Transportation Law Case Digest | Damages | Punitive Damages


JAPAN AIRLINES vs. SIMANGAN GR No. 170141 April 22, 2008 Third Division Reyes FACTS: Respondent needed to go to the US to donate his kidney to his ailing cousin. Having obtained an emergency US Visa, respondent purchased a round trip ticket from petitioner JAL. He was scheduled to a flight bound for LA via Japan. On the date of his flight, respondent passed through rigid immigration and security routines before being allowed to board a JAL plane. While inside the plane, respondent was asked to show his travel documents. After which he was ordered by the crew to leave the plane, imputing that respondent is carrying falsified travel documents. Respondent pleaded but was ignored and under constraint he gets off the plane. The plane took off and respondent was left behind. Respondent was refunded with the cost of his ticket minus 500 USD, when JAL found out eventually that his travel documents were not falsified and in order. Respondent filed an action for damages against JAL. RTC RULING: JAL is liable for beach of contract of carriage, and should pay 1M as MD, 500K as ED, 250K as AF + cost of suit. JAL appealed contending it is not guilty of breach of contract of carriage and not liable for damages. CA RULING: Affirmed RTC decision with modification as to amount of damages for being scandalously excessive. 500K MD, 250K ED and NO AT. ISSUE: WON JAL is guilty of breach of contract of carriage. WON Simangan is entitled to moral and exemplary damages. HELD: JAL is guilty of breach of contract of carriage and is liable for damages. Petition of JAL was denied. CA decision was affirmed with modification. 500K ED, 100K ED, 200K AF. RATIO: Breach of contract of carriage In an action for breach of contract of carriage, all that is required of plaintiff is to prove the existence of such contract and its non-performance by the carrier through the failure to carry the passenger safely to his destination. Simangan complied with these requisites. Damage was accrued by JAL when Simangan was bumped off despite his protestations and valid travel documents and notwithstanding his contract of carriage with JAL.

Award of moral damages in breach of contract of carriage. As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not enumerated under Art 2219 NCC. As an exception, such damages are recoverable in: 1. Mishaps resulting to a death of a passenger (Art. 1764 NCC) 2. When carrier is guilty of fraud or bad faith (Art. 2220) JAL breached its contract of carriage with respondent in bad faith, when its crew ordered respondent to disembark while the latter is already settled in his assigned seat under the guise of verifying the genuineness of his travel documents. Inattention to and lack of care for the interest of its passengers who are entitled ot its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to award of moral damages. Award of exemplary damages in breach of contract of carriage. Exemplary damages maybe recovered in contractual obligations as a way of example or correction for the public good.JAL is liable for exemplary damages as its acts constitute wanton, oppressive and malevolent acts against respondent. Passengers have the right to be treated by the carrier·s employees with kindness, respect, courtesy and due consideration and are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees.

diligence in ensuring the safety of Arroyo. That meant that Trans-Asia was, pursuant to Article 1755 of the said Code, bound to carry Arroyo safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. Herein, Trans-Asia failed to discharge this obligation. 3. Vessel was unseaworthy even before voyage began; Unseaworthiness defined, a clear breach of duty of carrier Before commencing the contracted voyage, Trans-Asia 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 is duty prescribed in Article 1755 of the Civil Code. 4. Article 1764 NCC; Liability for damages As to its liability for damages, Article 1764 of the Civil Code expressly provides that ´Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by common carrier. The damages comprised in Title XVIII of the Civil Code are actual or compensatory, moral, nominal, temperate or moderate, liquidated, and exemplary.µ 5. Actual and compensatory damages Actual or compensatory damages represent the adequate compensation for pecuniary loss suffered and for profits the obligee failed to obtain. 6. Damages resulting in contracts or quasi-contracts In contracts or quasi-contracts, the obligor is liable for all the damages which may be reasonably attributed to the non- performance of the obligation if he is guilty of fraud, bad faith, malice, or wanton attitude. 7. Moral damages Moral damages include moral suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, or similar injury. They may be recovered in the cases enumerated in Article 2219 of the Civil Code, likewise, if they are the proximate result of, as herein, Trans-Asia·s breach of the contract of carriage. Anent a breach of a contract of common carriage, moral damages may be awarded if the common carrier acted fraudulently or in bad faith. 8. Exemplary damages; not a matter of right Exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. In contracts and quasi-contracts, exemplary damages may be awarded if the defendant acted in a

