral damages. The omission from Article
2206 (3) of the brothers and sisters of the deceased passenger reveals legislative intent to exclude them
from the recovery of moral damages for mental anguish by reason of the death of the deceased. Same
with the case in North Negros Sugar Company, Inc. v. Ybañez t hat in case of death caused by
quasi--delict, the brother of the deceased was not entitled to the award of moral damages based
on Article 2206 of the Civil Code.
While it is true that under Article 1003 of the Civil Code they succeeded to the entire estate of the late Dr.
Curso in the absence of the latter’s descendants, ascendants, illegitimate children, and surviving spouse.
However, they were not included among the persons entitled to recover moral damages, as enumerated
in Article 2219 of the Civil Code, which circumscribes the instances in which moral damages may be
awarded. The provision does not include succession in the collateral line as a source of the right to
recover moral damages.
Therefore, the award of moral damages is deleted and set aside.

Subsidiary liability of Employer under Art. 103, RPC

#21 Gregoria vda de Paman, et. al., Hon. Seneris, G.R. No. L-37632, July 30. 1982
(MONCADA)

Facts: Accused-respondent de los Santos was charged and held guilty of Simple Imprudence
resulting in Homicide.

Paman, widow of the victim filed a motion for execution of the judgment to enforce the civil liability
of the accused- respondent and ex parte motion for execution of the judgment thereof. Western
Mindanao Lumber Company was duly notified. Such motion was granted. However, the Sheriff’s
Return of Service showed that the accused- respondent de los Santos had no property registered
in his name.

A "Motion for Execution on Subsidiary Liability of Employer Western Mindanao Lumber Company
under Article 103 of the Revised Penal Code." Was filed by the petitioner. Petitioner contended
therein that the subsidiary liability of the employer Western Mindanao Lumber Company in the
event the accused is insolvent, is executory in nature and there is no need for a separate action or a
further civil case to be filed in the enforcement of the decision aforementioned. Petitioner
concluded that the tenor of the aforesaid decision implies that the subsidiary liability of the
employer may be enforced in the same proceeding.

Respondent judge denied the motion for issuance of writ of execution against the employer of de
los Santos. He opined that the alleged employer not having been notified that its driver was facing a
criminal charge, a separate civil action must be filed.

Issue: Whether or not the subsidiary liability established in Article 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;

Ruling: Yes. Section 1, Rule 111 of the Rules of Court provides that "when a criminal action is
instituted, the civil action for recovery of civil liability arising from the offense charged is
impliedly instituted with the criminal action, unless the offended party expressly waives the civil
action or reserves his right to institute it separately." That means as if two actions are joined in
one as twins, each one completes with the same completeness as any of the two normal persons
composing the twins. It means that the civil action may be tried and prosecuted, with all the
ancillary processes provided by law. It was explained therein that the proceeding for the
enforcement of the subsidiary liability may be considered as part of the proceeding for the
execution of the judgment. A case in which an execution has been issued is regarded as still pending
so that all proceedings on the execution are proceedings in the suit.

This being the case, this Court stated that it has no other function than to render a 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. A separate and independent action is,
therefore, unnecessary and would only unduly prolong the agony of the heirs of the victim.

#22 Catacutan vs Heirs of Norman Kadusale et al., G.R. No. 131280, Oct. 18, 2000
(PELAYO)

iv. Exemplary
Arts. 2229, 2232, 2233

#23 Mecenas v. Court of Appeals, 180 SCRA 83 (RAMORAN)

FACTS:

#24 Singapore Airlines Limited v. Andion Fernandez, G.R. No. 142305, December 10, 2003
(REY)

FACTS:
Respondent Andion Fernandez is an acclaimed soprano in the Philippines and abroad. At the
time of the incident, she was availing of an educational grant from the Federal Republic of Germany
pursuing a Master’s Degree in Music major in Voice. She was invited to sing before the King and
Queen of Malaysia on Feb. 3-4, 1991. For this purpose, she bought an airline ticket from Singapore
Airlines (SAL) for the Frankfurt-Manila-Malaysia route. The respondent had to pass by Manila in
order to gather her wardrobe and rehearse with the pianist. SAL issued a ticket for Flight SQ 27
leaving Frankfurt on Jan. 27, 1991 for Singapore with connections to Manila in the morning of Jan.
28, 1991. On Jan. 27, 1991, SQ 27 left Frankfurt but arrived two hours late in Singapore on Jan.
28, 1991. By then, the aircraft bound for Manila had already left. Upon deplaning in Singapore,
Fernandez approached the transit counter at Changi Airport and was told by a lady employee that
there were no more flights to Manila on that day and that she had to stay in Singapore, if she
wanted, she could fly to HK but at her own expense. Respondent stayed with a relative in Singapore
for the night.

The next day, she was brought back to the airport and approached the counter for
immediate booking but was told by a male employee: “Can’t you see, I am doing something.” She
explained her predicament but was told: “It’s your problem, not ours.” The respondent never made it
to Manila and was forced to take a direct flight to Malaysia on Jan. 29, 1991 through the efforts
of her mother and a travel agency in Manila. Her mother had to travel to Malaysia with the
wardrobe which caused them to incur expenses of ₱50,000. The Regional Trial Court (RTC) in Manila
ordered SAL to pay the respondent ₱50,000 as actual damages, ₱250,000 as moral damages,
₱100,000 as exemplary damages, ₱75,000 as attorney’s fees and costs of suit. The Court of Appeals
(CA) affirmed the RTC’s decision.

ISSUE:
Whether or not SAL violated the contract of carriage.
RULING:
Yes, 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. If he does not, then the carrier opens
itself to a suit for a breach of contract of carriage. A contract of carriage requires common
carriers to transport passengers safely as human care and foresight can provide (Art. 1755, NCC).
In an action for breach of a contract of carriage, the aggrieved party does not have to prove that
the common carrier was at fault or was negligent. All that is necessary is to prove the existence of
the contract and the fact of its non-performance by the carrier. SAL failed to inform of the delay
in the turnaround aircraft in Frankfurt, neither did it ask if the respondent and 25 other delayed
passengers are amenable to a stay in Singapore. Even SAL’s manual mandates that in cases of
urgent connections, the SAL head office has to be informed of delays so as to make needed
arrangements for connecting passengers.
Petition is DENIED. The CA decision is affirmed.

#25 PHILIPPINE NATIONAL RAILWAYS (PNR) vs C.A. (SANTOS)
G.R. No. L-55347, October 4, 1985

FACTS:
On 10 September 1972, at about 9:00 p.m., Winifredo Tupang, husband of Rosario Tupang,
boarded Train 516 of the Philippine National Railways at Libmanan, Camarines Sur, as a paying
passenger bound for Manila. Due to some mechanical defect, the train stopped at Sipocot,
Camarines Sur, for repairs, taking some two hours before the train could resume its trip to Manila.

Unfortunately, upon passing Iyam Bridge at Lucena, Quezon, Winifredo Tupang fell off the
train resulting in his death. The train did not stop despite the alarm raised by the other
passengers that somebody fell from the train. Instead, the train conductor, Perfecto Abrazado,
called the station agent at Candelaria, Quezon, and requested for verification of the information.
Police authorities of Lucena City were dispatched to the Iyam Bridge where they found the lifeless
body of Winifredo Tupang. As shown by the autopsy report, Winifredo Tupang died of
cardio-respiratory failure due to massive cerebral hemorrhage due to traumatic injury. Tupang was
later buried in the public cemetery of Lucena City by the local police authorities.

Upon complaint filed by the deceased’s widow, Rosario Tupang, the then CFI Rizal, after
trial, held the PNR liable for damages for breach of contract of carriage and ordered it to pay
Rosario Tupang the sum of P12,000.00 for the death of Winifredo Tupang, plus P20,000.00 for loss
of his earning capacity, and the further sum of P10,000.00 as moral damages, and P2,000.00 as
attorney’s fees, and cost.

On appeal, the Appellate Court sustained the holding of the trial court that the PNR did not
exercise the utmost diligence required by law of a common carrier. It further increased the amount
adjudicated by the trial court by ordering PNR to pay Rosario Tupang an additional sum of
P5,000,00 as exemplary damages. Moving for reconsideration of the above decision, the PNR raised
for the first time, as a defense, the doctrine of state immunity from suit. The motion was denied.
Hence the petition for review.

ISSUE:
Whether there was contributory negligence on the part of Tupang.

HELD:
Yes, there was contributory negligence on the part of Tupang. While PNR failed to
exercise extraordinary diligence as required by law, it appears that the deceased was
chargeable with contributory negligence. Since he opted to sit on the open platform between the
coaches of the train, he should have held tightly and tenaciously on the upright metal bar found at
the side of said platform to avoid falling off from the speeding train. Such contributory
negligence, while not exempting the PNR from liability, nevertheless justified the deletion of
the amount adjudicated as moral damages.

PNR has the obligation to transport its passengers to their destinations and to observe
extraordinary diligence in doing so. Death or any injury suffered by any of its passengers
gives rise to the presumption that it was negligent in the performance of its obligation under
the contract of carriage. PNR failed to overthrow such presumption of negligence with clear and
convincing evidence, inasmuch as PNR does not deny, (1) that the train boarded by the deceased
Winifredo Tupang was so overcrowded that he and many other passengers had no choice but to sit
on the open platforms between the coaches of the train, (2) that the train did not even slow down
when it approached the Iyam Bridge which was under repair at the time, and (3) that neither did
the train stop, despite the alarm raised by other passengers that a person had fallen off the train
at Iyam Bridge.

The Supreme Court modified the decision of the appellate court by eliminating therefrom
the amounts of P10,000.00 and P5,000.00 adjudicated as moral and exemplary damages,
respectively; without costs.

#26 Trans-Asia Shipping Lines, Inc v. CA, G.R. No. 118126, March 4, 1996, supra (CRUZ)
Atty. Renato Arroyo], a public attorney, bought a ticket [from] defendant [herein petitioner], a
corporation engaged in . . . inter-island shipping, for the voyage of M/V Asia Thailand vessel to
Cagayan de Oro City from Cebu City on November 12, 1991.
At around 5:30 in the evening of November 12, 1991, plaintiff boarded the M/V Asia Thailand
vessel. At that instance, plaintiff noticed that some repair works [sic] were being undertaken on
the engine of the vessel. The vessel departed at around 11:00 in the evening with only one (1)
engine running.
After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor
thereat. After half an hour of stillness, some passengers demanded that they should be allowed to
return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro
City. The captain aceeded [sic] to their request and thus the vessel headed back to Cebu City.
At Cebu City, plaintiff together with the other passengers who requested to be brought back to
Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City.
Plaintiff, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise
a vessel of defendant.
On account of this failure of defendant to transport him to the place of destination on November
12, 1991, plaintiff filed before the trial court a complaint for damages against defendant.4
ISSUE: WON the CA is correct?
HELD:
No, before commencing the contracted voyage, the petitioner undertook some repairs on the
cylinder head of one of the vessel’s engines. But even before it could finish these repairs, it
allowed the vessel to leave the port of origin on only one functioning engine, instead of two.
Moreover, even the lone functioning engine was not in perfect condition as sometime after it had
run its course, it conked out. This caused the vessel to stop and remain adrift at sea, thus in order
to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy
even before the voyage began. For a vessel to be seaworthy, it must be adequately equipped for
the voyage and manned with a sufficient number of competent officers and crew. The failure of a
common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is
a clear breach of its duty prescribed in Article 1755 of the Civil Code.

#27 Sps. Fernando v. Northwest Airlines, Inc.,G.R. No. 212038, Feb. 8, 2017, (USON)

FACTS: Spouses Jesus and Elizabeth S. Fernando are frequent flyers of Northwest Airlines, Inc. and are holders of
Elite Platinum World Perks Card, the highest category given to frequent flyers of the carrier.

The Fernandos initiated the filing of the instant case which arose from two separate incidents: first, when
Jesus Fernando arrived at Los Angeles Airport on December 20, 2001; second, when the Fernandos were to depart
from the LA Airport on January 29, 2002.

On the first incident, Jesus Fernando arrived at the LA Airport via Northwest Airlines Flight No. NW02 to
join his family for Christmas, however upon arrival at the airport it was found out that his documents reflect his
return ticket as August 2001. So he approached Northwest personnel who was later identified as Linda
Puntawongdaycha, but the latter merely glanced at his ticket without checking its status with the computer and
peremptorily said that the ticket has been used and could not be considered as valid. The Immigration Officer
brought Jesus Fernando to the interrogation room of the Immigration and Naturalization Services where he was
asked humiliating questions for more than two (2) hours. When he was finally cleared by the Immigration Officer, he
was granted only a twelve-day stay in the United States, instead of the usual six months. He further incurred other
expenses due to the said incident.

On the second incident, when the Fernandos reached the gate area where boarding passes need to be
presented, Northwest supervisor Linda Tang stopped them and demanded for the presentation of their paper tickets
(coupon type). They failed to present the same since, according to them, Northwest issued electronic tickets
(attached to the boarding passes) which they showed to the supervisor. In the presence of the other passengers,
Linda Tang rudely pulled them out of the queue. Elizabeth Fernando explained to Linda Tang that the matter could be
sorted out by simply verifying their electronic tickets in her computer and all she had to do was click and punch in
their Elite Platinum World Perks Card number. But when the Fernandos reached the boarding gate, the plane had
already departed. They were able to depart, instead, the day after, or on January 30, 2002, and arrived in the
Philippines on January 31, 2002.

The Regional Trial Court ruled in favor of Plaintiffs which was affirmed by the Court of Appeals.

ISSUE:
1) Whether or not Northwest committed a breach of contract of carriage.
2) Whether or not Northwest is liable to petitioner spouses for exemplary damages.

RULING:
1) Yes. The Fernandos' cause of action against Northwest stemmed from a breach of contract of carriage. A
contract is a meeting of minds between two persons whereby one agrees to give something or render some service to
another for a consideration. There is no contract unless the following requisites concur: (1) consent of the
contracting parties; (2) an object certain which is the subject of the contract; and (3) the cause of the obligation
which is established.

Undoubtedly, a contract of carriage existed between Northwest and the Fernandos. They voluntarily and
freely gave their consent to an agreement whose object was the transportation of the Fernandos from LA to Manila,
and whose cause or consideration was the fare paid by the Fernandos to Northwest.

In an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the
common carrier was at fault or was negligent. All that he has to prove is the existence of the contract and the fact
of its non-performance by the carrier. As the aggrieved party, the Fernandos only had to prove the existence of the
contract and the fact of its non-performance by Northwest, as carrier, in order to be awarded compensatory and
actual damages.

Therefore, having proven the existence of a contract of carriage between Northwest and the Fernandos,
and the fact of non-performance by Northwest of its obligation as a common carrier, it is clear that Northwest
breached its contract of carriage with the Fernandos. Thus, Northwest opened itself to claims for compensatory,
actual, moral and exemplary damages, attorney's fees and costs of suit.

2) Yes. Exemplary damages, which are awarded by way of example or correction for the public good, may be
recovered in contractual obligations, if defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent
manner. They are designed by our civil law to permit the courts to reshape behavior that is socially deleterious in its
consequence by creating negative incentives or deterrents against such behavior.

In this case, while the discrepancy between the date of actual travel and the date appearing on the tickets
of the Fernandos called for some verification, however, the Northwest personnel failed to exercise the utmost
diligence in assisting the Fernandos. The actuations of Northwest personnel in both subject incidents are constitutive
of bad faith.

Hence, the Court held Northwest liable for the payment of exemplary damages in the amount of
₱2,000,000.00.