Trans-Asia Shipping Lines vs. Third Division, Davide Jr. (J): 4 concur







Facts: Atty. Renato Arroyo, a public attorney, bought a ticket Trans-Asia Shipping Lines Inc., 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 12 November 1991. At around 5:30p.m of the said day, Arroyo boarded the M/V Asia Thailand vessel. At that instance, Arroyo noticed that some repair work were being undertaken on the engine of the vessel. The vessel departed at around 11:00 p.m. with only 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 acceded [sic] to their request and thus the vessel headed back to Cebu City. At Cebu City, Arroyo, 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. Arroyo, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of Trans-Asia. On account of the failure of Trans-Asia to transport him to the place of destination on 12 November 1991, Arroyo filed before the trial court a complaint for damages against Trans-Asia. After due trial, the trial court rendered its decision and ruled that the action was only for breach of contract, with Articles 1170, 1172, and 1173 of the Civil Code as applicable law ³ not Article 2180 of the same Code. The Court dismissed the complaint as it did not appear that Arroyo was left in the Port of Cebu because of the fault, negligence, malice or wanton attitude of Trans-Asia·s employees; and likewise dismissed Trans-Asia·s counterclaim is likewise dismissed it not appearing also that filing of the case by Arroyo was motivated by malice or bad faith. Unsatisfied, Arroyo appealed to the Court of Appeals (CA-GR CV 39901). In its decision of 23 November 1994, the Court of Appeals reversed the trial court·s decision by applying Article 1755 in relation to Articles 2201, 2208, 2217, and 2232 of the Civil Code and, accordingly, awarded (1) P20,000.00 as moral damages; (2) P10,000.00 as exemplary damages; (3) P5,000.00 as attorney·s fees; and (4) Cost of suit. Trans-Asia instituted the petition for review on certiorari. The Supreme Court denied the petition, and affirmed the challenged decision of the Court of Appeals, subject to the modification as to the award for attorney·s fees which is set aside; with costs against Trans-Asia. 1. Laws applicable Undoubtedly, there was, between Trans-Asia and Arroyo, a contract of common carriage. The laws of primary application then are the provisions on common carriers under Section 4, Chapter 3, Title VIII, Book IV of the Civil Code, while for all other matters not regulated thereby, the Code of Commerce and special laws. 2. Article 1733 NCC, Extraordinary diligence; Article 1755, Utmost diligence of very cautious persons Under Article 1733 of the Civil Code, Trans-Asia was bound to observe extraordinary