#28 North Airlines v. Sps Fernando, G.R. No. 212043 (VALENZUELA)
FACTS:
From the first case (prior to this), RTC ruled in favor of the spouses Fernando. This leads to appeal
of both parties, North Airlines and Spouses. North Airlines contends that there is no breach of
contract of carriage, thus they are not liable for damages and that the Spouses are not entitled to
recover counterclaims as the Spouses are claiming for exemplary damages which are not given in
the first decision and increase in the award of moral damages (P200,000 only).

ISSUE:
From the foregoing issue, whether or not, the spouses are entitled to their additional claims due to
North Airlines’ breach of contract of carriage?

RULING:
YES. Passengers do not contract merely for transportation. They have a right to be
treated by the carrier’s employees with kindness, respect, courtesy and due consideration.
They are entitled to be protected against personal misconduct, injurious language, indignities and
abuses from such employees. So it is, that any rule or discourteous conduct on the part of
employees towards a passenger gives the latter an action for damages against the carrier. 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.
SC’s ruling: AFFIRMED with MODIFICATION. The award of moral damages and attorney’s
fees are hereby increased to P3,000,000.00 and ten percent (10%) of the damages awarded,
respectively. Exemplary damages in the amount of P2,000,000.00 is also awarded. Costs against
Northwest Airlines.

v. Nominal, Temperate and Liquidated
Arts. 2221, 2224, 2226

#29 Alitalia v. AIC, 192 SCRA 9 (ABUYUAN)
Facts:
Dr. Felipa Pablo—an associate professor in the University of the Philippines, and a research
grantee of the Philippine Atomic Energy Agency—was invited to take part at a meeting of the
Department of Research and Isotopes of the Joint FAO-IAEA Division of Atomic Energy in Food
and Agriculture of the United Nations in Ispra, Italy.
To fulfill this engagement, Dr. Pablo booked passage on petitioner airline, ALITALIA.
She arrived in Milan on the day before the meeting in accordance with the itinerary and time table
set for her byALITALIA. She was however told by the ALITALIApersonnel there at Milan that her
luggage was "delayed inasmuch as the same x x (was) in one of the succeeding flights from Rome to
Milan." Her luggage consisted of two(2) suitcases: one contained her clothing and other personal
items; the other, her scientific papers, slides and other research material. But the other flights
arriving from Rome Did not have her baggage on board
By then feeling desperate, she went to Rome to try to locate her bags herself. There, she
inquired about her suitcases in the " domestic and international airports, and filled out the forms
prescribed by ALITALIA for people in her predicament. However, her baggage could not be
found.Completely distraught and discouraged, she returned toManila without attending the meeting
in Ispra, Italy.
Once back in Manila she demanded that ALITALIAmake reparation for the damages thus
suffered by her.ALITALIA offered her "free airline tickets to compensate her for any alleged
damages x x." She rejected the offer,and forthwith commenced the action.
As it turned out, Prof. Pablo's suitcases were in fact located and forwarded to Ispra, Italy,
but only on the day after her scheduled appearance and participation at theU.N. meeting there. Of
course Dr. Pablo was no longer there to accept delivery; she was already on her way home to Manila.
And for some reason or other, the suitcases were not actually restored to Prof. Pablo by ALITALIA
until eleven (11) months later, and four (4) months after institution of her action.
Trial court ruled that ALITALIA should pay Pablo 20,000 nominal damages, 5,000 attorney’s
fees and cost of suit. Appellate court affirmed the decision and increase the award of nominal
damages to 40,000

Issues:
1. Whether or not the Warsaw Convention should have been applied to limit ALITALIA'S
liability
2. Whether or not there is no warrant in fact or in law for the award to Dr. Pablo of nominal
damages and attorney's fees

Ruling:
1. No. The Court ruled that Warsaw Convention cannot be applied in this case.
The Warsaw Convention does not operate as an absolute limit of the extent of an
airline's liability; it does not regulate or exclude liability for other breaches of contract by
the carrier, or misconduct of its employees, or for some particular or exceptional type of
damage. Otherwise,"an air carrier would be exempt from any liability for damages in the
event of its absolute refusal, in bad faith, to comply with a contract of carriage, which is
absurd."
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to
the employees of petitioner airline; and Dr. Pablo's luggage was eventually returned to her,
belatedly, it is true, but without appreciable damage.The fact is, nevertheless, that some
special species of injury was caused to Dr. Pablo because petitioner ALITALIAmisplaced her
baggage and failed to deliver it to her at the time appointed—a breach of its contract of
carriage, to be sure —with the result that she was unable to read the paper and make the
scientific presentation
Certainly, the compensation for the injury suffered byDr. Pablo cannot under the
circumstances be restricted to that prescribed by the Warsaw Convention for delay in the
transport. of baggage.

2. No. The Court ruled that Dr. Pablo is entitled to nominal damages and attorney’s fees.
She is not, of course, entitled to be compensated for loss or damage to her luggage.
As already mentioned, herbaggage was ultimately delivered to her in Manila, tardily but
safely. She is however entitled to nominal damages—which, as the law says, is adjudicated in
order that a right of the plaintiff, which has been violated or invaded by the defendant,
may be vindicated and recognized, and not for the purpose of indemnifying the plaintiff for
any loss suffered—and this Court agrees that the respondent Court Of Appeals correctly
set the amount thereof at P40,000.00.
Asto the purely technical argument that the award to her of such nominal damages
is precluded by her omission to include a specific claim therefor in her complaint, it suffices
to draw attention to her general prayer, following her plea for moral and exemplary damages
and attorney's fees, "for such other and further just and equitable relief in the premises,"
which certainly is broad enough to comprehend an application as well for nominal damages.
Besides, the petitioner should have realized that the explicit assertion, and proof, that Dr.
Pablo's right had been violated or invaded by it—absent any claim for actual or
compensatory damages, the prayer thereof having been voluntarily deleted by Dr. Pablo upon
the return to her of her baggage—necessarily raised the issue of nominal damages.
This Court also agrees that respondent Court of Appeals correctly awarded
attorney's fees to Dr. Pablo, and the amount "of P5,000.00 set by it is reasonable in the
premises. The law authorizes recovery of attorney's fees
inter alia where, as here, "the defendant's act oromission has compelled the plaintiff to
litigate with third personsor to incur expenses to protect his interest," or "where the court
deems it just and equitable."

#30 Saludo v. Court of Appeals, 207 SCRA 498 (ALCANTARA)
ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO, LEOPOLDO G. SALUDO and
SATURNINO G. SALUDO, petitioners,
vs.
HON. COURT OF APPEALS, TRANS WORLD AIRLINES, INC., and PHILIPPINE AIRLINES,
INC., respondents.

FACTS:
Crispina Galdo Saludo, mother of the petitioners, died in Chicago, Illinois. Pomierski and Son
Funeral Home of Chicago, made the necessary preparations and arrangements for the shipment of
the remains from Chicago to the Philippines. Pomierski brought the remains to Continental
Mortuary Air Services (CMAS) at the Chicago Airport which booked the shipment of the
remains from Chicago to San Francisco by Trans World Airways (TWA) and from San
Francisco to Manila with Philippine Airlines (PAL).
Salvacion (one of the petitioners), upon arrival at San Francisco, went to the TWA to inquire about
her mother’s remains. But she was told they did not know anything about it. She then called
Pomierski that her mother’s remains were not at the West Coast terminal. Pomierski immediately
called CMAS which informed that the remains were on a plane to Mexico City, that there
were two bodies at the terminal, and somehow they were switched. CMAS called and told
Pomierski that they were sending the remains back to California via Texas.
Petitioners filed a complaint against TWA and PAL for the misshipment and in the delay of the
cargo containing the remains of the late Crispina Saludo. Petitioners alleged that private
respondents received the casketed remains of Crispina on October 26, 1976, as evidenced by the
issuance of PAL Airway Bill by Air Care and from said date, private respondents were charged with
the responsibility to exercise extraordinary diligence so much so that the alleged switching of the
caskets on October 27, 1976, or one day after the private respondents received the cargo, the
latter must necessarily be liable. Petitioners consider TWA's statement that "it had to rely on the
information furnished by the shipper" a lame excuse and that its failure to prove that its personnel
verified and identified the contents of the casket before loading the same constituted negligence
on the part of TWA.
The lower court absolved both airlines, dismissing the complaint for lack of evidence.Upon
appeal, it was affirmed by the CA.
ISSUE: Whether or not private respondents are liable for damages for the switching of the two
caskets.
RULING:
No. The Supreme Court concluded that the switching occurred or, more accurately, was discovered

on October 27, 1976; and based on the above findings of the Court of appeals, it happened while
the cargo was still with CMAS, well before the same was place in the custody of private
respondents. Verily, no amount of inspection by respondent airline companies could have
guarded against the switching that had already taken place. Or, granting that they could have
opened the casket to inspect its contents, private respondents had no means of ascertaining
whether the body therein contained was indeed that of Crispina Saludo except, possibly, if the body
was that of a male person and such fact was visually apparent upon opening the casket. However, to
repeat, private respondents had no authority to unseal and open the same nor did they have any
reason or justification to resort thereto.
It is the right of the carrier to require good faith on the part of those persons who deliver
goods to be carried, or enter into contracts with it, and inasmuch as the freight may depend
on the value of the article to be carried, the carrier ordinarily has the right to inquire as to
its value. Ordinarily, too, it is the duty of the carrier to make inquiry as to the general nature
of the articles shipped and of their value before it consents to carry them; and its failure to
do so cannot defeat the shipper's right to recovery of the full value of the package if lost, in
the absence of showing of fraud or deceit on the part of the shipper. In the absence of more
definite information, the carrier has a the right to accept shipper's marks as to the contents
of the package offered for transportation and is not bound to inquire particularly about them
in order to take advantage of a false classification and where a shipper expressly represents
the contents of a package to be of a designated character, it is not the duty of the carrier
to ask for a repetition of the statement nor disbelieve it and open the box and see for itself.
However, where a common carrier has reasonable ground to suspect that the offered goods are of a
dangerous or illegal character, the carrier has the right to know the character of such goods and to
insist on an inspection, if reasonable and practical under the circumstances, as a condition of
receiving and transporting such goods.
It can safely be said then that a common carrier is entitled to fair representation of the nature

and value of the goods to be carried, with the concomitant right to rely thereon, and further
noting at this juncture that a carrier has no obligation to inquire into the correctness or
sufficiency of such information. The consequent duty to conduct an inspection thereof arises
in the event that there should be reason to doubt the veracity of such representations.
Therefore, to be subjected to unusual search, other than the routinary inspection procedure
customarily undertaken, there must exist proof that would justify cause for apprehension that
the baggage is dangerous as to warrant exhaustive inspection, or even refusal to accept
carriage of the same; and it is the failure of the carrier to act accordingly in the face of
such proof that constitutes the basis of the common carrier's liability.
In the case at bar, private respondents had no reason whatsoever to doubt the truth of the
shipper's representations. The airway bill expressly providing that "carrier certifies goods
received below were received for carriage," and that the cargo contained "casketed human remains
of Crispina Saludo," was issued on the basis of such representations. The reliance thereon by
private respondents was reasonable and, for so doing, they cannot be said to have acted
negligently. Likewise, no evidence was adduced to suggest even an iota of suspicion that the cargo
presented for transportation was anything other than what it was declared to be, as would require
more than routine inspection or call for the carrier to insist that the same be opened for scrutiny
of its contents per declaration.
Nonetheless, the facts show that petitioners' right to be treated with due courtesy in
accordance with the degree of diligence required by law to be exercised by every common
carrier was violated by TWA and this entitles them, at least, to nominal damages from TWA
alone. Articles 2221 and 2222 of the Civil Code make it clear that nominal damages are not
intended for indemnification of loss suffered but for the vindication or recognition of a right
violated or invaded.
WHEREFORE, with the modification that an award of P40,000.00 as and by way of nominal
damages is hereby granted in favor of petitioners to be paid by respondent Trans World Airlines,
the appealed decision is AFFIRMED in all other respects.
#31 Japan Airlines v. Court of Appeals, 294 SCRA 19 (BERNARDO)

#32 Savellano v. Northwest, 405 SCRA 416 (GR 151783; 7/8/03) (BUENCONSEJO)

SAVELLANO v. NORTHWEST AIRLINES
2003 Jul 8 G. R. No. 151783
Facts:
Petitioners Victorino, Virginia and Deogracias, all surnamed Savellano, were on board Northwest
Airlines Flight 27 bound for Manila when the pilot made an emergency landing in Seattle because of a fire
which has started in one of plane’s engine. As a result, they were billeted at a hotel nearby and instructed
that they can use the same boarding passes the next day. The family received a call, that midnight,
advising them to be at the airport by 7:00 a.m. for their departure, thus making them skip breakfast. When
petitioners reached the airport, they were belatedly advised that instead of flying to Manila they would
have to board NW Flight bound to Los Angeles for a connecting flight to Manila. In Los Angeles, they
found out that no flight was posted bound for Manila, thus it was only after complaining that the flight was
changed to include Manila. On arrival at the Manila airport, Col. Delfin teased the petitioners for taking the
longer and tiresome route to the Philippines. Thus, they filed a complaint for damages because they
suffered inconvenience, embarrassment, and humiliation for taking a longer route. The RTC ruled in favor
of and granted moral damages to petitioners because they were excluded from the Seattle-Tokyo-Manila
flight to accommodate several Japanese passengers for Japan. On appeal, the CA reversed the ruling of
the lower court and held that there was no basis for the award of moral damages finding no bad faith,
negligence or malice in transporting petitioners via the Seattle-Los Angeles-Seoul-Manila route.
Issue:
1. Whether or not petitioners’ discriminatory bump-off constitutes breach by respondent airline of its
air-carriage contract?
2. Whether or not petitioners are entitled to moral, exemplary and nominal damages as a consequence of
the breach by respondent airline of its air-carriage contract?
Ruling:
1. Yes.
The basis of the Complaint was the way respondent allegedly treated petitioners like
puppets that could be shuttled to Manila via Los Angeles and Seoul without their consent. Its
employees merely hustled the confused petitioners into boarding one plane after another without
giving the latter a choice from other courses of action that were available. It unilaterally decided
on the most expedient way for them to reach their final destination.
An examination of the conditions printed on the airline ticket, nothing there authorizes
Northwest to decide unilaterally, after the distressed flight landed in Seattle, what other stopping
places petitioners should take and when they should fly. True, Condition 9 on the ticket allowed
respondent to substitute alternate carriers or aircraft without notice. However, nothing there
permits shuttling passengers—without so much as a by yourleave—to stopping places that they
have not been previously notified of, much less agreed to or been prepared for. Substituting
aircrafts or carriers without notice is entirely different from changing stopping places or
connecting cities without notice.
2. No, only nominal damages.