wanton fraudulent, reckless, oppressive or malevolent manner. It cannot, however, be considered as a matter of right; the court having to decide whether or not they should be adjudicated. Before the court may consider an award for exemplary damages, the plaintiff must first show that he is entitled to moral, temperate or compensatory damages; but it is not necessary that he prove the monetary value thereof. 9. Article 1169 not applicable The Court of Appeals did not grant Arroyo actual or compensatory damages, reasoning that no delay was incurred since there was no demand, as required by Article 1169 of the Civil Code. This article, however, finds no application in the case because, as there was in fact no delay in the commencement of the contracted voyage. If any delay was incurred, it was after the commencement of such voyage, more specifically, when the voyage was subsequently interrupted when the vessel had to stop near Kawit Island after the only functioning engine conked out. 10. Article 698 of the Code of Commerce applies suppletorily to Article 1766 NCC; Rights and duties of parties arising out of delay As to the rights and duties of the parties strictly arising out of such delay, the Civil Code is silent. However, as correctly pointed out by the petitioner, Article 698 of the Code of Commerce specifically provides for such a situation. It reads ´In case a voyage already begun should be interrupted, the passengers shall be obliged to pay the fare in proportion to the distance covered, without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel and a passenger should agree to await the repairs, he may not be required to pay any increased price of passage, but his living expenses during the stay shall be for his own account.µ This article applies suppletorily pursuant to Article 1766 of the Civil Code. 11. Article 698 of the Code of Commerce must be read with Articles 2199, 2200, 2201, and 2208 in relation to Article 21 NCC; Arroyo not entitled to actual or compensatory damages The cause of the delay or interruption was Trans-Asia·s failure to observe extraordinary diligence. Article 698 must then be read together with Articles 2199, 2200, 2201, and 2208 in relation to Article 21 of the Civil Code. In so reading, it means that Trans-Asia is liable for any pecuniary loss or loss of profits which Arroyo may have suffered by reason thereof. For Arroyo, such would be the loss of income if unable to report to his office on the day he was supposed to arrive were it not for the delay. This, however, assumes that he stayed on the vessel and was with it when it thereafter resumed its voyage; but he did not. As he and some passengers resolved not to complete the voyage, the vessel had to return to its port of origin and allow them to disembark. Arroyo then took Trans-Asia·s other vessel the following day, using the ticket he had purchased for the previous day·s voyage. Any further delay then in Arroyo·s arrival at the port of destination was caused by his decision to disembark. Had he remained on the first vessel, he would have reached his destination at noon of 13 November 1991, thus been able to report to his office in the afternoon. He, therefore, would have lost only the salary for half of a day. But actual or compensatory damages must be proved, which Arroyo failed to do. There is no convincing evidence that he did not receive his salary for 13 November 1991 nor that his absence was not excused. 12. Trans-Asia is liable for moral and exemplary damages Trans-Asia is liable for moral and exemplary damages. In allowing its unseaworthy M/V Asia Thailand to leave the port of origin and undertake the contracted voyage, with full awareness that it was exposed to perils of the sea, it deliberately disregarded its solemn duty to exercise extraordinary diligence and obviously acted with bad faith and in a wanton and reckless manner. 13. Trans-Asia·s assertion shows lack of genuine concern for safety of passengers; Trans-Asia cannot expect passengers to act in manner it desired Trans-Asia·s assertions that the safety of the vessel and passengers was never at stake because the sea was ´calmµ in the vicinity where it stopped as faithfully recorded in the vessel·s log book demonstrates beyond cavil Trans-Asia·s lack of genuine concern for the safety of its passengers. It was, perhaps, only providential than the sea happened to be calm. Even so, Trans-Asia should not expect its passengers to act in the manner it desired. The passengers were not stoics; becoming alarmed, anxious, or frightened at the stoppage of a vessel at sea in an unfamiliar zone a nighttime is not the sole prerogative of the faint-hearted. More so in the light of the many tragedies at sea resulting in the loss of lives of hopeless passengers and damage to property simply because common carriers failed in their duty to exercise extraordinary diligence in the performance of their obligations. 14. Article 2208 NCC Article 2208 of the Civil Code provides that ´ In the absence of stipulation, attorney· s fees and expenses of litigation, other than judicial costs cannot be recovered except: (1) When exemplary damages are awarded; (2) When the defendant·s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.µ 15. Award of attorney·s fees not justified Under Article 2208 of the Civil Code, Attorney·s fees are recoverable only in the concept of actual damages, not as moral damages nor judicial costs. Hence, to merit such an award, it is settled that the amount thereof must be proven. Moreover, such must be specifically prayed for and may not be deemed incorporated within a general prayer for ´such other relief and remedy as the court may deem just and equitable. The statement that the ´plaintiff was forced to litigate in order that he can claim moral and exemplary damages for the suffering he incurredµ does not satisfy the benchmark of ´factual, legal and equitable justificationµ needed as basis for an award of attorney·s fees. In sum, for lack of factual and legal basis, the award of attorney·s fees must be deleted.


Air France v. Carrascoso G.R. No. L-21438, Sept. 28, 1966 FACTS: Carrascoso, a civil engineer, was a first class passenger of Air France on his way to Rome for a pilgrimage. From Manila to Bangkok, he traveled in ¶first class,· but at Bangkok, the Manager of Air France forced him to vacate his seat in favor of a ¶white man· who had a ¶better right to the seat.· Carrascoso filed for moral damages, averring in his complaint the contract of carriage betweenAir France and himself. Air France claims that to authorize an award for moral damages there must be an averment of fraud or bad faith, upon which Carrascoso·s complaint is silent. ISSUE: y Whether or not Carrascoso is entitled to an award for moral damages HELD: The foregoing substantially aver: 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 seatedµ and to take a seat in the tourist class, by reason of which he suffered inconvenience, embarrassment and humiliation, 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. But, the inference of bad faith is there; it may be drawn from the facts and circumstances set forth therein. The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful expulsion. NOTA BENE: Here there is a contract of carriage between the parties and such contract was breached by Air France when it wrongfully forced Carrascoso to vacate the first class seat which he paid for. The wrongful expulsion is independent of the breach since even without the contract, such wrongful expulsion may still make Air France liable for damages. In other words, the wrongful expulsion is in itself a tort.