The Supreme Court was not convinced when petitioners imputed impute oppression,
discrimination, recklessness and malevolence to respondent. There is no persuasive evidence that they
were maliciously singled out to fly the Seattle-Los Angeles-Seoul-Manila route. It appears that the
passengers of the distressed flight were randomly divided into two groups. One group was made to take
the Tokyo-Manila flight; and the other, the Los Angeles-Seoul-Manila flight. The selection of who was to
take which flight was handled via the computer reservation system, which took into account only the
passengers’ final destination.
The records show that respondent was impelled by sincere motives to get petitioners to their final
destination by whatever was the most expeditious course -- in its judgment, if not in theirs. Though they
claim that they were not accommodated on Flight 27 from Seattle to Tokyo because respondent had
taken on Japanese passengers, petitioners failed to present convincing evidence to back this allegation.
In the absence of convincing evidence, respondent could not be found guilty of bad faith.
Petitioners have failed to show convincingly that they were rerouted by respondent to Los
Angeles and Seoul because of malice, profit motive or self-interest. Good faith is presumed, while bad
faith is a matter of fact that needs to be proved by the party alleging it.
In the absence of bad faith, ill will, malice or wanton conduct, respondent cannot be held liable for
moral damages. Article 2219 of the Civil Code enumerates the instances in which moral damages may
be awarded. In a breach of contract, such damages are not awarded if the defendant is not shown to
have acted fraudulently or with malice or bad faith. Insufficient to warrant the award of moral damages is
the fact that complainants suffered economic hardship, or that they worried and experienced mental
anxiety.
Neither are exemplary damages proper in the present case. The Civil Code provides that in
contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner.” Respondent has not been proven to
have acted in that manner. At most, it can only be found guilty of having acted without first considering
and weighing all other possible courses of actions it could have taken, and without consulting petitioners
and securing their consent to the new stopping places. The unexpected and sudden requirement of
having to arrange the connecting flights of every single person in the distressed plane in just a few hours,
in addition to the Northwest employees’ normal workload, was difficult to satisfy perfectly. We cannot find
respondent liable for exemplary damages for its imperfection of neglecting to consult with the passengers
beforehand.
Nominal damages are recoverable if no actual, substantial or specific damages were shown to have
resulted from the breach. The amount of such damages is addressed to the sound discretion of the court,
taking into account the relevant circumstances.
In the present case, we must consider that petitioners suffered the inconveniences of having to
wake up early after a bad night and having to miss breakfast; as well as the fact that they were business
class passengers. They paid more for better service; thus, rushing them and making them miss their
small comforts was not a trivial thing. We also consider their social and official status. Victorino Savellano
was a former mayor, regional trial court judge and chairman of the Commission on Elections. Virginia B.
Savellano was the president of five rural banks, and Deogracias Savellano was then the incumbent vice
governor of Ilocos Sur. Hence, it will be proper to grant one hundred fifty thousand pesos (P150,000) as
nominal damage to each of them, in order to vindicate and recognize their right to be notified and
consulted before their contracted stopping place was changed.
In the present case, the Court considered that petitioners suffered the inconveniences of
having to wake up early after a bad night and having to miss breakfast; as well as the fact that
they were business class passengers. They paid more for better service; thus, rushing them and
making them miss their small comforts was not a trivial thing. It is also considered, their social
and official status. Victorino Savellano was a former mayor, regional trial court judge and
chairman of the Commission on Elections. Virginia B. Savellano was the president of five rural
banks, and Deogracias Savellano was then the incumbent vice governor of Ilocos Sur. Hence, it
will be proper to grant one hundred fifty thousand pesos (P150,000) as nominal damage to each
of them, in order to vindicate and recognize their right to be notified and consulted before their
contracted stopping place was changed.

#33 Victory Liner v. Gammad, supra (CANENCIA)

VICTORY LINER, INC. vs. GAMMAD
G.R. No. 159636 | November 25, 2004

FACTS:
Marie Grace Gammad was a passenger of petitioner’s bus when it fell on a ravine, which
resulted to her death. Hence, heirs of the deceased Marie Grace filed a case for damages
against Victory Liner, Inc. for breach of contract of carriage. Rosalito Gammad, husband of
deceased, completed his testimony and was scheduled for cross-examination. However, counsel
of peritioner failed to appear even after a reschedule, and thus the court deemed the
petitioner to have waived cross-examination. The petitioner’s counsel also failed to appear at
the presentation of evidence. The court already deemed the case submitted for resolution
when it received belatedly the telegram of petitioner’s counsel requesting for postponement.

ISSUE:
(1) Is the petitioner bound by the negligence of the counsel?
(2) Is the petitioner liable for breach of contract of carriage?
(3) Is the award of damages proper?

RULING:
(1) Yes. As a general rule, client is bound by negligence of counsel. Any act performed by a
counsel within the scope of his general or implied authority is regarded as an act of his client.
Consequently, the mistake or negligence of counsel may result in the rendition of an
unfavorable judgment against the client. However, exceptions have been recognized by the
court in cases where reckless or gross negligence of counsel deprives the client of due process
of law, or when its application will result in outright deprivation of the clients liberty or
property or where the interests of justice so require, and accord relief to the client who
suffered by reason of the lawyers gross or palpable mistake or negligence.

The exceptions, however, are not present in this case. Petitioners claim that it was denied
due process lacks basis. Petitioner too is not entirely blameless.

(2) Petitioner was correctly found liable for breach of contract of carriage. A common carrier
is bound to carry its passengers safely as far as human care and foresight can provide, using
the utmost diligence of very cautious persons, with due regard to all the circumstances. In a
contract of carriage, it is presumed that the common carrier was at fault or was negligent
when a passenger dies or is injured. Unless the presumption is rebutted, the court need not
even make an express finding of fault or negligence on the part of the common carrier. This
statutory presumption may only be overcome by evidence that the carrier exercised
extraordinary diligence.

In the instant case, there is no evidence to rebut the statutory presumption that the
proximate cause of Marie Grace’s death was the negligence of petitioner. Hence, the courts
below correctly ruled that petitioner was guilty of breach of contract of carriage.

(3) Nevertheless, the award of damages should be modified. Article 1764 in relation to
Article 2206, holds the common carrier in breach of its contract of carriage that results in
the death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity
for loss of earning capacity, and (3) moral damages.

In the present case, respondent heirs of the deceased are entitled to indemnity for the death
of Marie Grace which under current jurisprudence is fixed at P50,000.00.

The award of compensatory damages for the loss of the deceased’s earning capacity should be
deleted for lack of basis. As a rule, documentary evidence should be presented to
substantiate the claim for damages for loss of earning capacity. By way of exception,
damages for loss of earning capacity may be awarded despite the absence of documentary
evidence when (1) the deceased is self-employed earning less than the minimum wage under
current labor laws, and judicial notice may be taken of the fact that in the deceased’s line of
work no documentary evidence is available; or (2) the deceased is employed as a daily wage
worker earning less than the minimum wage under current labor laws.

Here, the award of compensatory damages for loss of earning capacity was based only on the
testimony of respondent Rosalito. No other evidence was presented. The award is clearly
erroneous because the deceased’s earnings does not fall within the exceptions. However, the
fact of loss having been established, temperate damages in the amount of P500,000.00 should
be awarded to respondents. Under Article 2224, temperate or moderate damages, which are
more than nominal but less than compensatory damages, may be recovered when the court
finds that some pecuniary loss has been suffered but its amount cannot, from the nature of
the case, be proved with certainty.

Anent the award of moral damages, the same cannot be lumped with exemplary damages
because they are based on different jural foundations. These damages are different in nature
and require separate determination. In culpa contractual or breach of contract, moral
damages may be recovered when the defendant acted in bad faith or was guilty of gross
negligence (amounting to bad faith) or in wanton disregard of contractual obligations and, as in
this case, when the act of breach of contract itself constitutes the tort that results in
physical injuries. By special rule in Article 1764 in relation to Article 2206, moral damages
may also be awarded in case the death of a passenger results from a breach of carriage. On
the other hand, exemplary damages, which are awarded by way of example or correction for
the public good may be recovered in contractual obligations if the defendant acted in wanton,
fraudulent, reckless, oppressive, or malevolent manner.

Respondents in the instant case should be awarded moral damages to compensate for the grief
caused by the death of the deceased resulting from the petitioner’s breach of contract of
carriage. Furthermore, the petitioner failed to prove that it exercised the extraordinary
diligence required for common carriers, it is presumed to have acted recklessly. Thus, the
award of exemplary damages is proper. Under the circumstances, we find it reasonable to
award respondents the amount of P100,000.00 as moral damages and P100,000.00 as
exemplary damages.

For actual damages, only substantiated and proven expenses or those that appear to have
been genuinely incurred in connection with the death, wake or burial of the victim will be
recognized. Hence, actual damages should be further reduced to P78,160.00, which was the
amount supported by official receipts.