Lara vs. Valencia (GR L-9907, 30 June 1958) En Banc, Bautista Angelo (J): 7 concur Facts: Demetrio Lara went to the lumber concession of Brigido R. Valencia in Parang, Cotabato upon instructions of his chief in order to classify the logs of defendant which were then ready to be exported and to be loaded on a ship anchored in the port of Parang. It took Lara 6 days to do his work during which he contracted malaria fever and for that reason he evinced a desire to return immediately to Davao. At that time, there was no available bus that could take him back to Davao and so he requested Valencia if he could take him in his own pick-up. Valencia agreed and, together with Lara, other passengers tagged along, most of them were employees of the Government. Valencia merely accommodated them and did not charge them any fee for the service. It was also their understanding that upon reaching barrio Samoay, the passengers would alight and transfer to a bus that regularly makes the trip to Davao but unfortunately there was none available at the time and so the same passengers, including Lara, again requested Valencia to drive them to Davao. Valencia again accommodated them and upon reaching Km. 96, Lara accidentally fell suffering fatal injuries. An action for damages was brought by Lourdes J. Lara, et. al. against Valencia in the CFI of Davao for the death of one Demetrio Lara, Sr. allegedly caused by the negligent act of Valencia. Valencia denied the charge of negligence and set up certain affirmative defenses and a counterclaim. The court after hearing rendered judgment ordering Valencia to pay Lara, et. al. the following amount: (a) P10,000 as moral damages; (b) P3,000 as exemplary damages; and (c) P1,000 as attorney·s fees, in addition to the costs of action. Both parties appealed to the Supreme Court because the damages claimed in the complaint exceed the sum of P50,000. The Supreme Court reversed the decision appealed from, without pronouncement as to costs. 1. Lara, et. al. merely accommodation passaengers who paid nothing for service; Degree of diligence required of owner of vehicle The deceased, as well as his companions who rode in the pick-up of Valencia, were merely accommodation passengers who paid nothing for the service and so they can be considered as invited guests within the meaning of the law. As accommodation passengers or invited guests, Valencia as owner and driver of the pick-up owes to them

merely the duty to exercise reasonable care so that they may be transported safely to their destination. Thus, ´The rule is established by the weight of authority that the owner or operator of an automobile owes the duty to an invited guest to exercise reasonable care in its operation, and not unreasonably to expose him to danger and injury by increasing the hazard of travel. This rule, as frequently stated by the courts, is that an owner of an automobile owes a guest the duty to exercise ordinary or reasonable care to avoid injuring him. Since one riding in an automobile is no less a guest because he asked for the privilege of doing so, the same obligation of care is imposed upon the driver as in the case of one expressly invited to rideµ Valencia, therefore, is only required to observe ordinary care, and is not in duty bound to exercise extraordinary diligence as required of a common carrier by Philippine law. 2. Valencia had done what a reasonable prudent man would have done Valencia was not in duty bound to take the deceased in his own pick-up to Davao because from Parang to Cotabato there was a line of transportation that regularly makes trips for the public, and if Valencia agreed to take the deceased in his own car, it was only to accommodate him considering his feverish condition and his request that he be so accommodated. The passengers who rode in the pick-up of Valencia took their respective seats therein at their own choice and not upon indication of Valencia with the particularity that Valencia invited the deceased to sit with him in the front seat but which invitation the deceased declined. The reason for this can only be attributed to his desire to be at the back so that he could sit on a bag and travel in a reclining position because such was more convenient for him due to his feverish condition. All the circumstances thereof clearly indicate that Valencia had done what a reasonable prudent man would have done under the circumstances. 3. Finding as to speed not supported by evidence; else, speed not unreasonable The finding of the trial court that the pick-up was running at more than 40 kilometers per hour is not supported by evidence. This is a mere surmise made by the trial court considering the time the pick- up left barrio Samoay and the time the accident occurred in relation to the distance covered by the pick-up. And even if this is correct, still we say that such speed is not unreasonable considering that they were travelling on a national road and the traffic then was not heavy. 4. Injury to passenger has been proximately caused by own negligence The incident may be attributed to lack of care on the part of the deceased considering that the pick-up was open and he was then in crouching position. Indeed the law provides that ´A passenger must observe the diligence of a good father of a family to avoid injury to himselfµ (Article 1761, new Civil Code), which means that if the injury to the passenger has been proximately caused by his own negligence, the carrier cannot be held liable. 5. Unfortunate happening due to unforeseen accident There is every reason to believe that the unfortunate happening was only due to an unforeseen accident caused by the fact at the time the deceased was half asleep and must have fallen from the pick-up when it ran into some stones causing it to jerk considering that the road was then bumpy, rough and full of stones. All things considered, the accident occurred not due to the negligence of Valencia but to circumstances beyond his control and so he should be exempt from liability.

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