Pursuant to Article 2208, attorney’s fees may also be recovered in the case at bar where
exemplary damages are awarded. The Court finds the award of attorneys fees equivalent to
10% of the total amount adjudged against petitioner reasonable.

Finally, when an obligation, regardless of its source (i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts) is breached, the contravenor can be held liable for payment of
interest in the concept of actual and compensatory damages, subject to the following rules:

1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have been
stipulated in writing.

Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169, Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the court at
the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or
damages except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil
Code) but when such certainty cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the judgment of the court is made
(at which time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in any case, be on
the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph
2, above, shall be 12% per annum from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of credit.

In the instant case, petitioner should also be held liable for payment of interest as damages
for breach of contract of carriage. Considering that the amounts payable by petitioner has
been determined with certainty only in the instant petition, the interest due shall be computed
upon the finality of this decision at the rate of 12% per annum until satisfaction.

NOTE: Legal interest rate is now fixed at 6%.

#34 Cathay Pacific Airways v. Reyes, G.R. No. 185891, June 26, 2013 (CRUZ)

Cathay Pacific vs. Reyes
FACTS:
Sometime in March 1997, respondent Wilfredo Reyes (Wilfredo) made a travel reservation with
Sampaguita Travel for his family’s trip to Adelaide, Australia scheduled from 12 April 1997 to 4
May 1997. Upon booking and confirmation of their flight schedule, Wilfredo paid for the airfare and
was issued four (4) Cathay Pacific round-trip airplane tickets for
Manila-HongKong-Adelaide-HongKong-Manila
One week before they were scheduled to fly back home, Wilfredo reconfirmed his family’s return
flight with the Cathay Pacific office in Adelaide. They were advised that the reservation was “still
okay as scheduled.”
On the day of their scheduled departure from Adelaide, Wilfredo and his family arrived at the
airport on time. When the airport check-in counter opened, Wilfredo was informed by a staff from
Cathay Pacific that the Reyeses did not have confirmed reservations, and only Sixta’s flight
booking was confirmed. Nevertheless, they were allowed to board the flight to HongKong due to
adamant pleas from Wilfredo. When they arrived in HongKong, they were again informed of the
same problem. Unfortunately this time, the Reyeses were not allowed to board because the flight
to Manila was fully booked. Only Sixta was allowed to proceed to Manila from HongKong. On the
following day, the Reyeses were finally allowed to board the next flight bound for Manila.
Upon reaching the Philippines, Wilfredo went to Sampaguita Travel to report the incident.
RTC and CA ruled in favor of Reyes and held Cathay Pacific liable.
ISSUE: WON CA is correct in its decision
HELD: Yes, Respondents’ cause of action against Cathay Pacific stemmed from a breach of
contract of carriage. A contract of carriage is defined as one whereby a certain person or
association of persons obligate themselves to transport persons, things, or news from one place
to another for a fixed price. Under Article 1732 of the Civil Code, this “persons, corporations,
firms, or associations engaged in the business of carrying or transporting passengers or goods
or both, by land, water, or air, for compensation, offering their services to the public” is called a
common carrier.

vi. Attorney’s Fees and Interest
Arts. 2208, 2210

#35 Asian Terminals, Inc., v. Allied Guarantee Insurance, G.R. No. 182208, October 14,
2015, supra (DATAN)

FACTS:
Marina, the predecessor of Asian Terminals Inc., is an arrastre operator based on Manila.
On February 5, 1989, a shipment of kraft linear board was loaded and received from the
ports of Lake Charles, LA, and Mobile, Al, USA for transport and delivery to San Miguel.
Upon offloading, it was assessed that a total of 158 rolls were damaged during shipping.
Further, upon the goods' withdrawal from arrastre and their delivery to the customs broker,
Dynamic and eventually to the consignee San Miguel, another 54 rolls were found to have
been damaged, for a total of 212 rolls of damaged shipment worth P755,666.84.
Allied Insurance was the insurer of the shipment. Thus, it paid San Miguel P755,666.84 and
was subrogated in the latter's right. Allied filed a Complaint against Transocean, Philippine
Transmarine, Dynamic and Marina seeking to be indemnified for the P755,666.84 it lost
paying San Miguel.
ISSUES: Whether or not petitioner has been proven liable for the additional 54 rolls of
damaged goods to respondent
RULING: Yes. Marina, the arrastre operator, from the above evidence, was not able to
overcome the presumption of negligence. The Bad Order Cargo Receipts, the Turn Over
Survey of Bad Order Cargoes as well as the Request for Bad Order Survey did not establish
that the additional 54 rolls were in good condition while in the custody of the arrastre. Said
documents proved only that indeed the 158 rolls were already damaged when they were
discharged to the arrastre operator and when it was subsequently withdrawn from the
arrastre operator by [the] customs broker. Further, the Turn Over Inspector and the Bad
Order Inspector who conducted the inspections and who signed the Turn Over Survey of
Bad [Order] Cargoes and the Request for Bad Order Survey, respectively, were not
presented by Marina as witnesses to verify the correctness of the document and to testify
that only 158 rolls was reported and no others sustained damage while the shipment was in
its possession.
On the other hand, defendant Dynamic (which) in its capacity as broker, withdrew the 357
rolls of kraft linear board from the custody of defendant Marina and delivered the same to
the consignee, San Miguel Corporation's warehouse in Tabacalera at United Nations, Manila,
is considered a common carrier.
It is noteworthy to mention that "in general, the nature of the work of an arrastre operator
covers the handling of cargoes at piers and wharves,"
"To carry out its duties, the arrastre is required to provide cargo handling equipment which
includes, among others, trailer, chassis for containers."
Hence, the "legal relationship betw.een the consignee and the arrastre operator is akin to
that of a depositor and the warehouseman. The relationship between the consignee and the
common carrier is similar to that of the consignee and the arrastre operator. Since it is the
duty of the arrastre to take good care of the goods that are in its custody and to deliver
them in good condition to the consignee, such responsibility also develops upon the carrier.
Both the arrastre and the carrier are, therefore, charged with and obligated to deliver the
goods in good condition to the consignee."
Since the relationship of an arrastre operator and a consignee is akin to that between a
warehouseman and a depositor, then, in instances when the consignee claims any loss, the
burden of proof is on the arrastre operator to show that it complied with the obligation to
deliver the goods and that the losses were not due to its negligence or that of its
employees.
the broker, Dynamic, cannot alone be held liable for the additional 54 rolls of damaged
goods since such damage occurred during the following instances: (1) while the goods were
in the custody of the arrastre ATI; (2) when they were in transition from ATI's custody to
that of Dynamic (i.e., during loading to Dynamic's trucks); and (3) during Dynamic's
custody.
While the trial court could not determine with pinpoint accuracy who among the two caused
which particular damage and in what proportion or quantity, it was clear that both ATI and
Dynamic failed to discharge the burden of proving that damage on the 54 rolls did not occur
during their custody. As for petitioner ATI, in particular, what worked against it was the
testimony, as cited above, that its employees' use of the wrong lifting equipment while
loading the goods onto Dynamic's trucks had a role in causing the damage. Such is a finding
of fact made by the trial court which this Court, without a justifiable ground, will not disturb,
The arrastre operator's principal work is that of handling cargo, so that its drivers/operators
or employees should observe the standards and measures necessary to prevent losses and
damage to shipments under its custody.
In the performance of its obligations, an arrastre operator should observe the same degree
of diligence as that required of a common carrier and a warehouseman.
Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to
take good care of the goods and to turn them over to the party entitled to their possession.
With such a responsibility, the arrastre operator must prove that the losses were not due to
its negligence or to that of its employees. And to prove the exercise of diligence in handling
the subject cargoes, petitioner must do more than merely show the possibility that some
other party could be responsible for the loss or the damage. It must prove that it exercised
due care in the handling thereof.
a mere sign-off from the customs broker's representative that he had received the subject
shipment "in good order and condition without exception" would not absolve the arrastre
from liability, simply because the representative's signature merely signifies that said person
thereby frees the arrastre from any liability for loss or damage to the cargo so withdrawn while the same
was in the custody of such representative to whom the cargo was released, but it does not foreclose the
remedy or right of the consignee (or its subrogee) to prove that any loss or damage to the subject
shipment occurred while the same was under the custody, control and possession of the arrastre
operator.
As it is now established that there was negligence in both petitioner ATI's and Dynamic's
performance of their duties in the handling, storage and delivery of the subject shipment to
San Miguel, resulting in the loss of 54 rolls of kraft linear board, both shall be solidarily
liable for such loss.

6 Singson v CA, supra (DIMAUKOM)
CARLOS SINGSON, petitioner,
vs.
COURT OF APPEALS and CATHAY PACIFIC AIRWAY, INC., respondents.
G.R. No. 119995 November 18, 1997

FACTS:
Petitioner CARLOS SINGSON and his cousin Crescentino Tiongson bought from respondent Cathay
Pacific Airways two (2) open-dated, identically routed, round trip plane tickets (Manila to LA and
vice versa). Each ticket consisted of six (6) flight coupons, each would be detached at the start of
each leg of the trip.
Singson failed to obtain a booking in LA for their trip to Manila. Apparently, the coupon
corresponding to the 5th leg of the trip was missing and instead the 3rd was still attached. It was
not until few days later that the defendant finally was able to arrange for his return to Manila.
Singson commenced an action for damages based on breach of contract of carriage against CATHAY
before the Regional Trial Court.
CATHAY alleged that there was no contract of carriage yet existing such that their refusal to
immediately book him could not be construed as breach of contract of carriage.
The trial court rendered a decision in favor of petitioner herein holding that CATHAY was guilty of
gross negligence amounting to malice and bad faith for which it was adjudged to pay petitioner
P20,000.00 for actual damages with interest at the legal rate of twelve percent (12%) per annum
from 26 August 1988 when the complaint was filed until fully paid, P500,000.00 for moral damages,
P400,000.00 for exemplary damages, P100,000.00 for attorney’s fees, and, to pay the costs.
On appeal by CATHAY, the Court of Appeals reversed the trial court’s finding that there was gross
negligence amounting to bad faith or fraud and, accordingly, modified its judgment by deleting the
awards for moral and exemplary damages, and the attorney’s fees as well.
ISSUES:
1.) Whether or not a breach of contract was committed by CATHAY when it failed to confirm the
booking of petitioner.
2.) Whether or not the carrier was liable not only for actual damages but also for moral and
exemplary damages, and attorney’s fees.
RULING:
1.) Yes. The round trip ticket issued by the carrier to the passenger was in itself a complete written
contract by and between the carrier and the passenger. It had all the elements of a complete
written contract, to wit:(a) the consent of the contracting parties manifested by the fact that the
passenger agreed to be transported by the carrier to and from Los Angeles via San Francisco and
Hong Kong back to the Philippines, and the carrier’s acceptance to bring him to his destination and
then back home; (b) cause or consideration, which was the fare paid by the passenger as stated in
his ticket; and, (c) object, which was the transportation of the passenger from the place of
departure to the place of destination and back, which are also stated in his ticket. In fact, the
contract of carriage in the instant case was already partially executed as the carrier complied with
its obligation to transport the passenger to his destination, i.e., Los Angeles. , x x x the loss of the
coupon was attributable to the negligence of CATHAY’s agents and was the proximate cause of the
non-confirmation of petitioner's return flight.
2.) Yes. Although the rule is that moral damages predicated upon a breach of contract of carriage
may only be recoverable in instances where the mishap results in the death of a passenger, or where
the carrier is guilty of fraud or bad faith, there are situations where the negligence of the carrier
is so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise
becomes entitled to recover moral damages.
These circumstances reflect the carrier’s utter lack of care and sensitivity to the needs of its
passengers, clearly constitutive of gross negligence, recklessness and wanton disregard of the
rights of the latter, acts evidently indistinguishable or no different from fraud, malice and bad
faith. As the rule now stands, where in breaching the contract of carriage the defendant airline is
shown to have acted fraudulently, with malice or in bad faith, the award of moral and exemplary
damages, in addition to actual damages, is proper.
However, the P500,000.00 moral damages and P400,000.00 exemplary damages awarded by the
trial court have to be reduced. The well-entrenched principle is that the grant of moral damages
depends upon the discretion of the court based on the circumstances of each case. This discretion
is limited by the principle that the "amount awarded should not be palpably and scandalously
excessive" as to indicate that it was the result of prejudice or corruption on the part of the trial
court. Damages are not intended to enrich the complainant at the expense of the defendant. They
are awarded only to alleviate the moral suffering that the injured party had undergone by reason of
the defendant's culpable action. There is no hard-and-fast rule in the determination of what would
be a fair amount of moral damages since each case must be governed by its own peculiar facts.
In the instant case, the injury suffered by petitioner is not so serious or extensive as to warrant an
award amounting to P900,000.00. The assessment of P200,000.00 as moral damages and P50,000.00
as exemplary damages in his favor is, in our view, reasonable and realistic.
On the issue of actual damages, we agree with the Court of Appeals that the amount of P20,000.00
granted by the trial court to petitioner should not be disturbed.
As regards attorney's fees, they may be awarded when the defendant's act or omission has
compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. It
was therefore erroneous for the Court of Appeals to delete the award made by the trial court;
consequently, petitioner should be awarded attorney's fees and the amount of P25,000.00, instead
of P100,000.00 earlier awarded, may be considered rational, fair and reasonable.

#37 PAL v C.A. and Sps. Buncio, G.R. No. 123238, Sept 22, 2008 (DYSANGCO)

FACTS

Spouses Buncio purchased from PAL, two plane tickets for their two minor children,
Deanna and Nikolai. Since they will travel as unaccompanied minors, PAL required Sps.
Buncio to accomplish, sign and submit to it an indemnity bond. Spouses complied and PAL
agreed to transport the children from Manila to San Francisco, California. They also
agreed that upon arrival in San Francisco, it would again transport the two on that same
day through a connecting flight from San Francisco to Los Angeles.
On 3 May 1980, the two arrived at the San Francisco Airport. However, the staff of
United Airways 996 refused to take aboard Deanna and Nikolai for their connecting flight
to Los Angeles because PAL's personnel in San Francisco could not produce the indemnity
bond which was lost by the personnel during the previous stop-over in Honolulu, Hawaii.
Deanna and Nikolai were then left stranded at the San Francisco Airport. Subsequently,
Mr. Edwin Strigl, then the Lead Traffic Agent of petitioner in San Francisco, California,
USA, took the children to his residence in San Francisco where they stayed overnight.

On the morning of 4 May 1980, Strigl took Deanna and Nikolai to San Francisco Airport
where the two boarded a Western Airlines plane bound for Los Angeles. Later that day,
Deanna and Nikolai arrived at the Los Angeles Airport where they were met by Mrs.
Regalado.

On 20 November 1981, Spouses Buncio filed a complaint for damages against petitioner
before the RTC alleging that the incident caused Deanna, Nikolai, Mrs. Regalado and
Spouses Buncio to suffer serious anxiety, mental anguish, wounded feelings, and sleepless
nights.

The RTC rendered a decision ordering PAL: (1) to pay Deanna and Nikolai P50,000.00 each
as moral damages and P25,000.00 each as exemplary damages; (2) to pay private
respondent Aurora R. Buncio, as mother of Deanna and Nikolai, P75,000.00 as moral
damages; (3) to pay Mrs. Regalado, as grandmother of Deanna and Nikolai, P30,000.00 as
moral damages; and (4) to pay an amount of P38,250.00 as attorney's fees and the costs
of suit. Private respondent Manuel S. Buncio was not awarded damages because his court
testimony was disregarded, as he failed to appear during his scheduled cross-examination.

Petitioner appealed to the Court of Appeals which affirmed in toto the decision of RTC.

ISSUE

Whether or not the CA erred in sustaining the RTC award of attorney's fees and order
for payment of costs.

RULING

Yes. Current jurisprudence instructs that in awarding attorney’s fees, the trial court must
state the factual, legal, or equitable justification for awarding the same, bearing in mind
that the award of attorney’s fees is the exception, not the general rule, and it is not sound
public policy to place a penalty on the right to litigate; nor should attorney’s fees be
awarded every time a party wins a lawsuit. The matter of attorney’s fees cannot be dealt
with only in the dispositive portion of the decision. The text of the decision must state
the reason behind the award of attorney’s fees. Otherwise, its award is totally unjustified.

In the instant case, the award of attorney’s fees was merely cited in the dispositive
portion of the RTC decision without the RTC stating any legal or factual basis for said
award. Hence, the Court of Appeals erred in sustaining the RTC’s award of attorney’s fees.

No moral and exemplary damages and attorney’s fees

#38 Morris and Whittier vs CA and Scandinavian Airlines System, G.R. No. 127957, February
21, 2001 (FULLEROS)

Reduction of damages and attorney’s fees

#39 Philttranco Service Enterprises, Inc. v. CA and Heirs of the late Ramon Acuesta, G.R.
No. 120553, June 17, 1997 (GALLEGO)
#40 Cathay Pacific Airways, Ltd. V. Sps. Arnulfo and Evelyn Fuentebella, G.R. No. 188283,
July 20, 2016 (LEONOR)

Facts:
Respondents prayed for a total of PI3 million in damages for the alleged besmirched
reputation and honor, as well as the public embarrassment they had suffered as a result of
a series of involuntary downgrades of their trip from Manila to Sydney via Hong Kong on 25
October 1993 and from Hong Kong to Manila on 2 November 1993.
In 1993, the Speaker of the House authorized Congressmen Arnulfo Fuentebella
(respondent Fuentebella), Alberto Lopez (Cong. Lopez) and Leonardo Fugoso (Cong.
Fugoso) to travel on official business to Sydney, Australia, to confer with their counterparts
in the Australian Parliament from 25 October to 6 November 1993.[8
On 22 October 1993, respondents bought Business Class tickets for Manila to Sydney via
Hong Kong and back.[9] They changed their minds, however, and decided to upgrade to
First Clas
According to petitioner, on 23 October 1993, one of the passengers called to request that
the booking be divided into two: one for the Spouses Lopez and Spouses Fugoso, and a
separate booking for respondents
Cong. Lopez... admitted that he had called up petitioner, but only to request an upgrade of
their tickets from Business Class to First Class
There was no showing whether the First Class tickets issued to Sps. Lopez and Sps.
Fugoso were open-dated or otherwise, but it appears that they were able to fly First Class
on all the segments of the trip, while respondents were not.[
They only discovered that they had not been given First Class seats when they were denied
entry into the First Class lounge
Respondent Fuentebella went back to the check-in counter to demand that they be given
First Class seats or at the very least, access to the First Class Lounge. He recalled that he
was treated by the ground staff in a discourteous, arrogant and rude manner
Montillana admitted that First Class tickets had been issued to respondents, but qualified
that those tickets were open-dated
Upon arrival in the Philippines, respondents demanded a formal apology and payment of
damages from petitioner
The trial court ordered petitioner to pay P5 million as moral damages, P1 million as
exemplary damages, and P500,000 as attorney's fee
The CA affirmed the RTC Decision with the modification that the attorney's fees be reduced
to P100,000
Issues:
The C A found that there were no conditions stated on the face of the tickets; hence,
respondents could not be expected to know that the tickets they were holding were
open-dated and were subject to the availability of seats.[61] It applied the rule on contracts
of adhesion, and construed the terms against petitioner.
There was a breach of contract
There is basis for the award of moral and exemplary damages; however, the amounts were
excessive
Moral and exemplary damages are not ordinarily awarded in breach of contract cases. This
Court has held that damages may be awarded only when the breach is wanton and
deliberately injurious, or the one responsible had acted fraudulently or with malice or bad
faith
Ruling:
RULING OF THE COURT
In Air France v. Gillego[68] this Court ruled that in an action based on a breach of
contract of carriage, the aggrieved party does not have to prove that the common
carrier was at fault or was negligent; all that he has to prove is the existence of the
contract and the fact of its nonperformance by the carrier
In FGU Insurance Corporation v. G.P. Sarmiento Trucking Corporation,[73] We recognized
the interests of the injured party in breach of contract cases:
A breach upon the contract confers upon the injured party a valid cause for
recovering that which may have been lost or suffered
According to Montillana, a reservation is deemed confirmed when there is a seat available
on the plane.[74] When asked how a passenger was informed of the confirmation,
Montillana replied that computer records were consulted upon inquiry.[75] By its issuance of
First Class tickets on the same day of the flight in place of Business Class tickets that
indicated the preferred and confirmed flight, petitioner led respondents to believe that their
request for an upgrade had been approved
Petitioner tries to downplay the factual finding that no explanation was given to respondents
with regard to the types of ticket that were issued to them. It ventured that respondents
were seasoned travelers and therefore familiar with the concept of open-dated tickets
In the present case, no evidence was presented to show that respondents were indeed
familiar with the concept of open-dated ticket. In fact, the tickets do not even contain the
term "open-dated."... when
Moral and exemplary damages are not ordinarily awarded in breach of contract cases. This
Court has held that damages may be awarded only when the breach is wanton and
deliberately injurious, or the one responsible had acted fraudulently or with malice or bad
faith
However, the award of P5 million as moral damages is excessive, considering that the
highest amount ever awarded by this Court for moral damages in cases involving airlines is
P500,000.[82] As We said in Air France v. Gillego,[83] the mere fact that respondent was a
Congressman should not result in an automatic increase in the moral and exemplary
damages."

vii. Quitclaims

#41 Baliwag Transport vs C.A., G.R. No. 80447, January 31, 1989 (MACAPAAR)

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Notes

---- ​START HERE​ ----

a. Damages Recoverable from Common Carriers

= [2/3 (80 - age at death)] x GAI - [50% of GAI]

On May 13, 1985, ​private respondents filed a complaint for damages against petitioners for the

Petitioner’s MR was likewise denied. Hence, this petition.

ISSUE: Whether respondent court erred in reversing the decision of the trial court and in finding

It is not negligence p

The victim herein, by stepping and standing on the platform of the bus, is already considered

With respect to the award of damages, an oversight was, however, committed by respondent Court

The award of moral damages is thus eliminated.

Held: No to all. Judgment modified raising damages from 100k to 150k.

PHILIPPINE AIR LINES, petitioner,

FLORANTE A. MIANO, respondent.

G.R. No. 106664 March 8, 1995

exemplary damages and atty’s fees.

undisputed facts do not so warrant the characterization of the action of petitioner.

Therefore, the award of moral damages is deleted and set aside.

Whether or not SAL violated the contract of carriage.

Petition is ​DENIED​. The CA decision is affirmed.

ISSUE: WON the CA is correct?

No. ​The Supreme Court concluded that the switching occurred or, more accurately, was discovered

It can safely be said then that ​a common carrier is entitled to fair representation of the nature

#31 Japan Airlines v. Court of Appeals, 294 SCRA 19 (BERNARDO)

2. No, only nominal damages.

ISSUE: WON CA is correct in its decision

CARLOS SINGSON, petitioner,

COURT OF APPEALS and CATHAY PACIFIC AIRWAY, INC., respondents.

G.R. No. 119995 November 18, 1997

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---- START HERE ----

On May 13, 1985, private respondents filed a complaint for damages against petitioners for the

Petition is DENIED. The CA decision is affirmed.

No. The Supreme Court concluded that the switching occurred or, more accurately, was discovered

It can safely be said then that a common carrier is entitled to fair representation of the nature